S2 RESOURCES LTD

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ABN 18 606 128 090

Financial Report

for the

Year Ended 30 June 2019

Financial Report 2019

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Corporate Directory .............................................................................................................................................. 1 Consolidated Statement of Profit or Loss and Other Comprehensive Income .................................................. 17 Consolidated Statement of Financial Position .................................................................................................... 18 Consolidated Statement of Changes in Equity ................................................................................................... 19 Consolidated Statement of Cash Flows .............................................................................................................. 21 Notes to the Consolidated Financial Statements ............................................................................................... 22 Directors’ Declaration ......................................................................................................................................... 59 Auditor’s Independence Declaration ................................................................................................................. 60 Independent Auditor’s Report ........................................................................................................................... 61

FINANCIAL REPORT 2019

Financial Report 2019

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Corporate Directory

Directors

Jeff Dowling Non‐Executive Chairman Mark Bennett Managing Director Anna Neuling Executive Director Grey Egerton‐Warburton Non‐Executive Director

Company Secretary Anna Neuling Principal and Registered Office 4/24 Parkland Road Osborne Park, Western Australia 6017 Telephone: +61 8 6166 0240 Facsimile: +61 8 6270 5410 Website: www.s2resources.com.au

Auditor BDO Audit (WA) Pty Ltd 38 Station Street Subiaco, Western Australia 6008 Telephone: (08) 6382 4600 Share Registry Computershare Investor Services Pty Limited Level 2, 45 St Georges Terrace Perth, Western Australia 6000 Telephone: 1300 787 575

Stock Exchange Listing S2 Resources Ltd shares are listed on the Australian Securities Exchange.

ASX Code

S2R

FINANCIAL REPORT 2019

Financial Report 2019

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Directors Report

The Directors of S2 Resources Ltd ("Directors") present their report on the consolidated entity consisting of S2 Resources Ltd (“the Company” or “S2”) and the entities it controlled at the end of, or during, the year ended 30 June 2019 (“Group”).

Directors

The names and details of the Directors in office during the financial year and until the date of this Report are as follows. Directors were in office for the entire year unless otherwise stated.

Jeff Dowling Mark Bennett Anna Neuling Grey Egerton‐Warburton

Principal Activities

The principal continuing activity of the Group is mineral exploration.

Dividends

No dividends were paid or proposed to be paid to members during the financial year.

Review of Operations

Operating Result

The loss from continuing operations for the year ended 30 June 2019 after providing for income tax amounted to $8,288,971.

The loss results from $5,093,484 of exploration expenditure incurred and expensed, $60,446 of exploration impairment expense, $118,994 of share‐based payments expenses, $1,093,981 of administration costs, $604,429 of business development costs including travel, $101,376 of depreciation costs, $356,169 of net income and other net gains, share of our associate’s consolidated statement of loss being $915,715, impairment of our associate’s investment of $586,270 and income tax expense of $70,445. The exploration expenditure incurred and expensed mainly relates to the Company’s projects in Finland and Nevada.

Significant Changes in the State of Affairs

In November 2018, the Group acquired a 19.99% strategic stake in Todd River Resources Ltd (ASX:TRT) at $0.08987 per share for $2,720,815.

On 30 November 2018, Dr Mark Bennett, was appointed as Non‐Executive Director of TRT as per the Company’s Subscription Agreement with TRT.

During the financial year ended 30 June 2019, 1,000,000 GT Gold Corp. shares and 3,000,000 Westgold Resources Ltd shares were disposed of and the Company received net proceeds of $5,837,940. The Company realised a total gain of $957,748. For more information in relation to the movement of the gain, please refer to note 8 (page 42) of the financial report.

FINANCIAL REPORT 2019

Financial Report 2019

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Directors Report (cont)

After Balance Date Events

In September 2019, the Group had entered into the following arrangement with Todd River Resources Ltd (ASX:TRT):

On 10 September 2019, the Group had participated in Todd River Resources Ltd’s (ASX:TRT) placement by purchasing 11,959,700 shares at $3.1 cents per share increasing its investment by $370,751.
The Group has also committed to take up its full entitlement under TRT’s 1‐for‐3 underwritten non‐renounceable pro‐rata Entitlement Offer which will result in an issue of 14,078,099 shares to the Group at $3.1 cents per share. The Entitlement Offer will end on 24 September 2019.
The Group will also participate as a sub‐under writer which is capped at a maximum of up to approximately $854,167 or 27,533,783 new shares.

Other than the after balance date events stated above, there has been no matter or circumstance that has arisen since 30 June 2019 that has significantly affected, or may significantly affect:

the Group’s operations in future financial years;
the result of those operations in future financial years; or
the Group’s state of affairs in future financial years.

Likely Developments and Expected Results of Operations

The Group will continue its drilling activities in Finland until the end of 2019 and continue exploration activities in Nevada and Australia for the foreseeable future. The Group will also seek other exploration opportunities that will add value to the Group’s portfolio of assets.

Environmental Regulation

The Group’s operations are subject to environmental regulation under the laws of Sweden, Finland, the State of Nevada, the Australian Commonwealth and the State of Western Australia. The Board of Directors (“Board”) is of the view that all relevant environmental regulation requirements have been met.

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Financial Report 2019

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Directors Report (cont)

Information on Directors

Mark Bennett – Chief Executive Officer and Managing Director

Experience and Expertise

Dr Bennett was the managing director and CEO of Sirius Resources NL (“Sirius”) from its inception until its merger with Independence Group NL, and was non‐executive director of Independence Group following the merger until June 2016.

He is a geologist with 28 years of experience in gold, nickel and base metal exploration and mining. He holds a BSc in Mining Geology from the University of Leicester and a PhD from the University of Leeds and is a Member of the Australasian Institute of Mining and Metallurgy, a Fellow of the Geological Society of London, a Fellow of the Australian Institute of Geoscientists and a Member of the Australian Institute of Company Directors.

He has worked in Australia, West Africa, Canada, USA and Europe, initially for LionOre Mining International Limited and WMC Resources Limited at various locations including Kalgoorlie, Kambalda, St.Ives, LionOre's nickel and gold mines throughout Western Australia, the East Kimberley, and Stawell in Victoria. His more recent experience, as Managing Director of Sirius, S2 Resources and as a director of private Canadian company True North Nickel, has been predominantly in Western Australia (the Fraser Range including Nova‐Bollinger, and the Polar Bear project in the Eastern Goldfields), Quebec (the Raglan West nickel project), British Columbia, Sweden, Finland, and Nevada.

Positions held include various technical, operational, executive and board positions including Managing Director, Chief Executive Officer, Executive Director, Non‐Executive Director, Exploration Manager and Chief Geologist.

Dr Bennett is a two times winner of the Association of Mining and Exploration Companies "Prospector Award" for his discoveries which include the Thunderbox gold mine, the Waterloo nickel mine and most recently the world class Nova‐ Bollinger nickel‐copper mine.

In addition to his technical expertise, Dr Bennett is very experienced in corporate affairs, equity capital markets, investor relations and community engagement and has led Sirius from prior to the discovery of Nova all the way through feasibility, financing, permitting and construction, and latterly through the schemes of arrangement to merge with Independence and to demerge S2.

Other Directorships

Non‐Executive Director of Todd River Resources Ltd since 30 November 2018.

Former Directorships in the Last Three Years

Dr Bennett has had no directorships of any other public listed company in the last three years.

Number of interests in shares and options held in S2 Resources Ltd

Options	19,500,000
Shares	5,635,869

Jeff Dowling – Non‐Executive Chairman

Experience and Expertise

Mr Dowling was Sirius’ Non‐Executive Chairman until 21 September 2015 and is a highly experienced corporate leader with 36 years' experience in professional services with Ernst & Young. Mr Dowling held numerous leadership roles within Ernst & Young which focused on the mining, oil and gas and other industries.

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Directors Report (cont)

His professional expertise centres around audit, risk and financial management derived from acting as lead partner on large public company audits, capital raisings and corporate transactions. Mr Dowling's career with Ernst & Young culminated in his appointment as Managing Partner of the Ernst & Young Western Region for a period of 5 years.

Mr Dowling has a Bachelor of Commerce from the University of Western Australia and is a fellow of the Institute of Chartered Accountants, the Australian Institute of Company Directors and the Financial Services Institute of Australasia.

Mr Dowling is a member of the Group’s Audit & Risk Committee and Chairman of the Remuneration & Nomination Committee which was formed on 19 July 2016.

Other Directorships

Non‐Executive Director of NRW Holdings Ltd since 22 August 2013. Non‐Executive Director of Fleetwood Corporation Ltd since 1 July 2017. Non‐Executive Director of Battery Minerals since 21 June 2019.

Former Directorships in the Last Three Years

Non‐Executive Chairman of Battery Minerals since 25 January 2018 to 20 June 2019.

Number of interests in shares and options held in S2 Resources Ltd

Options 4,750,000 Shares 700,000

Anna Neuling – Executive Director

Experience and Expertise

Ms Neuling was the Company Secretary and Chief Financial Officer of Sirius Resources NL from the company's inception in 2009 until 22 September 2013 where she was appointed as Executive Director – Corporate and Commercial until its merger with Independence Group that occurred on 21 September 2015.

Ms Neuling worked at Deloitte in London and Perth prior to joining LionOre Mining International Limited in 2005, until its takeover by Norilsk Nickel. She holds a degree in mathematics from the University of Newcastle (UK).

She is a Fellow of the Institute of Chartered Accountants in England and Wales and has held a number of senior executive positions in the resources industry, including CFO and Company Secretarial roles at several listed companies.

Ms Neuling is a member of the Group’s Audit & Risk Committee and Remuneration & Nomination Committee which was formed on 19 July 2016.

Other Directorships

Ms Neuling has no directorships of other public listed companies.

Former Directorships in the Last Three Years

Ms Neuling has had no directorships of any other public listed company in the last three years.

Number of interests in shares and options held in S2 Resources Ltd

Options 11,500,000 Shares 675,000

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Financial Report 2019

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Directors Report (cont)

Grey Egerton‐Warburton – Non‐Executive Director

Experience and Expertise

Mr Egerton‐Warburton is an experienced corporate financier, with a strong background in natural resources, having spent 16 years with Hartleys Limited, for many years as head of corporate finance. He has extensive experience in equity capital markets, acquisitions, divestments and domestic and international change of control transactions, having led a substantial number of capital raisings, takeovers and mergers for many ASX listed companies, across many sectors. Prior to a career in corporate finance, Mr Egerton‐Warburton practiced at a tier one national law firm.

Mr Egerton‐Warburton currently serves as Deputy Chair of the Womens and Infants Research Foundation (WIRF), the charitable arm of King Edward Memorial Hospital in Perth, Western Australia.

While at Hartleys, Mr Egerton‐Warburton worked closely with Sirius Resources NL as its corporate advisor from mid‐2012 until the completion of the merger between Sirius and Independence Group NL.

Mr Egerton‐Warburton is the Chairman of the Group’s Audit & Risk Committee and a member of the Remuneration & Nomination Committee which was formed on 19 July 2016.

Other Directorships

Mr Egerton‐Warburton has no directorships of other public listed companies.

Former Directorships in the Last Three Years

Mr Egerton‐Warburton has had no directorships of any other public listed company in the last three years.

Number of interests in shares and options held in S2 Resources Ltd

Options 3,250,000 Shares 1,030,400

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Directors Report (cont)

Meetings of Directors

The number of meetings of the Board and of each Board Committee held during the year ended 30 June 2019 and the number of meetings attended by each Director were:

	Directors’	Audit & Risk	Remuneration
	Meetings	Committee	& Nomination
			Committee
Name
Mark Bennett*	18	3	1
Anna Neuling	18	3	1
Jeff Dowling	18	3	1
Grey Egerton‐Warburton	18	3	1

Dr Bennett had attended the Audit & Risk and Remuneration & Nomination committee meetings by invitation and is not a member of either committee.

Indemnifying of Officers or Auditor

During the year the Group paid a premium in respect of insuring Directors and Officers of the Group against liabilities incurred as a Director or Officer. The insurer shall pay on behalf of the Group or each Director or Officer all losses for which the Director or Officer is not indemnified by the Group arising from a claim against a Director or Officer individually or collectively.

The Group had not, during or since the financial year, indemnified or agreed to indemnify the auditor of the Group against a liability incurred as an auditor.

Options & Rights

Unissued ordinary shares of the Company under options or rights at the date of this Report are as follows:

Options

ptions
Number	Grant Date	Expiry Date	Exercise Price $
28,450,000	14/09/2015	14/09/2019	0.31
50,000	09/10/2015	09/10/2019	0.31
400,000	23/10/2015	23/10/2019	0.31
400,000	28/11/2015	28/11/2019	0.31
200,000	18/04/2016	17/04/2020	0.31
1,000,000	29/04/2016	28/04/2020	0.35
9,050,000	07/10/2016	06/10/2020	0.61
7,750,000	17/10/2017	16/10/2021	0.23
2,650,000	20/10/2017	19/10/2021	0.23
2,700,000	28/11/2018	27/11/2022	0.14
50,000	05/03/2019	04/03/2023	0.11

There were no shares issued since the end of the financial year on the exercise of options. No person entitled to exercise an option had or has any rights by virtue of the option to participate in any share issue of any other body corporate.

FINANCIAL REPORT 2019DIRECTORS REPORT

Financial Report 2019

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Directors Report (cont)

Remuneration Report (audited)

This Remuneration Report, which has been audited, outlines the Key Management Personnel (as defined in AASB 124 Related Party Disclosures) (“KMP”) remuneration arrangements for the Group, in accordance with the requirements of the section 308 (3c) of the Corporations Act 2001 and its Regulations.

The KMP covered in this remuneration report are:

Mark Bennett – CEO and Managing Director
Anna Neuling – Executive Director and Company Secretary
Jeff Dowling – Non‐Executive Chairman
Grey Egerton‐Warburton – Non‐Executive Director
Su‐Mei Sain – Chief Financial Officer

The principles adopted have been approved by the Board and have been set out in this Remuneration Report. This audited Remuneration Report is set out under the following main headings:

Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share‐based compensation

The information provided under headings 1 to 4 above includes remuneration disclosures that are required under Accounting Standard AASB 124, Related Party Disclosures.

1. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION

The objective of the Group’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework which has been set out in detail under the remuneration structure in this Remuneration Report aligns executive reward with achievement of strategic objectives and the creation of value for shareholders, and conforms to market best practice for delivery of reward. The Board ensures that executive reward satisfies the following key criteria for good reward governance practices:

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competitiveness and reasonableness;

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aligns shareholders and executive interests;

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performance based and aligned to the successful achievement of strategic and tactical business objectives; and

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transparency.

Executive Directors

Remuneration to Executive Directors reflects the demands which are made on, and the responsibilities of, the Executive Directors. Executive Directors’ remuneration is reviewed annually to ensure it is appropriate and in line with the market. There are no retirement allowances or other benefits paid to Executive Directors other than superannuation guarantee amounts as required.

The executive remuneration and reward framework has three components:

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base pay;

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share‐based payments; and

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other remuneration such as superannuation and long service leave.

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Directors Report (cont)

Remuneration Report (audited) (cont)

1. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION (CONTINUED)

The combination of these comprises the Executive Director's total remuneration.

Fixed remuneration, consisting of base salary and superannuation will be reviewed annually by the Remuneration & Nomination Committee, based on individual contribution to corporate performance and the overall relative position of the Group to its market peers.

Non ‐ Executive Directors

Remuneration to Non‐Executive Directors reflects the demands which are made on, and the responsibilities of, the Non‐ Executive Directors. Non‐Executive Directors’ remuneration is reviewed annually. The maximum aggregate for remuneration of Non‐Executive Directors is $300,000 and was approved by shareholders prior to the demerger of the Company from Independence Group NL (formerly Sirius Resources NL) on 21 September 2015. For the year ended 30 June 2019, exclusive of superannuation guarantee the annual cash remuneration for the Non‐Executive Director was $45,000 per annum with the Chairman receiving $75,000 per annum.

Company Performance

As an exploration company the Board does not consider the operating loss after tax as one of the performance indicators when implementing an incentive based remuneration policy. The Board considers that identification and securing of new business growth opportunities, the success of exploration and, if appropriate, feasibility activities, safety and environmental performance, the securing of funding arrangements and responsible management of cash resources and the Company’s other assets are more appropriate performance indicators to assess the performance of management at this stage of the company’s development.

Short‐term incentives

To align the remuneration of employees with the company aim of responsible management of cash resources, there were no short‐term incentives paid or proposed to be paid for the year ended 30 June 2019. The company’s approach in regards to the use of short term cash incentives will be assessed by the Remuneration & Nomination Committee on an ongoing basis as the company evolves.

Long‐term incentives

To align the board and management with shareholder’s interests and with market practices of peer companies and to provide a competitive total remuneration package, the Board introduced a long‐term incentive (“LTI”) plan to motivate and reward Executives and Non‐Executive Directors. The LTI is provided as options over ordinary shares of the Company under the rules of the Employee Share Option Plan and the Directors Option Plan as approved in September 2015. No LTI’s were issued to directors under the plan during the year ended 30 June 2019.

Company performance, shareholder wealth and directors’ and executives’ remuneration

No relationship exists between shareholder wealth, director and executive remuneration and Company performance due to the nature of the Company’s operations being a non‐producing resources exploration company.

The table below shows the losses and earnings per share of the Company for the last four financial years.

	2019	2018	2017	2016
Net loss	(8,288,971)	(1,673,903)	(10,020,602)	(10,823,222)
Share price at year end (cents)	12	16	16	28.5
Loss per share (cents)	(3.34)	(0.68)	(4.12)	(7.12)

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Financial Report 2019

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Directors Report (cont)

Remuneration Report (audited) (cont)

2. DETAILS OF REMUNERATION

Year Ended 30 June 2019

The amount of remuneration paid and entitlements owed to KMP is set out below.

CASH REMUNERATION AND ENTITLEMENTS

	Cash remuneration	Cash remuneration
2019	Salary	Post–employment benefits (superannuation)	Annual leave entitlement owing	Total cash payments and entitlements
	$	$	$	$
Directors
M Bennett A Neuling J Dowling G Egerton‐Warburton Other Key Management Personnel S Sain	325,000 73,003 75,000 45,000 60,791	20,531 6,935 7,125 4,275 5,775	23,120	368,651 84,794 82,125 49,275 68,931
			4,856
			‐
			‐


			2,365

	578,794	44,641	30,341	653,776

Year Ended 30 June 2018

CASH REMUNERATION AND ENTITLEMENTS

	Cash remuneration	Cash remuneration
2018	Salary	Post –employment benefits (superannuation)	Untaken annual leave entitlement owing	Total cash payments and entitlements
	$	$	$	$
Directors
M Bennett A Neuling J Dowling G Egerton‐Warburton Other Key Management Personnel S Sain T Walsh(1)	325,000 91,443 75,000 45,000 63,638 31,000	20,049 8,654 7,125 4,275 4,857 ‐	11,871	356,920 101,645 82,125 49,275 69,357 31,000
			1,548
			‐
			‐


			862
			‐
	631,081	44,960	14,281	690,322

1) Mr Walsh’s short term payments are fees incurred as per his consultancy agreement with the Company. The fees disclosed are for the period 1 July 2017 to 5 December 2017 when Mr Walsh resigned as Company Secretary of the Group.

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Financial Report 2019

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Directors Report (cont)

Remuneration Report (audited) (cont)

2. DETAILS OF REMUNERATION (CONTINUED)

2019 TOTAL REMUNERATION

	Total cash payments	Options issued	Total	LTI % of remuneration
Directors M Bennett A Neuling J Dowling G Egerton‐Warburton Other Key Management Personnel S Sain	$	$	$
			345,531 79,938 82,125 49,275 80,085
	345,531	‐		‐ ‐ ‐ ‐ 17%
	79,938	‐
	82,125	‐
	49,275	‐


	66,566	13,519

	623,435	13,519	636,954

2018 TOTAL REMUNERATION

	Total cash payments	Options issued	Total	LTI % of remuneration
Directors M Bennett A Neuling J Dowling G Egerton‐Warburton Other Key Management Personnel S Sain T Walsh	$	$	$
			688,645 205,309 185,789 152,939 94,236 31,000
	356,920	331,725		48% 50% 56% 68% 26% 0%
	101,645	103,664
	82,125	103,664
	49,275	103,664


	69,357	24,879
	31,000	‐
	690,322	667,596	1,357,918

There were no non‐monetary benefits paid to the Directors or KMP for the year ended 30 June 2019.

Other than those disclosed above, there were no transactions with related parties to the KMP for the year ended 30 June 2019.

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Directors Report (cont)

Remuneration Report (audited) (cont)

3. SERVICE AGREEMENTS

For the year ended 30 June 2019, the following service agreements were in place with the Directors and KMP of S2:

On 4 September 2015, an Executive Services Agreement was entered into between the Company and Managing Director and Chief Executive Officer Mark Bennett. Under the terms of the Agreement:

Dr Bennett was paid a remuneration package of $325,000 per annum base salary plus statutory superannuation.
Under the general termination of employment provision, the Company may terminate the Agreement by giving Dr Bennett twelve months’ notice or payment in lieu of notice.
Under the general termination of employment provision, Dr Bennett may terminate the Agreement by giving the Company three months’ notice or payment in lieu of notice.
The Company may terminate the Agreement at any time without notice if serious misconduct has occurred. On termination with cause, the Executive is not entitled to any payment.

On 10 September 2015, a letter of appointment was entered into between the Company and Non‐Executive Chairman Jeff Dowling. Under the terms of the Agreement:

Mr Dowling was paid a remuneration package of $75,000 per annum base salary plus statutory superannuation.
Under the general termination of employment provision, either party may terminate the Agreement by the giving of written notice.

On 4 September 2015, an Executive Services Agreement was entered into between the Company and Executive Director Anna Neuling. Under the terms of the Agreement as Executive Director:

Ms Neuling was appointed as Executive Director, including the role of Company Secretary.
Ms Neuling was paid a remuneration package of $120,000 per annum comprising a base salary plus statutory superannuation for work on a part time basis (based on $300,000 full time equivalent).
Under the general termination of employment provision, the Company may terminate the Agreement by giving Ms Neuling twelve months’ notice or payment in lieu of notice.
Under the general termination of employment provision, Ms Neuling may terminate the Agreement by giving the Company three months’ notice or a payment in lieu of notice.
The Company may terminate the Agreement at any time without notice if serious misconduct has occurred. On termination with cause, the Executive is not entitled to any payment.

On 29 April 2016, a letter of appointment was entered into between the Company and Non‐Executive Director Grey Egerton‐Warburton. Under the terms of the Agreement:

Mr Egerton‐Warburton was paid a remuneration package of $45,000 per annum base salary plus statutory superannuation.
Under the general termination of employment provision, either party may terminate the Agreement by the giving of written notice.

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Financial Report 2019

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Directors Report (cont)

Remuneration Report (audited) (cont)

3. SERVICE AGREEMENTS (CONTINUED)

On 8 September 2015, the Company entered into an employment contract with Su‐Mei Sain. Under the terms of the Agreement:

Ms Sain was appointed in the capacity of Chief Financial Officer and paid a remuneration package of $120,000 per annum base salary plus statutory superannuation for work on a part time basis (based on $150,000 full time equivalent).
The Company or Ms Sain may terminate the contract at any time by giving the other party 12 weeks notice or payment in lieu of notice.
The Company may terminate the Agreement at any time without notice if serious misconduct has occurred. On termination with cause, Ms Sain is not entitled to any payment.

4. SHARE‐BASED COMPENSATION

Option holdings

The numbers of options in the Company held during the year ended by each KMP of S2, including their related parties, are set out below:

2019	Balance at the start of theyear	Granted during the year	Expired during the year	Other changes	Balance at the year ended
Director M Bennett A Neuling J Dowling G Egerton‐Warburton
	19,500,000	‐	‐	‐	19,500,000
	11,500,000	‐	‐	‐	11,500,000
	4,750,000	‐	‐	‐	4,750,000
	3,250,000	‐	‐	‐	3,250,000
	39,000,000	‐	‐	‐	39,000,000
Other Key Management Personnel S Sain

	1,400,000	300,000	‐	‐	1,700,000
	1,400,000	300,000	‐	‐	1,700,000

As at 30 June 2019, the number of options that have vested and exercisable were 50,450,000 and the number of options yet to vest and un‐exercisable were 2,750,000.

The option terms and conditions of each grant of options over ordinary shares affecting remuneration of Directors and other KMP in the year ended or future reporting years are as follows:

Options issued	Grant Date	Expiry date	Exercise	Fair value per	Vested
			price	option	%
			$	$
Directors Option Plan	14 Sep 2015	14 Sep 2019	0.31	0.13	100%
	29 Apr 2016	28 Apr 2020	0.35	0.16	100%
	7 Oct 2016	6 Oct 2020	0.61	0.23	100%
	17 Oct 2017	16 Oct 2021	0.23	0.08	100%

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Directors Report (cont)

Remuneration Report (audited) (cont)

Options issued	Grant Date	Expiry date	Exercise	Fair value per	Vested
			price	option	%
			$	$
Employee Share Option Plan	14 Sep 2015	14 Sep 2019	0.31	0.13	100%
	7 Oct 2016	6 Oct 2020	0.61	0.23	100%
	17 Oct 2017	16 Oct 2021	0.23	0.08	100%
	28 Nov 2018	27 Nov 2022	0.14	0.05	0%*
	5 Mar 2019	4 Mar 2023	0.11	0.04	0%*

*Options vest a year after grant date. Please refer to note 17 for more information.

The options issued to the Chief Financial Officer during the financial year ended 30 June 2019 were valued using a Black‐ Scholes model and were priced as follows:

choles model and were priced	as follows:
	Series 10
Grant date shareprice	0.09
Exerciseprice	0.14
Expected volatility	80%
Option life	4years
Dividendyield	0.00%
Interest rate	2.29%

Shareholdings

The numbers of shares in the Company held during the year ended by each KMP of S2, including their related parties, are set out below:

t below:
2019	Balance at the start of the year	Other changes during	Balance for the year ended
		the year
Directors M Bennett A Neuling J Dowling G Egerton‐Warburton
	4,695,001	940,868	5,635,869
	350,000	325,000	675,000
	500,000	200,000	700,000
	550,400	480,000	1,030,400

Other Key Management Personnel S Sain
	50,000	‐	50,000
	6,145,401	1,945,868	8,091,269

There were no shares granted to KMP’s during the reporting year as remuneration.

Use of remuneration consultants

No remuneration consultants were engaged or used for the Group during the year ended 30 June 2019.

FINANCIAL REPORT 2019DIRECTORS REPORT

Financial Report 2019

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Directors Report (cont)

Remuneration Report (audited) (cont)

Voting and comments made at the Company's Annual General Meeting

At the 2018 Annual General Meeting, the resolution to adopt the Remuneration Report for the year ended 30 June 2018 was passed on a poll with 90% of votes cast on the poll voting “For” the resolution to adopt the Remuneration Report. The Company did not receive any specific feedback at the Annual General Meeting regarding its remuneration practices.

Share trading policy

The trading of shares issued to participants under any of the Group’s employee equity plans is subject to, and conditional upon, compliance with the Group’s employee share trading policy as per the Group’s Corporate Governance Policy. Directors and executives are prohibited from entering into any hedging arrangements over unvested options under the Group’s employee option plan. The Group would consider a breach of this policy as gross misconduct which may lead to disciplinary action and potentially dismissal.

This concludes the Remuneration Report, which has been audited.

FINANCIAL REPORT 2019DIRECTORS REPORT

Financial Report 2019

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Directors Report (cont)

Proceedings on behalf of the Group

No person had applied to the court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the purpose of taking responsibility on behalf of the Group for all or part of those proceedings. No proceedings had been brought or intervened in on behalf of the Group with leave of the court under section 237 of the Corporations Act 2001.

Auditor

BDO Audit (WA) Pty Ltd was appointed as auditors for the Group in office in accordance with section 327 of the Corporations Act 2001.

Audit Services

During the year ended 30 June 2019, $37,309 was paid or is payable for audit services provided by the auditors. There were no non‐audit services performed during the financial year.

Auditor’s Independence Declaration

A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 61 of the financial report.

Corporate Governance

The Directors support and adhere to the principles of corporate governance, recognising the need for the highest standard of corporate behaviour and accountability.

Signed in accordance with a resolution of the Board of Directors.

Mark Bennett

Director Perth 10 September 2019

FINANCIAL REPORT 2019

Financial Report 2019

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Annual Financial Report

Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2019

for the year ended 30 June 2019
	Notes	30 June	30 June
		2019	2018
		$	$
Other income	4	157,154	213,899
Corporate salaries and wages		(503,769)	(531,168)
Consulting and legal fees		(257,504)	(346,577)
Share and company registry		(102,971)	(125,827)
Office rental and variable outgoings		(99,790)	(141,476)
Insurance		(129,947)	(119,889)
Business development including travel expenditure		(604,429)	(752,561)
Depreciation expense		(101,376)	(168,545)
Share‐based payments	17	(118,994)	(876,753)
Gain on disposal of available for sale financial assets	8	‐	1,893,669
Gain on disposal of WA Gold Projects	10	‐	5,919,557
Other net gains		199,015	209,139
Exploration expenditure expensed as incurred		(5,093,484)	(5,859,587)
Exploration impairment expense		(60,446)	(1,090,320)
Share of associate’s loss	9	(915,715)	‐
Associate impairment expense	9	(586,270)	‐
Loss before income tax		(8,218,526)	(1,776,439)
Income tax benefit/(expense)	5	(70,445)	102,536

Loss after income tax for the year		(8,288,971)	(1,673,903)
Other comprehensive income
Items that will not be classified to profit or loss
Changes in the fair value of Investments at fair value through other comprehensive income	8	(597,921)	1,722,579
Items that may be classified to profit or loss
Exchange differences on translation of foreign operations		3,175	102,379
Total comprehensive income/(loss) for the year attributable to the members of S2 Resources Ltd		(8,883,717)	151,055

Loss per share for loss attributable to the members of S2 Resources
Ltd
Basic loss per share (cents)	22	(3.34)	(0.68)

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

FINANCIAL REPORT 2019

Financial Report 2019

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Annual Financial Report (cont)

Consolidated Statement of Financial Position

as at 30 June 2019

as at 30 June 2019
	Notes	30 June	30 June
		2019	2018
		$	$
CURRENT ASSETS
Cash and cash equivalents	6	11,645,063	15,026,119
Restricted cash	6	365,778	348,889
Trade and other receivables	7	454,872	403,758
TOTAL CURRENT ASSETS		12,465,713	15,778,766
NON‐CURRENT ASSETS
Investments	8	1,875,000	8,310,859
Investments in associates	9	1,241,255	‐
Exploration and evaluation	11	1,028,199	1,083,153
Property, plant and equipment	12	151,878	227,737
TOTAL NON‐CURRENT ASSETS		4,296,332	9,621,749
TOTAL ASSETS		16,762,045	25,400,515
CURRENT LIABILITIES
Trade and other payables	13	660,511	546,786
Provisions	14	73,049	60,521
TOTAL CURRENT LIABILITIES		733,560	607,307

TOTAL LIABILITIES		733,560	607,307

NET ASSETS		16,028,485	24,793,208
EQUITY
Share capital	15	52,552,523	52,552,523
Reserves	16	8,539,513	9,973,013
Accumulated losses		(45,063,551)	(37,732,328)
TOTAL EQUITY		16,028,485	24,793,208

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

FINANCIAL REPORT 2019

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Annual Financial Report (cont)

Consolidated Statement of Changes in Equity for the year ended 30 June 2019

Attributable to equity holders of the Group	Share	Share	Other	Foreign	Fair Value Other	Accumulated	Total
in $ dollars	capital	based	Reserve	Currency	Comprehensive	losses
		payment		Translation	Income
		Reserves		Reserve	(“FVOCI”)
					Reserve
Balance at 1 July2018	52,552,523	7,786,606	144,517	131,223	1,910,667	(37,732,328)	24,793,208
Total comprehensive income for the year	‐	‐	‐	3,175	(597,921)	(8,288,971)	(8,883,717)
Transactions with owners, recorded directly in
equity
Contributions by and distributions to owners
Issue of share capital	‐	‐	‐	‐	‐	‐	‐
Capital raising costs	‐	‐	‐	‐	‐	‐	‐
Share‐based payment transactions	‐	118,994	‐	‐	‐	‐	118,994
Share options exercised	‐	‐	‐	‐	‐	‐	‐
Transfer cumulative gain on sale of investments to
accumulated losses	‐	‐	‐	‐	(957,748)	957,748	‐
Total contributions byand distributions to owners	‐	118,994	‐	3,175	(1,555,669)	(7,331,223)	(8,764,723)
Balance at 30 June 2019	52,552,523	7,905,600	144,517	134,398	354,998	(45,063,551)	16,028,485

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

FINANCIAL REPORT 2019

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Annual Financial Report (cont)

Consolidated Statement of Changes in Equity for the year ended 30 June 2018

Attributable to equity holders of the Group in $ dollars Share capital Share based payment Reserves Other Reserve Acquisition Reserve Foreign Currency Translation Reserve Balance at 1 July2017 52,237,523 6,909,853 144,517 (15,214,601) 28,844	Fair Value Other Comprehensive Income (“FVOCI”) Reserve Accumulated losses Total 188,088 (20,843,824) 23,450,400
Total comprehensive income for the year 102,379 Transactions with owners, recorded directly in equity Contributions by and distributions to owners Issue of share capital 315,000 ‐ ‐ ‐ ‐ Capital raising costs ‐ ‐ ‐ ‐ ‐ Share‐based payment transactions ‐ 876,753 ‐ ‐ ‐ Share options exercised ‐ ‐ ‐ ‐ ‐ Transfer of retained earnings in relation to sale of WA Gold Projects ‐ ‐ ‐ 14,362,583 ‐ Transfer of acquisition reserve for Sirius Europa to accumulated losses ‐ ‐ ‐ 852,018 ‐	1,722,579 (1,673,903) 151,055 ‐ ‐ 315,000 ‐ ‐ ‐ ‐ ‐ 876,753 ‐ ‐ ‐ ‐ (14,362,583) ‐ ‐ (852,018) ‐
Total contributions byand distributions to owners 315,000 876,753 ‐ 15,214,601 102,379	1,722,579 (16,888,504) 1,342,808
Balance at 30 June 2018 52,552,523 7,786,606 144,517 ‐ 131,223	1,910,667 (37,732,328) 24,793,208

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

FINANCIAL REPORT 2019

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Annual Financial Report (cont)

Consolidated Statement of Cash Flows

For the year ended 30 June 2019

	Notes	30 June	30 June
		2019	2018
		$	$
Cash flows from operating activities
Cash paid to suppliers and employees for corporate activities		(1,858,012)	(2,030,871)
Cash paid to suppliers and employees for exploration activities		(4,928,662)	(5,642,437)
Interest received		145,260	234,389
Interest and other finance costs paid		(18,423)	(9,128)
Income taxes paid	5	‐	(421,597)
Net cash used in operating activities	20	(6,659,837)	(7,869,644)
Cash flows from investing activities
Payment of property, plant and equipment		(15,779)	(1,663)
Payment of exploration activities capitalised		‐	(872)
Payment for Nevada JV acquisition		‐	(173,473)
Investment in Todd River Resources Ltd	9	(2,743,240)	‐
Net proceeds from disposal of investments	8	5,837,938	2,574,078
Net proceeds for disposal of WA Gold Projects	10	‐	2,829,437
Net cash derived from investing activities		3,078,919	5,227,507
Cash flows from financing activities
Payments for cash backed guarantees		(15,888)	(41,890)
Cash payments for financing activities		(15,888)	(41,890)
Net increase in cash and cash equivalents		(3,596,805)	(2,684,027)
Effects of exchange rate changes on cash and cash equivalents		215,749	209,139
Cash and cash equivalents at 1 July		15,026,119	17,501,007
Cash and cash equivalents at 30 June	6	11,645,063	15,026,119

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

FINANCIAL REPORT 2019

Financial Report 2019

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Annual Financial Report (cont)

Notes to the Consolidated Financial Statements

for the year ended 30 June 2019

S2 Resources Ltd (“Company” or “S2”) is a company incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. The consolidated financial statements of the Group as at and for the year ended to 30 June 2019 comprise the Company and its subsidiaries (together referred to as the “Group” or “consolidated entity” and individually as a “Group entity”).

The separate financial statements of the parent entity, S2 Resources Ltd, have not been presented within this financial report. Summary parent information has been included in note 26.

The financial statements were authorised for issue on 10 September 2019 by the Directors of the Company.

NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001.

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. The financial statements and notes also comply with International Financial Reporting Standards as issued by the International Accounting Standard Board (IASB). Material accounting policies adopted in the preparation of this financial report are presented below. They have been consistently applied unless otherwise stated.

The Group is a for‐profit entity for financial reporting purposes under Australian Accounting Standards. The consolidated financial statements 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.

Historical cost convention

The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of available‐for‐sale financial assets, financial assets and liabilities at fair value through profit or loss, investment properties, certain classes of property, plant and equipment and derivative financial instruments.

Critical accounting estimates

The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 1(a)(iii).

(i) Operating segments

Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.

(ii) Adoption of new and revised Accounting Standards

The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the AASB that are mandatory for the current reporting year. The adoption of these Accounting Standards and Interpretations did

FINANCIAL REPORT 2019

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(a) Basis of preparation (continued)

(ii) Adoption of new and revised Accounting Standards (continued)

not have any material impact on the financial performance or position of the consolidated entity, except for AASB 9 Financial Instruments .

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

AASB 9 Financial Instruments (“AASB 9”)

This note explains the changes in the Group’s accounting policies as a result of the adoption of AASB 9 Financial instruments, however the prior year financial statements did not have to be restated as a result.

AASB 9 replaces the provisions of AASB 139 Financial Instruments: Recognition and Measurement (“AASB 139”) that relate to the recognition, classification and measurement of financial assets and liabilities, recognition of financial instruments, impairment of financial assets and hedge accounting.

The adoption of AASB 9 resulted in minimal changes in accounting policies. The new accounting policies are set out below.

(a) Impact of adoption

(i) Classification and measurement of financial assets

On the date of initial application, 1 July 2018, the financial instruments of the Group were as follows, with any reclassification noted.

	Measurement category	Measurement category		Carrying amount	Carrying amount
	Original (AASB 139)	New (AASB 9)	Original $	New $	Difference $
*Current financial assets*
Trade and other receivables	Amortised cost	Amortised cost	403,760	403,760	‐
*Non ‐ current financial assets*
Equity securities	Available‐for‐sale assets	Investments	8,310,859	8,310,859	‐

The impact of these changes on the Group’s equity is as follows:

	Revaluation Reserve $	Fair Value Other Comprehensive Income Reserve (FVOCI) $	Effect on retained earnings $
Opening balance 30 June 2018 – AASB 139	1,910,667	‐	‐
Reclassify listed available‐for‐sale financial assets to the Fair Value Other Comprehensive Income Reserve(FVOCI)	(1,910,667)	1,910,667	‐
Opening balance 1 July 2018 – AASB 9	‐	1,910,667	‐

FINANCIAL REPORT 2019

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(a) Basis of preparation (continued)

(a) Impact of adoption (continued)

Equity investments previously classified as available‐for‐sale

The Group elected to present in other comprehensive income changes in the fair value of all its equity investments previously classified as available‐for‐sale. As a result, assets with a fair value of $8,310,859 were reclassified from available‐for‐sale financial assets, recognised under ‘Available‐for‐sale assets’ to ‘Investments’ and fair value gains or losses of $1,910,667 was reclassified from the ‘Fair Value Reserve’ to the ‘Fair Value Other Comprehensive Income Reserve’ (FVOCI) on 1 July 2018.

(ii) Impairment of financial assets

Prior to the adoption of AASB 9, in accordance with AASB 139, the Group applied an incurred credit loss model. Upon adoption of AASB 9, the Group has elected to apply the simplified approach to measuring expected credit losses, which uses the lifetime expected loss allowance for all trade and other receivables.

Due to the nature of the Group’s trade and other receivables, the impact of the expected loss allowance under AASB 9 against the loss incurred under AASB 139 was not material to the Group.

(b) Revised accounting policies

Investments and other financial assets

Investments and other financial assets are recognised and derecognised on settlement date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the time‐ frame established by the market concerned. They are initially measured at fair value, net of transaction costs, except for those financial assets classified as fair value through profit or loss, which are initially measured at fair value.

The Group classifies its financial assets in the following measurement categories:

Those to be measured subsequently at fair value (either through other comprehensive income (OCI), or through profit or loss); or
Those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, the classification will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at FVOCI.

(i) Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

FINANCIAL REPORT 2019

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(a) Basis of preparation (continued)

(b) Revised accounting policies (continued)

The Group subsequently measures all equity investments at fair value. The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include reference to the fair values of recent arm’s length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and pricing models to reflect the issuer’s specific circumstances.

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

Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

(ii) Impairment

The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. For trade and other receivables, the Group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience.

(iii) Use of estimates and judgements

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.

Share‐based payment transactions

The Group measures the cost of equity‐settled transactions by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using the Black‐Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity‐settled share‐based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Refer to note 17.

Exploration and evaluation costs

Exploration and evaluation costs are capitalised in an identifiable area of interest upon announcement of a JORC 2012 compliant resource and costs will be amortised in proportion to the depletion of the mineral resources at the

FINANCIAL REPORT 2019

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(a) Basis of preparation (continued)

commencement of production. Key judgements are applied in considering costs to be capitalised which includes determining expenditures directly related to these activities and allocating overheads between those that are expensed and capitalised. In addition, costs are only capitalised that are expected to be recovered either through successful development or sale of the relevant mining interest. Factors that could impact the future commercial production at the mine include the level of reserves and resources, future technology changes, which could impact the cost of mining, future legal changes and changes in commodity prices. To the extent that capitalised costs are determined not to be recoverable in the future, they will be written off in the period in which this determination is made.

Significant judgement – Interest in Associates and Impairment

Through the Subscription Agreement between the Company and its associate, Todd River Resources Ltd (“TRT”), the Company retains a board member on TRT’s board of directors if the shareholding is above 7.5%. For the financial year ended 30 June 2019, the Group’s shareholding in TRT was 19.99%. If TRT issues new shares, the Company has the right but not the obligation to participate in the new issue on the same terms as the other participants up to such additional number of shares in order to maintain its ownership percentage. The Company also has a share services agreement with TRT to share its offices and staff. Therefore the Company in accordance with AASB 128, determined it has significant influence over TRT for the year ended 30 June 2019. At each reporting date, the Company reviews for any impairment triggers that adversely reduces the value of its interest after the asset has been treated under equity accounting (refer to note 1(i)). The Company takes into consideration a number of impairment triggers such as but not limited to, TRT’s net assets as at reporting date, exploration activities announced on the ASX and movement in share price.

(iv) Principles of consolidation

The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by S2 at the end of the reporting year. A controlled entity is any entity over which S2 has the ability and right to govern the financial and operating policies so as to obtain benefits from the entity’s activities.

Where controlled entities have entered or left the Group during the year, the financial performance of those entities is included only for the period of the year that they were controlled. A list of controlled entities is contained in note 26 to the financial statements.

In preparing the consolidated financial statements, all intragroup balances and transactions between entities in the consolidated Group have been eliminated in full on consolidation.

Non‐controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent, are reported separately within the equity section of the Consolidated Statement of Financial Position and the Consolidated Statement of Profit or Loss and Other Comprehensive Income. The non‐controlling interests in the net assets comprise their interests at the date of the original business combination and their share of changes in equity since that date.

(b) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in the Australian dollar ($), which is the Company’s functional and presentation currency.

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(b) Foreign currency translation (continued)

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss. They are deferred in equity if they relate to qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.

Foreign exchange gains and losses that relate to borrowings are presented in the statement of profit or loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit or loss on a net basis within other income or other expenses.

Non‐monetary items that are measured at fair value in a foreign currency are translated using the exchanges rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation difference on non‐monetary assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on non‐monetary assets such as equities classified as available‐for‐sale financial assets are recognised in other comprehensive income.

(iii) Group companies

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

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

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

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

(c) Revenue Recognition

Interest income is recognised on a time proportion basis using the effective interest method.

(d) Income Tax

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(d) Income Tax (continued)

temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction.

The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.

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

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

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

(e) Impairment of Assets

At each reporting date, the Group reviews the carrying values of its tangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value.

Any excess of the asset’s carrying value over its recoverable amount is expensed to the Consolidated Statement of Profit or Loss and Other Comprehensive Income. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs.

(f) Cash and Cash Equivalents

For the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short‐term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(g) Trade and Other Receivables

A provision for doubtful receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short‐term receivables are not discounted if the effect of discounting is immaterial. The amount of any provision is recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

(h) Trade and Other Payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

(i) Investments in Associates

Principles of consolidation and equity accounting

Associates

Associates are all entities over which the Group has significant influence but not control or joint control. This is generally the case where the Group holds between 20% and 50% of the voting rights. Investments in associates are accounted for by using the equity method of accounting after being initially recognised at cost.

Equity method

Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post‐acquisition profits or losses of the investee in profit or loss, and the Group’s share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment.

When the Group’s share of losses in an equity‐accounted investment equals or excess its interest in the entity, including any other unsecured long‐term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity.

Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group.

The carrying amount of equity‐accounted investments is tested for impairment each reporting period.

(j) Exploration and Evaluation

Exploration and evaluation assets acquired

Exploration and evaluation assets comprise of acquisition of mineral rights (such as joint ventures) and fair value (at acquisition date) of exploration and expenditure assets from other entities. As the assets are not yet ready for use they are not depreciated. Exploration and evaluation assets are assessed for impairment if:

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(j) Exploration and Evaluation (continued)

sufficient data exists to determine technical feasibility and commercial viability; or
other facts and circumstances suggest that the carrying amount exceeds the recoverable amount.

Once the technical feasibility and commercial viability of the assets are demonstrable, exploration and evaluation assets are first tested for impairment and then reclassified to mine properties as development assets.

Exploration and evaluation expenditure

Exploration and evaluation expenditure incurred is expensed in respect of each identifiable area of interest until such a time where a JORC 2012 compliant resource is announced in relation to the identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves.

When the technical feasibility and commercial viability of extracting a mineral resource have been demonstrated then any capitalised exploration and evaluation expenditure is reclassified as capitalised mine development.

Prior to reclassification, capitalised exploration and evaluation expenditure is assessed for impairment annually in accordance with AASB 6. Where impairment indicators exist, recoverable amounts of these assets will be estimated based on discounted cash flows from their associated cash generating units.

The Statement of Profit or Loss and Other Comprehensive Income will recognise expenses arising from excess of the carrying values of exploration and evaluation assets over the recoverable amounts of these assets.

In the event that an area of interest is abandoned or if the Directors consider the expenditure to be of reduced value, accumulated costs carried forward are written off in the period in which that assessment is made. Each area of interest is reviewed at the end of each accounting period and accumulated costs are written off to the extent that they will not be recoverable in the future.

(k) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self‐constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located and capitalised borrowing costs.

Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within other income in

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(k) Property, plant and equipment

profit or loss. When revalued assets are sold, the amounts included in the revaluation reserve are transferred to retained earnings.

(ii) Subsequent costs

The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day‐to‐day servicing of property, plant and equipment are recognised in profit or loss as incurred.

(iii) Depreciation

Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.

Depreciation is recognised in the profit or loss on a straight‐line basis over the estimated useful lives of each part of an item of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Leased assets are depreciated over the shorter of the lease term or their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.

The depreciation rates used for each class of asset are:

	buildings	16.67%
	fixtures and fittings	22.5% ‐ 40%
	leasehold improvements	20%
	plant and equipment	22.5% ‐ 40%
	motor vehicles	20%

Depreciation methods, useful lives and residual values are reviewed at each financial year‐end and adjusted if appropriate.

(l) Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.

Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end of the lease term.

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(l) Leases (continued)

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight‐line basis over the term of the lease.

(m) Interest in Joint Ventures

The Group accounts for 100% of the assets, liabilities and expenses of joint venture activity. These have been incorporated in the financial statements.

(n) Provisions

General

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the Statement of Profit or Loss and Other Comprehensive Income net of any reimbursement.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision resulting from the passage of time is recognised in finance costs.

(o) Employee Benefits

(i) Equity Settled Compensation

The Group operates equity‐settled share‐based payment employee share and option schemes. The fair value of the equity to which employees become entitled is measured at grant date and recognised as an expense over the vesting period, with a corresponding increase to an equity account. The fair value of shares is ascertained as the market bid price. The fair value of options is ascertained using a Black–Scholes pricing model which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at each reporting date such that the amount recognised for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

(ii) Short‐term obligations

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

The liability for annual leave and accumulating sick leave is recognised in the provision for employee benefits. All other short‐term employee benefit obligations are presented as payables.

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(o) Employee Benefits (continued)

(iii) Other long‐term employee benefit obligations

The liability for long service leave and annual leave which is not expected to be settled within 12 months after the end of the period in which the employees render the related service is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

(iv) Share‐based payments

Share‐based compensation benefits are provided to employees via the Employee Option Plan.

The fair value of options granted under the Employee Option Plan is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted, which includes any market performance conditions and the impact of any non‐vesting conditions but excludes the impact of any service and non‐market performance vesting conditions.

Non‐market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non‐market vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

When the options are exercised, the Company transfers the appropriate amount of shares to the employee. The proceeds received net of any directly attributable transaction costs are credited directly to equity.

(v) Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or to providing termination benefits as a result of an offer made to encourage voluntary redundancy.

Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.

(p) Issued Capital

Ordinary shares are classified as equity. Costs associated with capital raisings (exclusive of GST) directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds. If the entity reacquires its own equity instruments, e.g. as the result of a share buy‐back, those instruments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any directly attributable costs associated with capital raisings (net of income taxes) is recognised directly in equity.

(i) Basic earnings per share

Basic earnings per share is calculated by dividing the profit / (loss) attributable to equity holders of the Group, excluding

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Annual Financial Report (cont)

Notes to the Consolidated Financial Statements

NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(p) Issued Capital (continued)

(i) Basic earnings per share (continued)

during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

(ii) Diluted earnings per share

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

(q) Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flow.

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

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for year ended 30 June 2019. The consolidated entity's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out below.

AASB 16 Leases

AASB 16 was issued in February 2016. It will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased term) and a financial liability to pay rentals are recognised. The only exceptions are short‐term and low‐value leases. The accounting for lessors will not significantly change.

The standard will affect primarily the accounting for the Group’s operating leases. As at the reporting date, the Group has non‐cancellable operating lease commitments of $265,688, see note 25. However, the Group has not yet determined to what extent these commitments will result in the recognition of an asset and a liability for future payments and how this will affect the Group’s loss and classification of cash flows.

Some of the commitments may be covered by the exception for short‐term and low‐value leases and some commitments may relate to arrangements that will not qualify as leases under AASB 16.

The application of this standard is mandatory on or after 1 January 2019. At this stage the Group does not intend to adopt the standard before its effective date.

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 2. FINANCIAL RISK MANAGEMENT

The Group’s financial instruments consist mainly of deposits with banks and accounts receivable and payable. The Group's activities expose it to a variety of financial risks; market risk (including fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. Risk management is carried out by the Board of Directors under policies approved by the Board. The Board identifies and evaluates financial risks and provides written principles for overall risk management.

The main risks the Group is exposed to through its financial instruments are interest rate risk, foreign currency risk, liquidity risk, credit risk and price risk.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s Australian Dollar current and non‐current debt obligations with floating interest rates. The Group is also exposed to interest rate risk on its cash and short term deposits.

2019	Floating interest rate	Fixed interest rate maturing in	Fixed interest rate maturing	Non‐interest bearing	Total	Weighted average
Financial Instruments		1 year or less	between 1 and 2 years			effective interest rate
	$	$	$	$	$	%
(i) Financial assets
Available cash on hand	472,860	7,425,923	‐	3,746,280	11,645,063	2.17%
Restricted cash	‐	195,000	‐	170,778	365,778	2.69%
Total financial assets	472,860	7,620,923	‐	3,917,058	12,010,841
(ii) Financial liabilities
Trade and other payables	‐	‐	‐	660,511	660,511
Total financial liabilities	‐	‐	‐	660,511	660,511
2018	Floating interest rate	Fixed interest rate maturing in	Fixed interest rate maturing	Non‐interest bearing	Total	Weighted average
Financial Instruments		1 year or less	between 1 and 2 years			effective interest rate
	$	$	$	$	$	%
(i) Financial assets
Available cash on hand	1,912,527	7,014,097	‐	6,099,495	15,026,119	2.31%
Restricted cash	195,000	‐	‐	153,889	348,889	2.51%
Total financial assets	2,107,527	7,014,097	‐	6,253,384	15,375,008
(ii) Financial liabilities
Trade and other payables	‐	‐	‐	546,786	546,786
Total financial liabilities	‐	‐	‐	546,786	546,786

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 2. FINANCIAL RISK MANAGEMENT (CONTINUED)

Net Fair Values

The net fair value of financial assets and liabilities approximate carrying values due to their short term nature.

Sensitivity Analysis – Interest Rate Risk

The Group has performed a sensitivity analysis relating to its exposure to interest rate risk at the reporting date. This sensitivity analysis demonstrates the effect on the current period results and equity which could result from a change in interest rates.

	30 June	30 June
	2019	2018
	$	$
Change in loss:
Increase by 1%	(82,890)	(16,739)
Decrease by 1%	82,890	16,739
Change in equity:
Increase by 1%	(160,285)	(247,932)
Decrease by 1%	160,285	247,932

Foreign exchange risk

Exposure

The Group holds foreign currency cash in Euro, US Dollar and Swedish Krona to operate in Finland, Sweden and the United States. It also has foreign currency receivables and payables in these countries which are exposed to foreign currency fluctuations. The Group manages its foreign exchange risk and exposure by purchasing foreign currency for the following budget year and reviews forecasted exchange rates by various banks on a monthly basis. The Group’s exposure to foreign currency risk at the end of the reporting year, expressed in Australian dollar, was as follows:

Year ended 30 June 2019 Cash on hand Restricted cash Other receivables Trade and other payables Year ended 30 June 2018 Cash on hand Restricted cash Other receivables Trade and other payables	EUR $ USD $ SEK $ Total $ 3,536,863 1,486,187 146,060 5,169,110 19,174 79,952 ‐ 99,126 210,805 ‐ 896 211,701 (300,390) (41,345) (4,032) (345,767)
	3,466,452 1,527,794 142,924 5,134,170
	EUR $ USD $ SEK $ Total $ 2,817,022 3,211,515 70,800 6,099,037 17,170 41,625 14,861 73,656 4,632 ‐ 4,342 8,974 (288,972) (23,622) (63,695) (376,289)
	2,549,852 3,229,518 26,308 5,805,378

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 2. FINANCIAL RISK MANAGEMENT (CONTINUED)

Amounts recognised in profit or loss and other comprehensive income

During the year ended, the following foreign‐exchange related amounts were recognised in profit or loss and other comprehensive income:

	2019	2018
	$	$
Amounts recognised in profit or loss
Net foreign exchange gain/(loss) included in other income/other	199,015	209,139
expenses
Total net foreign exchange (losses) recognised in loss before income tax	199,015	209,139
for the year
Net gains/(losses) recognised in other comprehensive income
Translation of foreign operations	3,175	102,379

Sensitivity

As shown in the table above, the Group is primarily exposed to changes in EUR/$exchange rates. The sensitivity of profit or loss to changes in the exchange rates arises mainly from Euro, US dollar and Swedish Krona denominated financial instruments and the impact on other components of equity arises from translation of foreign operations.

	Impact on	Impact on
	post tax loss	other
		components
		of equity
	$	$
EUR/$ exchange rate – increase 10%*	(292,582)	(341)
EUR/$ exchange rate – decrease (10%)*	292,582	341
USD/$ exchange rate – increase 10%*	(189,012)	(5,618)
USD/$ exchange rate – decrease (10%)*	189,012	5,618

*Holding all other variables constant

LIQUIDITY RISK

Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. Management monitors rolling forecasts of the Group’s cash reserves on the basis of expected development, exploration and corporate cash flows. This ensures that the Group complies with prudent liquidity risk management by maintaining sufficient cash and marketable securities and the availability of funding through the equity markets to meet obligations when due. For the year ended 30 June 2019, the Group had no contractual financial liabilities.

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 2. FINANCIAL RISK MANAGEMENT (CONTINUED)

Credit Risk

Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents and other receivables. The Group’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. The cash and cash equivalents are held with bank and financial institution counterparties, which are rated AA‐ based on Standard and Poor’s rating agency.

The credit risk on other receivables is limited as it is comprised of prepayments and GST recoverable from the Australian Taxation Office and tax authorities in Scandinavia. The credit risk on liquid funds is limited because the counter party is a bank with high credit rating. There are no receivable balances which are past due or impaired.

Price risk

Exposure

The Group’s exposure to equity securities price risk arises from investments held by the Group and classified in the statement of financial position as investments (see note 8). The Group’s investment is publicly traded on the Australian Stock Exchange (“ASX”).

The Group is not currently exposed to commodity price risk.

Sensitivity

The table below summarises the impact of increases/decreases of the investment’s share price on the Group’s equity and post‐tax loss for the year. The analysis is based on the assumption that the investment’s share price had increased or decreased by 10% with all other variables held constant, and that the Group’s equity instrument moved in line with the indexes.

	Impact on	Impact on	Impact on	Impact on
	post tax loss	post tax loss	other	other
			components	components
			of equity	of equity
	2019	2018	2019	2018
	$	$	$	$
TSXV index – increase 10%	‐	‐	‐	(91,086)
TSXV index – decrease (10%)	‐	‐	‐	91,086
ASX index – increase 10%	‐	‐	(187,500)	(740,000)
ASX index – decrease (10%)	‐	‐	187,500	740,000

There would be no impact on post tax loss as the Group does not recognise any financial assets at fair value through profit or loss. Other components of equity would increase/decrease as a result of gains/losses on equity securities classified as investments. As the fair value of investments would still be above cost, no impairment loss would be recognised in profit or loss as a result of the decrease in the index.

Amounts recognised in statement of profit or loss and other comprehensive income

The amounts recognised in profit or loss and other comprehensive income in relation to the investments held by the Group are disclosed in note 8.

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 3. SEGMENT INFORMATION

For management purposes, the Group has four reportable segments as follows:

Finland exploration activities, which includes exploration and evaluation of mineral tenements in Central Lapland.
Sweden exploration activities, which includes exploration and evaluation of mineral tenements in Skellefte. As disclosed in the half year ended 31 December 2018 financial report, the Group had discontinued its exploration activities in Sweden and any costs incurred relate to relinquishment of tenure and closure of the Swedish office based in Malå.
US exploration activities, which includes exploration and evaluation of mineral tenements in Nevada.
Australia exploration activities, which includes exploration and evaluation of mineral tenements in Western Australia.
Unallocated, which includes all other expenses that cannot be directly attributed to either segments above.

Segment information that is evaluated by the CODM is prepared in conformity with the accounting policies adopted for preparing the financial statements of the Group.

SEGMENT RESULTS

SEGMENT RESULTS
Statement of profit or loss for the year ended 30 June 2019			$
	Finland exploration activities	Sweden exploration activities	US exploration activities	Australia exploration activities	Unallocated	Total
Other income	‐	‐	‐	‐	157,154	157,154
Corporate expenses	‐	‐	‐	‐	(1,093,981)	(1,093,981)
Business Development	‐	‐	‐	‐	(604,429)	(604,429)
Depreciation expense	‐	‐	‐	‐	(101,376)	(101,376)
Share‐basedpayments	‐	‐	‐	‐	(118,994)	(118,994)
Othergain/(losses)‐ net		‐	‐	‐	199,015	199,015
Exploration expenditure expensed as incurred	(2,925,806)	9,164	(1,890,118)	(286,724)	‐	(5,093,484)
Exploration impairment expense	‐	‐	(60,446)	‐	‐	(60,446)
Share of associate's loss	‐	‐	‐	‐	(915,715)	(915,715)
Associate impairment expense	‐	‐	‐	‐	(586,270)	(586,270)
Loss before income tax	(2,925,806)	9,164	(1,950,564)	(286,724)	(3,064,596)	(8,218,526)
Income tax expense	‐	‐	‐	‐	(70,445)	(70,445)
Loss after income tax for the year	(2,925,806)	9,164	(1,950,564)	(286,724)	(3,135,041)	(8,288,971)

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 3. SEGMENT INFORMATION (CONTINUED)

Statement of profit or loss for the year ended 30 June 2018			$	$
	Finland exploration activities	Sweden exploration activities	US exploration activities	Australia exploration activities	Unallocated	Total
Other income	‐	‐	‐	‐	213,899	213,899
Corporate expenses	‐	‐	‐	‐	(1,268,537)	(1,268,537)
Business Development	‐	‐	‐	‐	(748,961)	(748,961)
Depreciation expense	‐	‐	‐	‐	(168,545)	(168,545)
Share‐basedpayments	‐	‐	‐	‐	(876,753)	(876,753)
Gain on disposal of available for sale financial assets	‐	‐	‐	‐	1,893,669	1,893,669
Gain on disposal of WA Gold Projects	‐	‐	‐	‐	5,919,557	5,919,557
Othergain/(losses)‐ net	‐	‐	‐	‐	209,139	209,139
Exploration expenditure expensed as incurred	(1,093,154)	(3,053,031)	(1,282,779)	(430,623)	‐	(5,859,587)
Exploration impairment expense	‐	(1,033,028)	(57,292)	‐	‐	(1,090,320)
Loss before income tax	(1,093,154)	(4,086,059)	(1,340,071)	(430,623)	5,173,468	(1,776,439)
Income tax expense	‐	‐	‐	‐	102,536	102,536
Loss after income tax for the year	(1,093,154)	(4,086,059)	(1,340,071)	(430,623)	5,276,004	(1,673,903)

SEGMENT ASSETS AND LIABILITIES

The Group’s assets are mostly attributable to the unallocated segment therefore assets attributable to exploration in Scandinavia, Nevada and Australia is immaterial for disclosure.

NOTE 4. OTHER INCOME

Interest received	30 June 2019 $ 30 June 2018 $ 157,154 213,899

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 5. INCOME TAX

Recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income Current tax Deferred tax Under (over) provided in prior years Total income tax benefit/(expense) per Consolidated Statement of Profit or Loss and Other Comprehensive Income (1) Numerical reconciliation between tax expense and pre‐tax net loss Net loss before tax Income tax benefit/(expense) at 27.5% Income tax benefit/(expense) for overseas entities (at various rates) Increase in income tax due to: Non‐deductible expenses Current year tax losses not recognised Decrease in income tax due to: Movement in unrecognised temporary differences Tax losses utilised during the year Unrecognised deferred tax assets Deferred tax assets have not been recognised in respect of the following: Previous year tax losses brought forward Tax revenue losses (2)	30 June 2019 $ 30 June 2018 $ ‐ 271,573 ‐ (169,037)
	‐ 102,536
	(8,288,971) (1,673,903) (914,780) 1,025,898 (1,042,125) (1,134,933) 1,423,602 390,355 998,111 1,100,060 119,975 993,502 (584,783) (2,374,883)
	‐ (102,536)
	3,736,617 2,569,081 1,845,105 1,167,536
	5,581,723 3,736,617

(1) For the financial year end 30 June 2018, the Group’s Scandinavian entities incurred an income tax benefit for the financial year end 30 June 2018 of $102,536 and this comprised of:

Income tax paid during the financial year end 30 June 2018 Tax credit owing from the Finnish tax authorities* Exchange differences Net Tax Payable Less Tax Provision 30 June 2017 Income Tax Benefit 30 June 2018	$421,597 ($249,570) ($2,990)
	$169,037
	($271,573)
	($102,536)

*The tax credit owing from the Finnish tax authorities represents the profit earned in Sweden (ie. the profit earned by the Branch) to avoid double taxation for the Finnish entity.

(2) Net deferred tax assets have not been brought to account as it is not probable that within the immediate future tax profits will be available against which deductible temporary differences and tax losses can be utilised.

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 6. CASH AND CASH EQUIVALENTS

Current Cash at bank and in hand Restricted cash	30 June 2019 $ 30 June 2018 $ 11,645,063 15,026,119 365,778 348,889
	12,010,841 15,375,008

NOTE 7. OTHER RECEIVABLES

GST refund due Accrued interest Prepayment Income Tax Receivable (1) Other	30 June 2018 $ 30 June 2018 $ 28,635 16,559 25,403 13,508 134,898 50,612 186,037 252,560 79,899 70,519
	454,872 403,758

(1) Please refer to note 5 for more information on the Income Tax Receivable.

The Group has no impairments to other receivables or have receivables that are past due but not impaired. Refer to note 2 for detail on the risk exposure and management of the Group’s other receivables.

NOTE 8. INVESTMENTS AND OTHER FINANCIAL ASSETS

(i) Classification of financial assets at fair value through other comprehensive income

Financial assets at fair value through other comprehensive income (FVOCI) comprise of equity securities which are not held for trading, and which the Group has irrevocably elected at initial recognition to recognise in this category.

(ii) Equity investments at fair value through other comprehensive income

Equity investments at FVOCI comprise the following individual investments:

	30 June	30 June
Non‐current	2019	2018
	$	$
Investments
Balance at beginning of the period
GT Gold	910,859	1,188,689
Westgold Resources Ltd	7,400,000	‐

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NOTE 8: INVESTMENTS AND OTHER FINANCIAL ASSETS (CONTINUED)

Investments Movement during the period GT Gold Westgold Resources Ltd (1) Balance as at 30 June 2019	30 June 2019 30 June 2018 $ $ (910,859) (277,830) (5,525,000) 7,400,000
	1,875,000 8,310,859

(1) The balance as at 30 June 2019 of $1,875,000 represents the investment in Westgold Resources Ltd (“Westgold”). The Group holds 1,000,000 shares in Westgold and the share price as at 30 June 2019 was $1.875 per share.

The table below describes the total gain/(loss) on disposal of the Group’s investments from the initial purchase to the financial year ended 30 June 2019:

Sold 30 June 2018 Sold 30 June 2019 Total gain/(loss) on disposal	GT Gold Corp.	Westgold Resources Ltd	Total
	Net proceeds Original cost Gain $ $ $ 2,574,078 (680,409) 1,893,669 1,813,925 (320,192) 1,493,733	Net proceeds Original cost Loss $ $ $ ‐ ‐ ‐ 4,024,015 (4,560,000) (535,985)	Net proceeds Original cost $ $ 2,574,078 (680,409) 5,837,940 (4,880,192)	Gain/ (loss) $ 1,893,669 957,748*
	4,388,003 (1,000,601) 3,387,402	4,024,015 (4,560,000) (535,985)	8,412,018 (5,560,601)	2,851,417

*The gain recognised of $1,893,669 for the financial year ended 30 June 2018 was disclosed in the profit or loss or other comprehensive income as per AASB 139. AASB 9 became effective from 1 July 2018.

** Please note that due to the change in accounting policies for financial assets, the total gain of $957,748 during the financial year ended 30 June 2019 was transferred from the fair value other comprehensive income (FVOCI) reserve to accumulated losses.

(iii) Amounts recognised in profit or loss and other comprehensive income

During the year, the following gains/(losses) were recognised in profit or loss and other comprehensive income.

	30 June	30 June
	2019	2018
	$	$
Gains/(losses) recognised in other comprehensive income	(597,921)	246,976

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 8: INVESTMENTS AND OTHER FINANCIAL ASSETS (continued)

The table below describes the movement in the FVOCI reserve the financial year ended 30 June 2019:

GT Gold Corp.	Westgold Resources Ltd	Movement of gain/(loss) in FVOCI
1,813,923 (910,859)	4,024,015 (5,550,000)	7,363,923 (8,310,859)
903,064	(1,525,985)	(622,921)
‐	25,000	25,000
‐	‐	(597,521)

On disposal of these equity investments, any related balance within the FVOCI reserve is reclassified to retained earnings. In the prior financial year, the Group had designated equity investments as available‐for‐sale where management intended to hold them for the medium to long‐term.

The change of accounting policy and the reclassification of certain equity investments from available‐for‐sale to investments at fair value through other comprehensive income is disclosed in the Basis of Preparation under note 1(a).

(iv) Fair values of other financial assets at amortised cost

Financial assets at amortised cost include the following:

v) Fair values of other financial assets at amortised cost inancial assets at amortised cost include the following:
Current – Trade and other receivables Trade and other receivables	30 June 2019 30 June 2018 $ $ 454,872 403,758
	454,872 403,758

Due to the short term nature of the trade and other receivables and prepayments, their carrying amount is considered to be the same as their fair value.

NOTE 9. INTERESTS IN ASSOCIATES

The entity listed below have share capital consisting of ordinary shares and options of which 19.99% of the ordinary shares are held directly by the Group. The country of incorporation or registration is also their principal place of business, and the proportion of ownership interest is the same as the proportion of voting rights held.

Name of entity	Place of business/ country of incorporate	% of ownership interest	% of ownership interest	Nature of relationship	Measurement method	Carrying	amount
Todd River Resources Ltd	Australia	2019 $ 19.99%	2018 $ ‐	Associate	Equity method	2019 $ 1,,241,255	2018 $ ‐

In November 2018, the Group acquired a 19.99% strategic stake in Todd River Resources Ltd (ASX:TRT) at $0.08987 per share for $2,720,815.

Dr Mark Bennett, Managing Director and CEO of S2 Resources Ltd became Non‐Executive director of TRT.

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 9. INTERESTS IN ASSOCIATES

Summarised financial information for associates

The tables below provide summarised financial information of Todd River Resources Ltd that are material to the Group. The information disclosed reflects the amounts presented in the financial statement of the relevant associates and not the Group’s share of those amounts. A reconciliation has been provided to reflect the adjustments made by the Group when using the equity method, including fair value adjustment and modifications for differences in accounting policy.

		30 June
Summarised balance sheet		2019
		$
Current assets		1,674,154
Non current assets		11,544,769
Total assets		13,218,923
Current liabilities		642,361
Non‐current liabilities		‐
Total liabilities		642,361
NET ASSETS		12,576,562
Share capital		18,846,172
Reserves		2,521,731
Accumulated losses		(8,791,341)
Total equity		12,576,562
		30 June
		2019
Reconciliation to carrying amounts
S2R's initial investment 20 November 2018(1)	$	2,743,240
Loss for the period ‐ Todd River Resources (2)	$	4,580,869
Group’s share	%	19.99%
Less Group’s share	$	(915,715)
Less impairment expense (3)	$	(586,270)
Carrying amount	$	1,241,255

(1) This includes $22,425 of transaction costs.

(2) The loss for the period has been modified to align TRT’s accounting policies with the Group’s accounting policies. TRT’s accounting policy is to capitalise all exploration and evaluation expenditure where as the Group expense all ongoing exploration and evaluation expenditure until such a time where a JORC 2012 compliant resource is announced in relation to the identifiable area of interest.

(3) The Group’s view was to impair their investment in TRT to the market price of the TRT shares as at 30 June 2019.

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 10. DISPOSAL OF WA GOLD PROJECTS

On 13th February 2018, the Group entered into a Heads of Agreement (“HOA”) with Westgold to sell its interest in the Polar Bear Project (100%), Eundynie Joint Venture (80%) and the Norcott Project (100%) (together, the “WA Gold Projects”) via the sale of all of the shares in S2’s wholly owned subsidiary Polar Metals Pty Ltd (“Sale”) for A$3 million cash and 4 million Westgold shares. The sale completed on 23[rd] February 2018.

Details of the sale of the subsidiary are as follows:

Consideration received Cash Westgold shares 4,000,000 at $1.52per share Total disposal consideration Less: Transaction costs Carrying amount of net assets sold* Gain on disposal of WA Gold Projects	$ 3,000,000 6,080,000
	9,080,000 (508,479) (2,651,964)
	5,919,557

*The cash received for this transaction less cost of sale of $170,563 was $2,829,437.

**The carrying amount of assets and liabilities for Polar Metals Pty Ltd as at the date of sale 13 February 2018 of $2,651,964 only consisted of the exploration asset.

NOTE 11. EXPLORATION AND EVALUATION

OTE 11. EXPLORATION AND EVALUATION
Exploration costs Movement during the year Balance at beginning of the year Exploration expenditure incurred during the year Exploration expenditure incurred during the year and expensed (i) Exploration expenditure relating to acquisitions (ii) Exploration impairment expense (iii) Disposal of WA Gold Projects (see note 9) Foreign currency translation differences Balance at end of the year	30 June 2019 $ 30 June 2018 $ 1,028,199 1,083,153
	1,083,153 4,650,820 5,093,484 5,860,731 (5,093,484) (5,859,587) ‐ 173,473 (60,446) (1,090,320) ‐ (2,651,964) 5,492 ‐
	1,028,199 1,083,153

(i) During the year ended 30 June 2019 the exploration expenditure incurred pertains to the following:

Australian Projects

The total exploration expenditure expensed for Polar Bear and Fraser Range projects was $286,724. The Polar Bear project was owned by the Group’s subsidiary Polar Metals Pty Ltd which was sold to Westgold Resources Limited on 13 February 2018 as described in note 10. The Group still holds nickel rights to the Polar Bear project.

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 11. EXPLORATION AND EVALUATION (CONTINUED)

Finland Projects

Exploration expenditure incurred and expensed for Finland was $2,916,642.

US Projects

Exploration expenditure incurred and expensed for the following projects in the US were:

Ecru $1,850,856
South Roberts ‐ $39,262
(ii) During the year ended 30 June 2018, the Group entered into a joint venture with Renaissance Gold Inc (“Rengold”), a TSXV listed company to earn in to three of RenGold’s properties located on some of the major known gold mineralized trends in Nevada, USA. The properties were South Roberts, Pluto and Ecru and each property had an initial investment of US$25,000. The total cost of acquiring these projects including transaction costs was $173,473.
(iii) During the year ended 30 June 2019, the Group made a decision to withdraw from the South Roberts Project and therefore made an impairment expense of $60,446. This decision would result in the Group not earning into the South Roberts joint venture with Rengold.

During the year ended 30 June 2018, the Group had made a decision to impair the Swedish exploration asset of $1,033,028 due to its change in focus and resources from Sweden to other opportunities available to the Company. The Company still retains tenure in Sweden. Also the Group also made a decision to withdraw from the Pluto Project and therefore made an impairment expense of $60,446. This decision would result in the Group not earning into the Pluto joint venture with Rengold.

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 12. PROPERTY, PLANT AND EQUIPMENT

2019 Cost or deemed cost Balance at 1 July 2018 Additions Disposals Transfers Exchange differences Balance at 30 June 2019 Depreciation Balance at 1 July 2018 Depreciation for the year – expensed Exchange differences Disposals Balance at 30 June 2019 Carrying amounts at 1 July 2018 at 30 June 2019	Property, Plant and Equipment $ Motor Vehicles $ Computer Software $ Fixtures and fittings $ Total $

	417,539 37,263 104,339 93,189 652,330
	14,391 ‐ ‐ 8,878 23,269
	‐ ‐ ‐ ‐ ‐
	‐ ‐ ‐ ‐ ‐
	(2,698) ‐ 296 ‐ (2,402)
	429,232 37,263 104,635 102,067 673,197


	258,144 19,874 84,009 62,569 424,596
	67,182 7,453 11,748 14,994 101,376
	(4,793) ‐ 139 ‐ (4,654)
	‐ ‐ ‐ ‐ ‐
	320,533 27,327 95,896 77,563 521,319



	159,395 17,389 20,330 30,620 227,734
	108,699 9,937 8,739 24,504 151,878

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 12. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

2018 Cost or deemed cost Balance at 1 July 2017 Additions Disposals Transfers Exchange differences Balance at 30 June 2018 Depreciation Balance at 1 July 2017 Depreciation for the year – expensed Exchange differences Disposals Balance at 30 June 2018 Carrying amounts at 1 July 2017 at 30 June 2018	Property, Plant and Equipment $ Motor Vehicles $ Computer Software $ Fixtures and fittings $ Total $

	412,902 37,263 103,734 92,386 646,285
	1,663 ‐ ‐ 1,308 2,971
	‐ ‐ ‐ ‐ ‐
	‐ ‐ ‐ ‐ ‐
	2,977 ‐ 606 (506) 3,077
	417,542 37,263 104,340 93,188 652,333


	150,755 12,421 52,752 38,767 254,695
	106,033 7,453 31,257 23,802 168,545
	1,356 ‐ ‐ ‐ 1,356
	‐ ‐ ‐ ‐ ‐
	258,144 19,874 84,009 62,569 424,596



	262,147 24,842 50,982 53,619 391,590
	159,398 17,389 20,331 30,619 227,737

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 13. TRADE AND OTHER PAYABLES

Trade and other payables (i)	30 June 2019 $ 30 June 2018 $ 660,511 546,786

(i) These amounts generally arise from the usual operating activities of the Group and are expected to be settled within 12 months. Collateral is not normally obtained.

NOTE 14. PROVISIONS

Current Employee benefits (1) Income Tax Payable (2) Carrying amount at start of the year Provisions made during the year Carrying amount at end of the year	30 June 2019 $ 30 June 2018 $ 73,049 60,521 ‐ ‐
	73,049 60,521 60,521 338,413 12,528 (277,892)
	73,049 60,521

(1) Employee benefits are provided for all employees of the Group in line with their employment contracts and the balance for the year ended 30 June 2019 is expected to be settled within 12 months. The measurement and recognition criteria relating to employee benefits have been included in note 1 to this financial report.

(2) During the financial year ended 30 June 2018, the Group paid an income tax payable for its subsidiary, Sakumpu Exploration Oy, however a tax refund was due as at 30 June 2019 from the Finnish Tax authorities. The tax refund has been disclosed as a receivable in note 7 and the refund has been received post 30 June 2019.

NOTE 15. SHARE CAPITAL

NOTE 15. SHARE CAPITAL
	30 June 2019 No. of Shares 30 June 2019 $ 30 June 2018 No. of Shares 30 June 2018 $
Ordinary shares fully paid Movement in Share Capital Ordinary shares fully paid Balance at beginning of year Shares issued at $0.17 per share* Cost of issues of shares	247,915,179 52,552,523 246,052,451 52,237,523 247,915,179 52,552,523 246,052,452 52,237,523 ‐ ‐ 1,862,727 315,000 ‐ ‐ ‐ ‐
Balance at year end	247,915,179 52,552,523 247,915,179 52,552,523

*The share price of $0.16910691 has been rounded to two decimal points.

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 15. SHARE CAPITAL (CONTINUED)

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

NOTE 16. RESERVES

OTE 16. RESERVES
Share‐based payments reserve (i) Other reserve (ii) Foreign currency translation reserve (iii) Revaluation reserve (iv)	30 June 2019 $ 30 June 2018 $ 7,905,600 7,786,606 144,517 144,517 134,398 131,223 354,998 1,910,667
	8,539,513 9,973,013

(i) The share‐based payments reserve recognises the fair value of the options issued to Directors, employees and service providers.

Each share option converts into one ordinary share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends or voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.

(ii) The other reserve recognises the remaining non‐controlling interest (33%) that was purchased from the Sakumpu vendors on 30 November 2015. Sakumpu Exploration Oy is a registered entity in Finland.
(iii) Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive income and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of.
(iv) The revaluation reserve recognises the change in fair value of investments. Please refer to note 8 of these financials.

FINANCIAL REPORT 2019

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 17. SHARE‐BASED PAYMENTS

The following share‐based payments arrangements were in existence during the current reporting year:

Options

ptions
Options Series	Number	Grant Date	Expiry Date	Exercise Price $	Fair value at Grant Date $
(1) Issued at 14 September 2015	29,250,000	14/09/2015	14/09/2019	0.31	0.13
(2) Issued at 9 October 2015	50,000	09/10/2015	09/10/2019	0.31	0.13
(3) Issued at 23 October 2015	400,000	23/10/2015	23/10/2019	0.31	0.12
(4) Issued at 29 November 2015	400,000	29/11/2015	28/11/2019	0.31	0.08
(5) Issued at 18 April 2016	800,000	18/04/2016	17/04/2020	0.31	0.14
(6) Issued at 28 April 2016	1,000,000	29/04/2016	28/04/2020	0.35	0.16
(7) Issued at 7 October 2016	11,950,000	07/10/2016	06/10/2020	0.61	0.23
(8) Issued 17 October 2017	7,750,000	17/10/2017	16/10/2021	0.23	0.08
(9) Issued 17 October 2017	3,400,000	17/10/2017	16/10/2021	0.23	0.08
(10) Issued 28 November 2018	2,900,000	28/11/2018	27/11/2022	0.14	0.05
(11) Issued 5 March 2019	50,000	05/03/2019	04/03/2023	0.11	0.04

(1) The 29,250,000 options in series 1 comprised 23,750,000 options issued to the Directors of the Group which vested immediately, 3,600,000 options issued to employees under the Employee Share Option Plan which vest one year from grant date and 1,900,000 options issued to service providers which vest one year from grant date. For the service provider options, the value of services received was unable to be measured reliably and therefore the value of services received was measured by reference to the fair value of options issued.
(2) The 50,000 options in series 2 which vests one year from grant date was issued to employees under the Employee Share Option Plan.
(3) The 400,000 options in series 3 which vests one year from grant date was issued to employees under the Employee Share Option Plan.
(4) The 400,000 options in series 4 which vests one year from grant date was issued to employees under the Employee Share Option Plan.
(5) The 800,000 options in series 5 comprised of 400,000 options were issued to employees under the Employee Share Option Plan which vests one year from grant date, and 400,000 options issued to service providers which vests one year from grant date. For the service provider options, the value of services received was unable to be measured reliably and therefore the value of services received was measured by reference to the fair value of options issued.
(6) The 1,000,000 options in series 6 which vested immediately were issued to a Director of the Group.
(7) The 11,950,000 options in series 7 comprised 6,500,000 options issued to the Directors of the Group which vested immediately, 2,700,000 options were issued to employees under the Employee Share Option Plan which vest one year from grant date and 2,750,000 options were issued to service providers which vest one year from grant date. For the service provider options, the value of services received was unable to be measured reliably and therefore the value of services received was measured by reference to the fair value of options issued.
(8) The 7,750,000 options in series 8 which vested immediately were issued to the Directors of the Group which vested immediately.

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 17. SHARE‐BASED PAYMENTS (CONTINUED)

(9) The 3,400,000 options in series 9 comprised 2,950,000 options issued to employees under the Employee Share Option Plan which vest one year from grant date and 450,000 options were issued to service providers which vest one year from grant date. For the service provider options, the value of services received was unable to be measured reliably and therefore the value of services received was measured by reference to the fair value of options issued.
(10) The 2,900,000 options in series 10 comprised 2,500,000 were issued to employees under the Employee Share Option Plan which vest one year from grant date and 400,000 options were issued to service providers which vest one year from grant date. For the service provider options, the value of services received was unable to be measured reliably and therefore the value of services received was measured by reference to the fair value of options issued.
(11) The 50,000 options in series 11 which vests one year from grant date was issued to an employee under the Employee Share Option Plan.

The weighted average fair value of the share options granted during the year is $0.14.

The total expense of the share based payments for the year was:

Options issued under Directors Option Plan Options issued under Employee Share Plan Options issued under Service Provider Plan	30 June 2019 $ 30 June 2018 $ ‐ 642,717 108,426 196,717 10,568 37,319
	118,994 876,753

The weighted average contractual life for options outstanding at the end of the year was 1.4 years.

Options were priced using a Black‐Scholes option pricing model using the inputs below:

	Series 1	Series 2	Series 3	Series 4	Series 5
Grant date shareprice	0.21	0.19	0.19	0.14	0.22
Exerciseprice	0.31	0.31	0.31	0.31	0.31
Expected volatility	100.00%	100.00%	100.00%	100.00%	100.00%
Option life	4years	4years	4years	4years	4years
Dividendyield	0.00%	0.00%	0.00%	0.00%	0.00%
Interest rate	3.10%	3.10%	3.10%	3.35%	3.26%

	Series 6	Series 7	Series 8	Series 9	Series 10	Series 11
Grant date shareprice	0.25	0.44	0.16	0.23	0.09	0.07
Exerciseprice	0.35	0.61	0.23	0.23	0.14	0.11
Expected volatility	100%	80%	80%	80%	80%	80%
Option life	4years	4years	4years	4years	4years	4years
Dividendyield	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Interest rate	3.35%	2.87%	2.34%	2.34%	2.29%	1.75%

FINANCIAL REPORT 2019

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 17. SHARE‐BASED PAYMENTS (CONTINUED)

The following reconciles the outstanding share options granted in the year ended 30 June 2018:

Balance at the beginning of the year Granted during the year Exercised during the year Expired during the year (i) Balance at the end of the year Un‐exercisable at the end of the year Exercisable at end of the year	30 June 2019 30 June 2019 30 June 2018 30 June 2018 No. of Options Weighted average exercise price $ No. of Options Weighted average exercise price $ 50,750,000 0.36 40,350,000 0.36 2,950,000 0.14 11,150,000 0.23 ‐ ‐ ‐ ‐ (500,000) 0.19 (750,000) 0.40
	53,200,000 0.34 50,750,000 0.35
	2,750,000 0.14 3,150,000 0.23
	50,450,000 0.35 47,600,000 0.36

(i) Options expired or cancelled during the year

For the year ended 30 June 2019, due to employee redundancies and resignations during the financial year, 500,000 employee share options were cancelled.

No amounts are unpaid on any of the shares. No person entitled to exercise an option had or has any rights by virtue of the option to participate in any share issue of any other body corporate.

NOTE 18. DIVIDENDS

There were no dividends recommended or paid during the year ended 30 June 2019.

NOTE 19. KEY MANAGEMENT PERSONNEL DISCLOSURES

Short term employee benefits Post‐employment benefits Long‐term benefits Share‐based payment	30 June 2019 $ 30 June 2018 $ 578,794 631,081 44,641 44,960 30,341 14,281 13,519 667,596
	667,295 1,357,918

Detailed remuneration disclosures are provided in the Remuneration Report.

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 20. RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH USED IN OPERATING ACTIVITIES

Loss for the year
Depreciation
Equity Settled share‐based payment transaction
Exploration expenditure written off
Income tax benefit/(expense)
Other (gain)/losses – net
Gain on disposal of available for sale financial assets
Gain on disposal of WA Gold Projects
Share of associate’s loss
Associate impairment expense
Increase/(Decrease) in trade and other payables
Increase/(Decrease) in provisions
(Increase)/Decrease in receivables
Net cash outflow from operating activities

30 June
2019
$
30 June
2018
$
(8,288,971)
(1,673,903)
101,376
168,545
118,994
876,753
60,446
1,090,320
70,445
(102,536)
(199,015)
(209,139)
‐
(1,893,669)
‐
(5,919,557)
915,715
‐
586,270
‐
13,486
69,967
12,529
(421,597)
(51,112)
145,172

(6,659,837)
(7,869,644)

NOTE 21. NON‐CASH INVESTING AND FINANCING ACTIVITIES

During the financial year ended 30 June 2018, the Group acquired available for sale assets with a fair value of $6,080,000 as consideration for the sale of the WA Gold Projects as per note 10. In relation the transaction costs of the sale, shares were issued at a value of $315,000 in exchange for services provided. The share consideration and transaction costs are not reflected in the statement of cashflows.

t reflected in the statement of cashflows.
	30 June
	2018
	$
Consideration of shares from Westgold as per the sale of WA Gold Projects	6,080,000
Transaction costs in relation to the sale of WA Gold Projects – shares issued	(315,000)

NOTE 22. BASIC LOSS PER SHARE

OTE 22. BASIC LOSS PER SHARE
	30 June	30 June
	2019	2018
	$	$
(a) Reconciliation of loss used in calculating loss per share
*Basic loss per share*
Loss attributable to the ordinary equity holders used in calculating basic loss per
share	(8,288,971)	(1,673,903)
(b) Weighted average number of shares used as the Denominator	Number	Number
Ordinary shares used as the denominator in calculating basic loss per share	247,915,179	247,915,179

FINANCIAL REPORT 2019

Financial Report 2019

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 22. BASIC LOSS PER SHARE (CONTINUED)

(c) Basic loss per share	Cents	Cents
Basic loss per share	(3.34)	(0.68)

Where loss per share is non‐dilutive, it is not disclosed.

NOTE 23. COMMITMENTS

The Group must meet the following operating lease and tenement expenditure commitments to maintain them in good standing until they are joint ventured, sold, reduced, relinquished, exemptions from expenditure are applied or are otherwise disposed of. These commitments, net of farm outs, are not provided for in the financial statements and are:

Not later than one year After one year but less than two years After two years but less than five years After five years*	30 June 2019 $ 30 June 2018 $ 361,920 43,007 287,382 202,397 702,546 368,044 227,232 122,681
	1,579,080 736,129

Per annum

The increase of commitments for the year ended 30 June 2019 is due to granting of exploration licences in Finland.

NOTE 24. RELATED PARTY TRANSACTIONS

On 5 March 2019, the Company entered into a Shared Services Agreement with Todd Resources Ltd (“TRT”). The fees and costs associated with the agreement include 40% of the Company’s budgeted administrative expenditure per month in lieu of the office facilities provided by the Company to TRT. The Company also provide personnel on a consulting basis for geological, GIS, financial and office administration services to TRT as part of the agreement. A total of $123,193 for administrative expenditure and consulting services had been incurred for the financial year ended 30 June 2019. As at 30 June 2019, the Group has a receivable outstanding from TRT of $49,896.

Other than the Directors and key management personnel salaries and options described in the Remuneration Report, there were no related party transactions for the year ended 30 June 2019.

NOTE 25. JOINT VENTURES

The Group has interests in the following joint venture operations:

e Group has	interests in the following joint venture operations:
Tenement	Activities	2019	2018
Area
Eundynie	All metals excluding nickel	‐	‐
Eundynie	Nickel	80%	80%

Due to the sale of Polar Metals Pty Ltd to Westgold Resources Limited as announced on 13 February 2018, the Group had sold all metals rights (excluding nickel) for the Eundynie JV.

FINANCIAL REPORT 2019

Financial Report 2019

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 26. PARENT ENTITY DISCLOSURES

Financial position

ancial position
Assets Current assets Non‐current assets Total assets Liabilities Current liabilities Non‐current liabilities Total liabilities Net assets Equity Issued capital Share‐based payments reserve Fair value and other comprehensive income reserve Accumulated losses Total equity ancial performance Loss for the year Other comprehensive income Total comprehensive income	30 June 2019 $ 30 June 2018 $ 11,693,967 14,902,074 4,667,728 10,003,974
	16,361,695 24,906,048
	333,211 189,819 ‐ ‐
	333,211 189,819
	16,028,484 24,716,229
	52,552,523 52,552,523 7,905,600 7,786,606 354,998 1,910,667 (44,784,639) (37,533,567)
	16,028,484 24,716,229
	30 June 2019 $ 30 June 2018 $ (8,208,819) (1,366,154) (597,921) 1,722,578 (8,806,740) 356,424

Financial performance

The parent entity has entered into an office lease agreement where the following commitments must be met:

Not later than one year After one year but less than two years	30 June 2019 $ 30 June 2018 $ 87,188 33,341 52,650 202,397 139,838 235,738

FINANCIAL REPORT 2019

Financial Report 2019

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Annual Financial Report (cont) Notes to the Consolidated Financial Statements

NOTE 27. SUBSIDIARIES

Name of entity	Country of incorporation	Class of Shares	Equity	Holding
			2018	2019
Sirius Europa Pty Ltd	Australia	Ordinary	100%	100%
Norse Exploration Pty Ltd	Australia	Ordinary	100%	100%
Sakumpu Exploration Oy	Finland	Ordinary	100%	100%
S2 Exploration Quebec Inc.	Canada	Ordinary	100%	100%
S2 Sverige AB	Sweden	Ordinary	100%	100%
S2RUS Pty Ltd	Australia	Ordinary	100%	100%
S2RUS LLC	United States	Ordinary	100%	100%
Nevada Star Exploration LLC	United States	Ordinary	100%	100%

NOTE 28. EVENTS OCCURRING AFTER THE REPORTING YEAR

In September 2019, the Group had entered into the following arrangement with Todd River Resources Ltd (ASX:TRT):

On 10 September 2019, the Group had participated in Todd River Resources Ltd’s (ASX:TRT) placement by purchasing 11,959,700 shares at $3.1 cents per share increasing its investment by $370,751.
The Group has also committed to take up its full entitlement under TRT’s 1‐for‐3 underwritten non‐renounceable pro‐rata Entitlement Offer which will result in an issue of 14,078,099 shares to the Group at $3.1 cents per share. The Entitlement Offer will end on 24 September 2019.
The Group will also participate as a sub‐under writer which is capped at a maximum of up to approximately $854,167 or 27,533,783 new shares.

Other than the after balance date events stated above, there has been no matter or circumstance that has arisen since 30 June 2019 that has significantly affected, or may significantly affect:

the Group’s operations in future financial years;
the result of those operations in future financial years; or
the Group’s state of affairs in future financial years.

NOTE 29. REMUNERATION OF AUDITORS

OTE 29. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor of the Group: Audit services Total remuneration for audit services	30 June 2019 $ 30 June 2017 $ 37,309 38,482
	37,309 38,482

FINANCIAL REPORT 2019

Financial Report 2019

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Directors’ Declaration

The Directors of the Group declare that:

The financial statements and notes as set out on pages 17 to 58 are in accordance with the Corporations Act 2001, and
(a) comply with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(b) give a true and fair view of the financial position of the Group as at 30 June 2019 and of its performance for the year ended on that date.
The financial report also complies with International Financial Reporting Standards as disclosed in note 1 to the financial statements.
The Director acting in the capacity of Chief Executive Officer has declared that:
(a) the financial records of the Company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001;
(b) the financial statements and notes for the financial year comply with the accounting standards; and
(c) the financial statements and notes for the financial year give a true and fair view.
In the opinion of the Directors there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.
The remuneration disclosures that are contained in the Remuneration Report in the Directors’ Report comply with Australian Accounting Standards AASB 124 Related Party Disclosures, the Corporations Act 2001 and the Corporations Regulations 2001.

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

Mark Bennett

Director Perth 10 September 2019

FINANCIAL REPORT 2019

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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DECLARATION OF INDEPENDENCE BY JARRAD PRUE TO THE DIRECTORS OF S2 RESOURCES LIMITED

As lead auditor of S2 Resources Limited for the year ended 30 June 2019, I declare that, to the best of my knowledge and belief, there have been:

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

This declaration is in respect of S2 Resources Limited and the entities it controlled during the period.

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Jarrad Prue

Director

BDO Audit (WA) Pty Ltd

Perth, 10 September 2019

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.

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 REPORT

To the members of S2 Resources Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of S2 Resources Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ declaration.

In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001 , including:

(i) Giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial performance for the year ended on that date; and
(ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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Carrying value of exploration and evaluation assets

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----- Start of picture text -----

Key audit matter How the matter was addressed in our audit
----- End of picture text -----

At 30 June 2019, the carrying value of the	We have evaluated management’s assessment of	We have evaluated management’s assessment of
capitalised exploration and evaluation asset is	impairment indicators in accordance with AASB
disclosed in Note 11.	6 including but not limited to the following:
As the carrying value of the capitalised	•	Obtaining a schedule of the areas of
exploration and evaluation asset represents a		interest held by the Group and assessing
significant asset of the Group, and judgement is		whether the rights to tenure of those
applied by management in considering whether		areas of interest remained current at
facts and circumstances indicate that the		balance date;
exploration and evaluation asset should be tested for impairment. As a result, the asset requires assessment for impairment indicators in accordance with_AASB 6 Exploration for and_ Evaluation of Mineral Resources(“AASB 6”).	•	Considering the status of the ongoing exploration programmes in the respective areas of interest by holding discussions with management, and reviewing the Group’s exploration
		budgets, ASX announcements and
		director’s minutes;
	•	Considering whether any such areas of
		interest had reached a stage where a
		reasonable assessment of economically
		recoverable reserves existed;
	•	Considering whether any facts or
		circumstances existed to suggest
		impairment testing was required; and
	•	Assessing the adequacy of the related
		disclosures in Notes 11 and 1(a) to the
		Financial Statements.

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Carrying value of investment in associate

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Key audit matter

How the matter was addressed in our audit Our procedures included, but were not limited to:

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At 30 June 2019, the carrying value of the equity Our procedures included, but were not limited accounted investment in associate Todd River to: Resources Limited (“TRT”) is disclosed in Note 9. • verifying the profit or loss and net assets At each reporting period, the value of the equity of the associate and checking the accounted investment in TRT needs to be calculations for the recognition of assessed for indicators of impairment in associate loss for the period; accordance with AASB 128 Investments in • Considering the existence of any Associates and Joint Ventures (“AASB 128”). If indicators of impairment of the indicators of impairment exist, the recoverable investment in accordance with AASB amount needs to be estimated.

Considering the existence of any indicators of impairment of the investment in accordance with AASB 128;

The assessment of the carrying value of the equity accounted investment in TRT was a key audit matter due to the judgment involved in determining the recoverable amount.

Reviewing ASX announcements, Board of Directors meetings minutes to assess for potential indicators of impairment;
Evaluating and assessing the accuracy of Group’s calculation of the impairment charge; and
• Assessing the adequacy of the related disclosures in Notes 9 and 1(a) to the Financial Statements.

Other information

The directors are responsible for the other information. The other information comprises the information contained in the Financial Report for the year ended 30 June 2019, but does not include the financial report and our auditor’s report thereon, which we obtained prior to the date of this auditor’s report, and the Annual Report to Shareholders, which is expected to be made available to us after that date.

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

In connection with our audit of the financial report, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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

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Responsibilities of the directors for the Financial Report

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

In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:

http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf

This description forms part of our auditor’s report.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 8 to 15 of the directors’ report for the year ended 30 June 2019.

In our opinion, the Remuneration Report of S2 Resources Limited, for the year ended 30 June 2019, complies with section 300A of the Corporations Act 2001 .

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

BDO Audit (WA) Pty Ltd

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Jarrad Prue

Director

Perth, 10 September 2019

AI assistant

S2 RESOURCES LTD — Annual Report 2019

65745_rns_2019-09-09_82bb9b3f-968e-455e-a430-dfa802aec842.pdf

S2 RESOURCES LTD

Contents

Corporate Directory

Directors

Directors Report

Directors

Principal Activities

Dividends

Review of Operations

Operating Result

Significant Changes in the State of Affairs

Directors Report (cont)

After Balance Date Events

Likely Developments and Expected Results of Operations

Environmental Regulation

Directors Report (cont)

Information on Directors

Mark Bennett – Chief Executive Officer and Managing Director

Experience and Expertise

Other Directorships

Former Directorships in the Last Three Years

Number of interests in shares and options held in S2 Resources Ltd

Jeff Dowling – Non‐Executive Chairman

Experience and Expertise

Directors Report (cont)

Other Directorships

Former Directorships in the Last Three Years

Number of interests in shares and options held in S2 Resources Ltd

Anna Neuling – Executive Director

Experience and Expertise

Other Directorships

Former Directorships in the Last Three Years

Number of interests in shares and options held in S2 Resources Ltd

Directors Report (cont)

Grey Egerton‐Warburton – Non‐Executive Director

Experience and Expertise

Other Directorships

Former Directorships in the Last Three Years

Number of interests in shares and options held in S2 Resources Ltd

Directors Report (cont)

Meetings of Directors

Indemnifying of Officers or Auditor

Options & Rights

Options

Directors Report (cont)

Remuneration Report (audited)

1. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION

Executive Directors

Directors Report (cont)

Remuneration Report (audited) (cont)

Non ‐ Executive Directors

Company Performance

Short‐term incentives

Long‐term incentives

Company performance, shareholder wealth and directors’ and executives’ remuneration

Directors Report (cont)

Remuneration Report (audited) (cont)

2. DETAILS OF REMUNERATION

Year Ended 30 June 2019

CASH REMUNERATION AND ENTITLEMENTS

Year Ended 30 June 2018

CASH REMUNERATION AND ENTITLEMENTS

Directors Report (cont)

Remuneration Report (audited) (cont)

2. DETAILS OF REMUNERATION (CONTINUED)

2019 TOTAL REMUNERATION

Directors Report (cont)

Remuneration Report (audited) (cont)

3. SERVICE AGREEMENTS

Directors Report (cont)

Remuneration Report (audited) (cont)

3. SERVICE AGREEMENTS (CONTINUED)

4. SHARE‐BASED COMPENSATION

Option holdings

Directors Report (cont)

Remuneration Report (audited) (cont)

Shareholdings

S2 RESOURCES LTD Annual Report 2019