WA KAOLIN LIMITED - Annual Report 2021

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WA Kaolin Limited ABN 56 083 187 017

Annual Financial Report 30 June 2021

Contents	Page
Corporate Information	2
Directors’ Report	3
Auditor’s Independence Declaration	19
Statement of Profit or Loss and Other Comprehensive Income	20
Statement of Financial Position	21
Statement of Changes in Equity	22
Statement of Cash Flows	23
Notes to the Financial Statements	24
Directors’ Declaration	64
Independent Auditor’s Report	65
ASX Additional Information	69

WA Kaolin Limited

CORPORATE INFORMATION

ABN 56 083 187 017

Directors

Dr John White (Non-Executive Chairman) Mr Alfred Baker (Executive Director) Ms Cathy Moises (Non-Executive Director) Mr Linton Putland (Non-Executive Director)

Chief Executive Officer

Mr Andrew Sorensen

Company secretary

Mr Michael Kenyon

Registered office

Lot 3, Ward Road ROCKINGHAM WA 6168 Telephone: +61 8 9439 6300

Principal place of business

Lot 3 Ward Road EAST ROCKINGHAM WA 6168 Telephone: +61 8 9439 6300 Website: www.wakaolin.com.au

Share registry

Automic Share Registry 126 Phillip Street SYDNEY NSW 2000 Telephone: 1300 288 664

Solicitors

Gilbert & Tobin Level 16 Brookfield Place Tower 2/123 St George’s Terrace PERTH WA 6000

Bankers

National Australia Bank 255 George Street SYDNEY NSW 2000

Auditors

BDO Audit (WA) Pty Ltd 38 Station Street SUBIACO WA 6008

WA Kaolin Limited

DIRECTORS’ REPORT

The directors of WA Kaolin Limited (the “Company”) submit the financial report for the year ended 30 June 2021. In order to comply with the provisions of the Corporations Act 2001 , the directors report as follows:

Directors

The names of directors who held office throughout the period and until the date of this report are as follows. Directors were in office for the entire period unless otherwise stated.

Mr Keith Snell (resigned 24 July 2020) Mr Alfred Baker Dr John White Ms Cathy Moises Mr Linton Putland Cameron Baker (appointed as alternate director on 16 August 2020) Mr Andrew Sorensen (resigned as alternate director on 24 July 2020)

Directors’ Information

Dr John White (Non-Executive Chairman)

Dr White has been a director and/or CEO of several publicly listed and private Australian companies. Dr White is formerly the Chairman of the Federal Government’s Uranium Industry Framework Council, a member of the Federal Government’s Defence Procurement Board and Director of the DefenceSA Advisory Board.

Dr White had extensive involvement with Woodside’s North West Shelf Offshore Gas and LNG Development from 1978 to 1984, and then participated in the RAN Collins Class Submarine Project tender as Project Director for the Australian-German owned AMEC proposal.

Dr White was CEO of Transfield Defence Systems Pty Ltd from 1988 to 1996 and then Global Chief Executive of the recycling/packaging group, Visy Industries. He is currently Chairman of Regenerative Australian Farmers Pty Ltd and Birdon Pty Ltd. Qualifications: BE(Hon), PhD

Other current directorships: None

Former directorships (last 3 years): None

Special responsibilities: Chairman of Board of Directors, Member of Remuneration and Finance & Audit Committees Interests in shares: None

Interests in options: 3,000,000

Mr Keith Snell (resigned 24 July 2020)

Mr Snell had over fifty years’ experience in the design, construction and logistic support of naval vessels in Australia, the United Kingdom and the United States of America - and throughout his career, successfully completed complex projects for maritime, land, aviation, electronic and industrial systems in Australia and internationally. Keith was also the co-owner and group Managing Director of Scientific Management Associates - Australia's largest supplier of Integrated Logistics Support services to the Department of Defence and Industry. Mr Snell passed away on 24 July 2020 after battling health issues for some time.

Other current directorships: None

Former directorships (last 3 years): None

Special responsibilities: None Interests in shares: 49,883,574 Interests in options: 7,200,000

Mr Alfred Baker (Executive Director)

Mr Baker has an engineering background with more than 40 years’ experience in process technology and is co-founder of WA Kaolin. He is an experienced and successful businessman, authoring several patents and designs during his extensive career. Since 1996, Mr Baker has founded and directed a number of companies, including:

EMC Pacific Aust P/L (EMCPA), Australia’s only manufacturer of power distribution insulators. EMCPA has formed a joint venture to commence manufacture of its products in USA, commencing April 2020.

 Pacific Polymers, a mineral treatment plant operating in Dandenong, Victoria, using patented technology. Mr Baker was Managing Director of the highly successful PQ Australia (PQA) from 1976 to 1996, which he co-founded with his brother. PQA produces the inorganic chemical, Sodium Silicate, in both glass and liquid form, and the patented valuable downstream product ‘Q-Cel’ hollow microspheres.

In all cases, innovation, hands on determination and training of younger executives have led to success and low-cost producer status. Mr Baker is also charged with the overall responsibility, as project director, of the Company’s Wickepin mine development.

WA Kaolin Limited

DIRECTORS’ REPORT (continued)

Mr Alfred Baker (Executive Director) (continued)

Other current directorships: None

Former directorships (last 3 years): None Special responsibilities: Executive Director Interests in shares: 49,883,574 Interests in options: 7,200,000

Ms Cathy Moises (Non-Executive Director)

Ms Moises has worked for a number of the most prominent stock broking firms within Australia including Merrill Lynch, Citigroup, Evans and Partners (as a partner) and most recently worked as Head of Research for Patersons Securities.

Ms Moises has a Bachelor of Science (Hons) Geology in addition to a Securities Institute of Australia Diploma of Finance and Investment and has over 30 years’ experience working within the resources industry primarily as a financial analyst. She has extensive capital markets, company management, financial analysis and Institutional Investor engagement experience.

Qualifications: BSc (Hons), GDAFI

Other current directorships: Arafura Resources Limited, Australian Potash Limited, Podium Minerals Limited, Pearl Gull Limited and PacGold Limited

Former directorships (last 3 years): None

Special responsibilities: Chair of Remuneration Committee, Member of Finance & Audit Committee Interests in shares: 1,250,000

Interests in options: 3,375,000

Mr Linton Putland (Non-Executive Director)

Mr Putland holds degrees in Mining Engineering (Bachelor of Engineering, Western Australian School of Mines) and a Masters in Science (Mineral Economics, Western Australian School of Mines) with more than 30 years’ experience in mining operations, joint ventures and corporate management in Australia, Africa and the Americas, over a wide range of commodities.

Mr Putland is principal of LJ Putland & Associates, a private mining consultancy company which was founded in 2002, providing advisory and consultancy services in mining project and company evaluation and due diligence appraisals with a focus on corporate growth. During this period, he has also been Managing Director of a privately-owned exploration company with joint venture interests in Africa.

Prior to this he held corporate and senior management roles in IAMGOLD, AurionGold, Delta Gold and Pancontinental Mining. He is a Member of AusIMM and a Graduate Member of AICD.

Qualifications: B Eng (Mining), MSc (Min Economics)

Other current directorships: Breaker Resources NL

Former directorships (last 3 years): Pacific Energy Limited (ceased 2 December 2019); Azumah Resources Limited (ceased 14 November 2019)

Special responsibilities: Chair of Finance & Audit Committee, Member of Remuneration Committee Interests in shares: None

Interests in options: 1,500,000

Mr Andrew Sorensen (Alternate Director – resigned 24 July 2020) / Chief Executive Officer

With more than three decades experience in operations management, Mr Sorensen joined WA Kaolin in 2006 and has overseen several of the company’s key developmental milestones. He is fundamental in driving and implementing the Company’s vision and strategy, overseeing the day-to- day activities of the business, liaising with the Board where necessary. He holds a bachelor’s degree in Applied Science (Information Management) and a Master of Business Administration.

Prior to joining WA Kaolin, Mr Sorensen held senior leadership positions across a broad range of industries, including General Manager CMTP Pty Ltd Derrimut, Vice President / General Manager (Asia Pacific) for Potters Industries Inc. and Manufacturing Manager for PQ Australia Pty Ltd.

Mr Sorensen’s responsibilities include the formulation and implementation of key strategic, business and operational matters. He also manages the operational team and guides the continuous improvement of the Wickepin Kaolin Project. Additionally, he drives standards in health and safety, security, environment, IT and procurement.

Qualifications: B App Sci and MBA

Other current directorships: None

Former directorships (last 3 years): None

Special responsibilities: Chief Executive Officer Interests in shares: 6,187,556 Interests in options: 2,100,000

WA Kaolin Limited

DIRECTORS’ REPORT (continued)

Mr Michael Kenyon (Company Secretary)

Mr Kenyon has held senior roles with both private and ASX-listed corporations over the past 23 years. He holds a Bachelor of Business degree from Edith Cowan University, is a Chartered Accountant and a graduate member of the Australian Institute of Company Directors.

He commenced his finance career with roles at then ‘Big 6’ professional services firms, Ernst & Whinney and Price Waterhouse before joining diversified industrial company, Vysarn Pty Ltd in 1997 as Chief Financial Officer.

Since that time, Mr Kenyon has held CFO roles with ASX-listed Forge Group Ltd, Matrix Composites and Engineering Ltd and is currently CFO for Resource Development Group Ltd. He is also a non-executive director of ASX-listed company Babylon Pump & Power Limited and a leading Catholic aged care and community services provider in Perth, Western Australia.

Directors’ Meetings

The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attended by each director was as follows:

Number of meetings held: Number of meetings attended: Mr Keith Snell Dr John White Mr Alfred Baker Ms Cathy Moises Mr Linton Putland Mr Andrew Sorensen Mr Cameron Baker	Directors’ Meetings Eligible to attend Remuneration Committee Disclosure Committee
	11 11 2 1 1 1 - - 11 11 2 - 11 11 - - 11 11 2 - 11 11 2 1 1 1 - 1 1 11 - -

Review of operations

The Company’s operations for the financial year resulted in loss after tax of $20,673,297 (2020: $5,162,653). The loss includes an interest expense of $2,877,951 (2020: $2,027,901) and significant non-cash expenses for share-based payments of $4,050,182 (2020: $Nil) and fair value adjustments to convertible notes of $8,916,984 (2020: $1,236,674).

The Company has current operations in a Company-owned facility in East Rockingham, Western Australia, where it operates a smallscale production plant producing beneficiated kaolin utilising its K99 Process. The Company also conducts mining operations at its mining tenement in East Wickepin, Western Australia, and transfers ore to East Rockingham for processing. The Company then sells the kaolin through a network of distributors both in Australia and overseas.

The Company is sole owner of a mining lease, a general-purpose lease, a miscellaneous licence and retention licences which comprise the Wickepin Kaolin Project (Project). The Project, which is one of the largest known remaining kaolin resources in the world, contains an Ore Reserve of 30 million tonnes and Mineral Resource (reported in accordance with JORC 2012) of 644.5 million tonnes of high-grade premium kaolinized granite. The Company is currently well advanced with the development of the Project which includes the establishment of a 200,000t per annum processing plant and associated infrastructure and equipment.

In May 2020, the Company formalised an offtake agreement with one of its key customers, Dak Tai Trading Limited, for the supply of 338,000 tonnes of kaolin. It also has in place informal arrangements with other key distributors and customers which further support the Company’s targeted production of kaolin.

WA Kaolin is also currently exploring a novel low capex wet processing method for kaolin, which will utilise the kaolin processed via the K99 Process as feedstock instead of raw ore. The Directors consider that this novel wet processing method could significantly lower the cost of entering the premium paper and packing market.

The Company is primarily focused on establishing itself as the preferred supplier of high-grade premium kaolin products globally through:

WA Kaolin Limited

DIRECTORS’ REPORT (continued)

Review of operations (continued)

Construction of a scaled-up processing plant in East Wickepin, utilising the K99 Process;
progressive increase in production to circa 200,00 tonnes per annum through the plant planned by the end of 2022;
expansion of production capacity at the Wickepin plant to 400,000 tonnes per annum by the end of 2023 through the installation of a second stage of production equipment;
negotiation of sales agreements for product on suitable commercial terms with acceptable counterparties; and
investment in further processing expansion including the construction of an additional wet processing plant to produce product suitable for use in premium paper and packaging markets and/or an expansion program for the construction of an additional processing plant to significantly increase production capacity utilising the K99 Process.

The Company was admitted to the Official List of ASX Limited on 24 November 2020 and its ordinary shares subsequently officially quoted on 26 November 2020.

Principal Activities

The principal activities of the Company were the exploration and development of an Inferred Mineral Resource of high-grade premium kaolinised granite, proprietary production and value-adding processes.

Significant events after reporting date

The impact of the Coronavirus (COVID-19) pandemic is ongoing and while there has not been any financially material impact on the Company up to 30 June 2021, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is still developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.

No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect the Company's operations, the results of those operations, or the Company's state of affairs in future financial years.

Likely developments and expected results

It is expected that the operations of the Company will continue in line with that of the current reporting period.

Environmental regulations

The Company is subject to and is compliant with all aspects of environmental regulation of its exploration and mining activities. The directors are not aware of any environmental law that is not being complied with.

Dividend paid, recommended and declared

No dividends were paid, declared or recommended since the start of the financial year (2020: $Nil).

Remuneration report (Audited)

This remuneration report, which forms part of the directors’ report, sets out information about the remuneration of the Company’s key management personnel for the financial year ended 30 June 2021. The term ‘key management personnel’ refers to those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any director (whether executive or otherwise) of the Company. The prescribed details for each person covered by this report are detailed below under the following headings:

Remuneration policy
Key management personnel emoluments
Service agreements
Options granted as part of remuneration
Share-based compensation
Additional disclosures relating to key management personnel

WA Kaolin Limited

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

Directors and Key Management Personnel (“KMP”) Dr John White Non-Executive Chairman Mr Keith Snell Non-Executive Director (resigned 24 July 2020) Mr Linton Putland Non-Executive Director Ms Cathy Moises Non-Executive Director Mr Alfred Baker Executive Director Mr Cameron Baker Alternate Director (appointed 16 August 2020) Mr Andrew Sorensen Chief Executive Officer / Alternate Director (resigned as alternate on 24 July 2020) Mr Michael Kenyon Chief Financial Officer / Company Secretary

Remuneration Policy

The Company does not yet have a formal remuneration policy however any remuneration has been designed to align directors’ objectives with shareholders and business objectives and is in line with the market. The Board of the Directors (the Board) believes this approach to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the business, as well as create goal congruence between directors, executives and shareholders. The Board’s policy for determining the nature and amount of remuneration for Board members of the Company is as follows:

The Board is responsible for determining and reviewing the compensation of the directors and the executive directors are responsible for determining and reviewing the remuneration of senior executives. This process requires consideration of the levels and form of remuneration appropriate to securing, motivating and retaining executives with the skills to manage the Company’s operations. The Board of Directors assesses market rates and seeks the advice of external advisers, where necessary, in connection with the structure of remuneration packages. The Board also recommends levels and form of remuneration for Non-Executive Directors with reference to performance, relevant comparative remuneration and independent expert advice. The total sum of remuneration payable to NonExecutive Directors shall not exceed the sum fixed by members of the Company in general meeting. The Company has not used a remuneration consultant.

There is no direct relationship between the Company’s Remuneration Policy and its performance. However, in determining the remuneration to be paid in each subsequent financial year, the Board may have regard to the following indicators of performance in respect of the current financial year and the previous four financial years:

Net loss after tax Share price Basic loss per share ($ per share) Dividend	2021 2020 2019 2018 2017
	$(20,673,297) $(5,162,653) $(1,415,031) $(1,855,387) $(1,739,848) $0.20 N/A N/A N/A N/A $(0.09) $(0.04) $(0.01) $(0.07) $(0.07) $Nil $Nil $Nil $Nil $Nil

Non-executive director remuneration

The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.

The ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. The latest determination was at a General Meeting held on 29 November 2019 when shareholders approved an aggregate remuneration of $350,000 per year.

The amount of aggregate remuneration sought to be approved by shareholders and the way it is apportioned amongst directors is reviewed annually. The Board considers advice from external shareholders as well as the fees paid to non-executive directors of comparable companies when undertaking the annual review process.

WA Kaolin Limited

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

CEO and executive director remuneration

Remuneration consists of fixed remuneration and variable remuneration (comprising short-term and long-term incentive schemes).

Compensation levels for executives of the Company are competitively set to attract and retain appropriately qualified and experienced executives. The compensation structures explained below are designed to attract suitably qualified candidates, reward the achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders.

The compensation structures consider:

The capability and experience of the executive;
The executive’s ability to control the company’s performance; and
The Company’s performance including:
(a) The Company’s earnings; and
(b) The growth in share price and delivering constant returns on shareholder wealth.

Key Management Personnel Emoluments

The Company’s policy for determining the nature and amount of emoluments of key management personnel is that key management persons are to be paid by salaries or consulting fees at commercial rates for professional services performed.

Details of the nature and amount of each element of the emoluments of each key management person of the Company are set out in the following tables:

WA Kaolin Limited

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

Key Management Personnel Emoluments (continued)

2021 Executive Director: Mr A Baker Total Executive Director Non-Executive Directors: Mr K Snell Dr J White Ms C Moises Mr L Putland Total Non- Executive Directors Executives Mr A Sorensen (CEO) Mr M Kenyon (CFO/ Company Secretary) Total Executives *Total	Short-term benefits Post- employment benefits Long- term benefits Share-based payments Cash salary and fees Cash bonus Non- monetary * Super- annuation Long service leave Equity- settled shares Equity- settled options Total Perfor- mance related $ $ $ $ $ $ $ $ % 205,800 - - - - - 1,752,962 1,958,762 -
	205,800 - - - - - 1,752,962 1,958,762 - - - - - - - 956,161 956,161 - 72,000 - - 6,840 - - 398,400 477,240 - 48,000 - - 4,560 - - 199,200 251,760 - 48,000 - - 4,560 - - 199,200 251,760 -
	168,000 - - 15,960 - - 1,752,961 1,936,921 224,004 6,500 21,100 22,400 - - 278,880 552,884 - 147,485 - - - - - 132,800 280,285 -
	371,489 6,500 21,100 22,400 - - 411,680 833,169
	745,289 6,500 21,100 38,360 - - 3,917,603 4,728,852 -

Mr Baker’s salary and fees includes $24,000 of director fees

** Mr K Snell resigned 24 July 2020

*** Non-monetary benefits relate to the payment for accommodation

**** Payment of bonus to Mr. Sorensen was at the Board’s discretion and not subject to any specific performance condition

WA Kaolin Limited

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

Key Management Personnel Emoluments (continued)

2020 Executive Director: Mr A Baker Total Executive Director Non-Executive Directors: Mr K Snell Dr J White Ms C Moises Mr L Putland Total Non- Executive Directors Executives Mr A Sorensen (CEO) Mr M Kenyon (CFO/ Company Secretary) Total Executives Total**	Short-term benefits Post- employment benefits Long- term benefits Share-based payments Cash salary and fees Cash bonus Non- monetary * Super- annuation Long service leave Equity- settled shares Equity- settled options Total Perfor- mance related $ $ $ $ $ $ $ $ %* 173,000 - 27,529 - - - - 200,529 -
	173,000 - 27,529 - - - - 200,529 - 36,000 - - - - - - 36,000 - 7,693 - - 730 - - - 8,423 - 5,129 - - 487 - - - 5,616 - 5,129 - - 487 - - - 5,616 -
	53,951 - - 1,704 - - - 55,655 142,833 - 31,899 14,283 - - - 189,015 - 24,126 - - - - - - 24,126 -
	166,959 - 31,899 14,283 - - - 213,141
	393,910 - 59,428 15,987 - - - 469,325 -

Mr Baker’s salary and fees includes $29,000 of director fees

** Mr K Snell resigned 24 July 2020

*** Dr J White, Ms C Moises and Mr L Putland were appointed on 22 May 2020

**** Non-monetary benefits relate to the payment for accommodation.

WA Kaolin Limited

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

Service Agreements

Non-Executive Directors

On appointment to the Board, all directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board policies and terms of appointment, including compensation relevant to the office of director. Remuneration and other terms of employment for the directors are also formalised in the letter as summarised below:

Dr J White (Chairman)

Term: Continuation of appointment is contingent upon successful election and re-election by shareholders of the Company at its Annual General Meeting as required by its Constitution

Fees: $72,000 per annum (exclusive of superannuation) until the Company’s first operational cash flow positive quarter then increased to $96,000 per annum (exclusive of superannuation)

Notice periods: Not applicable

Termination payments: Not applicable

- Ms C Moises (Non executive Director)

Term: Continuation of appointment is contingent upon successful election and re-election by shareholders of the Company at its Annual General Meeting as required by its Constitution

Fees: $48,000 per annum (exclusive of superannuation) until the Company’s first operational cash flow positive quarter then increased to $66,000 per annum (exclusive of superannuation)

Notice periods: Not applicable

Termination payments: Not applicable

- Mr L Putland (Non executive Director)

Term: Continuation of appointment is contingent upon successful election and re-election by shareholders of the Company at its Annual General Meeting as required by its Constitution

Fees: $48,000 per annum (exclusive of superannuation) until the Company’s first operational cash flow positive quarter then increased to $66,000 per annum (exclusive of superannuation)

Notice periods: Not applicable

Termination payments: Not applicable

Executive Director

Mr A Baker (Executive Director)

Term: Continuation of appointment is contingent upon successful election and re-election by shareholders of the Company at its Annual General Meeting as required by its Constitution

Fees: $24,000 per annum (exclusive of superannuation) until the Company’s first operational cash flow positive quarter then increased to $33,000 per annum (exclusive of superannuation)

Notice periods: Not applicable

Termination payments: Not applicable

In addition, Mr Baker is engaged as a consultant to the Company, through a related entity of his (Wamco Industries Pty Ltd), by way of a Consultancy Deed with the following terms and conditions:

Term: Open-ended

Fees: (i) $12,000 per month (exclusive of GST); and (ii) following successful completion of the Company’s IPO, $15,000 per month (exclusive of GST)

Termination: 6 months with no reason; immediately upon certain adverse events.

WA Kaolin Limited

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

Service Agreements (continued)

Management

The Company’s management are employed under an Executive Employment Contract and a Contract Services Agreement, respectively, as detailed below:

Mr A Sorensen (CEO)

Commencement date: 1 October 2019

Total remuneration package: Base salary – 1) On commencement $144,000 per annum, 2) After pre-IPO funding $192,000 per annum, 3) After IPO listing $240,000 per annum; superannuation at 10% per annum. Remuneration to be reviewed annually by the Board.

Notice period: 3 months by either party

Restraint area/period: Australia / 36 months

Mr M Kenyon (CFO/Company Secretary)

Commencement date: 4 June 2019 Fees: $1,300 per day (or part thereof) Notice period: 8 weeks by either party

Share-based compensation

Options

The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows:

						Fair value per
	Number of		Vesting date and		Exercise price	option at grant
	options granted	Grant date	exercisable date1	Expiry date	per option ($)	date ($)
Mr A Baker	13,200,000	20 Nov 2020	20 Nov 2022	20 Nov 2025	$0.35	$0.1328
Mr K Snell (estate)	7,200,000	20 Nov 2020	20 Nov 2022	20 Nov 2025	$0.35	$0.1328
Mr J White	3,000,000	20 Nov 2020	20 Nov 2022	20 Nov 2025	$0.35	$0.1328
Ms C Moises	1,500,000	20 Nov 2020	20 Nov 2022	20 Nov 2025	$0.35	$0.1328
Mr L Putland	1,500,000	20 Nov 2020	20 Nov 2022	20 Nov 2025	$0.35	$0.1328
Mr A Sorensen	2,100,000	20 Nov 2020	20 Nov 2022	20 Nov 2025	$0.35	$0.1328
Mr M Kenyon	1,000,000	20 Nov 2020	20 Nov 2020	20 Nov 2025	$0.35	$0.1328
1With the exception of	Mr Kenyon’s options, all other options are		subject to a 24-month	escrow period

Options granted carry no dividend or voting rights.

All options were granted over unissued fully paid ordinary shares in the company and vested immediately. Options are exercisable by the holder as from the vesting date (for certain holders, consideration must also be given to the escrow period). There has not been any alteration to the terms or conditions of the grant since the grant date. There are no amounts paid or payable by the recipient in relation to the granting of such options other than on their potential exercise.

Ms C Moises and Mr M Kenyon also received additional options upon conversion of their convertible notes held at the date of the Company’s IPO (refer table on page 14).

WA Kaolin Limited

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

Additional disclosures relating to key management personnel

Shareholding

The number of shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below:

Ordinary shares Directors Mr A Baker Mr K Snell (estate) Dr J White Ms C Moises Mr L Putland Executives Mr A Sorensen Mr M Kenyon Totals	Balance at the start of the year Received as part of remuneration Additions Disposals Net change other1,2 Balance at the end of the year
	59,860,289 - - - (9,976,715) 49,883,574 59,860,289 - - - (9,976,715) 49,883,574 - - - - - - - - - - 1,250,000 1,250,000 - - - - - -
	119,720,578 - - - (18,703,430) 101,017,148 7,425,068 - - - (1,237,512) 6,187,556 - - - - 140,635 140,635
	7,425,068 - - - (1,096,877) 6,328,191
	127,145,646 - - - (19,800,307) 107,345,339

1 Net change other (Mr Baker, Mr Snell and Mr Sorensen) – on 13 July 2020 a share consolidation was undertaken for shares held on that date at the rate of 0.8333 shares for each share held

2 Net change other (Ms Moises and Mr Kenyon) – on 20 November 2020, shares were issued as part of the conversion of convertible notes

Performance Rights

During the year ended 30 June 2021, the Company issued 27,500,000 Performance Rights to the chief executive, executive director and former director/founder. Each Performance Right is a right to be issued with a single ordinary share upon vesting of the Performance Right, free of encumbrances. No consideration will be payable upon the vesting or conversion of the Performance Rights. See note 13 for conditions attached to the Performance Rights.

The number of Performance Rights in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below:

Performance Rights Mr A Baker Mr K Snell (estate) Mr A Sorensen	Balance at start of period # Granted during the period Vested and Exercised Cancelled/ Forfeited Balance at end of period Value vested during the period ($)
	- 13,200,000 - - 13,200,000 - - 13,200,000 - - 13,200,000 - - 1,100,000 - - 1,100,000 -
	- 27,500,000 - - 27,500,000 -

WA Kaolin Limited

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

Additional disclosures relating to key management personnel (continued)

Option holding

The number of options over ordinary shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below:

Options over shares Directors Mr A Baker Mr K Snell (estate) Dr J White Ms C Moises Mr L Putland Executives Mr A Sorensen Mr M Kenyon Totals	Balance at the start of the year Granted Exercised Expired/ forfeited/ other Balance at the end of the year
	- 13,200,000 - - 13,200,000 - 7,200,000 - - 7,200,000 - 3,000,000 - - 3,000,000 - 3,375,000 - - 3,375,000 - 1,500,000 - - 1,500,000
	- 28,275,000 - - 28,275,000 - 2,100,000 - - 2,100,000 - 1,210,938 - - 1,210,938
	- 3,310,938 - - 3,310,938
	- 31,585,938 - - 31,585,938

Other transactions with directors and officers

Royalty Deed

On 1 July 2019, a Royalty Deed was executed between the Company and Wamco Industries Group Pty Ltd (Wamco), a company in which Mr. A Baker, Mr. A Sorensen and the estate of Mr. K Snell, all have an ownership interest.

WA Kaolin has agreed to pay a royalty to Wamco until the earlier of 1 July 2049 and the date WA Kaolin relinquishes, surrenders or conveys to Wamco all of the Tenements (other than L70/156 and G70/251).

WA Kaolin owes to Wamco a royalty for each quarter in which WA Kaolin either mines or sells kaolin ore ex-works, FCA or FOB or mines and processes kaolin ore to produce a kaolin product which is sold ex-works, FCA or FOB, which must be paid quarterly.

The royalty is the greater of:

(a) $1.50 per tonne of dry kaolin ore or product sold in a quarter, provided that if kaolin product has been sold after processing, then tonnage used to calculate the royalty will be twice the actual tonnage of the processed kaolin; or
(b) 1.5% of the price received for the sale of kaolin ore or product in a quarter.

Tonnage Royalty Deed

On 1 July 2019, a Tonnage Royalty Deed was executed between the Company and Wamco Industries Group Pty Ltd (Wamco), a company in which Mr. A Baker, Mr. A Sorensen and the estate of Mr. K Snell, all have an ownership interest.

The royalty is $1.25 per tonne of dry kaolin ore or product sold in a quarter, provided that if kaolin product has been sold after processing, then tonnage used to calculate the royalty will be twice the actual tonnage of the processed kaolin.

Royalty payments in the sum of $28,393 (2020: $7,726) were paid to Wamco during the year.

WA Kaolin Limited

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

Additional disclosures relating to key management personnel (continued)

Other transactions with directors and officers (continued)

Release of Security interest

As a result of monies advanced to the Company in previous years by EMC Pacific Pty Ltd (EMCP), a company related to Mr. A Baker (a director and shareholder of the Company), a security interest was granted in favour of EMCP. On 5 August 2020, a Deed of Release was executed between the parties as a result of the repayment of all monies and the security interest was subsequently removed.

Director / Other Fees

Mr. A Baker, Mr. A Sorensen and Mr. K Snell chose not to be paid any director / other fees during previous financial years, instead allowing the Company to accrue such amounts, including amounts accrued in prior financial years, to be paid at a later date as the Company’s cash flow allows. Details of the amounts owing can be found in the table below and are recorded in Trade and other payables within the Statement of Financial Position.

30 June 2021 Opening balance Director / Other fees Payments Closing balance 30 June 2020 (restated1) Opening balance Director / Other fees Payments Closing balance	A Baker K Snell (estate) A Sorensen
	368,000 447,000 234,000 205,800 3,000 - (208,800) - -
	365,000 450,000 234,000
	A Baker K Snell (estate) A Sorensen
	339,000 411,000 234,000 173,000 36,000 - (144,000) - -
	368,000 447,000 234,000

1 Mr A Baker’s 2020 opening balance was incorrectly stated as $663,000 in the Company’s 2020 accounts and has now been correctly restated

Convertible notes

Ms C Moises and Mr M Kenyon respectively held 200,000 and 22,500 convertible notes at the date of the Company’s IPO, which were subsequently converted to ordinary shares in the Company at the time of listing in November 2020.

Related party borrowings

Mr A Baker is a director and major shareholder of the Company. During the reporting period, the Company has borrowed funds from several entities of which Mr Baker is a director and major shareholder.

Mr K Snell was a director and major shareholder of the Company. During the reporting period, the Company has borrowed funds from several of entities of which Mr Snell was a director and major shareholder.

Mr A Sorensen is a key management person of the Company and has advanced funds to the Company.

Details of those loans can be found in the table below:

WA Kaolin Limited

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

Additional disclosures relating to key management personnel (continued)

Other transactions with directors and officers (continued)

30 June 2021 Entities associated with: Opening balance Interest Funds advanced Funds repaid Other – finance cost on related party borrowing (Note 5) Closing balance	A Baker1 K Snell (estate)2 A Sorensen3
	3,751,440 16,644,246 95,000 - 492,558 - (3,064) - - (1,076,000) (1,969,403) (95,000) 238,461 1,812,371 -
	2,916,965 16,979,772 -

30 June 2020

Entities associated with: Opening balance Interest Funds advanced Funds repaid Other – finance cost on related party borrowing (Note 5) Closing balance	A Baker1 K Snell (estate)2 A Sorensen3
	3,520,566 15,013,332 5,000 10,258 490,014 - 356,116 - 95,000 (348,410) - (5,000) 212,910 1,140,900
	3,751,440 16,644,246 95,000

Entities associated with the following key management personnel are as follows:

1 A Baker : Wamco Industries Group Pty Ltd, Wamco Industries Pty Ltd, Pacific Polymers R&D Pty Ltd, Pacific Polymers Pty Ltd, EMC Pacific Pty Ltd

2 K Snell (estate): Scientific Management Associates (Victoria) Pty Ltd, Scientific Management Associates (Operations) Pty Ltd

3 A Sorensen : Loans are held in Wamco Industries Group Pty Ltd on behalf of Mr Sorensen

This concludes the remuneration report, which has been audited.

WA Kaolin Limited

DIRECTORS’ REPORT (continued)

Shares under option

Unissued ordinary shares of WA Kaolin Limited under option at the date of this report are as follows:

Security name Grant date Expiry date Exercise price Unquoted options 20 November 2020 20 November 2023 $0.25 Incentive options 20 November 2020 20 November 2025 $0.35 Lead Manager options 20 November 2020 20 November 2023 $0.25	Number under option 126,732,813 30,500,000 10,000,000 167,232,813

Shares issued on the exercise of options

There were no shares issued during the year ended 30 June 2021 and up to the date of this report on the exercise of options granted.

Significant changes in the state of affairs of the company

During the year ended 30 June 2021, the Company undertook an IPO process in which it raised $22m, and then subsequently listed on the Australian Securities Exchange on 26 November 2020.

The Company also transitioned from the exploration to the development phase of its life cycle on 26 November 2020.

There were no other significant changes in the state of the affairs of the company throughout 2021.

Indemnification and insurance of Directors and Officers

The Company has indemnified all the directors of the Company for any liabilities to another person (other than the Company or related body corporate) that may arise from their position as directors of the Company, except where the liability arises out of conduct involving a lack of good faith.

Indemnification and insurance of auditor

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

During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity.

Proceedings on behalf of the Company

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

Auditor Independence

Section 307C of the Corporations Act 2001 requires our auditors, BDO Audit WA Pty Ltd, to provide the directors of the Company with an Independence Declaration in relation to the audit of the financial report. This Independence Declaration is set out on page 19 and forms part of this directors’ report for the year ended 30 June 2021.

Non-Audit Services

Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 17 to the financial statements. An amount of $115,753 (2020: $46,327) was paid for non-audit services provided by entities connected to the auditor.

The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 .

The directors are of the opinion that the services as disclosed in note 17 to the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for the following reasons:

WA Kaolin Limited

DIRECTORS’ REPORT (continued)

all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards

Signed in accordance with a resolution of the directors.

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Dr John White, Chairman Perth, Western Australia 29 September 2021

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

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

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DECLARATION OF INDEPENDENCE BY DEAN JUST TO THE DIRECTORS OF WA KAOLIN LIMITED

As lead auditor of WA Kaolin Limited for the year ended 30 June 2021, 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 WA Kaolin Limited.

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Dean Just

Director

BDO Audit (WA) Pty Ltd

Perth, 29 September 2021

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

WA Kaolin Limited

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2021

Notes Continuing operations Revenue 3(a) Other income 3(b) Cost of sales Rental expenses and outgoings 3(c) Employee benefits expense 3(c) Depreciation and amortisation 3(c) Share-based payments 13(g) Other expenses 3(c) Results from operating activities Finance income Finance costs 3(c) Net finance costs Loss before income tax Income tax (expense)/benefit 4 Loss after income tax from continuing operations Other comprehensive income Items that will not be reclassified subsequently to profit or losses (net of tax) Revaluation of land and buildings Total comprehensive income/(loss) for the year Other comprehensive income/(loss) for the period, net of income tax Total comprehensive loss Loss per share for the period attributable to the members of the Company Basic loss per share (cents per share) 14 Diluted loss per share (cents per share) 14	2021 $ Restated 2020 $
	1,209,644 622,709 273,022 351,206 (896,847) (224,926) (170,682) (236,160) (1,038,829) (644,826) (135,736) (59,118) (4,050,405) - (4,095,732) (1,708,021)
	(8,905,565) (1,899,136)
	27,203 1,058 (11,794,935) (3,264,575)
	(11,767,732) (3,263,517)
	(20,673,297) (5,162,653) - -
	(20,673,297) (5,162,653)
	373,395 (1,231,000)
	373,395 (1,231,000)
	373,395 (1,231,000)
	(20,299,902) (6,393,653)
	$(0.09) $(0.04) $(0.09) $(0.04)

The 2020 comparative has been restated to recognise revenue and cost of sales (see note 3(a))

The accompanying notes form part of these financial statements

WA Kaolin Limited

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2021

Assets Notes Current assets Cash and cash equivalents 5 Trade and other receivables 6 Total current assets Non-current assets Property, plant and equipment 7 Deferred exploration and evaluation expenditure 8 Mine development expenditure 9 Total non-current assets Total assets Liabilities Current liabilities Trade and other payables 10 Borrowings 11 Provisions 12 Total current liabilities Non-current liabilities Borrowings 11 Provisions 12 Total non-current liabilities Total liabilities Net assets Equity Issued capital 13(a) Reserves 13(g) Accumulated loss Total equity	2021 $ 2020 $
	10,915,712 2,020,295 557,065 257,206
	11,472,777 2,277,501
	4,483,922 3,843,902 - 1,756,132 9,788,098 -
	14,272,020 5,600,034
	25,744,797 7,877,535
	2,829,130 2,548,241 943,842 9,155,327 59,796 65,563
	3,832,768 11,769,131
	19,451,530 17,710,243 330,000 -
	19,781,530 17,710,243
	23,614,298 29,479,374
	2,130,499 (21,601,839)
	33,614,901 3,070,081 33,689,460 19,828,645 (65,173,862) (44,500,565)
	2,130,499 (21,601,839)

The accompanying notes form part of these financial statements

WA Kaolin Limited

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2021

Balance as at 1 July 2019 Loss for the year Revaluation of land Total comprehensive loss for the year Transactions with owners in their capacity as owners: Issue of shares Exercise of options Balance at 30 June 2020 Balance as at 1 July 2020 Loss for the year Revaluation of land Total comprehensive loss for the year Transactions with owners in their capacity as owners: Issue of shares Fair value of options Balance at 30 June 2021	Issued capital $ Accumulated losses $ Asset revaluation reserve $ Share-based payment reserve $ Capital contribution reserve $ Total equity $
	3,020,000 (39,337,912) 3,175,779 2,939 17,880,927 (15,258,267) - (5,162,653) - - - (5,162,653) - - (1,231,000) - - (1,231,000)
	- (5,162,653) (1,231,000) - - (6,393,653)
	39,642 - - - - 39,642 10,439 - - - - 10,439 3,070,081 (44,500,565) 1,944,779 2,939 17,880,927 (21,601,839)
	3,070,081 (44,500,565) 1,944,779 2,939 17,880,927 (21,601,839) - (20,673,297) - - - (20,673,297) - - 373,395 - - 373,395
	- (20,673,297) 373,395 - - (20,299,902)
	30,544,820 - - - - 30,544,820 - - - 13,487,420 - 13,487,420
	33,614,901 (65,173,862) 2,318,174 13,490,359 17,880,927 2,130,499

The accompanying notes form part of these financial statements

WA Kaolin Limited

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2021

Notes Cash flows from operating activities Receipts from product sales Payments to suppliers and employees Interest received R&D Tax credit Receipt of COVID-19 subsidy Other receipts Receipt of subsidies Net cash outflow from operating activities 5(ii) Cash flows from investing activities Purchase of property, plant and equipment Mine development Net cash outflow from investing activities Cash flows from financing activities Loan interest paid Repayment of Borrowings Proceeds from Borrowings Equity transaction fees Issue of shares Net cash inflow from financing activities Net increase/(decrease) in cash held Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 5	2021 $ 2020 $
	1,251,936 434,009 (4,351,868) (3,192,452) 27,203 1,058 - 268,233 50,000 50,000 17,182 - - 13,256
	(3,005,547) (2,425,896)
	(355,785) (165,342) (7,641,533) -
	(7,997,318) (165,342)
	(807,537) (443,478) (2,978,181) (642,394) 3,109,000 5,676,618 (1,425,000) - 22,000,000 47,142
	19,898,282 4,637,888
	8,895,417 2,046,650 2,020,295 (26,355)
	10,915,712 2,020,295

The accompanying notes form part of these financial statements

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation of the financial report

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

The financial report covers WA Kaolin Limited (the “Company”). WA Kaolin Limited is a company limited by shares, incorporated and domiciled in Australia. The address of the Company’s registered office and principal place of business is Lot 3 Ward Road, East Rockingham, Western Australia 6168. WA Kaolin Limited is a forprofit entity for the purpose of preparing the financial report.

The financial statements of WA Kaolin Limited for the year ended 30 June 2021 were authorised for issue in accordance with the resolution of the directors on 29 September 2021.

Compliance with IFRS

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

Historical cost convention

The financial report has been prepared under the historical cost convention, as modified by revaluations to fair value for certain classes of assets and liabilities as described in the accounting policies.

Functional and presentation currency

The financial statements are presented in Australian dollars which is the Company’s functional currency.

Fair value measurement

For financial reporting purposes, ‘fair value’ is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants (under current market conditions) at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique.

When estimating the fair value of an asset or liability, the Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Inputs to valuation techniques used to measure fair value are categorised into three levels according to the extent to which the inputs are observable:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.

Comparative information

Where necessary, comparative information has been reclassified and repositioned for consistency with current year disclosures.

(b) Adoption of new and revised standards

The Company has applied all new and revised Australian Accounting Standards that apply to annual reporting periods beginning on or after 1 July 2020.

The Company has adopted amendments to AASB 116 Property, Plant & Equipment (PP&E). This standard prohibits an entity from deducting from the cost of an item of PP&E any proceeds received from selling items produced while the entity is preparing the asset for its intended use. It also clarifies that an entity is ‘testing whether the asset is functioning properly’ when it assesses the technical and physical performance of the asset. The financial performance of the asset is not relevant to this assessment. Entities must disclose separately the amounts of proceeds and costs relating to items produced that are not an output of the entity’s ordinary activities. See note 3(a) for details of the impact of the adoption of this revised standard.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(b) Going concern

For the year ended 30 June 2021 the Company recorded a loss from continuing operations after income tax of $20,673,297 (2020: $5,162,653) and had net cash outflows from operating activities of $3,005,547 (2020: $2,425,896) and net current assets of $7,640,009 (2020: net current liabilities of $9,491,630).

The ability of the Company to continue as a going concern is dependent on maintaining the support of its existing and potentially new financiers, continued sales of WA Kaolin’s product and securing additional funding through raising of debt or equity to continue to fund the development activities and expansion of its business platform.

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

The directors have reviewed the Group’s financial position and are of the opinion that there are sufficient funds to meet the entity’s working capital requirements as at the date of this report.

The financial statements have been prepared on the basis that the entity is a going concern, which contemplates the continuity of normal business activity, realisation of assets and settlement of liabilities in the normal course of business for the following reasons:

The development of the Company’s Wickepin mine and associated plant will be completed during H1 2022;
Sales volumes are expected to increase once the plant is commissioned;
Existing and new orders will be filled as production is ramped up during calendar year 2022; and
Progression of discussions with financiers to seek additional capital.

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

(c) Foreign currency transactions and balances

Functional and presentation currency

The financial statements are presented in Australian dollars which is the Company’s functional and presentation currency.

Foreign currency transactions

Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

(d) 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. The Company only has one operating segment.

(e) Revenue

(i) Revenue from contracts with customers

The Company requires identification of discrete performance obligations within a transaction and associated transaction price allocation to these obligations. Revenue is recognised upon satisfaction of these performance obligations, which occur when control of goods or services is transferred, rather than on transfer of risks or rewards.

Revenue from the sale of the Company’s products is recognised when control has passed to the customer upon agreed delivery terms, generally being when the product is loaded onto the transport that takes the product to ship or directly to the customer’s premises, at which time a bill of lading is received. In cases where control of the product is transferred to the customer before shipping takes place, revenue is recognised when the customer has formally acknowledged the legal ownership of the product, which includes all inherent risks associated with control of the product. In these cases, the product is clearly identified and immediately available to the customer and this is when the performance obligation is met.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(f) Revenue (continued)

Revenue received for a contract that includes a variable amount is subject to revised conditions for recognition, whereby it must be highly probable that no significant reversal of the variable component may occur when the uncertainties around its measurement are removed.

(ii) Interest income

Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.

(iii) Other revenue

Other revenue is recognised when it is received or when the right to receive payment is established .

(g) Income tax

The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary difference and to unused tax losses.

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

Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except:

when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:

when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

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

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(h) Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
receivables and payables, which are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

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

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

(i) Impairment of assets

At the end of each reporting period, the Company assesses whether there is any indication that an asset may be impaired. The assessment will include considering external sources of information and internal sources of information, including dividends received from subsidiaries, associates or joint ventures deemed to be out of preacquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs of disposal and value in use to the asset’s carrying amount. Any excess of the asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance with another Standard (eg in accordance with the revaluation model in AASB 116: Property, Plant and Equipment). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that other Standard.

Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

(j) Cash and cash equivalents

Cash comprises cash at bank and in hand. Cash equivalents are 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. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.

For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

(k) Trade and other receivables

Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method, less any allowance for impairment. Trade receivables are generally due for settlement within 30 days.

The Company measures the loss allowance for trade and other receivables at an amount equal to lifetime expected credit loss. The expected credit losses on trade and other receivables are estimated with reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to the debtor, general economic conditions of the industry in which the debtor operates and an assessment of both the current and the forecast direction of conditions at the reporting date.

The Company writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery; for example, when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or when the trade receivables are over two years past due, whichever occurs earlier.

The impairment allowance is set equal to the difference between the carrying amount of the receivable and the present value of estimated future cash flows, discounted at the original effective interest rate. Where receivables are short-term discounting is not applied in determining the allowance.

The amount of the impairment loss is recognised in the statement of profit or loss and comprehensive income within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the statement of profit or loss.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(l) Property, plant and equipment

Land and buildings are shown at fair value, based on periodic valuations by external independent valuers, less subsequent depreciation and impairment for buildings. Land is not depreciated. The valuations are undertaken more frequently if there is a material change in the fair value relative to the carrying amount. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Increases in the carrying amounts arising on revaluation of land and buildings are credited in other comprehensive income through to the revaluation surplus reserve in equity. Any revaluation decrements are initially taken in other comprehensive income through to the revaluation surplus reserve to the extent of any previous revaluation surplus of the same asset. Thereafter the decrements are taken to profit or loss.

Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:

Plant and equipment – over 2 to 20 years

Motor Vehicle – over 4 to 6 years

Leasehold improvements – over 10 to 13 years

Derecognition and disposal

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.

Impairment

The carrying values of plant and equipment are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired.

The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating unit to which the asset belongs, unless the asset's value in use can be estimated to approximate fair value.

An impairment exists when the carrying value of an asset or cash-generating unit exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. For plant and equipment, impairment losses are recognised in the statement of profit or loss and other comprehensive income in the cost of sales line item. However, because land and buildings are measured at revalued amounts, impairment losses on land and buildings are treated as a revaluation decrement.

(m) Trade and other payables

Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Company prior to the end of the financial year that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months.

(n) Provisions

Provisions are recognised when the Company 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. Provisions are not recognised for future operating losses.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

When the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as separate assets but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of comprehensive income net of any reimbursement.

Provisions are measured at the present value or management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability.

When discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense.

(o) Employee leave benefits

(i) Wages, salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the balance date are recognised in other payables in respect of employees’ services up to the balance date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities accruing to employees in respect of wages and salaries, annual leave and long service leave not expected to be settled within 12 months of the balance date are recognised in non-current other payables in respect of employees’ services up to the balance date. They are measured as the present value of the estimated future outflows to be made by the Company.

(ii) Long service leave

The liability for long service leave 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 reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures, and period of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

(p) Contingent liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company, or is a present obligation that arises from past events but is not recognised because either it is not probable that an outflow of economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities are not recognised. Rather, contingent liabilities are disclosed in the financial statements unless the possibility of an outflow of economic benefits is remote. Contingent liabilities may develop in ways not initially expected. Therefore, they are assessed continually to determine whether an outflow of economic benefits has become probable. If it becomes probable that an outflow of future economic benefits will be required for an item previously dealt with as a contingent liability, a provision is recognised in the financial statements of the period in which the change in probability occurs (except in the extremely rare circumstances where no reliable estimate can be made).

(q) Borrowing costs

Borrowing costs include interest expense calculated using the effective interest method, finance charges in respect of lease arrangements, and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.

Borrowing costs are expensed as incurred, except for borrowing costs incurred as part of the cost of the construction of a qualifying asset, in which case the costs are capitalised until the asset is ready for its intended use or sale

(r) Issued capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a new business are not included in the cost of acquisition as part of the purchase consideration.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(s) Dividend

Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.

(t) Financial instruments

Recognition and derecognition

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the financial instrument.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred.

A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Classification and initial measurement of financial assets

Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).

For the purpose of subsequent measurement, financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:

amortised cost
fair value through profit or loss (FVTPL)
equity instruments at fair value through other comprehensive income (FVOCI)
debt instruments at fair value through other comprehensive income (FVOCI).

All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses.

The classification is determined by both:

the entity’s business model for managing the financial asset
the contractual cash flow characteristics of the financial asset.

Subsequent measurement of financial assets

Financial assets at amortised cost

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):

they are held within a business model whose objective is to hold the financial assets to collect its contractual cash flows
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After initial recognition, these are measured at amortised cost using the effective interest method.

Discounting is omitted where the effect of discounting is immaterial. The Company’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.

Impairment of financial assets

AASB 9’s impairment requirements use more forward-looking information to recognise expected credit losses – the ‘expected credit loss (ECL) model’.

Instruments within the scope of the requirements included loans and other debt-type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(t) Financial instruments (continued)

AASB 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.

Recognition of credit losses is no longer dependent on the Company identifying a credit loss event. Instead the Company considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

In applying this forward-looking approach, a distinction is made between:
financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Level 1’) and
financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Level 2’).
‘Level 3’ would cover financial assets that have objective evidence of impairment at the reporting date.

‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the second category.

Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.

Trade and other receivables and contract assets

The Company makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Company uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.

The Company assesses impairment of trade receivables on a collective basis as they possess shared credit risk characteristics they have been grouped based on the days past due.

Classification and measurement of financial liabilities

The Company’s financial liabilities include borrowings, trade and other payables and derivative financial instruments.

Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Company designated a financial liability at fair value through profit or loss.

Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments).

All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income.

(u) Borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.

The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the statement of financial position, net of transaction costs.

Convertible notes issued by the Group comprised convertible notes that could be converted to share capital at the option of the holder. The conversion feature is contingent on an event occurring and the conversion price is fixed. Furthermore upon conversion the holder was also entitled to free attaching options. Consequently the note fails the fixed for fixed requirement of AASB 132 and no equity component is recognised on initial recognition. The company had elected upon initial recognition of the convertible notes (including its embedded derivatives which is the free attaching options) to recognise the whole instrument as a financial liability carried at fair value through profit or loss .

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(u) Borrowings (continued)

On initial recognition the fair value of the convertible note equated to the proceeds received as no gain or loss on initial recognition can be recognised per the requirements of the accounting standards AASB9. The financial liability was subsequently measured at fair value at the end of the relevant reporting period and fair value movements were recognised in profit or loss as a finance cost.

The fair value of the liability took into account the value of the conversion feature (the discount and the free attaching options) and the probability of the contingent event occurring.

(v) Exploration, Evaluation and Development Expenditure

Exploration and evaluation costs including costs of studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortisation of assets used in exploration and evaluation activities along with those for general and administrative costs are expensed in the period they are incurred. Acquisition costs of acquiring are capitalised until the viability of the area of interest is determined. Those acquisition costs are carried forward when the following conditions are satisfied:

(i) the rights to tenure of the area of interest are current; and
(ii) at least one of the following conditions is also met:

a) the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale; or

b) exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years.

Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to development.

(w) Development expenditure

Development expenditure represents the accumulated exploration, evaluation, land and development expenditure incurred by or on behalf of the Company in relation to areas of interest in which mining of a mineral resource has commenced.

When further development expenditure is incurred in respect of a mine property after commencement of production, such expenditure is carried forward as part of the mine property only when substantial future economic benefit are thereby established, otherwise such expenditure is classified as part of the cost of production.

Amortisation of costs is provided on the unit-of-production method with separate calculations being made for each mineral resource at an average rate yet to be determined. The unit-of-production basis results in an amortisation charge proportional to the depletion of the estimated recoverable reserves. In some circumstances, where conversion of resources into reserves is expected, some elements of resources may be included. Where the life of the assets is shorter than the mine life their costs are amortised based on the useful life of the assets. Amortisation will only commence on commencement of commercial production.

The estimated recoverable reserves and life of the mine and the remaining useful life of each class of asset is reassessed at least annually. Where there is a change in the reserves/resources amortisation rates are correspondingly adjusted.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(w) Development expenditure

Significant judgements and estimates

Development activities commence after project sanctioning by the appropriate level of management. Judgement is applied by management in determining when a project is economically viable. In exercising this judgment, management is required to make certain estimates and assumptions similar to those described above for capitalised exploration and evaluation expenditure. Any such estimates and assumptions may change as new information becomes available. If, after having commenced the development activity, a judgement is made that a development asset is impaired, the impairment change is included in profit or loss.

(x) Restoration, Rehabilitation and Environmental Provision

Obligations associated with exploration and development assets are recognised when the Company has a present obligation, the future sacrifice of the economic benefits is probable, and the provision can be measured reliably. The provision is measured at the present value of the future expenditure to restore the land and a corresponding rehabilitation asset is also recognised.

On an ongoing basis, the rehabilitation will be remeasured in line with the changes in the time value of money (recognised as an expense and an increase in the provision), and additional disturbances (recognised as additions to a corresponding asset and rehabilitation liability).

Significant judgements and estimates

The determination of the provision requires significant judgement in terms of the best estimate of the future costs of performing the work required, the timing of the cash flows, the appropriate discount rate and inflation rate.

In relation to estimating the costs of performing the work required, significant estimates are required in relation to estimating the extent of rehabilitation activities, including volume to be rehabilitated and unit rates, technological changes, regulatory changes, timing of cash flows and appropriate discount rates.

When these estimates change or become known in the future, such differences will impact the mine rehabilitation provision in the period in which they change or become known.

(y) Share based payments

Equity-settled transactions are awards of shares, or options over shares, that are provided to employees and other third parties in exchange for the rendering of services.

The cost of equity-settled transactions is measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the Company receives the services that entitle the employees to receive payment.

Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.

If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.

If the non-vesting condition is within the control of the Company or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Company or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.

If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(y) Earnings per share

Basic earnings/loss per share is calculated as net profit/loss attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings/loss per share is calculated as net profit/loss attributable to members of the parent, adjusted for:

costs of servicing equity (other than dividends) and preference share dividends;
the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

(z) Government grants

Government grants are recognised when there is reasonable certainty that the grant will be received and all grant conditions are met.

Grants relating to expense items are recognised as income over the periods necessary to match the grant to the costs they are compensating.

Grants relating to depreciable assets are credited to deferred income and are recognised in profit or loss over the period and in the proportions in which depreciation expense on those assets is recognised.

(aa) Critical accounting estimates and judgements

The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

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

Determination of date of reclassification to mine development expenditure

During the year, exploration and evaluation expenditure attributable to the Wickepin area of interest was reclassified to mine development expenditure pursuant to the making of a judgement by the Directors that the criteria to be met to make such reclassification had been met on 26 November 2020. In making that judgement, the Directors took into account the outcomes of a definitive feasibility study and the listing of the Company on the ASX.

Impairment of Property, Plant and Equipment

In assessing impairment, management estimates the recoverable amount of each asset or cash-generating unit based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.

Useful lives of depreciable assets

Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets.

Fair value of land

Land and buildings are shown at fair value, based on periodic valuations by external independent valuers, less subsequent depreciation and impairment for buildings. The valuations are undertaken more frequently if there is a material change in the fair value relative to the carrying amount.

Discount rate on borrowings

As some of the Company’s borrowings are on interest-free terms, present value calculations have been performed on the basis of an implied 12% discount rate as determined by the directors.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(aa) Critical accounting estimates and judgements (continued)

Coronavirus (COVID-19) pandemic

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

Share-based payment

The Company measures the cost of equity-settled transactions with employees and convertible noteholders 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 either the Binomial or 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 13 for further information.

Contingent liabilities

The Company has assessed that the Royalty Deed entered into with Wamco Industries Group Pty Ltd and has determined that this represents a contingent liability. This is on the basis that the royalty is only payable if WA Kaolin either mines or sells kaolin ore or a kaolin product. At present, the Company is in the development phase of its Wickepin Kaolin Project (“Project”) and the future development of the Project (and consequent royalty payments) is dependent on, amongst other things, future kaolin prices and the overall economic feasibility of the Project.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(bb) New standards and interpretations not yet adopted

At the date of authorisation of the financial statements, the Company has not applied the following new and revised Australian Accounting Standards, Interpretations and amendments that have been issued but are not yet effective:

	Effective
	date for
	entity	Impact
New or Revised Requirements
AASB 17 Insurance Contracts	1 January	The Directors have
This standard will change insurance accounting in Australia, the level	2021	determined that there will
of impact will vary depending on the type of insurance entity and the		be no impact on the
current systems in place. AASB 17 treats insurance products with		financial position of the
similar risks in the same manner, regardless of whether they are		company as a result of
labelled as ‘general’, ‘life’ or ‘health’ insurance. Some products offered		the
by life insurance entities may now qualify for a simpler way of		change.
determining their insurance liabilities. AASB 17 requires an insurer to
recognise profits as it delivers insurance services (rather than when it
receives premiums) and to provide information about insurance
contract profits the company expects to recognise in the future. Insurer
will reflect the time value of money in expected payments to settle
incurred claims and will measure their insurance contracts based only
on the obligations created by these contracts
AASB 2014-10 Amendments to Australian Accounting Standards	1 January	The Directors do not
– Sale or Contribution of Assets between an investor and its	2022	anticipate that the
Associate or Joint Venture, AASB 2015-10 Amendments to	(Editorial	amendments will have a
Australian Accounting Standards – Effective Date of Amendments	corrections	material impact on the
to AASB 10 and AASB 128 and AASB 2017-5 Amendments to	in AASB	Group.
Australian Accounting Standards – Effective Date of Amendments	2017-5
to AASB 10 and AASB 128 and Editorial corrections	applied
The amendments to AASB 10 Consolidated Financial Statements and	from 1
AASB 128 Investment in Associates and Joint Ventures deal with	January
situations where there is a sale or contribution of assets between an	2018)
investor and its associate or joint venture. Specifically, the
amendments state that gains or losses resulting from the loss of
control of a subsidiary that does not contain a business in a transaction
with an associate or a joint venture that is accounted for using the
equity method, are recognised in the parent’s profit or loss only to the
extent of the unrelated investors’ interests in that associate or joint
venture. Similarly, gains and losses resulting from the remeasurement
of investments retained in any former subsidiary (that has become an
associate or a joint venture that is accounted for using the equity
method) to fair value are recognised in the former parent’s profit or loss
only to the extent of the unrelated investors’ interests in the new
associate or joint venture

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(cc) New standards and interpretations not yet adopted (continued)

New or Revised Requirements	Effective	Impact
	date for
	entity
AASB 2020-1 Amendments to Australian Accounting Standards –	1 January	The Directors have not
Classification of Liabilities as Current or Non-Current	2022	yet assessed the impact
This standards amends AASB 101 Presentation of Financial		that the application of this
Statements to: Clarify that the classification of liabilities as current or		standard will have on the
non-current is based on rights that in existence at the end of the		Group’s financial
reporting period; Specify that classification is unaffected by		statements
expectations about whether an entity will exercise its right to defer
settlement of a liability; Explain that rights are in existence if covenants
are complied with at the end of the reporting period; and Introduce a
definition of ‘settlement’ to make clear that settlement refers to the
transfer to the counterparty of cash, equity instruments, other assets or
services.
AASB 2020-3 Amendments to Australian Accounting Standards –	1 January	The Directors have
Annual Improvements 2018-2020 and Other Amendments	2022	chosen to early adopt
This standard amends numerous Standards to effect of number of		AASB 116 as it will
minor changes. The amendments apply to annual reporting periods		enable revenue and costs
beginning on or after 1 January 2022 (apart from the amendments to		to be separated and
AASB 16 which affect the Illustrative Examples which accompanying		improve overall
but are not part of the Standard and so do not have an effective date)		readability of the financial
The annual improvements amend the following standards: AASB 1,		statements.
AASB 9, AASB 16 and AASB 137.
		It is anticipated that the
		application of the other
		amendments will not
		have impact on the
		Group’s financial
		statements, as many of
		the amendments either
		do not have affect the
		Group’s existing
		accounting policies, or
		apply to situations,
		transactions and events
		that the Group does not
		undertake.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 2: SEGMENT REPORTING

The Company identifies its operating segments based on the internal reports that are reviewed and used by the Board of directors (chief operating decision maker) in assessing performance and determining the allocation of resources.

The Company operates primarily in the exploration and development of an Inferred Mineral Resource of high-grade premium kaolinised granite in Australia. The financial information presented in the statement of comprehensive income and the statement of financial position is the same as that presented to the chief operating decision maker.

NOTE 3: REVENUE AND EXPENSES

NOTE 3: REVENUE AND EXPENSES
(a) Revenue1 Sale of products - domestic Sale of products - export	2021 $ Restated 2020 $
	391,512 199,225 818,132 423,484
	1,209,644 622,709

1 As a result of the early adoption of certain amendments to AASB 116 Property, Plant & Equipment, the comparatives for 2020 have been restated in order to align with the current year

(b) Other income R&D Tax refund Cashflow Boost from COVID-19 Other income (c) Expenses Loss before income tax includes the following specific expenses: Rental expenses and outgoings Property rental Landowner’s payments Tenement rentals Tenement rates Total rental expenses and outgoings Employee benefits expense Directors’ fees Salaries and wages Superannuation Payroll tax Leave entitlements Total employee benefits expenses	205,840 268,233 50,000 50,000 17,182 32,973
	273,022 351,206
	21,100 44,429 66,030 42,662 55,171 114,611 28,381 34,458
	170,682 236,160
	188,000 82,951 729,691 485,504 96,593 51,977 30,313 - (5,768) 24,394
	1,038,829 644,826

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 3: REVENUE AND EXPENSES (continued)

Depreciation Plant & equipment Leasehold improvements Motor vehicles Total depreciation Finance costs Interest and finance charges paid/payable on borrowings Fair value adjustment on convertible notes (refer Note 15) Other expenses Accounting and administration fees Capital raising fees Equity transaction fees Consulting fees Corporate expenses Repairs and maintenance Materials and consumables Motor vehicle expenses Utilities Fuel Mining royalties Legal fees Freight ASX filing fees Insurance Research & development costs Other	2021 $ 2020 $
	103,809 28,065 8,674 23,174 23,253 7,879
	135,736 59,118
	2,877,951 2,027,901 8,916,984 1,236,674
	11,794,935 3,264,575
	177,373 74,039 166,140 163,600 1,982,368 570,726 162,719 234,305 85,869 - 96,869 28,534 50,972 32,688 55,281 30,292 47,583 51,855 31,159 14,999 81,690 28,037 471,345 25,807 237,171 114,516 127,004 - 122,985 56,780 27,965 147,163 171,239 134,680
	4,095,732 1,708,021

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 4: INCOME TAX

	2021	2020
	$	$
Income tax recognised in profit or loss:
The major components of tax expense are:
Current tax	-	-
Deferred tax	-	-
Under/(over) provision in prior years	-	-
Total income tax expense	-	-
Reconciliation of income tax expense to prima facie tax payable:
Loss from continuing operations before income tax expense	(20,673,297)	(5,162,653)
Tax at the Australian tax rate of 26% (2020: 27.5%)	(5,375,057)	(1,419,730)
Tax effect of amounts which are non-deductible (taxable) in calculating taxable income:
Other permanent differences	3,891,679	(13,750)
Research and development credit	(53,518)	(73,764)
Timing movements not recognised	(40,373)	(11,895)
Deferred tax assets not brought to account	1,577,269	1,519,139
Income tax expense/(benefit)	-	-
The applicable weighted average effective tax rates	0%	0%
	2021	2020
	$	$
Unrecognised deferred tax asset
Tax losses	7,039,687	6,232,168
Provisions and accruals	40,373	11,895
Net deferred tax assets unrecognised	7,080,060	6,244,063

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 4: INCOME TAX (continued)

Deferred Tax Assets Not Recognised

The tax benefits of the above deferred tax assets will only be obtained if:

The Company derives future assessable income of a nature and of an amount sufficient to enable the benefits to be utilised;
The Company continues to comply with the conditions for deductibility imposed by law; and
No changes in income tax legislation adversely affect the Company in utilising the benefits.

NOTE 5: CASH AND CASH EQUIVALENTS

Cash at bank and on hand	2021 2020 $ $
	10,915,712 2,020,295

Cash at bank earns interest at floating rates based on daily bank deposit rates.

(i) Reconciliation to the Statement of Cash Flows:

For the purposes of the statement of cash flows, cash and cash equivalents comprise cash on hand and at bank and investments in money market instruments, net of outstanding bank overdrafts.

Cash and cash equivalents as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows:

Balance as above Bank overdraft Balance as per statement of cash flows (ii) Reconciliation of net (loss)/profit for the year to net cash flows from operating activities	10,915,712 2,020,295 - -
	10,915,712 2,020,295

Net loss for the year Depreciation Financing costs Lead manager fees expense (per AASB132) Share-based payments (Increase)/decrease in operating assets: Trade and other receivables (Decrease)/increase in operating liabilities: Trade and other payables Provisions Net cash used in operating activities	2021 2020 $ $
	(20,673,297) (5,162,653) 135,736 59,118 11,794,935 3,295,124 1,601,794 - 4,050,182 - (94,019) (204,955) 173,355 (437,834) 5,767 25,304
	(3,005,547) (2,425,896)

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 5: CASH AND CASH EQUIVALENTS (continued)

(iii) Changes in liabilities arising from financing activities

Balance at 1 July 2019 Net cash from financing activities Other changes Balance at 30 June 2020 Issue of convertible notes Capital repayments Interest payments Other non-cash items Conversion of loan to convertible note Convertible note fair value adjustment Accrued interest / interest amortisation Conversion to share capital Transfer to share-based payments reserve Funds advanced Balance at 30 June 2021	Convertible notes $ Related party borrowings $ Other borrowings $ Total $
	- 18,538,896 443,744 18,982,640 3,832,500 597,979 815,813 5,246,292 1,282,828 1,353,811 - 2,636,639
	5,115,328 20,490,686 1,259,557 26,865,571
	2,819,000 - - 2,819,000 - (2,618,000) (360,181) (2,978,181) (281,809) (427,403) (98,325) (807,537) - - 216,743 216,743 1,000,000 - (1,000,000) - 8,916,824 - - 8,916,824 235,656 2,543,390 98,905 2,877,951 (9,564,375) - - (9,564,375) (8,240,624) - - (8,240,624) - 3,064 286,936 290,000
	- 19,991,737 403,635 20,395,372

(iv) Non-cash investing and financing activities Accrued interest / interest amortisation Fair value adjustments to convertible notes Conversion of convertible notes to share capital Other non-cash items Fair value of options issued with convertible notes	2021 2020 $ $
	(2,877,951) (1,353,811) (8,916,824) (1,282,828) 9,564,375 - (216,743) - 8,240,623 -
	5,793,482 (2,636,639)

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 6: CURRENT TRADE AND OTHER RECEIVABLES

Trade receivables Allowance for impairment Sundry debtors Prepayments Deposits paid Other receivable – GST (net) Total trade and other receivables Analysis of other receivables Within initial terms Ageing of past due but not impaired 30 – 60 days 60 – 90 days 90+ days Gross amount of other receivables	2021 2020 $ $
	108,248 115,501 - -
	108,248 115,501
	211,543 745 125,031 - 11,280 100,000 100,963 40,960
	448,817 141,705
	557,065 257,206
	2021 2020 $ $ 108,248 115,501 - - - - - - - - 108,248 115,501

Impairment of receivables

The amount of the impairment loss is recognised in the statement of comprehensive income within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the statement of profit or loss and other comprehensive income.

There was no significant change in the gross carrying amount of receivables as there was no lifetime expected credit loss for the years 2020 and 2021.

The impact of the Coronavirus (COVID-19) pandemic up to 30 June 2021 has not been financially material on trade and other receivables of the Company.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 7: PROPERTY, PLANT AND EQUIPMENT

Year ended 30 June 2020 At 1 July 2019, net of accumulated depreciation and impairment Additions Revaluation Depreciation charge for the year At 30 June 2020, net of accumulated depreciation and impairment At 30 June 2020 Cost or fair value Accumulated depreciation and impairment Net carrying amount	Plant and equipment Motor vehicles Land and buildings Total $ $ $ $
	30,099 41,352 4,897,230 4,968,681 158,539 - 6,800 165,339 - - (1,231,000) (1,231,000) (28,065) (7,879) (23,174) (59,118)
	160,573 33,473 3,649,856 3,843,902
	8,529,996 65,277 3,963,881 12,559,154 (8,369,423) (31,804) (314,025) (8,715,252)
	160,573 33,473 3,649,856 3,843,902

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 7: PROPERTY, PLANT AND EQUIPMENT (continued)

	Plant and equipment	Motor vehicles	Land and buildings	Total
	$	$	$	$
Year ended 30 June 2021
At 1 July 2020, net of accumulated
depreciation and impairment	160,573	33,473	3,649,856	3,843,902
Additions	358,966	43,393	-	402,359
Revaluation	-	-	373,397	373,397
Depreciation charge for the year	(103,809)	(8,674)	(23,253)	(135,736)
At 30 June 2021, net of
accumulated depreciation and
impairment	415,730	68,192	4,000,000	4,483,922
At 30 June 2021
Cost or fair value	8,888,962	108,670	4,337,278	13,334,910
Accumulated depreciation and
impairment	(8,473,232)	(40,478)	(337,278)	(8,850,988)
Net carrying amount	415,730	68,192	4,000,000	4,483,922
e useful life of the assets was estimated	as follows for both	2021 and 2020:
 Plant and equipment	2 to 20 years
 Motor vehicles	4 to 6 years
 Leasehold improvements	10 to 13 years
 Buildings	40 years

The useful life of the assets was estimated as follows for both 2021 and 2020:

The Company’s land and buildings had a carrying value of $3,649,856 prior to a revaluation undertaken by Acumentis (WA) Pty Ltd on 25 August 2021. The outcome of the valuation was an upward adjustment to the carrying value of the land and buildings by $373,397 (refer Note 15 for further details).

If land and buildings were stated under the historical cost convention, the carrying value would be $1,681,824 (2020: $1,705,077).

NOTE 8: DEFERRED EXPLORATION AND EVALUATION EXPENDITURE

Exploration and evaluation costs Formation costs Reclassify to mine development expenditure	2021 2020 $ $
	1,752,251 1,752,251 3,881 3,881 (1,756,132) -
	- 1,756,132

The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phases is dependent on the successful development and commercial exploitation of the respective areas.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 8: DEFERRED EXPLORATION AND EVALUATION EXPENDITURE (continued)

The criteria to reclassify deferred exploration and evaluation expenditure to mine development expenditure for the Company was met on 26 November 2020. In making that judgement, the Directors took into account the outcomes of a definitive feasibility study and the listing of the Company on the ASX. Accordingly, $1,756,132 of deferred exploration and evaluation expenditure related to the Company’s Wickepin kaolin project was reclassified to mine development expenditure, on that date.

The exploration and evaluation asset was tested for impairment at the date of reclassification by reference to value-in-use calculations performed using a life-of-mine model of the Wickepin mine incorporating key assumptions such as kaolin market prices, any premia obtainable over spot market prices, mining rates, ore grades, plant processing recoveries and efficiencies, exchange rates, staffing levels and equipment operating efficiencies, among others. The formulation of these key assumptions involved the use by the Directors of judgements as to current and expected general macro-economic conditions and expected conditions in the kaolin mining industry as well as factors specific to the Wickepin mine such as mineral resources and reserves estimates and ore grades. Where the Directors adjudge that it is necessary to make material changes to key assumptions employed in the life- of-mine model, then these new key assumptions are incorporated into the life-of-mine model and the resultant value-in-use valuation produced is for determining the necessity for and amount of any impairment.

The Directors did not believe that there was any necessity to impair the carrying value of that asset base at the date of reclassification.

NOTE 9: MINE DEVELOPMENT EXPENDITURE

OTE 9: MINE DEVELOPMENT EXPENDITURE
Balance at beginning of period Reclassified from deferred exploration and evaluation expenditure Wickepin plant project Total mine development expenditure	2021 2020 $ $ - - 1,756,132 - 8,031,966 -
	9,788,098 -

NOTE 10: TRADE AND OTHER PAYABLES

Current Trade payables Accruals Other employment-related payables	2021 $ 2020 $
	2,590,050 2,506,344 196,056 21,832 43,024 20,065
	2,829,130 2,548,241

NOTE 11: BORROWINGS

OTE 11: BORROWINGS
Current Loans from related parties (i) Loans from other parties (ii) Convertible notes (iii) Non-current Loans from related parties (i) Loans from other parties (ii) Total borrowings	2021 $ 2020 $ 790,896 3,788,000 152,946 252,000 - 5,115,327
	943,842 9,155,327 19,200,842 16,702,686 250,688 1,007,557
	19,451,530 17,710,243
	20,393,372 26,865,570

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 11: BORROWINGS (continued)

(i) The Company has the following executed loan agreements in place with its related parties at the reporting date with the respective terms and conditions:
(a) Lender: Wamco Industries Group Limited Agreement date: 30 June 2019 Expiry date: 30 June 2023 Interest rate: 0%

Repayments: 1) Prior to the IPO date - $276,000; 2) 10 Business days after the IPO date - $100,000; 3) Fourth anniversary of the agreement - $500,000; 4) Any balance repayable upon the Company achieving positive free cash flow for one quarter

Collateral securities: None

Amount due in less than 1 year: $34,000; Amount due in more than 1 year: $517,757

(b) Lender: Scientific Management Associates (Victoria) Pty Ltd Agreement date: 30 June 2019 Expiry date: 30 June 2025 Interest rate: 0%

Repayments: 1) 10 Business days after the IPO date - $1,242,000; 2) Fourth anniversary of the agreement - $4,635,000; 3) Fifth anniversary of the agreement - $7,405,000; 4) Any balance repayable upon the Company achieving positive free cash flow for one quarter

Collateral securities: None

Amount due in less than 1 year: $120,896; Amount due in more than 1 year: $8,148,355

(c) Lender: Wamco Industries Limited
Agreement date: 30 June 2019 Expiry date: 30 June 2023 Interest rate: 0%

Repayments: 1) Prior to the IPO date - $144,000; 2) 10 Business days after the IPO date - $150,000; 3) Second anniversary of the agreement - $250,000; 4) Third anniversary of the agreement - $61,000; 5) Fourth anniversary of the agreement - $839,000; 6) Any balance repayable upon the Company achieving positive free cash flow for one quarter

Collateral securities: None

Amount due in less than 1 year: $45,000; Amount due in more than 1 year: $1,041,310

(d) Lender: Scientific Management Associates (Operations) Pty Ltd Agreement date: 30 June 2019 Expiry date: 30 June 2024

Interest rate: 6% per annum

Repayments: 1) 10 Business days after the IPO date - $300,000; 2) Fourth anniversary of the agreement - $8,000,000; 3) Any balance repayable upon the Company achieving positive free cash flow for one quarter Collateral securities: None

Amount due in less than 1 year: $Nil; Amount due in more than 1 year: $8,710,521

(e) Lender: Pacific Polymers Pty Ltd

Agreement date: 30 June 2019 Expiry date: 30 June 2023 Interest rate: 0%

Repayments: 1) 10 Business days after the IPO date - $1,076,000; 2) Second anniversary of the agreement - $250,000; 3) Third anniversary of the agreement - $61,000; 4) Fourth anniversary of the agreement - $689,000; 5) Any balance repayable upon the Company achieving positive free cash flow for one quarter Collateral securities: None

Amount due in less than 1 year: $591,000; Amount due in more than 1 year: $782,899

(ii) The Company has the following executed loan agreements in place with other parties at the reporting date with the respective terms and conditions:

(a) Lender: Nathan Allbut Expiry date: 31 December 2020 Interest rate: 6% per annum

Repayment date: The earlier of 10 days after the IPO date or 31 December 2020; the loan was extended and repaid in full on 3 August 2021

Collateral securities: None

Amount due in less than 1 year: $53,000; Amount due in more than 1 year: $Nil

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 11: BORROWINGS (continued)

(b) There are two further finance agreements with Toyota Finance for the financing of plant and equipment and a small insurance premium funding facility.

(iii) In May and June 2020, the Company issued 3,832,500 convertible notes, with a face value of $1 each, for total proceeds of $3,832,500. In August 2020, a further 3,769,000 convertible notes were issued also at a face value of $1 each, for total proceeds of $2,769,000, as $1,000,000 was as the result of a conversion of a loan previously provided to the Company. Interest was paid at maturity after the successful IPO at a rate of 10% per annum based on the face value. The notes were converted into ordinary shares at the time of the successful IPO event. The conversion price of the notes was based on a 20% discount to the issue price per share, being $0.20. Noteholders were also entitled to pre-IPO options at the rate of 1.5 options for each ordinary share (ex price 25% premium on IPO price and 3 year expiry period). Transaction costs of $166,140 (2020: $163,500) were expensed. The table below reflects the movements relating to the convertible notes during the financial year:

Convertible Notes Opening balance Notes issued Interest accrued Interest paid Fair value adjustment upon granting of options Financing cost upon issue of shares Amounts converted to share capital Amounts transferred to reserves At 30 June	2021 2020 $ $ 5,115,327 - 3,819,000 3,832,500 235,656 46,153 (281,809) - 7,198,075 1,042,549 1,718,750 194,125 (9,564,375) - (8,240,624) -
	- 5,115,327

NOTE 12: PROVISIONS

Employee Entitlements: At 1 July Net movements At 30 June Rehabilitation provision: At 1 July Net movements At 30 June 2020 Current Non-current	Employee benefits $	2021 2020 $ $
		65,563 40,259 (5,767) 25,304
		59,796 65,563
		2021 2020 $ $
		- - 330,000 -
		330,000 -
		Rehabilitation provision Total $ $
	65,563 -	- 65,563 - -
	65,563	- 65,563

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 12: PROVISIONS (continued)

2021 Current Non-current NOTE 13: CAPITAL AND RESERVES (a) Paid up capital (b) Movements in ordinary share capital Balance at beginning of year Change to number of shares on issue above as a result of a share consolidation (0.8333:1) on 13 July 2020 Issue of shares to third parties Issue of shares upon IPO Exercise of options by employees Issue of shares upon conversion of convertible notes Capital raising costs1 Balance at end of year Change to number of shares on issue above as a result of share division (4.873:1) on 5 September 2019	Employee benefits Rehabilitation provision Total $ $ $ 59,796 - 59,796 - 330,000 330,000 59,796 330,000 389,796 30 June 2021 30 June 2020 Number of shares $ Number of shares $	Employee benefits Rehabilitation provision Total $ $ $
		59,796 - 59,796 - 330,000 330,000
		59,796 330,000 389,796
	282,821,885 33,614,901 150,000,000 3,070,081
	Year to 30 June 2021 Year to 30 June 2020 Number of shares $ Number of shares $
	150,000,000 3,070,081 26,065,000 3,020,000
	125,000,000 3,070,081 - -
	- - 3,964,203 39,642 110,000,000 22,000,000 - - - - 750,000 10,439 47,821,885 9,564,375 - - - (1,019,555) - -
	282,821,885 33,614,901 30,779,203 3,070,081

	- - 150,000,000 3,070,081

1 The Company is only able to allocate a proportion of capital raising fees to equity upon IPO pursuant to accounting standards. Total capital raising fees were $2,621,392, of which $1,425,000 was settled in cash and $1,196,392 in Lead Manager options expense (see note 13(g)). Of this amount only $1,019,555 was allocable to equity, with the balance of $1,601,837 being expensed.

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. Upon a poll each share is entitled to one vote. Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.

(c) Movements in unlisted performance rights

No.	Balance at start of period # Granted during the period Vested and Exercised Cancelled/ Forfeited Balance at end of period Value vested during the period($)
1 2 3 4	- 5,500,000 - - 5,500,000 - - 5,500,000 - - 5,500,000 - - 8,250,000 - - 8,250,000 - - 8,250,000 - - 8,250,000 -
	- 27,500,000 - - 27,500,000 -

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 13: CAPITAL AND RESERVES (continued)

Subject to two specific rights[1] , Performance Rights will vest if and when the following milestones (each a Milestone) are achieved in the periods specified in the table below:

1( General meetings ) The Performance Rights confer on the holder the right to receive notices of general meetings and financial reports and accounts of the Company that are circulated to holders of fully paid ordinary shares in the capital of the Company ( Shareholders ). Holders have the right to attend general meetings of Shareholders.

( No voting rights ) The Performance Rights do not entitle the holder to vote on any resolutions proposed at a general meeting of the shareholders of the Company except:

i) where the resolution is to amend the rights attaching to the Performance Rights; or

ii) as otherwise required by law.

==> picture [483 x 371] intentionally omitted <==

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

30-Jun- 30-Jun- 30-Jun-
30-Jun-22
23 24 25
No. Milestone
1 Project Delivery – CAPEX: Wickepin production facility
has been constructed and commissioned at or below 5,500,000 - - -
112.5% of budget ($18 million)
2 Project Delivery – Production: Wickepin production
achieves an average production rate equal to or
exceeding 20t/hour of processed kaolin during a 5,500,000 - - -
completion test, to be conducted over a 5-day period of
scheduled plant operation hours
Revenue: Deliver operating revenue from the Revenue
3 Wickepin plant of the amount specified or $31.7m $44.8m $80.7m
Target
greater, as set out in the audited accounts for
the period ending 30 June of the relevant
Milestone.
Rights 2,750,000 2,750,000 2,750,000
EBITDA: Deliver EBITDA of the amount EBITDA
$5.7m 10.3m 21.4m
4 specified or greater, as set out in the audited Target
accounts for the period ending 30 June of the
relevant Milestone.
Rights 2,750,000 2,750,000 2,750,000
Total number of Performance Rights to vest across all
11,000,000 5,500,000 5,500,000 5,500,000
holders (of a total on issue of 27,500,000):
Percentage of a holder’s Performance Rights to vest: 40% 20% 20% 20%
----- End of picture text -----

Whilst the above milestones are possible, they are not probable so no expense has been recognised during the year ended 30 June 2021.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 13: CAPITAL AND RESERVES (continued)

(d) Movements in unlisted options

Balance at beginning of financial period Issue of Incentive options to directors and employees Exercise of options to employees Issue of options to Lead Manager (Tr1) Issue of options to Lead Manager (Tr2) Issue of free attaching IPO options Issue of IPO options (to convertible note holders) Balance at end of financial period	Year to 30 June 2021 Year to 30 June 2020 Weighted average exercise price Number of options Weighted average exercise price Number of options
	- - $0.01 750,000 $0.35 30,500,000 - - - - $0.01 (750,000) $0.25 5,000,000 - - $0.30 5,000,000 - - $0.25 55,000,000 - - $0.25 71,732,813 - -
	$0.27 167,232,813 - -

During the year ended 30 June 2021, the Company granted the following options on 20 November 2020:

(i) 30,500,000 Incentive options to directors and key management personnel with a fair value of $4,050,405 for the purchase of 30,500,000 ordinary shares at a price of $0.35 for a period of five years from date of grant. The Incentive options vested immediately on the grant date. The share price at the date of grant was $0.20.
(ii) 5,000,000 Lead Manager options (Tranche 1) with a fair value of $574,762 for the purchase of 5,000,000 ordinary shares at a price of $0.25 for a period of three years from date of grant. The Lead Manager options (Tranche 1) vested immediately on the grant date. The share price at the date of grant was $0.20.
(iii) 5,000,000 Lead Manager options (Tranche 2) with a fair value of $621,630 for the purchase of 5,000,000 ordinary shares at a price of $0.30 for a period of four years from date of grant. The Lead Manager options (Tranche 2) vested immediately on the grant date. The share price at the date of grant was $0.20.
(iv) 55,000,000 free attaching IPO options for the purchase of 55,000,000 ordinary shares at a price of $0.25 for a period of three years from date of grant. The IPO options will vest one year from the grant date. The share price at the date of grant was $0.20.
(v) 71,732,813 IPO options (to convertible note holders) with a fair value of $8,243,723 for the purchase of 71,732,813 ordinary shares at a price of $0.25 for a period of three years from date of grant. The IPO options will vest one year from the grant date. The share price at the date of grant was $0.20.

The fair value of options during the year ended 30 June 2021 was estimated at the grant date using the Black-Scholes option pricing model with the following assumptions:

	30 June 2021
Expected annual volatility	100%
Risk-free interest rate	0.86%
Expected life	1 - 5 years
Share price at grant date	$0.20
Expected dividend yield	0%

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 13: CAPITAL AND RESERVES (continued)

(e) Asset revaluation reserve Opening balance Movement Closing balance (f) Capital contribution reserve Opening balance Closing balance (g) Share-based payment reserve Opening balance Fair value of Incentive options Fair value of Lead Manager options Fair value of IPO options (to convertible note holders) Closing balance Total reserves	2021 2020 $ $
	1,944,779 3,175,779 373,395 (1,231,000)
	2,318,174 1,944,779
	17,880,927 17,880,927
	17,880,927 17,880,927
	2,939 2,939 4,050,405 - 1,196,392 - 8,240,623 -
	13,490,359 2,939
	33,689,460 19,828,645

Nature and purpose of reserves

Asset revaluation reserve

The asset revaluation reserve has been used to record increases in the fair value of land and decreases to the extent that such decreases relate to an increase on the same asset previously recognised in equity.

Capital contribution reserve

The capital contribution reserve has been used to record increases in net assets arising from transactions with owners in their capacity as owners and that are not recognised as income.

Share option reserve

The share option reserve arises as share-based payments are issued.

Options issue

Unlisted options over ordinary shares in the company are granted to key management personnel, employees and advisors as a long-term incentive component of their performance-based remuneration.

NOTE 14: EARNINGS PER SHARE

OTE 14: EARNINGS PER SHARE
Loss after income tax attributable to owners of WA Kaolin Limited used to calculate basic loss per share Basic (loss)/profit per share Diluted (loss)/profit per share Weighted average number of ordinary shares for the purposes of basic and diluted loss per share	2021 2020
	($20,673,297) ($5,162,653)
	$ per share $ per share
	(0.09) (0.04) (0.09) (0.04) Number Number 221,254,007 146,349,291

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 15: FINANCIAL INSTRUMENTS

(a) Capital risk management

The Company manages its capital to ensure that the Company will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The capital structure of the Company consists of cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings/(accumulated losses).

The Company is not subject to externally imposed capital requirements.

Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as tax, dividends and general administrative outgoings.

Gearing levels are reviewed by the Board on a regular basis in line with its target gearing ratio, the cost of capital and the risks associated with each class of capital.

(b) Categories of financial instruments Financial assets Cash and cash equivalents Trade and other receivables Financial liabilities Trade and other payables Borrowings	2021 $ 2020 $
	10,915,712 2,020,295 557,065 257,206 2,829,130 2,548,241 20,395,372 26,865,570

(c) Financial risk management objectives

The Company is exposed to currency risk, market risk including fair value interest rate risk and price risk, credit risk, liquidity risk and cash flow interest rate risk.

Currency risk

The Company undertakes transactions denominated in foreign currencies. Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The group manages its currency risk in accordance with approved policies.

The carrying amounts of foreign currency denominated monetary assets and monetary liabilities at the reporting date are:

United States Dollar denominated (in AUD)	2021 2020 $ $
	11,000 13,523
	11,000 13,523

Sensitivity

As shown in table above, the Company is primarily exposed to changes in USD/AUD exchange rate. Impact on post tax profit as a result of movements in USD/AUD exchange rate were immaterial for both 2020 and 2021.

(d) Market risk

The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and commodity prices.

There has been no change to the Company’s exposure to market risks or the manner in which it manages and measures the risk from the previous period.

The Company does not have investments that would expose it to unmanageable market risks.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 15: FINANCIAL INSTRUMENTS (continued)

(e) Interest rate risk management

The Company is exposed to interest rate risk as the Company borrows funds at variable interest rates. The Company’s policy is to manage its exposure to movements in interest rates by fixing the interest rate on financial instruments, including bank loans, finance leases and hire purchase liabilities, wherever possible. In addition, the Company utilises a number of financial institutions to obtain the best interest rate possible and to manage its risk. The Company does not enter into interest rate hedges.

Financial instruments 30 June 2021 (i) Financial assets Cash Total financial assets (ii) Financial liabilities Borrowings Total financial liabilities 30 June 2020 (i) Financial assets Cash Total financial assets (ii) Financial liabilities Borrowings Total financial liabilities	Interest bearing Non-interest bearing Total carrying amount Fixed / variable rate $ $ $ - 10,915,712 10,915,712 Variable - 10,915,712 10,915,712 8,672,886 11,722,486 20,395,372 Fixed 8,672,886 11,722,486 20,395,372 - 2,020,295 2,020,295 Variable - 2,020,295 2,020,295 13,772,851 13,092,719 26,865,570 Fixed 13,772,851 13,092,719 26,865,570

No other financial assets or financial liabilities are expected to be exposed to interest rate risk.

Interest rate risk sensitivity analysis

The Company only had fixed rate borrowings at 30 June 2021 and 2020, therefore interest rate sensitivity analysis is not required to be undertaken for the purpose of this report.

(f) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company only transacts with entities that are rated the equivalent of investment grade and above.

This information is supplied by independent rating agencies where available and, if not available, the Company uses publicly available financial information and its own trading record to rate its counterparties. The Company’s exposure and the credit ratings of its counterparties are continuously monitored.

The Company does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.

The carrying amount of financial assets recorded in the financial statements, net of any allowance for losses, represents the Company’s maximum exposure to credit risk without taking account of the value of any collateral obtained.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 15: FINANCIAL INSTRUMENTS (continued)

(g) Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate liquidity risk management framework for the management of the Company’s short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

The following table outlines the Company’s remaining contractual maturities for non-derivative financial liabilities. The amounts presented in the table are the undiscounted contractual cash flows of the financial liabilities, allocated to time bands based on the earliest date on which the Company can be required to pay.

30 June 2021
Payables
Borrowings
Convertible Notes
30 June 2020
Payables
Borrowings
Convertible Notes

< 6 months
6-12 months
1-5 years
Total contractual
cash flows
Carrying amount
Weighted
average
interest
rate
$
$
$
$
$
2,829,130
-
-
2,829,130
2,829,130
Nil
234,919
708,923
23,140,895
24,084,737
20,395,372
2.54%
-
-
-
-
-
-
3,064,049
708,923
23,140,895
26,913,867
23,224,502
2,548,241
-
-
2,548,241
2,548,241
Nil
-
4,040,000
23,683,785
27,723,785
21,750,243
1.9%
-
5,115,327
-
5,115,327
5,115,327
10.0%
2,548,241
9,155,327
23,683,785
35,387,353
29,413,811

(h) Fair value of financial instruments

The directors consider that the carrying value of the financial assets and financial liabilities as recognised in the financial statements approximate their fair values.

Fair value hierarchy

The following tables detail the company’s assets and liabilities, measured or disclosed at fair value, using a three- level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3: Unobservable inputs for the asset or liability

Year ended 30 June 2021 Assets Land and buildings Total assets Liabilities Convertible notes Total liabilities	Level 1 Level 2 Level 3 Total $ $ $ $ - - 4,000,000 4,000,000
	- - 4,000,000 4,000,000
	- - - - - - - -

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 15: FINANCIAL INSTRUMENTS (continued)

Year ended 30 June 2020 Assets Land and buildings Total assets Liabilities Convertible notes Total liabilities	Level 1 Level 2 Level 3 Total $ $ $ $ - - 3,649,856 3,649,856
	- - 3,649,856 3,649,856
	- - 5,115,327 5,115,327 - - 5,115,327 5,115,327-

There were no transfers between levels during the financial year.

The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their short-term nature.

The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial liabilities.

Valuation techniques for fair value measurements categorised within level 3

Land and buildings

The basis of the valuation of land and buildings is fair value. The land and buildings were last revalued on 30 June 2021 based on independent assessments by a member of the Australian Property Institute having recent experience in the location and category of land and buildings being valued. The directors do not believe that there has been a material movement in fair value since the revaluation date. Valuations are based on current prices for similar properties in the same location and condition.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 15: FINANCIAL INSTRUMENTS (continued)

Fair value hierarchy (continued)

Level 3 assets and liabilities

Movements in level 3 assets and liabilities during the current and previous financial year are set out below:

Balance at 1 July 2019 Losses recognised in other comprehensive income Additions Other adjustments Fair value adjustment and finance costs Balance at 30 June 2020 Income recognised in other comprehensive income Losses recognised in profit or loss Additions (net) Fair value adjustment and finance costs Payment of interest Conversion of convertible notes to share capital Transfer to share payments reserve Other adjustments (net) Balance at 30 June 2021	*Assets* Land and buildings Convertible notes $ $ 4,897,230 - (1,231,000) - 6,800 (3,832,500) (23,174) - - (1,282,827)
	3,649,856 (5,115,327)
	373,395 - - - - (3,819,000) - (9,152,640) - 281,809 - 9,564,375 - 8,240,624 (23,251) 159
	4,000,000 -

The level 3 assets and liabilities unobservable inputs and sensitivity are as follows:

Description	Unobservable inputs	Value	Sensitivity
Assets
Land and buildings	Direct comparison – market rate ($/m2)	$140	$5 change would increase / decrease fair value by $141,500
	Capitalisation rate	5.50%	0.25% change would increase / decrease fair value by $193,575

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 16: DIVIDENDS

No dividends were paid, declared or recommended since the start of the financial year (2020: $Nil).

NOTE 17: AUDITOR’S REMUNERATION

Amounts paid and payable to BDO for: (i) Audit and other assurance services Audit of financial statements Total audit and other assurance services (ii) Other non-audit services Taxation services Corporate finance services Total non-audit services	2021 2020 $ $
	122,393 31,281
	122,393 31,281
	35,976 30,359 79,777 15,968
	115,753 46,327

NOTE 18: COMMITMENTS AND CONTINGENCIES

Capital commitments

At 30 June 2021, the Company had various commitments in the sum of $1,542,316 (excluding GST) in relation to the construction of its de-gritting plant, associated works and equipment at its Wickepin mine site in Western Australia. No other capital expenditure commitments have been made for items of plant and machinery as at 30 June 2021 (2020: Nil).

Exploration commitments

The Company has various exploration commitments in relation to its mining lease at its Wickepin mine site in Western Australia.

Payable: Within one year Within two to five years	2021 2020 $ $
	99,700 99,700 199,400 299,100
	299,100 398,800

Contractual commitments

The Company announced on 26 May 2021 that it had entered into a 15-year LNG Supply agreement, due to commence from the start of operations at its Wickepin plant, likely to be in Q1 2022. As a result, the Company has commitments of approximately $2,055,666 (excluding GST) in the first year of production and then approximately $4,262,100 (excluding GST) per year, until such time as the Company commits to its Stage 2 project, which will see production capacity increased from 200,000 tonnes per year to 400,000 per year.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 18: COMMITMENTS AND CONTINGENCIES (continued)

Contingencies

Royalty Deed

On 1 July 2019, a Royalty Deed was executed between the Company and Wamco Industries Group Pty Ltd, on behalf of several of the original and other owners of the Company since formation. Key details of the Royalty Deed are as follows:

Parties	WA Kaolin Wamco Industries Group Pty Ltd (WAMCO)
Brief description	WA Kaolin has agreed to pay a royalty (described below) to WAMCO until the earlier of 1 July 2049 and the date WA Kaolin relinquishes, surrenders or conveys to WAMCO all of the Tenements (other than L70/156 and G70/251).
Commencement date	1 July 2019.
Key terms	Royalty:WA Kaolin owes to WAMCO a royalty for each quarter in which WA Kaolin either mines or sells kaolin ore ex-works, FCA or FOB or mines and processes kaolin ore to produce a kaolin product which is sold ex-works, FCA or FOB, which must be paid quarterly. The royalty is the greater of: (a) $1.50 per tonne of dry kaolin ore or product sold in a quarter, provided that if kaolin product has been sold after processing, then tonnage used to calculate the royalty will be twice the actual tonnage of the processed kaolin; or (b) 1.5% of the price received for the sale of kaolin ore or product in a quarter.
	Payment and interest:Within 30 days after the end of each quarter, WA Kaolin must calculate the royalty payable for that quarter and give to WAMCO a statement in respect of that quarter (even if there is no royalty payable in that quarter) and if a royalty is payable, pay to WAMCO the royalty due by it for that relevant quarter in immediately available funds without demand, reduction or set off, by direct deposit. If payment is late, interest on the amount due is payable. Assignment:If WAMCO wishes to sell, transfer, grant, assign or otherwise dispose of (Assign) the whole of its interest in the royalty, it must first give notice to WA Kaolin. The notice must specify the price and the terms on which WAMCO is prepared to Assign the interest and give WA Kaolin a right to acquire the interest or to discharge its obligations under the agreement by paying the price to WAMCO. WA Kaolin may accept the notice in writing within 20 business days of receiving the notice. If WA Kaolin does not accept the offer, WAMCO may within 60 days enter into an agreement to Assign the interest, provided the assignment is on terms and conditions not less favourable to WAMCO than those offered to WA Kaolin. WA Kaolin may only Assign its interest in the Tenements (other than L70/156 and G70/251) or any rights in relation to the kaolin ore or kaolin products to a third party or related body corporate or related entity if it first delivers to WAMCO an assumption deed in favour of WAMCO, executed by WA Kaolin and the assignee. Encumbrances:WA Kaolin may grant an encumbrance over the Tenements, its rights under the Royalty Deed or any rights in relation to kaolin ore or products, without the prior written consent of WAMCO, provided that the Company gives WAMCO written notice of any such grant. WAMCO shall promptly do anything which WA Kaolin may reasonably request (including signing documents or supplying information) to ensure or enable any encumbrances to which it is a party is fully effective, enforceable and perfected with the contemplated priority. Confidentiality:A party must not disclose any confidential information, subject to exceptions. Termination:Unless otherwise agreed by the parties, the Royalty Deed terminates (with the exception of certain provisions, for example in relation to rehabilitation obligations) and has no further force or effect upon the earlier of 1 July 2049 and the date WA Kaolin relinquishes, surrenders or conveys to WAMCO all of the Tenements (other than L70/156 and G70/251).

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 18: COMMITMENTS AND CONTINGENCIES (continued)

Tonnage Royalty Deed

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

Parties
WA Kaolin
Wamco Industries Group Pty Ltd ( WAMCO )
Brief description
WA Kaolin has agreed to pay a royalty (described below) to WAMCO until the earlier of 1 July 2049
and the date WA Kaolin relinquishes, surrenders or conveys to WAMCO all of the Tenements (other
than L70/156 and G70/251).
Commencement date
1 July 2019.
----- End of picture text -----

Key terms Royalty: WA Kaolin owes to WAMCO a royalty for each quarter in which WA Kaolin either mines and sells kaolin ore ex-works, FCA or FOB or mines and processes kaolin ore to produce a kaolin product which is sold ex-works, FCA or FOB, which must be paid quarterly. The royalty is $1.25 per tonne of dry kaolin ore or product sold in a quarter, provided that if kaolin product has been sold after processing, then tonnage used to calculate the royalty will be twice the actual tonnage of the processed kaolin. Payment and interest: Within 30 days after the end of each quarter, WA Kaolin must calculate the royalty payable for that quarter and give to WAMCO a statement in respect of that quarter (even if there is no royalty payable in that quarter) and if a royalty is payable, pay to WAMCO the royalty due by it for that relevant quarter in immediately available funds without demand, reduction or set off, by direct deposit. If payment is late, interest on the amount due is payable. Assignment: If WAMCO wishes to sell, transfer, grant, assign or otherwise dispose of ( Assign ) the whole of its interest in the royalty, it must first give notice to WA Kaolin. The notice must specify the price and the terms on which WAMCO is prepared to Assign the interest and give WA Kaolin a right to acquire the interest or to discharge its obligations under the agreement by paying the price to WAMCO. WA Kaolin may accept the notice in writing within 20 business days of receiving the notice. If WA Kaolin does not accept the offer, WAMCO may within 60 days enter into an agreement to Assign the interest, provided the assignment is on terms and conditions not less favourable to WAMCO than those offered to WA Kaolin. WA Kaolin may only Assign its interest in the Tenements (other than L70/156 and G70/251) or any rights in relation to the kaolin ore or kaolin products to a third party or related body corporate or related entity if it first delivers to WAMCO an assumption deed in favour of WAMCO, executed by WA Kaolin and the assignee. Encumbrances: WA Kaolin may grant an encumbrance over the Tenements, its rights under the Royalty Deed or any rights in relation to kaolin ore or products, without the prior written consent of WAMCO, provided that the Company gives WAMCO written notice of any such grant. WAMCO shall promptly do anything which WA Kaolin may reasonably request (including signing documents or supplying information) to ensure or enable any encumbrances to which it is a party is fully effective and enforceable. Termination: Unless otherwise agreed by the parties, the Royalty Deed terminates (with the exception of certain provisions, for example in relation to rehabilitation obligations) and has no further force or effect upon the earlier of 1 July 2049 and the date WA Kaolin relinquishes, surrenders or conveys to WAMCO all of the Tenements (other than L70/156 and G70/251).

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 18: COMMITMENTS AND CONTINGENCIES (continued)

Security Interest

As a result of a loan agreement between the Company and its major lender, Scientific Management Associates (Victoria) Pty Ltd (SMA), a security interest was previously granted in favour of SMA granted. The security interest was a fixed charge (in respect of freehold and leasehold land, fixtures, plant, equipment, intellectual property and fixed assets, among other things), a floating charge in regard to all other assets and has a maximum prospective liability of $12,000,000.

The above security interest was formally released on 9 October 2020.

No other contingencies were noted as at 30 June 2021 (2020: Nil).

NOTE 19: EVENTS AFTER THE REPORTING PERIOD

The impact of the Coronavirus (COVID-19) pandemic is ongoing and while there has not been any financially material impact on the Company up to 30 June 2021, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.

NOTE 20: RELATED PARTIES

Key management personnel compensation

The key management personnel compensation is as follows:

Short-term employee benefits Post-employment benefits Share-based payments	2021 $ 2020 $
	772,889 453,338 38,360 15,987 3,917,603 -
	4,728,852 469,325

Other key management personnel and director transactions

A number of key management persons, or their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of those entities.

A number of these entities transacted with the Company in the reporting period. The terms and conditions of the transactions with key management personnel and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities on an arm’s length basis.

Mr A Baker is a director and major shareholder of the Company. During the reporting period, the Company has borrowed funds from several entities of which Mr Baker is a director and major shareholder. Details of those loans can be found in the table below and at Note 10(i).

Mr A Sorensen is a key management person of the Company and has advanced funds to the Company, as detailed below.

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 20: RELATED PARTIES (continued)

Related party borrowings

30 June 2021

Entities associated with: Opening balance Interest Funds advanced Funds repaid Other – finance cost on related party borrowing (Note 5) Closing balance	A Baker1 K Snell (estate)2 A Sorensen3
	3,751,440 16,644,246 95,000 - 492,558 - 3,064 - - (1,076,000) (1,969,403) - 238,461 1,812,371 -
	2,916,965 16,979,822 95,000

30 June 2020

Entities associated with: Opening balance Interest Funds advanced Funds repaid Other – finance cost on related party borrowing (Note 5) Closing balance	A Baker1 K Snell (estate)2 A Sorensen3
	3,520,566 15,013,332 5,000 10,258 490,014 - 356,116 - 95,000 (348,410) - (5,000) 212,910 1,140,900 -
	3,751,440 16,644,246 95,000

Entities associated with the following key management personnel are as follows:

1 A Baker : Wamco Industries Group Pty Ltd, Wamco Industries Pty Ltd, Pacific Polymers R&D Pty Ltd, Pacific Polymers Pty Ltd, EMC Pacific Pty Ltd

2 K Snell (estate): Scientific Management Associates (Victoria) Pty Ltd, Scientific Management Associates (Operations) Pty Ltd

3 A Sorensen : Loans are held in Wamco Industries Group Pty Ltd on behalf of Mr Sorensen

Full details of the lenders can be found at Note 11 (Borrowings).

WA Kaolin Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

NOTE 20: RELATED PARTIES (continued)

Fees and salaries

Director / Other Fees

30 June 2021 Opening balance Director / Other fees Payments Closing balance 30 June 2020 (restated1) Opening balance Director / Other fees Payments Closing balance	A Baker K Snell (estate) A Sorensen
	368,000 447,000 234,000 205,800 3,000 - (208,800) - -
	365,000 450,000 234,000
	A Baker K Snell (estate) A Sorensen
	339,000 411,000 234,000 173,000 36,000 - (144,000) - -
	368,000 447,000 234,000

1 Mr A Baker’s 2020 opening balance was incorrectly stated as $663,000 in the Company’s 2020 accounts and has now been correctly restated

Other transactions

Remuneration arrangements of key management personnel are disclosed in the annual financial report.

During the period ended 30 June 2021, the Company paid:

Director fees and superannuation of $196,424
Salary and superannuation of $39,628 to a part-time sales executive, who is the daughter of the Company’s executive director
Consulting fees of $181,800 (ex GST) for services rendered by the Company’s executive director through his associated entity
Ordinary business expense reimbursements of $73,595 to an entity associated with the Company’s executive director
Royalties of $22,994 to an entity associated with the Company’s executive director
Building supplies (at arm’s length or better) to an entity associated with the son of the Company’s executive director
Plant and equipment (at arm’s length or better) to an entity associated with the Company’s executive director

As outlined in the Company’s prospectus dated 11 October 2020, the Company repaid loans of $1,076,000 during the period to companies associated with the Company’s executive director.

Finally, 30,500,000 Incentive options were granted to directors and key management personnel on 20 November 2020 with a fair value of $4,050,405 for the purchase of 30,500,000 ordinary shares at a price of $0.35 for a period of five years from date of grant. The Incentive options vested immediately on the grant date. The share price at the date of grant was $0.20.

WA Kaolin Limited

DIRECTORS’ DECLARATION

In the opinion of the directors of WA Kaolin Limited (“the ‘Company’):
a. the accompanying financial statements and notes thereto, as set out on pages 20 to 63, are in accordance with the Corporations Act 2001, including:
- i. complying with Australian Accounting Standards and the Corporations Regulations 2001, and other mandatory professional reporting requirements;
- ii. as stated in Note 1 the financial statements also comply with International Financial Reporting Standards; and
- ii. give a true and fair view of the financial position of the Company as at 30 June 2021 and of its performance for the year ended on that date.
b. there are reasonable grounds to believe that WA Kaolin Limited will be able to pay its debts as and when they become due and payable.

This declaration has been made after receiving the declarations required to be made by the Chief Executive Officer and Chief Financial Officer to the Directors, in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2021.

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

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Dr John White Chairman

Dated this 29 September 2021

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 WA Kaolin Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of WA Kaolin Limited (the Company), which comprises the statement of financial position as at 30 June 2021, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the 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 WA Kaolin Limited, is in accordance with the Corporations Act 2001 , including:

(i) Giving a true and fair view of the Company’s financial position as at 30 June 2021 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 Company in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards ) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

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

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

Material uncertainty related to going concern

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

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Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.

Carrying value of mine development properties


*Key audit matter*	*How the matter was addressed in our audit*

During the year the company transitioned its Wickepin	Our	procedures included, but were not limited to the
Project from the exploration to the development	following:
phase.	•	Reviewing management’s basis of transfer of
As outlined in Note 8, following the decision to enter		exploration and evaluation assets to mine
development, the company transferred exploration and		development properties;
evaluation assets to mine development properties. On transition, the company was required to test the	•	Reviewing Board minutes and ASX announcements to confirm the date of transfer to mine
carrying value of the asset transferred for impairment.		development properties;
Further to this, the company is required to assess for indicators of impairment of mine development properties at 30 June 2021.	•	Verifying on a sample basis mine development expenditure capitalised during the year for compliance with the measurement and recognition
The carrying value of mine development properties was		criteria of the relevant accounting standards;
determined to be a key audit matter due to the carrying value representing a significant asset of the company, the key judgements involved in undertaking the impairment test on transition and assessing for indicators of impairment at 30 June 2021.	•	Evaluating management’s impairment assessment of the asset transferred to mine development properties in accordance with Australian Accounting Standards;
	•	Evaluating management’s assessment of indicators
		of impairment as at 30 June 2021 under Australian
		Accounting Standards; and
	•	Assessing the adequacy of the related disclosures
		in Note 1(w), Note 1(aa), Note 8 and Note 9 to the
		financial report.

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Accounting for Convertible Notes


*Key audit matter*	*How the matter was addressed in our audit*

During the year, the company issued convertible notes	Our	procedures included, but were not limited to the
as disclosed in Note 11.	following:
Accounting for convertible notes was considered to be	•	Obtaining an understanding of and assessing the
a key audit matter due to the complexity involved in		terms and conditions of the convertible note
assessing whether to account for the notes as equity, a		agreements to determine if the convertible notes
liability or combination of both as well as the		are to be accounted for as equity, a liability or a
subsequent measurement of the individual components		combination of both;
of the liability based on the terms and conditions of the agreement. The assessment includes significant judgement in determining the fair value of the separate components of the liability.	•	Considering the appropriateness of the valuation methodology against the requirements of the relevant Australian Accounting Standard;
	•	Considering the reasonableness of the inputs to the
		valuation; and
	•	Assessing the adequacy of the related disclosures in
		Note 1(u) and Note 11 of the financial report.

Other information

The directors are responsible for the other information. The other information comprises the information contained in the Company’s annual report for the year ended 30 June 2021, but does not include the financial report and our auditor’s report thereon.

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.

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.

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In preparing the financial report, the directors are responsible for assessing the Company’s ability 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 Company or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the Financial Report

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

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at: https://www.auasb.gov.au/admin/file/content102/c3/ar2_2020.pdf

This description forms part of our auditor’s report.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 6 to 16 of the directors’ report for the year ended 30 June 2021.

In our opinion, the Remuneration Report of WA Kaolin Limited, for the year ended 30 June 2021, 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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Dean Just

Director

Perth, 29 September 2021

WA Kaolin Limited

Additional Information for Listed Public Companies

Additional information included in accordance with the Listing Rules of the Australian Securities Exchange Limited. The information is current as at 28 September 2021.

1. Shareholdings

Substantial shareholders of WA Kaolin Limited:

ntial shareholders of WA Kaolin Limited:
Name of shareholder SILVER TROPIC PTY LTD SCIENTIFIC MANAGEMENT ASSOCIATES (VICTORIA) PTY LTD MR KENNETH JOSEPH HALL	Shares held 49,883,574 48,844,333 19,261,189
	117,989,096

Distribution of equity – Listed securities:

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above 0 up to and including 1,000 17 2,907 0.00%
above 1,000 up to and including 5,000 278 994,086 0.35%
above 5,000 up to and including 10,000 214 1,709,988 0.60%
above 10,000 up to and including 744 30,649,340 10.84%
100,000
above 100,000 215 249,465,564 88.21%
Totals 1,468 282,821,885 100.00%
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At the date of this report there were 64 shareholders, with a total of 98,481 shares, who held less than a marketable parcel of shares.

Listed securities in WA Kaolin Limited (WAK) are quoted on all member exchanges of the Australian Securities Exchange.

WA Kaolin Limited

Additional Information for Listed Public Companies (continued) Updated as at 28 September 2021

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Position Holder Name Holding % IC
1 SILVER TROPIC PTY LTD 49,883,574 17.64%

2 SCIENTIFIC MANAGEMENT ASSOCIATES (VICTORIA) PTY 48,844,333 17.27%
LTD

3 MR KENNETH JOSEPH HALL 19,261,189 6.81%

4 CENTURY HORSE LIMITED 9,375,000 3.31%
5 BONEYARD INVESTMENTS PTY LTD 7,000,000 2.48%
6 MR HAN SWEE TAN 6,425,600 2.27%
7 STEPHEN RICE 5,366,452 1.90%

7 MR JAMES WOULFE & 5,366,452 1.90%
MRS CATHERINE MARIA WOULFE

7 PAUL LOWRY & 5,366,452 1.90%
KIM WATSON

8 CITICORP NOMINEES PTY LIMITED 4,362,356 1.54%
9 MR ANDREW BRIAN SORENSEN 4,156,964 1.47%

10 MR BENG GIM TAN 3,500,000 1.24%
11 CAJWM PTY LTD 3,000,000 1.06%

12 TYNONG PASTORAL CO PTY LTD 2,500,000 0.88%

13 BNP PARIBAS NOMINEES PTY LTD 2,321,545 0.82%

14 MS LAY HOON LEE 2,202,000 0.78%
15 ANDREW SORENSEN HOLDINGS PTY LTD 2,030,592 0.72%

16 JASPER HILL RESOURCES PTY LTD ACCOUNT>
17 G & N LORD SUPERANNUATION PTY LTD 1,750,000 0.62%

18 T T NICHOLLS PTY LTD 1,687,500 0.60%

19 MR KENNETH BIDDICK & 1,625,000 0.57%
MRS CATHERINE BIDDICK

19 MRS LAY HOON LEE 1,625,000 0.57%
20 EXHIBITIONS PLUS PTY LTD 1,516,667 0.54%

Total 191,141,676 67.58%
Total issued capital - selected security class(es) 282,821,885 100.00%
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AI assistant

WA KAOLIN LIMITED — Annual Report 2021

66035_rns_2021-11-09_2244d8d0-a6f6-4a8a-86fc-29263e7f0a94.pdf

CORPORATE INFORMATION

ABN 56 083 187 017

Directors

Chief Executive Officer

Company secretary

Registered office

Principal place of business

Share registry

Solicitors

Bankers

Auditors

DIRECTORS’ REPORT

Directors

Directors’ Information

Dr John White (Non-Executive Chairman)

Mr Keith Snell (resigned 24 July 2020)

Mr Alfred Baker (Executive Director)

DIRECTORS’ REPORT (continued)

Mr Alfred Baker (Executive Director) (continued)

Ms Cathy Moises (Non-Executive Director)

Mr Linton Putland (Non-Executive Director)

DIRECTORS’ REPORT (continued)

Directors’ Meetings

Review of operations

DIRECTORS’ REPORT (continued)

Review of operations (continued)

Principal Activities

Significant events after reporting date

Likely developments and expected results

Environmental regulations

Dividend paid, recommended and declared

Remuneration report (Audited)

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

Remuneration Policy

Non-executive director remuneration

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

CEO and executive director remuneration

Key Management Personnel Emoluments

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

Key Management Personnel Emoluments (continued)

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

Key Management Personnel Emoluments (continued)

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

Service Agreements

Non-Executive Directors

Dr J White (Chairman)

- Ms C Moises (Non executive Director)

- Mr L Putland (Non executive Director)

Executive Director

Mr A Baker (Executive Director)

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

Service Agreements (continued)

Management

Mr A Sorensen (CEO)

Mr M Kenyon (CFO/Company Secretary)

Share-based compensation

Options

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

Additional disclosures relating to key management personnel

Shareholding

Performance Rights

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

Additional disclosures relating to key management personnel (continued)

Option holding

Other transactions with directors and officers

Royalty Deed

Tonnage Royalty Deed

DIRECTORS’ REPORT (continued)

Remuneration report (Audited) (continued)

WA KAOLIN LIMITED Annual Report 2021