Red5 Annual Report 2022

26 2022 ANNUAL REPORT 8. EVENTS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR In the first quarter of FY23, the Darlot Gold Mine’s processing plant was wound down and the Darlot operation has been transitioned to a satellite underground mine to provide ore to King of the Hills, with the majority of surface employees at Darlot transitioning or having already transitioned to King of the Hills. As a result, the Darlot process plant was placed into care and maintenance in July 2022. Other than the matters discussed above, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years. 9. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS In the opinion of the Directors, the successful completion of the KOTH Project will transform the future operating and financial performance of the Group. In the first half of FY23, KOTH is expected to steadily ramp up to full commercial production and deliver a step-change in operational performance and cost efficiency. This will establish a stable platform for continued growth and development at Red 5 well into the future. 10. BUSINESS STRATEGY AND PROSPECTS FOR FUTURE YEARS Business strategy The Group’s business strategy is firmly anchored in the Company vision of being a successful multi-operational exploration and mining company, providing benefits to all stakeholders, through the consistent application of technical excellence, and responsible and sustainable industry practices. With KOTH gold production ramping up in the first half of FY23, the Company is looking forward to another transformational year as it takes further important steps to deliver on its strategy of becoming a substantial Australian gold producer. To achieve the strategy, the Company will focus on: \ \ Unlocking the full potential of the KOTH operation; \ \ Attracting and retaining an experienced leadership and operating team; and \ \ Enhancing balance sheet strength and scale to achieve growth through economic and commodity price cycles. The substantial KOTH mineral resource and reserves underpin the future of Red 5, with the large KOTH bulk open pit providing the primary feed to the KOTH process plant, complemented by the additional higher-grade ore sources from the KOTH and Darlot underground mines. The longer-term strategy at KOTH is to expand the processing capacity, and to this end, the Company will embark on targeted technical studies to optimise and realise the full potential of this long-life deposit. The business plans associated with the strategy are in place, and the LOM plans demonstrate very robust future cash flows. The positive cash flow generated over a 16-year mine life will position the Company in the future to evaluate and undertake strategic acquisitions that align with the goal of becoming a major regional gold producer. Material Business Risks Red 5’s business, operating and financial results and performance are subject to various risks and uncertainties, some of which are beyond the Company’s reasonable control. Set out below are matters which the Directors consider relevant and that have the potential to impact the achievement of the business strategies. The matters identified are not necessarily listed in order of importance and are not intended as an exhaustive list of all business risks and uncertainties. External economic drivers (including macroeconomic, metal prices and exchange rates) \ \ The Company is exposed to fluctuations in the Australian dollar gold price, which can impact future revenue streams. As a mitigation, the Company has a partial gold price hedging program to assist in offsetting variations in the Australian dollar gold price, providing price certainty over a fixed portion of future production. \ \ The Company is exposed to global inflationary pressures across a range of input costs such as oil and gas, operating and maintenance parts and consumables and labour. As a mitigation the company collaborates with its suppliers to identify ways to manage these cost pressures. Reserves and Resources: \ \ The Mineral Resources and Ore Reserves for the Group’s assets are estimates only in compliance with industry standards, and no assurance can be given that future production will achieve the expected tonnages and grades. DIRECTORS’ Report (cont.)

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