ORA BANDA MINING LTD — Interim / Quarterly Report 2020

Mar 12, 2020

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ORA BANDA MINING LIMITED

ABN 69 100 038 266

CONDENSED CONSOLIDATED INTERIM FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2019

ORA BANDA MINING LIMITED CORPORATE DIRECTORY FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

DIRECTORS

Peter Mansell (Non-executive Chairman) David Quinlivan (Managing Director) Keith Jones (Non-executive Director) Mark Wheatley (Non-executive Director)

COMPANY SECRETARY

Tony Brazier Susan Hunter

REGISTERED & PRINCIPAL OFFICE ADDRESS

Level 1, 2 Kings Park Road West Perth 6005 Australia

Telephone:

• Within Australia: 1300 035 592

• Outside Australia: +61 8 6365 4548

Email: admin@orabandamining.com.au Website: www.orabandamining.com.au

SHARE REGISTRY

Computershare Investor Services Pty Limited GPO Box 2975 Melbourne VIC 3001

Telephone: 1300 555 159

AUDITORS

KPMG 235 St Georges Terrace Perth WA 6000

SECURITIES EXCHANGE LISTING

Listed on the Australian Securities Exchange under the trading code OBM

1

ORA BANDA MINING LIMITED DIRECTORS’ REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

The Directors submit herewith the financial report of Ora Banda Mining Limited (the Company) and its subsidiaries (the Group) for the half-year ended 31 December 2019.

DIRECTORS

The Directors of the Company at any time during the half year and up to the date of this report are set out below. Directors have been in office for this entire period unless otherwise stated.

Peter Mansell (Non-executive Chairman) David Quinlivan (Managing Director) Keith Jones (Non-executive Director) Mark Wheatly (Non-executive Director)

PRINCIPAL ACTIVITIES

The principal activities of the Group during the financial period were mineral exploration and evaluation and development related to the Davyhurst gold project.

Care and maintenance of the Group’s processing facilities located at the Davyhurst site, together with its historically producing gold mine at the Mt Ida gold project, remained ongoing.

There were no changes in activities during the financial period to those being undertaken at 30 June 2019.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There were no significant changes in the state of affairs of Ora Banda Mining Limited during the period under review.

REVIEW OF OPERATIONS

Resource & Reserve Drilling

Resource definition drilling operations at the Company’s Davyhurst Gold Project (DGP) continued during the review period with two RC drill rigs completing 17,840 metres and two diamond drill rigs completing 6,434 metres for a combined total of 24,274 drill metres.

The Company remains focussed on evaluating both the technical and economic viability of mining and processing ore from five advanced prospects, all of which are well-understood geologically and which are relatively close to the Davyhurst processing plant. A mineral resource increase at Riverina delivered an uplift in the Company’s Mineral Resource statement as at 31 December 2019 to 22.2Mt @ 2.6g/t for 1.85 million ounces of contained gold with further updates pending. The Company’s Reserve position for the Siberia project only totalled 2.8Mt @ 2.3g/t Au for 213,000 ounces. The Company expects reserves to be declared at the other four projects in the near term.

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ORA BANDA MINING LIMITED DIRECTORS’ REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

REVIEW OF OPERATIONS (continued)

Resource Definition Drilling Overview

The primary objective of the drilling programs is to deliver upgraded mineral resources and reserves into a Definitive Feasibility Study (DFS) that is due for completion in June 2020. The drilling also aims to quantify the technical aspects of each of the deposits, such as metallurgical and geotechnical parameters, that are also required for the DFS. The intensive drilling programs progressed well during the reporting period.

The five targeted deposits include:

• Riverina;

• Waihi;

• Callion;

• Siberia; and

• Golden Eagle.

These deposits will underpin the delivery of a fiveyear mine plan that will include both open pit and underground mining operations.

Riverina

Phase 1 of the Riverina infill drilling program which was complete during the review period (80 drill holes for 6,267 metres) was targeted at reducing overall drill spacing on the three primary lodes at Riverina (Main, Murchison and Reggie lodes) to approximately 20 metre centres within the Main Mining Area.

Assay results, which were consistent with the Company’s pre-drilling expectations, support the robust nature of the gold mineralisation with a combination of narrow high-grade intercepts and broader lower-grade zones intersected across the three primary lode systems.

Riverina is located approximately 48 kilometres from the Davyhurst processing plant.

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Waihi

Located just three kilometres from the Davyhurst processing plant, the Waihi prospect comprises the historical Waihi, Homeward Bound and Golden Pole deposits.

Phase 1 of the Waihi resource definition infill drilling program has focussed on delineating and upgrading an optimal open pit Mineral Resource on the Waihi and Homeward Bound lines of lode. Additional drilling targeted open pit extensions to the north and south of the existing open pit, and also the potential for underground resource extensions at depth.

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ORA BANDA MINING LIMITED DIRECTORS’ REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

REVIEW OF OPERATIONS (continued)

Waihi (Cont)

During the review period a structural geological consultant engaged by the Company completed a detailed review of the Waihi deposit and surrounding areas. This specialised input greatly assisted with drill targeting and advancement of a structurally dominated mineralisation model. Further development and understanding of the structural controls at Waihi remain an ongoing focus for the Company.

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ORA BANDA MINING LIMITED DIRECTORS’ REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

REVIEW OF OPERATIONS (continued)

Callion

Located approximately 13 kilometres from the Davyhurst processing plant, the existing Callion open pit is approximately 650 metres long and approximately 40 metres deep, with the underground workings extending off the southern end of the pit to a vertical depth of 220 metres below surface. The deepest high-grade diamond drill hole result recorded from Callion to date (CS6W1 – 10.5 metres @ 17.2 g/t) sits approximately 420 metres vertically below surface and approximately 200 metres vertically below the base of the existing mine workings.

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Drilling activities focussed on the open pit and immediate remanent underground resource. The mineralisation remains open at depth in an area which will be targeted by future exploration efforts.

Development plans for the Callion deposit include an open pit cut back, re-establishing access to existing underground mine workings, rehabilitating existing underground mine development where required to extract a number of high-grade zones that remain within the historical mine and the development and extraction of new high-grade areas below the existing mine workings.

Siberia

Located approximately 39 kilometres from the Davyhurst processing plant, the prospect incorporates both the Sand King and Missouri open pits. Although no Resource or Reserve drilling was undertaken at Siberia during the review period, a 16-hole infill drill program (600 metre RC and 1,400 metre diamond) at Sand King commenced in early 2020. The program is designed to infill resource areas below the base of the existing open pit.

Golden Eagle

Surface drilling to test the northern plunge extension of the mineralisation commenced during the review period. A total of six RC pre-collars were completed across two drill lines for 870 metres total. At 31 December 2019 three diamond tails had been completed for 616 metres. Variable amounts of alteration and quartz-sulfide were encountered across the holes. Golden Eagle core is currently being processed. Diamond drilling will continue in January 2020.

Golden Eagle is located approximately two kilometres from the Davyhurst processing plant.

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ORA BANDA MINING LIMITED DIRECTORS’ REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

REVIEW OF OPERATIONS (continued)

Regional Exploration

Regional exploration continued throughout the review period, with all minimum expenditure commitments met.

The exploration focus has been on the development of a coherent exploration program for the coming 12 months and continuation of the ranking and target definition for all prospects within the Company’s extensive project area.

Davyhurst Process Plant

A full clean-up of the processing plant area was completed during the review period, prior to the implementation of a care and maintenance program prepared by GR Engineering Services (GRES) in early 2020.

Corporate

Capital Raising

On 16 August 2019 the Company announced it had received firm commitments for a Placement to raise $18.5 million (before costs) via the issue of 100,000,000 new fully paid ordinary shares. The Placement was undertaken at an issue price of 18.5 cents per fully paid ordinary share and was strongly supported both by existing Ora Banda shareholders and new sophisticated and professional investors introducing a number of new institutional shareholders to the Company’s register.

Settlement of Tranche 1 of the Placement (the issue of approximately 57.6 million new shares) was announced on 26 August 2019. On 15 November 2019 shareholders approved the issue of approximately 42.4 million new shares to Ora Banda’s major shareholder, Hawke’s Point Holdings 1 Limited (Tranche 2 of the Placement).

Small Shareholding Sale Facility

On 7 August 2019 the Company announced it had established a small shareholding sale facility to provide shareholders with holdings valued at less than $500 (Unmarketable Parcels) with an opportunity to sell their shareholdings without incurring brokerage or handling costs.

On 24 October 2019 the Company announced completion of the small shareholding sale facility. Of the 812,878 fully paid ordinary shares comprising the Unmarketable Parcels at Record Date (6 August 2019), 643,882 fully paid ordinary shares (79%) were sold under the small shareholder sale facility.

Financial Review

The Group recorded a net loss of $5.17 million for the half-year ended 31 December 2019 (Half-year ended 31 December 2018: $17.52 million). There were no asset impairment losses recognised for the half-year ended 31 December 2019 (Half-year ended 31 December 2018: $0.69 million).

During the half-year ended 31 December 2019 the Group incurred $4.76 million (Year ended 30 June 2019: $1.56 million) of mine development expenditure; and acquired plant and equipment of $0.11 million (Year ended 30 June 2019: Nil).

During the half-year ended 31 December 2019 the Group recorded net cash outflows of $8.87 million in operating and investing activities, which was funded by existing cash of $14.14 million at 1 July 2019 and cash inflows of $17.67 million from share issues. The Group’s closing cash balance at 31 December 2019 was $22.86 million.

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ORA BANDA MINING LIMITED DIRECTORS’ REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

CAPITAL STRUCTURE

As discussed above, during the six months ended 31 December 2019 the Company issued 100 million ordinary shares through two tranches at a price of $0.185 per share, raising $18.5 million before capital raising costs of $0.83 million.

Additionally, 700,000 ordinary shares were issued as a result of the exercise of unlisted vested performance options at a nil exercise price.

A total of 3 million unlisted options were issued during the six months ended 31 December 2019, as follows:

• 2.5 million options are subject to a vesting condition based on Relative Total Shareholder Return, whereby the Company’s total shareholder return is measured relative to the returns of a peer group over the performance period 1 July 2019 to 30 June 2022. A total of 50% of the options will vest if the Company’s performance relative to the peer group is at the 50th percentile, while 100% of the options will vest if the Company’s performance relative to the peer group is at the 75th percentile. The vesting of the options between the 50th and the 75th percentile will be 50% to 100% vesting based on a straight-line pro rata basis;

• 500,000 options are subject to a vesting condition based on the achievement of the Company’s performance metrics over the performance period 1 July 2019 to 30 June 2020. The vesting criteria are 50% vesting based on the Company’s management response criteria, 40% vesting based on the Company’s physical and cost performance criteria and 10% based on the Company’s relative shareholder return performance criteria.

DIVIDENDS

No amounts were paid or declared by way of dividend since the end of the previous financial year.

The Directors do not recommend the payment of a dividend in respect of the current half-year.

EVENTS AFTER BALANCE DATE

No matters have arisen since the end of the half year that impact or are likely to impact the results of the Group in subsequent financial periods.

AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is included immediately following the Directors’ Report and forms part of the Directors’ Report.

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ORA BANDA MINING LIMITED DIRECTORS’ REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

ROUNDING OF AMOUNTS

In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the amounts in the Directors’ Report and in the financial statements have been rounded to the nearest one thousand dollars, or in certain instances to the nearest dollar (where indicated).

Signed in accordance with a resolution of directors made pursuant to s.306(3) of the Corporations Act 2001.

On behalf of the Directors

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David Quinlivan Managing Director

Perth, Western Australia 13 March 2020

8

ORA BANDA MINING LIMITED AUDITOR’S INDEPENDENCE DECLARATION FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

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Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

To the Directors of Ora Banda Mining Limited

I declare that, to the best of my knowledge and belief, in relation to the review of Ora Banda Mining Limited for the half-year ended 31 December 2019 there have been:

• i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and

• ii. no contraventions of any applicable code of professional conduct in relation to the review.

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KPMG

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R Gambitta Partner

Perth

13 March 2020

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Liability limited by a scheme approved under Professional Standards Legislation.

ORA BANDA MINING LIMITED CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

Notes Revenue from contract with customers – Gold sales Cost of sales Gross loss Other income/(expenses) General and administration expenses 6a Exploration and evaluation expenses Impairment of assets Other operating expenses 6b Operating loss Finance income Finance costs Loss before tax Income tax benefit Loss for the period Other comprehensive income Items that will not be reclassified to profit or loss Changes in fair value of financial assets, net of tax Other comprehensive income for the period, net of tax Total comprehensive loss for the period Total comprehensive loss attributable to: Equity holders of the parent Loss per share attributable to the ordinary equity holders of the parent: Basic and diluted loss per share (cents)	31 Dec 2019 $’000 - - - 139 (3,168) (1,212) - (949) (5,190) 145 (122) (5,167) - (5,167) - - (5,167) (5,167) (0.97)	31 Dec 2018 $’000
		6,094 (10,269)
		(4,175) (307) (5,284) (1,567) (693) (3,678)
		(15,704) - (1,863)
		(17,567) 44
		(17,523)
		103
		103
		(17,420)
		(17,420)
		(2.31)

The accompanying notes form part of these financial statements.

10

ORA BANDA MINING LIMITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019

Notes Current assets Cash and cash equivalents Trade and other receivables 7 Prepayments Inventories Total current assets Non-current assets Trade and other receivables 7 Property, plant and equipment 8 Right-of-use assets 9 Total non-current assets Total assets Current liabilities Trade and other payables Lease liabilities 10 Provisions 11 Total current liabilities Non-current liabilities Lease liabilities 10 Provisions 11 Total non-current liabilities Total liabilities Net assets EQUITY Share capital 12 Reserves Accumulated losses Total equity	31 Dec 2019 $’000 22,865 879 760 64 24,568 30 43,910 526 44,466 69,034 1,907 255 159 2,321 276 17,605 17,881 20,202 48,832 368,191 13,238 (332,597) 48,832	30 Jun 2019 $’000
		14,142 71 497 -
		14,710
		20 38,314 -
		38,334
		53,044
		853 - 179
		1,032
		- 16,644
		16,644
		17,676
		35,368
		350,519 13,030 (328,181)
		35,368

The accompanying notes form part of these financial statements.

11

ORA BANDA MINING LIMITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

Notes	Share capital Accumulated losses Share based payments reserve Fair value reserve Total $’000 $’000 $’000 $’000 $’000
Balance as at 1 July 2019 Loss for the period Total comprehensive loss for the period Issue of ordinary shares (net of costs) 12 Share based payments 13 Transfer from fair value reserve Balance as at 31 December 2019 Balance as at 1 July 2018 Loss for the period Other comprehensive income, net of income tax Total comprehensive loss for the period Share based payments 13 Balance as at 31 December 2018	350,519 (328,181) 12,279 751 35,368 - (5,167) - - (5,167)
	- (5,167) - - (5,167)
	17,672 - - - 17,672 - - 959 - 959 - 751 - (751) -
	368,191 (332,597) 13,238 - 48,832
	287,168 (336,255) 11,892 1,218 (35,977) - (17,523) - - (17,523) - - - 103 103
	- (17,523) - 103 (17,420)
	- - 125 - 125
	287,168 (353,778) 12,017 1,321 (53,272)

The accompanying notes form part of these financial statements.

12

ORA BANDA MINING LIMITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

Cash flows from operating activities Receipts from customers Other receipts Payments to suppliers and employees Interest received Interest paid Net cash flows used in operating activities Cash flows from investing activities Proceeds from sale of plant and equipment Payments for property, plant and equipment Receipts for financial assets Net cash flows (used in)/from investing activities Cash flows from financing activities Proceeds from the issue of shares (net of costs) Proceeds from loan advances Repayment of lease liabilities Net cash flows from financing activities Net increase in cash and cash equivalents held Cash and cash equivalents at the beginning of the financial period Cash and cash equivalents at the end of the financial period	31 Dec 2019 $’000 - 124 (5,192) 121 - (4,947) 36 (3,960) - (3,924) 17,672 - (78) 17,594 8,723 14,142 22,865	31 Dec 2018 $’000
		6,094 - (12,877) - (184)
		(6,967)
		- (1,565) 2,386
		821
		- 8,900 -
		8,900
		2,754
		5
		2,759

The accompanying notes form part of these financial statements.

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ORA BANDA MINING LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. REPORTING ENTITY

Ora Banda Mining Limited (Company) and its subsidiaries (the Group) are a for-profit group of entities incorporated and domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange (ASX). These condensed consolidated interim financial statements (interim financial statements) as at and for the six months ended 31 December 2019 comprise the Company and its subsidiaries (together referred to as the Group). The nature of the operations and principal activities of the Group are described in the Directors’ Report.

2. BASIS OF ACCOUNTING

These interim financial statements have been prepared in accordance with the Corporations Act 2001 and AASB 134 Interim Financial Reporting . The interim financial statements do not include notes of the type normally included in a complete set of annual financial statements and should be read in conjunction with the Group’s last annual consolidated financial statements as at and for the year ended 30 June 2019. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group’s financial position and performance since the last annual financial statements.

This is the first set of the Group’s financial statements in which AASB 16 Leases (AASB 16) has been applied. Changes to significant accounting policies are described in Note 4.

These interim financial statements were authorised for issue by the Company’s board of directors on 13 March 2020.

3. USE OF JUDGEMENTS AND ESTIMATES

In preparing these interim financial statements, management has made judgements and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

The significant judgements by managements in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements, except for the new significant judgements related to lessee accounting under AASB 16, which are described in note 4.

4. CHANGES IN SIGNIFICANT ACCOUNTING POLICIES

The accounting policies and methods of computation adopted in the preparation of these interim financial statements are consistent with those adopted and disclosed in the Company’s 30 June 2019 annual financial statements, except for the accounting policy on leases described below which has changed as a result of the adoption of AASB 16.

The change in the accounting policy for leases is also expected to be reflected in the Group’s consolidated financial statements as at and for the year ending 30 June 2020. The Group has initially adopted AASB 16 from 1 July 2019. There are new standards/amendments effective from 1 July 2019, but they are not expected to have a material effect on the Group’s financial statements.

AASB 16 introduced a single, on-balance sheet accounting model for lessees. As a result, the Group, as a lessee, has recognised right-of-use assets representing its right to use the underlying assets and lease liabilities representing its obligation to make lease payments.

The Group adopted the new standard using the modified retrospective approach, where the lease liability is measured at the present value of future lease payments on the initial date of application, being 1 July 2019. The lease asset is measured as an amount equal to the lease liability. Under the transition method, prior period comparative financial statements are not required to be restated. The details in the changes in accounting policies are disclosed below.

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ORA BANDA MINING LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Leases

Previously, the Group determined at contract inception whether an arrangement was or contained a lease under AASB Interpretation 4 Determining Whether an Arrangement contains a Lease . The Group now assesses whether a contract is or contains a lease based on the new definition of a lease. Under AASB 16, a contact is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.

On transition to AASB 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are leases. It applied AASB 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under AASB 117 and AASB Interpretation 4 were not reassessed. Therefore, the definition of a lease under AASB 16 has been applied only to contracts entered into or changed on or after 1 July 2019.

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease and non-lease component on the basis of their relative standalone prices. However, for leases of properties in which it is a lessee, the Group has elected not to separate non-lease components and will instead account for the lease and non-lease components as a single lease component.

The Group as Lessee

The Group assesses whether a contract is or contains a lease, at inception of that contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (as example certain office equipment). For these leases, the Group recognises the lease payments as an expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise:

• Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;

• • Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date.

The Group presents lease liabilities as a separate line item in the statement of financial position. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. The interest expense is charged to profit or loss over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability.

The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-ofuse asset) whenever:

• The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate;

• The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used);

• A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

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ORA BANDA MINING LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.

Right-of-use assets are presented as a separate line in the consolidated statement of financial position. The Group applies AASB 136 Impairment of Assets to determine whether a right-of-use asset is impaired and, if so, recognises the impairment loss in profit or loss.

The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognised.

Transition (Group as Lessee)

At transition, for leases classified as operating leases under AASB 117, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group’s incremental borrowing rate as at 1 July 2019. Right-of-use assets are measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.

The Group used the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:

• Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term;

• Excluded initial direct costs from measuring the right-of-use asset at the date of initial application;

• • Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.

For leases classified as finance leases under AASB 117, the carrying amount of the right-of-use asset and the lease liability at 1 July 2019 were determined at the carrying amount of the lease asset and lease liability under AASB 117 immediately before that date.

The impact of initial application of AASB 16 at the 1 July 2019 transition date was the recognition of a right-of-use asset of $132,000 and a corresponding lease liability in the statement of financial position. The weighted average discount rate used in discounting the lease liabilities as at 1 July 2019 was 6%. Further disclosures are included in Notes 9 and 10.

5. SEGMENT INFORMATION

For the period ended 31 December 2019 the Group’s focus has been on the exploration, evaluation and development of its interests in mineral tenement licences associated with the Davyhurst gold project, which represents one operating segment. The Group operates in Australia.

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ORA BANDA MINING LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

6. (a) GENERAL AND ADMINISTRATION EXPENSES

(a) GENERAL AND ADMINISTRATION EXPENSES
Employee benefit expenses Share based payments Administration and corporate costs Depreciation and amortisation charges Doubtful debts provision movements Realised hedging gains (b) OTHER OPERATING EXPENSES Site contractors and consultants Travel costs Other	31 Dec 2019 $’000 1,178 959 1,090 87 (146) - 3,168 31 Dec 2019 $’000 167 98 684 949	31 Dec 2018 $’000
		3,834 125 1,618 - - (293)
		5,284
		31 Dec 2018 $’000
		1,216 478 1,984
		3,678

6. (b) OTHER OPERATING EXPENSES

Gold-in-circuit movements of $1,927,000 for the six months ended 31 December 2018 were reclassified from other operating expenses to cost of sales.

7. TRADE AND OTHER RECEIVABLES

TRADE AND OTHER RECEIVABLES
Current GST receivables Other receivables _Less_Provision for doubtful debts Non-current Security deposits	31 Dec 2019 $’000 720 2,192 2,912 (2,033) 879 30	30 Jun 2019 $’000
		71 2,442
		2,513 (2,442)
		71
		20

The doubtful debts provision decreased by $409,000 during the six months ended 31 December 2019 as a result of: (i) fully provided debt amounting to $263,000 being written off during the period; and (ii) the reversal of the doubtful debts provision due to debts amounting to $146,000 being recovered.

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ORA BANDA MINING LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

8. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment include mine properties and other plant & equipment.

The net carrying value of property, plant and equipment at 31 December 2019 was $43,910,000 (30 June 2019: $38,314,000).

During the six months ended 31 December 2019, the Group acquired plant & equipment with a cost of $114,000 (Year ended 30 June 2019: Nil) and capitalised mine development expenditure with a cost of $4,765,000 (Year ended 30 June 2019: $1,565,000). During the six months ended 31 December 2019, an increase of $846,000 was attributed directly to mine properties as a result of the reassessment of rehabilitation provision at 31 December 2019 (Year ended 30 June 2019: Nil).

Plant & equipment with a carrying value of nil were disposed of during the six months ended 31 December 2019, resulting in a gain on disposal of $36,000. No disposals occurred during the year ended 30 June 2019.

Depreciation of $113,000 was recognised during the six months ended 31 December 2019 (Year ended 30 June 2019: $1.02 million), and no impairment loss was recognised during the six months ended 31 December 2019 (Year ended 30 June 2019: $692,000).

9. RIGHT-OF-USE ASSETS

Non-current Cost Opening balance at 1 July 2019 Recognised on initial application of AASB 16 Adjusted balance on 1 July 2019 Additions Closing balance at 31 December 2019 Accumulated depreciation Opening balance at 1 July 2019 Depreciation charge for the period Closing balance at 31 December 2019 Carrying amount – Opening balance at 1 July 2019 following initial application Carrying amount – Closing balance at 31 December 2019	Property, plant and equipment $’000
	- 132
	132 471
	603
	- 77
	77
	132
	526

There were no right-of-use assets recognised as at 30 June 2019. The impact of initial application of AASB 16 at the 1 July 2019 transition date was the recognition of a right-of-use asset of $132,000 and a corresponding lease liability. The weighted average discount rate used in discounting the lease liabilities as at 1 July 2019 and for additions during the six months ended 31 December 2019 was 6%.

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ORA BANDA MINING LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

10. LEASE LIABILITIES

Maturity analysis Year 1 Year 2 Year 3 Less: Unearned interest Analysed as: Current Non-current	31 Dec 2019 $’000 278 201 86 565 (34) 531 255 276 531	30 Jun 2019 $’000
		- - -
		- -
		-
		- -
		-

The right-of-use assets to which the lease liabilies relate is disclosed under Note 9.

During the six months ended 31 December 2019, the Group recognised $8,000 as lease liability interest expenses in the statement of profit and loss. There were no lease liabilities recognised as at 30 June 2019.

11. PROVISIONS

PROVISIONS
Current Employee entitlements Non-current Provision for rehabilitation	31 Dec 2019 $’000 159 17,605	30 Jun 2019 $’000
		179
		16,644

An accretion expense of $115,000, representing the unwinding of the discount on the rehabilitation provision, was recognised in profit or loss during the six months ended 31 December 2019. The rehabilitation provision was re-assessed at 31 December 2019 resulting in an increase of $846,000. The inputs applied in the estimation of the provision are outlined in the Group’s 30 June 2019 financial statements.

12. SHARE CAPITAL

The fully paid share capital value at 31 December 2019 was $368,191,000 (30 June 2019: $350,519,000), with 586,419,962 shares on issue at 31 December 2019 (30 June 2019: 485,719,962).

During the six months ended 31 December 2019 the Company issued 100 million ordinary shares through two tranches at a price of $0.185 per share raising $18.5 million before capital raising costs of $828,000 (30 June 2019: 6,524,016,609 ordinary shares issued at $0.01, raising $65.24 million before capital raising costs of $1.89 million).

Additionally, 700,000 ordinary shares were issued as a result of the exercise of unlisted vested performance options at a nil exercise price (30 June 2019: 12 unlisted options exercised at an average exercise price of $0.26). All issued shares are fully paid.

No dividends were declared by the Company (Half-year ended 31 December 2018: Nil).

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ORA BANDA MINING LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

13. SHARE-BASED PAYMENT ARRANGEMENTS

Of the 44,433,913 options outstanding at 30 June 2019, 700,000 performance options have been exercised during the six months ended 31 December 2019 at a nil exercise price.

A total of 3,000,000 unlisted options were issued during the six months ended 31 December 2019. Of the issued options, 2,500,000 are subject to a vesting condition based on Relative Total Shareholder Return (‘RTSR’), whereby the Company’s total shareholder return is measured relative to the returns of a peer group over the performance period 1 July 2019 to 30 June 2022. The fair value of the RTSR options was estimated as at the date of grant using a Monte Carlo simulation model taking into account the terms and conditions upon which the options were granted. These options will vest according to the following schedule:

Company’s Performance Relative to Peer Group	Percentage of Options Eligible to Vest
Below 50thpercentile 50thto 75thpercentile 75thpercentile	-% 50% to 100% on a straight-line pro rata 100%

The remaining 500,000 issued options are subject to a vesting condition based on the achievement of the Company’s performance metrics (‘OTHER’) over the performance period 1 July 2019 to 30 June 2020. The fair value of these options was estimated as at the date of grant using the Black Scholes option pricing methodology taking into account the terms and conditions upon which the options were granted. These options will vest according to the following schedule:

Option Vesting Conditions	Percentage of Options Eligible to Vest
Ora Banda Physical & Cost Performance Ora Banda Management Response Ora Banda Company RSR Performance	40% 50% 10%

The terms and conditions upon which the options were granted are summarised in the following table:

OPTION CLASS	OTHER RTSR RTSR
Underlying security share price at grant date Exercise price Grant date Vesting date Expiry date Risk-free rate Volatility Dividend yield Number of options issued Valuation per option Fair value per option class	$0.17 $0.17 $0.175 Nil Nil Nil 9/10/2019 9/10/2019 15/11/2019 30/06/2020 30/06/2022 30/06/2022 31/07/2020 30/06/2024 30/06/2024 0.62% 0.60% 0.75% 80% 80% 80% Nil Nil Nil 500,000 500,000 2,000,000 $0.17 $0.12 $0.128
	$85,000 $60,000 $256,000

During the six months ended 31 December 2019, the Group recognised a share based payment expense of $959,000 (Half-year ended 31 December 2018: $125,000).

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ORA BANDA MINING LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

14. CONTINGENT LIABILITIES AND COMMITMENTS

There were no significant changes to the commitments or contingent liabilities identified as at 30 June 2019.

The Company (and its wholly owned subsidiaries) is a party to various proceedings in the Wardens Court pursuant to which third parties are seeking to challenge its title to various mining tenements by way of forfeiture and other proceedings. The Group has legal representation in respect of these plaints. The Directors do not believe the plaints have a reasonable prospect of success and the plaints will be vigorously defended by the Group.

15. RELATED PARTIES

During the six months ended 31 December 2019, options were issued to the following Directors and Key Management Personnel (KMP):

David Quinlivan (Managing Director)	Grant Date Number of Options Total Value of Options Share based Payments Jul - Dec 19 $’000 $’000
	15/11/2019 2,000,000 256 43

The vesting condition of the abovementioned options is based on Relative Total Shareholder Return performance measurement against a peer group; and the options vest on 30 June 2022. The terms and conditions relating to the 2 million options are disclosed in Note 13.

David Quinlivan (Managing Director) exercised 700,000 performance options at nil exercise price during the six months ended 31 December 2019.

Other than the transactions stated above, there were no new related party transactions for the six months ended 31 December 2019.

16. EVENTS AFTER BALANCE DATE

No matters have arisen since the end of the half year that impact or are likely to impact the results of the Group in subsequent financial periods.

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ORA BANDA MINING LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

In accordance with a resolution of the Directors of Ora Banda Mining Limited, we declare that:

In the opinion of the Directors:

1. The financial statements and notes of the Group are in accordance with the Corporations Act 2001 (Cth), including:

2. a) Giving a true and fair view of the Group’s financial position as at 31 December 2019 and of its performance for the six-month period ended on that date; and

3. b) Complying with Australian Accounting Standards and the Corporations Regulations 2001 (Cth); and

4. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the Directors made pursuant to s.303(5) of the Corporations Act 2001.

On behalf of the Board of Directors

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David Quinlivan Managing Director

Perth, Western Australia 13 March 2020

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ORA BANDA MINING LIMITED INDEPENDENT AUDITOR’S REVIEW REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

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Independent Auditor’s Review Report

To the shareholders of Ora Banda Mining Limited

Report on the Interim Financial Report

Conclusion

We have reviewed the accompanying Interim Financial Report of Ora Banda Mining Limited.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the Interim Financial Report of Ora Banda Mining Limited 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 2019 and of its performance for the Half-year ended on that date; and

• complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

The Interim Financial Report comprises:

• Condensed consolidated statement of financial position as at 31 December 2019

• Condensed consolidated statement of profit or loss and other comprehensive income, Condensed consolidated statement of changes in equity and Condensed consolidated statement of cash flows for the Half-year ended on that date

• Notes comprising a summary of significant accounting policies and other explanatory information

• The Directors’ Declaration.

The Group comprises Ora Banda Mining Limited (the Company) and the entities it controlled at the Half year’s end or from time to time during the Half-year.

Responsibilities of the Directors for the Interim Financial Report

The Directors of the Company are responsible for:

• the preparation of the Interim Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001

• such internal control as the Directors determine is necessary to enable the preparation of the Interim Financial Report that is free from material misstatement, whether due to fraud or error.

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Liability limited by a scheme approved under Professional Standards Legislation.

ORA BANDA MINING LIMITED INDEPENDENT AUDITOR’S REVIEW REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

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Auditor’s responsibility for the review of the Interim Financial Report

Our responsibility is to express a conclusion on the Interim 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 Interim 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 2019 and its performance for the half-year ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As auditor of Ora Banda Mining Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of an Interim 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.

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 .

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KPMG

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R Gambitta Partner Perth 13 March 2020

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