HARTSHEAD RESOURCES NL

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(formerly Ansila Energy NL) ACN 150 624 169

Annual Financial Report for the year ended 30 June 2021

CORPORATE DIRECTORY

DIRECTORS

STOCK EXCHANGE LISTING

Mr Bevan Tarratt Non-Executive Chairman Mr Christopher Lewis Chief Executive Officer ASX Code – HHR Dr Andrew Matharu Chief Financial Officer Mr Nathan Lude Executive Director SHARE REGISTRY

Australian Securities Exchange Limited ASX Code – HHR

Computershare Investor Services Pty Limited Level 11, 172 St Georges Terrace PERTH WA 6000 Telephone: 1300 850 505 (within Australia) +61 3 9415 4000 (outside Australia) Website: www.investorcentre.com

COMPANY SECRETARY

Mr Matthew Foy

PRINCIPAL AND REGISTERED OFFICE

Level 1, 89 St Georges Terrace

PERTH WA 6000 Telephone: +61 8 9226 2011 AUDITOR Facsimile: +61 8 9226 2099 BDO Audit (WA) Pty Ltd Web: www.hartshead-resources.com.au 38 Station Street Email: [email protected] SUBIACO WA 6008

CONTENTS
	PAGE
Corporate Directory	2
Chief Executive Officer - Review of Activities	3
Directors’ Report	4
Auditor’s Independence Declaration	24
Consolidated Statement of Profit or Loss and Other Comprehensive Income	25
Consolidated Statement of Financial Position	26
Consolidated Statement of Changes in Equity	27
Consolidated Statement of Cash Flows	28
Notes to the Consolidated Financial Statements	29
Directors’ Declaration	61
Independent Auditor’s Report	62
Additional Information	66

Hartshead Resources NL (ACN 150 624 169)

CHIEF EXECUTIVE OFFICER - REVIEW OF ACTIVITIES

The last twelve months have been a standout period for Hartshead Resources NL. The company has become the owner and operator of a portfolio of gas field development and exploration opportunities in the southern part of the North Sea on the United Kingdom continental shelf. This has delivered a material resource base with tangible value, which the company is now focused on monetising in order to deliver that value to our shareholders.

The Phase I development of 217 Bcf[1] of gas provides Hartshead with a platform to secure gas transportation and processing agreements and reach first gas production. Phases II and III add significantly to the overall project, delivering cumulatively almost one half of a trillion cubic feet (0.5 Tcf) of gas resources, of which over 350 Bcf is already discovered resources ready for development.

Through the expertise and commitment of our team we are already delivering on the Phase I gas field development work program. Greenfield development options have been assessed, detailed subsurface work has been carried out and discussions are ongoing with owners of nearby infrastructure. All of this work is focused on the goal of getting our gas molecules to market in the fastest and most efficient way possible.

Hartshead’s people and portfolio, when combined with the support of our shareholders and stakeholders, will enable the company to grow as a responsible and safe European energy business that will deliver much needed natural gas to a heavily import dependant UK market. Increased consumption of clean energy, a reduction in burning of coal for electricity, accelerating electrification of transport and homes, moving toward hydrogen based energy systems and reducing emissions and energy use are all supported by natural gas as a transition fuel. I am proud that Hartshead will play its part in the United Kingdom’s journey to a Net-Zero future.

Much has been achieved in the last few months since the transaction in February of 2021 which delivered the UK gas portfolio to the business. However, the outlook for the next year promises further milestones and achievements as we remain busy and committed to adding value to our portfolio for our shareholders.

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Chris Lewis

30 September 2021

1 Volumetric estimates are from Oilfield Production Consultants (OPC) Ltd, Independent Competent Persons Report (CPR) entitled “Contingent Resources Review and Audit (Victoria and Viking Wx)” dated October 2020.

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

The Directors of Hartshead Resources NL ( Company or Hartshead ) and the entities it controls ( Consolidated Entity or Group ) present their report for the financial year ended 30 June 2021.

REVIEW OF OPERATIONS

OUTLOOK FOR 2022

HARTSHEAD HAS AN ACTIVE 2022 PERIOD AHEAD AS IT COMPLETES THE PHASE I PROJECT FIELD DEVELOPMENT PLANNING CONCEPT SELECT STAGE, PROGRESSES THE PHASE II ASSETS TO DEVELOPMENT PLANNING DECISION AND FINALISES THE PHASE III PROSPECT INVENTORY.

The following activities being conducted during the next reporting period are:

PHASE I ACTIVITIES

Concept Select Report submission and approval
Updated audit of gas Resources/Reserves (Competent Persons Report (CPR))
Identification of preferred 3rd party host for gas transportation and processing
Heads of Agreements with 3rd party host with key commercial terms
Entry into detailed engineering and well planning
Begin preparation of Final Field Development Plan
Commence environmental surveys and preparation of Environmental Statement
Commence Final Investment Decision (FID) planning and associated finance structuring

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Figure 1. Provisional Phase I timetable and key milestones

PHASE II & PHASE III ACTIVITIES

3D seismic reprocessing of existing datasets
Entry into Phase II Field Development Planning (Concept Select Stage)
Phase III exploration review
Finalise Phase III exploration prosect inventory
Commencement of exploration well planning
Updated CPR audit of revised Contingent and Prospective Resources

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

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Figure 2. Provisional Phase II timetable and key milestones

ENERGY TRANSITION

As a responsible and safe European focused energy business Hartshead is committed to its role in the UK’s energy transition and to ensuring that the Company positively contributes to the UK’s 2050 Net Zero target. As the Company progresses its Phase I development investors and other stakeholders will see Hartshead report on specific initiatives to develop its assets in a manner which mitigates carbon emissions and any environmental impact.

Hartshead is currently examining a number of options to develop its Phase I assets in a lower carbon setting as part of the Concept Select program and will report further on these initiatives throughout 2022.

ESG AND STAKEHOLDER ENGAGEMENT

Hartshead recognises the importance of its environmental and social responsibilities, which together with its compliance to the latest ASX guidance and reporting standards on corporate governance, are the basis of the Company’s Environmental, Social and Governance (ESG) strategy.

The Company has recently undertaken a review and update of all of its policies and procedures; including its corporate governance statement and adoption of the latest guidance issued by the ASX Corporate Governance Council. At the UK operating level a new Business Management System (BMS) and Safety and Environmental Management System (SEMS) has been implemented with new policies and procedures covering operations, risk, management and all aspects of HSE.

Hartshead has multiple stakeholders, in addition to its shareholders, requiring a level of engagement which is integral and critical to its business in the UK North Sea. The Offshore Petroleum Regulator for Environment and Decommissioning (OPRED), part of the UK Government’s Department for Business, Energy and Industrial Strategy (BEIS), working with the UK Oil & Gas Authority (OGA), are key stakeholders who interface with Hartshead on matters relating to the stewardship and regulation of Harthead’s Seaward Production License P2607. OPRED and the OGA play key roles in environmental matters relating to the Company’s License and this has a particular importance given the UK Government’s 2050 Net Zero target. As the Company progresses its Phase I field development, carrying out environmental surveys and preparing an environmental statement, it will interface with OPRED and the OGA. This work will mark critical milestones in journey to the execution of a field development plan and ultimately first gas.

OPERATIONAL REVIEW

SEAWARD PRODUCTION LICENSE P2607, OFFSHORE UNITED KINGDOM

(HARTSHEAD RESOURCES 100% AND OPERATOR)

Hartshead’s Seaward Production License P2607, formally awarded in January 2021, with an effective date of 1 December 2020, as part of the UK 32[nd] Offshore Licensing Round, covers five contiguous blocks (48/15c, 49/6c, 49/11c, 49/12d and

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

49/17b) located in the Southern North Sea ( Figure 3 ) with four existing discoveries totalling 354 Bcf[2] of 2C Contingent Resources.

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Figure 3. Location of the Hartshead Resources Seaward License P2607 in the Southern Gas Basin, United Kingdom

A multi-phased development of the four existing gas discoveries ( Figure 4 ) has been planned. The initial phase (Phase I) is already progressing rapidly with the selection of a preferred development concept following which a preliminary field development plan (FDP) will be prepared. It is anticipated the final Concept Select Report will be submitted to the UK Oil & Gas Authority (OGA) in Q2 2022. The second phase (Phase II) requires additional subsurface work before the anticipated commencement of development planning in 2022.

Phase I : Victoria and Viking Wx fields with 217[1] Bcf of audited 2C Contingent Resources

Phase II : Audrey NW and Tethys North fields with 139[2] Bcf of 2C Contingent Resources

Integral to the field development project is reaching commercial agreements with third party host facility and infrastructure owners for the transportation of gas to onshore processing facilities and sales point and is central to unlocking the value of the Victoria and Viking Wx fields. These discussions have commenced and are ongoing with multiple third parties.

The development project management team was strengthened in March 2021, bringing onboard a number of highly experienced personnel with a proven track record of delivering UK Southern Gas Basin projects.

Jeff Barnes – Project Developments Manager (40 years’ upstream and Southern Gas Basin experience)
Stephen Roser – Commercial Manager (30 years’+ commercial upstream experience)
Adam King – Contracts and Procurements Manager (30 years oil & gas sector experience)

The project management team now encompasses the disciplines of subsurface, drilling & completions, facilities, pipelines, HSE and commercial analysis which are all required to evaluate and select the optimal development concept.

2 Hartshead Resources management estimates.

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

In addition to the Phase I and Phase II gas field developments, the awarded license area also contains a Phase III exploration portfolio with 141 Bcf[2] of 2U Prospective Resources in two drill-ready exploration prospects with the potential for further exploration upside.

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Figure 4. Hartshead Resources Seaward License P2607 holds multiple gas fields and prospects

In June 2021 Hartshead awarded a number of Phase I Concept Select geoscience and engineering contracts as part of the field development planning for the Victoria and Viking Wx fields. The contracts were awarded following a technical and commercial bid evaluation process and cover the following disciplines:

Xodus Group - Subsurface Geology & Geophysics;
Petrofac – Pipelines, Facilities, Safety and Environmental;
Fraser Well Management – Well Construction ;
Fenix Consulting Delft BV - Frac Modelling and Design.

Combined with the Phase I development project management team, these contractors are key to delivering the Phase I field development Concept Select Report and the commercial agreements with third party host facility and infrastructure owners to monetise gas volumes from the Victoria and Viking Wx fields.

In addition to these contracts, Darrell Mandiwall, was appointed as Lead Reservoir Engineer to undertake detailed dynamic reservoir simulation, integrated asset modelling and act as interface between various disciplines within the Concept Select project; particularly those of subsurface and development well drilling.

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

UK GAS MARKETS

Structural supply-side constraints in liquified natural gas cargoes, limited storage inventories and reduced deliveries of piped gas from Norway and Russia during 2021 continue to dominate European gas markets. This market tightness has been reflected in the recent UK front month price reaching in excess of 180 pence per therm[3] (p/therm) in September 2021 and a near-term NBP futures (Jan 2022 contract) of circa 190 p/therm compared to 47.5 p/therm at the time of the acquisition of HRL in February 2021. The UK gas futures also points to a winter 2024/25 price approaching 60 p/therm. Concerns over the supply-side limitations have also been reflected in carbon credits pricing with European benchmark carbon contracts (EU ETS)[3] currently trading at over €60 per tonne. Hartshead’s internal economic evaluation of the Phase I development is based on a gas price assumption of 46 p/therm highlighting the potential for considerable economic upside should market conditions persist.

NEW VENTURES

The role of the UK Southern Gas Basin in the UK’s energy transition provides a fertile arena for both asset and corporate transactions and new business opportunities for incumbents such as Hartshead. The Company’s new ventures strategy is focused on specific Southern Gas Basin growth opportunities which complement the existing portfolio and provide exposure to discovered resources where commercial and development investment and work is required to deliver the full value of the assets.

Hartshead’s team, contractor network, and position as a gas development company already active in the Southern Gas Basin, puts it at a significant advantage to other companies. Leveraging this position, Hartshead will seek out opportunities where value is created or enhanced by proximity to the planned Hartshead Phase I & II infrastructure. In addition, Hartshead’s experience, knowledge and processes will enable it to replicate the work ongoing in Seaward Production License P2607 in order to unlock the value of discovered gas pools in other parts of the basin.

CORPORATE & FINANCIAL

ACQUISITION OF HARTSHEAD RESOURCES LTD (HRL)

The 2021 financial year was dominated by the award of Seaward Production License P2607 in the UK Southern Gas Basin to HRL by the UK OGA, the subsequent transformational acquisition of HRL by Hartshead and associated capital raise.

On 3 September 2020 a trading halt in the Company’s securities on the ASX was requested by the Company following an announcement by the OGA with respect to the UK 32[nd] Offshore Licensing Round. This trading halt was followed by a voluntary suspension in the trading of the Company’s shares on the ASX pending an announcement regarding a material investment and associated capital raise. On 14 December 2020 Hartshead announced that it had reached an agreement to acquire the remaining 78.4% interest in HRL that Hartshead did not already own in an all share deal aiming to create a new UK North Sea gas development Company. The Company issued a total of 1,000,000,000 new ordinary shares to the HRL vendors as consideration in the transaction, which were subject to a 12-month voluntary escrow arrangement and in the case of the related parties to an ASX compliant 12-month escrow.

FUNDING

A Placement for $7.0 million at a placing price of $0.025 per share, via the issue of 320,000,000 new ordinary shares to professional and sophisticated investors, was also announced to fully fund work commitments of Phase I operations through to preliminary FDP submission. The transaction was approved by shareholders at the Company’s Annual General Meeting, held on 29 January 2021, and completed on 3 February 2021 with an oversubscribed Placement to $8.0 million driven by demand from a UK institutional fund manager. The Company’s shares re-commenced trading on 3 February 2021 contemporaneously with the completion of the HRL transaction.

3 Source: InterContinental Exchange (ICE).

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

CORPORATE ACTIONS

The board resolved that significant and materiality of the HRL acquisition, coupled with the Company’s new strategic direction as a UK North Sea gas developer, merited changing the Company’s name to Hartshead Resources NL. At a General Meeting held on 21 May 2021, shareholder approval was given for the Company officially change its name to Hartshead Resource NL with the Australian Securities and Investments Commission (ASIC) effective from 27 May 2021 with the Company ASX ticker code changing from ASX:ANA to ASX:HHR.

DIRECTORATE CHANGES

On completion of the HRL transaction existing Executive Directors, Mr Christopher Lewis, and Dr Andrew Matharu, were appointed as Chief Executive Officer and Chief Financial Officer, of Hartshead, respectively.

In December 2020 it was announced that Mr Matthew Foy had been appointed as the new Company Secretary. Mr Foy is a professional Company Secretary with over 15 years’ experience facilitating public company compliance with a core focus on ASX Listing Rules and operational and governance disciplines.

DIVESTMENTS

On 1 June 2021, Hartshead, through its wholly owned subsidiary, Gora Energy Australia Pty Ltd (GEA), announced its withdrawal from its 35% interest in the Gora concession (Gora), onshore Poland. This withdrawal completes a strategic exit of Hartshead from onshore Poland.

PERFORMANCE RIGHTS

On 12 February 2021, the Company issued 1,000,000 fully paid ordinary shares following receipt of notices of exercise from holders of performance rights that have vested following the satisfaction of a performance milestone.

On 1 June 2021 the Company issued a total of 45,000,000 Performance Rights, subject to vesting conditions, to key members of the Hartshead UK project management team, who are not Directors, pursuant to the Company’s Employee Incentive Securities Plan.

MINORITY INVESTMENTS

Hartshead remains a holder of 69,637 shares in the capital of Gemini Resources Limited (GRL) (carrying value of $207,465), equating to 2.1% ownership in GRL as a result of the automatic conversion of the exclusivity fee payment (£250,000) at completion of the transaction with GRL announced in September 2019.

With 102,387,595 ordinary shares and an option on a further 10,611,411 shares, representing a total of 14.7% of the issued share capital and voting rights in SSH Group Limited (formerly Jacka Resources Limited) (SS H ), Hartshead was the SSH’s largest shareholder at the time of its removal from the ASX Official List on 21 September 2020.

Following its ASX delisting SSH acquired Site Service Holdings Group Limited (SSH Group) with the intention to re-list on the ASX via an IPO and complete a capital raise. Following a pre-IPO capital raise for IPO expenses and a share consolidation Hartshead’s holding in SSH Group was reduced to 102,387 shares with SSH Group recently filing an IPO Prospectus, raising $6.25 million and commencing trading on 17 September 2021.

TREASURY

Hartshead’s closing cash balance at 30 June 2021 was $6.9 million with the Company holding an additional ~$207K in financial investments.

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

PETROLEUM TENEMENTS HELD AS AT 30 JUNE 2021

				% Interest	Tenement	Location
Held at	30	June	2021	100%	Seaward Production License P2607	Offshore United Kingdom
				100%4	Nkembe Block	Offshore Gabon
				100%5	Ambilobe Block	Offshore Madagascar

PETROLEUM REPORTING STATEMENTS

SOUTHERN NORTH SEA LICENSE P2607 (UNITED KINGDOM) – CONTINGENT AND PROSPECTIVE RESOURCES

Please refer to the qualified person’s statement relating to the reporting of contingent and prospective resources on Hartshead Resources Southern North Sea License P2607 in Harthead’s ASX Announcement dated 14 December 2020. The Company is not aware of any new information or data that materially affects the information about the contingent resource and prospective resource estimates included in this announcement and all the material assumptions and technical parameters underpinning those estimates in this announcement continue to apply and have not materially changed.

Contingent resources reported herein have been estimated and prepared using the probabilistic method.

	Contingent Resources (Bcf)
Phase I Projects	1C 2C 3C
Victoria 49/17b	84 125 177
Viking Wx 49/17b	62 90 124
Combined6 49/17b	161 217 285

Contingent Resources (Bcf)	Contingent Resources (Bcf)	1C 2C 3C GCos
Phase II	49/6c, 49/11c Tethys North	14 39 70 100%
	48/15c Audrey NW	35 100 387 100%
Prospective Resources7		P90 P50 P10 GCoS
Phase III Exploration	49/17b Vixen SW	29 56 94 50%
	49/17b Vixen SE	43 85 142 30%

4 Hartshead’s interest is subject to the right of the State of Gabon to participate in any development for up to a 20% interest under the Nkembe PSC.

5 Subject to relinquishment as per the terms of the Ambilobe PSC.

6 Volumes combined stochastically to give portfolio volume.

7 Prospective resources are estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) and relate to undiscovered accumulations. These prospective resources estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

Competent Persons Statement

Hartshead has presented the Contingent Resource and Prospective Resource information in this document in accordance with the ASX Listing Rules and the 2007 Petroleum Resources Management System published by the Society of Petroleum Engineers (SPE-PRMS). The Contingent Resource estimates and Prospective Resource estimates presented in this document were originally disclosed to the market in an announcement released 14 December 2020. Hartshead confirms that it is not aware of any new information or data that materially affects the information included in the aforesaid market announcement and that all the material assumptions and technical parameters underpinning the estimates in the aforesaid market announcement continue to apply and have not materially changed. The information in this document that relates to Contingent Resource information in relation to the Phase I Victoria and Viking-Wx fields is based on information compiled by technical employees of independent consultants, Oilfield Production Consultants Ltd, which information was subsequently reviewed by Mr Christopher Lewis. The information in this document that relates to Contingent Resource information in relation to the Phase Il Audrey NW and Tethys North fields and the Prospective Resource information in relation to the Vixen SW and Vixen SE prospects is based on information compiled by Mr Christopher Lewis and information complied by technical consultants contracted to Hartshead which has been subsequently reviewed by Mr Christopher Lewis. Mr Lewis has consented to the inclusion of such information in this document in the form and context in which it appears and the resources information in this report is based on, and fairly represents, information and supporting documentation reviewed by, or prepared under the supervision of, Mr Christopher Lewis. Mr Lewis is a Director of Hartshead and has a BSc from the Imperial College, University of London and is a member of The American Association of Petroleum Geologists (AAPG) and the European Association of Geoscientists and Engineers (EAGE). Mr Lewis is qualified in accordance with the requirements in ASX Listing Rule 5.41.

RISK MANAGEMENT AND CORPORATE GOVERNANCE

The Board of Hartshead are committed to conducting its business in accordance with a high standard of corporate governance commensurate with its size, operations, and the industry within which it participates. The Directors of Hartshead are responsible for corporate governance of the Company and support the principles of the ASX Corporate Governance Council’s Principles and Recommendations (4[th] edition – February 2019) published by the ASX Corporate Governance Council.

The Company’s Corporate Governance Statement as at 30 September 2021 was approved by the Board on 29 September 2021. The Company’s Corporate Governance Statement can be viewed on the Company’s website www.hartsheadresources.com.au under the Corporate menu tab.

In addition, following completion of the HRL transaction, the Company undertook a review of all of its Corporate Governance policies, including Anti-Bribery & Corruption, Statement of Values and the Whistleblower Policy, to ensure that they remained current and compliant.

EVENTS AFTER THE REPORTING PERIOD

Hartshead continues to advance its Phase I Concept Select operations and has provided the market with timely updates regarding the progress of its component workstreams; namely subsurface, frac modelling & design, development well planning, production facilities planning, commercial gas transportation and Quality, Health, Safety and Environment (QHSE). All of these workstreams have achieved material operational progress during the reporting period.

On 30 August 2021 the Company reported the completion of the Phase I Viking Wx field geo-cellular model by Xodus Group resulting in the identification of an additional 112 Bcf of GIIP (gas-initially-in-place) and a revised Viking Wx volume of 368 Bcf – a 43% increase from previous estimates by Hartshead and within the CPR (dated October 2020).

The Company also announced that a Greenfield Concept Select report had been received from Petrofac identifying a dual platform development as the optimum development concept for Victoria & Viking Wx gas fields. This development concept reduces drilling risk relative to a single platform development whilst simultaneously yielding superior economic returns. Importantly, discussions are progressing with third party infrastructure hosts to identify the optimal gas transportation route from a dual platform development of the Phase I assets.

On 1 September 2021 the Company announced that it had reached agreement with the vendors of HRL for the extension of their voluntary escrow period for a further 12 months, from 3 February 2022 to 3 February 2023. The extended escrow

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

period applying following expiry of the current escrow period (3 February 2022) is the earlier of 3 February 2023 or until such time as one of the events listed below occurs:

there is a transaction involving a joint venture, farm-out or sale of the Company's 2P Reserves contained within the Phase I and/or Phase II assets for at least US$3 per boe; or
the Company achieves a listing on the AIM or London Stock Exchange (LSE) with an associated debt instrument, equity raising and/or vendor/off-taker financing of a least $10 million.

In the opinion of the Directors, no other event of a material nature or transaction, has arisen since year end and the date of this report that has significantly affected, or may significantly affect, the Company’s operations, the results of those operations, or its state of affairs.

FINANCIAL PERFORMANCE

The Group made a net loss after tax of $6,013,144 for the year ended 30 June 2021 (30 June 2020: loss of $467,430).

At 30 June 2021, the Group had net assets of $6,767,917 (30 June 2020: $123,284) and cash assets of $6,899,356 (30 June 2020: $148,784).

PRINCIPAL ACTIVITIES

Hartshead is an Australian-listed oil and gas exploration and development company. The Company has an interest in the Seaward Production License P2607, offshore United Kingdom, the Nkembe block, offshore Gabon and the Ambilobe block, offshore Madagascar. The Company’s strategy is to extract value from the Company’s assets and to build a diversified portfolio of assets over time.

Other than those already noted in the report, there were no other significant changes in the nature of these activities during the year.

INFORMATION ON DIRECTORS

The following information is current as at the date of this report.

INFORMATION ON DIRECTORS The following information is current as at the date of this report.	INFORMATION ON DIRECTORS The following information is current as at the date of this report.
Mr Bevan Tarratt,Non-Executive Chairman
BBus
Appointment date	24 May 2018
Experience and expertise	Mr Tarratt has an extensive background in the accounting industry primarily focused
	on small cap resource companies. This experience has allowed Mr Tarratt to develop
	an in-depth understanding of the resource sector within Western Australia and
	globally, allowing Mr Tarratt to systematically evaluate project and corporate
	opportunities. Mr Tarratt has extensive equity capital markets experience with
	Paterson’s Securities Ltd.
Directorships held in other	Current directorships
ASX listed entities	None
	Former directorships
	- Fenix Resources Ltd – from August 2015 to December 2019
	- Protean Energy Limited – from June 2007 to December 2020
	- SSH Group Limited – from August 2018 to September 2021
Committee Memberships	None
Interest in shares, options,	Fully paid ordinary shares 1,895,358
performance rights	Partly paid shares 1,075,000
	Performance rights 7,500,000

Mr Chris Lewis , Executive Director and Chief Executive Officer BSc

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

Appointment date 23 September 2019 (appointed Chief Executive Officer on 3 February 2021)

Experience and expertise Mr Lewis is a geophysicist with over 28 years’ experience in the oil and gas industry having worked for major E&P companies, junior and small cap companies and service companies and was the Chief Executive Officer of Hartshead Resources Limited. Over the last 17 years Mr Lewis has held a variety of executive and senior management positions, has managed oil and gas operations in Europe and Africa and has been instrumental in the start-up and rejuvenation of multiple small companies.

Mr Lewis has been involved in multiple, small oil and gas ventures including successful exits from:

Zeta Petroleum: Built a portfolio of assets in Romanian and sold to GMI Limited (CEO: 2005-2009);
Centric Energy: Awarded license in the Kenya Tertiary Rift Basin, farmed out to Tullow Oil and then sold to Africa Oil (VP Exploration: 2010);
Lion Petroleum: The company had two blocks onshore Kenya and was successfully reversed into TSX listed Taipan Resources (VP Exploration: 2011);
Black Star Petroleum: Awarded exploration licenses offshore Guinea Bissau and Namibia and sold company to Impact Oil and Gas (Co-Founder: 20132014).

Mr Lewis’s technical strengths are in exploration and development subsurface management and delivering effective and valuable sub-surface projects. Commercially he has been involved in license applications, negotiations with government bodies, new ventures transactions and capital raising for a variety of organisations

Directorships held in other	None
ASX listed entities
Committee Memberships	None
Interest in shares, options,	Fully paid ordinary shares	211,249,233
performance rights	Performance rights	8,089,161

Dr Andrew Matharu , Executive Director and Chief Financial Officer

BEng(Hons), PhD, CEng

Appointment date 23 September 2019 (appointed Chief Financial Officer on 3 February 2021) Experience and expertise Dr Matharu has over 26 years’ experience in the oil and gas industry and equity capital markets having commenced his career as a Petroleum Engineer with Chevron and Kerr McGee in the UK North Sea and was the Chief Financial Officer of Hartshead Resources Limited.

Following a move into investment banking he focused on oil & gas equity research and corporate finance within roles at Cazenove, Bridgewell Securities, Numis and Westhouse Securities where he advised a number of AIM listed companies.

Dr Matharu has a wide experience of financing private and publicly listed small and mid-cap companies in the oil and gas sector and also served as Vice President of Corporate Development at AIM-listed Tower Resources plc where he was involved in a series of corporate and asset transactions and capital raisings.

Andrew holds a BEng(Hons) degree in Chemical Engineering from the University of Sheffield, a PhD in Chemical Engineering from the University of Cambridge and is a Chartered Engineer.

	Chartered Engineer.
Directorships held in other	None
ASX listed entities
Committee Memberships	None
Interest in shares, options,	Fully paid ordinary shares	122,191,195
performance rights	Performance rights	8,089,161

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

Mr Nathan Lude, Executive Director

Mr Nathan Lude,Executive D	irector
BBus, Msud
Appointment date	Appointed Non-Executive Director 16 May 2016, assumed Executive role 1 May 2017
Experience and expertise	Mr Lude has broad experience working in Asset Management, Mining and the Energy
	Industry, and is well experienced in project identification and project development
	across multiple ASX listed companies.
	He is the founding Director of corporate advisory firm Advantage Management which
	specialises in business growth and project development of ASX listed companies or
	private companies aspiring to become listed. Previously Nathan worked for ATCO Gas
	Australia and has previously held Executive and Managing Director positions for various
	ASX listed companies. Nathan is currently the Chairman for ASX listed, GTI Resources.
	Since 2007 Mr Lude been involved in Asset and Fund Management and formerly
	operated a publicly unlisted business development fund. Nathan’s business network
	spreads across Australia and Asia and has strong ties with Australian broking firms,
	institutions and also Asian Investors.
	Nathan has completed a Masters of Asset Management at Bond University, a Post
	Graduate Diploma in Asset Management and has a Bachelor of Business degree.
Directorships held in other	Current directorships
ASX listed entities	- GTI Resources Limited – from July 2018
	Former directorships
	- Roto-Gro Limited – from February 2019 to June 2019
	- Frontier Resources Limited – from July 2019 to May 2020
Committee Memberships	None
Interest in shares, options,	Fully paid ordinary shares 9,072,660
performance rights	Performance rights 7,500,000

Company Secretary

Mr Matthew Foy , Appointed 11 December 2020

BCom, GradDipAppFin, GradDipACG, SAFin, AGIA, ACIS

Mr Foy is a contract Company Secretary and active member of the WA State Governance Council of the Governance Institute Australia (GIA). He spent four years at the ASX facilitating the listing and compliance of companies and possesses core competencies in publicly listed company secretarial, operational and governance disciplines

Mr Ben Secrett, Appointed 2 December 2019, resigned 11 December 2020

Mr Secrett has over 10 years’ experience providing corporate advisory, legal, risk and governance services to Australian and foreign listed and unlisted entities, having worked as a Corporate Lawyer and a Principal Adviser in ASX Listings Compliance. He has a comprehensive knowledge of the Corporations Act, ASX listing rules, the JORC Code and the Petroleum Resource Management System, and extensive experience in IPOs and capital raisings, backdoor listings, transaction structuring, and corporate governance and compliance. Mr Secrett has qualifications in economics, law and corporate governance.

Directors’ Meetings

The table sets out the number of Directors’ meetings (including meetings of committees of the Board of Directors of Hartshead) held during the financial year, which each Director of the Company was eligible to attend, and the number of meetings attended by each Director of the Company (while they were a Director or committee member).

Directors	Board of Directors
	Held Attended
B Tarratt	5 5
N Lude	5 5
A Matharu	5 5
C Lewis	5 5

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

Audit Committee

At the date of this report, the Company does not have a separately constituted Audit Committee as all matters normally considered by an audit committee are dealt with by the full Board.

Remuneration and Nomination Committee

At the date of this report, the Company does not have separately constituted Remuneration and Nomination Committees and as such, no separate committee meetings were held during the year. All resolutions made in respect of remuneration and nomination matters were dealt with by the full Board.

INDEMNIFYING OFFICERS AND AUDITOR

During the financial year, the Company paid a premium in respect of a policy insuring the Company’s Directors, Secretaries, Executive Officers and any related body corporate against a liability incurred as such a Director, Secretary or Officer to the extent permitted by the Corporations Act 2001 . The policy of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Company has entered into Deeds of Indemnity, Insurance and Access with the Company’s Directors, Secretary, and Executive Officers.

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

The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor. During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity.

DIVIDENDS AND DISTRIBUTIONS

No dividends or distributions have been declared, recommended, provided for or paid in respect of the financial year or prior financial year.

OPTIONS OVER UNISSUED SHARES

The Company has the following options on issue as at the date of this report and has not issued any shares as a result of the exercise of options during or since the end of the reporting period.

Number	Exercise Price	Expiry Date	Listed / Unlisted
20,000,000	$0.04	31 December 2022	Unlisted

CHANGES IN STATE OF AFFAIRS

There were no other significant changes in the state of affairs of the Consolidated Entity that occurred during the financial year not otherwise disclosed in this report or the financial statements.

PROCEEDINGS ON BEHALF OF COMPANY

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

No proceedings have been brought or intervened in on behalf of Hartshead with leave of the Court under section 237 of the Corporations Act 2001 .

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

The Company intends to continue its present range of activities during the forthcoming year. In accordance with its strategy, the Company may participate in exploration and appraisal wells and new projects and may grow its exploration portfolio by farming into or acquiring new exploration licenses. There are no likely developments of which the Directors are aware other than that disclosed in this report which could be expected to significantly affect the results of the Company’s operations in subsequent financial periods not otherwise disclosed in this report.

REMUNERATION REPORT (Audited)

The Directors of Hartshead Resources NL ( Company or Hartshead ) present the Remuneration Report of the Company and the entities it controlled ( Consolidated Entity or Group ) for the year ended 30 June 2021. The report outlines the remuneration arrangements for the Company's key management personnel ( KMP ) in accordance with the requirements of the Corporations Act 2001 and its Regulations.

This report is presented in the following sections:

Introduction
Governance
Key Management Personnel
2021 Remuneration
Remuneration related to Performance
Non-Executive Directors’ Remuneration Structure
Executive Service Agreements
Details of Remuneration
Share-Based Compensation
Other Transactions
Voting and Comments – 2020 Annual General Meeting

1. INTRODUCTION

Remuneration paid to Directors and Officers of the Company is set by reference to such payments made by other ASX listed companies of a similar size and operating in the oil and gas exploration industry. In addition, reference is made to the specific skills and experience of the Directors and Officers.

The objective of the Company’s reward structure is to ensure reward for performance is competitive and appropriate for the results delivered. The structure aligns individual reward with achievement of strategic objectives and the creation of value for shareholders and reflects current market practice for delivery of reward.

The Board aims to ensure that individual reward practices are aligned with the following key criteria:

competitive and reasonable, enabling the Company to attract and retain key talent;
aligned to the Company’s strategic and business objectives, and the creation of shareholder value; and
transparent.

Details of the nature and amount of remuneration of each Director, and other Key Management Personnel if applicable, are disclosed annually in the Company’s Annual Report.

2. GOVERNANCE

The Board has adopted the Formal Remuneration Committee Charter which provides a framework for the consideration of remuneration matters.

The Company did not have a separate Remuneration Committee for the full year and as such all remuneration matters are considered by the Board as a whole, with no Member deliberating or considering such matter in respect of their own remuneration.

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

REMUNERATION REPORT (Audited) (continued)

In the absence of a separate Remuneration Committee, the Board is responsible for:

Setting remuneration packages for Executive Directors, Non-Executive Directors and other Key Management Personnel; and
Implementing employee incentive and equity-based plans and making awards pursuant to those plans.

3. KEY MANAGEMENT PERSONNEL

The KMP disclosed in this report are as follows:

Executive

C Lewis – appointed 23 September 2019
A Matharu – appointed 23 September 2019
N Lude – appointed 1 May 2017

Non-Executive Directors

B Tarratt (Chairman) – appointed 24 May 2018

4. 2021 REMUNERATION

The Board remuneration policy is to ensure that packages offered properly reflect a person’s duties and responsibilities and that remuneration is competitive and attracts, retains, and motivates people of the highest quality. The Board has consciously focused on conserving funds and the remuneration policy reflects this.

During the year an independent review was undertaken by BDO to review the fixed remuneration packages of its Chief Executive Officer (CEO) and Chief Financial Officer (CFO) so as determine the appropriateness of their package to market. As a result, new contractual arrangements were entered into effective 1 June 2021.

The Board is satisfied that remuneration recommendation was made free from undue influence by members of key management personnel to whom recommendation relates.

Remuneration related to Performance

Given the Company's size, stage of development, and the need to attract and retain Directors of high calibre, whilst still maintaining cash reserves the Board may from time to time consider the issue of equity instruments to Directors, subject to shareholder approval.

The Consolidated Entity’s earnings results and shareholders’ returns for this reporting period and the previous four reporting periods, against which key management personnel remuneration and the Consolidated Entity’s remuneration principles and policies can be discussed, are detailed below.

30 June 2021 $ 30 June 2020 $ 30 June 2019 $ 30 June 2018 $ 30 June 2017 $	30 June 2021 $ 30 June 2020 $ 30 June 2019 $ 30 June 2018 $ 30 June 2017 $	30 June 2021 $ 30 June 2020 $ 30 June 2019 $ 30 June 2018 $ 30 June 2017 $	30 June 2021 $ 30 June 2020 $ 30 June 2019 $ 30 June 2018 $ 30 June 2017 $	30 June 2021 $ 30 June 2020 $ 30 June 2019 $ 30 June 2018 $ 30 June 2017 $
Revenue 6,044 - - - -
Net profit loss after income tax (6,013,144) (467,430)		-	-	-
Dividends - - - - -
Share price changes 0.016	-	-	-	-

Non-Executive Directors’ Remuneration Structure

While noting that corporate governance principles recommend that Non-Executive Directors be remunerated solely by way of fees and statutory superannuation. The annual fee is set to reflect current market levels based on the time, responsibilities and commitments associated with the proper discharge of their duties as members of the Board.

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

REMUNERATION REPORT (Audited) (continued)

Non-Executive Directors' fees and payments are reviewed annually by the Board and for the year ended 30 June 2021, is $25,000 per annum, excluding superannuation. Fees provided to Non-Executive Directors are exclusive of superannuation. There are no termination or retirement benefits paid to Non-Executive Directors (other than statutory superannuation). The aggregate amount of remuneration for Non-Executive Directors approved by shareholders at the 2014 Annual General Meeting is $400,000 per annum.

In addition, the Directors are entitled to receive additional remuneration at a rate of $1,000 per day or part thereof (or as otherwise approved by the Board) in addition to their fees for performing additional duties as requested by the Board.

Participation in equity-based remuneration schemes by Non-Executive Directors is subject to consideration and approval by the Company’s shareholders.

5. EXECUTIVE SERVICE AGREEMENTS

Remuneration and other terms of employment for key management personnel are formalised in service agreements. The service agreements specify the components of remuneration, benefits, and notice periods. Participation in the share and performance rights plans are subject to the Board's discretion. Other major provisions of the agreements relating to remuneration are set out below. Termination benefits are within the limits set by the Corporations Act 2001 such that they do not require shareholder approval.

Contractual arrangement with key management personnel

Executives – Current

Name	Effective date Term of agreement Notice period Base per annum(1) $ Termination payments
C Lewis(2), Chief Executive Officer	23-Sep-19 No fixed term 3 months 199,088 3 months
	1-Jun-21 No fixed term 6 months 398,176 6 months
A Matharu(3), Chief Financial Officer	23-Sep-19 No fixed term 3 months 199,088 3 months
	1-Jun-21 No fixed term 6 months 298,632 6 months

1 GBP:AUD exchange rate of 1.8434 as at 30 June 2021 has been used to calculate the base.

2 Mr Lewis, Executive Director, is a Director of Lewis Petroleum Consulting Limited which received Mr Lewis’s Director fees during the period.

3 Dr Matharu, Executive Director, is a Director of Firmitas Energy Advisers Limited, which received Dr Matharu’s Director fees during the period.

Agreements effective 23 September 2019 to 31 May 2021

The Company has agreed to pay Dr Matharu and Mr Lewis a guaranteed fixed retainer amount per calendar month of £9,000 which is equivalent to 80 hours of work. The retainer is payable regardless of the hours worked. Any hours worked in excess of 80 hours in any calendar month will be charged at the rate of £900 per day and will require the prior written consent of the Company. The fees payable are deemed to be inclusive of all other amounts in respect of wages, superannuation, bonuses and other costs associated.

Agreements effective 1 June 2021

The Company has agreed to pay Dr Matharu and Mr Lewis a guaranteed fixed retainer amount per calendar month equivalent to 120 hours. The retainer is payable regardless of the hours worked. Any hours worked in excess of 120 hours in any calendar month will be charged at the contractual rates. The fees payable are deemed to be inclusive of all other amounts in respect of wages, superannuation, bonuses and other costs associated.

Nathan Lude – Executive Director

Mr Lude supports the company in the areas of strategy, business development and investor relations in his role as an Executive Director of the Company. Mr Lude is entitled to receive $1,000 per day or part thereof for his Executive duties in addition to his Non-Executive Director fees.

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

REMUNERATION REPORT (Audited) (continued)

6. DETAILS OF REMUNERATION

Remuneration of KMP for the 2021 financial year is set out below:

	Short-term benefits	Short-term benefits		Post-employment benefits	Post-employment benefits	Post-employment benefits		Share-
									Total	Performance
Cash salary	Additional fees(1)	Non-cash benefit(2)		Super- annuation	Termination			based payments	remuneration	related
$	$		$	$		$		$	$	%
*Executive Directors – Current*
N Lude
25,000	186,000		1,600	20,045			-	30,038	262,683	11%
A Matharu
272,027	-		-		-		-	48,596	320,623	15%
C Lewis
328,301	-		-		-		-	48,596	376,897	13%
*Non-Executive Directors – Current*
B Tarratt
25,000	186,000		1,600	20,045			-	30,038	262,683	11%
650,328	372,000		3,200	40,090			-	157,268	1,222,886

1 Mr Lude and Mr Tarratt are entitled to receive additional remuneration at a rate of $1,000 per day or part thereof (or as otherwise approved by the Board) in addition to their fees for performing additional duties as requested by the Board.

2 Other benefits include the provision Working Directors’ Personal Accident & Sickness insurance.

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

REMUNERATION REPORT (Audited) (continued)

Remuneration of Hartshead Resources NL, KMP for the 2020 financial year is set out below :

	Short-term benefits	Short-term benefits		Post-employment benefits	Post-employment benefits	Post-employment benefits		Share-
									Total	Performance
Cash salary	Additional fees(1)	Non-cash benefit(2)		Super- annuation Termination				based payments	remuneration	related
$	$		$	$		$		$	$	%
*Executive Directors – Current*
N Lude
25,000	197,000		2,897	21,090			-	71,103	317,090	22%
A Matharu(3)
179,412	-		-		-		-	115,033	294,445	39%
C Lewis(4)
161,466	-		-		-		-	115,033	276,499	42%
*Non-Executive Directors – Current*
B Tarratt
25,000	187,500		2,897	20,188			-	71,103	306,688	23%
*Non-Executive Directors – Former*
B Lane(5)
10,417	50,000		762		5,740		-	36,925	103,844	36%
D Sanders(6)
10,417	-		762		990		-	18,463	30,632	60%
411,712	434,500		7,318	48,008			-	427,660	1,329,198

1 Directors are entitled to receive additional remuneration at a rate of $1,000 per day or part thereof (or as otherwise approved by the Board) in addition to their fees for performing additional duties as requested by the Board.

2 Other benefits include the provision Working Directors’ Personal Accident & Sickness insurance.

3 A Matharu was appointed 23 September 2019.

4 C Lewis was appointed 23 September 2019.

5 B Lane resigned 29 November 2019.

6 D Sanders resigned 29 November 2019.

Remuneration of Hartshead Resources Limited, KMP for the 2020 financial year is set out below :

During the year no fees were charged as remuneration for employment of Directors Dr Matharu and Mr Lewis.

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

REMUNERATION REPORT (Audited) (continued)

The following table sets out a reconciliation of each KMP’s relevant interest in ordinary shares and options, performance rights and retention rights to acquire shares in the Company:

KMP	Balance at start of the year	Granted / Acquired(1)	Exercised	Lapsed	Other changes	Balance at year end
*Executive - current*
N Lude
Fully paid ordinary shares	9,072,660	-	-	-	-	9,072,660
Performance rights	7,500,000	-	-	-	-	7,500,000
Options	-	-	-	-	-	-
A Matharu
Fully paid ordinary shares	5,711,247	116,479,948	-	-	-	122,191,195
Performance rights	8,089,161	-	-	-	-	8,089,161
C Lewis
Fully paid ordinary shares	5,711,247	205,537,986	-	-	-	211,249,233
Performance rights	8,089,161	-	-	-	-	8,089,161
*Non-Executive Directors - Current*
B Tarratt
Fully paid ordinary shares	1,895,358	-	-	-	-	1,895,358
Partly paid shares	1,075,000	-	-	-	-	1,075,000
Performance rights	7,500,000	-	-	-	-	7,500,000

1 On 3 February 2021, Hartshead Resources NL (formerly Ansila Energy NL), the legal parent and legal acquirer completed the acquisition of Hartshead Resources Limited. As shareholders of Hartshead Resources Limited, A Matharu and C Lewis acquired shares in Hartshead Resources NL.

7. SHARE-BASED COMPENSATION

Performance rights

During the year ended 30 June 2021, the following performance rights were granted, vested and/or lapsed to KMP:

				Number		Expense	Maximum
	Grant value(1)	Number	Balance at start of the	vested during the	Balance at end of the	recognised during the	value yet to expense
Grant date	$	granted	year	year	year	year(2)	$
N Lude -Executive Director
02-Sep-19	138,750	7,500,000	7,500,000	-	7,500,000	30,037	37,609
A Matharu -Executive Director
02-Sep-19	224,474	12,133,741	8,089,161	-	8,089,161	48,596	60,845
C Lewis –Technical Director
02-Sep-19	224,474	12,133,741	8,089,161	-	8,089,161	48,596	60,845
B Tarratt -Non-Executive Director
02-Sep-19	138,750	7,500,000	7,500,000	-	7,500,000	30,037	37,609

1 The value of performance rights is calculated as the fair value of the rights at grant date and allocated to remuneration equally over the period from grant date to expected vesting date.

2 Expense recognised reflects the portion of the vesting period, over which the expense has been recognised, that the person was a Director.

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

REMUNERATION REPORT (Audited) (continued)

8. OTHER TRANSACTIONS

During the period, the following related party transactions have occurred:

Payment of fees – Hartshead Resources NL

Dr Matharu, Executive Director, is a Director of Firmitas Energy Advisers Limited, which received Dr Matharu’s Director fees during the period. At year end the Company had an outstanding balance payable of $24,875 (30 June 2020: $16,150).

Mr Lewis, Executive Director, is a Director of Lewis Petroleum Consulting Limited which received Mr Lewis’s Director fees during the period. At year end the Company had an outstanding balance payable of $37,035 (30 June 2020: $16,150).

Purchases of services

The Group acquired the following services from entities in which the group’s key management personnel have an interest:

Corporate development and advisory services,
Project Management services,
Commercial services,
Geoscience and Engineering services, and
Share office services.

A Director, Dr Matharu is a Director of Firmitas Energy Advisers Limited. Firmitas Energy Advisers Limited have been a partner to Hartshead in providing corporate development, advisory and commercial services and support. All services provided have been on normal commercial terms and conditions. The amount recognised as an expense during the year was $80,275 (30 June 2020: $47,039).

A Director, Mr Lewis is a Director of Lewis Petroleum Consulting. Lewis Petroleum Consulting have been a partner to Hartshead in providing corporate development, advisory, project management, commercial, geoscience and engineering, services and support. All services provided have been on normal commercial terms and conditions. The amount recognised as an expense during the year was $125,554 (30 June 2020: $118,059).

A Director, Mr Nathan Lude, was a former Director and shareholder of Advantage Ventures Pty Ltd (formerly Battler Corporate Pty Ltd), which has provided office space and shared office services per a leasing arrangement with the Company on normal commercial terms and conditions. Mr Lude resigned as a Director from Advantage Ventures Pty Ltd on 14 November 2019. There was no related party expense recognised during the year (30 June 2020: $12,714 (ex GST)).

There are no other outstanding loans or other transaction arising to or from with key management personnel during the year related parties (30 June 2020: Nil).

9. VOTING AND COMMENTS - 2020 ANNUAL GENERAL MEETING

At the 2020 Annual General Meeting (AGM) held on 29 January 2021, the adoption of the remuneration report for the year ended 30 June 2020 was carried and received more than 95.8% of ‘yes’ votes. There were no comments made on the remuneration report at the Company's last AGM.

This concludes the Remuneration Report which has been audited.

AUDITOR’S INDEPENDENCE DECLARATION

The auditor’s independence declaration, as required under section 307C of the Corporations Act 2001 for the year ended 30 June 2021 has been received and can be found on page 24.

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ REPORT

NON-AUDIT SERVICES

The Board is satisfied that the provision of non-audit services during the period is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 .

The Directors are of the opinion that the services as disclosed below do not compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:

All non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and
None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as advocates for the Company or jointly sharing economic risks and rewards.

During the year ended 30 June 2021, the following amounts were paid or payable for non-audit services provided to the Group by the auditor:

Group by the auditor:
	2021 $ 2020 $
Taxation services Tax compliance services Total remuneration for taxation services Other services Remuneration advice Total remuneration for other services
	4,223 -
	4,223 -
	12,750 -
	12,750 -

BDO Audit (WA) Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001 .

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

On behalf of the Directors

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Bevan Tarratt Non-Executive Chairman

Perth, Western Australia 30 September 2021

Hartshead Resources NL (ACN 150 624 169)

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au

==> picture [77 x 30] intentionally omitted <==

DECLARATION OF INDEPENDENCE BY JARRAD PRUE TO THE DIRECTORS OF HARTSHEAD RESOURCES NL

As lead auditor of Hartshead Resources NL for the year ended 30 June 2021, I declare that, to the best of my knowledge and belief, there have been:

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

This declaration is in respect of Hartshead Resources NL and the entities it controlled during the period.

==> picture [73 x 49] intentionally omitted <==

Jarrad Prue

Director

BDO Audit (WA) Pty Ltd

Perth, 30 September 2021

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2021

CONSOLIDATEDSTATEMENT OFPROFIT ORLOSS ANDOTHERCOMPREH FORTHEYEARENDED30 JUNE2021	ENSIVEINCO	ME
	Note	2021 $ 2020 $
Income from continuing operations Interest income Total income Expenses Exploration and evaluation expenditure Depreciation expenses Administrative expenses Share-based payments expense Unrealised foreign exchange gain/(loss) Cost of listing Loss before income tax Income tax expense Loss attributable to the owners of the Company Other comprehensive income Items that may be reclassified to profit or loss Exchange differences on translation of foreign operations Items that will not be reclassified to profit or loss Changes in the fair value of financial assets at fair value through other comprehensive income (FVOCI) Other comprehensive income for the year, net of tax Total comprehensive loss for the year attributable to the owners of Hartshead Resources NL Earnings per share for loss from continuing operations attributable to the ordinary equity holders Basic and diluted loss per share (cents per share)

		6,044 -
	4 4 4 4 1 5 18	6,044 -
		(876,596) (460,022) (4,153) (840) (774,908) (6,568) (267,300) - 3,541 - (4,099,772) -
		(6,013,144) (467,430)
		- -
		(6,013,144) (467,430)
		20,364 - 10,005 -
		30,369 -
		(5,982,775) (467,430)
		(0.57) (2.80)

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

Hartshead Resources NL (ACN 150 624 169)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2021

CONSOLIDATEDSTATEMENT OFFINANCIALPOSITION ASAT30 JUNE2021
	Note	2021 $ 2020 $
Current assets Cash and cash equivalents Other receivables Total current assets Non-current assets Plant and equipment Financial assets at FVOCI Investment in associate Exploration assets Total non-current assets Total assets Current liabilities Trade and other payables Total current liabilities Total liabilities Net assets Equity Issued capital Share-based payment reserve Financial assets at FVOCI Foreign exchange reserve Accumulated losses Total equity
	6 7 12 10 11 13(a) 13(c) 13(c) 13(c) 13(b)	6,899,356 148,785 85,255 1,374
		6,984,611 150,159
		15,311 4,452 207,465 - - - 432,769 -
		655,545 4,452
		7,640,156 154,612
		872,239 31,328
		872,239 31,328
		872,239 31,328
		6,767,917 123,284
		12,950,822 590,714 267,300 10,005 - 20,364 - (6,480,574) (467,430)
		6,767,917 123,284

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

Hartshead Resources NL (ACN 150 624 169)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2021

CONSOLIDATEDSTATEMENT OFCHANGES INEQUITY FORTHEYEARENDED30 JUNE2021
	Issued Accumulated Total
	capital Reserves loss equity
	$ $ $ $
Balance at 1 July 2019 Loss for the year Other comprehensive loss for the year Total comprehensive loss for the year Transactions with owners in their capacity as owners Contributed equity Balance at 30 June 2020
	181 - - 181
	- - (467,430) (467,430) - - - -
	- - (467,430) (467,430)
	590,533 - - 590,533
	590,714 - (467,430) 123,284

Loss for the year	- - (6,013,144) (6,013,144)
Other comprehensive income for the year	- 30,369 - 30,369
Total comprehensive profit/(loss) for the year	- 30,369 (6,013,144) (5,982,775)

Transactions with owners in their capacity as
owners
Contributed equity	13,344,608 - - 13,344,608
Share issue costs	(984,500) - - (984,500)
Performance rights expense recognised during	- 267,300 - 267,300
the year

Balance at 30 June 2021	12,950,822 297,669 (6,480,574) 6,767,917

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

Hartshead Resources NL (ACN 150 624 169)

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2021

CONSOLIDATEDSTATEMENT OFCASHFLOWS FORTHEYEARENDED30 JUNE2021
	Note	2021 $ 2020 $
Cash flows from operating activities Payments to suppliers, consultants, and employees Payments for exploration and evaluation expenditure Interest received Net cash outflow from operating activities Cash flows from investing activities Plant and equipment Payments for exploration and evaluation expenditure Cash acquired on reverse acquisition Net cash inflow from investing activities Cash flows from financing activities Proceeds from issue of shares Share issue costs Net cash inflow from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the year

	15 13 13 6	(799,963) (4,560) (516,433) (438,930) 6,044 -
		(1,310,352) (443,490)
		(12,927) (2,128) 432,769 - 982,314 -
		536,618 (2,128)
		8,000,000 595,158 (484,500) -
		7,515,500 595,158
		6,741,766 149,540 148,785 - 8,805 (755)
		6,899,356 148,785

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

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2021

1. REVERSE ACQUISITION ACCOUNTING

On 3 February 2021, Hartshead Resources NL (formerly Ansila Energy NL), the legal parent and legal acquirer completed the acquisition of Hartshead Resources Limited. The acquisition did not meet the definition of a business combination in accordance with AASB 3 Business Combinations. Instead, the acquisition has been accounted for as a share-based payment by which Hartshead Resources Limited acquires the net assets and listing status of Hartshead Resources NL. Accordingly, the consolidated financial statements have been prepared as if Hartshead Resources Limited acquired Hartshead Resources NL, not vice versa as represented by the legal position. The comparative information is that of Hartshead Resources Limited for 30 June 2020. The Comparative information for the Remuneration Report and related party transactions contains both the Hartshead Resources Limited and Hartshead Resources NL.

Estimates and judgements were made in determining the accounting treatment and value of the transaction.

The impact of the group restructure on each of the primary statements is as follows:

Statement of Profit or Loss and Other Comprehensive Income

The Statement of profit or loss and other comprehensive income comprises the total comprehensive income for the year ended 30 June 2021 for Hartshead Resources Limited and the period 3 February 2021 to 30 June 2021 for Hartshead Resources NL.

The statement of profit or loss and other comprehensive income for the year ended 30 June 2020 comprises Hartshead Resources Limited only.

Statement of Financial Position

The statement of financial position as at 30 June 2021 represents the combination of Hartshead Resources Limited and Hartshead Resources NL.

The statement of financial position as at 30 June 2020 comprises Hartshead Resources Limited only.

Statement of Changes in Equity

The statement of changes in equity comprises:

The equity balance of Hartshead Resources Limited as at the beginning of the financial year (1 July 2020).
The total comprehensive income for the financial year and transactions with equity holders represents the combination of the Hartshead Resources Group.
The equity balance represents the combination of both Hartshead Resources NL & Hartshead Resources Limited

The statement of changes in equity for the year ended 30 June 2020 comprises Hartshead Resources Limited only.

Statement of Cash Flows

The statement of cashflows comprises:

The cash balance of the Hartshead Resources Limited at the beginning of the financial period (1 July 2020).

The transactions for the financial period represent the combination for Hartshead Resources Limited for a period of 12 months and Hartshead Resources NL for the period 3 February 2021 to 30 June 2021.

The cash balance represents the combination of both Hartshead Resources NL & Hartshead Resources Limited.

The Statement of cash flows for the year ended 30 June 2020 comprises Hartshead Resources Limited only.

Equity Structure

The equity structure (the number and type of equity instruments issued) in the financial statements reflects the consolidated equity structure of Hartshead Resources NL and Hartshead Resources Limited.

The comparatives reflect the equity structure of Hartshead Resources Limited only.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

1. REVERSE ACQUISITION ACCOUNTING

Earnings per share

The weighted average number of shares outstanding for the year ended 30 June 2021 is based on the weighted average number of shares of Hartshead Resources NL outstanding in the period following the acquisition. The comparative weighted average number of shares is based on the legal subsidiary's weighted average number of shares multiplied by the exchange ratio.

Deemed Consideration and Listing Expense

The purchase consideration was the issue of 1,000,000,000 shares in Hartshead Resources NL (legal parent) and was deemed to be $4,844,608 based on the below:

Hartshead Resources NL Securities on Issue Deemed issue price Deemed fair value	1,000,000,000 0.025
	4,844,608

The purchase consideration was settled via shares as follows:

Ordinary shares	Number $	Number $
	1,000,000,000 4,844,608
The transaction created a one-off non-cash expense arising from the treatment of the acquisitio NL in accordance with Australian Accounting Standards:
Deemed consideration Less: Net assets of Hartshead Resources NL at the time of acquisition Listing expense		4,844,608 744,836
		4,099,772
2. LISTING FEES

The transaction created a one-off non-cash expense arising from the treatment of the acquisition of Hartshead Resources NL in accordance with Australian Accounting Standards:

Note	2021 $ 2020 $
Listing expense on reverse acquisition of Hartshead Resources Limited 1	4,099,772 -

3. SEGMENT INFORMATION

Management has determined that the Group has four reportable segments. The first being an interest to develop and explore for gas fields in the UK North Sea in Seaward Production License P2607. Hartshead’s Seaward Production License P2607 was formally awarded in January 2021, with an effective date of 1st December 2020. The second being an interest to explore for oil in acreage known as, the Nkembe block, located at offshore Gabon. The third interest being at the Ambilobe block, located at offshore Madagascar. The fourth being an interest to appraise and explore for gas fields in acreage in Poland. This determination is based on the internal reports that are reviewed and used by the Board (chief operating decision maker) in assessing performance and determining the allocation of resources. As the Group is focused on oil and gas development and exploration, the Board monitors the Group based on actual versus budgeted development and exploration expenditure incurred by area of interest. This internal reporting framework is the most relevant to assist the Board with making decisions regarding the Group and its ongoing development and exploration activities, while also taking into consideration the results of development and exploration work that has been performed to date. During the prior period, the company was only corporate in nature as the business searches for viable tenements/operations. The Directors determined that there are no operating segments identified for the year, as a result no prior period comparative have been shown.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

3. SEGMENT INFORMATION (continued)

UK $	Poland(1) $ Gabon $ Madagascar $ Other corporate activities $ Total $
For the year ended 30 June 2021
Income from external sources
-	- - - 6,044 6,044
Reportable segment profit/(loss)(2)
(972,534)	(4,228) (1,166) (8,760) (5,026,455) (6,013,143)
Reportable segment assets(3)
2,142,332	- 44,398 6,501 5,446,925 7,640,156
Reportable segment liabilities
(320,971)	- (16,233) (396,029) (139,006) (872,239)

1 On 1 June 2021, Hartshead, through its wholly owned subsidiary, Gora Energy Australia Pty Ltd, announced its withdrawal from its 35% interest in the Gora concession (Gora), onshore Poland. This withdrawal completes a strategic exit of Hartshead from onshore Poland.

2 Other corporate activities included cost of listing expense on reverse acquisition of Hartshead Resources Limited (see Note 1).

3 Other corporate activities includes cash held of $5,221,352.

4. EXPENSES

4. EXPENSES
	2021 $ 2020 $
Loss before income tax includes the following specific items: Exploration and evaluation expenditure Polish project UK project(1) Total exploration and evaluation expenditure Share-based payments expenses Performance rights 14 Total share-based payments expenses Administrative expenses Employee benefits expense Advisory and audit fees Travel and accommodation Other expenses Total administrative expenses


	4,228 - 872,368 460,022
	876,596 460,022
	267,300 -
	267,300 -
	140,472 - 71,650 - 331 - 562,455 6,568
	774,908 6,568

1 Exploration lease acquisition costs relating to exploration provinces are initially capitalised. All other exploration and evaluation costs, are expensed to the profit or loss as incurred.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2021

4. EXPENSES (continued)

4. EXPENSES(continued)
	2021 $ 2020 $
Foreign exchange gain(2)	(3,541) -

2 Foreign exchange gain was recognised upon cash held and payments of United States dollar, Pound sterling and Euro dollar denominated balances.

5. TAXATION

5.
TAXATION

2021
$
2020
$

(a)
Income tax expense
Current tax
Deferred tax
Income tax expense
(b)
Reconciliation of income tax to prima facie tax payable
(Loss) before income tax
Income tax (benefit)at 30% (30 June 2020: 19%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable
income:
Share-based payments
Other
Deferred tax assets relating to tax losses and timing differences not recognised
Timing differences previously unrecognised now recognised
Total income tax expense
Unrecognised deferred tax assets
Deferred tax assets and liabilities not recognised relate to the following:
Tax loss
Exploration assets
Other temporary differences
Net deferred tax assets unrecognised

-
-
-
-
-
-
(6,013,143)
(460,022)
(1,803,943)
(87,404)

133,653
-
1,136,166
-

534,124
-
-
87,404
-
-
2,164,475
87,404
-
-
287,515
-
2,451,990
87,404

Significant accounting judgment

Deferred tax assets

The Group expects to have carried forward tax losses, which have not been recognised as deferred tax assets, as it is not considered sufficiently probable that these losses will be recouped by means of future profits taxable in the relevant jurisdictions. The utilisation of the tax losses is subject to the Group passing the required Continuity of Ownership and Same Business Test rules at the time the losses are utilised. Net deferred tax assets have not been brought to account as it is not probable within the immediate future that tax profits will be available against which deductible temporary difference can be utilised.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

5. TAXATION (continued)

Income taxes

The Group is subject to income taxes in Australia and overseas and at times significant judgement is required in determining the Group’s provision for income taxes. The Group estimates its tax liabilities based on the Group’s understanding of the tax law in the local jurisdiction in which it operates. During the prior period, the Group has treated the cash component with respect to the Mazagan farmout as being non-assessable based upon tax advice received from its Moroccan tax advisors. Should the final tax outcome of these matters be different from the initial assessment, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

6. CASH AND CASH EQUIVALENTS

(a) Risk exposure

Refer to Note 17 for details of the risk exposure and management of the Group’s cash and cash equivalents.

(b) Deposits at call

Deposits at call are presented as cash equivalents if they have a maturity of three months or less and include the term deposit held by the company as an office bond. Refer Note 27(m) for the Group’s other accounting policies on cash and cash equivalents. Deposits at call held with Australian banks and financial institutions and are bearing interest rates at 0.10%.

	2021 $ 2020 $
Cash at bank Deposits at call	6,859,356 148,785 40,000 -
	6,899,356 148,785

7. OTHER RECEIVABLES

The Group has no impairments to other receivables or have receivables that are past due but not impaired. Refer to Note 17 for detail of the risk exposure and management of the Group’s other receivables.

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

	2021 $ 2020 $
Other receivables Prepayments	66,523 - 18,732 1,374
	85,255 1,374

8. JOINTLY CONTROLLED OPERATIONS

At the reporting date, the Group has operator working interests in the following projects:

Project Activity	Working interest(1)
	Exploration phase Exploitation phase
	2021 % 2020 % 2021 % 2020 %
UK North Sea Development/Exploration Ambilobe block (Madagascar) Exploration Nkembe block (Gabon) Exploration Gora concession (Poland) Exploration	100 - 100 - 100 - 100 - 100 - 100(2) - - - - -

1 Working interest denotes the percentage share of costs to be borne by the Group in relation to its interests in the projects.

2 Subject to the right of the State of Gabon to participate in any development for up to a 20% interest under the Production Sharing Contract.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

9. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Financial assets at fair value through other comprehensive income (FVOCI) comprise of unlisted equity securities.

	2021 $ 2020 $
Unlisted equity securities Opening balance Assets acquired on reverse acquisition Movement in fair value Closing balance	- - 197,461 - 10,004 -
	207,465 -

On disposal of these equity investments, any related balance within the FVOCI reserve remain within other comprehensive income.

Significant accounting estimates, assumptions, and judgements

Classification of financial assets at fair value through other comprehensive income

During the prior period Hartshead purchased 102,387,595 ordinary shares and acquired an option on 10,611,411 shares for 14.7% of the total voting power in SSH Group Limited. Further, following the investment, Mr Bevan Tarratt was appointed as Non-Executive Director of SSH Group Limited in August 2018. The Company has considered the requirements of AASB 128 Investments in Associates and Joint Ventures as to whether the Company has significant influence over SSH Group Limited. As the Company has a holding of less than 20% and it is not clearly demonstrable that the Company has and/or exerts significant influence the investment has been treated as a Financial Asset at FVOCI.

As at 30 June 2021, the carrying value of the investment was nil.

Investments are designated at fair value through other comprehensive income where management have made the election in accordance with AASB 9: Financial Instruments .

Fair value for financial assets at fair value through other comprehensive income

Information about the methods and assumptions used in determining fair value is provided in Note 12.

10. EXPLORATION AND EVALUATION ASSETS

Note	2021 $ 2020 $
UK North Sea Opening balance Exploration expenditure incurred Closing balance	- - 432,769 -
	432,769 -

Significant accounting estimates and assumptions

Impairment of capitalised exploration and evaluation expenditure

The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale.

Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, costs of drilling and production, production rates, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

10. EXPLORATION AND EVALUATION ASSETS (continued)

The carrying values of items of exploration and evaluation expenditure are reviewed for impairment indicators at each reporting date and are subject to impairment testing when events or changes in circumstances indicate that the carrying values may not be recoverable. There were no impairment indicators or impairment for the year ended 30 June 2021.

Significant accounting judgement

Capitalisation of exploration and evaluation expenditure

The Group has capitalised significant exploration and evaluation expenditure on the basis that this is expected to be recouped through future successful development (or alternatively sale) of the areas of interest concerned or on the basis that it is not yet possible to assess whether it will be recouped. Refer to Note 27(l) for the Group’s accounting policy on exploration and evaluation expenditure.

11. TRADE AND OTHER PAYABLES

	2021 $ 2020 $
Trade payables Other payables	737,567 31,328 134,672 -
	872,239 31,328

All amounts recognised as trade and other payables, but not yet invoiced, are expected to settle within 12 months.

Refer to Note 17 for details of the risk exposure and management of the Group’s trade and other payables.

12. FAIR VALUE MEASUREMENTS

This note provides an update on the judgements and estimates made by the group in determining the fair values of the financial instruments since the last annual financial report.

Fair value hierarchy

To provide an indication about the reliability of the inputs used in determining fair value, the Group classifies its financial instruments into the three levels prescribed under the accounting standards. An explanation of each level follows underneath the table.

The following table presents the group's financial assets and financial liabilities measured and recognised at fair value at 30 June 2021 on a recurring basis. No such assets or liabilities were recorded at 30 June 2020.

	Level 1		Level 2	Level 3		Total
	$		$	$		$
As at 30 June 2021
Financial assets at FVOCI – Equity securities		-	207,465		-	207,465

There were no transfers between levels during the year. The Group's policy is to recognise transfers into and transfers out of fair value hierarchy levels at balance date.

The fair value of financial assets and liabilities held by the Group must be estimated for recognition, measurement and/or disclosure purposes. The Group measures fair values by level, per the following fair value measurement hierarchy:

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

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

12. FAIR VALUE MEASUREMENTS (continued)

Valuation techniques used to determine fair values

The Group did not have any financial instruments that are recognised in the financial statements where their carrying value differed from the fair value. The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The carrying amounts of cash and short-term trade and other receivables, trade payables and other current liabilities approximate their fair values largely due to the short-term maturities of these payments.

Financial assets at fair value through other comprehensive income – equity securities

Fair Value in Active Market (Level 1)

The fair value of the equity holdings held in ASX listed companies are based on the quoted market prices from the ASX on the last traded price prior to year-end.

Fair value in an inactive or unquoted market (Level 2 and Level 3)

The fair value of financial assets that are not traded in an active market is determined using valuation techniques. These include the use of a recent share price from completed or planned capital raising that provides a reliable estimate of prices obtained in actual market transactions.

13. ISSUED CAPITAL

(a) Contributed equity

13. ISSUED CAPITAL (a) Contributed equity
	2021 Securities 2020 Securities	2021 $ 2020 $
Fully paid ordinary shares Partly paid ordinary shares	1,849,772,127 166,667 5,703,550 -	12,893,786 590,714 57,036 -
		12,950,822 590,714

(i) Fully paid ordinary shares

Fully paid ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group in proportion to the number of shares held. 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. At 30 June 2021, there are no ordinary shares subject to escrow (30 June 2020: Nil).

Movement in fully paid ordinary shares

Movement in fully paid ordinary shares
	Date	Number of Securities	Issue price $	$
Balance at 1 July 2019		100		181
Subdivision of shares 1:1000	11-Jul-19	100,000	-	-
Issue of shares - placement	30-Jul-19	66,667	0.02	590,233
Balance at 30 June 2020		166,667		590,714

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

13. ISSUED CAPITAL (continued)

13. ISSUED CAPITAL (continued)
	Date	Number of Securities	Issue price $	$
Balance at 1 July 2020		166,667		590,714
Elimination of Hartshead Resources Limited share on acquisition	3-Feb-21	(166,667)		-
Hartshead Resources NL shares on acquisition	3-Feb-21	508,772,127
Consideration shares to vendors of Hartshead Resources NL	3-Feb-21	1,000,000,000	-	4,787,572
Issue of shares - placement	3-Feb-21	320,000,000	0.025	8,000,000
Share based payment - advisory fee(1)	3-Feb-21	20,000,000	0.025	500,000
Issue of shares - conversion of performance rights	12-Feb-21	1,000,000	-	-
Share issue costs				(984,500)
Balance at 30 June 2021		1,849,772,127		12,893,786

1 Share-based payment on the settlement of advisory fee, made at the value of the benefit, see Note 14(c).

(ii) Partly paid ordinary shares

Partly paid ordinary shares have an issue price of $0.20 of which $0.01 is paid. The balance of the issue price is payable at the election of the holder at any time by the issue of a payment notice in writing and delivered to the registered office of the Group. Partly paid shares participate in any dividends on the same basis as if the partly paid share were fully paid and are not listed.

Movement in partly paid shares

Date	Number of securities	Issue price $	$
Balance at 1 July 2019 Movement Balance at 30 June 2020	-		-
	-		-
	-		-
Hartshead Resources NL shares on acquisition	5,703,550	-	57,036
Balance at 30 June 2021	5,703,550		57,036

(iii) Options

Information relating to the Hartshead Incentive Option Scheme, including details of options issued, exercised, and lapsed during the financial year and options outstanding at the end of the reporting period, is set out in Note 14.

(iv) Performance rights and Retention rights

Information relating to the Hartshead Performance Rights Plan, including details of performance and retention rights issued, vested, and lapsed during the financial year and rights outstanding at the end of the reporting period, is set out in Note 14.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

13. ISSUED CAPITAL (continued)

(b) Accumulated losses

(b) Accumulated losses
	2021 $ 2020 $
Balance at 1 July Net loss attributable to owners of the Company Balance at 30 June	(467,430) - (6,013,144) (467,430) (6,480,574) (467,430)

(c) Reserves

The following table shows a breakdown of the reserves and the movements in these reserves during the year. A description of the nature and purpose of each reserve is provided.

rve is provided.
	2021 $ 2020 $
Balance at 1 July Currency translation differences arising during the year Balance at 30 June Balance at 1 July Performance rights expense Balance at 30 June reserve Balance at 1 July Movement during the year Balance at 30 June	- - 20,364 -
	20,364 -
	- - 267,300 -
	267,300 -
	- - 10,005 -
	10,005 -

Foreign currency translation reserve

Exchange differences arising on translation of the foreign controlled entities are recognised in other comprehensive income as described in Note 27(d) and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of.

Share-based payments reserve

The share-based payments reserve is used to recognise: (a) the grant date fair value of options issued to employees and directors but not exercised; (b) the grant date fair value of market-based performance rights granted to employees but not yet vested; and (c) the fair value non-market based performance and retention rights granted to employees but not yet vested.

Fair value through other comprehensive income reserve

The Group has elected to recognise changes in the fair value of certain investments in equity securities in OCI, as explained in Note 9. These changes are accumulated within the FVOCI reserve within equity. The Group transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised

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Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2021

14. SHARE-BASED PAYMENT TRANSACTIONS

Share-based payment transactions are recognised at fair value in accordance with AASB 2.

Note	2021 $ 2020 $
As part of share-based payments expense: Performance rights issued 14(b) As part of capital raising costs with equity: Shares issued 14(c)	267,300 - 500,000 -
	767,300 -

During the year, the Group had the following share-based payments arrangements:

(a) Share options

Hartshead Resources NL share options are used to reward Directors, Employees, Consultants and Vendors for their performance and to align their remuneration with the creation of shareholder wealth through the performance requirements attached to the options. Options are granted at the discretion of the Board of Directors and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits. Options granted to Directors are approval from the shareholders.

The options are not listed and carry no dividend or voting right. Upon exercise, each option is convertible into one ordinary share to rank pari passu in all respects with the Company’s existing fully paid ordinary shares.

Set out below are summaries of options granted:

	2021 2020
	Average exercise price per option Number of options Average exercise price per option Number of options
Opening balance Granted during the year Options on reverse acquisition Exercised during the year Forfeited during the year Closing balance Vested and exercisable	- - - -
	- - - -
	$0.040 20,000,000 - -
	- - - -
	- - - -
	$0.040 20,000,000 - -
	$0.040 20,000,000 - -

Grant date(1) Expiry date Exercise price	2021 Number of options 2020 Number of options
(i) 14-Oct-19 31-Dec-22 $0.040 Weighted average remaining contractual life of options outstanding at the end of the year:	20,000,000 -
	20,000,000 -
	1.5 years -

1 The securities issued during the year were approved on the 29 November 2019 at the Company’s Annual General Meeting.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

14. SHARE-BASED PAYMENT TRANSACTIONS (continued)

The fair value of option issued is measured by reference to the value of the goods or services received. The fair value of services received in return for share options granted to Directors, Employees and Consultants is measured by reference to the fair value of options granted. The fair value of services received by advisors could not be reliably measured and are therefore measured by reference to the fair value of the equity instruments granted. The estimate of the fair value of the services is measured based on a Black-Scholes option valuation methodology. The life of the options including early exercise options are built into the option model. The fair value of the options are expensed over the expected vesting period.

No expense arose from the options issued during the reporting period (30 June 2020: nil).

(b) Performance rights

Performance Rights Plan

Performance rights are issued under the long-term incentive plan and will vest as an entitlement to one fully paid ordinary share provided that certain performance milestones are met. If the performance milestones are not met, the performance rights will lapse, and the eligible participant will have no entitlement to any shares.

During the year, the Company granted performance rights as a long-term incentive to Employees and Advisors which have been issued under the Company’s Performance Rights Plans approved by shareholders on 2 September 2011 and 31 October 2014. Each performance right will vest as an entitlement to one fully paid ordinary share upon achievement of certain performance milestones. If the performance milestones are not met, the performance rights will lapse, and the eligible participant will have no entitlement to any shares.

Performance rights are not listed and carry no dividend or voting rights. Upon exercise each right is convertible into one ordinary share to rank pari passu in all respects with the Company’s existing fully paid ordinary shares.

Movement in the performance rights for the current year is shown below:

			Balance on		Converted
		Exercise	reverse	Granted during	during the	Balance at	Vested at
Grant date	Expiry date	price	acquisition	the year	year	year end	year end
02-Sep-19(1)	30-Sep-22	-	64,844,991	-	(1,000,000)	63,844,991	5,000,000
21-May-21	02-Jun-24	-	-	45,000,000	-	45,000,000	-
Total			64,844,991	45,000,000	(1,000,000)	108,844,991	5,000,000

1 Performance rights granted to Directors, Employees and Advisors; the securities were approved on the 2 September 2019 at the Company’s General Meeting.

Key inputs used in the fair value calculation of the performance rights which have been granted during the year ended 30 June 2021 were as follows:

Number	Exercise	Expected		Share price at	Fair value per	Total fair
granted	price	vesting dates	Expiry date	grant date	performance right	value
Grant date: 21-May-21(1)
45,000,000	-	31-Mar-22 to 31-May-22	02-Jun-24	$0.018	$0.018	$810,000

1. Upon achieving either Milestone 1, Milestone 2, Milestone 3, Milestone 4, Milestone 5 or Milestone 6, a third of the Performance Rights will be eligible to be converted into Shares upon exercise by the holder.

2. Milestones are as follows: Milestone 1 Final Selection of preferred development concept and offtake route for the Viking-Wx and Victoria Gas Field Development and a positive decision to proceed through the Concept Select Stage Gate;

Milestone 2 Oil and Gas Authority (OGA) approval of the Concept Select Report detailing the selected development concept and offtake route for the Viking Wx and Victoria Gas Fields Development; Milestone 3 Updated Competent Persons Report (CPR) for the Viking-Wx and Victoria Gas Field Development demonstrating that this development project is commercially viable and justified for development;

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

14. SHARE-BASED PAYMENT TRANSACTIONS (continued)

Milestone 4 Award of Front-End Engineering and Design (FEED) Contract for the Viking-Wx and Victoria Gas Field Development; Milestone 5 Award of Drilling Management Contract Viking-Wx and Victoria Gas Field Development; and Milestone 6 Execution of Third Party Agreements for transportation of produced gas from Hartshead owned Infrastructure to an onshore gas sales point.

No Milestones were achieved during the year.

Key inputs used in the fair value calculation of the performance rights which have been granted during the year ended 30 June 2020 were as follows:

Number	Exercise	Expected		Share price at	Fair value per	Total fair
granted	price	vesting dates	Expiry date	grant date	performance right	value
Grant date: 02-Sep-19(1)
88,267,482	-	17-Dec-19 to 30-Sep-22	30-Sep-22	$0.0185	$0.0185	$1,632,948

1. Upon achieving either Milestone 1, Milestone 2, Milestone 3, Milestone 4, Milestone 5, Milestone 6 or Milestone 7, a third of the Performance Rights will be eligible to be converted into Shares upon exercise by the holder.

2. Milestones are as follows: Milestone 1 Completion of an initial feasibility study that derives a Net Present Value (NPV) (utilising a discount rate of 10%) of the Gora project of not less than based on a 2C Contingent Resource;

Milestone 2 Securing necessary funding to undertake the drilling of an additional well at the Gora project or Nowa Sol project, including via equity or debt (or a combination of both) or other funding mechanism such as joint farmout or forward payments on a supply venture, agreement;

Milestone 3 The Company's VWAP over 10 consecutive trading days being at least $0.05; Milestone 4 The Company's VWAP over 10 consecutive trading days being at least $0.08; Milestone 5 Securing necessary funding to commence production at the Gora project or Nowa Sol project, including via equity or debt (or a combination of both) or other funding mechanism such as joint venture, farm-out or forward payments on a supply agreement;

Milestone 6 Execution of a binding gas sale agreement on the Gora project or oil sale agreement on the Nowa Sol project with a third party; or Milestone 7 Successful completion of Fracking and/or Flow Testing on the Gora and Nowa Sol project, including flowing of oil and gas to surface and all necessary data acquisition for project evaluation.

The Board determined that Milestone 1 was achieved in December 2019 and a third of the rights vested.

As at 30 June 2021, management believe that the remaining performance and service hurdles will be met and accordingly have recognised a share-based payment expense over the respective vesting periods.

The total expense arising from performance rights transactions recognised during the year were as follows:

	2021 $ 2020 $
Performance rights issued under the Performance Rights Plan	267,300 -
	267,300 -

(c) Share capital to vendors

During the financial year:

On 3 February 2021, 20,000,000 shares were issued in consideration for facilitating the capital raising. The fair value of the shares recognised was by direct reference to the fair value of service received. This was determined by the fair value of the equity instruments issued amounted to $500,000. This amount has been recognised in the Consolidated Statement of Changes in Equity as a capital raising cost.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

14. SHARE-BASED PAYMENT TRANSACTIONS (continued)

Significant accounting estimates and assumptions

Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees and vendors by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using the Black-Scholes or Monte-Carlo model taking into account the assumptions detailed within this note.

Probability of vesting conditions being achieved

Inputs to pricing models may require an estimation of reasonable expectations about achievement of future vesting conditions. Vesting conditions must be satisfied for the counterparty to become entitled to receive cash, other assets, or equity instruments of the entity, under a share-based payment arrangement.

Vesting conditions include service conditions, which require the other party to complete a specified period of service, and performance conditions, which require specified performance targets to be met (such as a specified increase in the entity's profit over a specified period of time).

The Company recognises an amount for the goods or services received during the vesting period based on the best available estimate of the number of equity instruments expected to vest and shall revise that estimate, if necessary, if subsequent information indicates that the number of equity instruments expected to vest differs from previous estimates. On vesting date, the entity shall revise the estimate to equal the number of equity instruments that ultimately vested.

The achievement of future vesting condition is reassessed every reporting period.

15. RECONCILATION OF LOSS AFTER INCOME TAX TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES

	Note	2021 $ 2020 $
Loss for the year Add/(Less) non-cash items: Depreciation Share-based payments Cost of listing Unrealised foreign exchange gain Changes in assets and liabilities during the financial year: Increase in receivables Decrease in payables Net cash outflow from operating activities		(6,013,143) (467,430) 4,153 840 267,300 - 4,099,772 - (8,805) - (31,846) (8,228) 372,217 31,328


	14 2




		(1,310,352) (443,490)

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2021

16. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

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

This note provides an overview of the areas that involved a higher degree of judgement or complexity and items which are more likely to be materially adjusted. Detailed information about each of these estimates and judgements is included in the notes together with information about the basis of calculation for each affected line item in the financial statements.

Significant accounting estimates and judgements

The areas involving significant estimates or judgements are:

recognition of deferred tax asset for carried forward tax losses – Note 5;
income taxes – Note 5;
classification of financial assets – Note 9;
estimation of fair value of financial assets – Note 9;
estimation of fair value of share-based payments – Note 14;
estimation of probability of vesting conditions being satisfied – Note 14;
disclosure of commitments – Note 20; and
disclosure of contingencies – Note 21.

Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

There have been no actual adjustments this year as a result of an error and of changes to previous estimates.

17. FINANCIAL AND CAPITAL RISK MANAGEMENT

Overview

The financial risks that arise during the normal course of the Group’s operations comprise market risk, credit risk and liquidity risk. In managing financial risk, it is policy to seek a balance between the potential adverse effects of financial risks on financial performance and position, and the "upside" potential made possible by exposure to these risks and by taking into account the costs and expected benefits of the various risk management methods available to manage them.

General objectives, policies, and processes

The Board is responsible for approving policies on risk oversight and management and ensuring management has developed and implemented effective risk management and internal control. The Board receives reports as required from the Chief Financial Officer and Chief Executive Officer in which they review the effectiveness of the processes implemented and the appropriateness of the objectives and policies it sets. The Board oversees how management monitors compliance with the Group's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced.

These disclosures are not, nor are they intended to be an exhaustive list of risks to which the Group is exposed.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

17. FINANCIAL AND CAPITAL RISK MANAGEMENT (continued)

Financial Instruments

The Group has the following financial instruments:

The Group has the following financial instruments:
	2021 $	2020 $
Financial assets
Cash and cash equivalents	6,899,356	148,785 -
Other receivables	66,523
	6,965,879	148,785
Financial liabilities		31,328
Trade and other payables	872,239
	872,239	31,328

(a) Market Risk

Market risk can arise from the Group’s use of interest-bearing financial instruments, foreign currency financial instruments and exposure to commodity prices. It is a risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate risk), foreign exchange rate (currency risk) and fluctuations in commodity prices (commodity price risk).

(i) Interest rate risk

As at the year ended 30 June 2021, the Group has interest-bearing assets and liabilities being liquid funds on deposit and unsecure funds. As such, the Group's income and operating cash flows (other than interest income from funds on deposit and interest expense from the senior secured revolving credit facility) are somewhat dependent on changes in market interest rates. The Board manages the Group's exposure to interest rate risk by regularly assessing exposure, taking into account funding requirements and selecting appropriate instruments to manage its exposure.

Sensitivity analysis Based on the financial instruments held at the reporting date, with all other variables assumed to be held constant, the table sets out the notional effect on consolidated profit after tax for the year and on equity at the reporting date under varying hypothetical changes in prevailing interest rates.		2021 $ 2020 $
	Impact on post-tax profits and equity Hypothetical basis points increase in interest Hypothetical basis points decrease in interest
		24,211 - (24,211) -

A hypothetical change of 50 basis points was used to calculate the Group's sensitivity to future interest rate movements as this figure approximates the movement in bond yields published by the Reserve Bank of Australia for bonds with a 12month maturity (30 June 2020: nil).

The weighted average effective interest rate of funds on deposit is 0.11% (30 June 2020: nil).

(ii) Currency risk

The Group operates in the UK, Poland, Madagascar and Gabon, however, maintains a corporate listing in Australia. As a result of various operating locations, the Group is exposed to foreign exchange risk arising from fluctuations in primarily the British pounds and US dollar.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

17. FINANCIAL AND CAPITAL RISK MANAGEMENT (continued)

Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company’s functional currency. The Group manages risk by matching receipts and payments in the same currency and monitoring movements in exchange rates. The exposure to risks is measured using sensitivity analysis and cash flow forecasting.

The Group’s exposure to foreign currency risk at the end of the reporting year, expressed in Australian dollars, was as follows:

follows:
	GBP	US	Euro		XAF	Other	Total
	$	$	$		$	$	$
At 30 June 2021
Financial assets
Cash	1,940,121	9,414		24	44,398	142	1,994,100
Other receivables	66,873	-		-	-	-	66,873
Financial liabilities
Trade and other payables	381,237	412,262		-	-	-	793,500
At 30 June 2020
Financial assets
Cash	148,785	-		-	-	-	148,785
Other receivables	-	-		-	-	-	-
Financial liabilities
Trade and other payables	31,328	-		-	-	-	31,328

Sensitivity analysis

The following table demonstrates the estimated sensitivity to a 10% increase/decrease in the GBP/Australian dollar exchange rate and a 10% increase/decrease in the US$/Australian dollar exchange rate, with all variables held consistent, on post tax profit and equity. These sensitivities should not be used to forecast the future effect of movement in the Australian dollar exchange rate on future cash flows.

		2021		2020
	%	$	%	$
Impact on post-tax
profits and equity
GBP/A$ + %	10	88,193	10	1,800
GBP/A$ - %	10	(88,193)	10	(1,800)
US$/A$ + %	10	(30,237)	10	29,847
US$/A$ - %	10	30,237	10	(29,847)

A hypothetical change of 10% in the GBP and US dollar exchange rates was used to calculate the Group's sensitivity to foreign exchange rate movements as the Company’s estimate of possible rate movements over the coming year taking into account current market conditions and past volatility.

(iii) Commodity price risk

As the Group has not yet entered into production, the risk exposure to changes in commodity price is not considered significant.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

17. FINANCIAL AND CAPITAL RISK MANAGEMENT (continued)

(b) Credit risk

Credit risk arises from cash and cash equivalents and deposits with financial institutions, as well as trade receivables. Credit risk is managed on a Group basis. For cash balances held with bank or financial institutions, independently rated parties with a minimum rating of ‘A’ are preferred.

The Board are of the opinion that the credit risk arising as a result of the concentration of the Group's assets is more than offset by the potential benefits gained.

The maximum exposure to credit risk at the reporting date is the carrying amount of the assets as summarised, none of which are impaired or past due.

Exposure to credit risk

The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk at the reporting date was:

The carrying amount of the Group’s financial assets represents the maximum exposure to credit risk at the reporting date was:	credit exposure. The Group’s maximum
	2021 $ 2020 $
Cash and cash equivalents Other receivables	6,899,356 148,785 66,523 - 6,965,879 148,785

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates.

	2021 $ 2020 $
Cash at bank and short-term deposits Held with Australian banks and financial institutions AA S&P rating A S&P rating B S&P rating Unrated Total Other receivables Counterparties with external credit ratings Counterparties without external credit ratings(1) Group 1 Group 2 Group 3 Total

	6,845,375 148,785
	5,923 - 44,398 - 3,659 -
	6,899,356 148,785
	- - - - 66,523 - - -
	66,523 -

1 Group 1 — new customers (less than 6 months).
Group 2 — existing customers (more than 6 months) with no defaults in the past.

Group 3 — existing customers (more than 6 months) with some defaults in the past. All defaults were fully recovered.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

17. FINANCIAL AND CAPITAL RISK MANAGEMENT (continued)

(c) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. Through continuous monitoring of forecast and actual cash flows the Group manages liquidity risk by maintaining adequate reserves to meet future cash needs. The decision on how the Group will raise future capital will depend on market conditions existing at that time.

Maturities of financial liabilities

The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

	Less than 6 months $ 6 - 12 months $ 1 - 5 years $ Over 5 years $ Total contractual cash flows $ Carrying amount liabilities $
At 30 June 2021
Trade and other payables	872,239 - - - 872,239 872,239
At 30 June 2020 Trade and other payables
	31,328 - - - 31,328 31,328

(d) Capital risk management

The Group’s objective when managing capital is to safeguard the ability to continue as a going concern. This is to provide returns for shareholders, benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The Board monitors capital on an ad-hoc basis. No formal targets are in place for return on capital, or gearing ratios, as the Group has not derived any income from exploration.

(e) Fair value measurements

Fair value hierarchy

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

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

18. LOSS PER SHARE

18. LOSS PER SHARE
	2021 2020
Basic and diluted loss per share Net loss after tax attributable to the members of the Company Weighted average number of ordinary shares Basic loss per share (cents)
	($ 6,013,144) ($ 467,430)
	1,054,524,993 166,667
	(0.57) (2.80)

No dilutive calculation has been performed for the current year. As a result of the loss position of the Group the diluted earnings per share is equal to the basic earnings per share.

Information concerning the classification of securities

(i) Partly paid ordinary shares

Partly paid ordinary shares carry the right to participate in dividends and have been recognised as ordinary share equivalents in the determination of earnings per share.

(ii) Options

Options granted to employees and Directors under the Incentive Option Scheme are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. The options have not been included in the determination of basic earnings per share. Details relating to the options are set out in Note 14.

(iii) Deferred shares

Rights to deferred shares granted to employees under the Performance Rights Plan are included in the calculation of diluted earnings per share assuming all outstanding rights will vest. The rights are not included in the determination of basic earnings per share. Further information about the rights is provided in Note 14.

19. DIVIDENDS

No dividend has been paid or is proposed in respect of the year ended 30 June 2021 (30 June 2020: Nil).

20. COMMITMENTS

(a) Capital commitments

UK North Sea, Seaward Production License P2607

The Group has certain obligations to perform minimum work on tenements held. These obligations may vary over time, depending on the Group's work programmes and priorities. As at reporting date, there are no minimum financial commitments.

Gabon, Nkembe block

The Group is currently in the first exploration phase of the Block, which initially covered a period of four years. On 3 November 2016, Hartshead was granted a 12-month extension of the current exploration phase with no additional work commitments. A dispute has arisen with the Directeur Général des Hydrocarbures (DGH) as to whether the first exploration stage commenced when the Nkembe PSC was signed, on 11 January 2013 or on the date of issue of the Presidential Decree, 4 December 2014. As a consequence of this dispute Hartshead has claimed force majeure in relation to the Nkembe PSC since 1 April 2018 until such time as the dispute is resolved. In the meantime, the Nkembe PSC remains on foot.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

20. COMMITMENTS (continued)

The work commitments for the first exploration stage under the Nkembe PSC includes the acquisition and processing of 3D seismic data and an exploration well. The Nkembe PSC included an estimate of US$17 million for the work commitments for the first exploration phase and Hartshead has expended approximately US$1.4 million towards these work commitments. Separately to the committed work program an additional US$8.6 million of allowable costs have been incurred during the first exploration phase. The effect of the dispute with the DGH has meant that Hartshead has been unable to make any progress with potential funding partners for an exploration well. Accordingly, until such time as the dispute is resolved it is not possible to quantify the likely commitment and/or payable (if any) in relation to the Nkembe PSC.

Hartshead has received legal advice that its obligations to make the fund contributions (refer Note 21) under the Nkembe PSC commenced on the issue of the Presidential Decree, being 4 December 2014. Based on this advice, no fund contributions are outstanding. This issue, however, remains unresolved between Hartshead and the DGH and accordingly until this matter is resolved the Board believe it is prudent to disclose a contingent liability.

Madagascar, Ambilobe block

The third phase of the Ambilobe block began in January 2017, the work commitments for the third phase includes drilling one exploration well (to be funded by a future farminee) prior to the expiry of the third phase which reached its anniversary in July 2019. The third phase may be extended, at Hartshead’s option, to July 2021, a representative of the Company’s subsidiary has presented the final relinquishment proposal to the Madagascan Government (OMNIS) and the Company has applied for the 2nd special two (2) year extension of the Ambilobe PSC. Discussions with OMNIS are ongoing and at the date of this report the Company has not reached agreement with OMNIS on the terms of the 2nd special two (2) year extension of the Ambilobe PSC.

The Ambilobe PSC includes an estimate of US$2.5 million for the work commitments of the third phase. The remaining portion of the work commitment as at the reporting date has been included in the table below (30 June 2020: US$2.5 million).

The capital expenditure estimated within the PSC’s noted above, less any amounts already spent, for the end of the reporting period but not recognised as a liability are as follows:

reporting period but not recognised as a liability are as follows:
	2021 (1) $ 2020 (2) $
Within one year Later than one year but no later than five years Later than five years	- -
	3,330,749 -
	- -
	3,330,749 -

1 The US$ commitments have been translated at a rate of 0.7506 to AUD

2 The US$ commitments have been translated at a rate of 0.6884 to AUD

21. CONTINGENCIES

(a) Contingent liabilities

Gabon, Nkembe block

A dispute has arisen with the Directeur Général des Hydrocarbures (DGH) as to whether the first exploration stage commenced when the Nkembe PSC was signed, on 11 January 2013 or on the date of issue of the Presidential Decree, 4 December 2014. As a consequence of this dispute Hartshead has claimed force majeure in relation to the Nkembe PSC since 1 April 2018 until such time as the dispute is resolved. In the meantime, the Nkembe PSC remains on foot, which the DGH has recently confirmed.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

21. CONTINGENCIES (continued)

Hartshead has received legal advice that its obligations to make the fund contributions under the Nkembe PSC commenced on the issue of the Presidential Decree, being 4 December 2014. Based on this advice, no fund contributions are outstanding and consequently have not been provided for on the statement of financial position as at 30 June 2021. During a prior period, included within the other payables was an amount payable to the Directeur Général des Hydrocarbures (DGH) in Gabon in relation to fund contributions pursuant to the Nkembe PSC for approximately US$2.91 million, based on the liability for fund contributions commencing on the date on which the Nkembe PSC was signed, being 11 January 2013. This issue, however, remains unresolved between Hartshead and the DGH. The potential undiscounted amount of the total payments that the group could be required to make if there was an adverse decision is estimated to be up to US$2.91 million.

Moroccan settlement

During a prior period, the Group completed a settlement agreement with Freeport-McMoRan and the Moroccan regulatory authorities which resulted in the Company receiving US$7 million and taking possession of surplus drilling inventory in January 2017. There is a potential liability attached to this payment however no provision has been booked at 30 June 2021 as the Company is currently seeking advice in relation to the matter.

The Group currently has no other contingent liabilities as at 30 June 2021.

(b) Contingent assets

The Group has no contingent assets as at 30 June 2021 (30 June 2020: Nil).

Significant judgments

Contingencies & commitments

As the Group is subject to various laws and regulations in the jurisdictions in which it operates, significant judgment is required in determining whether any potential contingencies are required to be disclosed and/or whether any capital or operating leases require disclosure (refer to Note 20).

22. RELATED PARTY TRANSACTIONS

Transactions with related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

(a) Parent entities

The ultimate parent entity and ultimate controlling party is Hartshead Resources NL (incorporated in Australia) which at 30 June 2021 owns 100% of the issued ordinary shares of the subsidiaries set out in Note 23.

(b) Subsidiaries

Interests in subsidiaries are set out in Note 23.

(c) Key management personnel compensation

(c) Key management personnel compensation
	2021 $ 2020 $
Short-term employee benefits Post-employment benefits Long-term benefits Termination benefits Share-based payments	1,022,328 853,530
	43,290 48,008 - - - - 157,268 427,660
	1,222,886 1,329,198

Detailed remuneration disclosures are provided within the Remuneration Report.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

22. RELATED PARTY TRANSACTIONS (continued)

(d) Transaction with other related parties

Payment of fees

Dr Andrew Matharu, Executive Director, is a Director of Firmitas Energy Advisers Limited, which received Dr Matharu’s Director fees during the period. At year end the Company had an outstanding balance payable of $24,875 (30 June 2020: $16,150).

Mr Christopher Lewis, Executive Director, is a Director of Lewis Petroleum Consulting Limited which received Mr Lewis’s Director fees during the period. At year end the Company had an outstanding balance payable of $37,035 (30 June 2020: $16,150).

Purchases of services

The Group acquired the following services from entities in which the group’s key management personnel have an interest:

Corporate development and advisory services,
Project Management services,
Commercial services,
Geoscience and Engineering services, and
Share office services.

(e) Outstanding balances arising from sales/purchases of goods and services

There are no other outstanding balances arising from sales/purchases of goods and services (30 June 2020: Nil).

(f) Loan to/from related parties

There are no outstanding loans arising to or from related parties (30 June 2020: Nil).

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2021

23. CONSOLIDATED ENTITIES

(a) Investments in controlled entities

The consolidated financial statements incorporate the assets, liabilities, and results of the following subsidiaries in accordance with the accounting policy described in Note 27(a):

	Country of	2021	2020
Name of entity	incorporation	Equity holding	Equity holding
Pura Vida Mazagan Pty Ltd	Australia	100%	-
Pura Vida Nkembe Pty Ltd	Australia	100%	-
Pura Vida Energy Sdn Bhd	Malaysia	100%	-
PVD Exploration Morocco SARL AU	Morocco	100%	-
PVD Gabon SARL	Gabon	100%	-
Pura Vida Africa Pty Ltd	Australia	100%	-
Pura Vida Mauritius	Mauritius	100%	-
Pura Vida Gabon SARL	Gabon	100%	-
Ansila Energy Polska Pty Ltd	Australia	100%	-
Gora Australia Pty Ltd	Australia	100%	-
Hartshead Resources Limited	UK	100%	-

24. REMUNERATION OF AUDITORS

During the year, the following fees were paid or payable for services provided by the auditor of the parent entity, its related parties and non-related audit firms:

related parties and non-related audit firms:
	2021 $ 2020 $
(a) BDO Australia Audit and assurance services Audit and review of financial statements Taxation services Tax compliance services Total remuneration for taxation services Other services Remuneration Advice Total remuneration for BDO Australia (b) Network firms of BDO(1) Audit and assurance services Audit and review of financial statements Tax Compliance Advice Total auditors’ remuneration
	23,028 - 4,223 -
	27,251 - 12,750 -
	40,001 -
	12,504 - 4,847 -
	57,352 -

1 Fees incurred from BDO PLT in relation to the audit of the Groups Malaysian subsidiary’s and BDO UK in relation to tax compliance of stamp duty.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

24. REMUNERATION OF AUDITORS

From time to time the Consolidated Entity may decide to employ an external auditor on assignments additional to their statutory audit duties where the auditor's expertise and experience with the Consolidated Entity are important. These assignments are principally tax advice and due diligence on acquisitions, which are awarded on a competitive basis. It is the Group’s policy to seek competitive tenders for all major consulting projects. The Board is satisfied that the provision of non-audit services during the period is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 .

25. PARENT ENTITY INFORMATION

The following information relates to the parent entity, Hartshead Resources NL as at 30 June 2021. The information presented here has been prepared using consistent accounting policies as presented in Note 27.

(a) Summary of financial information

y The individual aggregate financial information for the parent entity is shown in the table. (b) Guarantees entered into by the parent entity The parent entity did not have any guarantees as at 30 June 2021 or 30 June 2020. (c) Contingent liabilities of the parent entity The parent entity did not have any contingent liabilities as at 30 June 2021 or 30 June 2020. (d) Contractual commitments for the acquisition of property, plant, and equipment The parent entity did not have any contractual commitments for the acquisition of property, plant and equipment as at 30 June 2021 or 30 June 2020.		Company
		2021 $ 2020 $
	Financial position Current assets Total assets Current liabilities Total liabilities Equity Contributed equity Reserves Accumulated losses Total equity Financial performance Loss for the year Total comprehensive loss
		5,221,352 1,844,568
		7,053,065 1,846,402 552,911 548,144 552,911 548,144 12,950,822 54,652,907 297,669 5,062,515 (6,748,337) (58,417,165)
		6,500,154 1,298,257
		(2,281,161) (9,458,873) (2,281,161) (9,458,873)

(b) Guarantees entered into by the parent entity

26. EVENTS OCCURRING AFTER REPORTING DATE

The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has not impacted financially on the Company up to 30 June 2021, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.

In the opinion of the Directors, there are no events of a material nature or transaction has arisen since year-end and the date of this report that has significantly affected, or may significantly affect, the Group’s operations, the results of those operations, or its state of affairs in subsequent financial years.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

27. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Hartshead Resources NL ( Company or Hartshead) is a company incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange Hartshead is the ultimate parent entity of the Group.

The consolidated financial statements of Hartshead Resources NL for the year ended 30 June 2021 comprise the Company and its controlled subsidiaries (together referred to as the Group and individually as Group entities ).

Statement of compliance

This general-purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Australian Accounting Company Interpretations and the Corporations Act 2001 . Hartshead is a for-profit entity for the purpose of preparing the financial statements.

The financial statements of the Company also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis of preparation

The financial statements of the Group are presented in Australian dollars, which is the Company’s functional currency.

Historical cost convention

These financial statements have been prepared under the historical cost convention, except for costs and do not take into account changing money values or, except where stated, current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets.

Critical accounting estimates and significant judgements

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires Management to exercise its judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed within Note 16.

New and amended standards adopted by the Group

The Group has adopted all of the new and revised Standards and Interpretations issued by the AASB that are relevant to their operations and effective for the current annual reporting period.

IFRIC has published two agenda decisions clarifying how arrangements in respect of a specific part of cloud technology, Software-as-a-Service (SaaS), should be accounted for. The Company has taken the guidance for cloud computing into account for the year ended 30 June 2021 with no significant impact on the current or prior periods

The adoption of all the new and revised Standards and Interpretations has not resulted in any changes to the Group’s

accounting policies and has no effect on the amounts reported for the current or prior years.

New standards and interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2021 reporting periods and have not been early adopted by the group. The group's assessment of the impact of these new standards and interpretations is set out below. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

There are no other standards that are not yet effective and that are expected to have a material impact on the Group in the current or future reporting period and in the foreseeable future.

Accounting policies

In order to assist in the understanding of the accounts, the following summary explains the principle accounting policies that have been adopted in the preparation of the financial report. These policies have been applied consistently to all of the periods presented, unless otherwise stated.

(a) Principles of consolidation

Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of subsidiaries of the Company at the end of the reporting period. Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Where a subsidiary has entered or left the Group during the year, the financial performance of those entities is included only for the period of the year that they were controlled. A list of subsidiaries is contained in Note 23 to the financial statements.

Intercompany transactions, balances, and unrealised gains on transactions between Group companies are eliminated in full on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of financial position.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

(b) Going concern

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

During the year the Group incurred cash outflows from operating activities of $1,310,352;

As at 30 June 2021 Pura Vida Mauritius (a subsidiary of the Company) had commitments with an estimated value of $3.33 million (US$2.5 million) pertaining to the current exploration phase of the Ambilobe PSC. The third phase ended in July 2019 and may be extended to July 2021, and the company is continuing its discussions with OMNIS regarding the 2nd special two (2) year extension of the PSC to July 2021; and

Hartshead is currently in a dispute with the Gabonese Government with regards to the Nkembe PSC, (refer to Note 20 for details on the dispute). Until such a time as the dispute is resolved it is not possible to quantify the likely commitments and/or payable (if any) in relation to the Nkembe PSC.

In the event the Company is unable to secure funding to complete the current exploration phase in Madagascar and resolve the dispute with the Gabonese Government the Group may be unable to realize its assets and discharge its liabilities in the normal course of business. These conditions indicate a material uncertainty that may cast a significant doubt about the entity’s ability to continue as a going concern and, therefore, that it may be unable to realise its asset and discharge its liabilities in the normal course of business.

Management believe there are sufficient funds to meet the consolidated entity’s working capital requirements at the date of this report for the following reasons:

at 30 June 2021 the consolidated entity had $6.9 million of cash and a current working capital position of $6.3 million;
the Company is progressing realisation of the value of the consolidated entity’s assets in the UK North Sea.

Should the Group not be able to continue as a going concern, it may be required to realise its assets and discharge its liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or liabilities that might be necessary should the consolidated entity not continue as a going concern.

(c) Joint arrangements

Under AASB 11 Joint Arrangements investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. The Group only has joint operations.

Joint operations

The Group recognises its direct right to, and its share of jointly held assets, liabilities, revenues, and expenses of joint operations. These have been incorporated into the financial statements under the appropriate headings. Details of joint operations are set out in Note 8.

(d) Foreign currency translation

Functional and presentation currency

Items included in the financial statements of the Group are measured using the currency of the primary economic environment in which the Company operates (the functional currency). The financial statements are presented in Australian dollars, which is the Company’s functional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the dates of the transactions. Foreign currency monetary assets and liabilities at the reporting date are translated at the exchange rate existing at reporting date. Exchange differences are recognised in profit or loss in the period in which they arise.

No dividends were paid or proposed during the period.

Group companies

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;
income and expenses for each statement of profit or loss and other comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange difference is reclassified to profit or loss, as part of the gain or loss on sale where applicable.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

(e) Segment reporting

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

Operating segments are reported in a manner that is consistent with the internal reporting to the chief operating decision marker, which has been identified by the Group as the Executive Director and other members of the Board.

(f) Revenue recognition

Revenue is measured as the fair value of the consideration received or receivable. The Group recognises revenue when the amount of revenue can be reliably measured it is probable that future economic benefits will flow to the entity.

Revenue for other business activities is recognised on the following basis:

Recharge income

Revenue from consulting services is recognised in the accounting period in which the services are rendered.

Interest income

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

Settlement income

Revenue from settlement is recognised in the accounting period in which the settlement occurred.

(g) Impairment of assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset’s values in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash generating unit to which it belongs.

When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at re-valued amount (in which case the impairment loss is treated as a revaluation decrease).

An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was

recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had the impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at the revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

(h) Inventory

Raw materials and stores, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on the basis of weighted average costs. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

(i) Property, plant, and equipment

Plant and equipment is stated at cost less accumulated depreciation and any impairment in value.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the statement of profit or loss comprehensive income during the reporting period in which they are incurred.

Depreciation is calculated using the diminishing value or straightline method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives as follows:

 Office furniture and equipment 4 - 15 years  Computer software and equipment 2 - 4 years

Assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset carrying amount is written down immediately to its recoverable amount if the assets carrying value is greater than its estimated recoverable amount (Note 27(g)).

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statements of profit or loss.

(j) Income tax and other taxes

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Group’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provision where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the Group is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the Group has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The Group may be entitled to claim special tax deductions for investments in qualifying assets (investment allowances). The Group accounts for such allowances as tax credits, which means that the allowance reduces income tax payable and current tax expense. A deferred tax asset is recognised for unclaimed tax credits that are carried forward as deferred tax assets.

(k) Goods and services tax

Revenues, expenses, and assets are recognised net of the amount of GST except where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST component of cash flow arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(l) Exploration and evaluation expenditure

The Group expenses exploration and evaluation expenditure as incurred in respect of each identifiable area of interest until a time where an asset is in development.

Exploration and Evaluation expenditure

Exploration for and evaluation of mineral resources is the search for mineral resources after the entity has obtained legal rights to explore in a specific area as well as the determination of the technical feasibility and commercial viability of extracting mineral resource.

UK North Seas

Exploration lease acquisition costs relating to exploration provinces are initially capitalised and then amortised over the shorter term of the lease or the expected life of the project.

All other exploration and evaluation costs, including general permit activity, geological and geophysical costs and new venture activity costs are charged as expenses as incurred except where:

such evaluation costs are expected to be recouped through successful development and exploitation of the area of interest or alternatively, by its sale; or
exploration and/or evaluation activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in relation to the area are continuing.

Areas of interest are recognised at permit level. Subsequent to the recognition of an area of interest, all further costs relating to the Area of Interest are initially capitalised. Each area of interest is reviewed at least bi-annually to determine whether economic quantities of reserves exist or whether further exploration and evaluation work is required to support the continued carry forward of capitalised costs. To the extent it is considered that the relevant expenditure will not be recovered, it is written off.

In the statement of cash flows, those cash flows associated with the capitalised exploration and evaluation expenditure are

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

classified as cash flows used in investing activities exploration and evaluation expenditure expensed is classified as cash flows used in operating activities.

Other Projects

Exploration and evaluation expenditure are expensed to the profit or loss as incurred except when existence of a commercially viable oil and/or gas reserve has been established and it is anticipated that future economic benefits are more likely than not to be generated as a result of the expenditure.

(m) Cash and cash equivalents

For the purposes of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, cash in bank accounts, money market investments readily convertible to cash within two working days, and bank bills but net of outstanding bank overdrafts.

(n) Investments and other financial assets

Classification

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on 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; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For nonfinancial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.

The Group classifies its financial assets in the following categories:

those to be measured subsequently at fair value (either through OCI or through profit or loss); and
those to be measured at amortised cost.

For investments in equity instruments that are not held for trading, this will depend on whether the group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).

Investments in equity instruments

The Group subsequently measures all equity investments at fair value.

Fair value in active market (Level 1)

The fair value of financial assets and liabilities traded in active markets (such as publicly traded derivatives and listed equity securities) are based on quoted market prices at the close of trading at the end of the reporting period without any deduction for estimated future selling costs.

Fair value in an inactive or unquoted market (Level 2 and Level 3)

The fair value of financial assets that are not traded in an active market is determined using valuation techniques. These include the use of a recent share price from capital raising and option pricing models that provides a reliable estimate of prices obtained in actual market transactions.

Where the group's management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the group's right to receive payments is established.

Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the statement of financial position date which are classified as non-current assets. Loans and receivables are included in trade and other receivables in the statement of financial position.

Recognition and de-recognition

Investments are initially recognised at fair value plus transactions costs for all financial assets not carried at fair value through profit or loss. Financial assets are de-recognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

Subsequent measurement

Loans and receivables are carried at amortised cost using the effective interest method and available for sale assets are carried at fair value.

(o) Provisions

Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

probable that an outflow of economic benefits will result, and that outflow can be reliably measured.

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

(p) Employee benefits

Short-term employee benefits

Liabilities for wages and salaries, including short-term incentive payments, non-monetary benefits and accumulating annual leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.

The obligations are presented as current liabilities in the statement of financial position if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual settlement is expected to occur.

Other long-term employee benefits

Provision is made for long service leave and annual leave estimated to be payable to employees on the basis of statutory and contractual requirements. The liability for long service leave and annual leave which is not expected to be settled within twelve months after the end of the period in which the employees render the related service is recognised in the provision for employee entitlements and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period. Expected future payments are discounted using market yields at the end of the reporting period on government bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows.

Share-based payments

The Group has provided benefits to its employees (including key management personnel) in the form of share-based payments, whereby services were rendered partly or wholly in exchange for shares or rights over shares. The Remuneration Committee has also approved the grant of options, retention rights or performance rights as incentives to attract executives and to maintain their long-term commitment to the Company. These benefits were awarded at the discretion of the Board or following approval by shareholders.

The costs of these equity settled transactions are measured by reference to the fair value of the equity instruments at the date on which they are granted. Retention rights and performance rights granted under the Hartshead performance rights plans are determined at their fair value and can be valued by either using the share price of the Company as at the date of grant, a

Monte-Carlo simulation valuation model, or other appropriate valuation methodologies. The fair value of options granted is determined by using the Black-Scholes option pricing technique. Further details of options and performance rights granted are disclosed in Note 13.

The cost of these equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled (the vesting period).

At each subsequent reporting date until vesting, the cumulative charge to the profit or loss is the product of: (i) the fair value at grant date of the award; (ii) the current best estimate of the number of equity instruments that will vest, taking into account such factors as the likelihood of employee turnover during the vesting period and the likelihood of non-market performance conditions being met; and (iii) the expired portion of the vesting period.

The charge to the profit or loss for the period is the cumulative amount as calculated above less the amounts already charged in previous periods. There is a corresponding credit to equity.

Until an equity instrument has vested, any amounts recorded are contingent and will be adjusted if more or fewer equity instruments vest than were originally anticipated to do so. Any equity instrument subject to a market condition is valued as if it will vest irrespective of whether or not that market condition is fulfilled, provided that all other conditions are satisfied.

If the terms of an equity-settled award are modified, as a minimum, an expense is recognised as if the terms had not been modified. An additional expense is recognised for any modification that increases the total fair value of the share-based payment arrangement or is otherwise beneficial to the recipient of the award, as measured at the date of modification.

If an equity-settled transaction is cancelled (other than a grant cancelled by forfeiture when the vesting conditions are not satisfied), it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new equity instrument is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new equity instrument are treated as if they were a modification of the original award, as described in the preceding paragraph.

The dilutive effect, if any, of outstanding performance rights and options is reflected as additional share dilution in the computation of diluted earnings per share (refer Note 17).

(q) Earnings per share

Basic earnings per share

Basic earnings per share is determined by dividing the operating loss attributable to the equity holders of the Company after income tax by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share

Hartshead Resources NL (ACN 150 624 169)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(r) Trade and other receivables

Receivables are initially recognised at fair value and subsequently measured at amortised cost, less loss allowances. Current receivables for GST are due for settlement within 30 days and other current receivables within 12 months.

(s) Trade and other payables

Trade payables and other payables are carried at cost and represent liabilities for goods and services provided to the Group prior to the end of the financial period that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and usually paid within 30 days of recognition.

(t) Loans and borrowings

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are de-recognised as well as through the effective interest rate amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in profit or loss.

Transaction costs are included in borrowings and measured at amortised cost using the effective interest rate method.

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset form part of the cost of that asset, and therefore are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale.

(u) Parent entity financial information

The financial information for the parent entity, Hartshead Resources NL, disclosed in Note 24 has been prepared on the same basis as the consolidated financial statements, except as set out below:

Investments in subsidiaries, associates, and joint venture entities

Investments in subsidiaries, associates and joint venture entities are accounted for at cost.

Hartshead Resources NL (ACN 150 624 169)

DIRECTORS’ DECLARATION

In the Directors’ opinion:

the financial statements, and accompanying notes set out above, are in accordance with the Corporations Act 2001 and:
(a) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(b) giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2021 and its performance for the financial year ended on that date.
there are reasonable grounds to believe that the Consolidated Entity will be able to pay its debts as and when they become due and payable; and
the financial statements and accompanying notes are presented in compliance with International Financial Reporting Standards as issued by the International Accounting Standards Board, as stated in Note 27 to the financial statements.

The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001 .

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

On behalf of the Directors

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Bevan Tarratt Non-Executive Chairman

Perth, Western Australia 30 September 2021

Hartshead Resources NL (ACN 150 624 169)

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au

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INDEPENDENT AUDITOR'S REPORT

To the members of Hartshead Resources NL

Report on the Audit of the Financial Report

Qualified opinion

We have audited the financial report of Hartshead Resources NL (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, 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 the Group, is in accordance with the Corporations Act 2001 , including:

(i) Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance for the year ended on that date; and
(ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for qualified opinion

As disclosed in Note 20 and Note 21 to the financial statements, there is a dispute over the commencement date of Hartshead Resources NL (formerly Ansila Energy NL) obligations under the Nkembe Production Sharing Contract (PSC), which has prevented Hartshead Resources NL progressing funding discussions to meet its obligations under the PSC and has therefore resulted in force majeure being claimed by the Company. The Company has stated that until such time as the dispute is resolved, it is not possible to quantify the likely commitment and/or payable (if any) under the PSC. As such management were unable to provide support as to its commitment or obligation under the PSC as at 30 June 2021 and we were unable to obtain sufficient appropriate evidence to determine whether any adjustments to the commitments or other payables note disclosure was necessary.

Consequently, we were unable to determine whether any adjustments might have been necessary in respect of the carrying amount of other payables as at 30 June 2021, and the elements making up the statement of profit or loss and other comprehensive income.

Our audit opinion for the year ended 30 June 2020 was also modified with respect to this matter.

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 Group in accordance with 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 (including Independence Standards) (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.

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We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report.

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 27(b) in the financial report which describes the events and/or conditions which give rise to the existence of a material uncertainty that may cast significant doubt about the group’s ability to continue as a going concern and therefore the group may be unable to realise its assets and discharge its liabilities in the normal course of business. 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 matters described in the Basis for qualified opinion and Material uncertainty related to going concern sections, we have determined the matters described below to be the key audit matters to be communicated in our report.

Accounting for the Reverse Acquisition accounting transaction

Key audit matter How the matter was addressed in our audit During the year ended 30 June 2021, Hartshead Our procedures included, but were not limited to: Resources NL (formerly Ansila Energy NL) completed · Assessing the acquisition agreement to the acquisition of Hartshead Resources Limited on understand key terms and conditions; 3 February 2021, as disclosed in Note 1 to the financial report. · Obtaining an understanding of the transaction,

Obtaining an understanding of the transaction, including considering management’s assessment on whether the transaction constituted an asset acquisition or business combination and identification of the acquirer;

The Group treated the transaction as a reverse asset acquisition, rather than a business combination, as disclosed in Note 1 of the financial report.

Accounting for such transactions is complex and requires management to exercise judgement to determine the appropriate accounting treatment including whether the acquisition constitutes an asset acquisition or business combination. As a result, this is considered a key audit matter.

Agreeing the consideration paid to supporting documentation;
Evaluating managements calculation and accounting for the resultant listing expense; and
Assessing the adequacy of the related disclosures in Note 1 of the financial report.

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Other information

The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2021, but does not include the financial report and the 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 ability of the group 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 has 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 (http://www.auasb.gov.au/Home.aspx) at:

https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf

This description forms part of our auditor’s report.

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Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 16 to 22 of the directors’ report for the year ended 30 June 2021.

In our opinion, the Remuneration Report of Hartshead Resources NL, for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001 .

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.

BDO Audit (WA) Pty Ltd

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Jarrad Prue

Director

Perth, 30 September 2021

ADDITIONAL INFORMATION

The following additional information is required by ASX in respect of listed public companies only.

Information as at 17 September 2021

1 Distribution of shareholders

	Ordinary Shares	Ordinary Shares	Partly Paid Shares	Partly Paid Shares
Category	Holders	% of securities in class	Holders	% of securities in class
1 - 1,000	114	0.00	-	-
1,001 - 5,000	189	0.03	-	-
5,001 - 10,000	159	0.07	-	-
10,001 - 100,000	1,229	2.69	2	2.96
100,001 and above	886	97.21	10	97.04
Total	2,577	100	12	100

The number of shareholdings held in less than marketable parcels is 834.

2 Voting rights

The voting rights attached to each class of equity security are as follows:

Fully paid ordinary Each ordinary share is entitled to one vote when a poll is called, otherwise each shares member present at a meeting or by proxy has one vote on a show of hands. Partly paid shares The holder will be entitled to exercise any vote attaching to a partly paid share at general meetings of members in accordance with the Constitution of the Company. Under the Constitution, on a poll, partly paid shares have a vote pro rata to the proportion of the total issue price paid up. Amounts paid in advance of a call will be ignored when calculating the proportion.

Options There are no voting rights attached to any class of options on issue. Performance rights There are no voting rights attached to any class of performance right on issue.

3 20 largest shareholders - ordinary shares as at 17 September 2021

		Number of Fully	% Issued
	Name	Paid Ordinary	Ordinary
		Shares	Capital
1	MR CHRISTOPHER LEWIS	211,249,233	11.42
2	DR ANDREW MATHARU	122,191,195	6.61
3	JALBAR PTY LTD	86,791,506	4.69
4	GULF NATURAL RESOURCES PTY LTD	85,367,270	4.62
5	ALITIME NOMINEES PTY LTD	84,080,589	4.55
6	MR DONALD FERGUSON	79,340,526	4.29
6	MR JONATHAN JAMES TREEN	79,340,526	4.29
8	CITYSCAPE ASSET PTY LTD	40,000,000	2.16
9	MR MARK BRACEWELL	39,666,435	2.14
10	MR STEPHEN SMITH	39,666,434	2.14
11	J & TW DEKKER PTY LTD	31,335,701	1.69
12	BARCLAY WELLS LTD	22,000,000	1.19
13	CITICORP NOMINEES PTY LIMITED	20,218,081	1.09
14	BUSHWOOD NOMINEES PTY LTD	16,195,851	0.88

Hartshead Resources NL (ACN 150 624 169)

ADDITIONAL INFORMATION

		Number of Fully	% Issued
	Name	Paid Ordinary	Ordinary
		Shares	Capital
15	EPIC HEALTH HOLDINGS PTY LTD	16,000,000	0.86
16	NUTHATCH SNS INVESTMENTS	15,016,579	0.81
17	BARCLAYS WELLS LIMITED	13,240,013	0.72
18	MR ROBERT COLLINS	12,864,790	0.70
19	MR STEVEN PANOMARENKO	12,780,008	0.69
20	THORNBURY NOMINEES PTY LTD	12,690,000	0.69
Totals:	Top 20 holders of ORDINARY FULLY PAID SHARES (Total)	1,034,323,490	55.92
Total Remaining Holders Balance		815,448,637	44.08
Total		1,849,772,127	100.00

4 Unquoted securities

5,703,550 Partly paid shares with an issue price of $0.20 of which $0.01 was paid upon issue
20,000,000 Unlisted Options with an exercise price of $0.04 and expiring 31 December 2022
63,844,991 Performance Rights expiring 30/09/2022
45,000,000 Performance Rights expiring 02/06/2024

5 Unquoted equity securities holders with greater than 20% of an individual class

As at 17 September 2021, the following classes of unquoted securities had holders with greater than 20% of the class on issue.

Partly paid shares

Holder No securities held % held	Holder No securities held % held
David Ormerod 2,225,000 39.01
*Options*– exercise price $0.04
Expiry date	Holder No securities held % held
31 December 2022	Battler Investment Corporation Pty Ltd 4,547,715 22.74
*Performance Rights*
Expiry date	Holder No securities held % held
2 June 2024	Jeff Barnes 15,000,000 33.33
2 June 2024	Neil Marcus 15,000,000 33.33
2 June 2024	Steve Roser 15,000,000 33.33

6 Other

The Company is not currently conducting an on-market buy-back. There are no issues of securities approved for the purposes of item 7 of section 611 of the Corporations Act which have not yet been completed. No securities were purchased on-market during the reporting period in respect of an employee incentive scheme. There are no holders with a substantial holding in the Company.

7 Corporate Governance

Pursuant to the ASX Listing Rules, the Company’s Corporate Governance Statement will be released in conjunction with this report. The Company’s Corporate Governance Statement is available on the Company’s website at: - - https://hartshead resources.com.au/corporate governance/

Hartshead Resources NL (ACN 150 624 169)

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HARTSHEAD RESOURCES NL — Annual Report 2021

65052_rns_2021-09-29_fced830f-817b-4c82-9372-d19833f3cf12.pdf