IRON BEAR RESOURCES LTD — Interim / Quarterly Report 2021

Mar 15, 2021

CYCLONE METALS LIMITED (FORMERLY CAPE LAMBERT RESOURCES LIMITED)

ABN 71 095 047 920

AND ITS CONTROLLED ENTITIES

Interim Financial Report For The Half-Year Ended 31 December 2020

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HALF YEAR REPORT – 31 DECEMBER 2020

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CONTENTS

Corporate Directory	1
Directors' Report	2
Auditor’s Independence Declaration	8
Consolidated Statement of Profit or Loss and Other Comprehensive Income	9
Consolidated Statement of Financial Position	10
Consolidated Statement of Changes in Equity	11
Consolidated Statement of Cash Flows	13
Notes to the Consolidated Financial Statements	14
Directors' Declaration	24
Independent Auditor’s Review Report	25

HALF YEAR REPORT – 31 DECEMBER 2020

CORPORATE DIRECTORY

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Directors

Mr Terry Donnelly – Non-Executive Chairman (appointed 4 August 2020) Mr Tony Sage - Executive Director Mr Tim Turner - Non-Executive Director

Company Secretary Ms Melissa Chapman

Stock Exchange Listing

Australian Securities Exchange ASX code: CLE

Website

www.cyclonemetals.com

Country of Incorporation

Australia

Registered Address

32 Harrogate Street West Leederville, WA 6007 Australia

Tel: +61 8 9380 9555

Bankers

National Australia Bank 100 St George’s Terrace Perth, WA 6000

Auditors

BDO Audit (WA) Pty Ltd 38 Station Street Subiaco, WA 6008 Tel: +61 8 6382 4600 Fax: +61 8 6382 4601

Share Registry

Computershare Investor Services Pty Limited Level 11, 172 St Georges Terrace Perth, WA 6000

AUSTRALIA

Tel: 1300 85 05 05 (Australia) +61 3 9415 4000 (Overseas)

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HALF YEAR REPORT – 31 DECEMBER 2020

DIRECTORS’ REPORT

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Your Directors submit the financial report of Cyclone Metals Limited ( Cyclone or Company ) (previously Cape Lambert Resources Limited) and its controlled entities (together the Consolidated Entity ) for the half-year ended 31 December 2020.

DIRECTORS

The names of Directors who held office during or since the end of the half-year are set out below. Directors were in office for this entire period unless otherwise stated.

Terry Donnelly (appointed 4 August 2020) Tony Sage Timothy Turner Mark Hancock (resigned 4 August 2020)

COMPANY SECRETARY

Melissa Chapman

REVIEW OF RESULTS AND OPERATIONS

Principal Activity

The principal activity of the Consolidated Entity during the half-year was mineral investment, exploration and evaluation.

There were no significant changes in the nature of the principal activity during the half-year or infact the past 15 years of operating.

Review of Operations

Corporate

A summary of the most significant transactions is set out below:

Trading Suspension

On 16 October 2020, the Company’s securities were suspended from official quotation on the basis that ASX had determined CLE’s operations are not adequate to warrant the continued quotation of securities and compliance with LR 12.1. The Company is currently liaising with ASX regarding compliance with LR 12.1.

The Company made ongoing submissions to the ASX regarding compliance with LR 12.1, all of which were unfortunately rejected. The Company disputes the ASX interpretation.

Over the many years since the Company’s initial listing (over 15 years) it has consistently communicated with ASX and shareholders its strategy that involves the acquisition and investment in undervalued and/or distressed mineral assets and companies. The Company currently manages 6 major assets, being investments in listed companies European Lithium Ltd (ASX:EUR), Fe Ltd (ASX:FEL), and Cauldron Energy Ltd (ASX:CXU), the Marampa iron ore asset in Sierra Leone, the Lady Ethleen copper asset in Queensland, and our rare earths project in Western Australia. The market value of these assets is well over $20m and the Company has over $1.3m cash at hand. The Company continues to engage with ASX regarding this matter with a view to a resolution as soon as practicable.

Board Restructure

During the half year, the Company announced the appointment of Mr Terry Donnelly as Non-Executive Chairman and the resignation of Mr Mark Hancock as Non-Executive Director of the Company with effect from 4 August 2020.

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HALF YEAR REPORT – 31 DECEMBER 2020

DIRECTORS’ REPORT

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Mr Tony Sage was previously providing the services of Executive Chairman to Cyclone via Okewood Pty Ltd. To enable Mr Sage to focus on his role as Executive Director and growing Cyclone Metals business, Mr Terry Donnelly will act as Independent Non-Executive Chair of the Company. The appointment of Mr Donnelly to this role is also consistent with the recommendations of the ASX Corporate Governance Principles and Recommendations.

Shareholder Meetings

On 6 October 2020, the Company held an extraordinary general meeting ( EGM ) of shareholders. All resolutions were carried at the EGM.

On 30 November 2020, the Company held its annual general meeting ( AGM ) of shareholders. All resolutions were carried at the AGM.

Placement

In August 2020, the Company completed a placement to raise proceeds of $125,500 (before expenses).

In October 2020, the Company completed a placement to raise proceeds of $2,000,000 (before expenses).

In December 2020, the Company completed a placement to raise proceeds of $1,040,000 (before expenses).

Exercise of Options

On 17 September 2020, the Company issued 10,000,000 fully paid ordinary shares upon the exercise of options at an exercise price of $0.006 per share which expire on 30 June 2023.

- Financing Facility Magna

As previously announced, on 17 December 2018, the Company entered into a Convertible Note Agreement with MEF I, L.P. ( Magna ) of which A$750k (548,310 convertible notes) was drawn down on 19 December 2018.

During the half year ended 31 December 2020, Magna converted the remaining 108,612 notes which resulted in the issue of 35,951,450 fully paid ordinary shares in the Company. As at 31 December 2020, Magna had nil convertible notes remaining.

Financing Facility - Winance

On 31 July 2019, the Company announced that it had secured an A$15m finance facility with Winance Investment LLC ( Winance ) for mining exploration and general working capital purposes.

The initial tranche of A$1.2m (1,200 convertible notes) was drawn down on 8 August 2019 with the conversion of initial tranche A notes ($480k or 480 convertible notes) unconditional and the conversion of initial tranche B notes ($720k or 720 convertible notes) subject to prior approval by Cyclone shareholders. Further tranches of A$13.8m is available in tranches of A$500k each upon full conversion of the notes from the previous drawdown, subject to a cooling off period. Full terms and conditions of the convertible securities are included in the announcement released on 31 July 2019.

During the half year ended 31 December 2020, there were no conversion of notes. As at 31 December 2019, Winance had 10 convertible notes remaining.

Financing Facility – Winance Loan

On 24 January 2020 the Company entered into a $2.2m secured loan facility with Winance ( Winance Loan ). On 17 September 2020, the Company advises that the parties have agreed that the principle amount of $2.2m plus accrued

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HALF YEAR REPORT – 31 DECEMBER 2020

DIRECTORS’ REPORT

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interest and outstanding fees will be converted into Shares (subject to receipt of shareholder approval) ( Winance Debt Shares ) based on a share price of AUD $0.004 on 30 November 2020 ( Extended Maturity Date ).

On 16 October 2020, the Company issued 146,518,667 Winance Debt Shares to satisfy interest payable under the Winance Loan following receipt of shareholder approval at the EGM.

On 22 October 2020, the Company issued 450,000,000 Winance Debt Shares at a price of $0.004 per Share to Winance in part reduction of the Winance Loan.

On 30 November 2020, the Company issued 318,094,100 Winance Debt Shares at a price of $0.004 per Share to satisfy the balance of the Winance Loan following receipt of shareholder approval at the AGM. The fair value of these shares on issue date was $0.009 per share which resulted in a loss in the extinguishment of liabilities of $1,590,471.

At 31 December 2020, the Winance Loan had been repaid in full.

Conversion of Debt

On 15 October 2020, following receipt of shareholder approval at the AGM, the Company issued 125,631,533 fully paid ordinary shares to Bennett and Co to satisfy debts of $188,447.

On 16 October 2020, following receipt of shareholder approval at the AGM, the Company issued 228,866,754 fully paid ordinary shares to Directors of the Company to satisfy debts of $343,300 (refer to note 14).

On 18 December 2020, the Company issued 6,000,000 fully paid ordinary shares and 3,000,000 unlisted options with at an exercise price of $0.005 expiring 18 December 2021 to satisfy broker fees of $30,000 in relation to the December Placement.

Other Security Movements

On 16 October 2020, the Company issued 20,000,000 fully paid ordinary shares to Mr Terry Donnelly, the appointed Non-Executive Chairman of the Company. The shares were issued following receipt of shareholder approval at the EGM.

On 18 December 2020, the Company issued 5,000,000 unlisted options to Kapital Global, the broker that facilitated the Winance Loan, and negotiated on behalf of the Company with Winance on the conversion of the Winance Loan into Winance Debt Shares. The options were issued following receipt of shareholder approval at the AGM.

Project Information

Marampa

Marampa is an iron ore project at the development stage, and is located 90 km northeast of Freetown, Sierra Leone, West Africa ( Marampa or Marampa Project ). The Marampa Project comprised one mining licence (ML05/2014) comprising 97.40km2 and one exploration licence (EL46A/2011) comprising 145.86km2. The status of these tenements is as follows:

ML05/2014

In 2014, Marampa Iron Ore (SL) Limited ( Marampa SL ), a wholly owned subsidiary of Cyclone Metals was granted the mining and environmental licences for ML05/2014 (together the Mining Licence ). The Company has spent circa US$62.7m on exploration and development to date on the Marampa Project.

In September 2018, Marampa SL received a letter from the Sierra Leone Ministry of Mines ( SLMOM ) cancelling the Mining Licence. In 2018, Marampa SL commenced legal action in Sierra Leone to challenge SLMOM’s decision to cancel the Mining Licence ML05/2014, however, the Board subsequently placed this legal action on hold whilst arbitration commenced by another holder of a mining licence in the area (SL Mining, a wholly owned subsidiary of Gerald

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HALF YEAR REPORT – 31 DECEMBER 2020

DIRECTORS’ REPORT

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International Limited) against the Republic of Sierra Leone proceeded. The arbitration continues, with an application by the Republic to challenge a partial award from the arbitration recently dismissed by the English High Court.

The Company has during Q4/2020, and will continue to be, engaged in dialogue with the relevant Sierra Leonean authorities to present an updated mining and investment proposal (using current iron ore prices, which are significantly higher than when the Mining Licence was cancelled) in an attempt to have the Mining Licence reinstated or reissued by mutual agreement. Dialogue has been restricted significantly during the period by the impacts of COVID-19 on travel and government operations. However, the management has continued during Q4/2020 to be very active in discussions with relevant stakeholders at the SL government to fast-track the process getting the mining license issued again. Some ongoing political turmoil makes a prediction when the government would reissue the licence uncertain.

The Company has and continues to be in close contact with the relevant authorities in Sierra Leone and has finalised and lodged a sustainable business proposal to the relevant government department in Q1/2021. All our existing assets, staffing and minimum expenditure requirements are being met “in care and maintenance mode” and will be kept in place until the Company regains its mining license.

The Company has never ceased to operate in country and has spent in excess of $400k in maintaining and improving its assets in the past 12 months.

The Company will continue its discussions with the Government of Sierra Leone, as are the 2 other operators whose licenses were also cancelled.

EL46A/2011

In 2014, Marampa SL was granted exploration license EL46A/2011. In June 2014 the SLMOM extended EL46A/2011 for a further 2-year term from 31 July 2015 until 31 July 2017. Marampa SL has not paid renewal fees to the SLMOM in respect of EL46A/2011 since 31 July 2017. However, Marampa SL has not received any termination documentation or request for information from the SLMOM, therefore is of the view that EL46A/2011 remains a valid license. Marampa SL has contacted the SLMOM asking them to confirm the status of EL46A/2011 however no response has been received to date therefore tenure over EL46A/2011 remains uncertain. Marampa SL will continue to follow up with the SLMOM to determine the status of EL46A/2011. The management of Marampa SL has continued to be active in discussions with SLMOM to fast-track the process getting the EL46A/2011 to be issued again.

The Company is currently committing minimum expenditure on the Marampa Project and no exploration activities are currently underway at the Marampa Project.

Kukuna

Dempsey Resources Bermuda Limited holds the Kukuna Iron Ore Project located in Sierra Leone ( Kukuna or Kukuna Project ).

The Kukuna Project is located 120 km northeast of Freetown in the northwest of Sierra Leone and consists of one exploration licence (EL22/2012) covering 68km2. The licence comprises rocks known to host specular hematite mineralisation. Dempsey has not paid renewal fees to the SLMOM in respect of Kukuna. However Dempsey has not received any termination documentation or request for information from the SLMOM, therefore is of the view that Kukuna remains a valid license.

The Kukuna Project remained on care and maintenance.

Wee McGregor

Mining International Pty Ltd ( Mining International ), is a wholly owned subsidiary of Cyclone Metals holds tenure to 4 mining leases at the Wee MacGregor Project located 40 km southeast of Mt Isa in Queensland, which were first acquired in November 2015.

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HALF YEAR REPORT – 31 DECEMBER 2020

DIRECTORS’ REPORT

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The tenements are located within in the Eastern Fold Belt of the Mt Isa inlier. The tenements are located in the Mary Kathleen Zone/Wonga Subprovince. This area is prospective for a variety of deposit types, most notably structurally controlled epigenetic copper and gold deposits.

Cohiba Minerals Limited ( Cohiba ) has a Farm-in agreement with the Company for 80% of mining licences ML 2504, ML 2773 and ML 90098, with the Company retaining a 20% interest in and a pre-emptive right over Cohiba’s 80%.

The Lady Ethleen tenement (ML 2771) has been retained by Cyclone and is currently being utilized for a trial mining and processing exercise using a newly developed green leach process known as GlyLeach[TM] (refer ASX announcement 4 December 2020). A proposal for lab test work has been agreed on with Mining and Processing Solutions (MPS) to commence during Q1 2021. A drill rig has been tentatively booked to begin on the 15 February 2021 to obtain sufficient sample of oxide, transitional and sulphide material for use in lab testwork. Subject to border restrictions between Queensland and WA, drilling will commence on schedule and is expected to be completed within the week. Sample will then be freighted as soon as possible to Perth for commencement of proposed lab work.

A successful trial will mean a significant shift in future processing technology and will in turn facilitate possible development of the part owned nearby Wee Macgregor project as well as many other potential small assets in the district, that may be economic with appropriate processing technology.

Yalardy

On 11 September 2020, the Company announced that it has lodged applications for two tenements in the Carnarvon basin of WA.

The tenement applications (E09/2441 and E09/2442) cover a combined 297 graticular blocks or a total of 914.5 square kilometers starting approximately 33km east of the Overlander roadhouse near the turnoff to Shark Bay.

Recent geochemical sampling over the areas known as “Dogger” and “Sebastian” have identified two rare earth element (REE) anomalies coincident with identified geophysical anomalies that indicate potential for the existence of a buried diatreme beneath the geologically recent sedimentary cover sequences (refer ASX announcement 11 September 2020).

The southern gravity anomaly ( Sebastian ) presents as a deep gravity low with a coincident void in the TMI magnetics. The density depression and coincident magnetic low can be interpreted as a possible buried diatreme structure with similar dimensions to the Mt Weld REE deposit in the north eastern goldfields of WA. This presents an opportunity for a new REE discovery as the structural environment and geophysical indications may suggest a potential carbonatite source similar to that found at Mt Weld.

The presence of a buried diatreme may also bs a potential host to several different mineralisation possibilities.

These applications continue to progress through the DMIRS towards grant upon which reconnaissance exploration and project planning will commence.

The board intends to continue to follow its strategy of acquiring and investing in undervalued and/or distressed mineral assets and companies ( Projects ) and improve the value of these Projects, through a hands on approach to management, exploration, evaluation and development and retaining a long-term exposure to these Projects through a production royalty and/or equity interest. Cyclone aims to deliver shareholder value by adding value to these undeveloped Projects. If Projects are converted into cash, the Company intends to follow a policy of distributing surplus cash to Shareholders.

Competent Persons Statement

The contents of this Report relating to Exploration Results are based on information compiled by Olaf Frederickson, a Member of the Australasian Institute of Mining and Metallurgy. Mr Frederickson is a consultant to Cyclone and has sufficient experience relevant to the style of mineralisation and the deposit under consideration and to the activity he is undertaking to qualify as a Competent Person, as defined in the 2012 edition of the “Australasian Code for Reporting of

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HALF YEAR REPORT – 31 DECEMBER 2020

DIRECTORS’ REPORT

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Exploration Results, Mineral Resources and Ore Reserves”. Mr Frederickson consents to the inclusion in this report of the matters compiled by him in the form and context in which they appear.

Result

The Consolidated Entity made a loss after income tax for the half-year ended 31 December 2020 of $7,301,166 (31 December 2019: loss of $2,329,787). Included in this amount is loss of on extinguishment of liability of $6,743,087 (31 December 2019: $0).

EVENTS SUBSEQUENT TO BALANCE DATE

On 8 January 2021, the Company made two instalment payments to the ATO totalling $520k reducing the current tax liability.

On 12 January 2021, the Company entered into a deed of discharge and payment of debt agreement with a creditor of the Company to settle debts of $363,673 for a settlement amount of $100,000.

On 3 March 2021, the Company made one instalment payment to the ATO totalling $260k reducing the current tax liability.

There are no other matters or circumstances that have arisen since the end of the half year which 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 the future financial years.

DIVIDEND

No dividend was declared or paid during the half year ended 31 December 2020.

AUDITOR’S INDEPENDENCE DECLARATION

The auditor’s independence declaration under section 307C of the Corporations Act 2001 is set out on page 8 for the half-year ended 31 December 2020.

This report is signed in accordance with a resolution of the Board of Directors.

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___ Tony Sage Director

Dated this 16 day of March 2021

7

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

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

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DECLARATION OF INDEPENDENCE BY PHILLIP MURDOCH TO THE DIRECTORS OF CYCLONE METALS LIMITED

As lead auditor for the review of Cyclone Metals Limited for the half-year ended 31 December 2020, I declare that, to the best of my knowledge and belief, there have been:

1. No contraventions of the auditor independence requirements of the Corporations Act 2001 relation to the review; and

2. No contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Cyclone Metals Limited and the entities it controlled during the period.

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Phillip Murdoch Director

BDO Audit (WA) Pty Ltd

Perth, 16 March 2021

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

HALF YEAR REPORT – 31 DECEMBER 2020

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 31 DECEMBER 2020

Note Revenue 3a Other income 3b Gain/(loss) on extinguishment of liability 11, 12 Share based payments expense 12b Directors remuneration and employee benefits expenses Consulting and professional services expenses Occupancy expenses Compliance and regulatory expenses Travel and accommodation Depreciation and amortisation expense Gain/(loss) on fair value of financial assets through profit and loss 5a Exploration and evaluation expenditure 6 Other expenses Finance expenses Reversal of/(impairment) of investment in associate Impairment of investments in joint venture Share of net profits/(losses) of associates accounted for using the equity method 7b Net gain on dilution of interest in associates 7b Gain/(loss) on transfer from associated account to fair value through P&L 7b Profit/(Loss) before income tax Income tax benefit / (expense) Profit/(Loss) after income tax Other comprehensive income/(expenditure) net of tax Items that may be reclassified subsequently to profit or loss: Foreign exchange differences arising on translation of foreign operations Share of reserves of associate accounted for using the equity method 7b Total comprehensive income / (loss) for the period Profit/(Loss) after income tax attributable to: Members of Cyclone Metals Limited Total comprehensive income / (loss) attributable to: Members of Cyclone Metals Limited Profit/(Loss) per share attributable to members of Cyclone Metals Limited Basic profit/(loss) per share (cents per share) Diluted profit/(loss) per share (cents per share)	For the six months ended 31 December 2020 31 December 2019 $ $
	2,971 221,594 46,695 4,643 (6,743,087) - (169,664) - (279,236) (415,111) (318,744) (339,480) (26,238) (326,622) (88,656) (69,930) (35,102) (10,363) (3,574) (9,273) 1,274,171 9,443 (124,384) (177,114) (404,141) (105,208) (337,082) (546,979) - (851,848) - 57,489 (362,146) (83,677) 202,625 312,649 64,426 -
	(7,301,166) (2,329,787) - -
	(7,301,166) (2,329,787) 23,153 (4,021) 113,125 89,927
	(7,164,888) (2,243,881)
	(7,301,166) (2,329,787)
	(7,301,166) (2,329,787)
	(7,164,888) (2,243,881)
	(7,164,888) (2,243,881)
	(0.26) (0.22) (0.26) (0.22)

The accompanying notes form part of this financial report.

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HALF YEAR REPORT – 31 DECEMBER 2020

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMEBER 2020

Note CURRENT ASSETS Cash and cash equivalents Restricted cash Trade and other receivables 4 Other financial assets 5 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other financial assets 5 Investments accounted for using the equity method 7 Plant and equipment Exploration and evaluation expenditure 6 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 10 Provisions Current tax liabilities 8 Convertible notes 9 Short term loan payables 11 TOTAL CURRENT LIABILITIES NON CURRENT LIABILITIES Convertible note 9 Non-current tax liabilities 8 TOTAL NON CURRENT LIABILITIES TOTAL LIABILITIES/(DEFICIENCY) NET ASSETS EQUITY Issued capital 12 Reserves Accumulated loss TOTAL EQUITY/(DEFICIENCY)	As at 31 December 2020 30 June 2020 $ $
	1,555,488 238,222 17,500 12,500 267,976 293,305 3,931,574 -
	5,772,538 544,027
	1,436,237 884,679 1,849,637 5,052,941 72,815 81,923 - -
	3,358,689 6,019,543
	9,131,227 6,563,570
	854,670 2,506,410 85,554 81,137 1,512,999 1,773,171 - 206,773 - 2,200,000
	2,453,223 6,767,491
	103,204 69,643 1,300,861 1,300,861
	1,404,065 1,370,504
	3,857,288 8,137,995
	5,273,939 (1,574,425)
	220,116,993 206,133,405 24,051,622 23,885,680 (238,894,676) (231,593,510)
	5,273,939 (1,574,425)

The accompanying notes form part of this financial report.

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HALF YEAR REPORT – 31 DECEMBER 2020

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF- YEAR ENDED 31 DECEMBER 2020

Note Balance at 1 July 2020 (Loss) for the year Other comprehensive income Share of reserves of associate accounted for using the equity method Foreign exchange differences arising on translation of foreign operations Total comprehensive income for the half-year Transactions with owners in their capacity as owners Share based payments Shares issued during the period – Winance conversion 9 Shares issued during the period – Magna conversion 9 Shares issued during the period – Placement 12 Shares issued during the period – Creditor conversion 10 Shares issued during the period – Exercise of options 12 Shares issued during the period – Chairman shares 12 Shares issued during the period – Winance loan conversion 11 Capital raising costs Transactions with equity holders in their capacity as equity holders Balance at 31 December 2020	Issued Capital $ (Accumulated Loss) / Retained earnings $ Share Based Payment Reserve $ Foreign Currency Translation Reserve $ Business Combination Reserve $ Total Equity $
	206,133,405 (231,593,510) 2,757,033 22,219,148 (1,090,501) (1,574,425) - (7,301,166) - - - (7,301,166) - - 113,125 - - 113,125 - - - 23,153 - 23,153
	- (7,301,166) 113,125 23,153 - (7,164,888)
	- - 29,664 - - 29,664 219,778 - - - - 219,778 179,757 - - - - 179,757 3,165,500 - - - - 3,165,500 3,495,748 - - - - 3,495,748 60,000 - - - - 60,000 140,000 - - - - 140,000 6,912,847 - - - - 6,912,847 (190,042) - - - - (190,042)
	13,983,588 - 29,664 - - 14,013,252
	220,116,993 (238,894,676) 2,899,822 22,242,301 (1,090,501) 5,273,939

The accompanying notes form part of this financial report.

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HALF YEAR REPORT – 31 DECEMBER 2020

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

Balance at 1 July 2019 (Loss) for the year Other comprehensive income Share of reserves of associate accounted for using the equity method Foreign exchange differences arising on translation of foreign operations Total comprehensive income for the half-year Transactions with owners in their capacity as owners Shares issued during the period Transactions with equity holders in their capacity as equity holders Balance at 31 December 2019	Issued Capital $ (Accumulated Loss) / Retained earnings $ Share Based Payment Reserve $ Foreign Currency Translation Reserve $ Business Combination Reserve $ Total Equity $
	203,295,135 (230,059,028) 2,677,884 22,208,957 (1,090,501) (2,967,553) - (2,329,787) - - - (2,329,787) - - 66,528 23,399 - 89,927 - - - (4,021) - (4,021)
	- (2,329,787) 66,528 19,378 - (2,243,881)
	460,265 - - - - 460,265
	460,265 - - - - 460,265
	203,755,400 (232,388,815) 2,744,412 22,228,335 (1,090,501) (4,751,169)

The accompanying notes form part of this financial report

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HALF YEAR REPORT – 31 DECEMBER 2020

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CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2020

Note CASHFLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees (inclusive of GST) Payments for exploration and evaluation Interest received Income tax paid 8 Transfer of funds from non-restricted to restricted Net cash used in operating activities CASHFLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Purchase of equity investments Proceeds on sale of equity investments 5a Payment for other investments Net cash from / (used in) investing activities CASHFLOWS FROM FINANCING ACTIVITIES Proceeds from issue of convertible notes Proceeds from the exercise of options Transaction costs related to issue of convertible notes Proceeds from share issue Net cash provided by financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	For the six months ended 31 December 2020 31 December 2019 $ $
	(911,611) (305,875) (229,352) (328,317) 2,971 303 (260,172) (260,172) (5,000) -
	(1,403,164) (894,061)
	(2,364) - (30,000) - 12,373 - (325,037) -
	(345,028) -
	- 1,200,000 60,000 - (160,042) (412,403) 3,165,500 -
	3,065,458 787,597
	1,317,266 (106,464) 238,222 210,106
	1,555,488 103,642

The accompanying notes form part of this financial report.

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HALF YEAR REPORT – 31 DECEMBER 2020

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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1. BASIS OF PREPARATION

General Information

This general purpose condensed financial report for the half-year ended 31 December 2020 has been prepared in accordance with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Act 2001 and was authorised for issue in accordance with a resolution of Directors on 16 March 2021.

Cyclone Metals Limited (previously Cape Lambert Resources Limited) is a company limited by shares, incorporated and domiciled in Australia whose shares are publicly traded in the ASX. The principal activity of the Consolidated Entity during the half-year was mineral investment, exploration and evaluation.

This half-year financial report is to be read in conjunction with the annual financial report for the year ended 30 June 2020 and any public announcements made by Cyclone and its controlled entities during the half-year in accordance with the continuous disclosure requirements arising under the Corporations Act 2001 .

The half-year financial report does not include full disclosures of the type normally included in an annual financial report. Therefore, it cannot be expected to provide as full an understanding of the financial performance, financial position and cash flows of the group as in the full financial report.

Going Concern

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

For the half-year ended 31 December 2020 the Consolidated Entity incurred a loss after income tax of $7,301,166 (31 December 2019: $2,329,787 loss), net cash outflows from operating activities of $1,403,164 (31 December 2019: $894,061), a working capital surplus of $3,319,315 (30 June 2020: $6,223,464 deficit) and at that date had cash on hand of $1,555,488 (30 June 2020: $238,222).

The Consolidated Entity’s ability to continue as a going concern and to continue to fund its planned expanded activities is dependent on raising further capital, continued support from creditors and related parties, successful extension or renegotiation of borrowing facilities and reducing operational costs.

These conditions indicate a material uncertainty that may cast a significant doubt about the Consolidated Entity’s ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.

The Directors believe that it is reasonably foreseeable that the Consolidated Entity will continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report after consideration of the following factors:

• The Consolidated Entity is progressing towards the reissuance of the relevant licences at the Marampa Iron Ore Project and developing the project;

• The Consolidated Entity requires additional capital for its next phase. The Company continues to seek funding options;

• Continued support from external creditors allowing for the deferred payment of certain liabilities;

• The Consolidated Entity is engaging with the ATO regarding the outstanding debt; and

• ▪ Ability to realise certain of the Consolidated Entity’s financial assets through the sale of its listed shares.

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

14

HALF YEAR REPORT – 31 DECEMBER 2020

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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Significant Accounting Policies

The accounting policies and methods of computation adopted are consistent with those of the previous financial year and corresponding half-year. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards with the exception of the following:

Conceptual Framework for Financial Reporting and relevant amending standards (Conceptual Framework)

The Consolidated Entity has adopted the Conceptual Framework with the date of initial application being 1 July 2020.

The revised Conceptual Framework includes some new concepts, provides updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts. It is arranged in eight chapters, as follows:

• Chapter 1 – The objective of financial reporting

• Chapter 2 – Qualitative characteristics of useful financial information

• Chapter 3 – Financial statements and the reporting entity

• Chapter 4 – The elements of financial statements

• Chapter 5 – Recognition and derecognition

• Chapter 6 – Measurement

• Chapter 7 – Presentation and disclosure

• Chapter 8 – Concepts of capital and capital maintenance

Amendments to References to the Conceptual Framework in IFRS Standards has also been issued, which sets out the amendments to affected standards in order to update references to the revised Conceptual Framework. The changes to the Conceptual Framework may affect the application of IFRS in situations where no standard applies to a particular transaction or event. In addition, relief has been provided in applying IFRS 3 and developing accounting policies for regulatory account balances using IAS 8, such that entities must continue to apply the definitions of an asset and a liability (and supporting concepts) in the 2010 Conceptual Framework, and not the definitions in the revised Conceptual Framework.

At 1 July 2020 it was determined that the adoption of the Conceptual Framework had no impact on the Consolidated Entity.

AASB 2018-7 Definition of Material (Amendments to AASB 101 and AASB 108)

The Consolidated Entity has adopted AASB 2018-7 with the date of initial application being 1 July 2020.

This Standard amends AASB 101 Presentation of Financial Statements and AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors to align the definition of ‘material’ across the standards and to clarify certain aspects of the definition. The amendments clarify that materiality will depend on the nature or magnitude of information. An entity will need to assess whether the information, either individually or in combination with other information, is material in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users.

At 1 January 2020 it was determined that the adoption of AASB 2018-7 had no impact on the Consolidated Entity.

Standards and Interpretations in issue not yet adopted applicable to 31 December 2020

The Directors have reviewed the new and revised Standards and Interpretations in issue not yet adopted that are relevant to the Company and effective for the half-year reporting periods beginning on or after 1 January 2021. As a result of this review, the Directors have determined that there is no material impact of the new and revised Standards and Interpretations in issue not yet adopted on the Company and therefore no material change is necessary to the Consolidated Entity accounting policies. The Consolidated Entity has not elected to early adopt any new accounting standards and interpretations.

15

HALF YEAR REPORT – 31 DECEMBER 2020

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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Significant estimates and judgments

The Consolidated Entity makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Refer to the most recent annual financial report for the year ended 30 June 2020 for a discussion of the significant estimates and judgments.

2. SEGMENT INFORMATION

AASB 8 Operating Segments requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the Chief Operating Decision Maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. In the case of the Consolidated Entity the CODM are the executive management team and all information reported to the CODM is based on the consolidated results of the Consolidated Entity as one operating segment, as the Consolidated Entity’s activities relate to mineral exploration.

Accordingly, the Consolidated Entity has only one reportable segment and the results are the same as the Consolidated Entity’s results.

Information by geographical region

The analysis of the location of non-current assets other than financial instruments and deferred tax assets is as follows:

Australia West Africa evenue by geographical region Australia West Africa 3. PROFIT/(LOSS) FROM OPERATIONS (a) Revenue Interest Rental revenue (b) Other income Foreign currency gain / (loss) Sale of tenement income Government grants Other	31 December 2020 30 June 2020 $ $
	1,762,516 5,061,755 65,210 73,108
	1,827,726 5,134,864
	31 December 2019 30 June 2020 $ $
	1,762,516 324,910 65,210 -
	1,827,726 324,910
	31 December 2020 31 December 2019 $ $
	2,971 303 - 221,291
	2,971 221,594
	1,695 (5,934) 35,000 - 10,000 - - 10,577
	46,695 4,643

Revenue by geographical region

16

HALF YEAR REPORT – 31 DECEMBER 2020

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4. TRADE AND OTHER RECEIVABLES Trade and other receivables – current Trade debtors Deferred consideration receivable (a) GST recoverable and other debtors Prepayments Loans receivable (b) Expected credit loss allowance	31 December 2020 30 June 2020 $ $
	3,785,179 3,850,527 2,500,000 2,500,000 76,576 26,321 - 10,236 - - (6,093,779) (6,093,779)
	267,976 293,3052

• (a) Deferred consideration receivable payable on the achievement of a production milestone. This receivable has been previously provided for in full.

• (b) Current loans receivable at balance date are made up as follows:

Interest rate Current Convertible loan note of $250,250 15.0% Loan of USD$8,000,000 Libor + 6% Carrying value of loans Impairment of receivables Current carrying value at amortised cost at balance date 5. OTHER FINANCIAL ASSETS Current Financial Assets at Fair value through Profit or Loss Shares in listed entities (a) Non-Current Financial Assets at Fair value through Profit or Loss Shares in listed entities (a) Shares in unlisted entities Total Financial Assets (a) Movements in the carrying amount of the non-current shares in listed entities Brought forward Reclassification of financial asset at fair value through profit or loss to/(from) investment in associate Gain/(Loss) on fair value of financial assets through profit and loss Disposal of equity investments	Carrying value of loans 31 December 2020 30 June 2020 $ $
	159,250 159,250 10,447,200 10,447,200
	10,606,450 10,606,450 (10,606,450) (10,606,450)
	- -
	31 December 2020 30 June 2020 $ $
	3,931,574 -
	3,931,574 - 1,418,802 867,244 17,435 17,435
	1,436,237 884,679
	5,367,811 884,679
	31 December 2020 30 June 2020 $ $
	867,244 979,620 3,221,334 - 1,274,171 (112,376) (12,373) -
	5,350,376 867,244

17

HALF YEAR REPORT – 31 DECEMBER 2020

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

6. EXPLORATION AND EVALUATION EXPENDITURE Exploration and evaluation phases Movement in carrying amounts Brought forward Exploration and evaluation expenditure capitalised Exploration expenditure de-recognised during the period Total exploration and evaluation phases 7. INVESTMENTS IN ASSOCIATED ENTITIES Investments in associates accounted for using the equity method (a) Investment details Percentage held at balance date 31 December 2020 30 June 2020 European Lithium Limited¹ - 9.73 Fe Limited 26.85 29.84	6. EXPLORATION AND EVALUATION EXPENDITURE Exploration and evaluation phases Movement in carrying amounts Brought forward Exploration and evaluation expenditure capitalised Exploration expenditure de-recognised during the period Total exploration and evaluation phases 7. INVESTMENTS IN ASSOCIATED ENTITIES Investments in associates accounted for using the equity method (a) Investment details Percentage held at balance date 31 December 2020 30 June 2020 European Lithium Limited¹ - 9.73 Fe Limited 26.85 29.84	31 December 2020 30 June 2020 $ $
		- -
		- - 124,384 344,648 (124,384) (344,648)
		- -
		31 December 2020 30 June 2020 $ $
		1,849,637 5,052,941
		31 December 2020 30 June 2020 $ $
	- 9.73 26.85 29.84	- 3,156,907 1,849,637 1,896,034
		1,849,637 5,052,941

¹ Given the Company holds less than 20% interest in European Lithium Ltd (EUR), and that Mr Turner resigned as a Director of EUR on 2 September 2020, and as such Tony Sage is the only similar Director on EUR and Cyclone Metals Ltd, the Company is considered to no longer have significant influence over the investment and accordingly is no longer equity accounted for. Instead, the Company's shareholding in EUR is accounted for a fair value through profit and loss.

(b) Movements in the carrying amount of the investment in associates Balance at beginning of period Sale of shares Purchase of shares Share of profits/(losses) of associates recognised during the period Share of reserves of associates recognised during the period Net gain on dilution of interest in associates Reclassification to Financial Assets at fair value through Profit and Loss Gain/(loss on transfer from associated account to fair value through P&L Impairment (loss)	31 December 2020 30 June 2020 $ $
	5,052,941 6,030,739 - - - 3,982 (362,146) 1,430,813 113,125 95,513 202,625 483,806 (3,221,334) - 64,426 - - (2,991,912)
	1,849,637 5,052,941

(c) Fair value of investments in listed associates

The fair value of listed associates has been determined by reference to published price quotations in an active market (level 1 in the fair value hierarchy).

European Lithium Limited Fe Limited	31 December 2020 30 June 2020 $ $
	- 3,156,907 5,833,945 1,896,034

18

HALF YEAR REPORT – 31 DECEMBER 2020

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8. TAX LIABILITY Current Non-current Balance at beginning of period Repayments of income tax Balance at end of period 9. CONVERTIBLE NOTE Current Non-current Balance at beginning of period Funds borrowed under convertible loan agreement Finance charges Amounts repaid through cash Amounts repaid through issue of shares Amounts transferred to trade and other payables Balance at end of period		31 December 2020 30 June 2020 $ $ 1,512,999 1,773,171 1,300,861 1,300,861 2,813,860 3,074,032 31 December 2020 $ 30 June 2020 $
		3,074,032 3,903,572 (260,172) (829,540)
		2,813,860 3,074,032
		31 December 2020 30 June 2020 $ $ - 206,773 103,204 69,643 103,204 276,416 31 December 2020 $ 30 June 2020 $
		276,416 459,737 - 1,200,000 6,546 192,359 - (90,212) (179,758) (1,043,468) - (442,000)
		103,204 276,416

(a) Magna

During the year, Magna elected to convert 108,612 notes borrowed under the convertible loan agreement into 35,951,448 fully paid ordinary shares of the Company.

As at 31 December 2020, Magna had nil convertible notes.

(b) Winance

As at 31 December 2020, Winance had 10 convertible notes remaining at a fair value of $103,206.

10. TRADE AND OTHER PAYABLES Trade & Other Payables Other creditors and accruals Withholding tax	31 December 2020 30 June 2020 $ $
	757,366 1,600,028 96,876 905,175 428 1,207
	854,670 2,506,410

19

HALF YEAR REPORT – 31 DECEMBER 2020

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

11. LOAN PAYABLE Current Non-current (a) Movements in the carrying amount of loan payable Balance at beginning of period Proceeds from borrowings Repayment of borrowings (a) Foreign exchange	31 December 2020 30 June 2020 $ $ - 2,200,000 - - - 2,200,000
	31 December 2020 30 June 2020 $ $
	2,200,000 1,422,736 - 2,200,000 (2,200,000) (1,422,736) - -
	- 2,200,000

(a) Winance

On 16 October 2020, the Company issued 146,518,667 Winance Debt Shares to satisfy interest payable under the Winance Loan following receipt of shareholder approval at the EGM.

On 22 October 2020, the Company issued 450,000,000 Winance Debt Shares at a price of $0.004 per Share to Winance in part reduction ($1,800,000) of the Winance Loan. The fair value of these shares on issue date was $0.009 per share which resulted in a loss in the extinguishment of liabilities of $2,250,000.

On 30 November 2020, the Company issued 318,094,100 Winance Debt Shares at a price of $0.004 per Share to satisfy the balance of the Winance Loan. The fair value of these shares on issue date was $0.009 per share which resulted in a loss in the extinguishment of liabilities of $1,590,471.

At 31 December 2020, the Winance Loan had been repaid in full.

12. ISSUED CAPITAL

(a) Ordinary shares 4,532,236,982 fully paid ordinary shares (30 June 2020: 1,736,981,667) Shares on issue at 1 July 2020 Shares issued during the period – Winance conversion (note 11a) Shares issued during the period – Magna conversion (note 9a) Shares issued during the period – Placement (i) Shares issued during the period – Creditor conversion (ii) Shares issued during the period – Exercise of options Shares issued during the period – Chairman shares (note 14) Shares issued during the period – Winance Loan (note 9a) Capital raising costs	31 December 2020 30 June 2020 $ $
	220,116,993 206,133,405
	Ordinary fully paid shares Number $
	1,736,981,667 206,133,405 146,518,667 219,778 35,951,450 179,757 1,454,192,811 3,165,500 360,498,287 3,495,748 10,000,000 60,000 20,000,000 140,000 768,094,100 6,912,847 - (190,042)
	4,532,236,982 220,116,993

(i) Placements

The following shares were issued via share placement during the half year ended 31 December 2020:

20

HALF YEAR REPORT – 31 DECEMBER 2020

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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• On 25 August 2020, the Company issued 69,722,223 shares at an issue price of $0.0018 per share to raise proceeds of approximately $125,500 (before expenses).

• At various dates in October 2020, the Company issued 1,176,470,588 shares at an issue price of $0.0017 per share to raise proceeds of $2,000,000 (before expenses).

• On 18 December 2020, the Company issued 208,000,000 shares at an issue price of $0.005 per shares to raise proceeds of $1,040,000 (before expenses).

(ii) Creditor Conversions

The following shares were issued in settlement of liabilities during the half year ended 31 December 2020:

• On 15 October 2020 the Company issued 125,631,533 shares to settle liabilities of $188,447 at a deemed issue price of $0.0015 per share as approved by shareholders at the Company’s GM held on 6 October 2020 (resolution 9). The fair value of these shares on issue date was $0.011 per share which resulted in a loss in the extinguishment of liabilities of $1,193,500.

• On 16 October 2020 the Company issued 196,248,087 shares to settle liabilities of $294,72 at a deemed issue price of $0.0015 per share as approved by shareholders at the Company’s GM held on 6 October 2020 (resolution 4). The fair value of these shares on issue date was $0.09 per share which resulted in a loss in the extinguishment of liabilities of $1,471,861 (Refer to note 14).

• On 16 October 2020 the Company issued 10,618,667 shares to settle liabilities of $15,928 at a deemed issue price of $0.0015 per share as approved by shareholders at the Company’s GM held on 6 October 2020 (resolution 5). The fair value of these shares on issue date was $0.09 per share which resulted in a loss in the extinguishment of liabilities of $79,640 (Refer to note 14).

• On 16 October 2020 the Company issued 22,000 shares to settle liabilities of $33,000 at a deemed issue price of $0.0015 per share as approved by shareholders at the Company’s GM held on 6 October 2020 (resolution 6). The fair value of these shares on issue date was $0.09 per share which resulted in a loss in the extinguishment of liabilities of $165,000 (Refer to note 14).

• On 18 December 2020, the Company issued 6,000,000 shares to settle liabilities of $30,000 at a deemed issue price of $0.009 per share. The fair value of these shares on issue date was $0.09 per share which resulted in a loss in the extinguishment of liabilities of $24,000.

(b) Options

At 31 December 2020, the unissued ordinary shares of the Company under option are as follows:

Date of Expiry Status Exercise Price	Number of Options
30/06/2021 Unlisted $0.03 13/12/2020 Unlisted $0.005 18/12/2021 Unlisted $0.005 30/06/2023 Unlisted $0.006	15,000,000 5,000,000 107,000,000 11,200,000
	138,200,000

	(c) Share based payments	31 December 2020 30 June 2020 $ $
	Share Based Payment Reserve
	Share-Based Payment Expense	- 3,005 140,000 - 29,664 -
	Director Fees – options issued
	Director shares (note14)
	Corporate Advisor – options issued
	Total Expense Recognised in Profit & Loss	169,664 3,005 - 152,971
	Capital Raising Costs
	Corporate Advisor – options issued
	Total Expense Recognised in Equity	- 152,971
	Total Share Based Payments Expense	- 155,976

21

HALF YEAR REPORT – 31 DECEMBER 2020

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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13. CONTINGENT ASSETS AND LIABILITIES

The Company had no other movements in contingent liabilities as at 31 December 2020 from those disclosed at 30 June 2020.

14. RELATED PARTY TRANSACTIONS

On 16 October 2020 the Company issued 196,248,087 shares to Okewood Pty Ltd, an entity controlled by Director Tony Sage, to settle liabilities of $294,372 at a deemed issue price of $0.0015 per share as approved by shareholders at the Company’s GM held on 6 October 2020 (resolution 4). The fair value of these shares on issue date was $0.09 per share which resulted in a loss in the extinguishment of liabilities of $1,471,861 (Refer to note 14).

On 16 October 2020 the Company issued 10,618,667 shares to Haven Resources Pty Ltd, an entity controlled by Director Mark Hancock, to settle liabilities of $15,928 at a deemed issue price of $0.0015 per share as approved by shareholders at the Company’s GM held on 6 October 2020 (resolution 5). The fair value of these shares on issue date was $0.09 per share which resulted in a loss in the extinguishment of liabilities of $79,640 (Refer to note 14).

On 16 October 2020 the Company issued 22,000 shares to Marnichar Nominees Pty Ltd ATF the Hallemar Trust trading as CRMS, an entity controlled by Director Timothy Turner, to settle liabilities of $33,000 at a deemed issue price of $0.0015 per share as approved by shareholders at the Company’s GM held on 6 October 2020 (resolution 6). The fair value of these shares on issue date was $0.09 per share which resulted in a loss in the extinguishment of

On 16 October 2020, the Company issued 20,000,000 fully paid ordinary sign-on bonus shares to Mr Terry Donnelly, the appointed Non-Executive Chairman of the Company. The shares were issued following receipt of shareholder approval at the EGM held on 6 October 2020.

During the half year ended 31 December 2020, the Company paid an amount of $24,819 to a Director related entity for commission in respect to the placements which completed in October and December.

There are no significant changes to the nature of related party relationships and transactions from those disclosed in the 30 June 2020 annual financial report.

15. EVENTS SUBSEQUENT TO REPORTING DATE

On 8 January 2021, the Company made two instalment payments to the ATO totalling $520k reducing the current tax liability.

On 12 January 2021, the Company entered into a deed of discharge and payment of debt agreement with a creditor of the Company to settle debts of $363,673 for a settlement amount of $100,000.

On 3 March 2021, the Company made one instalment payment to the ATO totalling $260k reducing the current tax liability.

There are no other matters or circumstances that have arisen since the end of the half year which 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 the future financial years.

16. FINANCIAL INSTRUMENTS

Fair value measurement

The fair value of financial assets and liabilities must be estimated for recognition and measurement or for disclosure purposes. The Directors consider that the carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their fair values as the carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature.

22

HALF YEAR REPORT – 31 DECEMBER 2020

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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Financial Instruments Measured at Fair Value

The financial instruments recognised at fair value in the 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 or 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 or liability that are not based on observable market data (unobservable inputs) (Level 3)

31 December 2020 Financial assets: Investments in listed shares Investments in unlisted shares Financial liabilities: Convertible notes liability 30 June 2020 Financial assets: Investments in listed shares Investments in unlisted shares Financial liabilities: Convertible notes liability	Level 1 $ Level 2 $ Level 3 $ Total $
	5,350,376 - - 5,350,376 - - 17,435 17,435 - 103,204 - 103,204 Level 1 $ Level 2 $ Level 3 $ Total $
	867,244 - - 867,244 - - 17,435 17,435 - 276,416 - 276,416

23

HALF YEAR REPORT – 31 DECEMBER 2020

DIRECTORS’ DECLARATION

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In the opinion of the directors:

(a) The financial statements and notes of the Consolidated Entity for the half-year ended 31 December 2020 are in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2020 and of its performance for the half-year ended on that date; and

(ii) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting , International Financial Reporting Standard, IAS 34 Interim Financial Reporting and the Corporations Regulations 2001, and other mandatory professional reporting requirements.

(b) Subject to the matters set out in Note 1, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

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

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---

Tony Sage Director

Dated this 16 day of March 2021

24

Tel: +61 8 6382 4600 38 Station Street Fax: +61 8 6382 4601 Subiaco, WA 6008 www.bdo.com.au PO Box 700 West Perth WA 6872 Australia

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INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of Cyclone Metals Limited

Report on the Half-Year Financial Report

Conclusion

We have reviewed the half-year financial report of Cyclone Metals Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 December 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 halfyear ended on that date, a summary of statement of accounting policies and other explanatory information, and the directors’ declaration.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the accompanying half-year financial report of the Group does not comply with the Corporations Act 2001 including:

• (i) Giving a true and fair view of the Group’s financial position as at 31 December 2020 and of its financial performance for the half-year ended on that date; and

• (ii) Complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

Basis for conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity . Our responsibilities are further described in the Auditor’s Responsibilities for the Review of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to the audit of the annual 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 the same terms if given to the directors as at the time of this auditor’s review report.

Material uncertainty relating to going concern

We draw attention to Note 1 in the financial report which describes the events and/or conditions which give rise to the existence of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern and therefore the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. Our conclusion is not modified in respect of this matter.

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

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Responsibility of the directors for the financial report

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

Auditor’s responsibility for the review of the financial report

Our responsibility is to express a conclusion on the half-year financial report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31 December 2020 and its financial performance for the half-year ended on that date and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

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

BDO Audit (WA) Pty Ltd

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Phillip Murdoch

Director

Perth, 16 March 2021