Announcement PDF 30 June 2024 \ ANNUAL REPORT Contents 1 Corporate Directory 2 Message from the Chairman 4 Operations Review 6 Reserves and Resources Table 7 Tenement Map and Holdings 9 Sustainability 10 Corporate Governance Statement 19 Financial Report 90 Additional Information Corporate Directory Name of Company Secretary Kylie Anderson Address of Registered Office KGL Resources Limited Level 5, 167 Eagle Street Brisbane QLD 4000 07 3071 9003 Name and Address of Share Registry Link Market Services Limited Tower 4, 727 Collins Street Melbourne VIC 3008 Securities Exchange Listing Quotation has been granted for the unrestricted ordinary shares of the Company on all Member Exchanges of the Australian Securities Exchange Page 1 | KGL Resources Annual Report 2024 Message from the Chairman Dear Shareholders During the financial year ended 30 June 2024, KGL Resources Limited (KGL) continued to advance the high-grade Jervois Project in the midst of market expectations for stronger copper demand growth with the market price reaching its highest recorded price of US$5.20 per pound this year. The Jervois Project is a high-grade polymetallic project in Australia with substantial silver and gold by-products adding to its financial attractiveness. It is an important strategic mineral project in the Northern Territory that will create a regional mineral processing hub in the eastern Arunta region and once developed, will be a catalyst for economic development and job creation in the region. Drilling over the past 12 months has successfully increased confidence in the Jervois Project’s copper resource within the planned open cut mining areas now predominantly within the Mineral Resource Measured status. The Project total resource stands at 23.37 million tonnes at 2.02% copper containing 26.0 g/t silver and 0.2g/t gold. KGL continues to explore and target near-mine extensions along strike and at depth for Reward and Rockface in addition to near surface targets, that hold the potential to add substantial value for shareholders. The Jervois and Unca Creek deposits remain under-explored and possess significant potential for more highgrade copper, gold, and silver, as evidenced by recent successful drilling at Rockface Deeps, which yielded some of the highest grades of polymetallic mineralisation ever encountered at Jervois. Since the completion of the feasibility study in November 2022, which affirmed the technical soundness and financial viability of the Project, KGL has been actively enhancing the key project value drivers, including productivity improvements to offset recent hyperinflation and reducing construction and operating risks. The initiatives have included increasing the proportion of open-cut mined ore, revising underground mine designs for cost efficiency, and increasing the processing capacity by 25% to enable higher production rate/cashflow in the earlier years. These activities, together with the improvement in the resource definition and confidence, are aimed at delivering a project with lower operational and financial risk. Independent analysts continue to forecast growing copper supply deficits that are predicted to widen over the next decade due to the lack of new discoveries, falling grades at existing mines and new mine approvals continuing to be challenging and slow. These deficits are forecast as a result of a structural increase in demand driven by the Government sanctioned clean energy transition globally, electric vehicle production, electrification, and AI / data centres, in addition to strong traditional demand growth from rapid urbanisation in developing economies, particularly India and South East Asia. We have already seen an increase in copper, silver, and gold commodity prices since November 2022. KGL is well-positioned, with all necessary approvals, to deliver its high-grade Jervois Project into a copper market at a time of a projected chronic supply shortfall bringing opportunities for jobs and economic development to the Northern Territory. The primary focus of the KGL team will be moving the project forward into development through finalisation of mining, plant and infrastructure contracts, and an off-take agreement to manage delivery and operational risks, as well as developing funding and other requirements to allow a final investment decision (FID). FID within the second half of 2025 will be critical to achieving first concentrate production in 2027. Page 2 | KGL Resources Annual Report 2024 We have been collaborating with key contractors, government authorities at all levels, and the local community to maintain the critical support necessary to deliver a major infrastructure initiative. Aligning with Tier-1 service providers for the mining and plant processing will deliver confidence in the planning and execution of the project, as does having a major resource player involved for the smooth offtake of concentrate to manage inventory and working capital. During the 2024 year we have seen key appointments and promotions to strengthen and balance the management team including the Chief Financial Officer and Exploration Manager. New additions to the team included the Site Manager role to focus on site personnel management, safety, environmental controls, and local stakeholder interactions. Denis Wood, who has been a key driver at KGL in terms of the exploration strategy and operations of the company, retired as Executive Director and Chairperson early in 2024. During the interim period whilst filling the Chief Executive Officer role, the company was fortunate to have Kylie Anderson step into the role to maintain the company momentum. KGL recognises that developing projects in this challenging environment requires a sound people strategy, in particular, an experienced team of professionals with a proven track record in mine development. In this regard, KGL was pleased to announce the appointment of Mr. Philip Condon as Chief Executive Officer in July 2024. Philip brings over 35 years of extensive industry experience across a wide range of commodities and countries, with a particularly deep knowledge of the copper industry. His expertise, gained from working at CSA underground copper mine at Cobar, Freeport’s Grasberg underground copper mine in West Papua, and Mawarid Mining Company’s copper project in Oman, will be invaluable as KGL builds a skilled team to advance the project with a feasibility study update in the final quarter of this year. I take this opportunity to extend my gratitude to all Jervois stakeholders, particularly the Central Lands Council, the Bonya community, Lucy Creek, and Jervois Station pastoralists, as well as the Northern Territory government, for their ongoing support. I would also like to thank our employees for their contributions over the past year and look forward to making considerable progress in advancing the Jervois Project towards production. Finally, to our valued shareholders, I extend my heartfelt thanks for your unwavering patience, confidence, and steadfast support of the company. Your trust in our vision and commitment to our shared goals have been instrumental in our journey. We appreciate your continued belief in the Jervois Project’s potential as we navigate the challenges and opportunities ahead. Jeff Gerard Chairman Brisbane 24 September 2024 Page 3 | KGL Resources Annual Report 2024 Operations Review KGL Resources Limited (KGL, the Company) has continued to progress development of its high-grade Jervois Project (Jervois, the Project) through the year ended 30 June 2024 with the goal of delivering the Project into a copper market at a time of chronic supply shortfall. The Company has been actively exploring ways to enhance key Project value drivers while also identifying opportunities to improve productivity. This focus is particularly important given the challenges posed by global and domestic inflation, disruptions to global supply chains, and geopolitical tensions. These factors have significantly influenced the pricing and availability of skilled labour, energy, materials, equipment, and contractors. The Company’s goal is to ensure it can deliver a cost competitive project, on time and on budget, and progress to a final investment decision (FID) and first production in 2027 while, at the same time, increasing confidence in the resource, and growing the mine life and value of the underlying resource. The key milestones achieved during the year were: Maiden JORC Measured Resource reported for Reward. The updated Reward resource, combined with the Bellbird resource, gives JORC Measured Resource within two planned open pits at the Project: 67% Measured; 32% Indicated; 1% Inferred. Progress has been made on an update of the open cut and underground mine design on the back of an updated mineral resource estimate. A feasibility study update, together with updated reserve, is underway.  rilling during the past 12 months has increased D confidence in the Jervois mineral resource to 23.37 million tonnes at 2.02% copper, 26.0 g/t silver and 0.26 g/t gold for 472.2 kt of copper, 19.5 Moz of silver and 192.8 koz of gold.  echnology selection and design of the T processing plant (sulphide and oxide) is complete with an increase in the nominal annual processing capacity from 1.6 million tonnes per annum to 2.0 million tonnes per annum.  GL continues to target near mine extensions in K proximity to the existing deposits of Reward and Rockface which have the potential to add considerable value for shareholders.  GL was pleased to announce the appointment K of Mr. Philip Condon to the position of Chief Executive Officer, effective 29 July 2024. Philip has extensive experience in the industry spanning more than 35 years across a wide range of commodities and countries with a particularly deep knowledge of the copper industry and all aspects of project development.  he Company’s understanding of the geological T structures and potential prospectivity at Jervois continues to improve with some of the highest grades of polymetallic mineralisation ever encountered at Jervois confirmed from recent drilling at Rockface Deeps. FEASIBILITY STUDY AND UPDATE In November 2022, the Company completed its feasibility study on the Jervois Project. The study revealed an increase in the mine life from 7.5 years to 11.75 years, a 25% increase in copper metal produced, compared to the December 2020 prefeasibility study, and a 25% increase in ore reserves. The study was based on expected production of 24.7 kt of copper metal in concentrate with gold and silver payable credits annually, with a pre-production capital cost of A$298 million. The study assumed a long-term copper price of US$4.23/lb and, assuming this price, the Project was expected to have a net present value (8% real, after-tax) of A$241 million, an internal rate of return of 20.7%, and a simple payback of 4.2 years. The Project was also shown to be well-positioned to benefit from an expected long-term copper shortage, a consequence of meeting global decarbonisation goals. KGL has taken the opportunity to progress optimisation studies to improve key Project value drivers and identify opportunities for productivity improvements since the release of the feasibility study in November 2022, which coincided with the peak rate of inflation on a quarterly basis in Australia. These improved value drivers are aimed to support the goal to commence operations in 2027, a time of a forecast long-term chronic copper shortfall. A feasibility study update is scheduled for release in the final quarter of 2024. This will include an updated open cut and underground mine design, and schedules and costing reflecting the increase in mineral resource estimate. Process plant, civil works and ancillary infrastructure costings will be updated where applicable. Once an updated feasibility study is completed, KGL intends to complete an independent technical review with the aim to reach FID, progress financing for the Project, to commence operations in 2027. Page 4 | KGL Resources Annual Report 2024 OPERATIONS REVIEW (CONTINUED) COPPER MARKET Whilst a softer short-term demand view for the copper market is expected to result in a marginal surplus for the remainder of 2024 and in 2025, the medium to long-term outlook for copper remains strong with forecast supply deficits likely to grow. In addition to traditional demand growth from developing economies, accelerating demand from the clean energy transition is likely to support the long-term outlook for copper demand. Most nations have committed to net-zero emissions targets. Carbon dioxide emissions need to fall by about 45% from 2010 levels by 2030 to reach net zero by 2050, requiring significant investment in renewables, grid upgrades and electric vehicles (EVs). With EVs at least three times as copper intensive as internal combustion engine vehicles, analysts expect the transport sector to make up over 20% of globalDemand copper demand by 2040, compared only 11% Supply today. for Copper Is Likely to to Outstrip New technologies will also drive demand. Major technology companies are expected to invest $1 trillion in data centres over the next five years. Artificial intelligence data centre racks could require seven times more power than traditional data centre racks. Demand growth in this sector, currently about 1% of global copper demand, could grow six-fold by 2050.1 Demand for Copper is Likely to Outstrip Supply The expected accelerating copper demand is forecast to lead to copper shortages later in the decade at a time when new mines are becoming ever harder to build. 1 https://sprottetfs.com/media/6112/setm-investorpresentation.pdf Source: BloombergNEF Transition Metals Outlook 2023. The black line represents supply and the shaded areas represent demand. Demand is based on a net-zero scenario, i.e., global net-zero emissions by 2050 to meet the goals of the Paris Agreement. Source: BloombergNEF Transition Metals Outlook 2023. The black line represents supply and the shaded areas represent demand. Demand based on a net-zero scenario, i.e., global net-zero by2024) 2050 to meet Figure 1 Sprott: Copper – A iscentral role in electricity transmission and EVs.emissions (31 March the goals of the Paris Agreement. While recycled scrap will be an important source of supply to meet growing demand, primary mine supply is struggling to keep up and continues to face large-scale challenges. Industry analysts estimate that the world will require about 10 Mtpa of copper supply over the next 10 years, including mine life extensions and replacement for depletions. This translates to around a quarter of a trillion dollars investment in the sector for the same period. Lower grades and increased depth and complexity of deposits present significant below-ground challenges for primary supply while growing regulatory, environmental and sustainability commitments add to the cost of developing a mine, and this inflationary trend may prove stubbornly persistent. Major copper discoveries, 1990–2023 S&P Global has noted the disconnect between major copper discoveries and exploration budgets per the adjacent chart. As at 11 June 2024. MMt - million metric tons; $/t=dollars per metric ton. Source: S&P Global Market Intelligence. ©2024 S7P Global. Page 5 | KGL Resources Annual Report 2024 Reserves and Resources Table RESOURCE MINERALISED MASS Area Reward Open Cut Potential > 0.5 % Cu* Bellbird Underground Potential > 1 % Cu* Bellbird Rockface METAL Category (Mt) Copper (%) Silver (g/t) Gold (g/t) Copper (kt) Silver (Moz) Gold (koz) Measured 2.63 1.91 46.20 0.43 50.30 3.91 36.0 Indicated 0.92 1.61 43.20 0.26 14.81 1.28 7.7 Inferred 0.68 0.94 10.70 0.07 6.41 0.23 1.4 Measured 1.23 2.53 15.1 0.14 31.18 0.6 5.6 Indicated 1.26 1.45 9.1 0.17 18.23 0.37 6.8 Inferred 1.02 1.24 10.6 0.12 12.67 0.35 4.0 7.74 1.72 27.1 0.25 133.6 6.7 61.5 Indicated 5.3 2.0 40.8 0.4 107.3 6.9 70.8 Inferred 3.7 1.5 18.6 0.2 56.1 2.2 23.9 Sub Total Reward GRADE Indicated 0.33 2.33 19.8 0.14 7.78 0.21 1.5 Inferred 2.84 2.09 12.3 0.11 59.15 1.12 9.7 Indicated 2.80 3.37 21.4 0.23 94.31 1.93 21.1 Inferred Sub Total TOTAL 0.73 1.92 19 0.18 13.97 0.45 4.2 15.62 2.17 25.5 0.26 338.6 12.8 131.3 23.37 2.02 26.0 0.26 472.2 19.5 192.8 Refer to ASX release for resource update on 23 May 2024. * Cut-off grades: 0.5% Cu within approximately 150m of the surface; above 1% CU below 150m. Ore (Mt) RESERVES Cu grade (%) Cu (kt) Au (g/t) Au (koz) Ag (g/t) Ag (Moz) Reward Open-Cut Probable Reserve 2.34 1.73 40.6 0.3 25.7 38.5 2.9 Bellbird Open-Cut Proven Reserve 1.40 2.07 29.1 0.1 5.2 12.3 0.6 Probable Reserve 0.44 1.12 5.0 0.1 0.9 5.9 0.1 Rockface Underground Probable Reserve 2.32 3.26 75.3 0.2 17.0 21.3 1.6 Reward Underground Probable Reserve 1.82 2.30 41.9 0.6 37.6 30.2 1.8 Marshall Underground Probable Reserve 2.98 1.57 46.7 0.2 21.6 43.2 4.0 Bellbird Underground Probable Reserve 0.43 1.77 7.7 0.1 1.2 14.2 0.2 Proven Reserve 1.40 2.07 29.10 0.12 5.20 12.30 0.60 Probable Reserve 10.33 2.10 217.20 0.31 104.00 32.10 10.60 RESERVES TOTAL 11.73 2.10 246.30 0.29 109.20 29.8 11.20 Quantities and grades in the above table may not add exactly due to rounding or weighting. The ore reserves reported are contained within the mineral resources. COMPETENT PERSON’S STATEMENT The Jervois resources information was first released to the market on 23 May 2024 and complies with JORC 2012. The company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement, and that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The company confirms that the form and context in which the competent person’s findings are presented have not been materially modified from the original market announcement. The Jervois reserves information was first released to the market on 10 November 2022 and complies with JORC 2012. The company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement, and that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The company confirms that the form and context in which the competent person’s findings are presented have not been materially modified from the original market announcement. Page 6 | KGL Resources Annual Report 2024 Tenement Map and Holdings The Company’s current tenement holdings cover over 600km2 of Jervois Mining Leases, 37.9km2 of Jervois Exploration Licences and 72.7km2 of Unca Creek Exploration Licences. 1 TENEMENT NUMBER PROJECTS BENEFICIAL HOLDING EXPIRY ML 30180 Jervois Project, Northern Territory 100% 27/01/2034 ML 30182 Jervois Project, Northern Territory 100% 25/03/2034 ML 30829 Jervois Project, Northern Territory 100% 17/08/2032 ML 32277 Jervois Project, Northern Territory 100% 17/08/2032 EL 25429 Jervois Project, Northern Territory 100% 01/02/2025 EL 30242 Jervois, Northern Territory 100% 25/11/2024 EL 28340 1 Yambah, Northern Territory 100% 03/07/2024 EL 28271 Yambah, Northern Territory 100% 05/04/2025 EL 28082 Unca Creek, Northern Territory 100% 29/12/2025 Exploration licence renewal has been lodged. Page 7 | KGL Resources Annual Report 2024 JERVOIS PROJECT TENEMENTS Page 8 | KGL Resources Annual Report 2024 Sustainability Environment, social and governance reporting and indigenous relations remain top priorities for KGL. KGL emphasises health and safety by vigilant monitoring, continuous updates, and effective controls over its operations. The welfare of the Company’s workforce remains paramount. Ongoing interactions continue with key local stakeholders, and site visits are made to ascertain pivotal sustainability aspects relevant to both the local community and the business. This includes refining the set of overarching sustainability goals, targets, and performance metrics. The Company is also dedicated to employing local personnel and engaging local businesses. Page 9 The Company’s methodology for active management of environmental responsibilities and compliance with reporting mandates is outlined in the approved Mining Management Plan. An environmental risk assessment has been completed. No environmental, social, economic or human health and safety risks with extreme initial or residual risk rating were identified. The Company continues to refine its hybrid power generation design (solar/battery/generators) targets furthering its commitment to reduce the Jervois Project’s carbon footprint. Water intensity and re-use are also being optimised. | KGL Resources Annual Report 2024 Corporate Governance Statement as at 30 June 2024 Approved by the Board of KGL Resources Limited PRINCIPLE 1 LAYING SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT THE BOARD CHARTER The overriding responsibility of the Board, as set out in the Board Charter, is to act honestly, fairly, diligently and in accordance with the law in serving the interests of the Company’s shareholders, as well as its employees and its customers. The Board should work to promote and maintain an environment within the Company that establishes these principles as basic guidelines for all of its employees and representatives at all times. More specifically, the role of the Board is to provide strategic guidance for the Company and to effectively oversee management of the Company. The Board’s and Chairman’s responsibilities are set out below. AREA BOARD RESPONSIBILITY CEO and Senior Executives Appointing and removing senior executives and monitoring their performance. Authorities Determining and approving the levels of authority to be given to senior executives in relation to operational expenditures, capital expenditures, contracts and authorising any further delegations of those authorities by senior executives to the other employees of the Company. Corporate Strategy Approval of corporate strategy, financial plans and performance objectives. Risk Management Reviewing, ratifying and monitoring risk management and internal control systems, codes of conduct and legal compliance. Health Safety and Environment Monitoring occupational health, safety and environmental performance. Compliance and commitment of appropriate resources. Capital expenditure and Management Evaluating, approving and monitoring major capital expenditure, capital management and all major corporate transactions including the issue of securities. Reporting Approving all financial report, material reporting and external communications. Company Secretary Appointment of Company Secretary. AREA CHAIRMAN RESPONSIBILITY Leadership Leadership of the Board, facilitating effective contribution and promoting constructive and respectful relations between Directors and the Board and Management. Meeting Conduct The Chairman is also responsible for setting the agenda for Board meetings and ensuring the efficient organisation and conduct of the Board’s function, the briefing of all Directors in relation to issues arising at Board meetings and overseeing communications to shareholders and arranging Board performance evaluation. Page 10 | KGL Resources Annual Report 2024 To effectively carry out its responsibilities, the Board delegates all other functions to the Chief Executive Officer (CEO). Management, led by the CEO, is responsible for running the affairs of the Company under delegated authority from the Board and implementing the policies and strategies set by the Board. With the knowledge of the Chairman, Directors may seek independent professional advice at the expense of the Company on any matter connected with the discharge of their responsibilities. The Chairman may determine whether any such advice received by a director will be circulated to the Board. A copy of the Board Charter can be found on the Company’s website www.kglresources.com.au. The Board Charter is reviewed every two years. NOMINATION AND APPOINTMENT OF DIRECTORS Before a director is appointed, the Board undertakes appropriate evaluations including in-depth interviews and reference checks. All members of the Board are given the opportunity to interview the potential appointee. Where a director is standing for election or reelection, the Notice of Meeting, including the Explanatory Memorandum, will set out information on the director including qualifications and experience, independence status and the recommendation of the rest of the Board on the resolution. A statement as to whether the Board supports the election/re-election of each director standing for election is provided. Additionally, a detailed profile for each director is included in the Company’s Annual Report. TERMS OF APPOINTMENT FOR DIRECTORS AND EXECUTIVES Each director executes a Letter of Appointment with the Company prior to appointment as a director. The Letter of Appointment covers the following key terms: • • • • • • • • • • continuing appointment contingent on performance and shareholder elections, performance requirements in terms of Board meetings and matters under consideration, key responsibilities and powers as detailed in the Board Charter, conditions of continuing in the role of director, membership of committees, remuneration, directors’ and officers’ liability insurance, confidentiality, consideration of independence, and ability to seek independent advice. A separate Deed of Insurance and Indemnity is executed by each director. Upon appointment, the chief executive officer’s terms of contract, including remuneration, is provided to the market in an ASX announcement. Details of each director’s and other key management personnel’s employment terms and conditions are also provided annually in the Remuneration Report as part of the Directors’ Report. Each executive is employed under an employment agreement which sets out the employment terms, duties and responsibilities, remuneration details and the circumstances under which employment can be terminated. COMPANY SECRETARY The company secretary reports solely to the Board and communication between the directors and the company secretary is open and unfettered. The company secretary advises the Board and its committees on governance matters, attends and takes minutes at all Board meetings, communicates with the ASX and ASIC on all regulatory matters, monitors adherence to Board policies and procedures and retains professional advisors at the Board’s request. Page 11 | KGL Resources Annual Report 2024 DIVERSITY POLICY PRINCIPLE 2 The Company believes in equal opportunities for all of its people and recognises that its business benefits from the diversity of its people. The Company has a Diversity and Inclusiveness Policy and is committed to developing a diverse and inclusive workforce and providing a respectful environment free from discrimination. The Company believes that recruitment and promotion of people should be based on merit, regardless of race, gender or gender orientation, age, relationship or family status, disability, sexual orientation, nationality, political or religious beliefs, or any other factor not relevant to an employee’s competence and performance. The Company is focused on eliminating bias in all its forms. No form of unlawful discrimination will be tolerated. The Board has not set measurable objectives for achieving gender diversity however there has been progress made in recruiting women into what is considered a traditionally male dominated industry. The Group has 24 employees, 42% being female. The Company is not a ‘relevant employer’ as defined under the Workplace Gender Equality Act. A copy of the Diversity and Inclusiveness Policy can be found on the Company website www.kglresources.com.au. BOARD EVALUATION The Company is currently a small single project company. It is yet to develop a procedure for evaluating the performance of the Board as the outcomes related to the Project align with the outcomes required of the Board. As the Company advances the development of the Jervois Project, consideration will be given to how best to structure a Board performance review. SENIOR EXECUTIVE EVALUATION As the Company advances the Jervois Project, consideration will be given to the appropriate structure of the executive roles within the Company. As positions are filled, the Board will consider the processes for evaluating the performance of senior executives. STRUCTURING THE BOARD TO BE EFFECTIVE AND ADD VALUE NOMINATION COMMITTEE At this point in time, the Board only comprises three non-executive directors. The Board considers that it is more efficient to deal with matters relating to nomination at a Board level rather than delegating to a committee. When the Board increases the number of directors and the Company reaches a sufficient stage in its development, the Remuneration Committee, which comprises the functions of a Nomination Committee will be re-formed. The Remuneration Committee Charter is listed on the Company’s website under the Corporate Governance section. BOARD SKILLS Directors recognise the following skills as being either essential or desirable to the effective operation of the Board. An assessment is made as to whether these skills are required from the members of the Board or whether they are better sourced through a consultant. External consultants have been used on a limited basis. The directors have undertaken an assessment of their skills against the fol