HAWTHORN RESOURCES LIMITED

ABN 44 009 157 439

13 October 2020

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Market Announcements Office ASX Limited

COMPANY ANNOUNCEMENT

Level 2, 90 William St Melbourne Victoria 3000 Australia Telephone: +61 3 9605 5950 Email: [email protected] www.hawthornresources.com

2020 Annual Report Appendix 4G/Corporate Governance Statement

Attached for release to the market and following confirmation of dispatch is a copy of the Company’s 2020 Annual Report as dispatched to members as requested, either by post or electronically.

In addition, attached for released to the market is the Company’s Appendix 4G – Key to Disclosures Corporate Principles and Recommendations/Corporate Governance Statement.

Annual General Meeting

The 2020 AGM is to be held:

Day/Date: Friday 30 October 2020 Time: 2.00 p.m. (registration from 1.30 p.m.) Place: As a virtual meeting.

Shareholders are reminded that a rising from the existing restrictions associated with the COVID-19 pandemic the Company’s 2020 AGM will be held as a virtual meeting – details to enable member’s participation and proxy voting are as circulated to members on 30 September 2020 per the Virtual Online Meeting Guide.

Accordingly, the Company’s 2020 AGM will be held as a virtual meeting via: https://agmlive.link/HAW20.

The above documentation can be viewed on the Company’s website at: www.hawthornresources.com

END

Enquiries: Mourice Garbutt, Company Secretary Telephone: + 613 9605 5902

This announcement was authorised for release by the Managing Director, Hawthorn Resources Limited.

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A N N U A L R E P O R T 2 0 2 0 H AW T H O R N R E S O U R C E S L I M I T E D

a e r i a l v i e w o f T r o u s e r L e g s g o l d m i n e – o p e n - p i t i n b a c k g r o u n d a n d u n d e r g r o u n d d r i l l i n g i n f o r e g r o u n d

H AW T H O R N R E S O U R C E S L I M I T E D W E S T E R N A U S T R A L I A G O L D F I E L D S A R E A M A P

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Hawthorn Resources Limited Table of Contents

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2020 ANNUAL REPORT

CORPORATE DIRECTORY	IV
MANAGING DIRECTOR/CEO REPORT	V
TENEMENT LIST	IX
ASX – ADDITIONAL SHAREHOLDER INFORMATION	XI
FINANCIAL REPORT – YEAR ENDED 30 JUNE 2020	1
Directors’ Report	2
Auditor’s Independence Declaraton	14
FINANCIAL STATEMENTS AND NOTES
Consolidated Statement of Proft or Loss and Other Comprehensive Income	15
Consolidated Statement of Financial Positon	16
Consolidated Statement of Cash Flows	17
Consolidated Statement of Changes in Equity	18
Notes to the Consolidated Financial Statements	19
Directors’ Declaraton	38
Auditor’s Independent Report	39

Annual Report cover photography:

Depicted

Front Cover aerial view of Trouser Legs gold mine – open-pit in background and underground drilling in foreground; Inside Front Cover Hawthorn Resources Limited tenement areas; Inside Back Cover Trouser Legs gold underground exploration drilling; Back Cover Trouser Legs gold underground exploration drilling

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Hawthorn Resources Limited Corporate Directory

Directors

Li, Yi Jie Non-Executive Director/ Chairman Mark Kerr Managing Director/CEO David Tyrwhitt Non-Executive Director Christopher Corrigan Non-Executive Director Liao, Yongzhong Non-Executive Director Liu, Zhensheng Non-Executive Director

Company Secretary Mourice Garbutt

Mine Manager

William Lloyd

Financial Officer

Tony Amato

Registered Office and Domicile

Level 2, 90 William Street, Melbourne, Victoria 3000, Australia Telephone: +61 3 9605 5901 E-mail: [email protected] Internet: htp://www.hawthornresources.com

Legal Form

A public company - Liability Limited by shares

Country of Incorporation

Australia

Australian Securities Exchange Listing Code

HAW - Ordinary shares

Share Registry

Link Market Services Ltd Tower 4, 727 Collins Street, Melbourne Victoria 3000, Australia Telephone: +61 1300 554 474 (toll free within Australia)

Auditors

BDO Audit Pty Ltd Collins Square, Tower 4, Level 18, 727 Collins Street, Melbourne, VIC 3008

Bankers

National Australia Bank Limited Level 1, 99 Bell Street, Preston Victoria 3072, Australia

Solicitors

MinterEllison Lawyers

Rialto Towers, 525 Collins Street, Melbourne Victoria 3000, Australia

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Hawthorn Resources Limited Managing Director/CEO Report

Hawthorn Resources Limited (“Hawthorn” or “the Company”) is an Australian incorporated and listed public company which has mining and exploration tenement interests in the State of Western Australia.

Gold

Financial year 2020 saw the continued development of Hawthorn as a mining- exploration company firstly through its involvement in and management of the Trouser Legs open-pit gold mine in the State of Western Australia and, latterly, as an extension of the open-pit the exploration and evaluation of the potential for an economic underground gold mining operation.

Iron Ore/Base Metals

Iron Ore - In the area of the Company’s Iron Ore /Base metals interests, through the Mt Bevan joint venture with Legacy Iron Ore Limited (“Legacy”) as the Manager, the exploration and evaluation activities have as reported in the Quarterly Activities Reports to the Australian Stock Exchange centred upon the northern section of the tenement holding to continue to assess the potential of nickel-copper and geophysical anomalies in close proximity to those identified by and reported on by St George Mining Limited (ASX code: “SGQ”) in the immediately adjoining tenement areas.

Base Metals -In addition, in relation to base metals Legacy has continued to review the iron ore deposits within the southern areas of the tenement holding - which adjoins the Mt Mason DSO deposit of Jupiter Mining. Discussions are proceeding with Jupiter who it is understood is moving to develop the Mt Mason iron ore deposit towards production via an IPO. Roughly 20% of the DSO ore pod extends into the southern boundary area of the Mt Bevan Joint Venture lease. Some form of purchase or joint venture is under consideration with Jupiter.

MINING OPERATIONS

Gold

As such, and on behalf of the Trouser Legs Mining Joint Venture [“TLMJV”] [Hawthorn 70% and GEL Resources Pty Ltd 30%], the Company, as Manager, is pleased to again be able to report to shareholders on the successful open-pit gold-mining activities at the historic Pinjin gold province area located 140 kms. north-east of Kalgoorlie in Western Australia

As for FY 2019 the ore parcels shipments were hauled to the nearby Carosue Dam Mill for processing by Toll treatment up to and including the shipment of the final parcel, Parcel 22, in December 2019.

As in prior year’s operations the Trouser Legs Gold Mine has continued to have up to 51 full time contracted personnel at the project with up to a further 8 contractors (surveyors, electricians etc.) on site on a regular as needs basis and a significant but unquantified number of indirect supporting roles when at full capacity.

Again, lead contractors at the mine were all Kalgoorlie based.

In summary, mining of the Trouser Legs open-pit gold mine by the TLMJV commenced in December 2017 and ended in December2019 with a total of 22 ore parcels having been sourced from beneath and to the south of the old open cut pit, where ore block continuity, strike extent and assay reproducibility increased along strike and at depth.

The financial success of the TLMJV mining of the open-pit is attributable to the efforts of those at the mine site to successfully ‘win’ the ore, the window of opportunity for toll treatment of the ore through the Carosue Dam mill and most importantly the capturing and timing of the major upswing in the gold price over the period of mining.

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Hawthorn Resources Limited Managing Director/CEO Report

The following is an indicative table of data arising from the TLMJV mining operations:

	Total Project	FY 2020
No. of parcels	22	7
BCM – waste	1,827,786	1,357,479
Tonnes ore processed	672,595	190,513
Average au g/t	2.40	2.97
High au g / t	4.45	4.45
Low au g / t	1.13	2.14
Grams au	1,617,438	566,064
Inital ounces au	52,009	18,197
Recovery percentage	95.55%	94.81%
Final ounces au	49,694	17,252
Average A$ price / ounce	$1,890.30	$2,165.60
Gross proceeds A$	$93,936,595	$37,360,850
A$ price / ounce range
High
September 2019	$2,220.08	$2,220.08
Low
August 2018	$1,639.29
July 2019		$2,022.38

As a responsible mining company Hawthorn, on behalf of its 3,700+ shareholders and the TLMJV, maintained throughout a professional and pro-active approach to the often-complex issues associated with Mine commencement and operations.

It should be noted that as with the Pinjin gold province the development of the Trouser Legs gold mine revealed a complex and sometime difficult ore body and the on-site work force is congratulated on the physical results that they achieved.

EXPLORATION AND DEVELOPMENT

• Gold

With the completion in December 2019 of mining at the Trouser Legs Gold Mine open-pit Project the Company’s priority has been, together with GEL Resources Pty Ltd, to explore and evaluate the potential for the development of an underground gold mining operation below and immediately to the south of the open-pit.

In addition to the Company’s Quarterly Activities Reports to the ASX for December 2019, March 2020 and June 2020 Shareholders are referred to the following public announcements relating to the progress of the exploration and assessment of the Trouser Legs Mining Joint Venture’s underground project which can be viewed on the Company’s website or the Company’s ASX webpage (“HAW”):

14 April 2020 – Gold Project Underground Update; • 17 June 2020 – Underground – Stage 3;
10 July 2020 – Resource Extension Drilling Update; &
31 August 2020 – Underground Stage 3 In-fill Drilling

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Hawthorn Resources Limited Managing Director/CEO Report

At the time of this report the joint venture is undertaking the Stage 3 in-fill drilling programme and waiting of the assay results from the Stage 4 drilling.

It is expected that by mid-October the outstanding assay results will have been received and the joint venture will be in a position to provide a full report on Stage 3 In Fill and the Stage 4 drilling together with an assessment of all aspects of the underground project. The assessment to include an examination of the Mineral Resource Estimate by the BMGS resource expert inclusive of the recent drilling programmes.

• Iron Ore/ Base Metals

As summarized above.

For additional detailed information on all of the Company’s financial, exploration and development activities in FY 2020 shareholders are referred to the Company’s Quarterly Activities Reports for September and December 2019 and March and June 2020 either on the Company’s website or on the Company’s ASX webpage.

FUNDING

Hawthorn has continued to be prudent and ensured that expenditures were contained within the annual activities budgets. The Company had cash funds on hand at 30 June 2020 of $29.987m (2019: $15.969m), receivables of $0.192m (2019: $0.005) and current liabilities totalling $2.957 (2019: $5.817).and working capital of $26.223m (2019: $17.042m), being current assets less current liabilities, and net assets of $28.727m (2019: $20.947m).

During the year, Hawthorn recorded:

Total Comprehensive Income for the year of $13.921 m (2019: $8.316 m) of which:

• Profit attributable to members $8.912 m (2019: $7.410 m) • Profit attributable to non-controlled interests $5.010 m (2019: $0.906 m)

Cash Flows - generated $20,391,112 (2019: $3,009,479) from operating activities, paid $1,120,900 (2019: $1,028,257) for exploration activities. It raised no capital from the issue of new equity (2019: $nil). In addition, it received no cash calls from the TLMJV partner (2019: $nil). Rather, return of funds and profit distributions totaling $6,140,822 (2019: $600,000) were provided to the TLMJV partner.

ISSUED SECURITIES

The number of securities on issue at the end of the June 2020 financial year was 333,515,613 ordinary fully paid shares (2019: 326,615,613 shares) as quoted on the ASX under security code: “HAW”.

CAPITAL RETURN AND SPECIAL DIVIDEND

At the 2019 Annual General Meeting a return of funds to shareholders totalling $13.5 million being funds considered to be in excess of the Company’s funding needs was foreshadowed. The return of funds being subject to rulings from the Australian Taxation Office (“ATO)” and, where necessary, approval of shareholders in meeting.

As announced to the ASX and arising from an ATO draft class ruling the proposed return of funds subject to the approval of shareholders in meeting will consist in aggregate of a Capital Return (approx. $8.23 million) and a Special Dividend (approx. $5.27 million) which approximates on a per share basis to:

• Capital Return: $0.0247 • Special Dividend: $0.0157 • Total $0.0404

A resolution seeking the approval of shareholders for the return of funds to shareholders is to be put at the 2020 Annual General Meeting which is to be held as a virtual meeting on 30 October 2020.

VII

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Hawthorn Resources Limited Managing Director/CEO Report

Subject to the approval by shareholders of the ordinary resolution the timetable for the payment of the Capital Return and Special Dividend will be:

Effective date of the Capital Return / Special Dividend:
Last day for trading in ‘cum Capital Return / Special Dividend’ Shares:
Trading in Shares ‘ex’ entitlement to Capital Return / Special Dividend commences:
Capital Return Record Date – being the date for determining entitlements to participate in Capital Return and Special Dividend:
Payment Date for Capital Return and Special Dividend:

2 November 2020 3 November 2020 4 November 2020 5 November 2020 20 November 2020

BOARD OF DIRECTORS

For the year ended 30 June 2020 and as at the date of this Report the Board of Directors is unchanged with six directors.

In October 2019 I stepped down as Chairman of the Board while continuing as Managing Director. In November 2019 the Board of Directors appointed Mr Li, Yi Jie as the Chairman.

As at the date of this Report the Board of Directors consists of Mr Li, Yi Jie as Chairman; Mr Mark G Kerr as Managing Director/ CEO and as Non-Executive Directors Messrs. Liao, Yongzhong; Li, Yijie, Liu, Zhensheng; Christopher D Corrigan and Dr David S Tyrwhitt. A full and detailed description of each Director in office at 30 June 2020 and as at the date of this Report is set out in the Directors’ Report as contained in the 2020 Annual Report.

WA PARLIAMENT SELECT COMMITTEE into mining activities on Pinjin Station

As has been reported to shareholders - following the appearance in June 2018 of reprehensible signage on the Crown Reserve on which the Trouser Legs open-pit gold mine was sited a Select Committee of the Western Australian Parliament was formed to inquire into mining operations on Pinjin Station with reference to the actions of mine operators, pastoral leaseholders and government agencies. The Select Committee was established in August 2018 and its Report was handed down in May 2020.

The Company welcomed the release of the final report by the Select Committee and noted that no adverse findings have been found by the Select Committee against the joint venture participants or any of the many service providers employed in the gold mining operations.

ASX WEBPAGE / HAW WEBSITE

The Company continues to update its website to shareholders and potential investors with reports and announcements. See the ASX webpage (ASX code: “HAW”) or the Company’s website at: www.hawthornresources.com

This Annual Report detailing all of Hawthorn’s activities over the past financial year 2019/20 is available on the Company’s website and the Company’s ASX webpage. Shareholders are encouraged to note the details as have been circulated to them for participation in the virtual Annual General Meeting to shareholders.

Mark Kerr Managing Director/CEO Melbourne, 30 September 2020

VIII

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Hawthorn Resources Limited

Table of Interests in Mining Tenements – as at 30 June 2020

Project/ Tenement	Locaton	Interest at 01.07.2020	Interest at 30.06.2019	Joint Venture Partner / Farm-In Partner / Farm Out Partner
Pinjin East	West Australia
E 31/781		100%	100%
E 31/782		100%	100%
E 31/783		100%	100%
E31/1050		100%	100%
E31/1050		100%	100%
Edjudina	West Australia
M 31/481		100%	100%
Mt Bevan Iron Ore Joint Venture	West Australia
E 29/510 -I		40%	40%	LegacyIron Ore Limited
Pinjin – Trouser Legs Joint Venture	West Australia
G 31/4		70%	70%	GEL Resources PtyLtd
L 31/32		70%	70%	GEL Resources PtyLtd
L 31/65		70%	70%	GEL Resources PtyLtd
L 31/66		70%	70%	GEL Resources PtyLtd
L 31/68		70%	70%	GEL Resources PtyLtd
L 31/69(A)		Applicaton	Applicaton	GEL Resources PtyLtd
M 31/78		70%	70%	GEL Resources PtyLtd
M 31/79		70%	70%	GEL Resources PtyLtd
M 31/88		70%	70%	GEL Resources PtyLtd
M 31/113		70%	70%	GEL Resources PtyLtd
M 31/284		70%	70%	GEL Resources PtyLtd
Edjudina - Pinjin Joint Venture	West Australia
E 31/789		80%	80%	RNC Resources
Teutonic Bore Royalty *	West Australia			Conditonal Royalty up to$1 m. *
E 37/902		0%	0%	Jabiru Metals
P 37/7351		0%	0%	Jabiru Metals

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Hawthorn Resources Limited

Table of Changes in Interests in Mining Tenements – Financial Year ended - 30 June 2020 – all Tenements located in West Australia

Tenement Reference	Nature of Interest [note (4)]	Interest at 01.07.2020	Interest at 30.06.2019
E 31/760	Expired	0%	100%
E 31/882	Expired	0%	100%
E 31/1049	Expired	0%	100%

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Hawthorn Resources Limited Additional Shareholder Information

HAWTHORN RESOURCES LIMITED

Additional Shareholder Information - ASX Listing Rule 4.10 as at 31 August 2020

QUOTED SHARES - ASX CODE : HAW

Twenty Largest Holdings : Ordinary Fully Paid Shares ASX Code : HAW	Twenty Largest Holdings : Ordinary Fully Paid Shares ASX Code : HAW	Number Shares Held	% Issued Shares	Ranking
FENG HUA MINING INVESTMENT HOLDING (HK) LIMITED		120,788,101	36.22	1
BELL POTTER NOMINEES LTD		56,095,028	16.82	2
MR MARK GREGORY KERR	AND ASSOCIATES	13,500,456	4.05	3
LEGACY IRON ORE LIMITED		12,575,000	3.77	4
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED		6,660,716	2.00	5
MR BRIAN THORNTON		5,761,879	1.73	6
YELRIF INVESTMENTS PTY LIMITED		5,500,000	1.65	7
MR VICTOR LORUSSO		4,127,529	1.24	8
DR MARK THEO BLOCH		4,020,500	1.21	9
MR WILLIAM DONALD LLOYD		3,842,138	1.15	10
AUSTIC ENTERPRISES PTY LTD		2,250,000	0.67	11
CITICORP NOMINEES PTY LIMITED		2,023,853	0.61	12
YELRIF INVESTMENTS PTY LIMITED		2,000,002	0.60	13
MR MICHAEL ROBERT WELLARD		2,000,000	0.60	14
MR MARK ANDREW MITCHELL & MRS LINDA JOAN MITCHELL		1,800,000	0.54	15
GARRETT SMYTHE LTD		1,699,971	0.51	16
MR LUCIO ANTHONY CONTE		1,643,765	0.49	17
MR TONY DOMENIC AMATO		1,500,000	0.45	18
MS JANET ELIZABETH WELLARD		1,328,319	0.40	19
KRISHNAJIPITALE PTY LTD		1,326,112	0.40	20
Total Holding - 20 Largest Shareholders		250,443,369	75.09
Total Holding - Other Shareholders		83,072,244	24.91
TOTAL HOLDING- ALL SHAREHOLDERS		333,515,613	100.00

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Hawthorn Resources Limited Additional Shareholder Information Cont.

VOTING RIGHTS
Shares:	One vote per share

RANGE OF SHAREHOLDERS - CODE : HAW	Holdings		Shares Held
Range	Holders	%	Holders	%
1 to 1,000	1,817	48.51	386,380	0.12
1,001 to 5,000	770	20.56	2,195,332	0.66
5,001 to 10,000	293	7.82	2,264,495	0.68
10,001 to 100,000	667	17.81	24,241,892	7.27
100,001 and Over	199	5.31	304,427,514	91.28
	3,746	100.00	333,515,613	100.00

MARKETABLE PARCELS - SHARES

Holdings that are less than a marketable parcel of the Company’s ordinary fully paid shares as at 31 August 2020 at a market closing price of 14.5 cents/share consisted of a total of 1,457,896 shares held by 2,338 holders each holding a parcel of 3,448 or less shares

BUY-BACK

The Company has not undertaken any share buy-back during or since the end of the period under review

SUBSTANTIAL SHAREHOLDINGS

As at 31 August 2020 the following substantial shareholdings have been declared to the Company

Declared entitled party: No. shares Feng Hua Mining Investment Holding (HK) Ltd 120,788,101 Christopher D Corrigan 56,095,028

NON-QUOTED PERFORMANCE RIGHTS

Number on issue Number Holders

Performance Rights over unissued ordinary shares NIL NIL

XII

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Hawthorn Resources Limited

ABN 44 009 157 439

FINANCIAL REPORT YEAR ENDED 30 JUNE 2020

Comprising:
Directors’ Report including the Remuneraton Report	2
Auditor’s Independence Declaraton	14
Consolidated Statement of Proft or Loss and Other Comprehensive Income	15
Consolidated Statement of Financial Positon	16
Consolidated Statement of Cash Flows	17
Consolidated Statement of Changes in Equity	18
Notes to the Consolidated Financial Statements	19
Directors’ Declaraton	38
Auditor’s Independent Report	39

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Hawthorn Resources Limited ABN 44 009 157 439

Directors’ Report 2020

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Hawthorn Resources Limited Directors’ Report

The Directors of Hawthorn Resources Limited, a Company listed on the Australian Securities Exchange, present their report for the year ended 30 June 2020.

1 Directors

The Directors of the Company in office since 1 July 2019 and up to the date of this Report are:

Mr Li, Yi Jie

Non-Executive Chairman

Appointed 30 October 2012; last re-elected 2018 AGM

In November 2019 following Mr Kerr having stepped down as Chairman the Board of Directors elected Mr Li as

Chairman of the Board of Directors.

Mr. Li is the Chairman of the Board of Lite Smooth Investment Limited. Mr. Li has been the President of Guangdong Carriton

Real Estate Co., Ltd. since 2001, which is focused on real estate development, which has total assets of RMB 5 billion.

Indirect interest in securities (ordinary fully paid shares) through a greater than twenty per cent shareholding interest in Feng Hua Mining Investment Holding (Hong Kong) Limited.

Mr Mark G Kerr - LL.B

Managing Director and Chief Executive Officer

Appointed 22 November 2007; last re-elected 2014 AGM

Mr Kerr was appointed as a Director and as Chairman of the Board of Directors of Hawthorn Resources Limited in November 2007, which merged with Ellendale Resources N.L in June 2008. In June 2016 the Board of Directors resolved to additionally appoint Mr Kerr to be Managing Director and Chief Executive Officer with immediate effect from 24 June 2016. In November 2019 Mr Kerr stepped down as Chairman but continued in his role as Managing Director and CEO.

Mr Kerr is an experienced director and advisor to listed and private companies and is a director of Berkeley Consultants Pty Ltd which specialises in public relations and reputation management consultancy. In addition to his business activities, Mr Kerr’s community involvement currently extends to being a member of the Victorian Committee for Juvenile Diabetes Research Foundation; a committee member of the St Vincent’s Institute Charity Golf Day Committee and a board member of International Specialised Skills Institute Inc.

Mr Kerr holds current directorships as non-executive Chairman of Contango Income Generator Ltd (ASX: CIE); non-executive chairman of Think Childcare Limited (ASX: TNK) and non-executive director chairman Think Childcare Development Limited (ASX: TND).

Former directorships of listed entities during the past three-year period being: non-executive chairman of Contango Microcap Limited (ASX: CTN), now known as NCS Small Cap Opportunities Company Limited (ASX: NSC) - resigned 13 October 2017 – and non-executive director of Alice Queen Ltd (ASX: AQX) resigned 30 June 2019.

Mr Kerr is a member of the Company’s Audit Committee.

Interest in securities (ordinary fully paid shares): 13,500,456 (2019: 11,100,456). Interest in securities (Performance Rights): Nil (2019: 2,400,000).

Mr Christopher D Corrigan - BEc

Non-Executive Director

Appointed 5 October 2017; and elected by shareholders 29 November 2017

Mr C D Corrigan was appointed as a non-executive director of the Company with effect from 5 October 2017.

Mr Corrigan has indirect involvement in Hawthorn’s Anglo-Saxon project through Hawthorn’s joint venture partner.

Mr Corrigan directly holds 56,095,028 shares in Hawthorn Resources Limited.

Mr Corrigan is a member of the Company’s Audit Committee.

Prior to his appointment to the Board of Directors of Hawthorn Resources Limited, Mr Corrigan has during the past three years held directorships in listed entities:

• Webster Limited – Chairman from February 2016 to February 2020.

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Hawthorn Resources Limited Directors’ Report Cont.

Dr David S Tyrwhitt - PhD(Geology) BSc(Hons) FSEG(USA) FAusIMM CPGeo

Non-Executive Director

Appointed 14 November 1996; last re-elected 2019 AGM

Dr Tyrwhitt has been a Director of the Company since 1996. He has more than 50 years of experience in the mining industry.

Dr Tyrwhitt worked for over 20 years with Newmont Mining Corporation in Australia, South East Asia and the United States. During this time, he was responsible for the discovery of the Telfer Gold Mine in Western Australia. He was Chief Executive of Newmont Australia Limited between 1984 and 1988 and Chief Executive Officer of Ashton Mining Limited between 1988 and 1991. He established his own consultancy business in 1991 working in South-East Asia and China with several Australian, Canadian and British mining and exploration groups as a consulting geologist.

Dr Tyrwhitt is the Chairman of the Company’s Audit Committee.

Dr Tyrwhitt holds no other directorships of listed entities.

Former directorships in the last three years of listed entities being Merlin Diamonds Limited (December 2011 to September 2019) and Northern Capital Resources Incorporated (January 2008 to October 2019).

Interest in securities (ordinary fully paid shares): 650,000 (2019: 150,000). Interest in securities (Performance Rights): Nil (2019: 500,000).

Mr Liao, Yongzhong – MBA

Non-Executive Director

Appointed 30 October 2012; last re-elected 2017 AGM

Mr. Liao, Yongzhong has served Guangdong Fenghua Advanced Technology (Holding) Co., Ltd. for more than 20 years. Since joining it in 1993, he has held the following significant posts: Vice General Manager and Secretary of the Board of Directors from October 2003 to July 2007, Director and Vice General Manager from January 2007 to August 2008, Vice General Manager from August 2008 to May 2018.

He holds concurrent posts of investment adviser of Guangdong Ligguang New Material Co., Ltd. and Fenghua Mining Investment Holding (HK) Limited.

Interest in securities (ordinary fully paid shares): Nil (2019: Nil).

Mr Liu, Zhensheng

Non-Executive Director

Appointed 9 December 2015; last re-elected as a Director 2019 AGM

Mr. Liu is a senior engineer in geology and mineral processing engineering. He has been engaged in mineral resources exploration, mine construction and operation management, as well as mining investment management for 35 years and has held the following executive positions:

Deputy Investment Director of Guangdong Hongda Blasting Co., Ltd.(2018 to present); Director and General Manager of Guangdong Rising Mineral Resources Investment and Development Co., Ltd. (2013 – 2018); Director of Guangdong Rising Holding (HK) Limited and Fenghua Mining Investment Holding (HK) Limited (2014 – 2016); Chairman of Laos (Rising) Investment and Development Co., Ltd. (2015 – 2018); Former Director and General Manager, Deputy Mine Director, and Chief Engineer of Guangdong Jinding Gold Co., Ltd (1989 – 2013); Former Mining Technology Director, technician in team 719 of Guangdong Geology and Mineral Resources organization in Hetai Gold Mine area (1983 – 1989);

In addition, Mr Liu was a member of the National Technical Committee for Standardisation of the Gold Industry, member of Shanghai Gold Exchange Committee, Director of Guangdong Precious Metals Standardisation Committee and member of Guangdong metallurgical engineering Senior engineer (Professor) Review Committee, expert of Guangdong Mining Resource Evaluation Center.

Interest in securities (ordinary fully paid shares): Nil (2019: Nil).

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Hawthorn Resources Limited Directors’ Report Cont.

FORMER DIRECTORS

During the financial year ended 30 June 2020 and up to the date of this Report there have been no resignations of directors from the Board of Directors.

DIRECTORSHIPS

Other than the directorships noted above there have been no other directorships of listed entities held in the past three years.

2 Principal Activities and Review and Results of Operations

Hawthorn Resources Limited (“Hawthorn” or “the Company”) and its controlled entities (“the Group”) is an Australian diversified base metals and gold mining and exploration company, with strategic and significant tenement holdings throughout the Central Yilgarn Iron Province and the South Laverton Gold Zone of Western Australia.

The principal activity of the Group during the financial year was the development and mining of the Trouser Legs Mining Joint Venture Project (“TLMJV” or “the Project”), in which the Company holds a 70 per cent interest. GEL Resources Pty Ltd (“GEL”) owns the remaining 30% interest in the project. The Company also holds interests in exploration assets and continues exploration and evaluation activities on these assets.

As Hawthorn is deemed to control the operation of the TLMJV it has accordingly consolidated in full the Project assets and liabilities, plus income and expenditure, with the interest GEL holds being represented in the financial accounts as a non-controlling interest.

Objective

The Company’s objective is to increase shareholder wealth through successful exploration activities whilst providing a safe workplace and ensuring best practice in relation to its environmental obligations.

Consolidated Statement of Profit or Loss and Other Comprehensive Income

During the year the Group generated revenues of $37,360,850 (2019: $39,258,959) from ore sales. Mining costs and related development expenses amounted to $21,773,181 (2019: $37,907,828), including amortisation and impairment of previously capitalised exploration expenditure totalling $2,392,867 (2019: $3,418,987).

Exploration write-offs and impairment for the year amounted to $583,940 compared to $286,607 in 2019.

Administration expenses for 2020 were $1,473,434 (2019: $1,210,655), and consolidated profit for the year was $13,921,133 (2019: $8,315,992).

Consolidated Statement of Financial Position

The Group had cash funds on hand at 30 June 2020 of $28,987,487 (2019: $15,969,638), receivables of $192,719 (2019: $5,529,287), inventories of ore of $nil (2019: $1,360,063), available for sale securities of $113,090 (2019: $1,549) and current liabilities totaled $2,957,004 (2019: $5,816,734).

At 30 June 2020, the Group had working capital of $26,223,202 (2019: $17,042,254), being current assets less current liabilities (excluding mining assets disclosed as current assets), and net assets of $28,727,314 (2019: $20,947,003).

Cash Flow

During the year, the Group generated $20,391,112 (2019: $3,009,479) from operating activities, paid $1,120,900 (2019: $1,028,257) for exploration activities. It raised no capital from the issue of new equity (2019: $nil). In addition, it received no cash calls from the TLMJV partner (2019: $nil). Rather, return of funds and profit distributions totaling $6,140,822 (2019: $600,000) were provided to the TLMJV partner.

3 Significant Change in State of Affairs

During the year the Group completed its mining operations at the Trouser Leg Mining Joint Venture. Subsequently the Group began evaluating the potential for an underground mine immediately to the south of the Trouser Legs open-pit gold mine.

The on-going COVID-19 pandemic has impacted how the Company operates, refer point 8 below.

Other than this matter, the Directors are of the opinion that there has not been any significant change in the state of affairs of the Company during the year under audit.

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Hawthorn Resources Limited Directors’ Report Cont.

4 Dividends

The Directors do not recommend the payment of a dividend and no amount has been paid or declared by way of dividend since the end of the previous financial year and up to the date of this Annual Report.

In November 2019 the Company announced in the Managing Director’s address to the Annual General Meeting that the Board of Directors announced an intention to make a return of funds equally to all shareholders from the $13.5 million proceeds from the disposal of the Company’s interest in the Yundamindera Project (Box Well and Deep South prospects). Such return to be subject to clarification from the Australian Taxation Office (“ATO”) as to the inherent nature of the proposed return of funds for taxation purposes and subject to shareholder approval.

Arising from an ATO draft class ruling the proposed return of funds subject to the approval of shareholders in meeting will consist in aggregate of a Return of Capital (approx. $8.23 million) and a Special Dividend (approx. $5.27 million). The approval of shareholder will be sought as an item of Special Business at the 2020 Annual General Meeting of shareholders.

5 Status of operations at reporting date

Exploration and Development

In the interval between the end of the financial year and the date of this Report and, as reported to the ASX, the Company has continued its exploration and development on its Western Australia Gold Projects in South Laverton Zone.

6 Events after the balance date

On 3 August 2020, the Victorian Government declared a State of Disaster in response to the development of increased COVID-19 cases. This resulted in increased restrictions around work places. Whilst impacting workers in the Melbourne office there has been no impact on the operations of the Company Refer note 8 below.

Other than the above, there has not been any matter or circumstance that has arisen after balance date that has significantly affected, or may significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial periods. Refer to note 7 below.

7 Future Developments and Results

The current focus is exploring and evaluating underground reserves at the Trouser Legs Mining Joint Venture (“TLMJV”) tenement areas.

The Group will also continue to develop its other exploration assets and will fund such operations from existing reserves, cash flows from the TLMJV mining operation and, where necessary, capital raising. Other than this there are no likely developments of which the Directors are aware of which could be expected to significantly affect the results of the Group’s operations in subsequent financial years.

8 COVID-19 Pandemic

On 30 January 2020 the World Health Organisation (“WHO”) declared a Public Health Emergency of International Concern in relation to the coronavirus (COVID-19) pandemic, subsequently characterising COVID-19 as a pandemic affecting worldwide. The Australian Federal and State governments introduced legislation to help control the spread of the COVID-19 virus, impacting how work places operated. The Western Australia state government introduced a State of Emergency in March 2020, limiting movement within the state, and also between WA and other states. The Victorian state government introduced a State of Disaster subsequent to the year end placing further restrictions upon workplaces in Victoria.

Judgement has been exercised in considering the impacts that the measures undertaken to limit the impacts of the COVID-19 pandemic has had, or may have, on the Company based on known information. This consideration extends to the nature of the Company’s operations, supply chain, staffing and geographic regions in which the Company operates. Other than as addressed in specific notes in this report, there does not currently appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the Company unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.

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Hawthorn Resources Limited Directors’ Report Cont.

9 Issued Securities

(a) Ordinary Shares

At the date of this Report this Company has on issue a total of 333,515,613 shares (2019: 326,615,613 shares). During the year 6,900,000 performance rights were converted to ordinary shares.

(b) Options

At the date of this Report the Company has no options on issue (2019: nil).

(c) ESOP – Performance Rights

In October 2018 by a resolution of the Board of Directors, with Directors Mr M Kerr and Dr D Tyrwhitt abstaining, a total of 20,165,000 Performance Rights were granted under the terms of the Company’s Employee Share Option Plan (“ESOP”) which included the grant of 8,250,000 performance rights to Mr Kerr and Dr Tyrwhitt as previously approved by shareholders. All the performance rights as granted were subject to the achievement of various milestones linked to the mining operations at the TLMJV mine and exploration successes.

As at 1 July 2019 an aggregate of 14,815,000 Rights remained. During the FY 2020 an aggregate of 7,165,000 Rights related to milestones associated with the Yundamindera Project were cancelled following the disposal of the Yundamindera Project related Tenements (Box Well and Deep South) leaving a residual balance of 7,650,000 Rights related to the TlLMJV gold mine milestones.

With the completion of mining of the TLMJV Anglo Saxon open-pit mine an aggregate of 6,900,000 Rights vested and were exercised by holders who received an aggregate of 6,900,000 ordinary fully paid Hawthorn shares. The balance of 750,000 Rights were cancelled. Of the Yundamindera Project related Rights held by Mr Kerr and Dr Tyrwhitt a total of 2,500,000 Rights were cancelled (respectively 2,000,000 and 500,000) and

of the TLMJV gold mine related Rights a total of 2,900,000 Rights were vested and exercised (respectively 2,400,000 and 500,000).

10 Directors Interest in Issued Securities

The declared relevant interest of each Director of fully paid ordinary shares of the Company as at the date of this Report is:

	2020 2019
M G Kerr C D Corrigan D S Tyrwhit Liao, Yongzhong Li, Yi Jie ** Liu, Zhengsheng	13,500,456 11,100,456 56,095,028 56,095,028 650,000 150,000 - - - - - -

Mr Kerr’s shareholding is held indirectly through superannuation funds that Mr Kerr is trustee of 7,877,794 ordinary shares (2019: 7,877,794 ordinary shares) and nil share indirectly through Berkeley Consultants Pty Ltd (2019: 622,662 ordinary shares) and Paradyce Pty Ltd 5,622,662 (2019: 2,600,000 ordinary shares), companies in which Mr Kerr is a director and shareholder.

** Mr Corrigan’s direct relevant interest in the Company’s shares is held through Bell Potter Nominees Ltd .

*** Mr Li, as the owner and controller of Lite Smooth Investment Limited an entity which has a voting power in Feng Hua Mining Investment Holding (HK) Limited (“Feng Hua”) greater than 20 Per cent, has a relevant shareholding interest in Hawthorn Resources Limited (“HAW”). As declared, Feng Hua holds 120,788,101 ordinary fully paid voting shares (2019: 120,788,101 shares) in HAW currently being the equivalent of a 36.22 percentage voting interest in HAW (2019: 36.98 per cent).

In addition, Mr Kerr and Dr Tyrwhitt hold the following vested performance rights:

2020 2019 M G Kerr nil 4,400,000 D S Tyrwhitt nil 1,000,000

These Rights, upon issue, can be converted into ordinary fully paid shares based on one new shares for each vested and converted Right. Issue is subject to Board approval of the vesting conditions.

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Hawthorn Resources Limited Directors’ Report Cont.

11 Meetings of Directors

The number of meetings of Directors held including meetings of Committees of the Board during the financial year including their attendance was as follows:

	BOARD	BOARD	AUDIT COMMITTEE **	AUDIT COMMITTEE **
	ELIGIBLE TO ATTEND	ATTENDED	ELIGIBLE TO ATTEND	ATTENDED
M G Kerr	4	4	2	2
C D Corrigan	4	4	2	1
D S Tyrwhit	4	4	2	2
Liao,Yongzhong	4	4	n.a.	n.a.
Li,Yi Jie	4	4	n.a.	n.a.
Liu,Zhensheng	4	4	n.a.	n.a.

Note:

In between Board Meetings, Directors passed a total of nine circulating resolutions which are then noted and ratified at the next occurring Board meeting.

** Audit, Compliance and Corporate Governance Committee considerations are, when required, Chaired by Dr Tyrwhitt. Mr Corrigan was not available to attend one of the Audit Committee meetings as he was overseas. He did provide commentary on all matters of business considered at the meeting.

12 Company Secretary

Mr M Garbutt, appointed in May 2008, is the Company Secretary of the Company and its subsidiaries. Mr Garbutt is a Fellow of Governance Institute of Australia (FGIA) and Chartered Institute of Secretaries (FCIS) and formerly a Justice of the Peace in Victoria. He has over 30 years’ commercial experience and currently conducts a corporate compliance and company secretarial company providing such services to several public and listed companies in Australia including the Hawthorn Resources Limited Group.

13 Directors’ and Officers’ Indemnity and Auditor Indemnity

Directors:

The Company has entered into an Indemnity Deed with each of the Directors and with certain former Directors which will indemnify them against liability incurred to a third party (not being the Company or any related company) where the liability does not arise out of misconduct including a breach of good faith. The Indemnity Deed will continue to apply for a period of 10 years after a Director ceases to hold office and a Director’s Access and Insurance Deed with each of the Directors pursuant to which a Director can request access to copies of documents provided to the Director whilst serving the Company for a period of 10 years after the Director ceases to hold office. There will be certain restrictions on the Directors’ entitlement to access under the deed.

Pursuant to the requirements of the Indemnity Deed, the Company has taken out Directors and Officers Liability Insurance the terms of which are subject to confidentiality prohibiting disclosure of the terms and conditions of the policy cover.

Auditors:

The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify an auditor of the Company or of any related body corporate against a liability incurred as an auditor.

14 Environment

The mining and exploration activities of the Hawthorn group are conducted in accordance with, and controlled principally by, Australian state and territory government legislation. The group has extensive land holdings in Australia for exploration and exploitation or resources. The Company employs a system for reporting environmental incidents, establishing and communicating accountability, and rating environmental performance. During the year, data on environmental performance was reported as part of the periodic exploration reporting regime. In addition, as required under state legislation, procedures are in place to ensure that the relevant authorities are notified prior to the commencement of ground disturbing exploration activities. Mining activities are governed by licencing arrangements and the Company is committed to complying in full to all conditions and regulations associated with the TLMJV mining licence requirements.

The Company is committed to minimising the impact of its activities on the surrounding environment at the same time aiming to maximise the social, environmental and economic returns for the local community. To this end the environment is a key consideration in our mining and exploration activities and during the rehabilitation of disturbed areas. Generally, rehabilitation occurs immediately following the completion of a particular phase of exploration or, in the case of TLMJV, after the completion of mining activities. In addition, the Company continues to develop and maintain mutually beneficial relationships with the local communities affected by its activities.

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Hawthorn Resources Limited Directors’ Report Cont.

15 Non-Audit Services

During the year BDO Audit Pty Ltd, the Company’s auditor, has not performed other services in addition to their statutory duties.

Details of the amounts paid to the auditor of the Company, BDO Audit Pry Ltd, and its related practices, for audit and non-audit services provided during the year are set out below.

	2020 $ 2019 $
Statutory audit Auditors of the Company - BDO - audit and review of fnancial reports Other Services - BDO - other non-audit services Total fees	71,000 69,716 - -
	71,000 69,716

16 Remuneration Report - Audited

The Remuneration Report sets out remuneration information for non-executive directors, executive directors and other key management personnel.

The Report contains the following sections:

(i) Management Services – Berkeley Consultants Pty Ltd;

(ii) Overview of Company Performance on Remuneration Structures;

(iii) Non-Executive Directors;

(iv) Executive Directors Remuneration;

(v) Details of Directors, Executives and Remuneration; and
(vi) Details of Directors and Executives Interest in Securities.

(i) Management Services – Berkeley Consultants Pty Ltd

The Company entered into a service arrangement with Berkeley Consultants Pty Ltd (“Berkeley Consultants”) effective from 1 April 2008.

Total fees paid or due during the 30 June 2020 financial year amounted to $190,000 plus GST (2019: $190,000) for the provision for serviced office facilities at 90 William Street, Melbourne.

This arrangement with Berkeley Consultants represented a related party transaction with Mr M Kerr having a material personal interest in the transactions through his interests in Berkeley Consultants Pty Ltd.

Given the nature of the related party interest in this matter, the non-related non-executive directors, in March 2014 conducted a review of the provision of serviced office facilities and executive functions offered to the Hawthorn Resources group of companies by Berkeley Consultants Pty Ltd noting the terms and procedures set out in Section 195 of the Corporations Act 2001 and approved an extension to the term of the arrangement to 31 December 2017 and thereafter of a month to month basis.

In considering the extension of the Agreement to 31 December 2017 and beyond and the services to be provided by Berkeley

Consultants Pty Ltd to the Hawthorn Resources group of companies, the non-related Directors noted the following:

(i) the terms proposed are similar to the previous arrangements being on arms-length commercial terms; and

(ii) the proposal includes provision of serviced offices with reception, boardroom and other facilities as required, payable quarterly in advance.

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Hawthorn Resources Limited Directors’ Report Cont.

(ii) Overview of Company Performance on Remuneration Structures The Company’s performance, during the current year and over the past four years, has been as follows:

Revenue Net proft / (loss) Basic earnings / (loss) per share – cents Diluted earnings per share-cents Net assets	2020 $ Consolidated 37,758,946 13,921,133 2.715 2.715 28,727,314	2019 $ Consolidated 39,318,439 8,315,992 2.280 2.280 20,947,003	2018 $ Consolidated 17,339,153 (5,586,744) (1.723) (1.723) 13,272,581	2017 $ Consolidated 70,669 (3,048,655) (1.780) (1.780) 10,907,265	2016 $ Consolidated
					161,679 (1,760,756) (1.028) (1.028) 13,955,920

The Directors do not believe the financial or share price performance of the Company is an accurate measure when considering remuneration structures as the Company is in the mineral exploration industry. Companies in this industry do not have an ongoing source of revenue, as revenue is normally from ad-hoc transactions.

The more appropriate measure is the identification of exploration targets, identification and/or increase of mineral resources and reserves and the ultimate conversion of the Company from explorer status to mining status. The development of the TLMJV is the Company’s first such development and will provide a measure of the Company’s progress.

(iii) Non-Executive Directors Total remuneration for all Non-Executive Directors, last voted upon by shareholders in January 2008 at a General Meeting of shareholders and approved with a 99.65% acceptance in favour of the resolution, is not to exceed $300,000 per annum. The current aggregate of Non-Executive Directors’ base fees for the current year was $170,000 per annum (2019: $170,000). Non-Executive Directors do not receive performance related remuneration. Directors’ fees cover all main Board activities and membership of Board committees. Non-Executive Directors do not receive any benefits on retirement.

However, and as permitted under the Company’s Constitution, Non-Executive Directors are entitled to receive payment for services provided which are over and above their normal directorial duties and which have been specifically requested by the Board of Directors. For such additional services, consultancy fees are in addition to directors’ fees and are outside of the shareholder approved aggregate for directors’ fees.

There has been no change to the remuneration structure during the year, and as such no independent remuneration expert was engaged during the year.

(iv) Executive Directors Remuneration

The Company seeks to reward executives with a level of remuneration based upon their position and responsibilities.

The Company’s Managing Director/CEO, Mr M G Kerr was appointed on 24 June 2016. The key elements of the Executive Service Agreement were:

(i) Term: to 31 December 2018, and thereafter, renewable annually;
(ii) Remuneration: $147,000 a year plus government superannuation levy;
(iii) Bonus: the Board of Directors may, in its absolute discretion, set performance criteria which, if met, will entitle a bonus of 50 per cent of the annual remuneration to be paid in respect of each Financial Year or pro rata Financial Year;
(iv) Termination: the Agreement may be terminated by:
(a) mutual agreement between the Company and the Executive;
(b) expiry of the Agreement at the agreed date as extended; and
(c) by being summarily terminated by the Company without notice or compensation where certain events have occurred. The Agreement does not contain a period of notice; and
(v) Termination Benefits: subject to an entitlement to a bonus there are no other amounts payable on Termination.

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Hawthorn Resources Limited Directors’ Report Cont.

(v) Details of Directors, Executives and Remuneration

The names of the Directors and Executives in office during the year are as follows: -

(a) Directors

Li, Yi Jie – Non-Executive Chairman (appointed to Board 30 October 2012, appointed Chairman 29 November 2019)

M G Kerr – Managing Director and Chief Executive Officer (appointed 22 November 2007)

C D Corrigan – Non-Executive Director (appointed 5 October 2017)

D S Tyrwhitt – Non-Executive Director (appointed 14 November 1996)

Liao, Yongzhong – Non-Executive Director (appointed 30 October 2012)

Liu, Zhensheng – Non-Executive Director (appointed 9 December 2015)

(b) Executives

M Garbutt – Company Secretary (appointed 5 May 2008)

Details of the nature and amount of each major element of remuneration of each Director of the Company and of each Executive of the Company are:

Year Ended 30 June 2020

	SHORT TERM EMPLOYMENT BENEFITS	SHORT TERM EMPLOYMENT BENEFITS	SHORT TERM EMPLOYMENT BENEFITS	POST EMPLOYMENT	EQUITY BASED PAYMENTS	TOTAL
	Cash Salary and Fees	Leave provision	Cash Bonus	Superannuaton Contributons	Performance Rights
	$	$		$	$	$
Non-Executve Directors
C Corrigan	30,000	-	-	2,850	-	32,850
D S Tyrwhit (1)	79,100	-	-	4,750	-	83,850
Liao, Yongzhong	30,000	-	-	-	-	30,000
Li, Yi Jie	30,000	-	-	-	-	30,000
Liu, Zhensheng	30,000	-	-	-	-	30,000
Sub-Total	199,100	-	-	7,600	-	206,700
Executve Directors
M G Kerr	147,000	-	-	13,965	-	160,965
Sub-Total	147,000	-	-	13,965	-	160,965
Other KMP
M Garbut	-	-	-	-	-	-
Sub-Total	-	-	-	-	-	-

Total	346,100	-	-	21,565	-	367,665

In addition to directors’ duties, Dr Tyrwhitt undertook additional exploration ‘field’ duties at the request of the Board of Directors and received $29,100 in consulting fees.

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Hawthorn Resources Limited Directors’ Report Cont.

Year Ended 30 June 2019

	SHORT TERM EMPLOYMENT BENEFITS	SHORT TERM EMPLOYMENT BENEFITS	SHORT TERM EMPLOYMENT BENEFITS	POST EMPLOYMENT	EQUITY BASED PAYMENTS	TOTAL
	Cash Salary and Fees	Leave provision	Cash Bonus	Superannuaton Contributons	Performance Rights
	$	$		$	$	$
Non-Executve Directors					(2) (3)
C Corrigan	30,000	-	-	2,850	-	32,850
D S Tyrwhit_(1)_	68,000	-	-	4,750	-	71,769
Liao,Yongzhong	30,000	-	-	-	(981)	30,000
Li,Yi Jie	30,000	-	-	-	-	30,000
Liu,Zhensheng	30,000	-	-	-	-	30,000
Sub-Total	188,000	-	-	7,600	(981)	194,619
Executve Directors
M G Kerr	147,000	-	-	13,965	(11,792)	149,173
Sub-Total	147,000	-	-	13,965	(11,792)	149,173
Other KMP
M Garbut	-	-	-	-	-	-
Sub-Total	-	-	-	-	-	-

Total	335,000	-	-	21,565	(12,773)	343,792

In addition to directors’ duties, Dr Tyrwhitt undertook additional exploration ‘field’ duties at the request of the Board of Directors and received $18,000 in consulting fees. 2. During the year performance rights valued at $8,361 vested with Dr Tyrwhitt during the year. An expense of $9,342 recorded in 2018 was reversed in 2019 in respect of performance rights that failed to vest.
During the year performance rights valued at $36,787 vested with Mr Kerr during the year. An expense of $48,579 recorded in 2018 was reversed in 2019 in respect of performance rights that failed to vest.

(vi) Bonuses included in Remuneration

The proportion of remuneration linked to performance and the fixed proportion are as follows:

	2020	2020	2020	2019	2019	2019
	Fixed remuneraton	At risk - STI	At risk – LTI	Fixed remuneraton	At risk - STI	At risk – LTI
Non-Executve Directors
C Corrigan	100%	-	-	100%	-	-
D S Tyrwhit (1)	100%	-	-	100%	-	-
Liao, Yongzhong
Li, Yi Jie	100%	-	-	100%	-	-
Liu, Zhensheng	-	-	-	-	-	-
Executve Directors
M G Kerr	100%	-	-	100%	-	-
Other KMP
M Garbut	-	-	-	-	-	-

(vii) Details of Directors and Executives Interest in Securities

The Company has on issue fully paid ordinary shares and since October 2018 Performance Rights.

Directors:	01.07.2019	Exercise ofperformance rights	On Market movements	30.06.2020
M G Kerr	11,100,456	2,400,000	-	13,500,456
C D Corrigan	56,095,028	-	-	56,095,028
D S Tyrwhit	150,000	500,000	-	650,000
Liao,Yongzhong	-	-	-	-
Li,Yi Jie	-	-	-	-
Liu,Zhensheng	-	-	-	-
Total Directors	67,345,484	2,900,000	-	70,245,484
Executves
M Garbut	-	-	-	-
Total Directors/Executves	67,345,484	2,900,000	-	70,245,484

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Hawthorn Resources Limited Directors’ Report Cont.

Non-Quoted performance rights:

Directors	01.07.2019	Exercise of performance rights	Cancellaton of performance rights	30.06.2019 Balance	30.06.2019 Vested
M G Kerr	4,400,000	(2,400,000)	(2,000,000)	-	-
C D Corrigan	-	-		-	-
D S Tyrwhit	1,000,000	(500,000)	(500,000)	-	-
Liao, Yongzhong	-	-	-	-	-
Li, Yi Jie	-	-	-	-	-
Liu, Zhensheng	-	-	-	-	-
Total Directors	5,400,000	(2,900,000)	(2,500,000)	-	-

Executves
M Garbut	-	-	-	-	-
Total Directors/Executves	5,400,000	(2,900,000)	(2,500,000)	-	-

The performance rights were granted in November 2017. Six different tranches were granted, each with different performance hurdles. The details are contained in note 18 to the financial statements. At 30 June 2020 there are no outstanding Performance Rights.

(viii) Other transactions with Key Management Personnel

(i) During the year the Company paid $190,000 (2019: $190,000) to Berkeley Consultants Pty Ltd for serviced office facilities. Berkeley Consultants Pty Ltd is an entity in which Mr. M Kerr has a material personal interest in the transactions through his interests in Berkeley Consultants Pty Ltd.
(ii) K R Corporate Compliance Pty Ltd., a company related to and controlled by Mr Garbutt, has provided corporate secretarial, compliance and support services to the Hawthorn Resources Limited group for which it was paid fees of $104,079 (2019: $129,211).
(iii) During the year the Company paid consulting fees totalling $6,840 (2019: $12,663) to Public Relations Exchange, an entity controlled by a related party of Mr. M Kerr.

This concludes the Remuneration Report, which has been audited.

Proceedings on behalf of the Company

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

Auditor’s Independence Declaration:

The auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is set out on page 14.

Signed in accordance with a resolution of the Board of Directors at Melbourne this 18th day of September 2020.

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Mark Kerr Chairman

Tel: +61 3 9603 1700 Collins Square, Tower Four Fax: +61 3 9602 3870 Level 18, 727 Collins Street www.bdo.com.au Melbourne VIC 3008 GPO Box 5099 Melbourne VIC 3001 Australia

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DECLARATION OF INDEPENDENCE BY WAI AW TO THE DIRECTORS OF HAWTHORN RESOURCES LIMITED

As lead auditor of Hawthorn Resources Limited for the year ended 30 June 2020, 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 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 Hawthorn Resources Limited and the entities it controlled during the period.

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Wai Aw Director

BDO Audit Pty Ltd

Melbourne, 18 September 2020

BDO East Coast Partnership ABN 83 236 985 726 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 East Coast Partnership 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.

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Hawthorn Resources Limited Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2020

Contnuing operatons Revenue Other income Expenses Mining costs Exploraton expenditure impaired Exploraton expenditure expensed Administraton expenses Depreciaton expense Share based payments beneft/(expense) Proft / (Loss) before income tax expense from contnuing operatons Income tax expense Proft / (Loss) for the year afer tax from contnuing operatons Other comprehensive income - items that may be reclassifed subsequently to proft or loss Total other comprehensive income for the year, net of tax Total comprehensive income for the year Proft / (Loss) atributable to members Proft / (Loss) atributable to non-controlling interests Earnings per share Basic proft / (loss) per share for the year atributable to ordinary equity holders Diluted proft / (loss) per share for the year atributable to ordinary equity holders	Consolidated
	Note 2020 $ 2019 $
	2 37,758,946 39,318,439 7 8,367,709 8,367,709 3 (21,773,181) (37,907,828) 8 (111,769) (92,236) 8 (472,171) (194,371) (1,473,434) (1,210,655) (7,258) (6,636) 18 - 41,570
	13,921,133 8,315,992 12 - -
	13,921,133 (4,841,174)
	- -
	- -
	13,921,133 8,315,992
	8,911,998 7,409,698 5,009,135 906,294
	13,921,133 8,315,992
	Cents Cents 13 2.715 2.280
	13 2.715 2.280

The Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the accompanying notes

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Hawthorn Resources Limited Consolidated Statement of Financial Position as at 30 June 2020

ASSETS Current Assets Cash and cash equivalents Trade and other receivables Inventories Development and mining assets Total Current Assets Non-Current Assets Other fnancial assets Exploraton expenditure Plant and equipment Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Assets Trade and other payables Provisions Total Current Liabilites TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Accumulated losses Equity atributable to the members of Hawthorn Resources Ltd Non-controlling interest TOTAL EQUITY	Note	Consolidated
		2020 $ 2019 $
	14(a) 5 6 4	28,987,487 15,969,638 192,719 5,529,287 - 1,360,063 - 2,392,867
		29,180,206 25,251,855
	8	113,090 1,549 2,389,852 1,501,905 1,170 8,428
		2,504,112 1,511,882
		31,684,318 26,763,737
	15 16	1,111,987 4,563,169 1,845,017 1,253,565
		2,957,004 5,816,734
		2,957,004 5,816,734
		28,727,314 20,947,003
	17 18 19	62,319,314 62,043,314 - 276,000 (33,874,948) (42,786,946) 28,444,366 19,532,368 282,948 1,414,635
		28,727,314 20,947,003

The Consolidated Statement of Financial Position is to be read in conjunction with the accompanying notes

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Hawthorn Resources Limited Consolidated Statement of Cash Flows for the year ended 30 June 2020

Cash fows from operatng actvites Receipts from customers (inclusive of GST) Payments in the course of operatons (inclusive of GST) Government grant income Interest received Net cash provided by / (used in) operatng actvites Cash fows from investng actvites Payments for exploraton expenditure Receipts from sale of exploraton leases Payments for investments Receipts from disposal of investments Net cash provided by / (used in) investng actvites Cash fows from fnancing actvites Return of cash calls to JV partner Net cash used in fnancing actvites Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year	Note	Consolidated
		2020 $ 2019 $
		42,855,291 40,657,745 (22,785,085) (37,707,746) 50,000 - 270,906 59,480
	14 (b)	20,391,112 3,009,479
		(1,120,900) (1,028,257) - 13,500,000 (113,090) - 1,549 -
		(1,232,441) 12,471,743
		(6,140,822) (600,000)
		(6,140,822) (600,000)
		13,017,849 14,881,222 15,969,638 1,088,416
	14(a)	28,987,487 15,969,638

The Consolidated Statement of Cash Flows is to be read in conjunction with the accompanying notes

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Hawthorn Resources Limited

Consolidated Statement of Changes in Equity for the year ended 30 June 2020

	Contributed Equity $ Accumulated Losses $ Reserves $ Non-controlling Interest $ Total Equity $
CONSOLIDATED At 1 July 2018 Loss for the year afer income tax expense Other comprehensive income for the year, net of tax Total comprehensive income for the year Conversion of performance rights to shares Share based payment Joint venturer - return of cash calls At 30 June 2019 At 1 July 2019 Proft for the year afer income tax expense Other comprehensive income for the year, net of tax Total comprehensive income for the year Conversion of performance rights to shares Proft distributon Joint venturer - return of cash calls At 30 June 2020	61,615,314 (50,196,644) 745,570 1,108,341 13,272,581 - 7,409,698 - 906,294 8,315,992 - - - - -
	- 7,409,698 - 906,294 8,315,992 428,000 - (428,000) - - - - (41,570) - (41,570) - - - (600,000) (600,000)
	62,043,314 (42,786,946) 276,000 1,414,635 20,947,003
	62,043,314 (42,786,946) 276,000 1,414,635 20,947,003 - 8,911,998 - 5,009,135 13,921,133 - - - - -
	8,911,998 - 5,009,135 13,921,133 276,000 - (276,000) - - - - - (4,531,830) (4,531,830) - - (1,608,992) -(1,608,992)
	62,319,314 (33,874,948) - 282,948 28,727,314

The Consolidated Statement of Changes in Equity is to be read in conjunction with the accompanying notes

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Hawthorn Resources Limited

Notes to the Consolidated Financial Statements for the year ended 30 June 2020

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Reporting Entity

Hawthorn Resources Limited (the “Company”) is a public company incorporated and domiciled in Australia. The principal activity of the Company during the financial year was development and mining of gold ore, as well as exploration and evaluation of various base metals and gold.

The consolidated financial report of the Company as at, and for the year ended, 30 June 2020, comprises the Company and its subsidiaries. The financial report was authorised for issue by the Directors on the date of this report.

The registered office and principal place of business of the entity is Level 2, 90 William Street, Melbourne, Victoria, 3000.

(b) Basis of Preparation

The financial report is presented in Australian dollars. The financial report has been prepared on a historical cost basis, except for the valuation of financial assets at fair value through other comprehensive income and financial assets at fair value through profit or loss that have been measured at fair value in accordance with Australian Accounting Standards.

Separate financial statements for Hawthorn Resources Limited as an individual entity are no longer presented as a consequence of a change in the Corporations Act 2001 , however limited information for Hawthorn Resources Limited as an individual entity is presented at Note 25.

The accounting policies set out in the notes to the financial statements have been applied consistently to all periods presented in the financial report.

The financial statements have been prepared on a going concern basis.

(c) Statement of Compliance

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (‘AASBs’) (including Australian Accounting Interpretations) issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001, as appropriate for for-profit oriented entities.

The financial report complies with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board.

(d) Critical Accounting Estimates and Judgments

The preparation of a financial report in conformity with Australian Accounting Standards requires management to make significant judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

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

Judgements made by management in the application of Australian Accounting Standards have a significant effect on the financial report and estimates made in accordance with these Standards have a significant risk of material adjustment in the next year. The areas most impacted include:

the amortisation of Development and Mining assets, as discussed in note 4 to the accounts; and
Exploration expenditure in note 8.
COVID-19 Pandemic. The Company has considered the impacts of COVID -19 upon its operations and future plans. There has been no impact upon the carrying value of any of the Group’s assets, and the Directors will continue to monitor the impacts of the pandemic, including Government policy, travel and logistics restrictions and the economic impacts.

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Hawthorn Resources Limited

Notes to the Consolidated Financial Statements for the year ended 30 June 2020

(e) Principles of Consolidation

Subsidiaries

The consolidated financial statements comprise the assets, liabilities and results of the Company, and the entities it controlled at the end of, or during, the financial year. The Company and its controlled entities together are referred to in this financial report as the Company or Group.

Subsidiaries are all those entities over which the consolidated Group has control. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are de-consolidated from the date that control ceases.

The balances and effects of transactions between entities in the Group have been eliminated. Where an entity either began or ceased to be controlled during the year, the results are included only from the date control commenced or up to the date control ceased. The accounting policies adopted in preparing the financial statements have been consistently applied by all entities in the Company.

The acquisition of Ellendale Resources NL (“Ellendale”) on 10 June 2008 was treated as a reverse acquisition in accordance with AASB 3 “Business Combinations” whereby Ellendale is considered the accounting acquirer on the basis that Ellendale is the controlling entity in the transaction. As a result, Ellendale is the continuing entity for consolidated accounting purposes and the legal parent, Hawthorn Resources Limited, is the accounting subsidiary.

Investments in subsidiaries are accounted for at cost or recoverable amounts in the individual financial statements of Hawthorn Resources Limited.

2. REVENUE

Ore sales Government grant income Interest Total revenue	Consolidated
	2020 2019 $ $
	37,360,850 39,258,959 87,100 310,996 59,480
	37,758,946 39,318,439

Accounting Policy

Sale of goods

Revenue from the sale of gold ore is recognised when the performance obligation is satisfied. The performance obligation is generally considered to be satisfied when the gold ore is physically transferred to the buyer.

Gold sales are recognised based on the quantity and grade of the ore mined and processed at Saracen Gold Mines Pty Ltd’s (“Saracen”) Carosue Dam Mill processing operation. The amount paid by Saracen is the amount billed, net of processing costs borne by Saracen and any discounts allowed. If required, adjustments are made for variations in commodity price, assay or weight between the time of dispatch and the time of final settlement.

Government grant income

Government grants are recognised as income when it is reasonable to expect that the grant will be received, when all of the conditions associated with the grant income have been completed and over the period in which the expenses being compensated for by the grant income are incurred. During the year the Company received grant income relating to the Cash Flow Boost awarded by the ATO in response to the COVID-19 pandemic.

Interest

Interest revenue is recognised as the interest accrues.

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Hawthorn Resources Limited

Notes to the Consolidated Financial Statements for the year ended 30 June 2020

3. MINING COSTS

Processing costs Mine management and contract services Camp costs Amortsaton Royaltes and related costs Other expenses Opening work-in-progress Closing work-in-progress Total mining costs	Consolidated
	2020 2019 $ $
	9,104,344 15,214,969 5,200,333 16,021,583 957,118 1,387,448 2,392,867 3,418,987 1,312,362 1,689,401 1,446,094 1,535,503
	20,413,118 39,267,891 1,360,063 - - (1,360,063)
	21,773,181 37,907,828

4. DEVELOPMENT AND MINING ASSETS

Areas in the mining phase – At cost
Current	-	2,392,867

The project is expected to be completed within the next 12 months and the assets are expected to be fully amortised within that period. Accordingly, the development and mining assets have been classified as current assets.

Movement in the carrying value of development and mining assets during the year was:

Opening balance at 1 July Amortsaton during the year (i) Balance at 30 June	2,392,867 5,811,854 (2,392,867) (3,418,987)
	- 2,392,867

(i) Costs transferred and capitalised are amortised on the unit-of-production method.

Accounting policy

Development expenditure incurred by or on behalf of the Group is accumulated separately for each area of interest in which economically recoverable resources have been identified. Such expenditure comprises cost directly attributable to the construction of the mine and the related infrastructure. The TLMJV project is a pre-existing open-cut mine. Therefore, the development decision and the mining decision was effectively made at the same time, with some initial development and stripping undertaken to confirm the operation. These costs were capitalised, and all the accumulated exploration and development costs classified into mining assets, when it was deemed the mine was capable of operating in the manner intended by management. Amortisation is charged to using the units-of-production basis results in an amortisation charge proportional to the depletion of proved, probable and estimated reserves. Development properties are tested for impairment in accordance with the policy of impairment of assets.

Accounting policy - Impairment

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 value 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 a cash-generating unit exceeds its recoverable amount, the asset or cash generating unit is impaired and is written down to its recoverable amount.

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Hawthorn Resources Limited

Notes to the Consolidated Financial Statements for the year ended 30 June 2020

In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax 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.

An assessment is also made at each reporting date as to whether there is an indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the

Key estimates and judgements

Ore reserve and resource estimate

Ore reserves are estimates of the amount of product that can be economically and legally extractable from the Group’s current mining tenements. The Group estimates its ore reserves based on information compiled by appropriately qualified persons able to interpret the geological data. The estimation of recoverable reserves is based on factors such as estimates of foreign exchange rates, commodity prices, future capital requirements and production costs, along with geological assumptions and judgements made in estimating the size and grade of the ore body. Changes in the reserve or resource estimates may impact on the value of mine properties and amortisation charges.

Units of production amortisation

Estimated recoverable reserves are used in determining the amortisation of mine specific assets. This results in an amortisation charge proportional to the depletion of the anticipated remaining life of mine production. Each item’s life, which is assessed annually, has regard to both its physical life limitations and to present assessments of economically recoverable reserves of the mine property at which the asset is located. These calculations require the use of estimates and assumptions, including the amount of recoverable reserves and estimates of future capital expenditure. The Group adopts a Run of Mine tonnes of ore produced methodology. This involves using tonnes of ore processed to estimate remaining recoverable reserves and requires accurate measurement of ore processed, the ore grade and the recoverable reserves.

Impairment

Based on an assessment of the key variables underpinning the value of the project the Directors have determined there are no indicators of impairment as at 30 June 2020.

5. TRADE AND OTHER RECEIVABLES

CURRENT Trade receivables (i) Other receivables (iii)	Consolidated
	2020 2019 $ $
	- 5,494,441 192,729 34,846
	192,729 5,529,287

(i) Other debtors relate to GST and sundry debtors.

Accounting policy

Receivables are recognised initially at the amount of consideration that is unconditional. The Group holds trade receivables with the objective to collect contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method. Any impairment or expected loss allowance is recorded in a separate account and any write off is offset against this account in the future.

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Hawthorn Resources Limited

Notes to the Consolidated Financial Statements for the year ended 30 June 2020

6. INVENTORIES

INVENTORIES
Ore stockpiles	Consolidated
	2020 2019 $ $ - 1,360,063

Accounting policy

Inventories of ore are valued at the lower of cost and net realisable value. Costs comprise direct material, labour, and an appropriate allocation of variable and fixed production overheads based on normal production capacity. These costs are included in Mining Costs in the Statement of profit or loss and other comprehensive income. Net realisable value is the estimated sales value in the ordinary course of the business less any direct and the estimated selling costs.

7. OTHER INCOME

Disposal of interests in mining leases Proceeds from disposal Disposal of exploraton assets Transacton costs Total other income	- 13,500,000 - (5,127,361) - (4,930)
	- 8,367,709

During the year the Group completed the disposal of its interests in the Deep South and Yundamindera mining leases. The disposal included all tenements held under the licences. Proceeds were received in cash during the year.

8. EXPLORATION EXPENDITURE

Areas in the exploraton phase
At cost	2,389,852	1,501,905
Movement in the carrying value of exploraton expenditure during the year was:
Opening balance at 1 July	1,501,905	5,892,921
Costs incurred during the year	1,995,083	1,022,952
Disposal of exploraton assets	-	(5,127,361)
Exploraton expenditure writen of during the year	(472,171)	(194,371)
Exploraton expenditure impaired during the year (i)	(111,769)	(92,236)
Balance at 30 June	2,389,852	1,501,905

(i) Impairment expense for the year relates to amounts expended on lower priority projects where the Group has not committed to future expenditure.

Accounting policy

Exploration expenditure is capitalised for each separate area of interest where rights to tenure are current and:

(a) such costs are expected to be recovered through successful development and exploitation or by sale; or
(b) where activities in the area of interest have not yet reached a stage, which permits reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in relation to the area are continuing.

Ultimate recoupment of exploration expenditure carried forward is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas.

The carrying values of expenditures carried forward are reviewed for impairment at each reporting date when the facts, events or changes in circumstances indicate that the carrying value may be impaired. Accumulated expenditures are written off to the Profit or Loss to the extent to which they are considered to be impaired.

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Hawthorn Resources Limited

Notes to the Consolidated Financial Statements for the year ended 30 June 2020

The key points that are considered in this review include:

planned drilling programs and data evaluation;
environmental issues that may impact the underlying tenements;
and the estimated market value of assets at the review date.

Information used in the review process is rigorously tested to externally available information as appropriate.

The Group conducted a review of its exploration areas of interest at Mt Bevan and Trouser Leg, considering planned exploration activity over the next twelve months, which is over and above the expenditure requirements to maintain the tenements in good standing. In addition, the Group has other areas of interests, classified as a lower priority over the next twelve months. These lower priority areas of interests have been fully impaired in the current year.

Key estimates and judgements

The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgement in determining whether it is likely that future economic benefits are likely, which may be based on assumptions about future events or circumstances. Estimates and assumptions made may change if new information becomes available. If, after expenditure is capitalised, information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalised is written off to profit or loss in the period when the new information becomes available.

9. INTEREST IN JOINT OPERATIONS

The Company has an interest in the following joint ventures: Edjudina – Pinjin (Avoca Resources Pty Ltd) (i) Mt Bevan (Legacy Iron Ore Limited) (ii)	Consolidated
	2020 2019 $ $
	80% 80% 40% 40%

(i) Edjudina – Pinjin: Avoca Resources Pty Ltd has a non-contributory 20% interest that is free carried to decision to mine. Avoca Resources Pty Ltd was acquired by RNC Minerals from Westgold Resources Limited;
(ii) Mt Bevan: Whilst the Company’s financial/contributing interest in the joint operation is 40% the Company and Legacy Iron Ore Limited share management decision making on a 50/50 basis.

The principal activity of these joint operations is mineral exploration all of which are located within Australia.

The Company’s interest in these projects is included in exploration expenditure (Note 8).

Included in the assets and liabilities of the Group are the following assets and liabilities employed in the joint operations:

Assets Exploraton expenditure Total Assets Liabilites Trade and other payables Total Liabilites	Consolidated
	2020 2018 $ $
	1,501,905 1,501,905
	1,501,905 1,501,905
	59,000 59,000
	59,000 59,000

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Hawthorn Resources Limited

Notes to the Consolidated Financial Statements for the year ended 30 June 2020

Included in the Group commitments (note 10) are the following commitments in relation to the joint ventures:

Exploraton Not later than 1 year Later than one year but not later than fve years More than fve years Total	Consolidated
	2020 2018 $ $
	245,010 245,010 595,840 686,640 922,810 1,070,020
	1,763,660 2,001,670

Accounting policy

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. The Company has recognised its share of jointly held assets, liabilities, revenues and expenses of joint operations. These have been incorporated in the financial statements under the appropriate classifications.

10. COMMITMENTS

(a) Exploration

The Group must perform minimum exploration work and expend minimum amounts of money on its tenements. The overall expenditure requirement tends to be limited in the normal course of the Group’s tenement portfolio management through expenditure exemption approvals and expenditure reductions through relinquishment of parts or the whole of tenements deemed non prospective.

Should the Group wish to preserve interests in its current tenements the amount which may be required to be expended is as follows:

Not later than one year Later than one year but not later than fve years More than fve years	Consolidated
	2020 2019 $ $
	423,610 538,610 835,240 1,101,040 1,004,410 1,165,220
	2,263,260 2,804,870

The terms and conditions under which the Group has title to its various mining tenements oblige it to meet tenement rentals and minimum levels of exploration expenditure as gazetted by the Department of Industry and Resources of Western Australia, as well as Local Government rates and taxes.

The “More than five years” component represents commitments of up to sixteen years in respect of mining licences which are granted for a period of twenty-one years, but in common with prospecting licences and exploration licences they may be relinquished or sold by the Group before the expiry of the full term of the licence.

(b) Operating Leases

The Company’s lease for its principal place of business expired on 31 December 2018 and thereafter the Company has leased the premises on a month to month basis.

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Hawthorn Resources Limited

Notes to the Consolidated Financial Statements for the year ended 30 June 2020

11. EXPENSES

Profit before income tax expense includes the following expenses whose disclosure is relevant in explaining the performance of the Group:

(i) Payroll and contractor expenses Salaries and other employee costs Superannuaton Insurance Consultng and contractor fees Share based payments (see note 18) Total payroll and contractor expenses (ii) Fully serviced ofce rental expense	Consolidated
	2020 2019 $ $
	436,280 478,640 27,386 27,265 47,982 43,486 111,500 52,000 - (41,570)
	623,148 559,821
	190,000 190,000

Accounting policy

Other taxes

Revenues, expenses and assets are recognised net of the amount of associated 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; and
receivables and payables are stated with the amount of GST included.

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 included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to the taxation authority.

12. TAXATION

(a) Income tax recognised in proft or loss Tax expense comprises: Current tax beneft Deferred tax expense relatng to the originaton and reversal of temporary diferences Tax losses not recognised Income tax expense	Consolidated
	2020 2019 $ $
	- - - - - -
	- -

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Hawthorn Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2020

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

Proft / (Loss) from operatons Income tax expense at 27.5% (2019: 27.5%) Non-deductble expenditure Capital expenditure deducton Decline of value of depreciatng assets Allowable deductons Tax base of assets disposed of Tax and capital losses utlised Income tax expense (b) Deferred tax assets and liabilites Deferred tax liability comprises: Exploraton costs Amounts not recognised due to ofset of deferred tax assets (detailed below) Deferred tax asset comprises: Accruals and payables Employee enttlements Blackhole expenditure Tax Losses utlised to ofset remaining DTL Provisions Deferred tax liabilites not recognised Tax Loss amounts where beneft not recognised (potental beneft of 27.5%) *	Consolidated
	2020 2019 $ $
	13,921,133 8,315,992 3,828,312 2,286,898 1,495,110 1,206,916 (404,769) (282,667) (1,996) (1,825) (442,872) (165,207) (17,977) 868,081 (4,455,808) (3,912,196)
	- -
	332,731 746,583 (332,731) (746,583)
	- - 167,112 71,775 27,155 33,564 52,732 79,098 - 250,980 480,225 311,166
	727,224 (394,493) -
	332,731 746,583
	6,549,719 22,752,658

*At 10 June 2008, the Company formed a tax consolidated group. These losses are subject to further review by the Company to determine if they satisfy the necessary legislative requirements under the income tax legislation for the carry forward and recoupment of tax losses. Additionally, a deferred tax asset has not been recognised in respect of these items because at this stage of the Company’s development, it is not currently considered probable that future taxable profits will exceed the value of the gross value of the deferred tax assets available to the Company. This is due to the uncertainties and risks associated with estimating economic benefits arising from the Trouser Legs Mining Joint Venture, due to the risk factors discussed related to the Company’s assets and operations.

Accounting policy

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.

Current tax is the expected tax payable on the taxable income for the period. The Company has not derived taxable income in either the current or previous period.

Deferred income tax is determined using the balance sheet method which calculates temporary differences on the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

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Hawthorn Resources Limited

Notes to the Consolidated Financial Statements for the year ended 30 June 2020

Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and laws) that have been enacted or substantively enacted at the balance sheet date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the same taxable entity and the same taxation authority.

Hawthorn Resources Limited (the ‘head entity’) and its wholly-owned Australian entities have formed an income tax consolidated group under the tax consolidation regime. The head entity and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the group allocation approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group.

13. EARNINGS PER SHARE

Basic and diluted earnings per share

Basic and diluted earnings per share is calculated as follows:

Proft for the year atributable to members Weighted average number of ordinary shares at the end of the fnancial year Basic/Diluted Earnings Per Share (cents)	Consolidaton
	2020 2019 $ $
	8,911,998 7,409,698
	Consolidated
	2020 2019 Number of Shares Number of Shares
	328,266,615 325,047,257 2.715 2.280

There were no outstanding options at the reporting date (30 June 2019: $nil). Outstanding performance rights are considered non-dilutive as the rights have not vested due to the vesting conditions not being satisfied as at 30 June 2020.

14. CASH AND CASH EQUIVALENTS

(a) Cash and cash equivalents Cash at bank Term deposits Total cash and cash equivalents	Consolidated
	2020 2019 $ $ 7,079,695 1,895,810 21,907,792 14,073,828
	28,987,487 15,969,638

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Hawthorn Resources Limited

Notes to the Consolidated Financial Statements for the year ended 30 June 2020

Accounting policy

Cash and short-term deposits in the Consolidated Statement of Financial Position comprise cash at bank and short-term deposits whose maturity is within three months or less from the reporting date, net of bank overdrafts.

(b) Reconciliaton of proft / (loss) afer tax to net cash used in operatng actvites Proft / (Loss) for the year afer tax Adjustment for: Write of of exploraton expenditure Impairment of exploraton expenditure Amortsaton of mine assets Depreciaton Gain on disposal of exploraton leases Impairment of fnancial assets Share based payments Net cash from operatng actvites before change in assets and liabilites Change in assets and liabilites: Decrease in receivables and other assets Decrease / (Increase) in inventories Decrease in trade and other payables Increase in provisions Net cash from / (used in) operatng actvites	Consolidated
	2020 2019 $ $ 13,921,133 8,315,992 472,171 194,371 111,769 92,236 2,392,867 3,418,987 7,258 6,636 - (8,367,709) - 683 - (41,570)
	16,905,198 3,619,626 5,336,569 1,408,124 1,360,063 (1,360,063) (3,802,169) (1,535,898) 591,451 877,690
	20,391,112 3,009,479

b) Reconciliation of cash

For the purpose of the Consolidated Statement of Cash Flows, cash includes cash on hand and at bank.

(c) Non-cash financing and investing activities

During the year, there was no non-cash financing or investing activities (2019: Nil).

15. TRADE AND OTHER PAYABLES

Trade and other payables 1,111,987 4,563,169

Accounting policy

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

16. PROVISIONS

Employee enttlements Land rehabilitaton Provisions Reconciliaton of Land Rehabilitaton provision Opening balance Provision made in the year Closing balance	458,746 122,052 1,386,271 1,131,513
	1,845,017 1,253,565
	1,131,513 348,334 254,758 783,179
	1,386,271 1,131,513

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Hawthorn Resources Limited

Notes to the Consolidated Financial Statements for the year ended 30 June 2020

Accounting policy

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the risks specific to the liability.

Key estimates and judgements

Land rehabilitation

The Group makes provision for the rehabilitation of the land used in its mining operations. The provision is required to estimate the costs that the Group will incur to rehabilitate the land in the future. The quantum of the rehabilitation work is uncertain, and therefore the estimates are subject to a number of factors that can vary. These factors include of the costs of performing the work, the volume of land to be rehabilitated, regulatory changes, technological changes and discounting factors.

17. CONTRIBUTED EQUITY

Ordinary shares	Consolidated
	2020 2019 No. of shares $ No. of shares $
	333,515,613 62,319,314 326,615,613 62,043,314

The reconciliation of opening and closing equity is as follows:

Balance at 1 July 2018 Exercise of performance rights At 30 June 2019 Exercise of performance rights At 30 June 2020	2020 No. of Shares 2019 No. of Shares $ $ 321,265,613 61,615,314 5,350,000 428,000
	326,615,613 62,043,314 6,900,000 276,000
	333,515,613 62,319,314

Terms and Conditions of Issued Capital

Ordinary Shares (quoted): HAW

Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders meetings. In the event of winding up of the Company ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any proceeds of liquidation.

Accounting policy

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

Capital Management

The Company’s policy in relation to capital management is for management to regularly and consistently monitor future cash flows against expected expenditures. The Board determines the Company’s need for additional funding by way of either share placements or loan funds depending on market conditions at the time. Management defines working capital in such circumstances as its excess liquid funds over liabilities and defines capital as being the ordinary share capital of the Company.

There were no changes in the Company’s approach to capital management during the year.

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Hawthorn Resources Limited

Notes to the Consolidated Financial Statements for the year ended 30 June 2020

18. RESERVES

18. RESERVES
	Consolidated
	2020	2019
	$	$
Performance rights reserve	-	276,000

(a) Nature of Reserve This reserve records the value of the performance rights issued by the Company, in accordance with the measurement requirements of AASB 2 Share Based Payments. At the Group’s AGM in November 2017, it was resolved to award long term performance rights to key personnel of the Company, and performance rights were awarded to 6 officers of the Group. Each right is to be issued upon completion of the performance hurdle. Each right issued entitles the officer to one share per right at no cost. The rights are issued upon vesting and exercisable as soon as issued. The performance rights granted were in six tranches and details were as follows:

Grant Date	Total number granted	Performance conditon	Performance date	STATUS
29/11/2017	2,000,000	Completon of capital raising	18/9/2017	Vested and issued
29/11/2017	3,350,000	First deliver/sale of gold ore	28/2/2018	Vested and Issued
29/11/2017	3,450,000	Completon of 50% of mining Pit 2	31/10/2018	Vested
29/11/2017	4,200,000	Completon of Pit 2 mining	28/2/2019	Vested and issued
29/11/2017	2,450,000	Discoveryof additonal 130,000 oz at Yundamindera/Box Well	N/A	Expired *
29/11/2017	4,715,000	Discovery of further 240,000 oz at Yundamindera/Box Well	N/A	Expired *
Total	20,165,000

Yundamindera/Box Well has been sold, and therefore the performance rights cannot vest.

In accordance with AASB 2 the Company has valued each of the performance rights, and then determined the probability of the performance rights vesting, and calculated the total cost of issuing the performance rights. In order to estimate the cost, the Company has used the following inputs into a Black-Scholes/Binomial convergence model.

Input	Tranche 1	Tranche 2	Tranche 3	Tranche 4	Tranche 5	Tranche 6
Valuaton Date	29/11/2017	29/11/2017	29/11/2017	29/11/2017	29/11/2017	29/11/2017
VestngPeriod	18/9/2017	28/2/2018	31/10/2018	28/2/2019	N/A	N/A
Spot Price	$0.08	$0.08	$0.08	$0.08	$0.08	$0.08
Volatlity	61%	61%	61%	61%	61%	61%
Risk free rate	4.25%	4.25%	4.25%	4.25%	4.25%	4.25%
Dividendyield	0%	0%	0%	0%	0%	0%
Valueper right	$0.08	$0.08	$0.08	$0.08	$0.08	$0.08
Probabilityof success	100%	80%	60%	50%	25%	5%
Number of rights	2,000,000	3,350,000	3,450,000	4,200,000	-	-
Expected cost $	160,000	268,000	276,000	336,000	-	-
Actual Expense
2020 $	-	-	-	-	-	-
2019 $			115,377	(156,947)	-	-

Where the probability of the rights vesting is below 50% no expense has been recorded.

Tranche	Performance Hurdle
1	Completon of capital raisingon 18 September 2017
2	First Gold Sale from Anglo Saxon
3	Half-completon of the Anglo-Saxon openpit miningby31 October 2018
4	Completon of open-pit miningat Anglo-Saxon by30 June 2010
5	Yundamindera-Box Well discoveryof additonal 130,000oz(total 260,000oz)
6	Yundamindera-Box Well discovery of additonal 240,000oz (total 500,000oz)

There are no performance rights outstanding at 30 June 2020.

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Hawthorn Resources Limited

Notes to the Consolidated Financial Statements for the year ended 30 June 2020

(b) Movements in reserve

Balance as at 1 July Expense during the year Expense reversed on reassessment of probability of achieving performance hurdle Issued and exercised during the year (i) Balance at 30 June	Consolidated
	2020 2019 $ $
	276,000 745,570 - 115,377 - (156,947) (276,000) (428,000)
	- 276,000

(i) All outstanding performance rights were issued and 6,900,000 were converted into ordinary shares in May 2020. The remaining 750,000 Performance Rights were cancelled. (c) Accounting policy

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

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

Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured initially at the fair value of the liability. At the end of each reporting period until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured, with any changes in fair value recognised in profit or loss for the year.

19. NON-CONTROLLING INTERESTS

Hawthorn Resources Limited has a 70% equity interest in the Trouser Legs Mining Joint Venture (“TLMJV”) Project with GEL Resources Pty Ltd holding a 30% interest. As Hawthorn is deemed to control the operation it has accordingly consolidated in full the TLMJV Project assets and liabilities, plus income and expenditure, with the interest GEL holds being represented in the financial accounts as a non-controlling interest.

The movement in GEL’s non-controlling interest during the year ended 30 June 2020 is shown below and is represented by contributed equity and adjusted for its share of the Joint Venture profit or loss for the period.

At 1 July Proft distributon Return of cash calls Contributons called to exploraton expenditure Share of proft for the year At 30 June	Consolidated
	2019 2018 $ $
	1,414,635 1,108,341 (4,531,830) - (1,085,795) (600,000) (523,197) - 5,009,135 906,294
	282,948 1,414,635

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Hawthorn Resources Limited

Notes to the Consolidated Financial Statements for the year ended 30 June 2020

20. RELATED PARTIES

(a) Key Management Personnel Disclosures

The key management personnel for the Company during the year are set out as follows: -

Directors

Li, Yi Jie – Non-Executive Director (Appointed 30 October 2012) Mark G Kerr – Managing Director/CEO (Appointed 22 November 2007) Christopher D Corrigan – Non-Executive Director (Appointed 5 October 2017) David S Tyrwhitt – Non-Executive Director (Appointed 14 November 1996) Liao, Yongzhong – Non-Executive Director (Appointed 30 October 2012) Liu, Zhensheng – Non-Executive Director (Appointed 9 December 2015) Mourice Garbutt – Company Secretary (Appointed 5 May 2008)

The key management personnel compensation is as follows:

Short-term employee benefts Share based payments Post-employment benefts	2020 2019 $ $
	346,100 335,000 - (12,773) 21,565 21,565
	367,665 343,792

In addition to the above disclosed remuneration, $190,000 (2019: $190,000) was paid to Berkeley Consultants Pty Ltd during the year for serviced office facilities. As noted, Berkeley Consultants Pty Ltd is an entity in which Mr. M Kerr has a material personal interest in the transactions through his interests in Berkeley Consultants Pty Ltd.

During the year the Company paid consulting fees totalling $6,840 (2019: $12,663) to Public Relations Exchange, an entity controlled by a related party of Mr. M Kerr.

K R Corporate Compliance Pty Ltd., a company related to and controlled by Mr Garbutt, has provided corporate secretarial, compliance and support services to the Hawthorn Resources Limited group for which it was paid fees of $104,079 (2019: $129,211).

At year end, no amounts were due to or from key management personnel (2019: $nil).

(b) Wholly Owned Group Transactions

During the year there were no transactions with controlled entities, other than movements in the respective inter-company loan accounts.

As at 30 June 2020, Hawthorn Resources Limited loan balances with its subsidiary companies were:

Payable to Ellendale Resources Pty Ltd $515,746 (2019: $516,280) Receivable from Northern Resources Australia Pty Ltd $261,820 (2019: $261,553) Receivable from Trouser Leg Mining Joint Venture $1,677,387 (2019: $71,097)

As at 30 June 2020, Ellendale Resources Pty Ltd loan balances with its subsidiary companies were:

Payable to Sunderland Pty Ltd $477,423 (2019: $477,691) Receivable from Northern Resources Australia Pty Ltd $140,738 (2019: $140,738)

All loan balances have been provided on an interest free basis and have no fixed repayment date.

Movements in loan account during the year relate to payment of expenses. Expenses paid and charged through the loan accounts during the year relate to exploration, tenement costs and Company administration expenses.

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Hawthorn Resources Limited

Notes to the Consolidated Financial Statements for the year ended 30 June 2020

21. CONSOLIDATED ENTITIES

21. CONSOLIDATED ENTITIES
Name	Country of Incorporaton	Ordinary Share Consolidated Equity Interest
		2020	2019
		%	%
Parent entty
Hawthorn Resources Limited	Australia

Controlled enttes
Ellendale Resources Pty Ltd	Australia	100%	100%
Sunderland Pty Ltd *	Australia	100%	100%
Northern Resources Australia Pty Ltd *	Australia	100%	100%
Trouser Leg Mining Joint Venture**	Australia	70%	70%

Sunderland Pty Ltd and Northern Resources Australia Pty Ltd are non-operating 100% owned subsidiaries of Ellendale Resources Pty Ltd.

•• Trouser Legs Mining Joint Venture is an unincorporated joint venture, set up upon a decision to mine within the joint venture exploration tenements.

22. FINANCIAL RISK MANAGEMENT

The Group’s operations expose it to various financial risks including market, credit, liquidity and price risks. Financial risk management is carried out by the Board on an informal basis using a variety of methods as deemed appropriate, including performance analysis, cash flow and operating/capital expenditure forecasts, to manage market, credit, liquidity and price risk.

(a) Market Risk

Foreign Exchange Risk

Foreign currency risk is the risk of exposure to transactions that are denominated in a currency other than the Australian dollar. The Group’s operations are currently solely within Australia, and therefore are not exposed to any material foreign exchange risk.

Interest Rate Risk

Interest rate risk is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates. Fluctuations in interest rates will not have any material risk exposure to the cash held in bank deposits at variable rates.

The Group’s exposure to market interest rates relates primarily to the Group’s short-term cash deposits held.

Sensitivity Analysis on Cash and Cash Equivalents

The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the average monthly closing balances. A 100-basis point increase or decrease is used when reporting interest rate risk internally and represents Management’s assessment of the possible change in interest rates.

At the reporting date, if interest rates had been 100 basis points higher or lower and all other variables held constant, the Group’s net result and net assets would increase by $70,797 (2019: $61,629) and decrease by $70,797 (2019: $61,629). This is mainly attributable to the Group’s exposure to interest rates on its cash and cash equivalents.

(b) Credit Risk

Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions. For banks and financial institutions, only major Australian banking institutions are used. For customers, individual risk limits are set based on internal or external ratings in accordance with limits set by the Board.

The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets (refer Note 14). The Group’s cash assets are held with large Australian banks. The Group’s sales are all made to Saracen Gold Mines Pty Ltd. This presents itself as a credit risk to the Group, however, the directors are satisfied that the Saracen Group is a significant Australian gold producer that is listed on the ASX and has long history within the gold production industry. The directors have access to the results and financial position of the Saracen Group due to continuous disclosure requirements of the ASX.

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Hawthorn Resources Limited

Notes to the Consolidated Financial Statements for the year ended 30 June 2020

(c) Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The Group does not have any committed credit lines. As at the reporting date, the Group has no significant liquidity risk, as available cash assets significantly exceed amounts payable.

(d) Price Risk

The Group’s revenue is derived from the sale of gold ore and is therefore impacted by fluctuations in the price of gold. The gold price is quoted in US dollars and as a result the Group’s price risk is impacted by fluctuations in the exchange rate between the US and Australian dollars. The Group is limited in its ability to mitigate price risk as it is a new producer with little history of production, and limited financial resources to engage in forward contracts.

Whilst price risk is a risk facing the Group’s future economic returns price risk does not impact any of the Group’s financial assets at 30 June 2020.

(e) Maturities of Financial Liabilities

The tables below analyse 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.

Group – 30 June 2020

Group – 30 June 2020
	Less than 3 months	3 months to 1 year	1 - 5 years	5 + Years	Total
	$	$	$	$	$
Non-Interest Bearing	(1,111,987)	-	-	-	(1,111,987)
Group - 30 June 2019
	Less than 3 months	3 months to 1 year	1 - 5 years	5 + Years	Total
	$	$	$	$	$
Non-Interest Bearing	(4,563,169)	-	-	-	(4,563,169)

(f) Net Fair Values

The net fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

The carrying value at the reporting date of financial assets and financial liabilities, such as receivables and payables, are assumed to approximate fair values due to their short-term nature. For other financial assets, such as financial instruments traded in organised financial markets, fair value is the current quoted market bid price for an asset.

The financial instruments recognised at fair value in the Consolidated Statement of Financial Position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following levels:

quoted prices in active markets for identical assets and liabilities (Level 1)
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) (Level 2); and
inputs for the asset and liability that are not based on observable market data (unobservable inputs) (Level 3)

The Group’s financial assets held at fair value comprise the investment in ordinary shares of a private entity ($113,090).

These are valued using Level 3 inputs. The risk related to these assets are considered minimal based on the low level of resources invested.

Hawthorn Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2020

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Accounting policy

The Group’s principal financial instruments comprise receivables, payables, cash and term deposits. These instruments expose the Group to a variety of financial risks: market risk (including interest rate risk and price risk), credit risk and liquidity risk.

Management manages the different types of risks to which it is exposed by considering risk and monitoring levels of exposure to interest rate risk and by being aware of market forecasts for interest rate and commodity prices. Ageing analyses and monitoring of specific credit allowances are undertaken to manage credit risk, and liquidity risk is monitored through general business budgets and forecasts.

23. EVENTS AFTER THE BALANCE DATE

Other than the above there has not been any matter or circumstance that has arisen after balance date that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods.

24. REMUNERATION OF AUDITORS

The auditor of Hawthorn Resources Limited is BDO East Coast Partnership.

Amounts received or due and receivable by BDO for: An audit and review of the fnancial report of the Company and any other companies in the consolidated group	Consolidated
	2020 2019 $ $

	71,000 67,916

25. PARENT ENTITY INFORMATION

As at, and throughout the financial year ended 30 June 2020, the legal parent entity of the Group was Hawthorn Resources Limited.

Current assets Non-current assets	Consolidated
	2020 2018 Restated $ $
	26,029,342 13,880,147 2,644,949 8,025,373
Total assets	28,674,291 21,905,520
Current liabilites Non-current liabilites Total liabilites Net assets Issued capital Reserves Accumulated losses Total equity (Loss) / Proft of the parent entty Comprehensive Income of the parent entty	636,212 371,869 8,322,194 254,727
	8,958,406 626,596
	19,715,885 21,278,924 114,053,604 113,777,604 - 276,000 (94,337,719) (92,774,680)
	19,715,885 21,278,924
	(1,563,039) 7,028,097
	(1,563,039) 7,028,097

The parent Company has not provided any guarantees for its subsidiaries, nor does it have any contingent liabilities or contractual commitments to purchase plant and equipment. This is consistent with prior years.

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Hawthorn Resources Limited

Notes to the Consolidated Financial Statements for the year ended 30 June 2020

26. CONTINGENT LIABILITIES AND CONTINGENT ASSETS

There were no contingent liabilities and contingent assets in existence at 30 June 2020 and 30 June 2019.

27. OPERATING SEGMENTS

The Group has adopted AASB 8 Operating Segments whereby segment information is presented using a “management approach”. Management has determined the operating segments based on the reports reviewed by the Chief Operating Decision Makers, in the Group’s case being the Board of Directors, that are used to make strategic decisions. The Group operates predominately in one geographical location. The Group does not have any operating segments with discrete financial information. The Group does not have any customers outside Australia, and all the Group’s assets and liabilities are located within Australia.

The Board of Directors review internal management reports at regular intervals that are consistent with the information provided in the Consolidated Statement of Profit or Loss and Other Comprehensive Income, Consolidated Statement of Financial Position and Consolidated Statement of Cash Flows. As a result, no reconciliation is required because the information as presented is what is used by the Board of Directors to make strategic decision including assessing performance and in determining the allocation of resources.

28. IMPACT OF ADOPTING NEW ACCOUNTING STANDARDS AND ACCOUNTING STANDARDS NOT YET EFFECTIVE

(a) New, Revised or Amending Accounting Standards and Interpretations Adopted

The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”) that are relevant to its operations and effective for the year.

AASB 16: Leases

This standard replaces AASB 117 and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases.

The Group does not have any operating leases that fall under scope of AASB 16. Therefore, adoption of the Standard has not had a material impact upon the financial statements of the Group in the current year.

IFRIC 23 Uncertainty over Income Tax Treatments

This interpretation clarifies how to apply the recognition and measurement in AASB 112 when there is uncertainty over income tax treatments.

The Group does not have any uncertainties over its income tax treatments that has impacted the financial statements.

(b) New Accounting Standards and Interpretations not yet mandatory or early adopted

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2020. The consolidated entity has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.

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Hawthorn Resources Limited Directors Declaration

In the directors’ opinion:

(a) the financial statements and notes set out on pages 15 to 37 are in accordance with the Corporations Act 2001, including:
(i) complying with Australian Accounting Standards (including the Australian Accounting Interpretations), the Corporations Regulations 2001; and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its performance, for the financial year ended on that date; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable;
(c) the financial report also complies with International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) as disclosed in Note 1 (c); and
(d) the audited Remuneration Report set out on pages 9 to 13 of the Directors’ Report is in accordance with the Corporations Act 2001.

The directors have been given declarations, as required by section 295A of the Corporations Act 2001, by the chief executive officer and the chief financial officer for the financial year ended 30 June 2020.

Signed in accordance with a Resolution of the Board of Directors at Melbourne this 18th day of September 2020.

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Mark Kerr Managing Director

Tel: +61 3 9603 1700 Collins Square, Tower Four Fax: +61 3 9602 3870 Level 18, 727 Collins Street www.bdo.com.au Melbourne VIC 3008 GPO Box 5099 Melbourne VIC 3001 Australia

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INDEPENDENT AUDITOR'S REPORT

To the members of Hawthorn Resources Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Hawthorn Resources Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2020, 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 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 2020 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 opinion

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.

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 opinion.

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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.

Recoverability of exploration expenditure

Key audit matter The Group has incurred significant exploration expenditure which have been capitalised. As the carrying value of exploration expenditure represents a significant asset of the Group, we considered it necessary to assess whether facts and circumstances existed to suggest that the carrying amount of this asset may exceed its recoverable amount. AASB 6 Exploration for and Evaluation of Mineral Resources contains detailed requirements with respect to both the initial recognition of such assets and ongoing requirements to continue to carry forward the assets. Note 8 to the financial statements contains the accounting policy and disclosures in relation to exploration expenditure.

How the matter was addressed in our audit

Our procedures, amongst others, included:

Obtaining evidence that the Group has valid rights to explore in the areas represented by the capitalised exploration expenditure
Confirming whether the rights to tenure of the areas of interest remained current at the reporting date
Reviewing the directors’ assessment of the carrying value of the exploration expenditure, agreeing that management have considered the effect of impairment indicators and critically reviewed the status and findings of exploration activities at each tenement
Reviewing budgets and challenging assumptions made by the Group to agree that substantive expenditure on further exploration for and evaluation of the mineral resources in the areas of interest are planned
Reviewing ASX announcements and minutes of directors’ meetings to agree that the Group had not decided to discontinue activities in any of its current areas of interest

Other information

The directors are responsible for the other information. The other information comprises the information in the Group’s directors’ report for the year ended 30 June 2020, but does not include the financial report and the auditor’s report thereon, which we obtained prior to the date of this auditor’s report, and the Annual Report, which is expected to be made available to us after that date.

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

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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 on the other information that we obtained prior to the date of this auditor’s report, 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.

When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and will request that it is corrected. If it is not corrected, we will seek to have the matter appropriately brought to the attention of users for whom our report is prepared.

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.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 9 to 13 of the directors’ report for the year ended 30 June 2020.

In our opinion, the Remuneration Report of Hawthorn Resources Limited, for the year ended 30 June 2020, complies with section 300A of the Corporations Act 2001 .

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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 Pty Ltd

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Wai Aw Director

Melbourne, 18 September 2020

T r o u s e r L e g s g o l d u n d e r g r o u n d e x p l o r at i o n d r i l l i n g

ABN 44 009 157 439

HAWTHORN RESOURCES LIMITED | LEVEL 2, 90 WILLIAM STREET, MELBOURNE, VICTORIA 3000, AUSTRALIA TELEPHONE: +61 3 9605 5902 | EMAIL: [email protected] WWW.HAWTHORNRESOURCES.COM

Rules 4.7.3 and 4.10.3[1]

Appendix 4G

Key to Disclosures Corporate Governance Council Principles and Recommendations

Name of entity:

HAWTHORN RESOURCES LIMITED

ABN / ARBN: Financial year ended: 44 009 157 439 30 June 2020

Our corporate governance statement[2 ] for the above period above can be found at:[3]

☐ These pages of our annual report:

☒ This URL on our website: http://www.hawthornresources.com/media/2692/2016‐hr‐cgs.pdf

The Corporate Governance Statement is accurate and up to date as at 12 October 2020 and has been approved by the board.

The annexure includes a key to where our corporate governance disclosures can be located.

Date: 12 October 2020 Name of Secretary authorising lodgement: Mourice Garbutt

Signature

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1 Under Listing Rule 4.7.3, an entity must lodge with ASX a completed Appendix 4G at the same time as it lodges its annual report with ASX. Listing Rule 4.10.3 requires an entity that is included in the official list as an ASX Listing to include in its annual report either a corporate governance statement that meets the requirements of that rule or the URL of the page on its website where such a statement is located. The corporate governance statement must disclose the extent to which the entity has followed the recommendations set by the ASX Corporate Governance Council during the reporting period. If the entity has not followed a recommendation for any part of the reporting period, its corporate governance statement must separately identify that recommendation and the period during which it was not followed and state its reasons for not following the recommendation and what (if any) alternative governance practices it adopted in lieu of the recommendation during that period. Under Listing Rule 4.7.4, if an entity chooses to include its corporate governance statement on its website rather than in its annual report, it must lodge a copy of the corporate governance statement with ASX at the same time as it lodges its annual report with ASX. The corporate governance statement must be current as at the effective date specified in that statement for the purposes of rule 4.10.3.

2“Corporate governance statement” is defined in Listing Rule 19.12 to mean the statement referred to in Listing Rule 4.10.3 which discloses the extent to which an entity has followed the recommendations set by the ASX Corporate Governance Council during a particular reporting period.

3Mark whichever option is correct and then complete the page number(s) of the annual report, or the URL of the web page, where the entity’s corporate governance statement can be found. You can, if you wish, delete the option which is not applicable. Throughout this form, where you are given two or more options to select, you can, if you wish, delete any option which is not applicable and just retain the option that is applicable. If you select an option that includes “OR” at the end of the selection and you delete the other options, you can also, if you wish, delete the “OR” at the end of the selection.

Page 1

ANNEXURE – KEY TO CORPORATE GOVERNANCE DISCLOSURES

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …
PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
1.1	A listed entity should disclose: (a) the respective roles and responsibilities of its board and management; and (b) those matters expressly reserved to the board and those delegated to management.	… the fact that we follow this recommendation: ☒ in our Corporate Governance Statement ☐ at:h ttp://www.hawthornresources.com/media/2692/2016‐ hr‐cgs.pdf … and information about the respective roles and responsibilities of our board and management (including those matters expressly reserved to the board and those delegated to management): ☒ in our Corporate Governance Statement ☐ at[insert location]	☐ an explanation why that is soin our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable
1.2	A listed entity should: (a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and (b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director.	… the fact that we follow this recommendation: ☒ in our Corporate Governance Statement ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable
1.3	A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment.	… the fact that we follow this recommendation: ☐ in our Corporate Governance Statement OR ☐ at[insert location]	☒ an explanation why that is so in our Corporate Governance Statement ☐ we are an externally managed entity and this recommendation is therefore not applicable
1.4	The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board.	… the fact that we follow this recommendation: ☒ in our Corporate Governance Statement ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable

Page 2

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …
1.5	A listed entity should: (a) have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them; (b) disclose that policy or a summary of it; and (c) disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them and either: (1) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); or (2) if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act.	… the fact that we have a diversity policy that complies with paragraph (a): ☒ in our Corporate Governance Statement ☐ at[insert location] … and a copy of our diversity policy or a summary of it: ☒ in our Corporate Governance Statement ☐ at[insert location] … and the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with our diversity policy and our progress towards achieving them: ☒ in our Corporate Governance Statement ☐ at[insert location] … and the information referred to in paragraphs (c)(1) or (2): ☒ in our Corporate Governance Statement ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable
1.6	A listed entity should: (a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.	… the evaluation process referred to in paragraph (a): ☒ in our Corporate Governance Statement ☐ at[insert location] … and the information referred to in paragraph (b): ☒ in our Corporate Governance Statement ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable
1.7	A listed entity should: (a) have and disclose a process for periodically evaluating the performance of its senior executives; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.	… the evaluation process referred to in paragraph (a): ☒ in our Corporate Governance Statement ☐ at[insert location] … and the information referred to in paragraph (b): ☒ in our Corporate Governance Statement ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …
PRINCIPLE 2 - STRUCTURE THE BOARD TO ADD VALUE
2.1	The board of a listed entity should: (a) have a nomination committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively.	[If the entity complies with paragraph (a):] … the fact that we have a nomination committee that complies with paragraphs (1) and (2): ☐ in our Corporate Governance Statement OR ☐ at[insert location] … and a copy of the charter of the committee: ☐ at[insert location] … and the information referred to in paragraphs (4) and (5): ☐ in our Corporate Governance Statement OR ☐ at[insert location] [If the entity complies with paragraph (b):] … the fact that we do not have a nomination committee and the processes we employ to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively: ☐ in our Corporate Governance Statement OR ☐ at[insert location]	☒ an explanation why that is so in our Corporate Governance Statement ☐ we are an externally managed entity and this recommendation is therefore not applicable
2.2	A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.	… our board skills matrix: ☒ in our Corporate Governance Statement ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable

Page 4

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …
2.3	A listed entity should disclose: (a) the names of the directors considered by the board to be independent directors; (b) if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and (c) the length of service of each director.	… the names of the directors considered by the board to be independent directors: ☒ in our Corporate Governance Statement ☐ at[insert location] … and, where applicable, the information referred to in paragraph (b): ☒ in our Corporate Governance Statement ☐ at[insert location] … and the length of service of each director: ☒ in our Corporate Governance Statement ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement
2.4	A majority of the board of a listed entity should be independent directors.	… the fact that we follow this recommendation: ☐ in our Corporate Governance Statement OR ☐ at[insert location]	☒ an explanation why that is so in our Corporate Governance Statement ☐ we are an externally managed entity and this recommendation is therefore not applicable
2.5	The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity.	… the fact that we follow this recommendation: ☐ in our Corporate Governance Statement OR ☐ at[insert location]	☒ an explanation why that is so in our Corporate Governance Statement ☐ we are an externally managed entity and this recommendation is therefore not applicable
2.6	A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.	… the fact that we follow this recommendation: ☒ in our Corporate Governance Statement ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable
PRINCIPLE 3 – ACT ETHICALLY AND RESPONSIBLY
3.1	A listed entity should: (a) have a code of conduct for its directors, senior executives and employees; and (b) disclose that code or a summary of it.	… our code of conduct or a summary of it: ☐ in our Corporate Governance Statement OR ☐ at[insert location]	☒ an explanation why that is so in our Corporate Governance Statement

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …
PRINCIPLE 4 – SAFEGUARD INTEGRITY IN CORPORATE REPORTING
4.1	The board of a listed entity should: (a) have an audit committee which: (1) has at least three members, all of whom are non- executive directors and a majority of whom are independent directors; and (2) is chaired by an independent director, who is not the chair of the board, and disclose: (3) the charter of the committee; (4) the relevant qualifications and experience of the members of the committee; and (5) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner.	[If the entity complies with paragraph (a):] … the fact that we have an audit committee that complies with paragraphs (1) and (2): ☐ in our Corporate Governance Statement OR ☐ at[insert location] … and a copy of the charter of the committee: ☐ at[insert location] … and the information referred to in paragraphs (4) and (5): ☐ in our Corporate Governance Statement OR ☐ at[insert location] [If the entity complies with paragraph (b):] … the fact that we do not have an audit committee and the processes we employ that independently verify and safeguard the integrity of our corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner: ☐ in our Corporate Governance Statement OR ☐ at[insert location]	☒ an explanation why that is so in our Corporate Governance Statement
4.2	The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.	… the fact that we follow this recommendation: ☒ in our Corporate Governance Statement ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …
4.3	A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit.	… the fact that we follow this recommendation: ☒ in our Corporate Governance Statement ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity that does not hold an annual general meeting and this recommendation is therefore not applicable
PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE

5.1	A listed entity should: (a) have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and (b) disclose that policy or a summary of it.	… our continuous disclosure compliance policy or a summary of it: ☐ in our Corporate Governance StatementOR ☐ at[insert location]	☒ an explanation why that is so in our Corporate Governance Statement
PRINCIPLE 6 – RESPECT THE RIGHTS OF SECURITY HOLDERS
6.1	A listed entity should provide information about itself and its governance to investors via its website.	… information about us and our governance on our website: ☒ in our Corporate Governance Statement ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement
6.2	A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors.	… the fact that we follow this recommendation: ☒ in our Corporate Governance Statement ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement
6.3	A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders.	… our policies and processes for facilitating and encouraging participation at meetings of security holders: ☒ in our Corporate Governance Statement ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity that does not hold periodic meetings of security holders and this recommendation is therefore not applicable
6.4	A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically.	… the fact that we follow this recommendation: ☒ in our Corporate Governance Statement ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …
PRINCIPLE 7 – RECOGNISE AND MANAGE RISK
7.1	The board of a listed entity should: (a) have a committee or committees to oversee risk, each of which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework.	[If the entity complies with paragraph (a):] … the fact that we have a committee or committees to oversee risk that comply with paragraphs (1) and (2): ☐ in our Corporate Governance Statement OR ☐ at[insert location] … and a copy of the charter of the committee: ☐ at[insert location] … and the information referred to in paragraphs (4) and (5): ☐ in our Corporate Governance Statement OR ☐ at[insert location] [If the entity complies with paragraph (b):] … the fact that we do not have a risk committee or committees that satisfy (a) and the processes we employ for overseeing our risk management framework: ☐ in our Corporate Governance Statement OR ☐ at[insert location]	☒ an explanation why that is so in our Corporate Governance Statement
7.2	The board or a committee of the board should: (a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and (b) disclose, in relation to each reporting period, whether such a review has taken place.	… the fact that board or a committee of the board reviews the entity’s risk management framework at least annually to satisfy itself that it continues to be sound: ☒ in our Corporate Governance Statement ☐ at[insert location] … and that such a review has taken place in the reporting period covered by this Appendix 4G: ☒ in our Corporate Governance Statement ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …
7.3	A listed entity should disclose: (a) if it has an internal audit function, how the function is structured and what role it performs; or (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes.	[If the entity complies with paragraph (a):] … how our internal audit function is structured and what role it performs: ☐ in our Corporate Governance Statement OR ☐ at[insert location] [If the entity complies with paragraph (b):] … the fact that we do not have an internal audit function and the processes we employ for evaluating and continually improving the effectiveness of our risk management and internal control processes: ☐ in our Corporate Governance Statement OR ☐ at[insert location]	☒ an explanation why that is so in our Corporate Governance Statement
7.4	A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks.	… whether we have any material exposure to economic, environmental and social sustainability risks and, if we do, how we manage or intend to manage those risks: ☒ in our Corporate Governance Statement ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …
PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY
8.1	The board of a listed entity should: (a) have a remuneration committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive.	[If the entity complies with paragraph (a):] … the fact that we have a remuneration committee that complies with paragraphs (1) and (2): ☐ in our Corporate Governance Statement OR ☐ at[insert location] … and a copy of the charter of the committee: ☐ at[insert location] … and the information referred to in paragraphs (4) and (5): ☐ in our Corporate Governance Statement OR ☐ at[insert location] [If the entity complies with paragraph (b):] … the fact that we do not have a remuneration committee and the processes we employ for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive: ☐ in our Corporate Governance Statement OR ☐ at[insert location]	☒ an explanation why that is so in our Corporate Governance Statement ☐ we are an externally managed entity and this recommendation is therefore not applicable
8.2	A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives.	… separately our remuneration policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives: ☒ in our Corporate Governance Statement ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable
8.3	A listed entity which has an equity-based remuneration scheme should: (a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and (b) disclose that policy or a summary of it.	… our policy on this issue or a summary of it: ☐ in our Corporate Governance Statement OR ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☒ we do not have an equity-based remuneration scheme and this recommendation is therefore not applicable ☐ we are an externally managed entity and this recommendation is therefore not applicable

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …
ADDITIONAL DISCLOSURES APPLICABLE TO EXTERNALLY MANAGED LISTED ENTITIES NOT APPLICABLE
-	Alternative to Recommendation 1.1 for externally managed listed entities: The responsible entity of an externally managed listed entity should disclose: (a) the arrangements between the responsible entity and the listed entity for managing the affairs of the listed entity; (b) the role and responsibility of the board of the responsible entity for overseeing those arrangements.	… the information referred to in paragraphs (a) and (b): ☐ in our Corporate Governance Statement OR ☐ at[insert location]	☐ an explanation why that is so in our Corporate Governance Statement
-	Alternative to Recommendations 8.1, 8.2 and 8.3 for externally managed listed entities: An externally managed listed entity should clearly disclose the terms governing the remuneration of the manager.	… the terms governing our remuneration as manager of the entity: ☐ in our Corporate Governance Statement OR ☐ at[insert location]	☐ an explanation why that is soin our Corporate Governance Statement

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Hawthorn Resources Limited

2020 Corporate Governance Statement

Corporate Governance Practices and Conduct

The Board of Directors of Hawthorn Resources Limited is committed to and is responsible for establishing the corporate governance framework of the Group having regard to the ASX Corporate Governance Council (CGC) published guidelines as well as its corporate governance principles and recommendations. The Board guides and monitors the business and affairs of Hawthorn Resources Limited on behalf of the shareholders by whom they are elected and to whom they are accountable.

The information in this statement is current as at 12 October 2020 and has been approved by the Board. The statement includes cross references to the Company’s charters, codes and policies; a copy or summary of which can be viewed on the Company’s website in its Corporate Governance section.

This statement should be read in conjunction with the Directors’ Report, the Remuneration Report and the Financial Report for the financial year ended 30 June 2020 as contained in the 2020 Annual Report:

(a) Directors’ Report at page 2
(b) Remuneration Report at page 9 to 13
(c) Financial Statements and Notes at pages 19 to 49

Hawthorn Resources Limited's corporate governance practices were in place throughout the year ended 30 June 2020.

Principle 1

LAY SOLID FOUNDATION FOR MANAGEMENT AND OVERSIGHT

Board Role and Functions

The Board seeks to identify the expectations of the shareholders, as well as other regulatory and ethical expectations and obligations. In addition, the Board is responsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately manage those risks. To ensure that the Board is well equipped to discharge its responsibilities it has established guidelines for the nomination and selection of directors and for the operation of the Board. The responsibility for the operation and administration of the Group is delegated by the Board to the Managing Director and the executive management team.

The Board ensures that this team is appropriately qualified and experienced to discharge their responsibilities and has in place procedures to assess the performance of the executive management team. Whilst at all times the Board retains full responsibility for guiding and monitoring the Group, in discharging its stewardship it makes use of sub‐committees. Specialist committees are able to focus on a particular responsibility and provide informed feedback to the Board. To this end the Board has established an Audit, Compliance and Corporate Governance Committee (“Audit Committee”). Given that the Board has and at the date of this report comprises five directors of which two directors are normally resident in Australia, the functions and considerations of the Committees are dealt with within the Board Meetings and chaired by the chairman of such committees. The Chairman of the Board of Directors does not chair any meetings or considerations of the Committees.

The directors in office at the date of this statement, their skills, experience, expertise and period of directorship are detailed in the Directors’ Report which can be found as noted above at page 3 of the 2020 Annual Report. In respect of the attendance at Board and Committee Meetings, shareholders are referred to the table of Meeting Attendance contained on page 8.

Structure of the Board

The skills, experience and expertise relevant to the position of director held by each director in office at the date of the annual report are included in the directors’ report. Directors of Hawthorn Resources Limited are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the exercise of their unfettered and independent judgement

Hawthorn Resources Limited 2020 Corporate Governance Statement

Corporate Governance Practices and Conduct

In the context of director independence, “materiality” is considered from both the Group and individual director perspective. The determination of materiality requires consideration of both quantitative and qualitative elements. An item is presumed to be quantitatively immaterial if it is equal to or less than 5% of the appropriate base amount. It is presumed to be material (unless there is qualitative evidence to the contrary) if it is equal to or greater than 10% of the

appropriate base amount. Qualitative factors considered include whether a relationship is strategically important, the competitive landscape, the nature of the relationship and the contractual or other arrangements governing it and other factors that point to the actual ability of the director in question to shape the direction of the Group's loyalty.

In accordance with the definition of independence above, and the materiality thresholds set, the following directors of Hawthorn Resources Limited are considered to have the following status:

Name	Name	Position and status	Term in Office
Non‐Executive Directors
Li, Yi Jie		Non‐Executive Director & Chair Board of Directors 7.6 years
David S Tyrwhitt		Non‐Executive Director& Chair Audit,
		Compliance & Corporate Governance Committee	23.6 years
Christopher D Corrigan		Non‐Executive Director	2.75 years
Liao, Yongzhon		Non‐Executive Director	7.6 years
Liu, Zhensheng		Non‐Executive Director	4.6 years
	Executive Directors
	Mark G Kerr	Managing Director/ CEO	12.6 years

During the year there were no changes to the membership of the Board of Directors.

The Board acknowledges the Corporate Governance Council’s recommendation that the Chairman should be an independent director.

Composition of the Board

The Company's Constitution provides for the appointment of a minimum of three directors and up to a maximum of twelve. At the date of this report, the Company has six directors comprising one Executive and five Non‐Executive directors.

Mr Kerr, following his appointment as Managing Director in June 2016 is no longer considered to be a Non‐Executive Director. In October 2019 Mr Kerr stepped down from his additional role as Executive Chairman of the Board of Directors.

Dr Tyrwhitt, the Chairman of the Company’s Audit, Compliance and Corporate Governance Committee, continues to be considered to be an Independent Director.

Messrs Liao, Yongzhong, Li, Yi Jie and Liu, Zhensheng are Directors nominated by Feng Hua Mining Investment Holding (HK) Limited pursuant to its rights under the August 2012 Share Subscription Agreement. As such, whilst they are Non‐ Executive directors they are not regarded as Independent Directors.

Mr Li, Yij Jie was appointed as Non‐Executive Chairman of the Board of Directors in November 2019 following Mr Kerr having stepped down as Executive Chairman.

Mr Corrigan, who joined the Board of Directors on 5 October 2017, whilst a Non‐Executive Director is not regarded as an Independent Director through his declared substantial shareholding interest in the Company’s voting shares.

To ensure that it has the right mix of management skills and technical expertise to meet the challenges of its business, the Board regularly reviews its composition. The Board believes that at the current stage of the Company’s development, the composition is adequate. However, it continues to assess the need to enhance the membership of the Board and is cognisant of the ASX Corporate Governance Council definitions and recommendations.

Hawthorn Resources Limited 2020 Corporate Governance Statement

Corporate Governance Practices and Conduct

Board Responsibilities

The responsibility for the operation and administration of the Company is delegated by the Board to the specifically identified outsourced service providers. The Board ensures that this team of service providers is appropriately qualified and experienced to discharge their responsibilities and has in place procedures to assess their performance.

The Board is responsible for ensuring that management’s objectives and activities are aligned with the expectations and risks identified by the Board. The Board has a number of mechanisms in place to ensure this is achieved. In addition to the establishment of specific committees referred to in this statement, these mechanisms include the following:

implementation of operating plans and budgets by management and Board monitoring of progress against budget – this includes the establishment and monitoring of key performance indicators (both financial and non‐financial) for all significant business processes
procedures to allow directors, in the furtherance of their duties, to seek independent professional advice at the company’s expense
the review and approval of acquisitions and disposals of businesses and assets, and the approval of contracts and financing arrangements within defined limits; and
the appointment of an outsourced service provider, which is responsible for managing the Company’s public image and communication with shareholders.

In conjunction with an ongoing review of the Board Charter, the Board will consider its responsibilities and delegated authorities to ensure they comply with best practice corporate governance.

BOARD COMMITTEES

The Board of Directors is responsible for the overall governance of the Company inclusive of its strategic development and the direction and the control of operations of the Company. Whilst the Board retains overall responsibility, it has established an Audi, Compliance and Corporate Governance Committee.

Matters normally delegated to Remuneration and Nomination Committees are addressed at Board of Directors meetings.

ROLE OF MANAGEMENT

The day to day management of the Company’s activities and implementation of the corporate strategy and initiatives is delegated by the Board and vested in the Managing Director/CEO.

Day to day management of the Company’s activities and the implementation of Board strategy, policy and decisions is delegated to the Chief Executive Officer. This includes the following:

to develop and recommend internal control and accountability systems for the Company and if approved, ensure compliance with such systems
to prepare mission systems, corporate strategy and performance objectives for approval by the Board of Directors
to prepare systems of risk management and internal compliance and controls, codes of conduct, legal compliance and any other regulatory compliance and if approved, ensure compliance with such systems
to monitor employee and service provider performance, recommend appropriate resources and review and approve remuneration
to prepare all required financial reports, tax returns, budgets and any other appropriate financial reports, meet all statutory deadlines, monitor performance against budgets

Hawthorn Resources Limited 2020 Corporate Governance Statement

Corporate Governance Practices and Conduct

prepare recommendations on acquisitions and divestments of assets
to implement decisions of the Board of Directors on key standards of the Company covering such areas as ethical standards, reputation and culture of the Company and influence and provide guidance for employees on these areas
to protect the assets of the Company.

DIRECTOR SELECTION AND APPOINTMENT

When considering a candidate for appointment as a director of the Company or recommends the appointment to shareholders the Company undertakes information checks which include the person’s character, business, professional and educational qualifications, the existence of any criminal proceedings and probity. Such information, where considered material, is incorporated into shareholder meeting documentation for their consideration when voting on the election of directors.

As noted above, Messrs. Liao, Li and Liu are directors as nominated by Feng Hua Mining Investment Holding (HK) Limited pursuant to its rights under the August 2012 Share Subscription Agreement. Dr Tyrwhitt has been a director of the Company since November 1996; Mr Kerr a director since November 2007 and Mr Corrigan a director since October 2017.

COMPANY SECRETARY

The position of Company Secretary is accountable directly to the Board through the Chairman, on matters relevant to the proper functioning of the Board. The Directors have direct access to the Company Secretary through electronic communications or in‐person meetings.

DIVERSITY

The Hawthorn Board of Directors adopted a policy on Diversity in July 2011.

The Company’s Diversity Statement can be viewed on the website at www.hawthornresources.com/governance.aspx

Whilst Hawthorn Resources Limited, as a small‐cap exploration/mining entity, seeks to restrict the size of its staffing by the outsourcing of such functions as accounts preparation; secretarial and exploration services; mining tenement management and share registry services to experienced professionals it recognizes the value contributed to an organization by employing or engaging people with varying skills, cultural backgrounds, ethnicity and experience. Hawthorn Resources believes that the quality of the workforce is the key to its continued growth, improved productivity and performance. As at the date of this report apart from the members of the Board of Directors the Company has one direct employee. The Company is not a ‘relevant employer’ under the Workplace Gender Equality Act.

The Company actively values and embraces the diversity of our employees/out‐sourced consultants and are committed to creating an inclusive workplace where everyone is treated equally and fairly, and where discrimination, harassment and inequity are not tolerated. While Hawthorn Resources is committed to fostering diversity at all levels, the professional industry experience and quality of performance has been and continues to be a priority for the Company in engaging services to carry out the Company’s works programme.

To this end, the Company supports and complies with the recommendations contained in the ASX Corporate Governance Principles and Recommendations . The Company has established a diversity policy outlining the Board’s measurable objectives for achieving diversity. This is assessed annually to measure the progress towards achieving those objectives. The diversity policy is available in the corporate governance section on the Company’s website.

Broadly, the Company’s measurable objectives are as follows:

Hawthorn Resources state and re‐state where necessary that there are no forms of discrimination/bias in considering anyone for a position with the Company either as an employee or service provider, i.e. on grounds of gender, age, physical appearance, origins, race, religion, marital status, sexual preference, pregnancy or likely pregnancy, political leanings, disabilities

Hawthorn Resources Limited 2020 Corporate Governance Statement

Corporate Governance Practices and Conduct

All new appointments or promotion/career enhancement and remuneration be on the basis of merit and ability to carry out the work responsibilities
Within the broad ambit of ensuring that the Company’s activities are best developed and to ensure harmony of working within the Company that there be flexibility in working hours to enable domestic/private lives to allow for a balance between career and family obligations
Consideration be given to job sharing in such circumstances that would permit sharing.

The table below outlines the diversity within Hawthorn Resources Limited:

Level	Male	Male	Female	Female	Total
	Number	%	Number	%
Board	6	100%	0	0%	6
KeyManagementpersonnel	0	0%	0	0%	0
Other staff	0	0%	1	100%	1
Total	6	100%	1	100%	7

As noted, the Hawthorn Resources Limited Board of Directors adopted the policy on diversity in July 2011.

The Board of Directors is responsible for the reviewing and reporting on diversity.

BOARD PERFORMANCE

A performance evaluation process has been finalized through the Chairman together with informal performance monitoring sessions undertaken during the 2020 financial year at the in‐person Board meetings.

Arising from the informal monitoring, it is considered that the Board and the Board members are functioning in an appropriate manner in managing the affairs of the Company.

SENIOR EXECUTIVE PERFORMANCE

The process of assessing the performance of the Managing Director/Chief Executive Officer and the outsourced service providers within their delegated duties/services is reviewed by the Board of Directors when considering the Company’s each half‐year and annual budget forecasts; as was the case for the 2020 financial year.

Hawthorn Resources Limited 2020 Corporate Governance Statement

Corporate Governance Practices and Conduct

Principle 2 STRUCTURE THE BOARD TO ADD VALUE

NOMINATION AND REMUNERATION COMMITTEE

Director Nomination and Membership

Nomination Committee

The Company does not have a Nomination Committee. The Board believes that with five directors of which only two directors on the Board are normally resident in Australia, the Board itself is the appropriate forum to deal with this function. Subject to the provisions of the Company's Constitution, Board composition and selection criteria for directors are addressed by the full Board.

The Constitution provides for events whereby directors may be removed from the Board. Similarly, the Corporations Act provides shareholders with the ability to nominate, appoint and remove directors. The Constitution also provides for the regular rotation of directors, which ensures that directors seek re‐election by shareholders at least once every three years.

Remuneration Committee

The Company does not have a Remuneration Committee. The Board is responsible for determining and reviewing compensation arrangements for the directors themselves, the chief executive officer and executive team. A Remuneration Committee has not been separately established. Rather, the function is performed within the Board Meetings given that the Company at this time has a Board comprising six members of which only two members are normally resident in Australia

BOARD SKILL MATRIX

The Company has developed a matrix of skills and experiences necessary for the growth and development of the Company as an active explorer and mine developer in the Australian mining industries. The matrix is designed an ongoing review tool aids in noting the existing skills and experiences within the Company and those skills necessary to grow the Company as it expands in to mining activities such as, but not limited to:

(a) industry experience in exploration activities in relation to identification of areas of geological interest
(b) industry experience in Federal and State mining legislation
(c) industry experience in developing and managing mining operations
(d) experience in negotiating joint venture agreements
(e) experience in capital raising and capital management
(f) strategy planning to ensure the best usage of capital funds and over time, the ultimate delivery of returns to investors; and
(g) Corporate governance – experience in holding office in listed entities

INDEPENDENT DIRECTORS

As noted in Principle 1 – the Company has a Board of six directors of which five are classified as Non‐Executive directors. Of the Non‐Executive directors only Dr Tyrwhitt has been considered to be Independent for the reasons stated.

Hawthorn Resources Limited 2020 Corporate Governance Statement

Corporate Governance Practices and Conduct

In making this regular assessment the criteria applied included the factors set out in ASXCGPR to assess if a director is free of any interest, position, association or relationships that might influence or be perceived to influence in a material manner, the director’s capacity to hold an independent view on matters before the Board.

CHAIR

The Chairman is responsible for the efficient organization and conduct of the Board and the proper briefing of Board members on the activities of the Company and any specific responsibilities or duties assigned to Board members. The Chairman is also the bridge between the Board and the Company’s executive officers and advisers.

The Chairman of the Board of Directors is Non‐Executive Director Mr Li, Yi Jie who was appointed as the Chairman of the Board in November 2019 following Mr Kerr stepping down from the role of Executive Chairman but continuing in the executive roles of the Company’s Managing Director/CEO.

TERM OF OFFICE

The Company’s Constitution requires that all directors other than the Managing Director submit themselves for re‐ election every three years and may not hold office beyond the third Annual General Meeting following the Director’s election/re‐election. In addition, at every Annual General Meeting not less than one third of the previously elected directors must retire by rotation. Directors appointed during the period since the last Annual General Meeting of the Company must submit themselves for election at the next Annual General Meeting.

The term of office of each director is as incorporated into Principle 1 above and as noted on pages 3, 4 and 11 of the 2020 Annual Report.

BOARD INDUCTION AND PROFESSIONAL DEVELOPMENT

All new directors participate in an informal induction to the Company’s activities, procedures, key strategies and staffing. The Board encourages all directors to participate in industry conferences and presentations that are particularly appropriate the Company’s exploration and mining activities.

INDEPENDENT PROFESSIONAL ADVICE

Directors, in carrying out their duties as directors or as members of Board Committees, may, after prior consultation with the Chairman, seek independent professional advice at the expense of the Company. If appropriate, such advice will be available to all directors.

Principle 3 ACT ETHICALLY AND RESPONSIBILY

CODE OF CONDUCT

The Company operates under an informal code of conduct that sets out the ethical standards under which the Company operates when dealing with internal and external parties. This code requires parties to act with integrity, fairness and honesty in all dealings and to treat other parties with dignity at all times. The code covers:

discrimination against any staff member or potential employee
carrying out of duties in respect to the law at all times
use and protection of the Company’s assets responsibly
respect for the confidentiality of the Company’s business dealings

Hawthorn Resources Limited 2020 Corporate Governance Statement

Corporate Governance Practices and Conduct

responsibility for their own actions and for the consequences surrounding their own actions
trading in securities
a commitment to shareholder’s interests
conflicts of interest; and
reporting of violations of the code

The Company has a Code of Conduct.

Principle 4 SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

AUDIT AND RISK COMMITTEE (“Audit Committee”)

It is the Board's responsibility to ensure that an effective internal control framework exists within the entity. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information as well as non‐financial considerations such as the benchmarking of operational key performance indicators.

The Board has delegated responsibility for establishing and maintaining a framework of internal control and ethical standards to the Committee. However, as the Board of Directors comprises six only directors of which two are normally resident in Australia, the functions of the committee are carried out within the structure and conduct of Board Meetings but under the Chairmanship of Dr Tyrwhitt. The Audit and Risk charter has been reviewed, updated and is subject to final review and approval by the Board.

The committee, as at the date of this statement, comprises:

Chairman Dr D S Tyrwhitt Member Mr M G Kerr Member Mr C D Corrigan

Each of the Committee members is financially literate and having served in senior positions within mining and financial industry entities – their personal qualifications are set out in detail in the Directors’ Report contained in the 2019 Annual Report at pages 3 and 4 together with the details of Committee meetings attended during the 2019 financial year are shown on page 7.

The Company's Auditors are invited to attend meetings and to participate in committee discussions. The Company Secretary and the Group Financial Officer attend committee meetings.

The main duties of the Committee have been established as and include:

the review of the Audit Programme and all matters relevant to the financial affairs of the Company's activities together with the production of Statutory Financial Reports inclusive of the Reports and Declarations by Directors
to review and advise on procedures in place to record the Company's activities and to ensure the safety of the Company's records and assets
to review Internal Control Procedures; the External Auditor Engagement letter and the Auditor's Management Representation letter
to review the half‐yearly and yearly reports to the ASX Limited together with a review of the scope and quality of the annual statutory audit and the half‐year audit review
to monitor Compliance with the provisions of the Corporations Act 2001, Australian Securities and Investment Commission guidelines and practice notes, ASX Listing Rules, taxation requirements and all regulatory bodies

Hawthorn Resources Limited 2020 Corporate Governance Statement

Corporate Governance Practices and Conduct

carry out the functions of the Remuneration Committee
carry out the functions of Group Risk management
to review the performance of the external auditor and the level of fees charged for audit services.

CEO AND CFO DECLARATION

As required, the Managing Director/CEO and Chief Financial Officer provided assurance to the Board prior to the release of the 31 December 2019 and the 30 June 2020 statutory financial statements that, in their opinion:

(a) the financial records of the company/disclosing entity have been properly maintained in accordance with section 286 of the Corporations Act 2001
(b) the financial statements, comprising the consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity, and accompanying notes, are in accordance with the Corporations Act 2001 and:
(i) comply with Accounting Standards and the Corporations Regulations 2001; and
(ii) give a true and fair view of the financial position as at 30 June 2020 and of the performance for the year ended on that date of the company and the consolidated entity.
(c) any other matters prescribed by the Regulations for the purposes of section 295A have been satisfied in relation to the financial statements and notes for the financial year, and
(d) the financial statements are founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board. The company's risk management and internal compliance and control systems are operating efficiently and effectively in all material respects.

The Board agrees with the views of the ASX on this matter and notes that due to its nature, internal control assurance from the Managing Director/CEO and Chief Financial Officer can only be reasonable rather than absolute. This is due to such factors as the need for judgement, the use of testing on a sample basis, the inherent limitations in internal control and because much of the evidence available is persuasive rather than conclusive and therefore is not and cannot be designed to detect all weaknesses in control procedures. In response to this, internal control questions are required to be completed by the key management personnel of all significant business units, including finance managers, in support of these written statements.

EXTERNAL AUDITOR

As noted, the duties of the Committee include reviewing the performance of the external auditor and the level of fees charged for audit services to ensure the quality and independence of the External Auditor.

Arising from a restructuring by BDO‐East Coast Partnership {“BDO ECP”) of its audit practice, audits of the Company’s financial activities are now conducted by BDO Audit Pty Ltd (“BDO Audit”), an authorized audit company, rather than BDO ECP. Arising from this change BDO Audit has been appointed as the Company’s external auditor. Historically BDO – East Coast Partnership has audited the Company’s financial affairs since 2012 when it merged its activities with those of PKF (Pannell Kerr Foster) which had been the Company’s Auditors since incorporation.

In line with legislation the BDO‐ Audit rotate the audit engagement partner on listed entities at least every five years. The current audit engagement partner was appointed on and as from the financial year ended 30 June 2018.

Hawthorn Resources Limited

2020 Corporate Governance Statement

Corporate Governance Practices and Conduct

The amount of the fees paid to the External Auditor is reported in the Annual Report on page 38; there were no fees paid for non‐audit services. As required and as included in the Annual Report, the Auditor provides an annual declaration of independence – see page 14 of the Annual Report.

The External Auditor attends the Company’s Annual General Meetings and is available to answer shareholder’s questions relative to the conduct of the audit and the preparation and content of the Auditor’s Independent Report – see pages 39 to 4 of the 2020 Annual Report.

Principle 5

MAKE TIMELY AND BALANCED DISCLOSURES

CONTINUOUS DISCLOSURE

While the Company’s policy on continuous disclosure for complying with the disclosure obligations recommended by the ASXCGPR (Recommendation 5.1) has been adopted which is to ensure that the Company identifies and discloses any matter that a reasonable person would expect to have a material effect on the price of the Company’s shares.

All such disclosure matters as released to the ASX are posted onto the Company’s website.

The Company’s continuous disclosure compliance procedure enables it to meet its obligations and to ensure that all matters, which may require announcement to the Australian Securities Exchange, are brought to the attention of directors immediately. Corporate Governance and Compliance is a ‘standing’ Agenda item for Board of Directors meetings.

Principle 6 RESPECT THE RIGHTS OF SECURITY HOLDERS

COMPANY WEBSITE

The Company maintains a website at www.hawthornresources.com providing shareholders with up to date information on the Company’s activities inclusive of management, news, projects, governance and market/investor information.

Shareholders may also communicate with the Company through its e‐mail address [email protected]

INVESTOR RELATIONS

Shareholder Communication Policy/Shareholder Meetings/Electronic Communications

Hawthorn’s objective is to promote effective communication with its shareholders at all times. Hawthorn Resources Limited is committed to:

ensuring that shareholders and the financial markets are provided with full and timely information about Hawthorn’s activities in a balanced and understandable way
complying with continuous disclosure obligations contained in applicable ASX listing rules and the Corporations Act in Australia, and
communicating effectively with its shareholders and making it easier for shareholders to communicate with Hawthorn Resources Limited.

2020 Corporate Governance Statement

Hawthorn Resources Limited

Corporate Governance Practices and Conduct

To promote effective communication with shareholders and encourage effective participation at general meetings, information is communicated to shareholders:

through the release of information to the market via the ASX
through the distribution of the annual report and Notices of Annual General Meeting
through shareholder meetings and investor relations presentations
through letters and other forms of communications directly to shareholders
by posting relevant information on the Hawthorn website www.hawthornresources.com.

The Company’s website www.hawthornreseources.com has a dedicated Investor Relations section for the purpose of publishing all important company information and relevant announcements made to the market. The Company has also established an e‐mail directory for the direct distribution of announcements made to the ASX.

The External Auditors are required to attend the Annual General Meeting and are available to answer any shareholder questions about the conduct of the audit and preparation of the audit report.

Annual Reports are provided to all shareholders who have elected to receive the Report. In addition, the Company has established an electronic advice directory in which shareholders may register to receive by e‐mail copy announcements.

At the meetings of shareholders, directors are subject to questioning by shareholders about the Directors' stewardship of the Company's affairs and it is shareholders who ultimately vote upon the financial statements and reports, the election of directors, appointment of Auditors and any matters of Special Business.

Whilst the Company does not web‐cast shareholder meetings and does not believe that at this stage the cost‐benefit of web casting is worthwhile to a Company of its size the 2020 Annual General Meeting of shareholders due to the COVID‐19 pandemic will be held as ‘virtual’ meeting within the authorizing and prescribe legislation.

Principle 7 RECOGNIZE AND MANAGE RISK

AUDIT AND RISK (mandated to the Audit, Compliance and Corporate Governance Committee)

Structure – refer to Principle 4 for details composition, structure and membership.

Risk

The Board has continued its proactive approach to risk management. The identification and effective management of risk, including calculated risk‐taking, is viewed as an essential part of the Company's approach to creating long‐term shareholder value.

In recognition of this, the Board determines the Company's risk profile and is responsible for overseeing and approving risk management strategy. The Committee reviews policies, internal compliance and internal control.

The Committee, pursuant to the mandate by the Board of Directors, oversees on an ongoing basis the assessment of the effectiveness of risk management and internal compliance and control. The tasks of undertaking and assessing risk management and internal control effectiveness are delegated to management through the Chief Executive Officer and Chief Financial Officer, including responsibility for the day to day design and implementation of the Company's risk management and internal control system.

Management reports to the Committee on the Company’s key risks and the extent to which it believes these risks are being adequately managed. The reporting on risk by Management is a standing agenda item at Board meetings.

A review of the Risk Management Policy and Framework is currently under consideration and, if thought fit, adoption by the Board of Directors.

Hawthorn Resources Limited 2020 Corporate Governance Statement

Corporate Governance Practices and Conduct

Business Risk

The main areas of business risk, which are considered on an ongoing basis by the Board are:

failure to identify and develop commercial undertakings from the exploration research and development activities
failure to secure and ensure the integrity and good standing of the Company’s interests in mining tenements
ability to raise capital or generate free cash flow to fund future exploration and development activities
failure to market the company’s mining resources
general economic factors including those affecting interest rates, mineral commodity prices and exchange rates
changes in Corporations and Taxation Laws.

INTERNAL AUDIT FUNCTION

Given the size of the Company as a junior exploration entity, an internal audit function has not been established. However, through the internal practices applied by the Company and the half‐year and annual external audit programs, the Board considers that there is proper conduct of the Company’s affairs.

ECONOMIC, ENVIRONMENTAL AND SOCIAL SUSTAINABILITY

The Company through management and the Board monitors its risks be they economic, environmental or social; refer to pages 34 and 36 of the 2020 Annual Report.

Principle 8 REMUNERATE FAIRLY AND RESPONSIBLY

NOMINATION AND REMUNERATION COMMITTEE

As noted in Principle 2 the Company has not established such committees. Rather such matters are dealt within the meetings of the Board of Directors. In carrying out these functions the Board receives regular briefings and advices from external advisers on remuneration and related human resources matters.

NON‐EXECUTIVE DIRECTOR REMUNERATION POLICY

Refer to pages 10 to 12 in the 2020 Annual Report

EXECUTIVE DIRECTOR REMUNERATION POLICY

Refer to pages 10 to 12 in the 2020 Annual Report

SHARE TRADING POLICY

In December 2011 the Company, in accordance with the requirements of the ASX, adopted a Share Trading Policy which was released to the ASX and which can be viewed on the Company’s website at www.hawthornresources.com/governance.aspx

Hawthorn Resources Limited 2020 Corporate Governance Statement

Corporate Governance Practices and Conduct

Under the Policy, an executive or director must not trade in any securities of the Company at any time when the Company is in a designated ‘Blackout Period’ being the ten business days immediately preceding the release of the half‐ year or the full year trading results to the ASX OR for the two consecutive business days following the release of a material announcement to the ASX OR when they are in possession of unpublished, price‐sensitive information in relation to those securities.

As required by the ASX listing rules, the Company notifies the ASX of any transaction conducted by directors in the securities of the Company. The Company has in place with each director an agreement in the form required under Listing Rule 3.19B.

OCCUPATIONAL HEALTH AND SAFETY

The Company is committed to providing a safe and healthy working environment for all staff. It considers that safety is a collective responsibility and ensures that regular training in safe working methods is undertaken and encourages participation and involvement in the development of workplace safety programs. Individual employees and employees of contractors are required to practice safe working habits, to take all reasonable care to prevent injury to themselves and their colleagues and to report all hazards and accidents.

New staff and contractors (where appropriate) are required to undergo an induction program to familiarize themselves with policies, procedures and work practices prior to commencing work. All staff are covered against injury under the various Workers’ Compensation Acts.

AI assistant

HAWTHORN RESOURCES LIMITED — Annual Report 2020

65039_rns_2020-10-12_f3d2a012-8e64-469f-baa8-fd7e29e4d9d7.pdf

13 October 2020

COMPANY ANNOUNCEMENT

Hawthorn Resources Limited

2020 Annual Report Appendix 4G/Corporate Governance Statement

Annual General Meeting

END

2020 ANNUAL REPORT

Annual Report cover photography:

Depicted

Hawthorn Resources Limited Corporate Directory

Directors

Mine Manager

Financial Officer

Registered Office and Domicile

Legal Form

Country of Incorporation

Australian Securities Exchange Listing Code

Share Registry

Auditors

Bankers

Solicitors

Hawthorn Resources Limited Managing Director/CEO Report

Gold

Iron Ore/Base Metals

MINING OPERATIONS

Gold

Hawthorn Resources Limited Managing Director/CEO Report

EXPLORATION AND DEVELOPMENT

• Gold

Hawthorn Resources Limited Managing Director/CEO Report

• Iron Ore/ Base Metals

FUNDING

ISSUED SECURITIES

CAPITAL RETURN AND SPECIAL DIVIDEND

Hawthorn Resources Limited Managing Director/CEO Report

BOARD OF DIRECTORS

WA PARLIAMENT SELECT COMMITTEE into mining activities on Pinjin Station

ASX WEBPAGE / HAW WEBSITE

Hawthorn Resources Limited

Hawthorn Resources Limited

Hawthorn Resources Limited Additional Shareholder Information

HAWTHORN RESOURCES LIMITED

QUOTED SHARES - ASX CODE : HAW

Hawthorn Resources Limited Additional Shareholder Information Cont.

MARKETABLE PARCELS - SHARES

BUY-BACK

SUBSTANTIAL SHAREHOLDINGS

NON-QUOTED PERFORMANCE RIGHTS

Number on issue Number Holders

Hawthorn Resources Limited

FINANCIAL REPORT YEAR ENDED 30 JUNE 2020

Directors’ Report 2020

Hawthorn Resources Limited Directors’ Report

1 Directors

Mr Li, Yi Jie

Non-Executive Chairman

Appointed 30 October 2012; last re-elected 2018 AGM

Chairman of the Board of Directors.

Mr Mark G Kerr - LL.B

Managing Director and Chief Executive Officer

Appointed 22 November 2007; last re-elected 2014 AGM

Mr Christopher D Corrigan - BEc

Non-Executive Director

Appointed 5 October 2017; and elected by shareholders 29 November 2017

Hawthorn Resources Limited Directors’ Report Cont.

Non-Executive Director

Appointed 14 November 1996; last re-elected 2019 AGM

Mr Liao, Yongzhong – MBA

Non-Executive Director

Appointed 30 October 2012; last re-elected 2017 AGM

Mr Liu, Zhensheng

Non-Executive Director

Hawthorn Resources Limited Directors’ Report Cont.

FORMER DIRECTORS

DIRECTORSHIPS

2 Principal Activities and Review and Results of Operations

Objective

HAWTHORN RESOURCES LIMITED Annual Report 2020