Announcement PDF TG Metals Limited ACN: 644 621 833 ANNUAL REPORT For the year ended 30 June 2024 1 TG Metals Ltd Contents 30 June 2024 Corporate directory Chairperson's Letter Directors' report Auditor's independence declaration Statement of Profit or Loss and Other Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the financial statements Consolidated entity disclosure statement Directors' declaration Independent auditor's report ASX Additional Information 2 3 4 5 25 26 27 28 29 30 43 44 45 49 TG Metals Ltd Corporate directory 30 June 2024 Directors Richard Bevan (Non-Executive Chair) Brett Smith (Non-Executive Director) Di (Gloria) Zhang (Non-Executive Director) Company Secretary Nicki Farley Registered Office Level 24, 44 St Georges Terrace PERTH WA 6000 Ph: +61 8 6211 5099 Principal Place of Business Level 2, Suite 3 28 Ord Street West Perth WA 6005 Share Registry Automic Registry Services Level 5, 191 St Georges Terrace PERTH WA 6000 Auditors BDO Audit Pty Ltd Level 9 Mia Yellagonga Tower 2 5 Spring St PERTH WA 6000 Stock Exchange Listing Australian Securities Exchange Home Exchange: Perth ASX code: TG6 Corporate Governance Statement https://tgmetals.com.au/about-us/corporate-governance/ 3 TG Metals Ltd Chairperson's Letter 30 June 2024 Chairperson’s Letter Dear Shareholders, It gives me great pleasure on behalf of the Board of Directors to present the 2024 Annual Report of TG Metals Limited (“Company”). The 12 months of the financial year 2023/24 are defined by two very different halves. Just prior to our AGM last year, the Company had made a significant high grade lithium discovery at our 100% owned Lake Johnston Project in Western Australia. This was a material discovery that has been progressed during the period to provide an Exploration target of 15.6-20.1 Mt at 0.97 to 1.19% Li2O. The maiden discovery represents the results of the great work undertaken by our technical team, well led by CEO David Selfe. Significant work has continued to increase our confidence that the Project represents significant economic value for the Company. The second half was the year was characterised by a material change in the macro-economic environment for lithium, with a marked deterioration of the commodity price leading to a material reduction in lithium equities across the board. The Company’s strategy has adjusted in response to the current conditions, prioritising activities that add value to the project whilst ensuring we preserve our current balance sheet strength. There are many of us who have been through these cycles before and we know that at some point the headwinds will abate, and we will see more value reflected in the shares of the Company. Your Board and Management are working hard to ensure that when that time comes, the Company is well positioned to take full advantage. I would again like to thank all our stakeholders for their support of the Company. I’d like to acknowledge the Ngadju people on whose land we work as a key stakeholder in the Project and we look forward to continuing to strengthen this relationship as the Project continues to move forward. We continue to remain excited for the future of the Company. Sincerely Richard Bevan 4 TG Metals Ltd Directors' report 30 June 2024 The directors present their report, together with the financial statements, on TG Metals Ltd ('TG Metals Ltd' or 'the Company') for the year ended 30 June 2024. The Company was incorporated on 16 October 2020. Following the Company’s successful Initial Public Offering (‘IPO’), the Company was admitted to quotation on the Australian Securities Exchange (‘ASX’) on 24 May 2022. Directors The names of the directors in office during the financial year and up to the date of this report, unless otherwise stated, are: Richard Bevan Brett Smith Di (Gloria) Zhang Information on Directors Richard Bevan, Non-Executive Chair Mr Bevan has been involved in a range of business areas including construction and engineering, resources, healthcare and information services. He has extensive senior management experience having been the Managing Director, CEO and Chairperson of several listed and unlisted companies, including being the founding Managing Director of Cassini Resources Limited. Mr Bevan is currently Non-Executive Chair of Killi Resources Limited, and Executive Chair of Narryer Metals Limited. He is a Non-Executive Director of Elmore Limited. Directorships held in other ASX-listed companies in the last 3 years: ● Cannon Resources Limited, appointed 21 February 2021, resigned 24 January 2023 ● Killi Resources Limited, appointed 18 August 2021 ● Narryer Metals Limited, appointed 1 July 2021 Interests in shares: Interests in options: Interests in rights: 791,667 600,000 1,400,000 Brett Smith, Non-Executive Director Mr Smith has more than 35 years’ experience as a geologist across a wide range of commodities and global jurisdictions. He has over 20 years’ experience in investor engagement, corporate management and board responsibilities with private and ASX-listed companies. Mr Smith is currently the Managing Director of Corazon Mining Limited (ASX: CZN) - a Perth based company focused on nickel sulphide exploration and resource development in Canada and Australia. Directorships held in other ASX-listed companies in the last 3 years: ● Corazon Mining Limited, appointed 1 July 2010 ● Aruma Resources Limited, appointed 1 August 2022 Interests in shares: Interests in options: Interests in rights: 2,300,000 1,388,706 880,000 5 TG Metals Ltd Directors' report 30 June 2024 Di (Gloria) Zhang, Non-Executive Director Ms Zhang has more than 30 years’ experience in international business, banking, project management and marketing. She works as an international business advisor for several ASX-listed companies and companies from Australian critical minerals sector. Ms Zhang is instrumental in capital raising, offtake negotiation, joint venture management and Asian shareholder relations and once held a senior management role in a Chinese mining company’s Australian operation. She is a Graduate Member of the Australian Institute of Company Directors and is currently the Chair of the Australian Association of International Business and Managing Director of Intlang Corporate Consulting. Directorships held in other ASX-listed companies in the last 3 years: ● None Interests in shares: Interests in options: Interests in rights: 568,750 775,645 880,000 Company secretary Nicki Farley On 2 March 2022, Ms Farley was appointed as Company Secretary. Ms Farley has over 15 years' experience working within the legal and corporate advisory sector providing advice in relation to capital raisings, corporate and securities laws, mergers and acquisitions and corporate compliance. Ms Farley has held a number of company secretarial roles for ASX listed companies. Principal Activities The Company’s principal continuing activities consisted of exploring for, discovering and then proceeding to develop mineral deposits. Operating Results The loss for the year ended 30 June 2024 after providing for income tax amounted to $2,275,200 (2023: $1,213,380). 6 TG Metals Ltd Directors' report 30 June 2024 Review of Operations TG Metals successfully executed its planned exploration programs at the Lake Johnston project, discovering the Burmeister lithium spodumene deposit and identifying other priority lithium targets. Figure 1 shows the Lake Johnston Project and deposit and prospect locations. Figure 1 – Simplified Geology with prospect locations and the main area of exploration focus (black outline) Datum: AMG Zone 51 (GDA94) 7 TG Metals Ltd Directors' report 30 June 2024 Review of operations (continued) Lake Johnston Project – Lithium During the period the Company conducted soil sampling, surface geophysical surveys consisting of 2D seismic and RC and diamond core drilling which resulted in the discovery of the Burmeister lithium pegmatite deposit and the Jaegermeister lithium pegmatite prospect. See Figure 2. Figure 2 – Soil sampling contours for Li2O with priority drilling targets and Burmeister deposit drilling and pit shell. Datum: AMG Zone 51 (GDA94). 8 TG Metals Ltd Directors' report 30 June 2024 Review of operations (continued) In addition, the Company prepared an Exploration Target Statement on the Burmeister Lithium Deposit and derived a conceptual pit shell. This work was completed to confirm the company’s belief that the Burmeister deposit is a significant lithium pegmatite discovery and that the depths of intersections to date are within the realms of surface mining potential. The Exploration Target Statement table is shown below in Table A. Table A – Exploration Target Range at 0.4% Li2O cutoff Tonnes Range Low Tonnes Range High Li2O Range Low (%) Li2O Range High (%) 15.6 million 20.1 million 0.97 1.19 The Exploration Target quantity and grade is conceptual in nature. There has been insufficient exploration to estimate a Mineral Resource and it is uncertain if further exploration will result in the estimation of a Mineral Resource. The Target is based on the Company’s resource definition drilling undertaken since discovery in October 2023. The current drill hole density (spacing between holes) at Burmeister is not considered sufficient to determine a Mineral Resource. The drilling defining the Burmeister pegmatites has been modelled within grade envelopes and aggregated to determine the total Exploration Target ranges as per Table 1 above. The cutoff grade of 0.4% Li2O was determined as the lowest grade assayed within all pegmatite intercepts, including RC drilling intervals, which crossed pegmatitebasalt boundaries. This captures all the lithium mineralisation within the pegmatite hosts which is predominantly spodumene. The Company believes this Exploration Target is of a high quality and provides an achievable goal for further resource definition drilling. Preliminary examinations indicate that infill drilling will likely only require a 100m x 100m spacing to achieve an inferred resource. Next pass drilling will target this infill spacing. The size of the Target and the results of “Conceptual Pit Optimisations” provide support for the Company’s strategy to develop a stand-alone lithium mining and processing operation at Lake Johnston. The deposit remains open at depth and at the limit of the conceptual pit shells, 290m depth for the USD$1500 shell and 340m depth for the USD$2500 shell, offering further opportunities at depth for deposit extensions, see Figures 3 and 4. Figure 3 – Isometric view of interpreted lithium pegmatites with conceptual optimised pit shells 9 TG Metals Ltd Directors' report 30 June 2024 Review of operations (continued) Figure 4 – Long Section view of modelled lithium and conceptual pit shells Further studies including metallurgical testwork and mining assessments are required to confirm the validity and economics of a custom processing Plant suitable for the Burmeister ore. The Company conducted further drilling on the Burmeister deposit which was included in the Exploration Target Statement, significant intercepts are included in Table B. Table B – Significant RC and DD drilling pegmatite intercepts >0.5% Li2O, downhole widths are approximate to true widths. 10 TG Metals Ltd Directors' report 30 June 2024 Review of operations (continued) The Company conducted Mico-XRF/AMICS mineralogy determinations on a sample of drill core which showed spodumene to be the dominant mineral in the pegmatite, making up 35.9% of the sample. These results provide a positive indication of simple mineral separation techniques which is being examined in the Metallurgical testwork underway at IMO Laboratories. Figure 5 below shows the Micro-XRF image coloured by mineral type and the mineral abundance table. Figure 5 – Micro-XRF/AMICS mineralogy result on core from TGRCD0009, interval 134.2m to 134.4m (nominally 2.29% Li2O). Lower image is a mosaic scan of the coloured image above Lake Johnston Project – Nickel Exploration During the period, RC and diamond core drilling on nickel sulphide targets was completed as well as downhole TEM. The Highfield and LJC137 targets were drill tested with no significant nickel intercepts found. Subsequent downhole TEM detected off-hole conductors at Highfield however these are interpreted to be from known conductive sediments which has downgraded the potential for nickel sulphides on this target. The Cathkin South target remains untested by drilling, as does the Gravity anomalies defining potential deep notch weathering at the Tottenham prospect (ASX announcement 8 August 2023). Downhole TEM is yet to be completed on the LJC137 target drillhole. Drilling of these remaining nickel sulphide targets is on hold as the Company’s focus turns to the lithium discoveries on the Lake Johnston tenements. Similarly metallurgical testwork has been deferred on the nickel laterite mineralization defined in 2023. 11 TG Metals Ltd Directors' report 30 June 2024 Business Development During the period the Company applied for two (2) exploration licences E63/2433 and E63/2434 totaling 8 graticular blocks in size. Both applications were subject to ballot, the ballot for E63/2433 was unsuccessful and the ballot for E63/2434 is yet to be drawn. These applications are strategically in proximity to the Maggie Hays nickel minesite within the Lake Johnston region and are prospective for nickel, lithium and gold. Figure 1 shows the tenements under application in blue. Material Business Risk The Company makes every effort to identify material risks and to manage these effectively. This section does not attempt to provide an exhaustive list of risks faced by the Company or by investors in the Company, nor are they in order of significance. Actual events may be different to those described. The Board aims to manage these risks by carefully planning its activities and implementing risk control measures. Some of the risks are, however, highly unpredictable and the extent to which the Board can effectively manage them is limited. a) Tenure and Access Risk Applications While the Company does not anticipate there to be any issues with the grant of its Tenement applications, there can be no assurance that the applications (or any future applications) will be granted. While the Company considers the risk to be low, there can also be no assurance that when the relevant tenements are granted, they will be granted in their entirety. Some of the tenement areas applied for may be excluded. Renewal Mining and exploration tenements are subject to periodic renewal. The renewal of the term of granted tenements is subject to the discretion of the relevant authority. Renewal conditions may include increased expenditure and work commitments or compulsory relinquishment of areas of the tenements. The imposition of new conditions or the inability to meet those conditions may adversely affect the operations, financial position and/or performance of the Company. Access A number of the tenements overlap certain third party interests that may limit the Company’s ability to conduct exploration and mining activities, including Crown Reserves, areas on which native title is yet to be determined and other forms of tenure for access roads, pipelines and similar third party interests. Where the Project overlaps other tenure land, exploration and mining activity on the Project may require authorisation or consent from the owners of that land. The Company is not required to enter into land access agreements to undertake its proposed exploration program on the Tenements. However, the Company intends to carry out heritage clearance surveys before implementing its proposed ground disturbing exploration programs. The Company’s current proposed exploration programs are not impacted by the known sites of registered aboriginal heritage significance. b) Exploration Risk Potential investors should understand that mineral exploration and development are high-risk undertakings. There can be no assurance that exploration of the Project, or any other tenements that may be acquired in the future, will result in the discovery of an economic ore deposit. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited. The success of the Company will also depend upon the Company having access to sufficient development capital, being able to maintain title to its projects and obtaining all required approvals for its activities. In the event that exploration programmes prove to be unsuccessful this could lead to a diminution in the value of the Tenements, a reduction in the cash reserves of the Company and possible relinquishment of its projects. 12 TG Metals Ltd Directors' report 30 June 2024 c) Climate Change The operations and activities of the Company are subject to changes to local or international compliance regulations related to climate change mitigation efforts, specific taxation or penalties for carbon emissions or environmental damage and other possible restraints on industry that may further impact the Company. While the Company will endeavour to manage these risks and limit any consequential impacts, there can be no guarantee that the Company will not be impacted by these occurrences. Climate change may also cause certain physical and environmental risks that cannot be predicted by the Company, including events such as increased severity of weather patterns, incidence of extreme weather events and longerterm physical risks such as shifting climate patterns. All these risks associated with climate change may significantly change the industry in which the Company operates. d) Reliance on Key Personnel The Company’s future depends, in part, on its ability to attract and retain key personnel. It may not be able to hire and retain such personnel at compensation levels consistent with its existing compensation and salary structure. Its future also depends on the continued contributions of its key management and technical personnel, the loss of whose services would be difficult to replace. In addition, the inability to continue to attract appropriately qualified personnel could have a material adverse effect on the Company’s business. e) Environmental The operations and proposed activities of the Company are subject to Australian laws and regulations concerning the environment. As with most exploration projects and mining operations, the Company’s activities are expected to have an impact on the environment, particularly if advanced exploration or mine development proceeds. It is the Company’s intention to conduct its activities to the highest standard of environmental obligation, including compliance with all applicable environmental laws. The disposal of mining and process waste and mine water discharge are under constant legislative scrutiny and regulation. There is a risk that environmental laws and regulations become more onerous making the Company’s operations more expensive. Approvals are required for land clearing and for ground disturbing activities. Delays in obtaining such approvals can result in the delay to anticipated exploration programmes or mining activities. f) Native Title The Native Title Act recognises and protects the rights and interests in Australia of Aboriginal and Torres Strait Islander people in land and waters, according to their traditional laws and customs. There is significant uncertainty associated with Native Title in Australia and this may impact on the Company's operations and future plans. The Company is required to enter into standard regional heritage agreements or negotiated alternative aboriginal heritage agreements for the Grant of its Tenement applications and to undertake its proposed exploration program on the Tenements. The Company intends to carry out heritage clearance surveys before implementing its proposed ground disturbing exploration programs. The Company’s current proposed exploration programs are not impacted by the known sites of registered aboriginal heritage significance. g) Economic General economic conditions, introduction of tax reform, new legislation, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company, as well as on its ability to fund its operations. h) Additional Requirements for Capital The Company’s capital requirements depend on numerous factors. The Company may require further financing in addition to amounts currently on its balance sheet. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations. There is however no guarantee that the Company will be able to secure any additional funding or be able to secure funding on terms favourable to the Company. 13 TG Metals Ltd Directors' report 30 June 2024 Significant Changes in the State of Affairs There have been no significant changes in the state of affairs of the Company during the financial year other than disclosed elsewhere in this Annual Report. Events Subsequent to Reporting Date On the 9th August 2024 the Company reported the results of maiden drilling on the Jaegermeister lithium prospect. The drilling encountered high grade lithium, Figure 6 shows the location of significant intercepts achieved in this drilling campaign. Figure 6 - Jaegermeister lithium pegmatite RC drilling showing lithium pegmatite intercepts. Datum: AMG Zone 51 (GDA94). 14 TG Metals Ltd Directors' report 30 June 2024 Events Subsequent to Reporting Date (continued) Although this is the first drilling conducted on the Jaegermeister targets it has successfully intersected high grade lithium pegmatites of similar thicknesses and orientation to the Burmeister deposit to the south west. Considering the width drilled so far and the open mineralization, the Jaegermeister prospect has the potential to be of a similar size to Burmeister. Further drilling will test these assumptions. On the 6th of September the Company reported infill drilling results on the Burmeister lithium deposit. Figure 7 shows the location of significant intercepts achieved in this drilling campaign. Figure 7 – Burmeister lithium pegmatite RC drilling showing pegmatite intercepts. Datum: AMG Zone 51 (GDA94) 15 TG Metals Ltd Directors' report 30 June 2024 Events Subsequent to Reporting Date (continued) There are no other matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, or the state of affairs of the Group in future financial years. Likely Developments and Expected Results of Operations Likely developments, future prospects and business strategies of the operations of the Company and the expected results of those operations have not been included in this report as the Directors believe that the inclusion of such information would be likely to result in unreasonable prejudice to the Company. Dividends Paid or Recommended No dividends were paid during the financial year (2023: nil) and no recommendation is made as to payments of future dividends. Meetings of Directors During the financial year, seven meetings of Directors were held. Attendances by each director were as follows: Richard Bevan Brett Smith Gloria Zhang Number eligible to attend Number attended 7 7 7 7 7 7 Directors’ Security Interests As at the date of this report, the interests of the Directors in the securities of the Company were: Director Richard Bevan Brett Smith Gloria Zhang Ordinary Shares Unlisted Options Performance Rights 791,667 2,300,000 568,750 600,000 1,388,706 775,645 1,400,000 880,000 880,000 Share Options As at the date of this report, the unissued ordinary shares of the Company under option are as follows: Options Founder Options Seed Options Management Options Management Options Advisor Options Lead Manager Options Number under Balance vested Option at 30 June 2024 Grant Date Expiry Date Exercise Price 10 March 2022 10 March 2022 15 March 2022 24 May 2025 24 May 2025 24 May 2027 $0.00 $0.25 5,218,606 2,590,889 5,218,606 2,590,889 $0.20 1,800,000 1,800,000 30 March 2022 24 May 2027 19 October 2022 9 February 2024 31 October 2024 9 February 2027 $0.30 $0.30 1,200,000 500,000 1,200,000 500,000 $1.12 2,000,000 2,000,000 13,309,495 13,309,495 All options on issue are unlisted. 16 TG Metals Ltd Directors' report 30 June 2024 Remuneration Report (Audited) This report outlines the remuneration arrangements in place for the key management personnel of TG Metals Limited (the “Company”) for the financial year ended 30 June 2024. The information provided in this remuneration report has been audited as required by Section 308(3C) of the Corporations Act 2001. The remuneration report details the remuneration arrangements for key management personnel (“KMP”) who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company, directly or indirectly. The board policy is to remunerate Non-Executive Directors at a level which provides the Company with the ability to attract and retain directors with the experience and qualification appropriate to the development strategy of the Company. The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval by shareholders at a General Meeting. The current maximum amount of remuneration that may be paid to all NonExecutive Directors has been set at $500,000 per annum as per the Company’s Constitution. The remuneration of Directors is reviewed annually by the Company. Non-Executive Director fees are not linked to the performance of the Company. However, to align Directors' interests with shareholder interests, the Directors are encouraged to hold shares in the Company. During the financial year, the Company did not employ the use of remuneration consultants. Company performance and link to remuneration Remuneration packages do not include performance-based components. An individual member of staff's performance assessment is done by reference to their contribution to the Company’s overall operational achievements. All Directors and Executives hold shares, options and performance rights in the Company to facilitate goal congruence between Executives with that of the business and shareholders. Refer below for further details of the performance based remuneration paid to Directors and Executives for the year. Voting of Remuneration Report at 2023 Annual General Meeting The 2023 Remuneration Report was voted for, without any commentary or discussion, at the 2023 Annual General Meeting, based on poll votes with votes for of 3,651,335 (100%) and nil votes against (0%). Key Management Personnel The key management personnel of the Company are considered to be the Directors and Mr David Selfe, who was appointed as Chief Executive Officer on 30 March 2022. There are no other individuals who have the authority and responsibility for planning, directing and controlling the activities of the Company. The following table discloses the contractual arrangements with the Company’s key management personnel that were in place as at 30 June 2024. Component Non-Executive Chair – Mr Richard Bevan Fixed remuneration Long term incentives $60,000 per annum plus statutory superannuation and excluding any GST. Options 600,000 options to acquire shares on a 1 for 1 basis, each with an exercise price of $0.30 and expiring 24 May 2027. Performance Rights 1,400,000 rights to acquire shares on a 1 for 1 basis, vesting on the date of achievement of certain performance milestones and expiring 24 May 2027, comprising: (i) 466,667 performance rights automatically vesting on the Company achieving a 20-day volume weighted average price (VWAP) of at least $0.40 (Class A Performance Rights); (ii) 466,667 performance rights automatically vesting on the Company achieving a 20-day volume weighted average price (VWAP) of at least $0.60 (Class B Performance Rights); and (iii) 466,666 performance rights automatically vesting on the Company achieving a 20-day volume weighted average price (VWAP) of at least $0.70 (Class C Performance Rights). 17 TG Metals Ltd Directors' report 30 June 2024 Component Non-Executive Director – Mr Brett Smith Fixed remuneration Long term incentives $45,000 per annum plus statutory superannuation and excluding any GST. Component Non-Executive Director – Ms Gloria Zhang Fixed remuneration Long term incentives $45,000 per annum plus statutory superannuation and excluding any GST. Component Chief Executive Officer – Mr David Selfe Fixed remuneration Long term incentives $220,000 per annum plus statutory superannuation. Options 600,000 options to acquire shares on a 1 for 1 basis, each with an exercise price of $0.30 and expiring 24 May 2027. Performance Rights 880,000 rights to acquire shares on a 1 for 1 basis, vesting on the date of achievement of certain performance milestones and expiring 24 May 2027, comprising: (i) 293,334 performance rights automatically vesting on the Company achieving a 20-day volume weighted average price (VWAP) of at least $0.40 (Class A Performance Rights); (ii) 293,333 performance rights automatically vesting on the Company achieving a 20-day volume weighted average price (VWAP) of at least $0.60 (Class B Performance Rights); and (iii) 293,333 performance rights automatically vesting on the Company achieving a 20-day volume weighted average price (VWAP) of at least $0.70 (Class C Performance Rights). Options 600,000 options to acquire shares on a 1 for 1 basis, each with an exercise price of $0.30 and expiring 24 Ma