Announcement PDF ANNUAL REPORT YEAR ENDED 30 JUNE 2023 CORPORATE INFORMATON Emu NL ABN 50 127 291 927 Directors Peter Thomas (Non-Executive Chairman) Gavin Rutherford (Non-Executive Director) Terence Streeter (Non-Executive Director) Tim Staermose (Non-Executive Director) Company Secretary Damien Kelly Registered Office C/- Elderton Audit Pty Ltd Level 32, 152 St George’s Terrace PERTH WA 6000 Principal Place of Business 10 Walker Avenue WEST PERTH WA 6005 Telephone: +61 8 9226 4266 Postal Address PO Box 1112 WEST PERTH WA 6872 Share Register Automic Group Level 5, 191 St George’s Terrace PERTH WA 6000 GPO Box 5193 SYDNEY NSW 2001 Telephone: +61 2 8072 1400 or 1300 288 664 Auditors Elderton Audit Pty Ltd Level 32, 152 St George’s Terrace PERTH WA 6000 Email info@emunl.com.au Internet Address www.emunl.com.au Stock Exchange Listing Emu NL is listed on the Australian Securities Exchange (ASX codes: EMU and EMUCA). 1 CONTENTS Review of Operations 3 Directors' Report 11 Auditor’s Independence Declaration 21 Corporate Governance Statement 22 Consolidated Statement of Financial Performance 23 Consolidated Statement of Financial Position 24 Consolidated Statement of Changes in Equity 25 Consolidated Statement of Cash Flows 26 Notes to the Consolidated Financial Statements 27 Directors' Declaration 42 Independent Audit Report 43 ASX Additional Information 46 2 REVIEW OF OPERATIONS ACTIVITIES The increasing urgency of the “green, renewable energy transition” has seen explorers update and transform their portfolios to meet rising demand for critical minerals, battery minerals and rare earth elements (REE) and to satiate the appetite of investors who made it clear they were shifting support to explorers focussed on these minerals. EMU NL, (EMU or the Company), like many of peers, directed its exploration effort and activities at delineating critical minerals, battery minerals and rare earth elements (REE). These minerals are required to build the infrastructure equipment and components which regulatory demands have been driving and appear likely to do so to greater or lesser degree for some time to come, with the demand for REE production in the west being heightened by the fact that current production of REEs is mostly generated by China. Georgetown Project, Georgetown QLD EMU acquired the Georgetown Project (Queensland) which it farmed into under JV with Rugby Resources Ltd (TSXV:RUG) 1. EMU secured earn-in rights over a significant underexplored package of tenements covering 850km2 of the multi element mineral endowment in the Georgetown Mining District representing a large-scale, grass roots, opportunity for EMU to explore in an area that has seen little, or no exploration for decades. The Georgetown Project extended EMU’s exploration focus and substantially increased the portfolio of minerals under exploration. The Georgetown Project endowment includes gold, copper, silver, lead, zinc, iron, rare earth minerals, molybdenum, lithium and uranium. Geoscience Australia, in a 2022 study which interrogated its extensive Australian database2 to seek “forgotten discoveries”, identified critical mineral occurrences along with gold, copper, iron and silver-lead-zinc in the Georgetown mining district. The report noted that the Georgetown inlier is “exceedingly rich in gold, copper, lead, silver and zinc mineralisation”. The Queensland Department of Natural Resources and Mines (DNRM)3, reported the Georgetown mining district as having untested potential for significant lithium resources. In its August 2021 report, the University of Queensland’s Sustainable Minerals Institute4 highlighted rare earth mineral potential at Georgetown. The Fiery Creek and Georgetown tenements overlay rare earth prospectivity related to potential Iron-Oxide-Copper-Gold (IOCG) deposits and which is further supported by moderate stream sediment anomalism within these tenements for rare earth minerals. EMU engaged the services of Mr Erik Norum, consulting geologist, to prepare a targeting review of the Georgetown tenements. Mr Norum’s report, which included a review of all open-source historic reports and an assessment of available mapping, provided EMU with numerous targets for exploration underpinning a maiden reconnaissance field trip was conducted in July 2023. 1 Refer ASX Announcement “Scale Project Added to Exploration Portfolio” 1 September 2022 2 “Mineral Occurrences: Forgotten discoveries providing new leads for mineral supply” C. Kucka, A Senior, A. Britt, Geoscience Australia 2022. Exploring for the Future. 3 “Emerging strategic minerals in Queensland”, July 2017, Queensland Department of Natural Resources and Mines. 4 “Queensland New Economy Minerals Compilation: Rare Earth Elements”, UQ Sustainable Minerals Institute, University of Queensland 10 August 2022 3 REVIEW OF OPERATIONS Georgetown QLD Condingup Project, near Esperance WA Following emphatic signals from the market generally and capital providers , EMU conducted a thorough investigation and systematic review of its WA databases and available public information for rare earth elements in WA in June 2022 with a view to securing a meritorious REE project at nominal cost rather than via purchase cock and bull projects at inflated prices. In the result, EMU applied for and was granted a highly prospective package of tenements at Condingup, near Esperance WA5. EMU’s geologists identified open ground located near the (ASX:OD6) Splinter Rocks project. The saprolite, clay enriched soils adjacent to, and overlaying the Booanya granite suite, was providing significant success to OD6. EMU secured tenements covering more than 1,560 square kilometres of vacant ground located directly over (critically important) Booanya granites in the region extending from Condingup to Balladonia, east of Esperance. EMU completed two field surveys of the project during the year and advised the market of results from rock and clay samples confirming the fertility and prospectivity of the project6. The sample results also confirmed that the Rare Earth Elements (REE) concentrations were not only significant (up to 2,124ppm Total Rare Earth Oxide – TREO7) - but were represented by highly desirable, “heavy” and “magnetic” REE ratios. EMU followed up its field evaluation trips with a passive seismic survey which was designed to and did delineate depths of clays to vector aircore drilling programmes. 5 ASX Release “Rare Earth Exploration Projects”, 7 October 2023 ASX Release “ Assays Confirm Magnetic and Heavy REE Fertility” 13 March 2023 7 Total Rare Earth Oxides 6 4 REVIEW OF OPERATIONS EMU’s geologists working with Passive Seismic Survey recording equipment, Condingup WA In addition to the Condingup applications, EMU applied for prospective REE tenements near Merredin in the WA wheatbelt8. The Merredin tenements were chosen, and then extended after a field survey, following evaluation of publicly available GSWA data which indicated 2 highly elevated, anomalous TREO sample values which were taken from areas overlying a structural fault package. EMU reported significantly anomalous REE values (up to 971pmm TREO) from rock samples collected within the project area9. Viper Project, near Jerramungup, WA EMU completed its maiden, 587m RC drilling programme at the Viper project located near Jerramungup WA on 24 November 2022. Following an auger drilling programme and a Fixed Loop Electromagnetic survey, EMU undertook an RC drilling programme to test depth extensions at the Netty Copper mine and the high-priority EM conductor located west of the mine on the Netty dyke. EMU’s drilling targeted the discovery of nickel, copper, platinum group metals and gold all of which reported anomalous results from the auger geochemistry drilling programme. Submission of samples to undertake multielement assay reported anomalous REE’s from 4m composite 10.   Drillhole 22VRC001: 40m @ 438.70 ppm TREO from 28m Drillhole 22VRC002: 4m @ 566.5 ppm TREO from 12m o and 20m @ 432.7 ppm TREO from 84m  Drillhole 22VRC003: 20m @ 654.23 ppm TREO from 0m o including 4m @ 1,137.68 ppm TREO from 16m Drillhole 22VRC004:  32m @ 459.87 ppm TREO from 0m Drillhole 22VRC005: 52m @ 541.95 ppm TREO from 4m o including 28m @ 648.12 ppm TREO from 4m 8 ASX Release “ Rare Earth Exploration Projects”, 7 October 2023 ASX Release “Further Rare Earths Discovery at EMU’s Merredin Project WA” 14 June 2023 10 ASX Release “REE Discovery Viper Project Jerramungup WA” 15 May 2023 9 5 REVIEW OF OPERATIONS All RC drill holes ended in significantly anomalous (composite) REE up to 380.9 ppm TREO with an overall sample average MREO11 of 29.4% and HREO12 of 15.6%. Prompted by these results, EMU applied for and was granted a further 120 square kilometres of tenements bringing the total tenement package to 240 square kilometres. Rock samples collected from the extended area reported REE anomalism with up to 567pmm TREO recorded. Graceland Project, near Lake Grace, WA EMU conducted a heritage survey over the Graceland tenements during December 2022 and followed up with its maiden RC drill programme in January 2023. The drilling programme was successful for the high values of TREO and the ratios of “heavies” and “magnetic” REE’s to TREO recorded.13 The ratio of MREO to TREO recorded was 26.7% with the ratio of HREO recorded as 14.6%. 11 Total Magnetic Rare Earth Oxides Total Heavy Rare Earth Oxides 13 ASX Release “Graceland Project Added to EMUs REE Portfolio in WA” 25 May 2023 12 6 REVIEW OF OPERATIONS RC Drilling at Graceland – February 2023 Badja Project, near Yalgoo, WA EMU completed a short follow up RC drilling programme at Flying Emu, Watertank Hill and Gnows Nest in July 2022. EMU previously established the presence of high-grade tungsten coincident with gold at Monte Cristo and, during the period, extended this finding to Flying Emu and Watertank Hill prospects. Primary assessment included the use of a UV light (blacklight) to identify the presence of UV light fluorescing scheelite in RC drill cuttings. The work led to the selection of drill hole samples for submission to the laboratory for multielement assays. Sunfire Project , near Bridgetown WA EMU advanced the required administrative processes for land access over its Sunfire Project. Environmental surveys were completed, and reports generated to support the access being granted. A planned systematic soil survey and fixed loop electromagnetic survey was placed on hold as EMU awaited (and still does) ministerial 7 REVIEW OF OPERATIONS advice on EMU’s ability to conduct drilling activities, submitted in November 2022 on the whether prospective portions of the tenements can be drill tested. Project Generation EMU continuously reviews resource and exploration projects both within Australia and overseas with a view to acquiring assets that may have the potential to add significant financial value and returns for its shareholders. During the period, EMU reviewed several domestic and overseas projects. EMU maintains a valuation criterion that projects must have the potential to be value-accretive and demonstrate significant upside at any stage in the project life cycle including greenfield exploration, late-stage exploration and near-term cash flow. EMU’s project generation during the period was either all low cost organic (rework of Badja for tungsten, Viper for REE’s, Graceland for REE’s); or ground zero acquisitive via application (Condingup and Merredin projects and extension applications at Merredin, Viper and Merredin), other than its acquisition of Georgetown. RISK FACTORS Introduction An investment in the Company is risky and the Directors strongly recommend potential investors consider the risk factors described below, together with information contained elsewhere in this report, publicly available information, circumstances peculiar to them and that they consult their professional advisers before deciding whether to invest in the Company. There are specific risks which relate directly to the Company’s business. In addition, there are general risks, many if not all of which are largely beyond the control of the Company and the Directors. The risks identified in this section, or other risk factors, may have a material impact on the financial performance of the Company and the market price of its Shares. With respect to shares in the Company, no guarantee or assurance is given with respect to the payment of dividends, returns of capital or the market value thereof. Potential investors should consider an investment in the Company as speculative and should consult their professional advisers before deciding whether to invest. The following is not intended to be an exhaustive list of the risk factors to which the Company and investors in the Company are exposed. Company specific risks Exploration Results The Company has numerous samples and geophysical data from its exploration programmes that are currently being assayed or evaluated. No assurance can be given that these exploration results will be favourable. Any results that are not favourable may materially adversely affect the Company’s share price and prospects. Additional requirements for capital The Company’s capital requirements, and the Company’s ability to satisfy those requirements, depend on numerous factors, many of which are beyond the control of the Company. The Company requires further funding. Additional equity financing will dilute shareholdings. Any debt financing, if available, can be expected to involve restrictions on the Company’s activities. If the Company is unable to obtain additional funding as needed, it may be required to reduce the scope of its operations, dispose of assets or scale back its exploration programmes, as the case may be. 8 REVIEW OF OPERATIONS The Company’s ability to raise funds through the issue of shares or other securities is subject to share market conditions from time to time. The market for securities in junior exploration companies fluctuates. There is no certainty that the Company will be able to secure any additional funding or be able to secure funding on terms favourable to the Company and its Shareholders. Executive Management The responsibility of overseeing the day-to-day operations and the Company’s strategic management depends substantially on its senior management and key personnel. There can be no assurance that there will be no detrimental impact on the Company if one or more of these employees cease their employment. Industry specific risks Exploration success The future profitability of the Company and the value of its securities is likely to be directly related to the results of exploration on its current and/or future projects. The exploration tenements held by the Company are at various stages of exploration and potential investors should understand that minerals exploration and development are high-risk undertakings. There can be no assurance that exploration of these tenements, or any other tenements that may be acquired, will result in discovery of an economic ore deposit. Even if an apparently viable deposit is identified, there is no guarantee that it can ultimately be economically exploited. The Company’s future exploration activities may be affected by a range of factors including geological conditions, limitations on activities due to seasonal weather patterns, unanticipated operational and technical difficulties, industrial and environmental accidents, native title processes and laws relating to Aboriginal heritage and other first Australian matters, changing government regulations and many other factors beyond the Company’s control. The Company’s success will depend upon the Company being able to maintain, renew or replace title to its tenements and obtaining all required approvals for its activities. In the event that exploration programmes prove to be unsuccessful, this would likely and be expected to lead to diminution in the value of the Company’s tenements, and possible relinquishment of tenements. The Company’s anticipated exploration costs are based on certain assumptions with respect to the method and timing of exploration. By their nature, these estimates and assumptions are subject to significant uncertainties and, accordingly, the actual costs may be materially different from these estimates and assumptions. Accordingly, no assurance can be given that any cost estimates or the underlying assumptions will be realised in practice, which may materially and adversely affect the Company’s viability. Tenure risks and native title Interests in tenements in Australia are governed by the mining legislation of the respective states. Each licence or lease is for a specific term and carries with it annual expenditure and reporting commitments, as well as other conditions requiring compliance. Consequently, the Company could lose title to or its interest in tenements if licence conditions are not met or if insufficient funds are available to meet expenditure commitments. If exploration is successful, the Company will not be able to exploit any mineral deposit unless the Company has or first acquires a mining title. The grant of a mining titles is subject to ministerial discretion. Additionally, in areas where native title exists or may exist, the ability of the Company to acquire a valid mining title will be subject to compliance with the ‘right to negotiate’ process under the Native Title Act. Compliance with this process can (and usually does) cause delays in obtaining the grant of a mining title and ultimately there can be no guarantee that a mining tile will be granted. Attaining a negotiated agreement with native title claimants or holders to facilitate the grant of a valid mining title generally adds significantly to the costs and timetabling of any development or mining operation. 9 REVIEW OF OPERATIONS The ability of the Company to conduct activities on exploration or mining tenements is subject to compliance with Aboriginal heritage laws. Conduct of site surveys to ensure compliance can be and mostly are expensive and involve delays. If any Aboriginal sites are located within areas of proposed exploration, mining or other activities, the ability of the Company to conduct those activities may be dependent on the Company obtaining further regulatory consents or approvals none of which can be assured. The requirements for obtaining environmental approvals are becoming increasingly stringent, financially burdensome and being subjected to ever more vigilant public scrutiny. Again, significant costs and delays are involved and now represent a real potential barrier to development. COMPETENT PERSON’S STATEMENT The information in this report that relates to exploration results is based on, and fairly represents information and supporting documentation prepared by Kurtis Dunstone, a Competent Person who is a Member of the Australian Institute of Geoscientists. Mr Dunstone is an employee of EMU NL and has sufficient experience in the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Dunstone consents to the inclusion herein of the matters based upon his information in the form and context in which it appears. 10 DIRECTORS’ REPORT CORPORATE Board Changes There have been no board changes during this reporting period. Capital Raising activities During the year, the Company:     conducted a private placement of 137,453,621 fully paid ordinary shares at $0.00672 each, raising $923,688 before costs; conducted a non-renounceable rights issue which resulted in the issue of 762,753,174 fully paid ordinary shares at $0.002 each; issued a total of 172,453,621 options exercisable at $0.01 each on or before 7 October 2024 (as approved by shareholders at the Company’s 2022 Annual General Meeting) to participants in the private placement conducted in October 2022, and brokers to the issue; and received $3,500 from directors and contractors for the exercise of all 35,000,000 options to acquire partly paid ordinary shares at $0.0001 each. Your directors submit their report on the consolidated entity (referred to hereafter as the Group) consisting of Emu NL and the entities it controlled at the end of, or during, the year ended 30 June 2023. DIRECTORS The names and details of the Company's directors in office during the year and until the date of this report follow. Each Director was in office for this entire period unless otherwise stated. Names, qualifications, experience and special responsibilities Peter Thomas, (Non-Executive Chairman) Comes from a legal background specialising in resources and corporate. For over 30 years, before retiring from legal practice, he specialised in the delivery of wide ranging legal, corporate and commercial advice to listed explorers and miners. Mr Thomas is now a professional director leveraging that background whilst delivering the insight of his commercial acumen and business expertise. For nearly 40 years he has served on the boards of various listed companies including being the founding chairman of both copper producer Sandfire Resources NL and mineral sands producer Image Resources NL. Other current ASX listed company board positions include being a non-executive director of Image Resources NL (since 19 April 2002) and non-executive chair of Middle Island Resources Limited (since 2 March 2010). Gavin Rutherford, (Non-Executive Director) Mr Rutherford has a passion for mineral exploration and development. Apart from EMU NL, he is general manager of another ASX listed explorer. He holds other directorships including chairperson of a public-unlisted tech company outside of the exploration segment. Mr Rutherford’s strong past experience includes construction and agribusiness. Terence Streeter, (Non-Executive Director) Mr Streeter has extensive experience in funding, listing and overseeing junior explorers in all exploration and economic cycles and has served in various roles in the nickel sulphide industry for over 30 years. He was a director of West Australian nickel explorer and miner, Jubilee Mines NL from 1993 to May 2004 and was a founding shareholder of Western Areas NL (ASX:WSA) in 1999, which went on to discover and develop two highgrade nickel sulphide mines in the Forrestania region of Western Australia. He served as a non-executive director of Western Areas NL from 1999, and non-executive chairman from 2007 to November 2013. He has also been the non-executive chairman of unlisted Fox Resources Ltd (since June 2005), a non-executive director of Midas Resources Ltd (from June 2001 to April 2013), non-executive chairman of Alto Metals Ltd (from December 2016 to 8 November 2018) and non-executive director of Minera IRL (from April 2007 to 2011). In 2010, Mr Streeter 11 DIRECTORS’ REPORT founded Riverbank Resources Mineracao Ltda, a private company incorporated in Brazil which is engaged in the exploration and development of iron, titanium, vanadium, base metal and gold projects throughout Brazil. Riverbank is actively exploring 100% owned iron and iron-titanium-vanadium projects in north-eastern Brazil. He is also non-executive chairman of ASX listed Corazon Mining Limited (from 18 September 2019) and Moho Resources Limited (from 6 July 2018). Tim Staermose, (Non-Executive Director) Tim Staermose has 27 years of equity capital markets, and equity research experience. He has worked at international sell-side equity brokerage firms in South Korea, and Hong Kong, including Banque Indosuez, (now part of Credit Agricole), in the late 1990s and, Lehman Brothers in the early 2000s. Following his career in sell-side equity research, Tim worked as an independent researcher and stockpicker for a series of boutique investment research firms, including ones focussed specifically on natural resources, gold, and mining investments. Tim is currently based in Tanzania, after starting African Lions Fund Ltd, an investment fund which invests in listed companies in sub-Saharan Africa frontier equity markets. Tim is CEO of the Investment Manager, ST Funds Management Limited and solely responsible for managing the African Lions Fund portfolio. Tim has prior public company board experience in Australia with US Residential Limited, where he served as a Non-Executive Director from January to December 2017 and Copper Strike Limited where he was previously Chairman. COMPANY SECRETARY Damien Kelly Mr Kelly is the founder and principal of Western Tiger Corporate Advisers. He has broad corporate and commercial experience spanning 20+ years, providing professional services to ASX and AIM listed companies predominately in the mining and energy sector. He has an MBA, Bachelor of Commerce, a Graduate Diploma in Applied Finance and Investment and is a former officer in the armed services, having graduated from the Royal Military College, Duntroon. He is also a member of CPA Australia. INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY AND RELATED BODIES CORPORATE As at the date of signing this report, the relevant interests of the directors in the shares of Emu NL were: Ordinary Shares Contributing Shares Peter Thomas Gavin Rutherford Terence Streeter Tim Staermose Total 32,001,597 15,122,023 4,000,000 33,940,569 85,064,189 14,420,651 6,884,281 5,000,000 5,750,000 32,054,932 PRINCIPAL ACTIVITIES The principal activities of the Group during the year were to (i) explore its mineral interests in Western Australia, and (ii) assess and pursue mineral property acquisition opportunities globally. DIVIDENDS No dividends were paid or declared during the year. No recommendation for payment of dividends has been made. 12 DIRECTORS’ REPORT OPERATING AND FINANCIAL REVIEW Finance Review During the year, total exploration expenditure incurred by the Group amounted to $1,164,613 (2022: $2,422,958). In line with the Group’s accounting policies, all exploration and tenement acquisition expenditure is expensed as incurred. Other expenditure incurred, net of revenue, amounted to $822,990 (2022: $897,230). This resulted in an operating loss after income tax for the year ended 30 June 2023 of $1,987,603 (2022: $3,320,188). At 30 June 2023 cash assets available totalled $1,149,742, an increase of $364,786 from the beginning of the year. The net assets of the Group increased by $362,694 during the year to $996,931 at 30 June 2023. The Group’s working capital increased during the year by $374,882 to $989,479 at 30 June 2023. 2023 Summarised operating results are as follows: Revenues Net Loss $ $ Revenues and net loss for the year from ordinary activities before income tax expense Shareholder Returns Basic and diluted loss per share (cents) 42,426 1,987,603 2023 2022 (0.21) (0.60) Risk Management The board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that activities are aligned with the risks and opportunities identified by the board. The board believes that it is crucial for all board members to be a part of this process, and, accordingly, all board members form, and discharge the obligations of the risk management committee. The board has a number of mechanisms in place to ensure that management’s objectives and activities are aligned with the risks identified by the board. These include implementation of board approved operating plans and budgets and board monitoring of progress against these budgets. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS Other than as disclosed in this Annual Report, no significant changes in the state of affairs of the Group occurred during the financial year. SIGNIFICANT EVENTS OCCURRING AFTER THE BALANCE SHEET DATE No matters or circumstances, besides those disclosed above, have arisen since the end of the year which significantly affected or which in the judgement of the board may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods. 13 DIRECTORS’ REPORT LIKELY DEVELOPMENTS AND EXPECTED RESULTS In order to further its existing projects, the Group expects to undertake capital raisings. EMU’s focus in the coming year will be on exploring, evaluating, and pursuing each of its projects, or otherwise monetising in a manner and on terms which is intended to accrete value to shareholders. The Board is mindful of the impact of diluting equity capital and seeking to balance that against its judgment regarding managing solvency risk. EMU reserves the right to pursue resource equity investments. Other than as set out above, likely developments in the operations of the Group and the expected results of those operations in future financial years have not been included in this report as the directors believe, on reasonable grounds, that the inclusion of such information would be likely to result in unreasonable prejudice to the Group. ENVIRONMENTAL REGULATION AND PERFORMANCE The Group is subject to significant environmental regulation in respect to its activities. The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and intends to comply with all environmental legislation. REMUNERATION REPORT (Audited) The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001. Policy principles used/to be used to determine the nature and amount of remuneration Remuneration Policy The remuneration policy of Emu NL is designed to align key management personnel objectives with shareholder and business objectives by providing a fixed remuneration component. The board of Emu NL believes the remuneration policy for the year under review was appropriate to attract and retain suitable key management personnel to run and manage the Group having