LOTUS RESOURCES LIMITED - Interim / Quarterly Report 2021

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A B N 3 8 1 1 9 9 9 2 1 7 5

I N T E R I M F I N A N C I A L R E P O R T F O R T H E H A L F - Y E A R

31 DECEMBER 2020

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LOTUS RESOURCES LIMITED ABN 38 119 992 175

Interim Financial Report – Half-Year Ended 31 December 2020

Contents	Page
Corporate Directory	3
Directors’ Report	4
Auditor’s Independence Declaration	10
Interim Financial Statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income	11
Consolidated Statement of Financial Position	12
Consolidated Statement of Changes in Equity	13
Consolidated Statement of Cash Flows	14
Notes to the Financial Statements	15
Directors’ Declaration	20
Independent Auditor’s Review Report	21

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C O R P O R A T E D I R E C T O R Y

Directors Mr Michael Bowen Non-Executive Chairman Mr Grant Davey Non-Executive Director Mr Mark Hanlon Non-Executive Director Mr Keith Bowes Managing Director Company Secretary Mr Stuart McKenzie Principal Place of Business Emerald House, 1202 Hay Street West Perth WA 6005 Website Address www.lotusresources.com.au Auditor RSM Australia Partners Level 32, Exchange Tower 2 The Esplanade Perth WA 6000 Solicitor Thompson Geer Level 27, Exchange Tower 2 The Esplanade Perth WA 6000 Share Registry Computershare Investor Services Pty Ltd Level 2, Reserve Bank Building 45 St George's Terrace Perth, Western Australia, 6000 Securities Exchange ASX Limited Level 40, Central Park, 152-159 St Georges Terrace Perth, Western Australia, 6000 ASX Code: LOT

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D I R E C T O R S ’ R E P O R T

The Directors present their financial statements of Lotus Resources Limited (“the Company”) and its subsidiaries (“the Group or Consolidated Entity”) for the six months ended 31 December 2020 and the auditor’s review report thereon:

Directors

The Directors of the Company at any time during or since the end of the half-year and until the date of this report are:

Name Period of Directorship Mr Michael Bowen Director since 22 February 2021 (date of appointment) Non-Executive Chairman Mr Grant Davey Director since 22 June 2020 (date of appointment) Non-Executive Director Mr Mark Hanlon Director since 22 February 2021 (date of appointment) Non-Executive Director Mr Keith Bowes Director since 15 February 2021 (date of appointment) Managing Director Mr John Sibley Resigned 19 February 2021 Non-Executive Chairman Mr Eduard Smirnov Resigned 10 February 2021 Managing Director

Mr Mark Hanlon Non-Executive Director

Mr Stuart McKenzie Resigned 19 February 2021 Non-Executive Director

Review of Operations

During the half-year, the Group focused on four key areas, each of which is considered fundamental to a successful recommencement of sustainable operations at the Kayelekera Uranium Project (“Kayelekera” or the “Project”) in Malawi:

Reducing care and maintenance costs at Kayelekera;
Confirming the potential for Kayelekera to support a viable long-term uranium mining operation;
Engaging with potential offtakers, to ensure Kayelekera is strongly positioned to secure the necessary sales arrangements required for restart of operations; and
Near-mine exploration to support ongoing operations at Kayelekera.

Reducing care and maintenance costs

A comprehensive review of all activities and associated costs at the Project site was undertaken in order to ensure that site care and maintenance programs and costs are optimised. The review identified the following as core requirements of ongoing care and maintenance activities:

Maintaining a high level of security and safety at site;
Ensuring compliance with all regulatory requirements; and
On-going maintenance of critical equipment.

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A revised budget, which was prepared from first principles to deliver these core functions, has been developed and delivered significant cost reductions with a material decrease in on-site employee numbers as almost 100 personnel accepted redundancy packages, lower camp related costs with fewer residents in the onsite camp, a reduction in annual consumption of diesel and negotiation of a lower diesel price with in-country suppliers.

The Group is focused on reducing the care and maintenance costs for the year ending 30 June 2021. The Group has also identified a number of other areas that could see further potential cost reductions implemented, with these initiatives under ongoing review.

In order to achieve the care and maintenance operating cost reduction, certain capital projects will be undertaken to deliver the required modifications and include the following:

The large diesel gensets that currently power the site have been turned off, with a small genset set-up to power the camp and a combination of solar power and direct diesel power used to power pumps, communication towers and other infrastructure.
To support the reduced security contingent, cameras and guard dogs are employed to enable the majority of Project site security to be managed from the control room, with a smaller reactionary team available to respond if required.
An evaporative system to manage water in future wet seasons may be designed and implemented; and
Upgrades to surface water infrastructure including drains, ponds and pumping systems.

Restart study

The Group completed a Restart Scoping Study (“Study”) during the period which demonstrated that Kayelekera has the capacity to be one of the first operations globally to recommence uranium production to meet the impending and growing shortfall in supply.

Kayelekera’s existing infrastructure and Mineral Resources represent a considerable advantage, providing for a low restart capital expenditure and significant long-term production. The estimated C1 cash cost is on par with current term price indicators, which have been trending upwards in recent years. The Study assessed two scenarios:

Scenario 1: 8-year life of mine, producing 16.4Mlbs U3O8 with average head grade of ~900ppm U3O8; and
Scenario 2: 14 years life of mine, producing 23.8Mlbs U3O8 with treatment of stockpiles from year 8 (average head grade ~680ppm U3O8).

The results of the Study are shown in Table 1 below. Further information on the Study is available in ASX announcement dated 21 October 2020.

Table 1: Summary of production and cost data (estimated)

General	High-grade ore only	With Medium-grade stockpiles
	LOM total / Avg.	LOM total / Avg.
Mine Life (Years)	8	14
Total Material Mined (Mt)	47.1	47.1
Strip Ratio	3.5	1.8
Total U3O8Mined (Mlbs)	18.9	27.5
Production	LOM total / Avg.	LOM total / Avg.
Plant Feed (Mt)	9.6	18.4
Plant Feed Grade (ppm U3O8)	898	679
Plant Recovery (%)	86.7%	86.7%
Av. Annual Production (Mlbs)	2.3	1.8
Max Annual Production	3.0	3.0
LOM Production (Mlbs)	16.4	23.8
Operating costs	LOM total / Avg.	LOM total / Avg.
Mining Costs (US$ / t mined)	2.87	2.87
Processing Costs (US$ / t ore)	37.84	35.47
G&A Costs (US$M pa)	12.4	12.4
Steady-state1Cash costs (US$ / lb)	32.75	32.06
Steady-state2AISC (US$ / lb)	39.83	39.07
Capital costs	LOM total / Avg.	LOM total / Avg.
Initial Capital (US$M)	50.2	50.2
Plant Sustaining Capital (US$M)	28.0	48.0
TSF Sustaining Capital (US$M)	36.1	36.12
Closure Costs (US$M)	31.5	31.5

1 Production Years 2 to 6 after ramp-up; 2 Assumes in-pit tailings disposal will be possible otherwise this could increase to US$65.4M

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Lotus has continued with work to identify and optimise opportunities to improve the operation and expand the resource base through targeted exploration activities to support an extension of the mine life. To this end, several opportunities have been identified that form the basis of a five-stage process for the restart of Kayelekera:

Develop the programs of work to verify the activities, cost estimates and timeframe required to restart the operation;
Investigate potential to implement new technologies in the circuit front-end, focused on upgrading the ore feed grade and/or rejecting high acid consuming gangue minerals;
Identify further process improvements to reduce operating costs, with a focus on resin-in-pulp circuit, acid recovery options, yellow cake dryer, tailings disposal and power supply options;
Complete a Restart Feasibility Study (“RFS”), with a revised mining schedule incorporating results from programs above; and
Complete further detailed design work to increase the level of confidence in engineering design and cost estimates of the RFS.

This work is being undertaken while the Group continues to maintain Project asset integrity through its care and maintenance program and engages with the Government of Malawi to ensure that the permits required for a restart of operations are in place.

Discussions with offtakers

A total of 10.9Mlbs of uranium (U3O8 equivalent) was successfully produced, marketed and delivered from the Kayelekera Project during the period from 2009 to 2014 to conversion facilities located in the United States, Canada and France operated by Honeywell, Cameco, and Orano, respectively.

Given the long-term nature of supply contracts with nuclear utilities – on average, no more than ten percent of utility requirements are left open to spot purchasing – it is typical to engage in supply contracting discussions with utilities and other nuclear fuel market participants long before production at a uranium mine commences.

The Group’s engagement with likely offtake partners who understand the Kayelekera product is a central element of the Group’s strategy to position the Project for an efficient and cost-effective restart of operations.

Near-mine exploration

The Group carried out a review of historical exploration data, which resulted in the identification of two priority target areas – Kayelekera South and Mpata. Both targets are located within trucking distance of the Kayelekera mine site. For further information on the near-mine exploration opportunity at Kayelekera, refer to the ASX announcement dated 16 December 2020.

The Kayelekera South Prospect is located to the south-west of the Kayelekera pit which has a combined Mineral Resource endowment of approximately 50Mlbs U3O8 comprising of the current resource (37.5Mlbs) and historical production (11Mlbs). For further information on the Kayelekera Mineral Resource, refer to the ASX announcement dated 26 March 2020.

A total of six target areas have been identified at Kayelekera South, ranging between 0.5km and 4km from the existing Kayelekera pit. These exploration targets were identified through a review of airborne radiometric data which clearly shows that a number of anomalous radiometric responses exist over the areas of outcrop as highlighted in Figure 1 below.

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Figure 1 – Kayelekera airborne radiometrics and key targets

The Mpata Prospect represents the largest cluster of radiometric anomalies outside of the Kayelekera Resource (Figure 2) and comprises several high priority anomalies associated with arkose units identified over a 3km strike length, all contained within Karoo sediments.

A total of 76 historic drillholes have been completed within the Mpata Prospect area for a total of 9,070m. The drilling has defined several small, narrow bodies of low to medium grade mineralisation. A total of 23 of the holes encountered grades in excess of 250ppm eU3O8. Significant intercepts include 10m at 690ppm eU3O8 (MP017 from 19m) and 5m at 410ppm eU3O8 (MP031 from 23m). For further information on the results of previous exploration at the Mpata Prospect, refer to the ASX announcement dated 16 December 2020.

Mineralisation appears to be open along strike, with approximately 600m of trend untested, and is open at depth.

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Figure 2 – Mpata airborne radiometric anomalies

The newly identified exploration target areas at Kayelekera South and Mpata provide further confirmation of possible uranium resource growth potential in the underexplored near-mine areas where uranium radiometric anomalies have been identified through airborne surveys. The Group is confident that there is an opportunity to extend the current life of mine.

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Reference to previous ASX announcements

In relation to the Restart Study announced on 20 October 2020, the Company confirms that all material assumptions underpinning the production target and forecast financial information included in that announcement continue to apply and have not materially changed.

The information in this announcement that relates to the Mineral Resource at Kayelekera was announced on 26 March 2020. The Company confirms that it is not aware of any new information or data that materially affects the information included in the announcement of 26 March 2020 and that all material assumptions and technical parameters underpinning the Mineral Resource estimate in that announcement continue to apply and have not materially changed.

In relation to the exploration results included in this announcement, the dates of which are referenced, the Company confirms that it is not aware of any new information or data that materially affects the information included in those announcements.

Results

The consolidated entity made a loss of $2,546,524 after income tax for the half-year (2019: loss of $1,066,638).

Events Subsequent to Reporting Date

The Company raised $270,067 (net of costs) from the exercise of 6,751,675 options (exercise price $0.04).

On 10 February 2021 the Company’s Managing Director Mr Eduard Smirnov resigned and Mr Keith Bowes was appointed on 15 February 2021 as his replacement.

On 19 February 2021 the Company’s Non-Executive Chairman Mr John Sibley resigned and Mr Michael Bowen was appointed on 22 February 2021 as his replacement.

On 19 February 2021 the Company’s Non-executive Director Mr Stuart McKenzie resigned and Mr Mark Hanlon was appointed on 22 February 2021 as his replacement.

On 4 March 2021, the Company announced that it has completed a placement of $12,500,000 via the issue of 100,000,000 shares at $0.125 per share to sophisticated and professional investors.

The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has had no significant impact on the consolidated entity up to 31 December 2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.

Apart from the above, there has not arisen in the interval between the end of the half-year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

Auditor’s independence declaration under Section 307C of the Corporations Act 2001

Section 307C of the Corporations Act 2001 requires our auditor, RSM Australia Partners, to provide the Directors of the Company with an Independence Declaration in relation to the review of the interim financial report. This Independence Declaration is set out on page 10 and forms part of this Directors’ report for the six months ended 31 December 2020.

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

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Michael Bowen Non-Executive Chairman

Dated at Perth, Western Australia, this 16[th] day of March 2021

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RSM Australia Partners

Level 32, Exchange Tower 2 The Esplanade Perth WA 6000 GPO Box R1253 Perth WA 6844

T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111 www.rsm.com.au

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the review of the financial report of Lotus Resources Limited for the half-year ended 31 December 2020, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
(ii) any applicable code of professional conduct in relation to the review.

RSM AUSTRALIA PARTNERS

Perth, WA Dated: 16 March 2021

ALASDAIR WHYTE Partner

THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING

RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.

RSM Australia Partners ABN 36 965 185 036

Liability limited by a scheme approved under Professional Standards Legislation

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C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R L O S S A N D O T H E R C O M P R E H E N S I V E I N C O M E

F o r t h e h a l f - y e a r e n d e d 3 1 D e c e m b e r 2 0 2 0

Other income Care and maintenance expenses Exploration and evaluation general expenses Corporate and administrative expenses Depreciation expenses Share based payments Finance costs Loss before income tax Income tax expense Loss for the half-year *Other comprehensive income* Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations Total other comprehensive loss Total comprehensive loss for the half-year Loss attributable to: Non-controlling interests Members of the parent Total comprehensive loss attributable to: Non-controlling interests Members of the parent Loss per share: Basic and diluted loss per ordinary share (cents)	Half-Year Consolidated Consolidated 31 December 2020 $ 31 December 2019 $ 146,662 25,431 (1,331,260) - (42,551) (169,547) (951,650) (886,284) (24,690) (33,365) (343,035) - - (2,873) (2,546,524) (1,066,638) - - (2,546,524) (1,066,638) (685,387) - (3,231,911) (1,066,638) (3,231,911) (1,066,638) (325,035) - (2,221,489) (1,066,638) (2,546,524) (1,066,638) (814,693) - (2,417,218) (1,066,638) (3,231,911) (1,066,638) (3.32) (0.50)	Half-Year Consolidated Consolidated 31 December 2020 $ 31 December 2019 $ 146,662 25,431 (1,331,260) - (42,551) (169,547) (951,650) (886,284) (24,690) (33,365) (343,035) - - (2,873) (2,546,524) (1,066,638) - - (2,546,524) (1,066,638) (685,387) - (3,231,911) (1,066,638) (3,231,911) (1,066,638) (325,035) - (2,221,489) (1,066,638) (2,546,524) (1,066,638) (814,693) - (2,417,218) (1,066,638) (3,231,911) (1,066,638) (3.32) (0.50)
		(1,066,638) -
		(1,066,638)
		-
		(1,066,638)
		(1,066,638)
		- (1,066,638)
		(1,066,638)
		- (1,066,638)
		(1,066,638)
		(0.50)

The statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.

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C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N A s a t 3 1 D e c e m b e r 2 0 2 0

Note CURRENT ASSETS Cash and cash equivalents 3 Other assets Total Current Assets NON-CURRENT ASSETS Plant and equipment Exploration and evaluation assets 4 Right-of-use assets Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Lease liabilities Other liabilities 5 Total Current Liabilities NON-CURRENT LIABILITIES Other liabilities 5 Provisions 6 Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 7 Reserves 8 Accumulated losses Equity attributable to owners of the Company Non-controlling interest TOTAL EQUITY	Consolidated 31 December 2020 $ 19,577,029 370,196 19,947,225 1,741 58,353,320 - 58,355,061 78,302,286 430,282 - 1,298,364 1,728,646 9,491,823 54,771,948 64,263,771 65,992,417 12,309,869 64,744,515 498,110 (53,648,843) 11,593,782 716,087 12,309,869	Consolidated 30 June 2020 $ 16,496,834 611,441
		17,108,275
		- 65,056,336 24,402
		65,080,738
		82,189,013
		1,385,645 27,284 1,456,134
		2,869,063
		10,280,670 61,427,529
		71,708,199
		74,577,262
		7,611,751
		57,157,521 350,804 (51,427,354)
		6,080,971 1,530,780
		7,611,751

The statement of financial position is to be read in conjunction with the accompanying notes.

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C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y

F o r t h e h a l f - y e a r e n d e d 3 1 D e c e m b e r 2 0 2 0

Consolidated 2020 At 1 July 2020 Loss for the period Other comprehensive income Total comprehensive loss for the half-year Transactions with equity holders in their capacity as equity holders Securities issued Exercise of options Issue of options Share issue costs At 31 December 2020 Consolidated 2019 At 1 July 2019 Loss for the period Other comprehensive income Total comprehensive loss for the half-year Transactions with equity holders in their capacity as equity holders Securities issued Share issue costs At 31 December 2019	Contributed equity $ Share based payment reserve $ Options premium reserve $ Foreign currency translation reserve $ Accumulated losses $ Non- controlling interest $ Total Equity $ 57,157,521 46,040 1,018,399 (713,635) (51,427,354) 1,530,780 7,611,751 - - - - (2,221,489) (325,035) (2,546,524) - - - (195,729) - (489,658) (685,387)
	- - - (195,729) (2,221,489) (814,693) (3,231,911)
	4,940,861 - - - - - 4,940,861 2,990,843 - - - - - 2,990,843 - - 343,035 - - - 343,035 (344,710) - - - - - (344,710)
	64,744,515 46,040 1,361,434 (909,364) (53,648,843) 716,087 12,309,869
	Contributed equity $ Share based payment reserve $ Options premium reserve $ Foreign currency translation reserve $ Accumulated losses $ Non- controlling interest $ Total Equity $ 43,790,848 46,040 1,018,399 - (33,314,134) - 11,541,153 - - - - (1,066,638) - (1,066,638) - - - - - - - - - - - (1,066,638) - (1,066,638) 4,289,302 - - - - - 4,289,302 (200,035) - - - - - (200,035) 47,880,115 46,040 1,018,399 - (34,380,772) - 14,563,782

The statement of changes in equity is to be read in conjunction with the accompanying notes.

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C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S F o r t h e h a l f - y e a r e n d e d 3 1 D e c e m b e r 2 0 2 0

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Payments for care and maintenance Interest paid on lease liabilities Interest received Net cash outflow in operating activities Cash flows from investing activities Payments for exploration expenditure – capitalised costs Payments for exploration expenditure – acquisition costs Payments for plant and equipment Net cash outflow in investing activities Cash flows from financing activities Proceeds from issue of shares Proceeds from the exercise of options Proceeds from shares application received in advance Repayment of borrowings Repayment of lease liabilities Capital raising costs Net cash inflow from financing activities Net increase in cash held Cash and cash equivalents at the beginning of the period Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the period	Half-Year Consolidated Consolidated 31 December 2020 $ 31 December 2019 $ 143,664 22,534 (1,142,303) (1,061,574) (1,839,912) - - (2,366) 2,998 3,075 (2,835,553) (1,038,331) - (15,387) - (200,000) (2,029) (2,955) (2,029) (218,342) 4,880,000 4,289,302 2,990,843 - - 102,858 - (150,000) (23,787) (27,841) (344,710) (200,035) 7,502,346 4,014,284 4,664,764 2,757,611 16,496,834 72,846 (1,584,569) - 19,577,029 2,830,457	Half-Year Consolidated Consolidated 31 December 2020 $ 31 December 2019 $ 143,664 22,534 (1,142,303) (1,061,574) (1,839,912) - - (2,366) 2,998 3,075 (2,835,553) (1,038,331) - (15,387) - (200,000) (2,029) (2,955) (2,029) (218,342) 4,880,000 4,289,302 2,990,843 - - 102,858 - (150,000) (23,787) (27,841) (344,710) (200,035) 7,502,346 4,014,284 4,664,764 2,757,611 16,496,834 72,846 (1,584,569) - 19,577,029 2,830,457
		(1,038,331)
		(15,387) (200,000) (2,955)
		(218,342)
		4,289,302 - 102,858 (150,000) (27,841) (200,035)
		4,014,284
		2,757,611 72,846 -
		2,830,457

The statement of cash flows is to be read in conjunction with the accompanying notes.

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N O T E S T O T H E F I N A N C I A L S T A T E M E N T S

1. BASIS OF PREPARATION

These general purpose financial statements for the interim half-year reporting period ended 31 December 2020 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'.

These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2020 and any public announcements made by the Company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

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

New or amended Accounting Standards and Interpretations adopted

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

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

2. SEGMENT REPORTING

In the current half-year, the consolidated entity operated in two geographical locations and two business segments, being Africa (Uranium) and Corporate (Australia).

Operating segments are reporting in a manner that is consistent with the internal reporting to the Chief Operating Decision Maker (CODM), which has been identified by the consolidated entity as the Board of Directors.

An operating segment is a component of the consolidated entity that engages in business activities form which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the consolidated entity’s components.

At 31 December 2020, the consolidated entity had the following segment:

Consolidated 31 December 2020 Uranium (Africa) Corporate Consolidated 31 December 2019 Uranium (Africa) Corporate	Operating Loss $ Total Assets $ Total Liabilities $ (928,672) 68,654,745 62,655,650 (1,617,852) 9,647,541 3,336,767
	(2,546,524) 78,302,286 65,992,417
	Operating Loss $ Total Assets $ Total Liabilities $ (136,311) 200,000 - (930,327) 14,770,778 406,996
	(1,066,638) 14,970,778 406,996

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N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )

3. CASH AND CASH EQUIVALENTS Cash at bank and on hand Restricted cash1	Consolidated 31 December 2020 $ 6,504,116 13,072,913 19,577,029	Consolidated 30 June 2020 $ 1,935,494 14,561,340
		16,496,834

1 As at 31 December 2020, restricted cash consist of a collateral deposit in the form of a bond issued for rehabilitation obligations of the Kayelekera Uranium Project in Malawi in the amount of US$10,000,000. The security for environmental protection, rehabilitation and closure costs has been provided in the form required by the relevant Malawian authorities. The bond was transferred to the Company as part of the Kayelekera Uranium Project acquisition.

The Company acquired the bond as part of the acquisition of the Kayelekera Uranium Project. This is restricted cash that cannot be used to fund operations whilst the environmental performance bond is in place. The Company is currently working with its bank and insurance company to put insurance in place that would allow the Company to access part of the funds currently restricted by the bond.

4. EXPLORATION AND EVALUATION ASSETS Exploration, evaluation and development costs carried forward in respect of areas of interest Reconciliation Carrying amount at beginning of period1 Exploration and evaluation expenditure Assets acquired Provision for impairment Movement in exchange rates Carrying amount at end of period	Consolidated 31 December 2020 $ 58,353,320 65,056,336 - - - (6,703,016) 58,353,320	Consolidated 30 June 2020 $ 65,056,336
		11,789,470 3,978,327 62,070,156 (12,781,617) -
		65,056,336

The ultimate recoupment of exploration and evaluation expenditure is dependent upon successful development and commercial exploitation, or alternatively, sale of the respective areas.

1 Included in the balance is an amount of $62,070,156 that was acquired via the acquisition of the Company’s Kayelekera Uranium Project in 2020. At the time these financial statements were authorised for issue, the Company had not yet completed the accounting for the acquisition of the business. In particular, the fair value of assets and liabilities disclosed in the 30 June 2020 financial statements have only been determined provisionally. If new information obtained within one year of the date of acquisition about facts and circumstances that existed at the date of acquisition which identifies adjustments to the acquisition balance, the fair values of the assets and liabilities will be revised in the 30 June 2021 financial statements.

5. OTHER LIABILITIES Deferred consideration - current Deferred consideration - non-current Reconciliation Liability at beginning of period Liabilities acquired Movement in exchange rates Liability at end of period	Consolidated 31 December 2020 $ 1,298,364 9,491,823 10,790,187 11,736,804 - (946,617) 10,790,187	Consolidated 30 June 2020 $ 1,456,134 10,280,670
		11,736,804
		- 11,736,804 -
		11,736,804

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N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )

6. PROVISIONS Mine closure and rehabilitation provision Reconciliation Provision at beginning of period Provisions acquired Movement in exchange rates Provision at end of period Movement in contributed equity At 1 July 2020 Issue of shares Issue of shares on exercise of options Share issue costs At 31 December 2020 8. RESERVES Share based payment reserve Option premium reserve Foreign exchange reserve Movement in reserves Share based payment reserve Opening balance Movement during the period Closing balance Option premium reserve Opening balance Movement during the period Closing balance Foreign exchange reserve Opening balance Exchange rate differences on translating foreign operations Closing balance 7. CONTRIBUTED EQUITY Fully paid ordinary shares	Consolidated 31 December 2020 $ 54,771,948 61,427,529 - (6,655,581) 54,771,948 No. 672,326,050 61,529,224 74,771,074 - 808,626,348 Consolidated 31 December 2020 $ 46,040 1,361,434 (909,364) 498,110 46,040 - 46,040 1,018,399 343,035 1,361,434 (713,635) (195,729) (909,364) Consolidated 31 December 2020 $ 64,744,515	Consolidated 30 June 2020 $ 61,427,529
		- 61,427,529 -
		61,427,529
		Consolidated 30 June 2020 $ 57,157,521
		$ 57,157,521 4,940,861 2,990,843 (344,710)
		64,744,515
		Consolidated 30 June 2020 $ 46,040 1,018,399 (713,635)
		350,804
		46,040 -
		46,040 1,018,399 -
		1,018,399 - (713,635)
		(713,635)

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N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )

8. RESERVES (CONTINUED)

Movement in options: Opening balance Granted* Exercised Expired Closing balance	31 December 2020 Shares No. 30 June 2020 Shares No. 155,417,981 7,678,571 10,000,000 212,535,006 - (57,117,025) - (7,678,571)
	165,417,981 155,417,981

*On 28 November 2019, 10,000,000 options were granted to external consultants for corporate advisory services.

Options Number	Grant date	Expiry date	Exercise Price
5,000,000 2,500,000	28 November 2019 28 November 2019	27 November 2022 27 November 2022	$0.04 each $0.06 each $0.08 each
2,500,000	28 November 2019	27 November 2022

The Black-Scholes Model was used to determine the estimated fair value of options granted during the period ended 31 December 2020. The following assumptions were used:

Options Number	Share price at grant date	Expected volatility	Dividend yield	Risk-free interest rate	Fair value at grant date
5,000,000 2,500,000 2,500,000	$0.057 $0.057 $0.057	94% 94% 94%	Nil Nil Nil	0.62% 0.62% 0.62%	$0.038 $0.033 $0.029

Share - based payments reserve

This reserve is used to record the value of equity-settled share-based payments provided to employees and directors as part of their remuneration.

Option premium reserve

This reserve is used to record the value of monies raised from issue of options and from issue of incentive options.

Option expired

No options expired during the period.

Foreign currency translation reserve

The foreign currency translation reserve records exchange rate differences on translating foreign operations.

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N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )

9. CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Bank Guarantee

The Company has given a bank guarantee of $20,000 (30 June 2020: $20,000) to the Department of Mines and Petroleum for a tenement bond.

Hylea Project

On 5 February 2018, the Company completed the acquisition of the Hylea Project. As part of the purchase consideration, the Company assumed a contingent liability for a royalty payable.

Royalty

1.5% net smelter return is payable on gross sales of all future metals obtained from the tenements acquired and sold on an arm’s length basis.

Kayelekera Uranium Project

As at 31 December 2020, the Company had three agreements providing royalty payments to local government and former owners for production from the Kayelekera Uranium Project. Royalties payable on production comprise an uncapped 3.0% royalty on revenue to the Malawi Government, a 3.5% royalty on revenue capped at US$5.0 million to Paladin Energy and an uncapped 0.75% royalty on revenue to Power Resources Limited.

10. EVENTS SUBSEQUENT TO REPORTING DATE

The Company raised $270,067 (net of costs) from the exercise of 6,751,675 options (exercise price $0.04).

On 10 February 2021 the Company’s Managing Director Mr Eduard Smirnov resigned and Mr Keith Bowes was appointed on 15 February 2021 as his replacement.

On 19 February 2021 the Company’s Non-Executive Chairman Mr John Sibley resigned and Mr Michael Bowen was appointed on 22 February 2021 as his replacement.

On 19 February 2021 the Company’s Non-executive Director Mr Stuart McKenzie resigned and Mr Mark Hanlon was appointed on 22 February 2021 as his replacement.

On 4 March 2021, the Company announced that it has completed a placement of $12,500,000 via the issue of 100,000,000 shares at $0.125 per share to sophisticated and professional investors

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Directors’ declaration

In the opinion of the Directors:

the financial statements and notes, as set out within this financial report, are in accordance with the Corporations Act 2001 , including:
(a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2020 and its performance for the six months ended on that date; and
(b) complying with Accounting Standard AASB 134 “Interim Financial Reporting” and Corporations Regulations 2001;
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 signed in accordance with a resolution of the Board of Directors.

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Michael Bowen Non-Executive Chairman

Dated at Perth, Western Australia this 16[th] day of March 2021.

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RSM Australia Partners

Level 32, Exchange Tower 2 The Esplanade Perth WA 6000 GPO Box R1253 Perth WA 6844

T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111 www.rsm.com.au

INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF LOTUS RESOURCES LIMITED

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Lotus Resources Limited which comprises the statement of financial position as at 31 December 2020, the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the half-year end or from time to time during the half-year.

Directors’ Responsibility for the Half-Year Financial Report

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

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2020 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of Lotus Resources Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

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

THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING

Liability limited by a scheme approved under Professional Standards Legislation

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Independence

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

Conclusion

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

(a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2020 and of its performance for the half-year ended on that date; and
(b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001 .

Perth, WA Dated: 16 March 2021

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RSM AUSTRALIA PARTNERS

ALASDAIR WHYTE Partner

AI assistant

LOTUS RESOURCES LIMITED — Interim / Quarterly Report 2021

65254_rns_2021-03-15_76e993da-49a5-4887-9fbb-43927aef0afa.pdf

I N T E R I M F I N A N C I A L R E P O R T F O R T H E H A L F - Y E A R

LOTUS RESOURCES LIMITED ABN 38 119 992 175

Interim Financial Report – Half-Year Ended 31 December 2020

C O R P O R A T E D I R E C T O R Y

D I R E C T O R S ’ R E P O R T

Directors

Review of Operations

Reducing care and maintenance costs

Restart study

Discussions with offtakers

Near-mine exploration

Reference to previous ASX announcements

Results

Events Subsequent to Reporting Date

Auditor’s independence declaration under Section 307C of the Corporations Act 2001

Michael Bowen Non-Executive Chairman

RSM Australia Partners

AUDITOR’S INDEPENDENCE DECLARATION

C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R L O S S A N D O T H E R C O M P R E H E N S I V E I N C O M E

C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N A s a t 3 1 D e c e m b e r 2 0 2 0

C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y

F o r t h e h a l f - y e a r e n d e d 3 1 D e c e m b e r 2 0 2 0

C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S F o r t h e h a l f - y e a r e n d e d 3 1 D e c e m b e r 2 0 2 0

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S

1. BASIS OF PREPARATION

New or amended Accounting Standards and Interpretations adopted

2. SEGMENT REPORTING

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )

8. RESERVES (CONTINUED)

Share - based payments reserve

Option premium reserve

Option expired

Foreign currency translation reserve

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )

9. CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Bank Guarantee

Hylea Project

Royalty

Kayelekera Uranium Project

10. EVENTS SUBSEQUENT TO REPORTING DATE

Directors’ declaration

RSM Australia Partners

INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF LOTUS RESOURCES LIMITED

Report on the Half-Year Financial Report

Directors’ Responsibility for the Half-Year Financial Report

Auditor’s Responsibility

THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING

Independence

Conclusion

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LOTUS RESOURCES LIMITED Interim / Quarterly Report 2021