Austpac Resources N L : Annual Report – 29 December 2020

AUSTPAC RESOURCES N.L.

AND CONTROLLED ENTITIES

ABN 87 002 264 057

ANNUAL REPORT 2020

FOR THE YEAR ENDED 30 JUNE 2020

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Austpac Resources N.L.

ABN 87 002 264 057

and Controlled Entities

DIRECTORS' REPORT

The directors of Austpac Resources N.L., ('the company') A.C.N. 002 264 057, present their report together with the financial report of the company and of the consolidated entity, being the company and its controlled entities, for the financial year ended 30 June 2020 and the auditor's report thereon.

DIRECTORS

The names and positions of the directors of the consolidated entity during the financial year and up to the date of this report, unless otherwise stated, are:

Terry Cuthbertson

Non-executive Chairman

Mr Cuthbertson qualified as Chartered Accountant and holds a Bachelor of Business Degree with extensive corporate finance expertise, having advised several businesses and government organisations in relation to mergers, acquisitions and financing. He was formerly a Partner of KPMG Corporate Finance and NSW Partner in Charge of Mergers and Acquisitions, where he coordinated government privatisations, mergers, divestitures and public offerings on the ASX for the New South Wales practice. He is the Non-executive Chairman of ASX listed MNF Group Limited and Malachite Resources Limited. He was previously the Chairman of ASX listed Lark Distilling Co. Ltd (resigned 20 May 2019) and a non-executive director of Isentric Limited (resigned 31 May 2019).

Mr Cuthbertson was appointed a Director of Austpac Resources N.L. on 27 March 2001 and Chairman of Austpac Resources N.L. on 31 May 2004.

Colin Iles

Director and CEO

Mr Iles is a metallurgist with over 35 years' experience in international trade, sales and business development and the commercial management of technical projects at plant level. He was previously General Manager for CMC Cometals Australia, a subsidiary of the Commercial Metals Company headquartered in Texas, USA, where he was responsible for key objectives of profit, production and marketing. Mr Iles has been intimately involved with supply and offtake contracts with the Australian and international iron and steel industry and is an expert in international metals sourcing and trading.

Mr Iles was appointed a Director of Austpac Resources N.L. on 13 March 2017 and CEO of Austpac Resources N.L. on 14 July 2020.

Geoff Hiller

Non-executive Director

Mr Hiller is a mining/civil engineer with over 25 years of mining industry experience including feasibility, financing, development and construction of projects. Mr Hiller holds a Bachelor of Engineering Mining (Hons) from the University of Melbourne, a Bachelor of Civil Engineering (Hons) from the University of Sydney and MBA from the Australian Graduate School of Management (University of New South Wales). Mr Hiller is currently the Chief Executive Officer and director of ASX listed Malachite Resources Limited.

Mr Hiller was appointed a Director of Austpac Resources N.L. on 2 May 2019.

COMPANY SECRETARY

Mr Gaston is a Chartered Secretary with 47 years listed public company experience including Lend Lease Corporation, Peko Wallsend Limited and American Metals Climax (AMAX). Mr Gaston resigned as the company secretary and CFO on 3 July 2020.

The Company has appointed Mr Kenneth Lee as the company secretary on 3 July 2020. Kenneth is a member of the Institute of Chartered Accountants (England & Wales) and has a Master degree in Business Administration. He was a Director of KPMG Corporate Finance, Sydney.

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Annual Report 2020

Austpac Resources N.L.

ABN 87 002 264 057

and Controlled Entities

DIRECTORS' REPORT (CONTINUED)

DIRECTORS' INTERESTS AND BENEFITS

The relevant interest of each director in the share capital of the company at the date of this report and as notified by the directors to the Australian Stock Exchange in accordance with Section 205G(1) of the Corporations Act 2001 was:

	Ordinary Shares
	Direct		Indirect
Terry Cuthbertson		-	19,166,667
Colin Iles		-	-
Geoff Hiller		-	-

DIRECTORS' MEETINGS

The number of meetings held and attended by each of the directors of the company during the financial year are:

	Board of Directors	Audit Committee	Remuneration
	Committee
	Eligible to		Eligible to		Eligible to
	Attend	Attended	Attend	Attended	Attend	Attended
Terry Cuthbertson	12	12	2	2	-	-
Colin Iles	12	11	2	2	-	-
Geoff Hiller	12	12	-	-	-	-

PRINCIPAL ACTIVITIES

The principal activity of the consolidated entity is the development of mineral processing technology and exploration and development of mineral sands deposits and gold deposits.

OPERATING RESULTS

The loss of the Group for the financial year after providing for income tax amounted to $231,493 (2019: $853,612).

REVIEW OF OPERATIONS

In December 2019 Austpac Resources NL received a Research and Development tax concession refund for $119,779 for 2019.

In September 2019 the Company announced that a synthetic rutile technology package developed by the Company in 2006, had been sold to Lido Holdings Limited (British Virgin Islands) for $1.5 million. Lido is a wholly-owned subsidiary of Yanshan. The technology package comprised information contained in an internal conceptual study undertaken by Austpac in 2006 into an ERMS synrutile rutile plant in Australia (the Study). The Chinese companies have the right to use the information for their own purposes in China. It is not a license and does not represent the sale or transfer the ownership of any of Austpac's Intellectual Property.

In June 2020, the Company scaled down Newcastle site operations and implemented personnel changes at its Sydney office. The Company is currently reviewing its assets and investigating complementary opportunities in the mining sector.

The Company has also negotiated with its core technical employees to revise their terms of employment from being an employee to being consultants where they would be engaged on a need's basis.

In the interim, the directors have agreed to reduce their fees to $1,000 per month, effective from 1 January 2020 until the Company's financial position improves.

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Annual Report 2020

Austpac Resources N.L.

ABN 87 002 264 057

and Controlled Entities

DIRECTORS' REPORT (CONTINUED)

Austpac's ZIRP proof of concept testwork program completed during the year

The planned Proof of Concept (PoC) testwork program was completed on the 8th of November 2019. The objective of this program was to process zinc-contaminated steel furnace dust (BOF filter cake) and Spent Pickle Liquor (SPL) through the first three stages of Austpac's Zinc & Iron Recovery Process (ZIRP) and produce a reduced iron oxide-zinc oxide material for melting tests in an induction furnace, which is the last process stage.

The program commenced with the Evaporation stage (EVAP) to convert filtercake and the SPL to solid iron oxide-iron chloride pellets. The EVAP pellets were campaigned through a dual-purpose fluid bed roaster operating in Pyrohydrolysis (PYRO) mode to produce solid iron oxide-zinc oxide pellets. These pellets were then processed through the roaster operating with excess fuel to partially reduce the iron in the PYRO pellets so they are suitable for feeding to an induction furnace.

To ensure the melt tests are undertaken to industry standards, the Company signed a Technical Services Agreement with the CSIRO's Mineral Resources High Temperature Chemistry Division at Clayton Victoria. Samples were sent to CSIRO in December 2019. CSIRO has completed the melt test and the POC work proved the process technically as high grade of Zinc Oxide and a pig iron was recovered during the CSIRO test work. Additional work is required to develop the process to a commercial level.

Three steel companies visited the Newcastle plant during the test program, and one of these took samples of the raw materials and of the products from each process stage. This group is conducting detailed chemical and physical analyses of the samples they obtained, and they undertook to provide the results to Austpac and to assist our assessment.

In April 2019, Tangshan Yanshan Iron and Steel Company of China became a significant shareholder of Austpac through a share placement which provided $805,000 for the Company's testwork program designed to demonstrate the first three stages of the ZIRP process.

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Annual Report 2020