GREENWING RESOURCES LTD - Annual Report 2019

==> picture [228 x 85] intentionally omitted <==

ABN 31 109 933 995

==> picture [477 x 294] intentionally omitted <==

Annual Report

For the year ended

30 June 2019

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

CORPORATE DIRECTORY	3
CHAIRMAN’S REVIEW	4
MINERAL RESOURCE STATEMENT	5
DIRECTORS’ REPORT	6
REVIEW OF OPERATIONS	10
AUDITOR’S INDEPENDENCE DECLARATION	30
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME	31
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	32
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	33
CONSOLIDATED STATEMENT OF CASH FLOWS	34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	35
INDEPENDENT AUDITORS REVIEW TO THE MEMBERS OF BASS METALS LTD	76
DIRECTORS DECLARATION	80
TENEMENTS LISTING	81
SHAREHOLDER INFORMATION	82
DISCLAIMER AND CAUTIONARY STATEMENTS	83
CORPORATE GOVERNANCE STATEMENT	84

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

CORPORATE DIRECTORY

DIRECTORS

Richard Stacy Anthon - Non-Executive Chairman Jeffrey Marvin – Non-Executive Director Peter Wright – Executive Director

COMPANY SECRETARY

David Round

CHIEF EXECUTIVE OFFICER

Tim McManus

REGISTERED OFFICE

Level 2, 34 Colin Street West Perth, WA, 6005

PO Box 1048 Subiaco, WA, 6904

Telephone: (07) 3203 5894 Website: www.bassmetals.com.au Email: [email protected]

LEGAL ADVISORS

HFW Australia Level 15, Brookfield Place Tower 2, 123 St Georges Terrace Perth WA 6000, Australia

SHARE REGISTRY

Computershare Investor Services Pty Ltd Level 11, 172 St Georges Terrace Perth WA 6000 Telephone: 1300 850 505

AUDITORS

Grant Thornton Audit Pty Ltd Level 43, Central Park 152 - 158 St Georges Terrace Perth WA 6000

STOCK EXCHANGE LISTINGS

ASX Ltd (Code: BSM and BSMOC)

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

CHAIRMAN’S REVIEW

Dear Shareholders,

I am pleased to report to you, following a challenging year, which has seen our Company further grow and develop and, importantly, position us for an exciting future.

Whilst the past 12 months have been a difficult period for the resource sector, this has not slowed down our completion of the Stage 1 refurbishment of operations at our 100% wholly owned, Graphmada LargeFlake Graphite Mine in Madagascar. In addition to this, and following completion of Stage 1, we have made substantial investments, this year, in our proposed Stage 2 growth plans and much of this detail has been outlined in our market releases over the past year.

During 2019, we spent a substantial period in ramping up and perfecting production to a level that we believe is optimal. This process is never linear nor easy and has taken some time, but we now believe we have achieved many of the production milestones that were expected of us. This period of ramping up has allowed us to make technical modifications and design changes, and we do believe the Company will benefit from this in the near future and our recent production results certainly indicate this.

Demand for our graphite has steadily increased over the last year and we are now consistently selling our product into the European, Indian and US markets. We recently initiated an exclusive agency agreement with the Polo Queen Group in Mumbai, India and we see this market as having enormous potential for us in the near term.

We also have progressed discussions with a number of other parties with the intention of expanding our supply channels into other parts of Asia and Europe. We expect demand for our premium large and jumbo flake products to be stable and improve over the short to medium term and this provides us with an opportunity that is unique to our business. Our focus continues to be on producing premium, high grade and high value product which allows us to differentiate our business from other suppliers of graphite. Overall, we see the market for Graphite continuing to grow and be strong. China now imports more graphite than it exports and other countries are now looking for alternative supplies of concentrate. We see this as an opportunity and we intend to capitalize on this.

We are now entering an exciting phase in the growth of our business. We believe we have, in many respects, eliminated many of the risk factors that exist in building a mine and can now focus on growing production in order to meet expected strong demand. We will also continue to establish new trade partners for our products, secure prospective tenure and continue to maintain our focus on reducing costs whilst optimising production.

I thank our shareholders for your ongoing support of your Company. Your board and management team believe we now have a sound financial and operational platform to grow the Company and deliver positive outcomes that will be sustainable in the long term. Yours sincerely,

Rick Anthon Chairman

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

MINERAL RESOURCE STATEMENT

Mineral resources at 30 June 2019 were the following:

Deposit	Tonnes	Total	Contained	JORC	JORC
		Graphitic	Graphite	Classification	Code
		Carbon %	Tonnes
Loharano1	421,000	5.2	21,630	Total Indicated	2004
	5,273,000	4.0	213,029	Total Inferred	2004
Total mineral resources	5,694,000	4.1	234,659
Mahefedok2	776,000	4.2	32,600	Total Indicated	2012
	2,700,000	4.2	113,600	Total Inferred	2012
Total mineral resources	3,476,000	4.2	146,200
Total mineral resources	9,170,000	4.2	380,859

Note 1: Reported in accordance with the 2004 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (‘the JORC Code 2004) at a >2% cut-off and first disclosed by Stratmin Global Resource PLC under the JORC Code 2004. Bass Metals notes that the estimates have not been updated to JORC Code 2012 on the basis that the information has not materially changed since it was last reported. Reference is made to the Company's announcement of 2 September 2015, for further detail . Differences may occur due to rounding.

Note 2: Reported in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (‘the JORC Code 2012’) at a > 3% TGC cut-off. Differences may occur due to rounding.

Prior to acquisition, only 120,000 tonnes or less than ~2% of the mineral resource at Loharano had been mined by Stratmin. Since acquiring the deposit, a further 110,000 tonnes or 1.9% of the mineral resource at Loharano has been mined by the Company. On this basis, a total of approximately 230,000 tonnes or 4.0% of the resource has been mined at Loharano.

Prior to acquisition, no mining occurred at Mahefedok. Since acquiring the deposit, only 82,000 tonnes or 2.3% of the mineral resource has been mined by the Company.

On this basis, the information in relation to the resource estimates has not materially changed.

These estimates were prepared and first disclosed by Stratmin and reported in compliance with the JORC Code 2004. The estimates have not been updated to JORC Code 2012 on the basis that the information has not materially changed since it was last reported.

The Group and Competent Person propose to update the current JORC Resource to 2012 Reporting Standards and at this stage do not expect any material change to the results previously published and in compliance with the 2004 Reporting Standard. Refer page 83 for the Competent Persons Statement.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

The Directors of Bass Metals Ltd (“the Company” or “Bass”) present their report together with the financial statements of the consolidated entity, being Bass Metals Ltd (“the Company”), it’s Controlled Entities (“the Group”) for the year ended 30 June 2019.

Directors

The following persons were Directors of the Company during or since the end of the financial year:

Richard Anthon - Non-Executive Chairman Jeffrey Marvin - Non-Executive Director Peter Wright - Executive Director

Rick Anthon - Non-Executive Chairman BA (ANU) LLB (ANU) MAICD Appointed - 4 October 2013 Chair of Audit Committee

Mr Anthon has practiced extensively in corporate, mining and resources law for over 30 years. He has advised on numerous acquisitions, joint ventures, and debt and capital raisings both in Australia and overseas. Additionally, he has acted as non-executive director and chairman for a number of public resource companies over the last 25 years and has chaired audit and remuneration committees for those companies. Mr Anthon is currently General Counsel and Joint Company Secretary for Orocobre Ltd, Australia’s premier Lithium producer.

Other Current Directorships: Laneway Resources Ltd

Previous directorships (last 3 years): Laneway Resources Ltd

Jeffrey Marvin - Non-Executive Director Appointed – 12 June 2015 Member of the Audit Committee

Mr Marvin has over 20 years’ experience working with corporate management and investors to bring International minerals companies to public markets. He specialises in early stage mineral company investment, corporate management and business restructuring. He is currently involved in minerals projects in Africa and Western Europe where he focuses on coal, manganese, copper, chrome and precious metals.

Other Current Directorships: Nil

Previous directorships (last 3 years): Nil

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

Peter Wright - Executive Director Appointed – 2 September 2016

Mr Wright is currently an Executive Director of Bizzell Capital Partners Pty Ltd (BCP), a Brisbane based corporate advisory and funds management firm. Mr Wright has over 20 years’ experience in financial markets with a focus on investment in the resources sector. As part of his role at BCP, Mr Wright has recently acted as the corporate advisor to Altura Mining Ltd, advising on capital markets, investor relations, acquisitions and divestments and industrial metals end markets. Most recently, Mr Wright has been advising the Company as part of BCP’s role as Joint Lead Manager and Underwriter to the Company’s recent capital raising.

Other Current Directorships: Laneway Resources Ltd

Previous directorships (last 3 years): Nil

David Round - Company Secretary BBus., CPA, MBA Appointed – 12 June 2015

Mr Round is an experienced CFO and Company Secretary with many years experience as an advisor to the resource sector. Amongst his roles, Mr Round was previously CFO and Company Secretary to Ironbark Zinc Ltd and Wolf Minerals Ltd, and acted for nickel sulphide producer, Albidon Ltd, overseeing their operations in Zambia.

Mr Round previously worked on the listing of International Coal Ltd, with Chairman Rick Anthon, and served as Company Secretary and Finance Director for several years. He was instrumental in the Company securing a number of successful joint ventures, including the company’s JV with Queensland Coal Investments Ltd (a subsidiary of Hancock Prospecting Ltd).

Interests in the shares and options of the Company and related bodies corporate

As at the date of this report, the interests of the directors in the shares and options of Bass Metals Ltd were:

Ordinary Shares Mr R Anthon1 48,746,331 Mr J Marvin 12,091,424 Mr P Wright2 46,600,000	Listed Options 8,300,000 3,400,000 3,800,000	Unlisted Options 22,400,000 9,000,000 9,000,000	Performance Rights3 9,000,000 3,600,000 3,600,000

Note 1: 46,046,331 shares and all options and all performance rights are held indirectly. Note 2: Shares and options are held indirectly.

Note 3: Director performance rights have not vested at 30 June 2019

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

COMPANY OVERVIEW

Bass Metals Ltd (“Bass”, “the Company” or “the Group”) is a producer of industrial mineral concentrates from its 100% owned Graphmada Large Flake Graphite Mine.

The Graphmada Mine is located in eastern Madagascar, a democratic island country in the Indian Ocean, off the coast of Southeast Africa, governed under a French legal system with a low Corporate Tax rate of 20% and a low 2% Mining Royalty.

The country has produced benchmark quality graphite for over 100 years due to the high proportion of high purity, large flake, premium quality graphite in soft, easily mineable, saprolitic ore, providing for low operating costs and extremely low capital costs.

The Graphmada Mine has 40-year mining permits and 20-year landholder agreements in place, with four large flake graphite deposits. With all associated mining infrastructure and logistics in place, the mine currently produces and sells a range of graphite concentrates into multiple market segments, to customers in Europe under an offtake agreement, and on order to customers in India and the United States.

As one of only two ASX listed producers of premium large flake concentrates, Bass is working to expand production from 6,000 tonnes per annum (tpa) to gradually exceed 20,000 tpa (Stage 2). Additionally, Bass intends to pursue the development of Expandable Graphite production (Stage 3) for which our graphite concentrates are highly suitable.

With an established production platform and growing market share, complimented with the Company’s prudent capital management, sound cash position and sustainable cash flow, Bass has a robust operational and financial platform to realise the considerable potential of its operations in Madagascar.

PRINCIPLE ACTIVITIES

The principle activities of the Group during the year focused on consistent production of graphite and the completion of the Stage 1 Operational Optimisation Program with modifications and improvements made to our plant during the year. Substantial capital upgrades and investments were made to the plant designed to assist in the smooth implementation of a substantial increase in production.

The Group also completed a substantial exploration program at its Millie’s Reward lithium projects within Madagascar.

In addition, the Group continued with care and maintenance activities relating to its Tasmanian exploration and evaluation assets.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

SIGNIFICANT CHANGE IN STATE OF AFFAIRS

Issue of Share Capital

On 10 August 2018, 2,400,000 listed options at $0.025 each were exercised raising $60,000.
On 3 September 2018, 1,000,000 unlisted options at $0.025 each were exercised raising $25,000.
On 17 September 2018, 10,875 listed options at $0.025 each were exercised raising $272.
On 17 September 2018, the Company issued 528,169 shares at $0.025 each is settlement of $13,204 for geological services provided by a contractor.
On 17 September 2018, the Company issued 1,690,141 shares at $0.025 each is settlement of $42,253 for mineral exploration services provided by a contractor.
On 26 September 2018, 20,400,000 listed options at $0.025 each were exercised raising $510,000.
On 1 November 2018, 31,493,492 listed options at $0.025 each were exercised raising $787,337.
On 1 November 2018, 900,000 unlisted options at $0.00 each were exercised raising $9,000.
On 16 November 2018, 10,800,000 Director performance rights vested and exercised for $nil consideration.
On 16 November 2018, 14,000,000 management performance rights vested and exercised for $nil consideration.
On 20 December 2018, the Company issued 214,771,274 shares to institutional, professional and sophisticated investors at $0.0125 per share raising $2.7 million.
On 20 December 2018, 66,334 listed options at $0.025 each were exercised raising $1,658.
On 20 December 2018, the Company issued 7,350,000 shares pursuant to the Bass Metals Incentive Scheme for nil consideration. The fair value of total shares was $95,550.
On 31 December 2018, 64,000 listed options at $0.025 each were exercised raising $1,600.
On 20 March 2019, the Company completed the deferred placement to institutional professional, sophisticated and retail investors by issuing 27,120,000 shares at $0.0125 each raising $339,000.
On 29 March 2019, the Company completed the deferred placement to institutional professional, sophisticated and retail investors by issuing 17,308,720 shares at $0.0125 each raising $216,359.
On 22 May 2019 4,000,000 shares at $0.0125 per share were issued to Directors as part of the placement to institutional, professional and sophisticated investors on the 20 December 2018 raising $50,000.

Issue of Convertible Notes

On 28 June 2019, the Group announced a capital raising of up to $4 million (before issue costs) via a tranched issue of Convertible Notes to sophisticated and professional investors at an issue price of $0.008 each, with an interest rate of 15% per annum and a maturity date of 15 June 2021. Interest is payable half yearly in arrears and the interest may be paid in at the Company’s election by the issue of further Convertible Notes. Each Convertible Note coverts into one ordinary share in the Company and is secured over the assets of the Company.

At reporting date, the Company has received subscriptions from cornerstone investors for $1.4 million of the Convertible Notes which have been issued as an initial tranche 1 (being 176,250,000 Convertible Notes at $0.008), refer note 21. Additionally, and subsequent to the year end, the Company received further subscriptions for the amount of $1.567 million (195,875,000 Convertible Notes – tranche 2) with the details announced on 21 August 2019, refer Events subsequent to the end of the reporting period on page 18.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

REVIEW OF OPERATIONS

Result for the Financial Year

Consolidated net loss after tax for the Group was $7,550,809 (2018: $4,448,178 loss).

Dividends

No dividends have been paid during the period and no dividends have been recommended by the Directors (2018: nil).

Review of operations and financial results

Bass completed the Stage 1 optimisation and refurbishment, with substantial improvement and upgrades made, at its 100% owned, Graphmada Large Flake Graphite Mine, in Madagascar.
Following completion of Stage 1, new mining and processing equipment was delivered and installed – all designed to assist with further expansion in the near term
No Lost Time Injuries were incurred which continues Bass’s outstanding health and safety record at Graphmada.
Bass expanded its supply of concentrate to India during the year to complement existing supply channels into Europe and the USA .
The production of premium graphite concentrations has steadily increased with a high proportion of large flake graphite concentrates produced at greater than 94% Fixed Carbon.
Independent laboratory testing of Graphmada concentrates demonstrated the highest known flake size distribution for an operating mine and qualifies Graphmada’s concentrates as the benchmark for foundries, crucible and refractory sectors, as well as highly suitable for Expandable Graphite applications.
Bass signed an agency agreement for the sale of a substantial portion of its production in to the growing and developing Indian market
Planning for the Stage 2 expansion of Graphmada commenced and is well advanced. Up to around $1,000,000 in capital was invested in the year in early plans for Stage 2 production.
The Company began the assessment of options for the production of Expandable Graphite products and technologies as a Stage 3 initiative and has engaged a number of experts in this field.
Consistent with its stated strategy to materially grow the Company’s resource inventory of graphite, Bass completed various exploration programs at the Mahefedok deposit and Mahela prospect, located immediately adjacent to Graphmada’s infrastructure.
Bass successfully completed the maiden early stage drilling and exploration program at its Millie’s Reward, a potentially high grade, pegmatite hosted, lithium project also located in Madagascar.
Management has continued with numerous community development and education programs and now directly employs over 200 local Malagasy people and provides a direct benefit to other parts of the economy in the region of its operations.
Environmental rehabilitation has continued in some historic mining areas, with the Company working towards international standards for environmental management.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

REVIEW OF OPERATIONS

Health & Safety

Graphmada continues to operate with no Lost Time Injuries and no significant injuries recorded during the year.

Environment

The Graphmada team has continued with environmental rehabilitation of historic mining areas, working towards international standards for environmental management.

Community

Bass continues to significantly improve the region in which it operates through the community engagement program: Graphmada Care. The program is based on the commitment by the Company to develop its business through strong local partnerships built on five pillars: education, health, production, transparency and empowerment.

==> picture [477 x 268] intentionally omitted <==

School rehabilitation at Mahatsara

As part the Company’s commitment to the community, the Bass Metals Board; Mr. Rick Anthon (Chairman) and Mr. Peter Wright (Executive Director), along with Management, visited regional officials and attended a number of workforce and community celebrations. Mr. Anthon re-affirmed the Company’s commitment to working with the community in delivering benefits to its people through the Company’s long-term presence in Madagascar. The Company also hosted a number of investor briefings on site with the assistance of local management.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

REVIEW OF OPERATIONS

Community (continued)

Other highlights include:

In a first for Madagascar, the Land Ownership Certification program has been sustained with over 1,900 parcels of land certified.
20-year lease agreements for 36 owners holding land over mine infrastructure have been completed
10-year lease agreements in negotiation for Mahefedok Mineral Resource, and subsequently completed early in the year
Contributions and transporting of materials for the refurbishment of local schools.
An education program initiated.
The Government of Madagascar completed the certification of the Graphmada Mine Clinic. Staffed with a full time doctor the clinic can now provide services directly to all members of the community in the surrounding regions.
Provision of transportation for students undertaking National Primary School exams.
Provision of transport and materials for road repair in the Mahatsara district.
Financial contribution in support of the Eastern Region of Madagascar’s celebration of Independence Day, including Brickaville district celebrations.
Commissioning of water wells to provide clean water, with the important commissioning of a well at the Mahatsara hospital undertaken.

Stage 1: Completion and Preparation for Stage 2

The completion of the low capital refurbishment (Stage 1) of operations at Graphmada was delivered as planned and is now fully operational. Commercial ramp up to supply 6,000 tpa premium large flake concentrates is largely concluded, with significant milestones achieved in head grade, recovery and final concentrate grade. Additionally, the Company also made substantial investments in certain capital and processing plant. The completion of Stage 1 re-establishes Bass as one of only two ASX listed producers, and one of only four publicly listed graphite producers globally.

The graphite flakes currently being produced at Graphmada are of a leading industry quality. They set the benchmark for refractory and crucible applications. Their expandability results exceed concentrates currently available elsewhere in the market and they are highly suitable for battery applications with a very high purity of 99.99 wt.% carbon while meeting all anode manufacturer specifications.

With Process Plant availability metrics achieved, the plan is to now incrementally increase the throughput of ore, with the aim to reach nameplate production from the Process Plant and consistently continue this.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

REVIEW OF OPERATIONS

Stage 3: Expandable graphite production and technologies

The company has continued in its research and development in relation to its capacity to provide graphite in to the advanced expandables market. During the year, the Company continued with expandability tests across all flake sizes delivered excellent results, with the maximum expansion volume of 510 cm3/g achieved with extremely large flakes > 400 microns. These results exceed typical concentrates currently available.

Expandable graphite concentrates and products have the highest price growth of any graphite sector. Due in large part to the regulatory pressures forcing higher adoption in flame retardants, with demand increasing significantly. The possible production of expandables is a natural low capital intensity growth strategy, that can utilize the existing workforce and infrastructure, with consumables available in country. Graphmada’s large flake concentrates provides excellent feedstock into Expandable Graphite technologies; achieving 3 - 4 times the margin for low capital and operating costs.

Subsequent to the reporting period, Bass Executives visited a number of US based facilities that are currently testing and producing graphite for the expandables market. The Company continues to explore these opportunities and intends to advance various plans over the forthcoming year.

Exploration

Exploration success and a material increase in Bass’s resource inventory is a key component of the Company’s strategy to deliver value for shareholders from the broader permit holding of the Graphmada Mine and the highly prospective Madagascar jurisdiction.

Mahefedok graphite deposit

The Company’s Mahefedok deposit is located within the Graphmada graphite mine area, along strike of the Loharano deposit.

This resource provides additional shallow, easily mineable ore feed to the Graphmada processing facilities. The graphite mineralization is distributed in three broad north-south striking zones dipping to the west at between 30° and 45°. It contains numerous lenses between 2 m and 14 m in true thickness.

A first pass drilling program last year, at the deposit, delivered a maiden Mineral Resource of 3.5 Mt at 4.2% Total Graphitic Carbon (TGC). The total resource at Graphmada is now sufficient to provide feed for a Stage 2 expansion. The Company began mining ore at Mahefedok during December 2018.

As announced in May 2019, the Company commenced an extensive drill program at this deposit in May 2019 and, as at the date of this report, the results are yet to be published.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

REVIEW OF OPERATIONS

Mahela graphite prospect

The Mahela prospect is located 3.5 km south of the recently refurbished Graphmada Process Plant and associated infrastructure. The mineralized footprint is two to three times that of the Loharano deposit and is immediately adjacent to the Mahefedok deposit, which will underpin long-term production at Graphmada.

As announced in May 2019, the Company commenced an extensive drill program at this deposit in May 2019 and, as at the date of this report, the results are yet to be published.

Initial details regarding the drill program were published in August 2019 and the Company is confident that a substantial economic resource shall be reported in the near future.

Andapa graphite prospect

Andapa, in eastern Madagascar is immediately south of the privately owned and operated Antsirabe graphite mine, currently owned and operated by private Chinese mining interests, who ship their premium quality, large flake graphite concentrates directly to China.

During 2018, the Company Bass concluded a maiden augur sampling program at the Andapa prospect, with results demonstrating wide spread mineralization with grades up to up to 5.5% FC in the first 10m.

As planned, the program was successful at establishing the broad parameters of the mineralization and providing a better understanding of the boundaries of the prospect in order to define follow up targets.

Millie’s Reward Lithium Project

During 2017, the Company entered into a binding Term Sheet with Ruby-Red Madagascar SARL (a Company incorporated in Madagascar) and acquired two contiguous mining permits and the lithium mining rights for a third mining permit in Madagascar, that are prospective for pegmatite-hosted lithium mineralisation. The total consideration is as follows:

a) $US100,000 in cash (since paid December 2017) and $US50,000 in shares on the acquisition of the mining permits and completion of the transaction;
b) $US100,000 in cash and $US50,000 worth of shares upon establishing a JORC compliant resource of >5 million tonnes at >1.5% Li2O;
c) $US100,000 in cash and $US50,000 worth of shares upon the tabling of a feasibility study for Millie’s Reward;
d) $US100,000 in cash and $US50,000 worth of shares upon first sales of either Direct Shipping Ore (DSO) or Chemical Grade (>6% Li2O) lithium concentrates; and
e) The Company will pay to the Vendor a 0.25% concentrate sales royalty on any future lithium concentrate or DSO sales from Millie’s Reward for a period of 12 years from first concentrate or DSO sales, up to US$US2m.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

REVIEW OF OPERATIONS

The Millie’s Reward prospect is located southwest of the capital Antananarivo. The property consists of three contiguous permits (numbers 4383, 11545 and 39808) that encompass a total area of 25 sq.km.

The area, extending North-South for 10 km and East-West for 2.5 km, is characterized by gentle hills with the exception of a few rocky areas. Vegetation is scarce and characterized by typical Malagasy low savanna.

Access to the area is by sealed road, departing from the main highway, where Holcim mining operations are present on the north-eastern side of the Company’s Permits. Due to the long-standing Holcim mining operations adjacent to the prospect area the area has excellent infrastructure with grid power and sealed roads.

The Company undertook an extensive field season of rock chip samples and followed this with a substantial drill program with the results published during the year. The Company is highly encouraged by initial test results and continues to explore plans to further explore and develop these sites.

Tasmanian operations

Management and Divestment

During the quarter, the Company continued care and maintenance activities to comply with its Care and Maintenance Plan for the assets. Environmental management at the Que River site is focused on the rehabilitation of the surface areas of the site. To date significant progress has been achieved in the cleanup, covering and re-seeding of previously disturbed areas. Daily field testing and environmental laboratory testing continued throughout the period as per the site’s Care and Maintenance Plan.

The Company continued to engage with a number of parties that have expressed an ongoing interest in the Tasmanian assets and the Company will update the market as and when this is appropriate.

Environmental regulation

The Group is subject to environmental regulation in respect of its mining and exploration activities. The Group makes every effort to comply with the relevant regulations and, during the year, has not been advised by the regulatory authority of any breaches in relation to the regulations within the State or country in which it operates.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

Meetings of Directors

The following table sets out the number of meetings of the Company’s Directors and meetings of committees of the Directors held during the year ended 30 June 2019 and the number of meetings attended by each Director.

Director	Directors’ Meetings Audit Committee Remuneration Committee1
Mr R Anthon Mr J Marvin Mr P Wright	A B A B A B
	4 4 2 2 1 1 4 4 2 2 - - 4 4 2 2 1 1

A: Number of meetings eligible to attend

B: Number of meetings attended

Note 1: The directors met as the Nomination Committee on an as required basis during the year ended 30 June 2019. Note 2: The current members of the Audit committee are Mr Anthon (Chairman) and Mr Marvin.

Likely developments and expected results

The likely developments in the operation of the Group and the expected results of those operations in future financial years are as follows:

Continue production and expand and improve production outputs and consistency;
Conclude our plan for the implementation of the Stage 2 Optimization Plan which is likely to occur during 2020 and provide for a further significant increase in production and activity;
Negotiate the sale of the Group’s strategic land position and assets in Tasmania, whilst providing for a reasonable, consistent and long-term financial return from this sale; and
Conclude plans for integration into the expandable market with a supply or production arrangement prepared to be developed and implemented.

Shares issued during or since the end of the year as a result of exercise of options

During or since the end of the financial year, the Company issued ordinary shares as a result of the exercise of options as follows (there were no amounts unpaid on the shares issued):

Date optionsgranted	Issueprice of shares($)	Number of shares issued
Listed options:
2 September 2016	0.025	54,434,701
Unlisted options:
2 September 2016	0.01	900,000
2 September 2016	0.025	1,000,000

Performance rights issued

No performance rights were granted to directors or key management personnel during the financial year ended 30 June 2019.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

Shares issued during or since the end of the year as a result of exercise of Management Performance Rights

During or since the end of the financial year, the Company issued ordinary shares as a result of the exercise of Management Performance Rights as follows (there were no amounts unpaid on the shares issued):

Date rightsgranted Issueprice of shares($) Number of shares issued 3 May 2017 nil 24,800,000 Unissued shares under option Unissued ordinaryshares of Bass Metals Ltd under option at the date of this report are:	Date rightsgranted Issueprice of shares($) Number of shares issued 3 May 2017 nil 24,800,000 Unissued shares under option Unissued ordinaryshares of Bass Metals Ltd under option at the date of this report are:
Date options granted Expiry date Exercise price of shares ($)	Number under option
Listed options: 2 September 2016 31 December 2020 0.05 3 May 2017 31 December 2020 0.05 27 September 2018 31 December 2020 0.05 16 November 2018 31 December 2020 0.05 20 December 2018 31 December 2020 0.05 20 March 2019 31 December 2020 0.05 29 March 2019 31 December 2020 0.05 22 May 2019 31 December 2020 0.05 Unlisted options: 6 September 2016 31 December 2020 0.025 6 September 2016 31 December 2020 0.075 6 September 2016 31 December 2020 0.10 3 May 2017 31 December 2020 0.025 3 May 2017 31 December 2020 0.075 3 May 2017 31 December 2020 0.10 Total unlisted options Total options Performance rights: 3 May2017 15 August 2020	17,500,000 13,500,000 92,250,000 44,236,882 109,970,283 13,560,000 9,209,719 2,000,000
	302,226,884
	17,500,000 17,500,000 17,500,000 13,400,000 13,500,000 13,500,000
	92,900,000
	395,126,884
	30,200,000
	425,326,884

As at the date of this report, there were 395,126,884 unissued ordinary shares under options (2018: 620,820,800) and 30,200,000 unissued ordinary shares under performance rights (2018: 55,000,000).

All options expire on the earlier of their expiry date or termination of the employee’s employment. Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body corporate.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

Events arising since the end of the reporting period

Since the end of the reporting period, the Company has received a further $1,567,000 from subscribers as part of the capital raising of up to $4 million (before issue costs) via a tranched issue (Tranche 2) of Convertible Notes to sophisticated and professional investors at an issue price of $0.008 each (refer note 21 for details of the Convertible Notes). The details of this issue were released to the market on 21 August 2019.

There were no other events subsequent to the end of the reporting period.

Indemnities given to, and insurance premiums paid for, auditors and officers

Insurance of officers

During the year, the Company paid a premium to insure officers of the Group. The officers of the Group covered by the insurance policy include all Directors. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else to cause detriment to the Group.

Details of the amount of the premium paid in respect of insurance policies are not disclosed as such disclosure is prohibited under the terms of the contract.

The Group has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify any current or former officer of the Group against a liability incurred as such by an officer.

Indemnity of auditors

The Group has agreed to indemnify its auditors, Grant Thornton, to the extent permitted by law, against any claim by a third party arising from the Group’s breach of its agreement. The indemnity requires the Group to meet the full amount of any such liabilities including a reasonable amount of legal costs.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

Auditors Independence Declaration

Non-audit services

During the year, Grant Thornton, the Company’s auditors, performed certain other services in addition to their statutory audit duties.

The Board has considered the non-audit services provided during the year by the auditor and, in accordance with written advice provided by resolution of the Audit and Risk Committee, is satisfied that the provision of those non audit services during the year is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:

all non-audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by the Audit and Risk Committee to ensure they do not impact upon the impartiality and objectivity of the auditor
the non-audit services do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards

Details of the amounts paid to the auditors of the Company, Grant Thornton, and its related practices for audit and non-audit services provided during the year are set out in Note 31 to the financial statements.

A copy of the Auditor’s Independence Declaration as required under s307C of the Corporations Act 2001 is included on page 30 of this financial report and forms part of this Directors’ Report.

Proceedings on behalf of the group

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

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

Remuneration Report (Audited)

The Directors of Bass Metals Ltd (the Group) present the Remuneration Report for Non-Executive Directors, Executive Directors and other Key Management Personnel, prepared in accordance with the Corporations Act 2001 and the Corporations Regulations 2001.

Remuneration Policy

The principles used to determine the nature and amount of remuneration are applied through a remuneration policy which ensures the remuneration package properly reflects the person’s duties and responsibilities and that the remuneration is competitive in attracting, retaining and motivating people of the highest quality.

The remuneration policy, setting the terms and conditions for the Directors and other executives has been developed by the Board and takes into account market conditions and comparable salary levels for entities of a similar size and operating in similar sectors.

The remuneration policy is to provide a fixed remuneration component and a specific equity related component if applicable. The Board believes that this remuneration policy is appropriate given the stage of development of the Group and the activities which it undertakes and is appropriate in aligning Director and executive objectives with shareholder and business objectives.

The remuneration framework has regard to shareholders’ interests in the following ways:

Focuses on sustained growth as well as on key non-financial drivers of value; and
Attracts and retains high calibre executives.

The remuneration framework has regard to executives’ interests in the following ways:

Rewards performance, capability and experience;
Reflects competitive reward for contributions to shareholder growth;
Provides a clear structure for earning rewards; and
Provides recognition for contribution.

Non-Executive Directors

The Board’s policy is to remunerate Non-Executive directors at market rates for comparable companies for time, commitment and responsibilities. The Board determines payments to the Non-Executive Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought as deemed appropriate. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at a general meeting. Fees for NonExecutive Directors are not linked to the performance of the Group. However, to align non-executive directors’ interests with shareholder interests, Non-Executive Directors are encouraged to hold shares in the Company and may receive options as long-term incentive remuneration.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

Remuneration Report (Audited)

The Board has resolved that Director’s fees, for the Chairman will be $75,000 per annum, effective 1 January 2019 and for Non-Executive Directors will be $45,000 per annum, effective 1 April 2011. Shareholders approved on 30 November 2010 the aggregate remuneration for all non-executive directors at an amount of $350,000 per annum. This amount does not include the value of options provided to non-executive directors or committee member fees.

Any issue of shares, options or performance rights to Directors under the Bass Metals Ltd Employee Share and Option Plan will be subject to shareholder approval pursuant to the provisions of the ASX Listing Rules and the Corporations Act 2001.

From time to time Non-Executive Directors have undertaken specific tasks in addition to their role as NonExecutive Directors. The basis of remuneration for such tasks was agreed between the Non-Executive Director and the Company.

Executives

Executive Directors and executives receive either a salary plus superannuation guarantee contributions as required by law, currently set at 9.50%, or provide their services via a consultancy arrangement. Individuals may elect to sacrifice part of their salary to increase payments towards superannuation. Bonus payments are at the discretion of the Board and are based on an executive’s performance. In addition, long term incentives are received through participation in the Bass Metals Ltd Employee Share and Option Plan.

The Board has resolved that Director’s fees for the Executive Director will be $125,000 per annum, effective 1 October 2018.

Valuation methodology

All remuneration paid to Directors and executives is valued at cost to the Group and expensed. Options are valued using the Black-Scholes methodology and performance rights are valued using the Monte Carlo Simulation methodology, both the options and performance rights are expensed at the date of grant.

Base Salary

Executive remuneration is structured as a “total employment cost” package comprising cash, leave benefits and superannuation, and is reviewed annually with regard to competitiveness and performance. There are no guaranteed salary increases fixed in any senior executive contracts.

Bass Metals Ltd Employee Share and Option Plan

Information on the Bass Metals Ltd Employee Share and Option Plan is set out in note 26.

Bass Metals Ltd Employee Share Loan Scheme

There are no Employee Share Loans granted at reporting date.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

Remuneration Report (Audited)

Relationship between the Remuneration Policy and Group Performance

The remuneration policy has been tailored to increase goal congruence between shareholders, Directors and executives. Two methods have been applied to achieve this aim, the first being a performance-based incentive based on performance milestones, and the second being the issue of options and shares to directors, executives and employees to encourage the alignment of personal and shareholder interests. The performance milestones are set annually, with a certain level of consultation with key management personnel to ensure buy-in. The measures are specifically tailored to the area each individual is involved in and has a level of control over. The performance milestones target areas the Board believes hold greater potential for group expansion and profit, covering financial and non-financial as well as short and long-term goals. The level set for each performance milestone is based on the Group’s production plans and respective industry standards.

Performance in relation to the performance milestones is assessed annually, with bonuses being awarded depending on the degree to which the milestone has been achieved. Following the assessment, the performance milestones are reviewed by the Remuneration Committee in light of the desired and actual outcomes, and their effectiveness in achieving the Group’s goals and shareholder returns. The performance milestones are then set for the following year.

During each year directors and executives of the Group may be issued with performance rights, options and shares. The Board considers that this is an appropriate way to attract persons of experience and ability to the Group; foster and promote loyalty by providing an incentive to remain in the Group’s employment for the long term; and to recognise the ongoing ability of key management personnel to contribute to the performance and success of the Group.

During the period under review, the Company issued shares to a director in lieu of Director fees. These are detailed on page 27 to page 29.

The Company has not granted any options or performance rights to directors or executives of the Group during the reporting period.

Consequences of performance on shareholder wealth

In considering the Group’s performance and benefits for shareholder wealth, the Board have regard to the following indices in respect of the current financial year and the previous four (4) financial years:

Item	2019	2018 2017 2016 2015
EPS (cents) Dividends (cents per share) Net (loss)/profit ($000’s) Share price ($)	(0.29) - (7,551) $0.008	(0.22) (0.85) 0.19 (0.15) - - - - (4,448) ($9,904) $795 ($537) $0.029 $0.009 $0.019 $0.003

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

Remuneration Report (Audited)

Performance Conditions Linked to Remuneration

The Group seeks to emphasise reward incentives for results and continued commitment to the Group through the provision of various cash bonus reward schemes, specifically the incorporation of incentive payments based on the achievement of performance milestones and continued employment with the Group.

The objective of the reward scheme is to both reinforce the short and long-term goals of the Group and provide a common interest between management and shareholders.

The satisfaction of the performance conditions are evidenced by execution of contracts or agreements and whole of Board assessment and approval. The Board does not consider that performance conditions should include a comparison with factors external to the Group at this time.

The performance related proportions of remuneration paid during the year based on these targets are included in the remuneration table, refer to page 26.

Details of Key Management Personnel

The Group considers the following persons as key management personnel:

Chairman - Non-executive Richard Anthon - Appointed 4 October 2013.

Non-executive Director

Jeff Marvin - Appointed 12 June 2015

Executive Director

Peter Wright - Appointed 2 September 2016

Other Key Management Personnel Tim McManus - Chief Executive Officer - Appointed 7 July 2016 David Round - Chief Financial Officer and Company Secretary - Appointed 12 June 2015

Refer to the remuneration table contained in the Directors’ Report on page 26 for details of the remuneration paid or payable to each member of the Group’s key management personnel for the year ended 30 June 2019.

Related Party Transactions

During the year, the Group paid management, underwriting and placement fees to Bizzell Capital Partners (“BCP”) as part of BCP’s role as corporate advisors to the Group. BCP actively managed the capital raising programs for the Group and Peter Wright (Executive Director) is an Executive Director of BCP. Total fees charged by BCP for the period was $177,989 of which all was settled by payment in cash.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

Remuneration Report (Audited)

Employment Contracts

The contract duration, period of notice and termination conditions for current key management personnel are as follows:

(i) Tim McManus, Chief Executive Officer (“CEO”) of Bass Metals Limited

Commenced employment with the Group on 7 July 2016. His base salary is A$305,000 per annum, plus statutory superannuation. In addition, the Group may, at the Board’s absolute discretion, pay the employee an annual cash bonus. In the event of a Corporate Action that results in a Change of Control Event, the employee will be entitled to a cash bonus, payable at completion of the change of control event, of 50% of the employee’s total financial remuneration. Termination of the contract by the Group or by the employee is 4 months’ notice or at Bass Metals’ election by payment in lieu of notice. The Group may terminate the contract at any time without notice if serious misconduct has occurred.

Long Term Incentives – Performance Rights

The Employee has been granted 20,000,000 Performance Rights. The Performance Rights will require the employee to achieve the following Key Performance Indicators:

LTI (a) 8 million Performance Rights for achieving a total production of 1,250t of saleable graphite concentrate over any given 3 month period. During the reporting period these Performance Rights vested and were exercised by the employee;
LTI (b) 8 million Performance Rights for Graphmada Operations achieving cash flow positive results over three consecutive months; and
LTI (c) 4 million Performance Rights will be allocated for the Group achieving a Market Capitalisation of $75m. During the previous reporting period these Performance Rights vested and were exercised by the employee.

Long Term Incentives- Unlisted Options

The employee has been granted 40,000,000 unlisted options, with the following exercise prices;

10 million options @ 2.5 cents
10 million options @ 7.5 cents
10 million options @ 10 cents

Long Term Incentives- Listed Options

10 million options @ 5 cents

All options will vest immediately and be exercisable on or before the 31st of December 2020 and are subject to the Group’s Employee Share Option Plan term and conditions.

(ii) David Round Chief Financial Officer and Company Secretary (“CFO”) of Bass Metals Limited.

Engaged on a contract basis on 12 June 2015, Mr D Round commenced permanent employment with the Group on 7 July 2016. His base salary is A$245,000 per annum plus statutory superannuation. In addition, the Group may, at the Board’s absolute discretion, pay the employee an annual cash bonus. In the event of a Corporate Action that results in a Change of Control Event, the employee will be entitled to a cash bonus, payable at completion of the change of control event, of 50% of the employee’s total financial remuneration. Termination of the contract by the Group or by the employee is 4 months’ notice or at Bass Metals’ election by payment in lieu of notice. The Group may terminate the contract at any time without notice if serious misconduct has occurred.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

Remuneration Report (Audited)

(ii) David Round (continued)

Long Term Incentives – Performance Rights

The Employee has been granted 15,000,000 Performance Rights. The Performance Rights will require the employee to achieve the following Key Performance Indicators:

LTI (a) 6 million Performance Rights for achieving a total production of 1,250t of saleable graphite concentrate over any given 3 month period. During the reporting period these Performance Rights vested and were exercised by the employee;
LTI (b) 6 million Performance Rights for Graphmada Operations achieving cash flow positive results over three consecutive months; and
LTI (c) 3 million Performance Rights will be allocated for the Group achieving a Market Capitalisation of $75m. During the previous reporting period these Performance Rights vested and were exercised by the employee.

Long Term Incentives- Unlisted Options

The employee has been granted 30,000,000 unlisted options, with the following exercise prices;

7.5 million options @ 2.5 cents
7.5 million options @ 7.5 cents
7.5 million options @ 10 cents

Long Term Incentives- Listed Options

7.5 million options @ 5 cents

All options will vest immediately and be exercisable on or before the 31st of December 2020 and are subject to the Group’s Employee Share Option Plan term and conditions.

No other Director or key management personnel are employed under a written contract of service.

Other than the Group executives, no other person is concerned in, or takes part in, the management of, or has authority and responsibility for planning, directing and controlling the activities of the Group. As such, during the financial year, the Group did not have any person, other than directors and Group executives that complied with the definition of “Key Management Personnel” for the purposes of AASB 124: Related Party Disclosures or “Company Executive” for the purposes of Section 300A of the Corporations Act 2001 (“Act”).

Other Information

Voting and Comments made at the Group’s last Annual General Meeting:

The Board advise that all resolutions put to shareholders at the Group’s 2018 AGM were passed.
The Group received 75% “yes” votes on its Remuneration Report for the financial year ending 30 June 2018.
The Group received no specific feedback on its Remuneration Report at the Annual General Meeting.

==> picture [40 x 107] intentionally omitted <==

Short-term employee benefits Post- Employment benefits Long term benefits – share based payments Total Performance based % of remuneration Cash salary and fees Cash bonus Non-monetary benefits3 Superannuation Options Performance rights $ $ $ $ $ $ $ %	Executive Director Mr P Wright1 2019 105,000 15,937 - - - - 120,937 13 2018 45,000 - - - - - 45,000 -	Non- executive Directors Mr R Anthon2 2019 67,500 15,937 - - - - 83,437 19 2018 60,000 - - - - - 60,000 -	Mr J Marvin 2019 11,951 5,625 33,049 - - - 50,625 11 2018 35,701 - 9,299 - - - 45,000 -	Other Key Management Personnel Mr T McManus (CEO) 2019 305,000 18,750 - 28,975 - - 352,725 5 2018 262,729 5,000 19,244 24,959 - - 311,932 8	Mr D Round (Co. Sec.) 2019 245,000 18,750 - 23,275 - - 287,025 7 2018 186,706 5,000 14,845 19,048 - - 225,599 9			Note 1: Mr P Wright Directors Fees were paid to Bizzell Capital Partners. Note 2: During 2019 $67,500 (2018 $60,000) of Mr Anthon’s short-term benefits (Director fees) listed above were paid to Anthon Consulting Pty Ltd of which Mr Anthon is a Director. Note 3: During 2019, shares were issued to Mr J Marvin in lieu of director fees of $33,049 (2018 $9,299). During the prior year, shares were also issued in lieu of short term bonuses t Mt T McManus (19,244) and Mr D Round ($14,845).
						8	6


						894,749	687,531


						-	-


						-	-


						52,250	44,007


						33,049	43,388


						74,999	10,000


						734,451	590,136


						2019	2018


						Total

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

Remuneration Report (Audited)

The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:

Employee	Fixed remuneration At risk: Short term incentives(STI) At risk: Options At risk: Performance rights
Executive Director Mr P Wright Non-executive Directors Mr R Anthon Mr J Marvin Group Executives Mr T McManus Mr D Round	87% 13% - - 81% 19% - - 89% 11% - - 95% 5% - - 93% 7% - -

Since the long-term incentives are provided exclusively by way of options and performance rights, the percentages disclosed also reflect the value of remuneration consisting options and performance rights, based on the value of options and performance rights expensed during the year.

Bonuses included in remuneration

Details of the short-term incentive bonuses awarded as remuneration to each key management personnel, the percentage of the available bonus that was paid in the financial year, and the percentage that was forfeited because the person did not meet the service and performance criteria is set out below. No part of the bonus is payable in future years.

Cash bonuses included in remuneration:

Employee	Included in remuneration($)
Executive Director Mr P Wright Non-executive Directors Mr R Anthon Mr J Marvin Group Executives Mr T McManus1 Mr D Round1	15,937 15,937 5,625 18,750 18,750

Note 1: Cash bonus were granted on 2/1/2019

Listed and unlisted options included in remuneration

No options have been granted as remuneration during the reporting period.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

Remuneration Report (Audited)

Shares held directly and indirectly in the Group

The number of Shares held directly and indirectly in the Group are set out below.

2019	Balance at the start of the year Granted as Remuneration1 Received on exercise Other Changes2 Balance at the end of the year
Directors Mr R Anthon Mr J Marvin Mr P Wright Group Executives Mr T McManus Mr D Round	41,146,331 - 6,000,000 1,600,000 48,746,331 7,891,424 800,000 3,400,000 - 12,091,424 40,200,102 - 2,400,000 3,999,898 46,600,000 13,208,257 - 8,000,000 200,000 21,408,257 7,489,942 - 6,000,000 371,964 13,861,906
	109,936,056 800,000 25,800,000 6,171,862 142,707,918

Note 1: During 2019, 800,000 shares were issued to Mr J Marvin in lieu of director fees of $10,000. Note 2: On market transactions.

Listed and unlisted options held directly and indirectly in the Group

The number of listed and unlisted options to acquire shares in the Company by each of the key management personnel of the Group; including their related parties are set out below. When exercised each option is convertible to one ordinary share in the Company.

Listed options:

Listed options:
2019	Balance at the start of the year Lapsed1 Exercised Received on Conversion of Unlisted Options2 Other Changes3 Vested and Exercisable at the End of the Year
Directors Mr R Anthon Mr J Marvin Mr P Wright Group Executives Mr T McManus Mr D Round	13,334,820 (13,334,820) - 7,500,000 800,000 8,300,000 2,051,154 (2,051,154) - 3,000,000 400,000 3,400,000 11,126,297 (11,126,297) - 3,000,000 800,000 3,800,000
	26,512,271 (26,512,271) - 13,500,000 2,000,000 15,500,000
	5,265,176 (5,265,176) - 10,000,000 - 10,000,000 - - - 7,500,000 127,834 7,627,834
	5,265,176 (5,265,176) - 17,500,000 127,834 17,627,834

Note 1: Listed lapsed on 31/12/2018.

Note 2: Unlisted options with an exercise price of $0.05 and expiry date of 31/12/2020 were converted to Listed Options on 2/05/2019.

Note 3: On market transactions

ANNUAL REPORT For the year ended 30 June 2019

==> picture [107 x 40] intentionally omitted <==

DIRECTORS’ REPORT

Remuneration Report (Audited)

Unlisted options:

Unlisted options:
2019	Balance at the start of the year Lapsed Exercised Converted to Listed Options Vested and Exercisable at the End of the Year
Directors Mr R Anthon Mr J Marvin Mr P Wright Group Executives Mr T McManus Mr D Round	31,900,000 (2,000,000) - (7,500,000) 22,400,000 16,000,000 (3,000,000) (1,000,000) (3,000,000) 9,000,000 14,100,000 (2,100,000) - (3,000,000) 9,000,000
	62,000,000 (7,100,000) (1,000,000) 13,500,000 40,400,000
	40,000,000 - - (10,000,000) 30,000,000 30,000,000 - - (7,500,000) 22,500,000
	70,000,000 - - 17,500,000 52,500,000

Refer to note 26 for details of the grants and assumptions that were used in determining the fair value of unlisted options on the grant date.

Performance Rights held by Key Management Personnel

Details of Performance Rights held by each Key Management Personnel but not yet vested under the LTI plan as at 30 June 2019 are outlined below:

Performance Rights:

2019	Balance at the start of theyear Number granted as Remuneration Number vested and exercised1 Balance at the end of the year Portion vested (%) Portion un- vested (%)
Directors Mr R Anthon Mr J Marvin Mr P Wright Group Executives Mr T McManus Mr D Round	15,000,000 - (6,000,000) 9,000,000 40% 60% 6,000,000 - (2,400,000) 3,600,000 40% 60% 6,000,000 - (2,400,000) 3,600,000 40% 60% 16,000,000 - (8,000,000) 8,000,000 60% 40% 12,000,000 - (6,000,000) 6,000,000 60% 40%
	55,000,000 - (24,800,000) 30,200,000 51% 49%

Note 1: Performance Rights that vested and exercised during the period based on the Group achieving total production of 1,250 tonnes of saleable graphite over any 3 month period.

Performance Rights included in remuneration

No Performance rights have been granted as remuneration during the period.

Refer note 26 for details on the key performance indicators and the assumptions that were used in determining the fair value of Performance Rights on the grant date.

(End of remuneration report)

==> picture [101 x 36] intentionally omitted <==

Signed in accordance with a resolution of directors.

25 September 2019

Rick Anthon Chairman Brisbane, Queensland

==> picture [166 x 52] intentionally omitted <==

Grant Thornton Audit Pty Ltd Level 43 Central Park 152-158 St Georges Terrace Perth WA 6000 PO Box 7757 Cloisters Square Perth WA 6850 T +61 8 9480 2000

Auditor’s Independence Declaration

To the Directors of Bass Metals Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Bass Metals Limited for the year ended 30 June 2019, I declare that, to the best of my knowledge and belief, there have been:

a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b no contraventions of any applicable code of professional conduct in relation to the audit.

==> picture [122 x 41] intentionally omitted <==

GRANT THORNTON AUDIT PTY LTD

Chartered Accountants

==> picture [137 x 48] intentionally omitted <==

L A Stella

Partner – Audit & Assurance

Perth, 25 September 2019

ACN-130 913 594

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards Legislation.

www.grantthornton.com.au

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2019

Note Revenue from contracts with customers Cost of sales 8a Gross loss Other revenue 6 Other income 7 Administration expenses 8b Finance costs Foreign currency gain 8c Loss before income tax from continuing operations Income tax expense 9 Loss for the year from continuing operations Loss after tax from discontinued operations 10 Loss for the year Other comprehensive income Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations Total comprehensive loss for the period, net of tax Loss attributed to: Continuing operations Discontinued operations Total comprehensive loss attributed to: Equity holders of the parent entity Earnings per share Basic and diluted loss per share from operations (cents) 11	2019 $ 2018 $ 1,328,326 38,770 (3,340,010) (825,059)
	(2,011,684) (786,289) 55,537 28,444 151,922 225,000 (5,562,452) (4,096,463) (15,586) (112,062) 469,577 356,251
	(6,912,686) (4,385,119) - -
	(6,912,686) (4,385,119) (638,123) (63,059)
	(7,550,809) (4,448,178) (744,844) (367,667)
	(8,295,653) (4,815,845)
	(7,657,530) (4,752,786) (638,123) (63,059)
	(8,295,653) (4,815,845)
	(0.29) (0.22)

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

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019

Note CURRENT ASSETS Cash and cash equivalents 12a Trade and other receivables 13 Inventories 14 Other assets Total Current Assets NON-CURRENT ASSETS Restricted cash 12b Trade and other receivables 13 Plant and equipment 16 Exploration and evaluation assets 17 Mine properties 18 Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 20 Borrowings 21 Total Current Liabilities NON-CURRENT LIABILITIES Borrowings 21 Provisions 22 Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 23 Reserves 24 Accumulated losses TOTAL EQUITY	2019 $ 2018 $ 1,561,212 4,604,427 789,163 424,998 1,617,927 1,203,602 109,841 57,497
	4,078,143 6,290,524
	10,801 18,300 680,500 680,500 5,472,453 5,265,782 1,786,942 894,146 5,700,438 5,489,100
	13,651,134 12,347,828
	17,729,277 18,638,352
	1,816,108 753,705 412,420 18,300
	2,228,528 772,005
	1,122,160 - 1,113,324 1,113,324
	2,235,484 1,113,324
	4,464,012 1,885,329
	13,265,265 16,753,023
	92,709,574 88,005,521 229,435 917,806 (79,673,744) (72,170,304)
	13,265,265 16,753,023

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

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2019

	Share	Option	Other	Foreign	Accumulated	Total
	Capital	Reserve	Reserve	Currency	Losses	Equity
				Translation
				Reserve
	$	$	$	$	$	$
Balance at 1 July 2018	88,005,521	1,150,350	-	(232,544)	(72,170,304)	16,753,023
Loss for the period	-	-	-	-	(7,550,809)	(7,550,809)
Other comprehensive loss	-	-	-	(744,844)	-	(744,844)
Total comprehensive loss for the year	-	-	-	(744,844)	(7,550,809)	(8,295,653)
Transactions with owners, recorded
directly in equity
Shares issued during the period	4,835,875	-	-	-	-	4,835,875
Options – value of options exercised	183,998	(183,998)	-	-	-	-
Options – value of options expired	-	(47,369)	-	-	47,369	-
Convertible notes	-	-	287,840	-	-	287,840
Cost of shares issued forplacement	(315,820)	-		-	-	(315,820)
Balance at 30 June 2019	92,709,574	918,983	287,840	(977,388)	(79,673,744)	13,265,265

	Share Capital Option Reserve Foreign Currency Translation Reserve Accumulated Losses Total Equity $ $ $ $ $
Balance at 1 July 2017 Loss for the period Other comprehensive loss Total comprehensive loss for the year Transactions with owners, recorded directly in equity Shares issued during the period Cost of shares issued for placement Balance at 30 June 2018	74,219,238 1,150,350 135,123 (67,722,126) 7,782,585 - - - (4,448,178) (4,448,178) - - (367,667) - (367,667)
	- - (367,667) (4,448,178) (4,815,845) 14,708,722 - - - 14,708,722 (922,439) - - - (922,439)
	88,005,521 1,150,350 (232,544) (72,170,304) 16,753,023

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

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2019

Note Cash flows from operating activities Receipts from customers Research and development grant Payments to suppliers and employees Net cash used in operating activities 12c Cash flows from investing activities Purchase of property, plant and equipment Payment for exploration and evaluation assets Interest received Payment for deferred acquisition Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Transaction costs on issue of shares Proceeds from issue of convertible notes Proceeds from loan funds Interest paid Net cash from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Restricted cash 12b Cash and cash equivalents at the end of the period 12a	2019 $ 2018 $ 1,199,603 78,287 147,954 - (8,659,682) (4,934,972)
	(7,312,125) (4,856,685) (801,560) (3,592,740) (713,529) (415,482) 45,537 17,944 - (400,000)
	(1,469,552) (4,390,278) 4,695,007 12,036,241 (310,959) (544,874) 1,370,000 1,428,000 - 18,300 (15,586) (1,799)
	5,738,462 12,935,868 (3,043,215) 3,688,905 4,604,427 933,822 - (18,300)
	1,561,212 4,604,427

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

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

Notes to the Consolidated Financial Statements

1. General information and statement of compliance

These consolidated financial statements and notes represent those of Bass Metals Ltd (the “Company”) and it’s Controlled Entities (the “Consolidated Group” or “Group”). Bass Metals Ltd is the Group’s ultimate Parent Company (the “parent entity”) and is a public company incorporated and domiciled in Australia.

Financial information of the parent entity, Bass Metals Ltd, is presented in note 35.

The Group is a for profit entity for financial reporting purposes under Australian Accounting Standards.

The Financial Report was approved by the Board of Directors on 25 September 2019.

The Consolidated general purpose financial statements of the Group have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. Compliance with Australian Accounting Standards results in full compliance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

Except for cash flow information, the financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

2. Summary of Accounting Policies

Overall Considerations

The significant accounting policies that have been used in the preparation of these financial statements are summarised below.

The financial statements have been prepared using the measurement bases specified by Australian Accounting Standards for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies below.

Basis of consolidation

At reporting date, the Company has four subsidiaries, Graphmada Mauritius (registered in Mauritius), Graphmada SARL (registered in Madagascar), Limada SARL (registered in Madagascar) and Bass Metal Holdings Pty Ltd (registered in Australia).

The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30 June 2019. The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. Two subsidiaries have a different reporting date other than 30 June, however they have provided financial information to allow the consolidated Group financial statements to be prepared based on a 30 June reporting date.

All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.

Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss and net assets that is not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the noncontrolling interests based on their respective ownership interests. There are no non-controlling interests in the Group during the year.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

2. Summary of Accounting Policies (continued)

Foreign Currency Translation

Functional and Presentation Currency

The consolidated financial statements are presented in Australian Dollars ($AUD), which is also the functional currency of the Parent Company. The functional currency of the Company subsidiaries Graphmada SARL, Graphmada Mauritius and Limada SARL is US Dollars being the currency which sales and material expenses are transacted. These subsidiary financial statements are translated into Australian Dollars in accordance with Australian Accounting Standards as detailed below.

Foreign Currency Transactions and Balances

Foreign currency transactions are translated into the functional currency, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the re-measurement of monetary items at year end exchange rates are recognised in profit or loss and other comprehensive income.

Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at the date of the transaction), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.

Foreign operations

In the Group’s financial statements, all assets, liabilities and transactions of Group entities with a functional currency other than the $AUD are translated into $AUD upon consolidation. On consolidation, all monetary assets and liabilities have been translated into $AUD at the closing rate at the reporting date. Non-monetary items are not retranslated at year-end and are measured at historical cost, these are translated into $AUD using the exchange rates at the date of the transaction. Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets and liabilities of the foreign entity and translated into $AUD at the closing rate at the date of acquisition. Income and expenses have been translated into $AUD at the average rate over the reporting period. Exchange differences are charged or credited to other comprehensive income and recognised in the foreign currency translation reserve in equity. On disposal of a foreign operation the cumulative translation differences recognised in equity are reclassified to profit or loss and recognised as part of the gain or loss on disposal.

Segment reporting

Management currently identifies two service lines as the Group’s operating segments and all other activities are reported within the segment other. These operating segments are monitored by the Group’s chief operating decision maker and strategic decisions are made on the basis of adjusted segment operating results.

In identifying its operating segments, management generally follows the Group’s service lines, which represent the main products and services provided by the Group. All inter-segment transfers are carried out at arm’s length prices.

The measurement policies the Group uses for segment reporting under the Accounting Standards are the same as those used in its financial statements, except that expenses relating to discontinuing operations (refer note 10) are not included in arriving at the operating profit of the operating segments. In addition, non-current exploration and evaluation asset held for sale are assets which are not directly attributable to the business activities of any operating segment and are not allocated to a segment. There have been no other changes from prior periods in the measurement methods used to determine reported segment profit or loss.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

2. Summary of Accounting Policies (continued)

Revenue

Revenue arises from the sale of graphite concentrate.

To determine whether to recognise revenue, the Group follows a 5-step process:

Identifying the contract with a customer
Identifying the performance obligations
Determining the transaction price
Allocating the transaction price to the performance obligations
Recognising revenue when/as performance obligation(s) are satisfied.

The Group enters into transactions with customers involving a range of the Group’s graphite concentrate specifications. The total transaction price for a contract is based of the relative stand-alone market selling prices determined by reference to the carbon content, the graphite mesh or flake size and the current international USD graphite price.

The Group recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts as other liabilities on the statement of financial position. Similarly, if the Group satisfies a performance obligation before it receives the consideration, the Group recognises a receivable in its statement of financial position, depending on whether something other than the passage of time is required before the consideration is due.

Revenue is recognised either at a point in time or over time, when (or as) the Group satisfies performance obligations by transferring the promised goods or services to its customers.

Sale of graphite concentrate

Sale of graphite concentrate is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership, generally when the customer has taken undisputed delivery of the goods. This occurs when goods are physically collected from the Group’s premises by or on behalf of the customer, or when the sea container containing the goods to be exported have been sealed for customs export purposes.

Interest income

Interest is reported on an accrual basis using the effective interest method.

Other Income

Other income is recognised as and when it is receivable and has been recorded as part of other receivables if it has not yet been received.

Operating Expenses

Operating expenses are recognised in profit or loss upon utilisation of the service or as incurred.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost includes all expenses directly attributable to the mining process as well as directly related production costs based on normal operating capacity. Costs of ordinarily interchangeable items are assigned using the first in, first out cost formula. Net realisable value is the estimated selling price in the ordinary course of business less any applicable selling expenses.

Leased Assets

Operating Leases

All other leases are treated as operating leases. Where the Group is a lessee, payments on operating lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred. At reporting date, entities within the Group have operating lease arrangements, however these are inter-Group only, whereby one subsidiary is renting certain items of plant and equipment to another subsidiary within the Group, which are then eliminated on consolidation.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

2. Summary of Accounting Policies (continued)

Property, Plant and Equipment

Equipment is initially recognised at acquisition or manufacturing cost, including any costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by the Group’s management.

Property, plant and equipment are depreciated through the straight-line distribution of cost over the estimated technical useful life of the asset which is the period which the Company expects the use of the asset.

The Group uses the units of production basis when depreciating specific assets which results in a depreciation charge proportional to the depletion of the anticipated remaining life of mine production. Each item’s economic life, which is assessed annually, has due regard to both its physical life limitations and to present assessments of economically recoverable reserves of the mine property at which it is located.

The useful lives used for depreciation and amortisation of assets included in property, plant and equipment are presented below:
Buildings: 5 to 20 years
Plant & equipment: 2 to 14 years
Motor vehicles: 3 to 5 years

Material residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss and other comprehensive income within other income or other expenses.

Exploration and Evaluation

Exploration and evaluation activity involves the search for mineral resources, the determination of technical feasibility and the assessment of commercial viability of an identified resource. Exploration and evaluation activity includes:

Researching and analysing historical exploration data
Gathering exploration data through geophysical studies
Exploratory drilling and sampling
Determining and examining the volume and grade of the resource
Surveying transportation and infrastructure requirements
Conducting market and finance studies

Licence costs paid in connection with a right to explore in an existing exploration area are capitalised and amortised over the term of the permit. Once the legal right to explore has been obtained, exploration and evaluation expenditure is charged to profit or loss and other comprehensive income as incurred if the Group concludes that a future economic benefit is more likely than not to be realised. These costs include directly attributable employee remuneration, materials and fuel used, surveying costs, drilling costs and payments made to contractors.

In evaluating whether the expenditures meet the criteria to be capitalised, several different sources of information are used. The information that is used to determine the probability of future benefits depends on the extent of exploration and evaluation that has been performed.

Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. Exploration and evaluation expenditure is capitalised in the year in which is occurred when the following conditions are satisfied:

The rights to tenure of the area of interest are current; and
at least one of the following conditions is also met:
(i) the exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; and
(ii) exploration and evaluation activities in the area of interest have not at the end of the reporting period reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

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

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

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

2. Summary of Accounting Policies (continued)

Mine Properties

Mine properties includes capitalised development expenditure, rehabilitation costs and accumulated amortisation.

Development expenditure

Development expenditure incurred by or on behalf of the consolidated entity is accumulated separately for each area of interest in which economically recoverable resources have been identified. Such expenditure comprises costs directly attributable to the construction of a mine, the related infrastructure and expenditure transferred from the capitalised exploration and evaluation expenditure phase.

Development expenditure also includes goodwill paid on a business combination relating to a mining operation. It is calculated as the excess of the sum of: (a) fair value of consideration transferred, (b) the recognised amount of any non-controlling interest in the acquire, and (c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets.

Rehabilitation costs

Costs of site restoration are provided for over the life of the facility from when exploration commences and are included in the costs from that stage. Site restoration costs include obligations relating dismantling and removing mining plant, reclamation, waste dump rehabilitation and other costs associated with restoration and rehabilitation of the site. Such costs have been determined using estimates for current costs and currently legal requirements and technology.

Any changes in the estimates are accounted for on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly, the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.

Amortisation of Development expenditure and rehabilitation costs

Amortisation is charged using the units-of-production method, with separate calculations being made for each area of interest. The units-ofproduction basis results in an amortisation charge proportional to the depletion of proved and probable reserves. Mine properties are tested for impairment in accordance with the following policy on Impairment Testing of Non-Financial Assets.

Impairment Testing of Non-Financial Assets

At each reporting date, the Group assesses whether there is any indication that an asset may be impaired.

For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cashgenerating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.

All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group’s latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect management’s assessment of respective risk profiles, such as market and asset-specific risks factors.

Any impairment loss is charged pro rata to the other assets in the cash-generating unit. All assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment charge is reversed if the cash-generating unit’s recoverable amount exceeds its carrying amount.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

2. Summary of Accounting Policies (continued)

Financial Instruments

Recognition, initial measurement and derecognition

Financial assets and liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted by transaction costs, except for those carried at fair value through profit or loss, which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities are described below.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Classification and Subsequent Measurement of Financial Assets

Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).

For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition:

amortised cost
fair value through profit or loss (FVPL)
equity instruments at fair value through other comprehensive income (FVOCI)
debt instruments at fair value through other comprehensive income (FVOCI)

All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses.

Classifications are determined by both:

The entities business model for managing the financial asset
The contractual cash flow characteristics of the financial assets

Subsequent measurement financial assets

Financial assets at amortised cost

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVPL):

they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding

After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments that were previously classified as held-to-maturity under AASB 139.

Financial assets at fair value through profit or loss (FVPL)

Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at fair value through profit and loss. Further, irrespective of business model financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVPL. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply (see below).

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

2. Summary of Accounting Policies (continued)

Equity instruments at fair value through other comprehensive income (Equity FVOCI)

Investments in equity instruments that are not held for trading are eligible for an irrevocable election at inception to be measured at FVOCI. Under Equity FVOCI, subsequent movements in fair value are recognised in other comprehensive income and are never reclassified to profit or loss. Dividend from these investments continue to be recorded as other income within the profit or loss unless the dividend clearly represents return of capital.

Debt instruments at fair value through other comprehensive income (Debt FVOCI)

Financial assets with contractual cash flows representing solely payments of principal and interest and held within a business model of collecting the contractual cash flows and selling the assets are accounted for at debt FVOCI.

Any gains or losses recognised in OCI will be reclassified to profit or loss upon derecognition of the asset.

Impairment of Financial Assets

AASB 9’s impairment requirements use more forward-looking information to recognize expected credit losses – the ‘expected credit losses (ECL) model’. Instruments within the scope of the new requirements included loans and other debt-type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under AASB 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.

The Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

In applying this forward-looking approach, a distinction is made between:

financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’) and
financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage 2’).

‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.

‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the second category.

Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.

Classification and measurement of financial liabilities

The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments.

Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss.

Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments).

All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

2. Summary of Accounting Policies (continued)

Income Taxes

Tax expense recognised in profit or loss and other comprehensive income comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity.

Current income tax assets and/or liabilities comprise those obligations to, or claims from, the Australian Taxation Office and other fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss and other comprehensive income in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill or an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with investments in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future.

Deferred tax liabilities are always provided for in full. Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off current tax assets and liabilities from the same taxation authority.

Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss and other comprehensive income, except where they relate to items that are recognised in other comprehensive income or directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or equity, respectively.

Cash and Cash Equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

Non-current Assets and Liabilities Classified as Held-for-Sale and Discontinued Operations

When the Group intends to sell a non-current asset or a group of assets (a disposal group), and if sale within 12 months is highly probable, the asset or disposal group is classified as “held for sale” and presented separately in the statement of financial position. Liabilities are classified as “held for sale” and presented as such in the statement of financial position if they are directly associated with a disposal group.

The Group has determined that its Tasmanian Non-Current Exploration and Evaluation asset held for sale shall be designated in this category.

Assets classified as “held for sale” are measured at the lower of their carrying amounts immediately prior to their classification as held for sale and their fair value less costs to sell. However, some “held for sale” assets such as financial assets or deferred tax assets, continue to be measured in accordance with the Group's accounting policy for those assets. Once classified as “held for sale”, the assets are not subject to depreciation or amortisation.

Profit or loss from discontinued operations

A discontinued operation is a component of the entity that either has been disposed of, or is classified as held for sale, and:

represents a separate major line of business or geographical area of operations;
is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or
� is a subsidiary acquired exclusively with a view to resale

Profit or loss from discontinued operations, including prior year components of profit or loss, are presented in a single amount in the statement of profit or loss and other comprehensive income. This amount, which comprises the post-tax profit or loss of discontinued operations and the post-tax gain or loss resulting from the measurement and disposal of assets classified as held for sale.

The disclosures for discontinued operations in the prior year relate to all operations that have been discontinued by the reporting date for the latest period presented.

The Group has determined that its Tasmanian Non-Current Exploration and Evaluation asset held for sale shall be designated in this category.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

2. Summary of Accounting Policies (continued)

Equity and Reserves

Share capital represents the fair value of shares that have been issued. Any transaction costs associated with the issuing of shares are deducted from share capital, net of any related income tax benefits.

Other components of equity include (a) Foreign Currency Translation Reserve which records the exchange differences arising from translation of financial statements of foreign operations into Australian dollars; (b) the Share Option Reserve which comprises costs associated with share-based payments (see Share-based Employee Remuneration); and (c) the Available for Sale Financial Asset Reserve which records the subsequent re-measurement at fair value of financial assets designated as available for sale. Unrealised gains or losses are recognised in other comprehensive income and credited in the AFS reserve until the investments are derecognised.

Retained earnings include all current and prior period retained profits.

All transactions with owners of the parent are recorded separately within equity.

Employee Benefits

Wages, salaries and annual leave

Liabilities for wages and salaries, including non–monetary benefits and annual leave expected to be settled wholly with 12 months of reporting date are recognised in other payables and accruals in respect of employee services up to reporting date. They are measured at the amounts that are expected to be paid when the liabilities are settled.

Share-based Employee Remuneration

The Group operates equity-settled share-based remuneration plans for its employees. None of the Group's plans feature any options for a cash settlement.

All goods and services received in exchange for the grant of any share-based payment are measured at their fair values. Where employees are rewarded using share-based payments, the fair values of employees' services are determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (ie: profitability and sales growth targets and performance conditions).

All share-based remuneration is ultimately recognised as an expense in profit or loss and other comprehensive income with a corresponding credit to share option reserve. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest.

Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting.

Upon exercise of share options, the proceeds received net of any directly attributable transaction costs are allocated to share capital.

Provisions, Contingent Assets and Liabilities

General

Provisions for legal disputes, onerous contracts or other claims are recognised when the Group has a present legal or constructive obligation as a result of: (a) a past event; (b) it is probable that an outflow of economic resources will be required from the Group; and (c) amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material.

Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

2. Summary of Accounting Policies (continued)

In those cases where the possible outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognised.

Rehabilitation provision

Mine rehabilitation costs will be incurred by the Group either while operating, or at the end of the operating life of, the Group’s facilities and mine properties. The Group assesses its mine rehabilitation provision at each reporting date. The Group recognises a rehabilitation provision where it has a legal and constructive obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of obligation can be made. The nature of these restoration activities includes: dismantling and removing structures; rehabilitating mines and tailings dams; dismantling operating facilities; closing plant and waste sites; and restoring, reclaiming and revegetating affected areas.

The obligation generally arises when the asset is installed or the ground/environment is disturbed at the mining operation’s location. When the liability is initially recognised, the present value of the estimated costs is capitalised by increasing the carrying amount of the related mining assets to the extent that it was incurred as a result of the development/construction of the mine.

Over time, the discounted liability is increased for the change in present value based on the discount rates that reflect current market assessments and the risks specific to the liability. The periodic unwinding of the discount is recognised in the statement of profit or loss and other comprehensive income as part of finance costs.

Goods and Services Tax (GST) and Value Added Tax (VAT)

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

Cash flows are presented in the statement of cash flows on a gross basis, except for the GST and VAT components of investing and financing activities, which are disclosed as operating cash flows.

Comparative Figures

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

Significant Management Judgement in Applying Accounting Policies

When preparing the financial statements, management undertakes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.

Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.

Provision for Restoration and Rehabilitation

The Group assesses its mine rehabilitation provision annually. Significant estimates and assumptions are made in determining the provision for mine rehabilitation as there are numerous factors that will affect the ultimate liability. These factors include estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes, cost increases as compared to inflation rates, and changes in discount rates. These uncertainties may result in future actual expenditure differing from the amounts currently provided.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

2. Summary of Accounting Policies (continued)

Share-based Payment Transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using the Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.

Estimation of Useful Lives of Assets

The Group’s management determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment. The useful lives could change significantly as a result of technical innovations or some other event. Management will increase the depreciation and amortisation charge where useful lives are less than previously estimated lives, or it will write off or write down technically obsolete or non-strategic assets that have been abandoned or sold.

Exploration and Evaluation

The application of the Group’s accounting policy for E&E expenditure requires judgement to determine whether future economic benefits are likely from either future exploitation or sale, or whether activities have not reached a stage that permits a reasonable assessment of the existence of reserves. In addition to applying judgement to determine whether future economic benefits are likely to arise from the Group’s E&E assets or whether activities have not reached a stage that permits a reasonable assessment of the existence of reserves, the Group has to apply a number of estimates and assumptions. The determination of an Australasian Joint Ore Reserves Committee Code (JORC) resource is itself an estimation process that involves varying degrees of uncertainty depending on how the resources are classified (i.e., measured, indicated or inferred). The estimates directly impact when the Group defers E&E expenditure. The deferral policy requires management to make certain estimates and assumptions about future events and circumstances, particularly, whether an economically viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after expenditure is capitalised, information becomes available suggesting that the recovery of expenditure is unlikely, the relevant capitalised amount is written off to the statement of profit or loss and other comprehensive income in the period when the new information becomes available.

Impairment

In assessing impairment, management estimates the recoverable amount of each asset or cash-generating unit based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.

Ore reserve and mineral resource estimates

Ore reserves and mineral resource estimates are estimates of the amount of ore that can be economically and legally extracted from the Group’s mining properties. Such reserves and mineral resource estimates and changes to these may impact the Group’s reported financial position and results, in the following way:

The carrying value of exploration and evaluation assets, mine properties, plant and equipment and goodwill (mine properties – development asset) may be affected due to changes in estimated future cash flows
Depreciation and amortisation charges in the statement of financial profit or loss and other comprehensive income may change where such charges are determined using the units of production method, or where the useful life of the related assets change
Provisions for rehabilitation and environmental provisions may change where reserve estimate changes affect expectations about when such activities will occur and the associated cost of these activities

The Group estimates its ore reserves and mineral resources based on information compiled by appropriately qualified persons relating to the geological and technical data on the size, depth, shape and grade of the ore body and suitable production techniques and recovery rates. Such an analysis requires complex geological judgements to interpret the data. The estimation of recoverable reserves is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements and production costs, along with geological assumptions and judgements made in estimating the size and grade of the ore body. As the economic assumptions used may change and as additional geological information is produced during the operation of a mine, estimates of ore reserves and mineral resources may change.

The Group estimates and reports mineral resources in line with the principles contained in the 2004 and 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code).

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

3. Changes in Accounting Policies

(a) New and revised standards that are effective for these financial statements

A number of new and revised standards became effective for the first time to annual periods beginning on or after 1 July 2018. Information on the more significant standard(s) is presented below.

AASB 9 Financial Instruments

AASB 9 introduces new requirements for the classification and measurement of financial assets and liabilities and includes a forwardlooking ‘expected loss’ impairment model and a substantially changed approach to hedge accounting. These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of AASB 139.

The main changes are:
Financial assets that are debt instruments will be classified based on: (i) the objective of the entity’s business model for managing the financial assets; and (ii) the characteristics of the contractual cash flows.
Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income (instead of in profit or loss). Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument.
Introduces a ‘fair value through other comprehensive income’ measurement category for particular simple debt instruments.
Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases.
Where the fair value option is used for financial liabilities the change in fair value is to be accounted for as follows:
the change attributable to changes in credit risk are presented in Other Comprehensive Income (OCI)
the remaining change is presented in profit or loss

If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk are also presented in profit or loss. Otherwise, the following requirements have generally been carried forward unchanged from AASB 139 into AASB 9:

classification and measurement of financial liabilities; and
derecognition requirements for financial assets and liabilities.
AASB 9 requirements regarding hedge accounting represent a substantial overhaul of hedge accounting that enable entities to better reflect their risk management activities in the financial statements.

Furthermore, AASB 9 replaces the ‘incurred loss’ model in AASB 139 with an ‘expected credit loss’ (ECL) model. This model makes use of more forward-looking information and applies to all financial instruments that are subject to impairment accounting.

The adoption of aasb9 has not had a significant effect on the Group’s accounting policies related to financial liabilities. Trade and other receivables is the only financial asset that has been impacted by the adoption of the standard, specifically the measurement basis for impairment of trade and other receivables.

When determining the credit risk of trade and other receivables the Group uses quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment, as well as forward-looking information.

There was no material impact on the transactions and balances recognised in the financial statements when this new standard was adopted.

AASB 15 Revenue from Contracts with Customers

AASB 15 replaces AASB 118: Revenue, AASB 111 Construction Contracts and some revenue-related Interpretations. In summary, AASB 15:

establishes a new revenue recognition model;
changes the basis for deciding whether revenue is to be recognised over time at a point in time;
provides a new and more detailed guidance on specific topics (eg multiple element arrangements, variable pricing, rights of return and warranties); and
expands and improves disclosures about revenue.

There was no material impact on the transactions and balances recognised in the financial statements when this new standard was adopted.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

3. Changes in Accounting Policies (continued)

(b) Impact of standards issued but not yet applied by the Group

New and revised accounting standards and amendments that are currently issued for future reporting periods that are relevant to the Group include:

AASB 16 Leases

The new AASB 16:

replaces AASB 117 Leases and some lease-related Interpretations
requires all leases to be accounted for ‘on-balance sheet’ by lessees, other than short-term and low value asset leases
provides new guidance on the application of the definition of lease and on sale and lease back accounting
largely retains the existing lessor accounting requirements in AASB 117
requires new and different disclosures about leases

The estimated impact of this impending change as at 30 June 2019 can be summarised as follows: introduction of a right-of-use asset of $147,000, an increase in borrowings of $147,000.

The Group will adopt AADB 16 on 1 July 2019 using the Standard’s modified retrospective approach. Under this approach the cumulative effect of initially applying AASB 16 is recognised as an adjustment to equity at the date of initial application. Comparative information is not re-stated.

4. Going Concern

The financial report for the year ended 30 June 2019 has been prepared on the basis of going concern, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

During the year, the Group reported a loss after tax of $7,550,809 (2018 loss: $4,448,178). Net cash operating cash outflows were $7,312,125 (2018 outflow: $4,856,685).

The ability of the Group to continue as a going concern is principally dependent upon one or more of the following:

the ability of the Group to raise sufficient additional capital in the future;
its ability to achieve a financial return from its subsidiary Graphmada Mauritius.

If the Group is unable to continue as a going concern, it may be required to realise its assets and or settle its liabilities other than in the ordinary course of business and at amounts different from those stated in the financial report.

The Directors will continue to monitor the capital requirements of the Group on a go forward basis and will include additional capital raisings in future periods as required.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

5. Segment Information

The measurement policies the Group uses for segment reporting under the Accounting Standards are the same as those used in its financial statements, except expenses relating to discontinuing operations are not included in arriving at the operating loss of the operating segments. There have been no other changes from prior periods in the measurement methods used to determine reported segment profit or loss.

Segment information for the reporting period is as follows:

Graphite Mining	Exploration - Lithium	Other Total	Other Total
$	$	$	$

-	-	1,328,326	1,328,326
-	-	45,537	45,537
3,968	-	157,954	161,922
1,330,246	-	(1,330,246)	-
1,334,214	-	201,571	1,535,785
(4,868,301)	(12,961)	(1,715,233)	(6,596,496)
(756,288)	(12,653)	(1,239)	(770,180)
-	-	(15,586)	(15,586)
(261,249)	(6,149)	736,975	469,577
(5,885,839)	(31,764)	(995,083)	(6,912,686)
14,616,331	780,442	2,332,504	17,729,277
Graphite Mining $	Exploration - Lithium $	Other Total $ $
1,439 - 225,000 37,331	- - - -	37,331 38,770 17,944 17,944 10,500 235,500 (37,331) -
263,770	-	28,444 292,214
(2,261,574) (283,684) - (62,442)	(6,648) (91) - 3,003	(2,069,919) (4,338,141) (7,392) (291,167) (112,062) (112,062) 415,690 356,251
(2,607,700)	(3,736)	(1,773,683) (4,385,119)
12,967,509	353,637	5,317,206 18,638,352

*EBITAIX - Segment earnings before interest, taxes, depreciation, amortisation, impairment, and foreign currency gains/(losses).

No segment liabilities are disclosed because there is no measure of segment liabilities regularly reported to the chief operating decision maker.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

5. Segment Information (continued)

Reconciliation to Financial Statements

The total presented for the Group’s operating segments reconcile to the key financial figures as presented in its financial statements as follows:

Loss Total reportable segment operating loss Discontinued operations, refer note 10 Loss for the period Assets Total reportable segment assets Group assets	2019 2018 $ $ (6,912,686) (4,385,119) (638,123) (63,059)
	(7,550,809) (4,448,178)
	17,729,277 18,638,352
	17,729,277 18,638,352

The Group’s revenues from external customers and its non-current assets are divided into the following geographical areas:

Madagascar Mauritius Australia India Europe USA Total	Revenue	Non-current assets Revenue Non-current assets 2019 2018 2018 $ $ $
	2019
	$
	-	11,011,714 1,439 9,348,045 1,878,518 - 2,260,703 760,902 - 739,080 - - - - - - - 37,3311 -
	-
	-
	374,251
	296,150
	657,925
	1,328,326	13,651,134 38,770 12,347,828

Note 1: Represents revenue from one customer.

Revenues from external customers have been identified based on the customer’s geographical location. Non-current assets are allocated based on their physical location.

6. Other revenue

Other revenue
Interest received Rent and access fees received	2019 2018 $ $ 45,537 17,944 10,000 10,500
	55,537 28,944

7. Other income

Gain - Settlement gain1 Gain – VAT2 Sale of Scrap metal Research and development grant Total other income	2019 2018 $ $ - 100,000 - 125,000 3,968 - 147,954 -
	151,922 225,000

Note1: Relates to gain on settlement of the Graphmada acquisition.

Note2: Relates to VAT received that was previously written off as uncollectable at the date of acquisition of Graphmada.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

8. Loss for the period

The loss for the period is stated after taking into account the following: 8 (a) Cost of sales Direct mine operating expense Depreciation expense Inventory write down to net realisable value Total cost of sales 8 (b) Administration expenses Mine administration expense: Depreciation Amortisation Employee benefits expense Mine consultancy Write off of plant & equipment Repairs and maintenance Other administration expenses Total mine administration expenses Corporate administration: Employee benefits expense Contracting & consulting expenses Rental expenses Legal expenses Depreciation Director fees Travel expenses Share registry, ASX Other administration expenses Total corporate administration expenses Total administration expenses 8 (c) Foreign currency (gain)/loss Foreign currency loss/(gain) – realised Foreign currency gain – unrealised Total foreign currency (gain)/loss	2019 $ 2018 $ 2,689,661 688,153 405,200 136,906 245,149 -
	3,340,010 825,059
	69,380 146,869 294,361 - 877,549 575,109 235,345 67,218 - 21,138 229,399 173,015 1,268,857 907,359
	2,974,891 1,890,708
	1,253,499 792,939 119,301 157,655 86,274 48,541 21,450 61,754 1,239 7,392 270,054 149,705 312,094 361,067 187,648 196,653 336,002 430,049
	2,587,561 2,205,755
	5,562,452 4,096,463
	9,961 (1,974) (479,538) (354,277)
	(469,577) (356,251)

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

9. Income Tax Expense

The prima facie tax on loss before income tax is reconciled as follows:

prima facie tax on loss before income tax is reconciled as follows:
	2019	2018
	$	$
(a) The components of tax expense comprise:
Current tax	-	-
Under provision in respect of prior years	-	-
	-	-
(b) The prima facie tax on loss before income tax at 27.5% (2018: 27.5%)	(2,281,305)	(1,330,104)
Non assessable income	(203,075)	9,337
Non-deductible expenditure	254,093	-
Impact of different exchange rates	196,409	(108,726)
Deferred Tax Asset not brought to account	2,033,878	1,429,493
Income tax (benefit) attributable to loss from ordinary activities	-	-

Unrecognised temporary differences

At 30 June 2019, there are no unrecognised temporary differences associated with the Group's investments as the Group has no liability for additional taxation should unremitted earnings be remitted (2018: $Nil).

(c)
Deferred tax balances
The following deferred tax assets and liabilities have been recognised:
brought to account:
Deferred tax asset – losses available
Deferred tax liability – prepayments
Deferred tax liability – exploration expenditure
Net recognised tax balances
The following deferred tax assets and liabilities
have not been brought to account:
Unrecognised deferred tax assets comprise:
Australian tax losses - revenue
Australian tax losses - capital
Madagascan tax losses - revenue
Mauritian tax losses - revenue
Capital raising costs
Accruals and Provisions

2019
2018
$
$
13,127
-
(13,127)
-
-
-
-
14,613,619
17,557,658
5,223,606
5,223,606
2,533,624
1,525,251
66,578
-
51,608
-
47,369
28,060
22,536,404
24,334,575

Deferred tax asset not recognised is $22.5 million (2018: $24.3 million) which is represented by $19.8 million (2018: $23 million) from Australian based operations carried forward tax losses and undisclosed tax losses of $2.6 million (2018:$1 million) from overseas subsidiaries based on prior years lodged tax returns and the accounting losses for the periods to 30 June 2019..

The deductible temporary differences and tax losses do not expire under current tax legislation. Madagascan Tax Losses expire after a period of 5 years. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilise the benefits from.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

10. Loss attributable to discontinued operations

The Company continues to seek a buyer for its Tasmanian capitalised exploration assets. This disposal group was fully impaired during 2017 and is, therefore, carried at nil value having been recognised as Capitalised Exploration and Evaluation Assets Held for Sale in the Statement of Financial Position.

During the current and prior year, care and maintenance expenses relating to this disposal group have been eliminated from profit or loss from the Group’s continuing operations and are shown as a single line item on the face of the statement of profit or loss and other comprehensive income (see loss after tax from discontinued operations ).

Expenses Hellyer operating infrastructure – care & maintenance Total expenses arnings Per Share (Basic and diluted Earnings Per Share) Loss for the period Weighted average number of ordinary shares used in the calculation of basic earnings per share Basic and diluted loss per share (cents)	2019 $ 2018 $ 638,123 63,059
	638,123 63,059
	2019 $ 2018 $ (7,550,809) (4,448,178) 2,638,056,957 1,990,361,646
	(0.29) (0.22)

11. Earnings Per Share

There is no dilutive potential for ordinary shares as the exercise of options to ordinary shares would have the effect of decreasing the loss per ordinary share and would therefore be non-dilutive.

12. Cash and Cash Equivalents

(a) Cash and cash equivalents include the following components:

Cash at bank and in hand: Australian Dollars United State Dollars Madagascar Ariary	2019 $ 2018 $ 975,639 4,435,854 337,086 55,118 248,487 113,455
	1,561,212 4,604,427

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. The Group deposits cash surpluses only with major banks of high-quality credit standing.

(b) Restricted Cash

As at reporting date $10,801, (2018: $18,300) of cash held remains restricted.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

12. Cash and Cash Equivalents (continued)

(c) Reconciliation of cash flows from operations with loss after income tax

Operating loss after income tax Adjustments for: Depreciation & amortisation Share based payments Inventory write down to net realisable value Plant and equipment written off Unrealised foreign exchange gain Non cash settlement of administration expenses Non cash settlement of convertible note accrued interest Gain on settlement of Graphmada deferred consideration Add: Finance expense (disclosed in financing activities) Less: finance income (disclosed in investing activities) Net changes in working capital: Change in other current assets Change in trade and other receivables Change in inventories Change in other financial assets - current Change in trade and other payables relating to operating activities Net cash used in operating activities ade and Other Receivables Current Trade receivables VAT receivable Allowance for credit losses Other receivables Non-current Other security deposits1		2019 $ 2018 $ (7,550,809) (4,448,178) 770,180 291,167 95,550 - 245,149 - 13,166 21,138 (479,538) (354,277) 12,641 77,639 - 110,263 - (100,000) 15,586 1,799 (45,537) (17,944) (38,399) (13,387) (374,165) (37,807) (659,473) (549,827) (13,946) (1,413) 697,470 164,142




















		(7,312,125) (4,856,685)
		2019 $ 2018 $ 138,107 - 729,017 433,676 (183,177) (104,156) 105,216 95,478 789,163 424,998 680,500 680,500 680,500 680,500

13. Trade and Other Receivables

Note 1: Security deposits and guarantees associated with the Tasmanian exploration assets held for sale.

All amounts are short-term and non-interest bearing. The net carrying value of trade receivables is considered a reasonable approximation of fair value. As at reporting date, there were no trade receivables that were past due, but not impaired.

In determining the recoverability of a trade or other receivable, the Group performs a risk analysis considering the type and age of the outstanding receivable and the creditworthiness of the counterparty.

Information regarding credit, foreign exchange and liquidity risk exposure is set out in note 27.

14. Inventories

Equipment spares and consumables Ore stockpiles Graphite in circuit Graphite concentrate	2019 $ 2018 $ 989,576 873,785 3,906 8,418 6,459 176,808 617,986 144,591 1,617,927 1,203,602

Total inventories are carried at the lower of cost and net realisable value.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

15. Financial assets and liabilities

Categories of financial assets and liabilities

Note 1 provides a description of each category of financial assets and financial liabilities and the related accounting policies.

The carrying amounts of financial assets and financial liabilities in each category are as follows:

2019 Notes	Amortised cost Assets at fair value through profit or loss (FVPL) Debt fair value through other comprehensive income (FVOCI) Equity fair value through other comprehensive income (FVOCI) Total	Amortised cost Assets at fair value through profit or loss (FVPL) Debt fair value through other comprehensive income (FVOCI) Equity fair value through other comprehensive income (FVOCI) Total
	$ $ $ $ $
Financial assets
Cash and cash equivalents 12a	1,561,212 - - - 1,561,212
Trade and other receivables - current 13	789,163 - - - 789,163
Trade and other receivables – non current 13	680,500 - - - 680,500
	3,030,875 - - - 3,030,875

2019 Notes		Derivatives used for hedging (FV) Other liabilities (amortised cost) Total
		$ $ $
Financial liabilities
Trade and other payables 20		- 1,816,108 1,816,108
Borrowings 21		- 1,534,580 1,534,580
		- 3,350,688 3,350,688

Notes	Amortised cost Assets at fair value through profit or loss (FVPL) Debt fair value through other comprehensi ve income (FVOCI) Equity fair value through other comprehensive income (FVOCI) Total $ $ $ $ $	Amortised cost Assets at fair value through profit or loss (FVPL) Debt fair value through other comprehensi ve income (FVOCI) Equity fair value through other comprehensive income (FVOCI) Total $ $ $ $ $
12a 13 13 Notes	4,604,427 - - - 4,604,427 424,998 - - - 424,998 680,500 - - - 680,500
	5,709,925 - - - 5,709,925
		Derivatives used for hedging (FV) Other liabilities (amortised cost) Total $ $ $
20 21		- 753,705 753,705 - 18,300 18,300
		- 772,005 772,005

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

16. Plant and Equipment

Details of the Group’s property, plant and equipment and their carrying amount are as follows:

Plant & equipment	Motor Vehicles	Capital work inprogress	Buildings & Infrastructure	Total
$	$	$	$	$

2,766,727	1,056,596	1,849,719	733,666	6,406,708
177,118	492,670	531,567	-	1,201,355
1,592,560	943	(1,917,303)	323,800	-
-	-	(388,870)	(202,504)	(591,374)
-	(37,468)	-	-	(37,468)
4,536,405	1,512,741	75,113	854,962	6,979,221

(478,845)	(443,157)	-	(218,924)	(1,140,926)
(351,083)	(83,466)	-	(41,270)	(475,819)
-	-	-	85,675	85,675
-	24,302	-	-	24,302
(829,928)	(502,321)	-	(174,519)	(1,506,768)
3,706,477	1,010,420	75,113	680,443	5,472,453

2018 Gross carrying amount Balance 1 July 2017 Additions Reclassification at cost Disposal Balance 30 June 2018 Depreciation and impairment Balance 1 July 2017 Depreciation Disposal Balance 30 June 2018 Carrying amount 30 June 2018	Plant & equipment Motor Vehicles Capital work in progress Buildings & Infrastructure Total $ $ $ $ $
	1,058,511 554,107 502,678 733,666 2,848,962 62,490 56,812 3,473,438 - 3,592,740 1,680,720 445,677 (2,126,397) - - (34,994) - - - (34,994)
	2,766,727 1,056,596 1,849,719 733,666 6,406,708
	(332,471) (382,977) - (148,166) (863,614) (160,229) (60,180) - (70,758) (291,167) 13,855 - - - 13,855
	(478,845) (443,157) - (218,924) (1,140,926)
	2,287,882 613,439 1,849,719 514,742 5,265,782

All depreciation and impairment charges are included within depreciation, amortisation and impairment of non-financial assets. There was no Plant and Equipment impairment losses recognised during the current or prior reporting periods

Property, plant and equipment pledged as security for liabilities

There is no fixed and floating charge over any of the assets in the Group.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

17. Exploration and Evaluation Assets

Exploration and evaluation expenditure consist of: Exploration and evaluation expenditure consist of: Exploration drilling – Mahefedok deposit Madagascar Exploration drilling – Andapa deposit Madagascar Exploration drilling – Mahela deposit Madagascar Lithium mineralisation exploration permits in the Sahatany region in Madagascar	2019 $ 2018 $ 815,492 514,226 21,954 21,702 233,074 4,581 716,422 353,637
	1,786,942 894,146

Refer to Tenements Listing on page 81 for detail of the exploration licences held by the Group.

Movement in carrying amount:

Movement in the carrying amounts for mine development and rehabilitation expenditure between the beginning and the end of the current period:

Carrying amount 1 July 2018 Expenditure incurred during the year Carrying amount 30 June 2019	2019 $ 2018 $ 894,146 508,523 892,796 385,623
	1,786,942 894,146

Carry forward exploration and evaluation expenditure

The recovery of the costs of exploration and evaluation expenditure carried forward is dependent upon the discovery of commercially viable mineral and other natural resource deposits and their subsequent development and exploitation or alternatively their sale.

Impairment and write-off

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. Management regularly evaluates the recoverability of exploration and evaluation assets.

18. Mine Properties

Capitalised development and rehabilitation expenditure consist of:

Acquisition of mining assets – Graphmada1 Capitalised rehabilitation costs – Graphmada2 Reclassification of deferred mining expenditure Accumulated amortisation	2019 $ 2018 $ 5,070,019 5,070,019 419,081 419,081 505,699 - (294,361) -
	5,700,438 5,489,100

Movement in carrying amount:

Movement in the carrying amounts for mine development and rehabilitation expenditure between the beginning and the end of the current period:

Carrying amount 1 July 2018 Additions Reclassification of deferred mining expenditure Amortisation charge for the year Carrying amount 30 June 2019	2019 $ 2018 $ 5,489,100 5,473,699 - 15,401 505,699 - (294,361) -
	5,700,438 5,489,100

Note 1: Goodwill acquired on acquisition of Graphmada. Note 2: Rehabilitation costs expected to be incurred upon closure of the Graphmada mine in Madagascar, refer note 22.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

19. Impairment Testing of Non-Current Assets

In accordance with the Group’s accounting policies and processes, the Group performs its impairment assessment annually at 30 June. Non-financial assets are reviewed at each reporting period to determine whether there is an indication of impairment.

When indicators of impairment exist, a formal estimate of the recoverable amount is made. External and internal indicators of impairment as at 30 June 2019 included;

long range planning and scheduling meeting the JORC 12 Compliances;
increased expected future costs of production; and
under-utilisation of the processing plant.

Due to the indicators above, the Group assessed the recoverable amounts of its major Cash-Generating-Unit (“CGU”), relating to the Co-O mining operations.

a) Impairment testing

i) Methodology

Impairment is recognised when the carrying amount exceeds the recoverable amount. The recoverable amount being the value in use of the CGU has been estimated using the discounted cashflows method based on the Group’s recoverable minerals.

Value in use is estimated based on discounted cash flows using market-based commodity price, estimated quantities of recoverable minerals, production levels, operating costs and capital requirements. When Life of Mine (“LOM”) plans fully utilise the existing mineral resource and the Group have demonstrated an ability to replenish resources, an estimated replenishment rate has been applied to unmined resources.

Estimates of quantities of recoverable minerals, production levels, operating costs and capital requirements are sourced from the Group planning and budgeting process, mill capacity levels and mining plans for the following year. The 2019 budget and mine plan were developed in the context of the current gold price environment.

Significant judgements and assumptions are made by the Group to determine value in use. This includes assessing variable key assumptions such as gold market prices, cost structures, production utilisation and capacity, available minerals and discount rates. Any change in these variable assumptions can cause adverse changes in one or more of the assumptions used to estimate value in use.

ii) Key Assumptions

The table below summarises the key assumptions used in the 30 June 2019 carrying value assessments. Comparison to the prior period has been provided.

Assumptions	Unit	2019	2018
		(2019-2024)	(2018- 2019)
Projected Average Graphite price	US$/ton	US$900/t	US$900/t
Projected Average C1 costs (1)	US$/ton	US$400 - US$500	US$400 - US$500
Pre-Tax discount rate (%)	%	10%	10%
Mineral Resource (indicated) (2)	Contained Graphite tonnes	54,230t	54,230t
Production capacity per annum	Tonnes	6,000 – 20,000t (3)	6,000t

Note 1: C1 costs represents the cash cost of running the mining operation in Madagascar. These are production and local administration costs and excludes royalties, taxation, capital expenditure and exploration costs.

Note 2: The Company has recently concluded a substantial infill drilling and drill program with the intention of materially increasing its Mineral Resource.
Note 3: The Production Capacity increase would require a substantial investment by the Company before 20,000t annual production capacity could be achieved

Commodity prices

Commodity prices are estimated with reference to external market forecasts and reviewed at least annually. The price applied has taken into account observable market data.

Discount rate

The future cash flows of the CGU are discounted by the estimated real after tax weighted average cost of capital (“WACC”), pursuant to the Capital Asset Pricing Model. The denominal pre-tax WACC has been derived from comparable company analysis, in addition to the WACC rate of the group’s Co-O mining operations being the primary CGU.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

19. Impairment Testing of Non-Current Assets (continued)

a) Impairment testing (continued)

ii) Key Assumptions (continued)

Production activity and operating and capital costs

Life of mine production activity and operating and capital cost assumptions are based on the Group’s latest budget, including the five-year budget and separately estimated LOM plan. Discounted cash flows include expected cost improvements and sustaining capital requirements. Estimated production is assumed consistent with the capacity constraint of the Flotation plant taken into account while assuming a constant recovery rate.

Resources and reserves

Mineral resource tonnes were based on the Group’s JORC 2004 compliant Mineral Resource Statement detailed on page 5.

iii) Impacts

Due to the recoverable amount of the Group’s mining operations CGU being greater than the estimated carrying amount, no impairment charge was required for the year ending 2019 (2018: nil):

Description Note	2019 2018 Carrying amt $ Impairment $ Balance $ Carrying amt $ Impairment $ Balance $
Plant & equipment 16 Exploration & Evaluation assets 17 Mine properties 18 Total	5,472,453 - 5,472,453 5,265,782 - 5,265,782 1,786,942 - 1,786,942 894,146 - 894,146 5,700,438 - 5,700,438 5,489,100 - 5,489,100
	12,959,833 - 12,959,833 11,649,028 - 11,649,028

b) Sensitivity Analysis

Variation movements in any key assumptions may result in a change to the estimated recoverable amount which may indicate an additional impairment to non-current assets.

The changes to estimated key assumptions would have the following approximate impact on the recoverable amount of the CGU in its functional currency that has been subject to impairment in the 30 June 2019 statutory accounts:

Assumption changes	2019
	Effect on recoverable amount
	$
US$100 per tonne increase/decrease in graphite price	-
1% increase/decrease in the discount rate	-
5% increase in operating costs	-

The changes to the above assumptions were not considered material enough, individually, to change the recoverable amounts.

In addition to the above, the level of production activity is also a key assumption in the determination of recoverable amount. Should the Group recognise decreases/increases in processing capacity, changes in recoverable amount estimates may arise. Due to the number of factors that could impact production activity, assessment to sensitivity has not been determined for these factors.

The sensitivities above assume specific assumption moves are in isolation, whilst all other assumptions are held constant. In reality, a change in one of the aforementioned assumptions may accompany a change in another assumption.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

20. Trade and Other Payables

Current Unsecured liabilities: Trade Payables Other payables	2019 $ 2018 $ 1,439,582 481,310 376,526 272,395
	1,816,108 753,705

Other payables are recognised when the Group has identified a present obligation from the result of past events. These amounts include employee payment obligations, professional fees and statutory obligations.

Due to the short-term nature of these payables, their carrying value is assumed to approximate their fair value. Trade payables and other payables are non-interest-bearing and are normally settled on 30 to 60-day terms. For other terms and conditions relating to related party payables refer note 29. Information regarding credit, foreign exchange and liquidity risk exposure is set out in note 27.

21. Borrowings

Advances received Current Balance at the beginning of the period1 Over subscription funds received for shares1 Repayment of oversubscribed shares Short term loan repaid to Stramin Global Resources Plc2 Funds settled upon issue of convertible notes3	2019 $ 2018 $ 18,300 642,500 - 18,300 (7,499) - - (25,000) - (617,500)
	10,801 18,300

Note 1: Over subscription of capital raising funds received from investors during the reporting period, to be refunded. Note 2: During the prior period, the Group repaid the balance owing of $25,000 of a short-term non-interest-bearing advance from Stratmin Global Resources Plc.

Note 3: During the prior period, the Group settled short-term non-interest-bearing advances totalling $617,500 from subscribers for convertible notes that were issued on 3 July 2017.

Short term borrowings Current Balance at the beginning of the period Borrowings for mobile mining equipment Repayments Exchange rate movement Total current borrowings	2019 $ 2018 $ - - 492,669 - (92,874) - 1,824 -
	401,619 -
	412,420 18,300

During April2019, the Group purchased a dozer and two trucks from a local Madagascar Caterpillar dealer for the equivalent value of $492,669 (the purchase was denominated in Madagascar Ariary). The supplier has agreed to terms, including interest 13.5% per annum, that require the Group to make monthly instalment payments with the final payment due on 31 March 2020.

Convertible notes Non-Current Balance at the beginning of the period Convertible notes Total non-current borrowings	2019 $ 2018 $ - - 1,122,160 -
	1,122,160 -

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

22. Provisions

ovisions
Non-Current *Restoration and rehabilitation* Tasmanian exploration assets Graphmada: Provision for rehabilitation – acquisition of subsidiary Exchange rate movement	2019 $ 2018 $ 694,243 694,242 419,081 406,484 - 12,598
	419,081 419,082
	1,113,324 1,113,324

23. Issued Capital

Capital management

For the purpose of the Group’s capital management, capital includes issued capital and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise the shareholder’s value.

Management controls the capital of the Group by monitoring performance against budget to provide the shareholders with adequate returns and ensure the Group can fund its operations and continue as a going concern. The Group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets.

Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues. There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year. There are no externally reported capital requirements.

Ordinary shares

2,809,875,584 (30 June 2018: 2,455,972,569) fully paid ordinary shares	2019 $ 2018 $ 92,709,574 88,005,521

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group in proportion to the number of fully paid ordinary shares. On a show of hands every holder of ordinary shares present at a meeting, in person or by proxy, is entitled to one vote and upon a poll each share is entitled to one vote. The Group has no authorised share capital and the shares have no par value.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

23. Issued Capital (continued)

The movement in ordinary shares during the financial period are as follows:

Balance at the beginning of the period Issued during the period � Placement in Sept 2017 � Non-renounceable rights issue � Deferred placement � Settlement of convertible notes � Placement in Dec 2017 � Unlisted Options exercised in Feb 2018 at $0.015 � Listed Options exercised in Mar 2018 at $0.025 � Unlisted Options exercised in Apr 2018 at $0.01 � Listed Options exercised in Apr 2018 at $0.025 � Performance rights vested in Apr 2018 at nil � Listed Options exercised in May 2018 at $0.025 � Unlisted Options exercised in May 2018 at $0.011 � Listed Options exercised in Jun 2018 at $0.025 � Unlisted Options exercised in Jun 2018 at $0.025 � Unlisted Options exercised in Jun 2018 at $0.01 � Fair value of unlisted ESOP options exercised prior year � Listed Options exercised in Aug 2018 at $0.025 � Unlisted Options exercised in Sep 2018 at $0.025 � Listed Options exercised in Sep 2018 at $0.025 � Placement in Sep 2018 to two suppliers in lieu of payment at $0.025 � Listed Options exercised in Sep 2018 at $0.025 � Listed Options exercised in Nov 2018 at $0.025 � Unlisted Options exercised in Nov 2018 at $0.01 � Performance rights vested in Nov 2018 at nil (Fair value of $173,312) � Placement to sophisticated investors in Dec 2018 at $0.0125 � Listed Options exercised in Dec 2018 at $0.025 � Placement to employees pursuant to the Bass Metals Incentive Scheme at nil (Fair value of $95,550) � Listed Options exercised in Dec 2018 at $0.025 � Placement in Mar 2019 at $0.0125 � Placement to Directors at $0.0125 � Capital raising costs Balance at the end of the period	2019 Number of Shares 2019 $ 2018 Number of Shares 2018 $ 2,455,972,569 88,005,521 1,368,146,729 74,219,238
	272,727,273 3,000,000 228,024,455 2,508,271 45,454,545 500,000 208,146,936 2,291,813 90,909,090 1,000,000 6,000,000 90,000 11,500 288 25,480,000 254,800 3,176,000 79,400 7,000,000 - 117,770,319 2,944,258 1,650,000 16,500 78,475,722 1,961,893 2,100,000 52,500 900,000 9,000 - 10,686 2,400,000 60,000 1,000,000 25,000 10,875 272 2,218,310 55,458 20,400,000 510,000 31,493,492 787,337 900,000 9,000 24,800,000 173,312 214,771,284 2,684,641 66,334 1,658 7,350,000 95,550 64,000 1,600 44,428,720 555,359 4,000,000 50,000 (315,820) (922,439)
	2,809,875,584 92,709,574 2,455,972,569 88,005,521

Balance at the beginning of the period
Issued during the period
� Placement in Sept 2017
� Non-renounceable rights issue
� Deferred placement
� Settlement of convertible notes
� Placement in Dec 2017
� Unlisted Options exercised in Feb 2018 at $0.015
� Listed Options exercised in Mar 2018 at $0.025
� Unlisted Options exercised in Apr 2018 at $0.01
� Listed Options exercised in Apr 2018 at $0.025
� Performance rights vested in Apr 2018 at nil
� Listed Options exercised in May 2018 at $0.025
� Unlisted Options exercised in May 2018 at $0.011
� Listed Options exercised in Jun 2018 at $0.025
� Unlisted Options exercised in Jun 2018 at $0.025
� Unlisted Options exercised in Jun 2018 at $0.01
� Fair value of unlisted ESOP options exercised prior year
� Listed Options exercised in Aug 2018 at $0.025
� Unlisted Options exercised in Sep 2018 at $0.025
� Listed Options exercised in Sep 2018 at $0.025
� Placement in Sep 2018 to two suppliers in lieu of payment at
$0.025
� Listed Options exercised in Sep 2018 at $0.025
� Listed Options exercised in Nov 2018 at $0.025
� Unlisted Options exercised in Nov 2018 at $0.01
� Performance rights vested in Nov 2018 at nil (Fair value of
$173,312)
� Placement to sophisticated investors in Dec 2018 at $0.0125
� Listed Options exercised in Dec 2018 at $0.025
� Placement to employees pursuant to the Bass Metals
Incentive Scheme at nil (Fair value of $95,550)
� Listed Options exercised in Dec 2018 at $0.025
� Placement in Mar 2019 at $0.0125
� Placement to Directors at $0.0125
� Capital raising costs
Balance at the end of the period

2019
Number of
Shares
2019
$
2018
Number of
Shares
2018
$
2,455,972,569
88,005,521
1,368,146,729
74,219,238

272,727,273
3,000,000
228,024,455
2,508,271
45,454,545
500,000
208,146,936
2,291,813
90,909,090
1,000,000
6,000,000
90,000
11,500
288
25,480,000
254,800
3,176,000
79,400
7,000,000
-
117,770,319
2,944,258
1,650,000
16,500
78,475,722
1,961,893
2,100,000
52,500
900,000
9,000
-
10,686
2,400,000
60,000
1,000,000
25,000
10,875
272
2,218,310
55,458
20,400,000
510,000
31,493,492
787,337
900,000
9,000
24,800,000
173,312
214,771,284
2,684,641
66,334
1,658
7,350,000
95,550
64,000
1,600
44,428,720
555,359
4,000,000
50,000
(315,820)
(922,439)

2,809,875,584
92,709,574
2,455,972,569
88,005,521

Note 1: Issued to Bizzell Capital Partners in lieu of corporate advisory fees.

Options and performance rights

Refer note 26 for information relating to the Group employee option plan, including details of options issued, exercised and lapsed during the financial year. Refer to the remuneration report for information relating to share options issued to key management personnel during the financial year.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

24. Reserves

	Foreign Currency	Other	Share Option	Total $
	Translation	Reserve $	Reserve $
	Reserve$
Balance 1 July 2018	(232,544)	-	1,150,350	917,806
Options exercised	-	-	(183,998)	(183,998)
Options lapsed	-	-	(47,369)	(47,369)
Convertible notes	-	287,840	-	287,840
Exchange differences on translating foreign
operations	(744,844)	-	-	(744,844)
Before tax	(744,844)	287,840	(231,367)	(688,371)
Tax benefit/(expense)	-	-	-	-
Net of tax	(744,844)	287,840	(231,367)	(688,371)
Balance 30 June 2019	(977,388)	287,840	918,983	229,435
	Foreign Currency		Share Option	Total $
	Translation Reserve$		Reserve$
Balance 1 July 2017		135,123	1,150,350	1,285,473
Exchange differences on translatingforeign	operations	(367,667)	-	(367,667)
Before tax		(367,667)	-	(367,667)
Tax benefit/(expense)		-	-	-
Net of tax		(367,667)	-	(367,667)
Balance 30 June 2018		(232,544)	1,150,350	917,806

Foreign Currency Translation Reserve

The Foreign Currency Translation Reserve is used to recognise exchange differences arising from translation of the financial statements of foreign operations to Australian dollars.

Share Option Reserve

The Share Option Reserve records the items recognised as expense on valuation of employee share options and performance rights.

Other Reserve

The Other Reserve relates to the convertible note conversion feature relating to the convertible notes issued by the Company.

25. Commitments

ommitments
Not later than 1 year Exploration commitments (1) Discontinued operation commitments (2) Operating leases (3) Capital purchase commitments (4) Later than 1 year but not greater than 5 years Exploration commitments (1) Discontinued operation commitments (2) Operating leases (3)	2019 $ 2018 $ 285,103 214,806 602,000 593,360 77,383 31,958 42,116 51,496
	1,006,602 891,620
	427,655 300,000 2,408,000 - 94,310 65,669
	2,929,965 365,669

(1) The Group must meet minimum expenditure commitments in relation to option agreements over tenements and to maintain those tenements in good standing.

(2) The Group has expenditure commitments in relation to care and maintenance activities and environmental management of its Hellyer operating infrastructure in Tasmania.

(3) The operating lease commitments includes a non-cancellable lease on warehouse premises, in Madagascar, and office premises, in Australia, both with an approximate two-year term remaining at 30 June 2019. Rent is payable monthly in advance.

(4) Capital commitments relate to items of plant and equipment where funds have been committed but the assets not yet received.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

26. Share-based Payments

The following share-based payment arrangements existed at 30 June 2019.

(i) Bass Metals Ltd Employee Share and Option Plan (ESOP)

The Bass Metals Ltd Employee Share and Option Plan (“ESOP” or “Plan”) was approved by shareholders at an annual general meeting held on 30 November 2010. The directors of the Group administer the Plan and in their absolute discretion determine to whom the securities will be offered, the number to be offered and any performance criteria in relation to the options or performance rights issued under the Plan.

Options or performance rights may not be issued to a Director (or associate) or employee except where the relevant shareholder approval is provided pursuant to the Corporations Act 2001 and ASX Listing Rules.

No consideration is payable by an eligible person for a grant of an option or a performance right, unless the board decides otherwise. Subject to the rules of the Plan and to ASX Listing Rules, the Group (acting through the Board) may offer options or performance rights to any eligible person at such times and on such terms as the Board considers appropriate. Options issued under the Plan may be exercised or vest at any time during the period commencing on the issue date and ending no later than five years from the date of issue. Performance rights granted will only vest upon satisfaction of the performance condition and during the period that the performance condition was met.

Options or performance rights which have vested and have been issued under the Plan will automatically lapse in three months from the date of departure or such longer period as the board determines in the event that an eligible person either resigns voluntarily from employment with the Group or is dismissed in certain circumstances, unless otherwise agreed by the Board.

Options or performance rights issued under this Plan carry no dividend or voting rights.

On vesting of performance rights, shares will automatically be issued to the eligible person subject to compliance with the Group’s Policy for Trading in Group Securities and the insider trading provisions of the Corporations Act 2001. Unless otherwise provided in the invitation to receive performance rights, no amount shall be payable by the eligible person on the automatic exercise of performance rights.

ESOP Unlisted Options Outstanding at the beginning of the period Transfer to listed ESOP options Lapsed Exercised Outstanding at the end of the period Exercisable at the end of the period	2019 2018 Number of Options Weighted Average Exercise Price$ Number of Options Weighted Average Exercise Price$
	133,900,000 0.060 136,000,000 0.062 (31,000,000) 0.05 - - (9,000,000) 0.032 - - (1,000,000) 0.025 (2,100,000) 0.025
	92,900,000 0.067 133,900,000 0.060
	92,900,000 0.067 133,900,000 0.060

Note 1: Total ESOP unlisted options outstanding at the end of the period represents 40,400,000 (2018: 63,900,000) ESOP Directors options issued and 52,500,000 (2018: 70,000,000) ESOP options issued to Group Executives.

ESOP listed Options Outstanding at the beginning of the period Transfer from unlisted ESOP options Outstanding at the end of the period Exercisable at the end of the period	2019 2018 Number of Options Weighted Average Exercise Price$ Number of Options Weighted Average Exercise Price$
	- - - - 31,000,000 0.05 - -
	31,000,000 0.05 - -
	31,000,000 0.05 - -

Note 1: Total ESOP unlisted options outstanding at the end of the period represents 31,000,000 ESOP Directors options.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

26. Share-based Payments (continued)

The tables below summarise the details of the grants and assumptions that were used in determining the fair value of unlisted and listed options on the grant date.

Input Variable	Director Options A Director Options B Director Options C Director Options D Director Options E Director Options F
Grant Date Vesting Date Expiry Date Valuation Model Exercise Price Share Price (at date terms agreed) Expected Life (years) Expected Volatility Expected Dividend Yield Expected Risk Free Rate Performance Conditions Fair Value(average)	2 Sept 2016 2 Sept 2016 3 May 2017 3 May 2017 3 May 2017 3 May 2017 2 Sept 2016 2 Sept 2016 31 Aug 2017 31 Aug 2017 31 Aug 2017 31 Aug 2017 2 Sept 2018 2 Sept 2019 31 Dec 2020 31 Dec 2020 31 Dec 2020 31 Dec 2020 Black Scholes Black Scholes Black Scholes Black Scholes Black Scholes Black Scholes $0.025 $0.035 $0.025 $0.05 $0.075 $0.10 $0.014 $0.014 $0.012 $0.012 $0.012 $0.012 3.38 3.38 3.67 3.67 3.67 3.67 100% 100% 213% 213% 213% 213% $0 $0 $0 $0 $0 $0 1.6% 1.6% 1.96% 1.96% 1.96% 1.96% As set out in Remuneration Report As set out in Remuneration Report As set out in Remuneration Report As set out in Remuneration Report As set out in Remuneration Report As set out in Remuneration Report $0.0048 $0.0055 $0.0065 $0.0049 $0.0041 $0.0035
	Management Options A Management Options B Management Options C Management Options D 2 Sept 2016 2 Sept 2016 2 Sept 2016 2 Sept 2016 2 Sep 2016 2 Sep 2016 2 Sep 2016 2 Sep 2016 31 Dec 2020 31 Dec 2020 31 Dec 2020 31 Dec 2020 Black Scholes Black Scholes Black Scholes Black Scholes $0.025 $0.05 $0.075 $0.10 $0.014 $0.014 $0.014 $0.014 3.38 3.38 3.38 3.38 100% 100% 100% 100% $0 $0 $0 $0 1.6% 1.6% 1.6% 1.6% As set out in Remuneration Report As set out in Remuneration Report As set out in Remuneration Report As set out in Remuneration Report $0.0079 $0.0063 $0.0054 $0.0048
Input Variable	Management Options A Management Options B Management Options C Management Options D
Grant Date Vesting Date Expiry Date Valuation Model Exercise Price Share Price (at date terms agreed) Expected Life (years) Expected Volatility Expected Dividend Yield Expected Risk Free Rate Performance Conditions Fair Value(average)	2 Sept 2016 2 Sept 2016 2 Sept 2016 2 Sept 2016 2 Sep 2016 2 Sep 2016 2 Sep 2016 2 Sep 2016 31 Dec 2020 31 Dec 2020 31 Dec 2020 31 Dec 2020 Black Scholes Black Scholes Black Scholes Black Scholes $0.025 $0.05 $0.075 $0.10 $0.014 $0.014 $0.014 $0.014 3.38 3.38 3.38 3.38 100% 100% 100% 100% $0 $0 $0 $0 1.6% 1.6% 1.6% 1.6% As set out in Remuneration Report As set out in Remuneration Report As set out in Remuneration Report As set out in Remuneration Report $0.0079 $0.0063 $0.0054 $0.0048

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

26. Share-based Payments (continued)

Details of unlisted ESOP options over ordinary shares in the Company that are unexercised at the end of the year.

	Option	Number	Grant	Value per	Value of	Number	Exercise	Vesting and	Last exercise
		unexercised	date	option at	options at	vested	price ($)	first exercise	date
				grant date($)	grant date($)			date
Directors
Mr R Anthon	C	7,400,000	3 May 2017	0.0065	48,862	7,500,000	0.025	3 May 2017	31 Dec 2020
Mr R Anthon	E	7,500,000	3 May 2017	0.0041	30,509	7,500,000	0.075	3 May 2017	31 Dec 2020
Mr R Anthon	F	7,500,000	3 May 2017	0.0035	26,084	7,500,000	0.10	3 May 2017	31 Dec 2020
Mr J Marvin	C	3,000,000	3 May 2017	0.0065	19,545	3,000,000	0.025	3 May 2017	31 Dec 2020
Mr J Marvin	E	3,000,000	3 May 2017	0.0041	12,204	3,000,000	0.075	3 May 2017	31 Dec 2020
Mr J Marvin	F	3,000,000	3 May 2017	0.0035	10,434	3,000,000	0.10	3 May 2017	31 Dec 2020
Mr P Wright	C	3,000,000	3 May 2017	0.0065	19,545	3,000,000	0.025	3 May 2017	31 Dec 2020
Mr P Wright	E	3,000,000	3 May 2017	0.0041	12,204	3,000,000	0.075	3 May 2017	31 Dec 2020
Mr P Wright	F	3,000,000	3 May 2017	0.0035	10,434	3,000,000	0.10	3 May 2017	31 Dec 2020
Group Executives
Mr T McManus	A	10,000,000	2 Sept 2016	0.0079	79,079	10,000,000	0.025	2 Sept 2016	31 Dec 2020
Mr T McManus	C	10,000,000	2 Sept 2016	0.0054	54,246	10,000,000	0.075	2 Sept 2016	31 Dec 2020
Mr T McManus	D	10,000,000	2 Sept 2016	0.0048	47,850	10,000,000	0.10	2 Sept 2016	31 Dec 2020
Mr D Round	A	7,500,000	2 Sept 2016	0.0079	59,310	7,500,000	0.025	2 Sept 2016	31 Dec 2020
Mr D Round	C	7,500,000	2 Sept 2016	0.0054	40,685	7,500,000	0.075	2 Sept 2016	31 Dec 2020
Mr D Round	D	7,500,000	2 Sept 2016	0.0048	35,887	7,500,000	0.10	2 Sept 2016	31 Dec 2020

Details of listed ESOP options over ordinary shares in the Company that are unexercised at the end of the year.

	Option	Number	Grant	Value per	Value of	Number	Exercise	Vesting and	Last exercise
		unexercised	date	option at	options at	vested	price ($)	first exercise	date
				grant date($)	grant date($)			date
Directors
Mr R Anthon	D	7,500,000	3 May 2017	0.0050	37,133	7,500,000	0.050	3 May 2017	31 Dec 2020
Mr J Marvin	D	3,000,000	3 May 2017	0.0050	14,853	3,000,000	0.050	3 May 2017	31 Dec 2020
Mr P Wright	D	3,000,000	3 May 2017	0.0050	14,853	3,000,000	0.050	3 May 2017	31 Dec 2020
Group Executives
Mr T McManus	B	10,000,000	2 Sept 2016	0.0063	63,483	10,000,000	0.050	2 Sept 2016	31 Dec 2020
Mr D Round	B	7,500,000	2 Sept 2016	0.0063	47,612	7,500,000	0.050	2 Sept 2016	31 Dec 2020

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

26. Share-based Payments (continued)

Performance Rights

Under the ESOP, certain Directors and group executives may be granted a right to be issued a share in the future subject to the performance based vesting conditions being met.

Details of Performance Rights held by each Director and group executive that were granted but not yet vested under the LTI plan as at 30 June 2019 are outlined below:

2019	Balance at the start of theyear Number granted as Remuneration Number vested Other Changes Balance at the end of theyear Portion vested (%) Portion un- vested (%)
Directors Mr R Anthon Mr J Marvin Mr P Wright Group Executives Mr T McManus Mr D Round	15,000,000 - 6,000,000 - 9,000,000 40% 60% 6,000,000 - 2,400,000 - 3,600,000 40% 60% 6,000,000 - 2,400,000 - 3,600,000 40% 60% 16,000,000 - 8,000,000 - 8,000,000 40% 40% 12,000,000 - 6,000,000 - 6,000,000 40% 40%
	55,000,000 - 24,800,0001 - 30,200,000 40% 49%

Note 1: 24,800,000 Group Executive and Director Performance Rights were exercised during the period based on the Key Performance Indicator KPI (A) for the Group achieving a total production of 1,250t of saleable graphite concentrate over any given 3 month period.

The remaining Performance Rights will require Key Management Personnel to achieve the following Key Performance Indicators:

Key Performance Indicators	Performance Rights not yet vested held at the end of the year	Performance Rights not yet vested held at the end of the year
	Directors R Anthon J Marvin P Wright	Group Executives T McManus D Round
KPI (B) Graphmada Operations achieving cash flow positive results over three consecutive months	9,000,000 3,600,000 3,600,000	8,000,000 6,000,000

Group executive KPI’S vest independently of each other.

The Performance Rights were issued during the prior year on 3 May 2017 to Directors and Executive Management as part of their Long Term Incentive (LTI) are in accordance with the Company’s Incentive Scheme (“Incentive Scheme”). The Company’s Incentive Scheme was approved at a meeting of shareholders on 22 August 2016.

Performance Rights were issued as a retention strategy for key employees and provide for a component of the Directors and Executive Management Remuneration.

The Rights granted have a zero exercise price. No Performance Rights will vest unless they meet the Key Performance Indicators (KPI), as detailed below. Upon satisfaction of the performance condition, the Performance Rights will vest during the period that the performance condition was met. All Performance Rights expire on 15 August 2020.

A summary of key terms of Performance Rights are as follows:

General Conditions

1) Performance Rights issued under the Incentive Scheme are for no consideration.
2) The vesting of Performance Rights is subject to the achievement of Key Performance Indicators (“Performance Milestones”).
3) Performance Rights are only transferable or assignable upon the achievement of Performance Milestones.
4) Where the person who was initially offered the Performance Rights ceases to be an Eligible Participant and, at that time, there are Milestone Conditions in relation to those Performance Rights that are unsatisfied (and they are not waived), the Company may, subject to the Corporations Act and the Listing Rules, buy back and cancel or sell the Shares in accordance with clause 8.1 of this Plan.
5) The Performance Rights are valid for a term of 3 years from the date of issue.
6) All shares issued upon exercise of the Performance Rights will rank equally in all respects with shares in the same class.
7) In the event of a capital reorganisation, the number of Performance Rights will be adjusted by the Board in accordance with the Corporations Act.
8) In the event of a bonus or rights issue, a participant, upon conversion of Performance Rights into shares, will enjoy all rights attaching to the shares of the Company.
9) In the event of a takeover, scheme or winding up, the Board is deemed to have waived all conditions applicable to an incentive security.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

26. Share-based Payments (continued)

The table below summarises the details of the grants and assumptions that were used in determining the fair value of Performance Rights on the grant date .

Input Variable

Performance
Rights A
Performance
Rights B
Performance
Rights C

Grant Date
Vesting Date
Expiry Date
Valuation Model
Exercise Price
Share Price (at date terms agreed)
Expected Life (years)
Expected Volatility
Expected Dividend Yield
Expected Risk Free Rate
Performance Conditions
Fair Value(average)

3 May 2017
3 May 2017
3 May 2017
On achievement of
Performance Condition
On achievement of
Performance Condition
On achievement of
Performance Condition
15 August 2020
15 August 2020
15 August 2020
Monte Carlo Simulation
Monte Carlo Simulation
Monte Carlo Simulation
$0.00
$0.00
$0.00
$0.012
$0.012
$0.012
3
3
3
213%
213%
213%
$0
$0
$0
1.82%
1.82%
1.82%
As set out in
Remuneration Report
As set out in
Remuneration Report
As set out in
Remuneration Report
$0.0068
$0.00945
$0

Performance Right Methodology

The Groups Performance Rights link rewards for executives to the Company’s strategy which drives the creation of long term shareholder wealth – the greater the performance of the Company, the greater the return to the executives; and vesting of Performance Rights only occurs with the successful achievement of performance conditions.

During the year the Board determined that material increases to production, operational cash flow and growth in the Group’s market capitalisation were the main three criteria that are most likely to increase shareholder wealth. Accordingly, the following Performance Rights and Criteria were established to align the Group’s strategy for increased long term shareholder wealth, with the intention of rewarding and retaining the Group’s Directors:

Groups Strategy for Shareholder wealth	Performance Rights KPI’s (criteria)
Substantially Increase levels of Graphite Production at Graphmada and achieve material operational cost efficiencies. Achieve substantial economies of scale from increases in Production. Engage the market and drive the Group’s growth proposition.	Increase levels of Graphite Production to 1,250mt per month of Concentrate Operations to be cash flow positive Increase the Group’s market capitalisation to $75,000,000

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

26. Share-based Payments (continued)

Details of Performance Rights over	Details of Performance Rights over	ordinary shares in the Company	ordinary shares in the Company	not vested and	unexercised at the	end of the year	are as follows:
	Grant date	Number	KPI	Value per	Value of	Date of issue	Date of expiry
		unvested		Performance	Performance
		and		Right at grant	Right at grant
		unexercised		date($)	date($)
Directors
Mr R Anthon	3 May 2017	6,000,000	KPI (B)	0.00946	56,738	15 Aug 2017	15 Aug 2020
Mr R Anthon	3 May 2017	3,000,000	KPI (C)	0.00006	170	15 Aug 2017	15 Aug 2020
Mr J Marvin	3 May 2017	2,400,000	KPI (B)	0.00946	22,695	15 Aug 2017	15 Aug 2020
Mr J Marvin	3 May 2017	1,200,000	KPI (C)	0.00006	68	15 Aug 2017	15 Aug 2020
Mr P Wright	3 May 2017	2,400,000	KPI (B)	0.00946	22,695	15 Aug 2017	15 Aug 2020
Mr P Wright	3 May 2017	1,200,000	KPI (C)	0.00006	68	15 Aug 2017	15 Aug 2020
Group Executives
Mr T McManus	3 May 2017	8,000,000	KPI (B)	0.00946	75,650	15 Aug 2017	15 Aug 2020
Mr D Round	3 May2017	6,000,000	KPI(B)	0.00946	56,738	15 Aug2017	15 Aug2020

(ii) Total Listed Options

Balance at the start of the year Granted Transfer from unlisted options Exercised Lapsed Outstanding at the end of the period1 Exercisable at the end of the period	2019 2018 Number of Options Weighted Average Exercise Price $ Number of Options Weighted Average Exercise Price$
	478,966,580 0.025 344,847,424 0.025 271,226,884 0.050 333,552,697 0.025 31,000,000 0.050 - - (54,434,701) 0.025 (199,433,541) 0.025 (424,531,879) 0.025 - -
	302,226,884 0.050 478,966,580 0.025
	302,226,884 0.050 478,966,580 0.025

Note 1: Total of listed options outstanding at the end of the period represents 269,226,884 (2018: 452,404,309) options issued under placement to investors, 2,000,000 (2018: 26,562,271) options issued to Directors as part of the investor placement, 13,500,000 (2018: nil) ESOP issued to Directors, and 17,500,000 (2018:nil) ESOP options issued to Group Executives.

(iii) Total Unlisted Options

Balance at the start of the year Granted Transfer to listed options Exercised Lapsed Outstanding at the end of the period1 Exercisable at the end of the period	2019 2018 Number of Options Weighted Average Exercise Price $ Number of Options Weighted Average Exercise Price$
	144,254,220 0.057 180,384,220 0.049 - - - - (31,000,000) 0.050 - - (1,900,000) 0.018 (36,130,000) 0.012 (18,454,220) 0.022 - -
	92,900,000 0.067 144,254,220 0.057
	92,900,000 0.067 144,254,220 0.057

Note 1: Total unlisted options outstanding at the end of the period represents nil (2018: 8,254,220) options issued under placement to investors, nil options issued to Directors as part of investor placement (2018: 2,100,000), nil (2018:10,000,000 options) ESOP issued to Directors, 40,400,000 (2018: 53,900,000) ESOP Directors options and 52,500,000 (2018:70,000,000) ESOP options issued to Group Executives.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

27. Financial Risk Management

(i) Financial Risk Management Policies

The Group is exposed to various risks in relation to financial instruments. The Group’s financial instruments consist of at call and short term deposits with banks, trade and other receivables, trade and other payables, loans, AFS financial assets.

The Group’s risk management is coordinated at its headquarters, in close cooperation with the Board of Directors, and focuses on actively securing the Group’s short to medium-term cash flows by minimising the exposure to financial markets. Long-term financial investments are managed to generate lasting returns.

It is the Group’s policy that no trading in derivatives for speculative purposes may be undertaken. Currently, the Group does not currently apply any form of hedge accounting. Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Group is exposed are described below.

(ii) Financial Risk Exposures and Management

The main types of risks affecting the Group are market risk, liquidity risk and credit risk.

(a) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risks: foreign currency, interest rate risk and commodity price risk. The Group’s financial instruments affected by market risk include deposits, trade and other receivables, trade and other payables and accrued liabilities.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group has transactional currency exposures that arise from sales or purchases in currencies other than the respective functional currencies. The Group manages this risk by matching receipts and payments in the same currency and monitoring movements in exchange rates.

The Group’s transactions are usually carried out in either $AUD, $US-Dollars ($USD) and Malagasy Ariary (MGA). Exposures to currency exchange rates arise from:

The Group’s overseas trade receivables which are primarily denominated in $US-Dollars ($USD),
Intercompany Loans provided by Bass to its subsidiaries which are all denominated in $US-Dollars ($USD),
VAT receivable which are denominated in MGA,
Trade and other payables are denominated in either $USD or MGA.
The Group may also hold cash balances in $USD and MGA.

Foreign currency sensitivity

The following table demonstrates the Groups sensitivity to a 5% increase and decrease in the Australian Dollar against the relevant foreign currencies and the impact on the reported loss for the year. 5% represents management’s assessment of the possible change in foreign exchange rates. The sensitivity includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates.

Year ended 30 June 2019 +/- 5% Increase/(decrease) in $A/$US exchange rate +/- 5% Increase/(decrease) in $A/MGA exchange rate Year ended 30 June 2018 +/- 5% Increase/(decrease) in $A/$US exchange rate +/- 5% Increase/(decrease) in $A/MGA exchange rate	Loss Equity $ $

	+/-1,001,159 +/-1,001,159
	+/-24,128 +/-24,128
	+/-588,162 +/-588,162 +/-24,289 +/-24,289

If the AUD had strengthened against the $USD, or MGA, by 5% then this would have increased the reported loss by the above amounts.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

27. Financial Risk Management (continued)

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of change in market interest rates relates primarily to the Group’s cash deposits. The Group’s convertible notes issued have a fixed interest rate and therefore have no exposure to the risk of change in market interest rates.

Interest rate sensitivity

Interest rate sensitivities have not been included in the financial report as the changes in the loss before tax due to changes in interest rate is not material to the results of the Group.

Commodity price risk

Commodity price risk arises from the sale of Graphite. The Group manages this risk arising from future commodity sales through sensitivity analysis, cash flow management and forecasting. The Group currently does not engage in the use of derivative financial instruments such as hedging.

Commodity price sensitivity

The following table demonstrates the sensitivity to a 10% increase and decrease in the Graphite price, with all other variables held constant. 10% represents management’s assessment of the possible change in the Graphite price.

Year ended 30 June 2019 +/- 10% Increase/(decrease) in graphite price Year ended 30 June 2018 +/- 10% Increase/(decrease) in graphite price	Loss Equity $ $

	+/-132,833 +/-132,833
	+/-3,733 +/-3,733

(b) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Group monitors its risk of a shortage of funds by monitoring its payables. At reporting period, the Group does not have any debt.

The Group manages liquidity risk by monitoring its risk of a shortage of funds by reviewing forecast cash flows, investing in financial instruments which under normal market conditions are readily converted to cash and monitoring its payables.

All the Group’s trade payable and accrued liabilities are payable between 7 and 90 days.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

27. Financial Risk Management (continued)

(c) Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to this risk for various financial instruments, for example by granting receivables to customers and placing deposits, etc. The Group’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at the reporting date, as summarised below:

Classes of financial assets Carrying amounts: Trade receivables Other receivables VAT receivable (Madagascar) Allowance for credit losses Tasmanian assets -security deposits and guarantees	2019 2018 $ $ 138,107 - 105,216 45,478 729,017 433,676 (183,177) (104,156) 680,500 680,500
	1,469,663 1,055,498

There are no amounts of collateral held as security at 30 June 2019.

The credit risk for cash and cash equivalents, money market funds, debentures and derivate financial instruments is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

In respect of trade and other receivables, the Group trades only with recognised creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures, which include an assessment of credit rating, short-term liquidity and financial position. The Group obtains sufficient collateral (where appropriate) from customers as a means of mitigating the risk of financial loss from defaults. All potential customers are assessed for credit worthiness taking into account their size, market position and financial standing. In addition, receivable balances are monitored on an ongoing basis, with the result that the Group’s exposure to bad debts is not significant.

VAT, after expected credit losses, is receivable from the Government of Madagascar for the equivalent value of A$545,840 (2018: A$329,520) at reporting date. The receivable amount relates to VAT included on trade and other purchase transactions in Madagascar since acquiring the Graphmada operations. Whilst the Company is confident that it will receive the VAT in full, there is always an element of risk associated with recouping foreign taxes.

The Group’s management considers that all of the above financial assets that are not impaired or past due for each of the reporting dates under review are of good credit quality.

At reporting date, the Group has certain trade receivables, other receivables and VAT receivable that have not been settled by the contractual due date but are not considered to be impaired. The amounts at reporting date analysed by the length of time past due, are:

2019	Current More than 30 days More than 60 days More than 90 days Total
Expected credit loss rate (%)	11% 11% 25% 24% 19%
Gross carrying amount ($)	269,742 138,573 36,402 527,623 972,340
Expected credit loss ($)	30,997 15,135 9,147 127,899 183,177
2018 Expected credit loss rate (%) Gross carrying amount ($) Expected credit loss ($)	Current More than 30 days More than 60 days More than 90 days Total
	9% 19% 24% 24% 20% 145,467 27,412 22,603 333,672 529,154 13,447 5,143 5,428 80,138 104,156

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

27. Financial Risk Management (continued)

The closing balance of trade and other receivables loss allowances as at 30 June 2019 reconciles with trade and other receivables loss allowance opening balance as follows:

Loss allowance as at 1 July calculated under AASB 139 Amounts restated through opening retained earnings Opening estimated credit losses 1 July 2018 Receivables written off during the year Estimated credit losses provided in year Expected credit loss at 30 June 2019	2019 2018 $ $ 104,156 - - -
	104,156 - (187,004) (49,844) 266,025 154,000
	183,177 104,156

(iii) Net Fair Values

The fair value of a financial asset or a financial liability is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair values of cash and cash equivalents and trade and other payables approximate their carrying values, as a result of their short maturity or because they carry floating rates of interest.

Financial instruments classified as other receivables – settlement proceeds, available held for sale financial assets (being listed securities) and VAT receivable are measured at fair value. In addition, the deferred consideration payable, borrowings (including convertible notes) are measured at fair value. No other financial assets or financial liabilities are measured at fair value.

The fair value of all Groups’ financial instruments recognised in the financial statements approximates or equals their carrying amounts. For details on how fair values are calculated for each class of financial instrument refer to Note 1 of the Notes to the financial statements.

(iv) Financial Instruments Measured at Fair Value

The financial instruments recognised at fair value in the statements of financial position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy consists of three levels:

Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities;
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (as prices) or indirectly (derived from prices); and
Level 3: Inputs for the asset or liability that is not based on observable market data (unobservable inputs).

The following table shows the levels within the hierarchy of financial assets and liabilities measured at fair value on a recurring basis.

2019 Financial Assets VAT receivable Financial Liabilities Borrowings 2018 Financial Assets VAT receivable Financial Liabilities Borrowings	Level 1 Level 2 Level 3 Total $ $ $ $

	- - 545,840 545,840

	- - 1,534,580 1,534,580
	Level 1 Level 2 Level 3 Total $ $ $ $
	- - 329,520 329,520 - - 18,300 18,300

Measurement of fair value of financial instruments

The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting period and are outlined in note 1.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

28. Capital management policies and procedures

The Group’s capital management objectives are:

to ensure the Group’s ability to continue as a going concern; and
to provide an adequate return to shareholders

by pricing products and services commensurately with the level of risk.

The Group monitors capital on the basis of the carrying amount of equity plus debt (if any) less cash and cash equivalents as presented on the face of the statement of financial position.

The amounts managed as capital by the Group for the reporting periods under review are summarised as follows:

Total equity Cash and cash equivalents Capital Total equity Borrowings Overall financing Capital-to-overall financing ratio	2019 2018 $ $ 13,265,265 16,753,023 (1,561,212) (4,604,427)
	11,704,053 12,148,596 13,265,265 16,753,023 1,534,580 18,300
	14,799,845 16,771,323 0.79 0.72

29. Related Party Transactions

During the year, the Group paid management, underwriting and placement fees to Bizzell Capital Partners (“BCP”) totalling $177,989 (2018: $652,102) of which $177,989 (2018: $246,523) was settled in cash and nil (2018:$405,079) was settled by issue of shares in relation to BCP’s role as corporate advisors to the Group. BCP actively managed the capital raising programs for the Group and Peter Wright (Executive Director) is an Executive Director of BCP.

30. Transactions with Key Management Personnel

The Key management of the Group at 30 June 2019 are: Mr R Anthon, Mr J Marvin, Mr P Wright, Mr T McManus and Mr D Round. Key Management Personnel remuneration includes the following expenses:

Short term employee benefits Salaries including bonuses Post-employment benefits Superannuation Share-based payments Total remuneration	2019 $ 2018 $ 809,450 600,136 52,250 44,007 33,049 43,388 894,749 687,531

31. Remuneration of Auditors

emuneration of Auditors
Amounts received or due and receivable by Grant Thornton Audit Pty Ltd for: Audit and review of the financial report	2019 $ 2018 $ 53,500 50,000
	53,500 50,000

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

32. Contingencies

Contingent Liabilities

Millie’s Reward Lithium Project:

During 2017, the Company entered into a binding Term Sheet with Ruby-Red Madagascar SARL (a Company incorporated in Madagascar)

and acquired two contiguous mining permits and the lithium mining rights for a third mining permit in Madagascar, that are prospective for pegmatite-hosted lithium mineralisation.

The consideration payable by the Company includes certain cash payments (refer to the Directors Report) and the requirement to issue Bass Metals Ltd shares to Ruby Red, contingent on the Company achieving the following milestones on the project:

a) $US50,000 in shares on the acquisition of the mining permits and completion of the transaction;

b) $US50,000 worth of shares upon establishing a JORC compliant resource of >5 million tonnes at >1.5% Li2O;

c) $US50,000 worth of shares upon the tabling of a feasibility study for Millie’s Reward;

d) $US50,000 worth of shares upon first sales of either Direct Shipping Ore (DSO) or Chemical Grade (>6% Li2O) lithium concentrates. In addition, the Company is required to pay to Ruby Red a 0.25% concentrate sales royalty on any future lithium concentrate or DSO sales from Millie’s Reward for a period of 12 years from first concentrate or DSO sales, up to US$US2m.

Stratmin Global Resources Plc (“Stratmin”):

As part of the agreement to acquire the Graphmada mine, the Company is required to pay Stratmin a 2.5% sales royalty. The agreement terminates on 1 January 2029 or upon total Royalty payments reaching $5,000,000, whichever occurs first.

Contingent Assets

No contingent assets exist at reporting date.

33. Interests in Subsidiaries

Composition of the Group

Set out below details of the subsidiaries held directly by the Group:

	Country of
	incorporation and
	principle place of
Name of subsidiary	business	Principle activity	Group portion of ownership interests
			30 June 2019	30 June 2018
Graphmada Mauritius	Mauritius	Mining operation services	100%	100%
Graphmada SARL	Madagascar	Graphite mining	100%	100%
Limada SARL	Madagascar	Exploration	100%	100%
Bass Metals Holdings Pty Ltd	Australia	Investment holdings	100%	100%

34. Post-reporting Date Events

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

35. Parent Information

The following information has been extracted from the books of the parent, Bass Metals Ltd, and has been prepared in accordance with the accounting standards.

Assets Current Assets Non Current Assets1 Total Assets Liabilities Current Liabilities Non Current Liabilities Total Liabilities Net Assets Equity Issued Capital Compound Interest Reserve Share Option Reserve Accumulated Losses Total Equity Statement of Comprehensive Income Loss for the year2 Other comprehensive gain Total comprehensive loss for the year	2019 $ 2018 $ 1,582,403 4,776,926 14,481,234 12,875,822
	16,063,637 17,652,748
	986,889 232,848 1,816,402 694,242
	2,803,291 927,090
	13,260,346 16,725,658
	92,709,574 88,005,522 287,840 - 918,983 1,150,350 (80,656,051) (72,430,214)
	13,260,346 16,725,658
	(8,273,206) (4,836,742) 47,369 -
	(8,225,837) (4,836,742)

Note 1: Parent entity Non-Current Assets at 30 June 2019 includes: investment in subsidiary of $7,041,747 (2018: $7,041,747) and intercompany $US loans with subsidiaries with a net carrying value of $6,650,204 (2018: $5,293,795) - being $28,590,204 (2018: $20,593,795) receivable at cost less the provision for impairment of $21,940,000 (2018: $15,300,000). These are eliminated on consolidation.

Note 2: Parent entity loss for the current year includes:

An impairment expense of $6,640,000 (2018: $3,000,000) was recorded to write down the carrying value of net assets of the Parent entity to reflect the recoverable value of the Group assets. The impairment was applied against the loans receivable from subsidiaries.

Guarantees

Bass Metals Ltd has $176,411 (2018: $146,000) in bank guarantees relating to the Tasmanian assets which are offset by term deposits.

==> picture [158 x 31] intentionally omitted <==

Grant Thornton Audit Pty Ltd Level 43 Central Park 152-158 St Georges Terrace Perth WA 6000 PO Box 7757 Cloisters Square Perth WA 6850

T +61 8 9480 2000

Independent Auditor’s Report

To the Members of Bass Metals Limited

Report on the audit of the financial report

Qualified Opinion

We have audited the financial report of Bass Metals Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, and the directors' declaration.

In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial report of Bass Metals Limited is in accordance with the Corporations Act 2001 , including:

a Giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial performance for the year then ended; and

b Complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for Qualified Opinion

Carrying value of the Graphmada Graphite Project (“GGP”)

The Group has reported Mine Properties (Note 18: $5,700,438) and Plant and Equipment (Note 16: $5,472,453) in relation to the Group’s activities in Madagascar. Under AASB 136 “Impairment of Assets” the entity shall perform an impairment test on an annual basis to determine the assets recoverable amount.

At the date of this report, the Directors have not undertaken an impairment assessment in line with AASB 136. As such, we have been unable to obtain sufficient appropriate audit evidence to support the Directors’ assessment that the carrying value of the assets is at least equal to their recoverable amount. In the event that the carrying value of the assets exceed their recoverable amount, it would be necessary for carrying value of the assets to be written down to its recoverable amount.

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

==> picture [107 x 8] intentionally omitted <==

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

www.grantthornton.com.au
----- End of picture text -----

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation.

==> picture [157 x 31] intentionally omitted <==

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

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

Material uncertainty related to going concern

We draw attention to Note 4 in the financial statements, which indicates that the Group incurred a net loss of $7,550,809 during the year ended 30 June 2019, and as of that date, the Group’s net cash outflows were $7,312,125. As stated in Note 4, these events or conditions, along with other matters as set forth in Note 4, indicate that a material uncertainty exists that may cast doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.

Key audit matter	How our audit addressed the key audit matter	How our audit addressed the key audit matter
Exploration and evaluation assets Note 1 and 17
At 30 June 2019 the carrying value of Exploration and Evaluation	Our	procedures included, amongst others:
Assets was $1,786,942.	�	obtaining the management reconciliation of capitalised
		exploration and evaluation expenditure and agreeing to the
In accordance with AASB 6_Exploration for and Evaluation of Mineral_		general ledger;
Resources, the Group is required to assess at each reporting date if	�	reviewing management’s area of interest considerations against
there are any triggers for impairment which may suggest the carrying		AASB 6;
value is in excess of the recoverable value.	�	conducting a detailed review of management’s assessment of
		trigger events prepared in accordance with AASB 6 including;
The process undertaken by management to assess whether there are		o tracing projects to statutory registers, exploration
any impairment triggers in each area of interest involves an element of		licenses and third party confirmations to determine
management judgement.		whether a right of tenure existed;
		o enquiry of management regarding their intentions to
This area is a key audit matter due to the significant judgement		carry out exploration and evaluation activity in the
involved in determining the existence of impairment triggers.		relevant exploration area, including review of
		management’s budgeted expenditure;
		o understanding whether any data exists to suggest
		that the carrying value of these exploration and
		evaluation assets are unlikely to be recovered
		through development or sale;

	management’s budgeted expenditure; o understanding whether any data exists to suggest that the carrying value of these exploration and evaluation assets are unlikely to be recovered through development or sale;
�	evaluating the competence, capabilities and objectivity of
	management’s experts in the evaluation of potential impairment
	triggers; and
�	assessing the appropriateness of the related financial statement
	disclosures.

==> picture [157 x 31] intentionally omitted <==

Information other than the financial report and auditor’s report thereon

The Directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2019, but does not include the financial report and our auditor’s report thereon.

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

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

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

Responsibilities of the Directors for the financial report

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

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

Auditor’s responsibilities for the audit of the financial report

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

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our auditor’s report.

Report on the remuneration report

Opinion on the remuneration report

We have audited the Remuneration Report included in pages 23 to 29 of the Directors’ report for the year ended 30 June 2019.

In our opinion, the Remuneration Report of Bass Metals Limited, for the year ended 30 June 2019 complies with section 300A of the Corporations Act 2001 .

==> picture [157 x 31] intentionally omitted <==

Responsibilities

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

==> picture [128 x 44] intentionally omitted <==

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

==> picture [120 x 45] intentionally omitted <==

L A Stella Partner – Audit & Assurance

Perth, 25 September 2019

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

DIRECTORS DECLARATION

In the opinion of the Directors of Bass Metals Limited:
a. the consolidated financial statements and notes of Bass Metals Limited for the year ended 30 June 2019 are in accordance with the Corporations Act 2001, including:
- i. giving a true and fair view of its financial position as at 30 June 2019 and of its performance, for the year ended on that date; and
- ii. Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
- b. there are reasonable grounds to believe that the of Bass Metals Limited will be able to pay its debts as and when they become due and payable.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2019.
Note 1(a) confirms that the consolidated financial statements also comply with International Financial Reporting Standards.

Signed in accordance with a resolution of the Directors

==> picture [102 x 36] intentionally omitted <==

Rick Anthon Chairman

Brisbane, Queensland 25 September 2019

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

TENEMENTS LISTING

Lease	Country	Region	Status	BSM	Applicant Holder
				Interest
EL48/2003 Mt Block2	Australia	Tasmania	Granted	100%	Bass Metals Ltd
CML 103M/1987 Hellyer Mine Lease1&2	Australia	Tasmania	Granted	100%	Bass Metals Ltd
CML 68M/1984 Que River Mine Lease2	Australia	Tasmania	Granted	100%	Bass Metals Ltd
ML 10W/1980 Access Easement to QRML	Australia	Tasmania	Granted	100%	Bass Metals Ltd
PE 25600 Loharano (East)	Madagascar	Antsinanana	Granted	100%	Graphmada SARL
PE 26670 Mahefedok	Madagascar	Antsinanana	Granted	100%	Graphmada SARL
PE 24730 Antsirabe (Andapa)	Madagascar	Antsinanana	Granted	100%	Graphmada SARL
PRE 4383	Madagascar	Antsirabe	Granted	100%	Graphmada SARL
PE 11545	Madagascar	Antsirabe	Granted	100%	Graphmada SARL
				Mineral
PE 39808	Madagascar	Antsirabe	Granted	rights	Graphmada SARL

Notes:

CML 103M/1987 is owned by HMO a 100% subsidiary of Ivy Resources Ltd. Bass has 100% interest in all of the existing base metal resources and base metal exploration rights through a Sublease Agreement.
Intec Limited holds a 2.5% NSR Royalty over all product from Bass’ interests EL48/2003, CML68M/1984 and CML103M/1987.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

SHAREHOLDER INFORMATION

(As at 20 September 2019)

Distribution of Shareholdings

(a) Distribution schedule and number of holders of equity securities

	Total	Ordinary Shares*	% Units
	holders
1 – 1,000	194	16,227	0.00
1,001 – 5,000	209	649,918	0.02
5,001 – 10,000	152	1,237,776	0.04
10,001 – 100,000	1,006	48,152,252	4.17
100,001 – and over	1,376	2,759,819,410	98.23
Total	2,937	2,809,875,583	100.00

*All ordinary shares carry one vote per share without restriction

(b) Unmarketable Parcels

Unmarketable Parcels
Minimum $500 parcel at $0.008 per unit	Minimum Parcel Size Holders Units
	62,500 1,280 25,234,910

Largest Security Holders

Names of the 20 largest holders of Ordinary Shares (ASX Code: BSM) are listed below:

Name	No. of shares	%
ROOKHARP CAPITAL PTY LIMITED 188,345,426 6.70 FINN AIR HOLDINGS PTY LTD 112,983,323 4.02 CHOICE INVESTMENTS DUBBO PTY LTD 106,747,205 3.80 MR PHILLIP ALEXANDER PURDIE + MRS CAROL ANN PURDIE 85,000,000 3.03 MR BRIAN CARL BARTELS + MRS ANGELA BARTELS 77,592,611 2.76 MR JOHN STEPHEN FINNEMORE + MRS LEIGH ANN FINNEMORE 48,544,400 1.73 ANKLA PTY LTD 48,000,000 1.71 J P MORGAN NOMINEES AUSTRALIA PTY LIMITED 46,144,275 1.64 JLGI SMSF PTY LTD 42,313,313 1.51 ROW BOAT PTY LTD 41,920,700 1.49 MACQUARIE RIVER HOLDINGS PTY LTD 36,000,000 1.28 CITICORP NOMINEES PTY LIMITED 35,919,422 1.28 MR GLENN FRANCIS WORTEL 34,100,000 1.21 MR AKMAL REZKALLA 33,511,241 1.19 SEVEN STARS PTY LTD 28,545,454 1.02 RATHA KRISHNAN VADIVELU SUPERANNUATION PTY LTD 26,666,667 0.95 NAMBIA PTY LTD 24,849,553 0.88 SHOPFITTING HEADQUARTERS PTY LTD 23,747,544 0.85 MR PAUL AINSWORTH 23,000,000 0.82 CANCELER PTY LTD 23,000,000 0.82 TOTAL 1,086,931,134 38.68 Remaining Holders Balance 1,722,944,449 61.32

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

DISCLAIMER AND CAUTIONARY STATEMENTS

Disclaimer

This document has been prepared by Bass Metals Limited (the “Company”). It should not be considered as an invitation or offer to subscribe for or purchase any securities in the Company or as an inducement to make an invitation or offer with respect to those securities. No agreement to subscribe for securities in the Company will be entered into on the basis of this document. This document is provided on the basis that neither the Company nor its officers, shareholders, related bodies corporate, partners, affiliates, employees, representatives and advisers make any representation or warranty (express or implied) as to the accuracy, reliability, relevance or completeness of the material contained in the document and nothing contained in the document is, or may be relied upon as a promise, representation or warranty, whether as to the past or the future. The Company hereby excludes all warranties that can be excluded by law.

The document may contain forward-looking information and prospective financial material, which is predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties, and may differ materially from results ultimately achieved. All references to future production, production targets and resource targets and infrastructure access are subject to the completion of all necessary feasibility studies, permitting, construction, financing arrangements and infrastructure-related agreements. Where such a reference is made, it should be read subject to this paragraph and in conjunction with further information about the Mineral Resources and Exploration Results, as well as the Competent Persons' statements. All persons should consider seeking appropriate professional advice in reviewing the document and all other information with respect to the Company and evaluating the business, financial performance and operations of the Company. Neither the provision of the document nor any information contained in the document or subsequently communicated to any person in connection with the document is, or should be taken as, constituting the giving of investment advice to any person.

Forward-looking statements

This document may contain certain forward-looking statements. Such statements are only predictions, based on certain assumptions and involve known and unknown risks, uncertainties and other factors, many of which are beyond the Company’s control. Actual events or results may differ materially from the events or results expected or implied in any forward-looking statement. The inclusion of such statements should not be regarded as a representation, warranty or prediction with respect to the accuracy of the underlying assumptions or that any forward looking statements will be or are likely to be fulfilled. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this document (subject to securities exchange disclosure requirements). The information in this document does not take into account the objectives, financial situation or particular needs of any person. Nothing contained in this document constitutes investment, legal, tax or other advice.

Competent Persons Statement

The information in this report that relates to Mineral Resource estimates is based on information reviewed by Tim McManus who is a Member of the Australasian Institute of Mining and Metallurgy. Mr McManus has sufficient experience which is relevant to the style of mineralisation and type of deposit and to the activity which he is undertaking 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 (the JORC Code)”. Mr McManus consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.

ANNUAL REPORT For the year ended 30 June 2019

==> picture [108 x 40] intentionally omitted <==

CORPORATE GOVERNANCE STATEMENT

The Board is committed to achieving and demonstrating the highest standards of corporate governance. As such, Bass Metals Ltd and its Controlled Entities (‘the Group’) have adopted the third edition of the Corporate Governance Principles and Recommendations which was released by the ASX Corporate Governance Council on 27 March 2014 and became effective for financial years beginning on or after 1 July 2014.

The Group’s Corporate Governance Statement for the financial year ending 30 June 2019 is dated as at 30 June 2019 and was approved by the Board on 25 September 2019. The Corporate Governance Statement is available on the company’s website at www.bassmetals.com.au.

AI assistant

GREENWING RESOURCES LTD — Annual Report 2019

65029_rns_2019-09-24_c3d4317d-168b-4608-ae6c-c67c30fd8ee4.pdf

Annual Report

TABLE OF CONTENTS

CORPORATE DIRECTORY

DIRECTORS

COMPANY SECRETARY

CHIEF EXECUTIVE OFFICER

REGISTERED OFFICE

LEGAL ADVISORS

SHARE REGISTRY

AUDITORS

STOCK EXCHANGE LISTINGS

CHAIRMAN’S REVIEW

Dear Shareholders,

MINERAL RESOURCE STATEMENT

DIRECTORS’ REPORT

Directors

DIRECTORS’ REPORT

DIRECTORS’ REPORT

COMPANY OVERVIEW

PRINCIPLE ACTIVITIES

DIRECTORS’ REPORT

SIGNIFICANT CHANGE IN STATE OF AFFAIRS

Issue of Share Capital

Issue of Convertible Notes

DIRECTORS’ REPORT

DIRECTORS’ REPORT

Community

DIRECTORS’ REPORT

Stage 1: Completion and Preparation for Stage 2

DIRECTORS’ REPORT

REVIEW OF OPERATIONS

Stage 3: Expandable graphite production and technologies

Exploration

Mahefedok graphite deposit

DIRECTORS’ REPORT

Andapa graphite prospect

Millie’s Reward Lithium Project

DIRECTORS’ REPORT

REVIEW OF OPERATIONS

Tasmanian operations

Management and Divestment

Environmental regulation

DIRECTORS’ REPORT

Meetings of Directors

Likely developments and expected results

Shares issued during or since the end of the year as a result of exercise of options

Performance rights issued

DIRECTORS’ REPORT

DIRECTORS’ REPORT

Events arising since the end of the reporting period

Indemnities given to, and insurance premiums paid for, auditors and officers

Insurance of officers

Indemnity of auditors

DIRECTORS’ REPORT

Auditors Independence Declaration

Proceedings on behalf of the group

DIRECTORS’ REPORT

Remuneration Report (Audited)

Remuneration Policy

Non-Executive Directors

DIRECTORS’ REPORT

Remuneration Report (Audited)

Executives

Valuation methodology

DIRECTORS’ REPORT

Remuneration Report (Audited)

DIRECTORS’ REPORT

Remuneration Report (Audited)

Details of Key Management Personnel

Executive Director

Related Party Transactions

DIRECTORS’ REPORT

Remuneration Report (Audited)

Employment Contracts

(i) Tim McManus, Chief Executive Officer (“CEO”) of Bass Metals Limited

Long Term Incentives – Performance Rights

Long Term Incentives- Unlisted Options

GREENWING RESOURCES LTD Annual Report 2019