Brockman Mining : Annual Report 2020

Chairman's Message

Dear Shareholders,

I am pleased to report that our Company continues its steady progress towards the commencement of production of iron ore from our flagship Marillana Project (Marillana).

During this reported fiscal year, all the activities in Marillana are related to the Farm-in Obligations under the Farm-in Joint Venture (FJV) Agreement that was entered between Brockman Iron Pty Ltd (a wholly owned subsidiary of the Company) and Polaris Metals Pty Ltd (a wholly owned subsidiary of Mineral Resources Limited (MRL)) in July 2018. For Polaris Metals Pty Ltd (Polaris) and MRL to complete its Farm-in Obligations under the FJV, a drilling campaign and metallurgical test works were conducted and the results will be the foundation for an economic feasibility study, which is the basis for a Final Investment Decision (FID) to be made. The completion of such feasibility report is expected by end September 2020. The Company has been working closely with Polaris and MRL for all the activities in assessing Marillana. As at 30th June 2020 more than A$3 million has been spent on the Farm-in Obligations in relation to Marillana.

In accordance with the FJV, the parties also entered into a Mine to Ship Services Agreement, under which an infrastructure solution for Marillana shall be provided (constructed and funded) by MRL. Such infrastructure solution shall be critical to the success of Marillana. I can assure you that we shall exhaust all efforts in achieving our goal in bringing Marillana into production. At the current stage such production commencement time line is by the second half of calendar year 2022.

Annual Report 2020

I would like to thank the Brockman family for their continued hard work and commitment in progressing Marillana activities as well as other iron ore tenements of the Company. All of which are prospective and promising for the Company's future. I would also like to thank fellow shareholders for their unwavering support for the Company. Such unwavering support has proven to be pivotal for the Company's progress.

Kwai Sze Hoi

Chairman

15 September 2020

OVERVIEW

During the year, the Group continues to focus on the development of its iron ore tenements in Western Australia with the aim to bring these into production in the near future. Loss for the year before income tax from continuing operations was HK$22.6 million, compared to the previous year HK$25.8 million. The decrease is due to HK$3.2 million in cost saving initiatives for exploration and evaluation expenditure, in particular reduction in tenement holding costs and employment costs.

The Group recorded a loss after tax from continuing operations of approximately HK$21.0 million (2019: HK$67.6 million profit after tax from continuing operations). During 2019, the Group recognised an income tax credit of HK$93.4 million. This credit was the result of a partial offset of the deferred tax liability upon recognition of a deferred tax asset in respect of certain of the Group's Australian tax losses. This income tax credit is non-cash in nature.

On 11 March 2020, the World Health Organisation declared a global pandemic related to COVID-19. The impacts on the global economy and commerce have

already been significant and are expected to continue in the future. The duration of the pandemic and its impact on global financial markets, did not affect the Group significantly; however, appropriate protocols are in place to minimise the associated risks to employees.

IRON ORE OPERATIONS - WESTERN AUSTRALIA

This segment of the business comprises the 100% owned Marillana Iron Ore Project ("Marillana"), the Ophthalmia Iron Ore Project ("Ophthalmia") and other regional exploration projects.

The loss before income tax and share of losses of joint venture for the year for this segment attributable to the Group was HK$9.5 million (2019: HK$4.7 million). Total expenditure associated with mineral exploration for the year ended 30 June 2020 amounted to HK$4.5 million (2019: HK$7.8 million).

Total expenditure associated with mineral exploration and evaluation for each of the projects in Western Australia for the financial years is summarised as follows:

No development expenditure has been recognised in the financial statements during the year ended 30 June 2020 (year ended 30 June 2019: Nil).

Total capital expenditure for each of the projects in Western Australia for the financial years is summarised as follows:

Impairment

The Group has assessed whether any indicators of impairment exist with reference to both external and

Figure 1: Project location map - Brockman tenements

MARILLIANA PROJECT OVERVIEW

The 100% owned Marillana is Brockman's flagship project located within mining lease M47/1414 in the Hamersley Iron Province within the Pilbara region of Western Australia. It is located approximately 100 km north-west of the township of Newman (Figures 1 and 2).

Annual Report 2020

internal sources of information. As at 30 June 2020, the Group assessed and concluded there were no indicators of impairment present.

The project area covers 82 square km bordering the Hamersley Range, where extensive areas of supergene iron ore mineralisation, the source of hematite detrital mineralisation at Marillana, have developed within the dissected Brockman Iron Formation that caps the Range.

Marillana Development

On 26 July 2018 Brockman Iron Pty Ltd ('Brockman Iron')(a wholly-owned subsidiary of the Company) and Polaris Metals Pty Ltd (a wholly-owned subsidiary of MRL) entered into a Farm-in Joint Venture (FJV) Agreement (see announcements dated 27 July 2018 on the HKEX and ASX platforms) pursuant to which and subject to the terms and conditions therein, Polaris may farm-in and earn a 50% interest in Marillana by satisfying certain Farm-in obligations.

On 21 January 2019, the FJV Agreement ('JVA') became Unconditional and Polaris commenced its Farm-In Obligations. At the same time, Brockman Iron and a SPV subsidiary of MRL entered into a Mine to Ship Services Agreement for the transport of the Marillana iron ore product via a land transport infrastructure system from the mine site to Port Hedland.

Farm-in prior to Joint Venture

Farm-in obligations and interest

S i n c e J a n u a r y 2 0 1 9 , w h e n t h e J V A b e c a m e unconditional, Polaris has spent more than A$3.0 million (~HK$15.6 million) in relation to the Marillana Project. In July 2019 Brockman Iron and Polaris agreed that Polaris conduct a drilling campaign on the tenements and carry out further metallurgical test work. Such activities are to assist Polaris to complete its evaluation of the economic feasibility of Marillana. At that time the parties acknowledged that the Farm-in Obligations may take until 31 July 2020 to be completed.

The parties have therefore agreed to vary certain dates within the agreements, as outlined below:

1. Construction commencement of the rail and port system has been extended from 'on or before 31 December 2019' to 'on or before 31 December 2020';
2. Operation commencement of the rail and port system has been extended from 'on or before 31 December 2021' to 'on or before 31 December 2022'; and
3. The date for satisfaction of the Conditions Precedent for the Mine to Ship Services Agreement has been extended to 31 December 2020.

During the first quarter of 2020, a total of 17 large diameter diamond drill holes for 972m of core were completed. A number of composite samples representative of the various geometallurgical domains at Marillana were then prepared and subject to a metallurgical test-work program, limited to the Rockhole Bore material within the deposit.

Due to work protocols established in response to the COVID-19 pandemic, the drilling and metallurgical program has taken longer than expected to complete. Polaris now expect that they will finalise a Technical Study by the end of September 2020. The Company has been working closely with Polaris and MRL for all the activities in assessing Marillana.

To evaluate the economic feasibility of mining minerals on the tenements at Marillana, the results of the metallurgical testing and Technical Study will, amongst other matters include the preferred processing option and mine planning information.

The Technical Study which is the basis for determination of Final Investment Decision (FID) will also include the estimated capital and operating costs for Marillana, to assist Brockman Iron and Polaris to make their respective FID. Once FID occurs and a port lease agreement is finalised the Joint Venture will be established. The Joint Venture will then progress Marillana into construction and operation with production expected to commence by Q3 CY 2022.

Joint Venture

Formation and scope

The parties have agreed to establish the Joint Venture as an unincorporated joint venture (in which both parties have a 50% interest). The scope of the Joint Venture is to establish a mining and processing operation at Marillana at a minimum 20Mtpa, production rate with the product to be transported to Port Hedland for export. The infrastructure for land transportation and loading facilities at the port will be built owned and operated by a subsidiary of MRL under the Mine to Ship Services Agreement.

Management committee

A management committee comprising a total of six representatives shall be established. Each of the Joint Venturers shall appoint three representatives.

The role of the management committee is to make all strategic decisions relating to the conduct of the activities undertaken by the Joint Venture including the consideration and approval of any work programme and budget in the management of the joint venture.

Development funding

The Joint Venturers will respectively fund their capital cost commitments for the development of Marillana with loans from MRL. The initial loan to the Joint Venture is expected to amount to A$300 million with a further A$200 million available if needed (to be determined following completion of the economic feasibility study). The terms and conditions under which Brockman Iron shall repay its share of the debt financing are to be determined.

The Joint Venturers' capital commitments will fund the ore processing facilities and certain parts of non- process infrastructure. Certain parts of the non-process infrastructure may not be funded by the Joint Venturers but will be provided by MRL under build own operate life of mine services agreements.

Manager

Pursuant to the terms of the FJV Agreement, Polaris has agreed to act as the first manager of the Joint Venture.

Loan Agreement

As part of the FJV Agreement, Polaris is to provide an interest-free loan of A$10 million (the Loan) to Brockman Iron for working capital purposes. A$5 million of the loan has been released and the remaining A$5 million is in an escrow account and upon formation of the Joint Venture will be released from escrow. The loan will be repaid from the net revenue received by Brockman Iron from the sale of its share of Marillana

ore sold and transported under the Mine to Ship Services Agreement. However, the loan would become immediately repayable (within 14 days) in the event that Polaris approves the development of the project but Brockman Iron does not proceed.

MINERAL RESOURCES AND ORE RESERVES

Brockman reports its Mineral Resources and Ore Reserves on an annual basis, in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 Edition (the 'JORC Code 2012'), unless otherwise noted. Mineral Resources are quoted inclusive of Ore Reserves.

In the previous year, Brockman updated its Marillana Mineral Resources and Ore Reserves to the JORC 2012 Code (refer to announcement dated 25 May 2018). Mineral Resources and Ore Reserves were previously reported under the JORC 2004 Code and released to the market on 9 February 2010 and 9 September 2010 respectively by Brockman Resources Limited, now a wholly owned subsidiary of Brockman Mining Limited.

Marillana has a very significant Mineral Resource estimate of 1.51 billion tonnes (Bt) of hematite Detrital (DID) and Channel Iron (CID) mineralisation, comprising

169.5 million tonnes (Mt) of Measured Mineral Resources,

1,046 Mt of Indicated Mineral Resources and 291 Mt of Inferred Mineral Resources (see Tables 1 and 2).

The JORC 2012 Ore Reserve estimate is based on the revised JORC 2012 Mineral Resource model, and incorporates a number of factors and assumptions as outlined in the announcement of 25 May 2018.

The base case optimisation was determined with cut-off grades of 38% Fe for DID and 52% Fe for CIDs within the final pit and tenement boundary limits.

Metallurgical testwork results were used to estimate the recoverable fraction from the DID ore component. Recoveries of final product and grades (of iron, silica, alumina and LOI) were estimated in the block model.

Table 3: Marillana Project - Ore Reserves*

Based upon dense media separation (DMS) testwork, it is expected that the final product has an average grade of at least 60% Fe and 37.3% in mass recovery.

The Marillana project has total estimated Probable Ore Reserves of 967 Mt of DID plus 46 Mt of direct ship CID (Table 3). The total saleable product from the processed iron ore feed is estimated at 404 Mt averaging 60% Fe, 6.1% SiO2, and 3.1% AI2O3 (Table 4). Life of mine strip ratio is 1.0:1 (tonnes of Waste of tonnes of Ore).

The Marillana Ore Reserves are based solely on the Measured and Indicated Mineral Resources. The Mineral Resources also include some 273Mt of Inferred Mineral Resources (DID), comprising 201Mt based on wide-spaced drilling to the north of the Indicated Mineral Resource boundary and 72Mt of previously Indicated Mineral Resources that was downgraded to Inferred classification during the Projection Pursuit Multivariate Transform (PPMT) process. Based on historical conversion of Inferred to Indicated Mineral Resources, it is anticipated that additional drilling may enable some of the Inferred material to be upgraded to Indicated classification.

Marillana represents one of the largest published hematite Ore Reserve positions in the Pilbara, outside the three major producers (BHP, Rio and FMG). The Detrital Ore is upgraded to a high-quality, sinter feed product via simple beneficiation, which is supported by low-cost mining, low waste ratios and large continuous ore zones.

The Mineral Resource and Reserve estimation (see Tables 1 to 4) was prepared by Golder Associates Pty Ltd and has been classified in accordance with the Australasian Code for Reporting of Exploration results, Mineral Resources and Ore Reserves (JORC Code, 2012 Edition).

OPHTHALMIA PROJECT OVERVIEW

The 100% owned Ophthalmia iron ore project, located north of Newman in the East Pilbara region of Western Australia (see figures 1 and 3), is the most significant iron ore project for the Company outside of its flagship Marillana project. Since the discovery of significant occurrences of bedded hematite mineralisation by field reconnaissance mapping and surface sampling in August 2011, major exploration drilling programmes have been completed and JORC compliant Mineral Resources have been estimated and reported for the Sirius, Coondiner, and Kalgan Creek deposits. The total Mineral Resource at Ophthalmia is 341 Mt grading 59.3% Fe (Table 5).

Approvals

The Native Title Agreement with the Nyiyaparli people that was executed in May 2015 covers all tenements comprising the Ophthalmia project and was based on the existing agreement with the Nyiyaparli people covering Marillana (signed in 2009). It takes into consideration the Nyiyaparli people's interests with regard to the management of Cultural Heritage and Protection of the land and environment at the Ophthalmia project, as well as providing education and training opportunities for the local Nyiyaparli people.

The signing of this agreement paves the way for the granting of mining leases over the project area once Brockman has established an infrastructure solution to facilitate development of the project.

Metallurgy

In 2016 a bulk sample of ore from the Sirius deposit was sent to CISRI (China Iron and Steel Resources Institute Group) in China for a comprehensive sinter testwork programme. The bulk sample was generated in 2013 by compositing diamond drill core from 7 holes spaced across the entire deposit.

The sinter testwork program showed that there are no fatal flaws in the sintering performance of blends where Sirius fines replaces either Pilbara Blend or MAC (Mining Area C) fines up to 30%. Most parameters show only gradual changes as substitution increases, except that mix moisture and fuel loads do increase significantly. There is little change in sinter productivity or granulation, RDI (Reduction Degradation Index) is similar or improved marginally, as has its softening and melting performance. RI (Reducibility Index) is lower but still well within tolerance.

Table 5: Ophthalmia DSO Mineral Resource Summary

Annual Report 2020

Mineral Resources

Ophthalmia has a Mineral Resource estimate of 340.9 million tonnes of hematite mineralisation, comprising 280 million tonnes of Indicated Resources and 61 million tonnes classified as Inferred Resources (see Table 5).

The resource estimate was classified in accordance with guidelines provided in the JORC Code 2012. Refer to ASX Announcement dated 1 December 2014.

WEST PILBARA PROJECT

Overview

The West Pilbara project comprises four tenements centred around Duck Creek, located about 100-130 km WNW of Paraburdoo in the West Pilbara region. (Refer to Figure 1).

At Duck Creek, mineralisation comprises discrete mesas of channel iron deposits ('CID') 15-30 m above the surrounding plains with stripping ratios expected to be very low for the targets identified. Seven mesas containing ore grade CID mineralisation have been identified from surface sampling, but only six have been drilled due to access limitations.

Brockman has completed an Inferred Mineral Resource estimate of 21.6 Mt grading 55.9% Fe, for the channel iron deposit ('CID') mineralisation at Duck Creek (E47/1725), as detailed in Table 6 below. The Mineral Resource estimate has been classified in accordance with guidelines of the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. The Mineral Resource estimate is based on the results of 45 vertical RC holes drilled on sections varying from approximately 200 to 400 m apart along the long axis of each mesa, supported by surface sampling to confirm the lateral extent of mineralisation.

Total tonnes may not add due to rounding.

Mineral Resources and Ore Reserves

The information in this report that relates to the Mineral Reserve and Mineral Resource estimates of the Marillana project was declared as part of a market announcement issued on 25 May 2018.

The information in this report that relates to the Mineral Resource of Ophthalmia project was declared as part of a market announcement issued on 1 December 2014.

The information in this report that relates to the Inferred Mineral Resource of West Pilbara Project was declared as part of a market announcement issued on 31 August 2020.

The Company confirms that it is not aware of any new information or data that materially affects the information included in the original announcements referred to above. 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 announcements.

Mineral Resources and Ore Reserves Governance of Internal Controls

Brockman ensures that the Mineral Resources and Ore Reserve estimates quoted are subject to governance arrangements and internal controls activated at a site level and at the corporate level. Internal and external review of Marillana Resources and Ore Reserves estimation procedures and results are carried out through a technical review team which is comprised of highly competent and qualified professionals. These reviews have not identified any material issues.

LIQUIDITY AND FINANCIAL RESOURCES

The Group generally finances its short-term funding requirements with equity funding and borrowings. The Group's ability to advance its iron ore project developments is reliant, among other things, on access to appropriate and timely funding.

The current ratio as at 30 June 2020 is 16.05 (30 June 2019: 14.51). The gearing ratio of the Group (long-term debt over equity and long-term debt) is measured at 0.05 (30 June 2019: 0.02).

During the period, the Group did not engage in the use of any financial instruments for hedging purposes, and there was no hedging instrument outstanding as at 30 June 2020.

CAPITAL STRUCTURE

During the reporting period, the Company has the following movements in the share capital:

Exercise of employee options

58,000,000 employee options were exercised by directors and employees.

PLEDGE OF ASSETS AND CONTINGENT LIABILITIES

As at 30 June 2020 there were no assets that were pledged to secure any debt, and the Company did not provide any financial guarantees and there was no material contingent liability of the Group. (30 June 2019: Nil)

RISK DISCLOSURE

MARKET RISK

The Group is exposed to various types of market risks, including fluctuations in iron ore price and exchange rates.

1. Commodities price risk Iron ore price:
   The fair value of the Group's mining exploration properties in Australia is exposed to fluctuations in expected future iron ore price.
   We have not used any commodity derivative instruments or futures for speculation or hedging purposes. Management will review market conditions from time to time and determine the best strategy to deal with the fluctuations of iron ore price as required.
2. Funding risk
   The commencement of exploration and potential development of the iron ore projects will depend on whether the Group can secure the necessary funding.
3. Risk that the project will not be materialised
   This risk is largely driven by various factors such as commodity prices, government regulations, regulation related to prices, taxes, royalties, land tenure, viable infrastructure solution, capital raising ability etc. The Board will therefore closely monitor the development of the project.
4. Exchange rate risk
   The Group is exposed to exchange rate risk primarily in relation to our mineral tenements that are denominated in Australian dollars. Depreciation in the Australian dollar may adversely affect our net asset value and earnings when the value of such assets is converted to Hong Kong dollars. During the year, no financial instrument was used for hedging purposes.

STAFF AND REMUNERATION

As at 30 June 2020, the Group employed 15 employees (30 June 2019: 14), of which 5 were in Australia (includes

2 non-executive directors) (30 June 2019: 4) and 10 in Hong Kong (includes 4 non-executive directors) (30 June 2019: 10).

The remuneration policy and packages, including share options of the Group's employees, senior management and directors are maintained at market levels and are reviewed periodically by the management and the remuneration committee.

ENVIRONMENTAL POLICY AND COMPLIANCE WITH RELEVANT LAWS AND REGULATIONS

Environmental Protection

As a responsible entity, the Group has endeavoured to comply with local laws and regulations in relation to waste disposal and environmental protection. At a corporate level, the Group also encourages staff to save energy, minimise the use of natural resources and paper products.

We operate effective and sustainable iron ore business work actively through all areas of the business to minimise the actual and potential environmental impact of the Company's activities, respect the rights of the traditional owners and value the indigenous cultural heritage associated with its operations. Furthermore, with no mining operations carried out, disturbance to the environment is expected to be minimal. We will continue to ensure that in the future, we are accountable for our environmental footprint.

Compliance with Laws and Regulations

During the year, the Group has complied with the relevant standards, laws and regulations that have a significant impact on our businesses. At the same time, the Group always maintains a safe working environment for staff in accordance with relevant safety policies.

Relationship with Employees, Customers and Suppliers The Group believes that human resources are the most important asset for the Group's sustainable development. We offer competitive remuneration packages and a high quality working environment for our employees. It is our custom to respect each other and ensure that fairness is applied to everyone. From time to time, we provide relevant on-the-jobtraining to enhance employees' professional knowledge. The Group also organises different leisure events and frequent group discussions for the participation of employees to enhance the working relationship of the employees and communications with management. We also strive to maintain good working relationships with our suppliers and customers.

Remuneration Policy

The Group's compensation strategy is to promote a pay-for-performance culture to reward employee performance that will maximise shareholder value in the long term. The Group from time to time reviews remuneration packages provided to its employees to ensure that the total compensation is internally equitable, externally competitive and supports the Group's strategy.

As at the date of this report, the Company has the following directors and senior management:

NON-EXECUTIVE DIRECTORS

Mr. Kwai Sze Hoi

Mr. Kwai Sze Hoi, aged 70. Mr. Kwai joined the Group in June 2012. He is the Chairman of the Group. Mr. Kwai graduated from Anhui University in 1975. Mr. Kwai has more than 30 years experience in international shipping and port operation businesses and is a successful entrepreneur. In 1990, he founded Ocean Line Holdings Ltd ('Ocean Line'). Ocean Line wholly owns, operates and manages a fleet of total deadweight tonnage of 3 million metric tonnes, with routes running worldwide. Also, Ocean Line has investments in infrastructure and operates other shipping related businesses including ports, terminals, warehouses, logistics, ship repairs and crew manning etc. The diversified operations of Ocean Line put it in a highly competitive position globally. In addition, Ocean Line has investments in real estate, mining, financial services, securities, trading and hotel businesses. Mr. Kwai is also the chairman and an executive director of Ocean Line Port Development Limited, which is listed on the GEM of the Hong Kong Stock Exchange. Mr. Kwai is the father of Mr. Kwai Kwun, Lawrence, an Executive Director of the Group.

Mr. Liu Zhengui

Mr Liu Zhengui, aged 73. Mr. Liu joined the Group in April 2012, and became the Vice Chairman of the Group in June 2012. Mr. Liu Zhengui has over 40 years of experience in corporate finance and capital management. He holds a bachelor degree in management engineering from HeFei University of Technology. He is currently a director of Shandong School of Economics and Social Development （山東 社會經濟發展研究院）and is the chairman of Shandong Dongyin Investment Management Co., Ltd（山東東銀投 資管理有限公司）. He is also a financial consultant of the Shandong provincial government. During the period 2004 to 2009, Mr. Liu was the chairman of Bank of China Group Investment Limited (BOCGI). Prior to that, he served as the chief executive of Bank of China's branches in three different provinces for 16 years.

Mr. Ross Stewart Norgard

Mr. Ross Stewart Norgard, aged 74. Mr. Norgard joined the Company as Non-executive Director in August 2012. He is a chartered accountant and former managing director of KMG Hungerfords and its successor firms in Perth, Western Australia. For the past 30 years he has worked extensively in the fields of raising venture capital and the financial reorganisation of businesses. He has held numerous positions on industry committees including past chairman of the West Australian Professional Standards Committee of the Institute of Chartered Accountants, a former member of the National Disciplinary Committee, a former member of Lionel Bowens National Corporations Law Reform Committee, a former chairman of the Duke of Edinburgh Award Scheme and a former member of the University of Western Australia's Graduate School of Management (MBA programme). Mr. Norgard is also a director of Nearmap Limited (formerly known as Ipernica Limited) (Chairman since 1987) and was a director of Ammtec Limited from 1994 to November 2010. Prior to his present appointment as Non-executive Director of the Company, he was the non-executive Deputy Chairman of Brockman Resources Limited, a former ASX listed entity which is now a wholly owned subsidiary of Brockman Mining Limited.

EXECUTIVE DIRECTORS

Mr. Kwai Kwun, Lawrence

Mr. Kwai Kwun, Lawrence, aged 39, joined the Board in March 2014. He is a member of the Executive Committee. He has extensive experience in investment in international shipping, port operations and ship building, mining and finance. Mr Kwai graduated from Harvard University in the United States with a Bachelor of Mathematics degree. Mr Kwai is the son of Mr. Kwai Sze Hoi, the Chairman of the Group.

Mr Chan Kam Kwan, Jason

Mr. Chan Kam Kwan, Jason, aged 47, joined the Group in January 2008. He is the Company Secretary and a member of the Executive Committee. Mr. Chan graduated from the University of British Columbia in Canada with a Bachelor of Commerce Degree and he holds a certificate as a Certified Public Accountant issued by the Washington State Board of Accountancy in the United States of America. Mr. Chan has extensive experience in corporate finance.

Mr. Colin Paterson

Chief Executive Officer of Australian Operation

Mr. Colin Paterson, aged 59, has over 30 years' experience in the resources sector covering a diverse range of geological environments throughout Australia, but principally in Pilbara iron ore region as well as gold and nickel exploration in the Archaean of Western Australia. He has extensive experience in the technical supervision of exploration projects; resource development, project generation and project evaluations. He was principal geologist with Asarco Australia Ltd and held a similar position with Mining Project Investors Pty Ltd (subsequently MPI Mines Limited). Following which he was the founding director of Brockman Mining Australia Pty Ltd.

INDEPENDENT NON-EXECUTIVE DIRECTORS

Mr. Yap Fat Suan, Henry

Mr. Yap Fat Suan, Henry, aged 74, joined the Group in January 2014. He holds a master degree in Business Administration from the University of Strathclyde, Glasgow, in the United Kingdom. He is a fellow member of the Institute of Chartered Accountants in England and Wales and an associate member of the Hong Kong Institute of Certified Public Accountants. He has extensive experience in finance and accounting. Mr Yap retired as managing director of Johnson Matthey Hong Kong Limited in June 2017 and prior to that he was the general manager of Sun Hung Kai China Development Limited. He is also an independent non- executive director of Concord New Energy Group Limited and Frontier Services Group Limited, which are listed on the Main Board of the Stock Exchange.

Annual Report 2020

Mr. Choi Yue Chun, Eugene

Mr. Choi Yue Chun, Eugene, aged 48, joined the Group in June 2014. He holds a Bachelor of Laws degree from the University of Hong Kong, and was admitted as a solicitor of the High Court of Hong Kong 1997. Currently Mr. Choi is a member of the Law Society of Hong Kong. He has over 20 years of experience in the legal field, specialising in corporate finance and compliance matters for listed companies in Hong Kong. Mr Choi is currently the senior legal counsel of Rusal Global Management B.V.

Mr. David Rolf Welch

Mr. David Rolf Welch, aged 54, joined the Group in 2019. He holds a Bachelor of Commerce degree from the University of Western Australia. Mr Welch has held senior executive positions within ASX listed Aurizon Holdings Limited from 2007 to 2017. These positions included Vice President Iron Ore, Vice President Market Development and Executive Vice President Strategy and Business Development. He has experience in strategy, business transformation and performance, merger and acquisition and business development. Mr Welch was previously the managing director of The Millennium Group from 1998 to 2006 and was a marketing manager of CSBP Limited (part of the Wesfarmers conglomerate) from 1989 to 1994 in the development of mining reagent and agriculture products.

SENIOR MANAGEMENT HONG KONG

Mr. Hendrianto Tee

Business Development Director

Mr. Hendrianto Tee joined Brockman Mining Limited in January 2009 as the Chief Investment Officer after spending a large part of his career focusing on debt capital markets with several global financial institutions, among others Fleet Boston (now Bank of America Merrill Lynch) and UBS AG. In October 2014, Mr. Tee re-joined Brockman Mining Limited as the Business Development Director overseeing project funding and development. Prior to re-joining, Mr. Tee spent 3 years in investment and advisory activities covering the resources sector in Australia, Canada and Indonesia. Mr. Tee graduated from Walsh University, USA, with a Bachelor of Arts Degree (Magna Cum Laude).

COMPLIANCE OF THE CODE ON CORPORATE GOVERNANCE PRACTICES

The Company is listed on both the Australian Securities Exchange ("ASX") and the Stock Exchange of Hong Kong Limited ("SEHK"). The Company's Corporate Governance policies have been formulated to ensure that it is a responsible corporate citizen. Unless otherwise noted, the Company has compiled with all aspects of the Corporate Governance Code as set out in Appendix 14 of the Rules Governing the Listing of Securities on the SEHK ("the HK Listing Rules") and the ASX Corporate Governance Council's 'Corporate Governance Principles and Recommendations 3rd Edition ("the CGPR") which applies for year- ends commencing on or after 1 July 2016, ("the ASX Principles") during the entire year ended 30 June 2020.

The exceptions to this are as follows:

1. Appendix 14 Code Provision A.2.1 of the HK Listing Rules, states that the roles of chairman and chief executive should be separate and should not be performed by the same individual. The position of Chief Executive Officer at the Group level has been vacant during the period. Nonetheless, Mr. Colin Paterson, who serves as the chief executive officer of Brockman Mining Australia Pty Ltd (a wholly-owned subsidiary of the Company), is responsible for the oversight of the core iron ore business operation; and
2. Appendix 14 Code Provision A.6.7 of the HK Listing Rules, states that non-executive Directors should attend general meetings. During the year, due to directors' other commitments and schedule conflicts, not all of the non-executive directors of the Company attended all the general meetings.

BOARD OF DIRECTORS

The Board is responsible to shareholders for the overall strategic direction of the Group, including establishing goals for management and monitoring the achievement of those goals with the objective of enhancing the Company and shareholders' value. The Board has delegated responsibility for the management of the Company's business and affairs to the Executive Committee. The responsibilities reserved for the Board of Directors are set out in the Board Charter, a copy of which is available on the website of the Company. The Board Charter is reviewed periodically and each Director is provided with a letter of appointment which outlines their key terms and conditions so each Director clearly understands their responsibilities.

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

The roles of the Chief Executive Officer and Chairman are separate and exercised by different individuals. The position for the chief executive officer at the Group level has been vacant during the period. Nonetheless, Mr. Colin Paterson, an executive director of the Company, also serves as the Chief Executive Officer of Brockman Mining Australia Pty Ltd (a wholly-owned subsidiary of the Company), and is responsible for the oversight of the core iron ore business operations.

The Chairman held interests in the shares of the Company, and is not independent as he is a substantial shareholder of the Company. The Board has determined that his commercial experience is more beneficial to shareholders at this stage of the Company's development than the independence requirement outlined in the Principles.

BOARD MEMBERSHIP

The Board has been structured for an effective composition, with a balance of skills, experience and commitment to adequately discharge its responsibilities and duties. During the year ended 30 June 2020, three of the nine Directors were independent. Whilst this is not a majority of Independent non-executive directors, it is believed to be a suitable balance between the composition of executive and non-executive directors. Each of the independent non-executive Directors has made an annual confirmation stating compliance with the independence criteria set out in Rule 3.13 of the HK Listing Rules and Principle 2.4 of the ASX Principles. The Directors consider all of the independent non-executive Directors to be independent under the independence criteria and all are capable of effectively exercising independent judgment.

Induction of Directors

Following appointment, directors are supported through an induction briefing given by the corporate legal counsel, which seeks to familiarise the directors with listing rules, responsibilities and legal obligations of being appointed as Directors of the Company. Furthermore, meetings with senior management are held at times to familiarise the directors with the operations of the Company. In addition, a written directors' training material is circulated at times to keep directors abreast of the latest updates in regulations.

Annual Report 2020

• Succession planning for the Board and senior management;
• The appointment and re-election of Directors; and
• Ensuring appropriate skills are available to the
  Board to discharge its duties and add value to the Company.

NOMINATION COMMITTEE

The Board has established a Nomination Committee which carries out its duties in accordance with the Terms of Reference and Nomination Policy, a copy of which is located on the Company's website. The Committee's primary functions are:

The Committee consists of a majority of independent Directors and was comprised of the following members during the year ended 30 June 2020:

Nomination Policy

The Company has adopted a Nomination Policy which sets out below the nomination procedures and the criteria.

Nomination procedures

Subject to the provisions in the Company's Bye-laws, if the Board recognises the need for an additional Director or member of senior management:

1. The Board determines the required skilled set, relevant expertise and experience, having consideration of the current Board composition and size and shareholder structure of the Company;

1. The Committee and/or Board identifies potential candidates, possibly with assistance from external agencies and/or advisors;
2. The Company Secretary provides the Board with the biographical details and details of the relationship between the candidate and the company and/or Directors, directorships held, skills and experience, other positions which involve significant time commitment and any other particulars required by law for any candidate for appointment to the Board;
3. The Board develops a short list of candidates;

1. In the case of the appointment of an additional independent non-executive Director, the Board obtains all information in relation to the proposed Director to allow the Board to adequately address the independence of the Director;
2. The Board agrees on a preferred candidate;
3. The Chairman of the Board approaches the preferred candidate to canvass interest, availability and terms of appointment; and
4. The Chairman of the Committee, Chairman of the Board and the Company Secretary finalise a letter of appointment for Board approval.

In the case of the appointment of independent non- executive Directors, appointments should be for specific terms and subject to re-election, the ASX Listing Rules, the HK Listing Rules and the Companies Act 1981 of Bermuda.

The selection criteria include but are not limited to the following:

• Business experience: The candidate should have significant experience from a senior role in an area of business, public affairs or academia, relevant to the Company. Awareness of the Group's focusing industry would be an advantage but not a requirement in all cases.
• Public board experience: The candidate should have relevant expertise and experience earned as a Board member of a reputable listed company or from a senior position in his or her industry, public affairs or academia.
• Diversity: The candidate should contribute to the Board being a diverse body, with diversity reflecting gender, age, cultural and educational background, ethnicity, professional experience, qualifications, skills and length of service. Given the current composition of the Board, a female candidate would be an advantage but not a requirement.
• Standing: The candidate should be of the highest ethical character and have a strong reputation and standing, both personally and professionally, in his or her fields.
• Time commitment: Each Board member must have sufficient time available for the proper performance of his or her duties. Directors should

be sufficiently free of other commitments to be able to devote the time needed to prepare for meetings and participate in induction, training, appraisal and other Board associated activities.

• Independence: For the candidate who is proposed as an independent non-executive director, he or she must satisfy all the independence requirements as set out in Rule 3.13 of the HK Listing Rules. He or she must always be aware of threats to his or her independency and avoid any conflict of interest with the Company. He or she must be able to represent and act in the best interest of the Company and its shareholders as a whole.

To ensure that the existing policy continues to be implemented in practice, the Company shall undertake regular reviews and reassess this policy having regard to the regulatory requirement, good corporate governance practice and the expectations of shareholders and other stakeholders of the Company.

BOARD DIVERSITY POLICY

The Board has adopted a board diversity policy setting out the approach to achieve diversity on the Board. The Company considered diversity of board members can be achieved through consideration of a number of aspects. Including but not limited to gender, age, cultural and educational background, professional experience, skills, knowledge and length of service. All board appointments are based on merit and contribution, and candidates are considered against objective criteria, having due regard for the benefits of diversity on the Board. The Nomination Committee reviews the Policy on a regular basis and discusses any revisions that may be required, and recommends any such revisions to the Board for consideration and approval.

APPOINTMENT AND RE-ELECTION OF DIRECTORS

In accordance with the Bye-Laws of the Company and to comply with relevant HK and ASX Listing Rules, every Director should be subject to retirement by rotation at least once every three years. Non-Executive Directors are appointed for a fixed term of 3 years. All Directors appointed to fill a casual vacancy should be subject to re-election by shareholders at the first annual general meeting ("AGM") after their appointment and not less than one-third of the Directors should be subject to retirement and re-election every year.

In accordance with our Bye-Laws 87(1), at each AGM one-third of the directors shall retire from office by rotation so that each Director shall retire at least once every three years. Messrs. Colin Paterson, Choi Yue Chun, Eugene and Yap Fat Suan, Henry will be standing for re-election at the forthcoming AGM.

No Directors' service contract contains a provision requiring greater than one year's notice or requires compensation greater than one year's emoluments.

CONTINUING PROFESSIONAL

DEVELOPMENT

Each of the Directors keeps abreast of his responsibilities as a Director of the Company and of the conduct, business activities and development of the Company, as well as the laws and regulations applicable to the Company. Comprehensive inductions are conducted upon appointment and the Company ensures suitable professional development is undertaken by Directors and members of senior management, with an objective to keep them abreast of the listing rules amendments and refresh their knowledge and skills on corporate governance. The Directors provide and the Company maintains, a record of all professional development undertaken during the period. Mr. Chan Kam Kwan, Jason, being an Executive Director and the Company Secretary of the Company received no less than 15 hours of relevant professional training during the financial year. All Directors reviewed written professional development materials during the year ended 30 June 2020.

way of telephone or video-conference. Any resolutions can be passed by way of written resolutions circulated to and signed by all Directors from time to time when necessary except for matters in which a substantial shareholder or a Director or their respective associates has a conflict of interest. The Board held 16 meetings during the year ended 30 June 2020.

The Company normally provides a reasonable notice period for every Board meeting to all the Directors to give them an opportunity to attend. If such notice is not possible, permission to waive is obtained from the Directors.

Prior to each meeting of the Board, the Directors are provided with appropriate, complete and reliable information to ensure timely consideration before each Board meeting to enable them to make informed decisions. The Board is provided with the opportunity to meet independently from Executive Directors as and when required. Each Director also has separate and independent access to senior management whenever necessary.

REMUNERATION AND PERFORMANCE COMMITTEE

The Board has a Remuneration and Performance Committee to ensure that the Company is able to attract, retain, and motivate a high-calibre team which is essential to the success of the Company. The Committee carries out its duties in accordance with the Terms of Reference, a copy of which is located on the Company's website.

BOARD MEETINGS

The Board conducts meetings on a regular basis as required by business needs. The Bye-Laws of the Company allow board meetings to be conducted by

Name of Director/role

The Committee consists of a majority of independent Directors and was compromised of the following members during the year ended 30 June 2020:

Meetings attended/ eligible to attend(*)

The principal duties of the Remuneration and Performance Committee include, inter alia, reviewing and making recommendations to the Board on t h e C o m p a n y ' s r e m u n e r a t i o n p o l i c y ; m a k i n g recommendations to the Board on the remuneration of Executive and Non-Executive Directors, and members of the senior management; reviewing and making recommendations to the Board in respect of performance-based remuneration by reference to corporate goals and objectives resolved; and ensuring no Director or any of his or her associates is involved in deciding his own remuneration.

In addition to its duties surrounding remuneration, the Committee is also responsible for the annual performance review of the Board, Board Committees and individual Directors' performance.

REMUNERATION AND PERFORMANCE

The terms of reference in respect of the Remuneration and Performance Committee distinguishes the structure of the Non-Executive Directors' remuneration from that of Executive Directors and senior executives.

Non-Executive Director Compensation

The Board is determined to attract and retain high calibre Non-Executive Directors to work with the Company, whilst at the same time preserving cash flow. Accordingly, the structure of the Non-Executive Directors' remuneration allows for remuneration in the form of share options, granted under the share option scheme. Whilst this represents a departure from the Code and Principles, the Committee believes it is appropriate for the size of the Company, and is satisfied by the fact that all Director participation under the share option scheme is approved by Shareholders and the grant aligns with the long term performance of the Company. The Company's Bye-laws provide that the Directors' remuneration shall be determined by the Company in general meeting. The Company has fixed

1. maximum sum of A$1 million in aggregate for Non- Executive Directors per annum, unless otherwise and approved by the Shareholders.

Performance review of the Board

B o a r d p e r f o r m a n c e a n d i n d i v i d u a l D i r e c t o r performance are reviewed on an ongoing basis and evaluated annually by the Remuneration and Performance Committee. Individual Directors may meet with the Chairman of the Committee to discuss their views towards their remuneration packages.

Remuneration of Executive Directors

The Remuneration and Performance Committee of the Board of Directors of the Company is responsible for reviewing compensation arrangements for the Executive Directors, including the Chief Executive Officer (if any) and the senior management team, and making recommendations to the Board for approval. The Committee assesses the appropriateness of the nature and amount of remuneration of Directors and senior managers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality board and executive team.

Executive compensation framework

The Company aims to reward executives with a level and mix of compensation commensurate with their position and responsibilities within the Company. The Remuneration and Performance Committee is assisted in the process by the use of independent salary data, if applicable.

The executive pay and reward framework has 2 components: base pay and long-term incentives through participation in the 2012 Share Option Scheme. Details of the 2012 Share Option Scheme can be found in the financial statements.

Performance review - Executives

Senior executives' performance is reviewed on an ongoing basis and evaluated annually by the Remuneration and Performance Committee. The evaluation is undertaken by each executive completing a questionnaire on performance issues or each executive having one-on-one interviews with the chairman of the Committee. Performance evaluations were completed during the period for senior executives.

Individual executives may meet with the chairman of the Committee to discuss their responses.

AUDIT COMMITTEE

The Board has established an Audit Committee to carry out its oversight of the Company's financial reporting system and internal control procedures. The Committee carries out its duties in accordance with the Terms of Reference, a copy of which is located on the Company's website. The Audit Committee has reviewed the Group's annual results for the year ended 30 June 2020.

The Committee consists of a majority of Independent Directors, none of whom have been employed as previous or current auditors of the Company.

The composition and expertise of the Committee was as follows during the year ended 30 June 2020:

The primary responsibilities of the Audit Committee are, inter alia,

1. to consider and make recommendations to the Board on the appointment, reappointment and removal of the external auditor (and to approve the remuneration and terms of engagement of the external auditor) and any questions of resignation or dismissal of that auditor;
2. to review and monitor the external auditor's independence and objectivity and the effectiveness of the audit process in accordance with applicable standards. The Committee should discuss with the auditor the nature and scope of the audit and reporting obligations before the audit commences;
3. to develop and implement policy on the engagement of an external auditor or to supply non-audit services. For this purpose, 'external auditor' shall include any entity that is under common control, ownership or management of the audit firm, or any entity that a reasonable and informed third party having knowledge of all relevant information would reasonably conclude as part of the audit firm nationally or internationally. The Committee should report to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken;
4. to monitor the integrity of financial statements of the Company and the Company's annual and half-yearly reports and, if prepared for publication, quarterly reports, and to review significant financial reporting judgements contained in them;
5. to evaluate the adequacy of the Company's accounting control system by reviewing written reports from the external auditors, and monitor management's responses and actions to correct any noted deficiencies;
6. to review the adequacy and effectiveness of the Company's financial controls, and unless expressly addressed by a separate board risk committee, or by the board itself, to review the Company's internal control and risk management systems through active communication with management and the external auditors;

1. to discuss with management the system of internal control and risk management and ensure that management has discharged its duty to have effective systems. This discussion should include the adequacy of resources, staff qualifications and experience, training programmes and budget of the Company's accounting and financial reporting function;
2. to consider any findings of major investigations of risk management and internal control matters as delegated by the Board or on its own initiative and management's response to these findings;
3. where an internal audit function exists, to ensure co-ordination between the internal and external auditors, and to ensure that the internal audit function is adequately resourced and has appropriate standing within the Company, and to review and monitor the effectiveness of the internal audit function;
4. where an internal audit function exists, to assess the performance and objectivity of the internal audit function and to make recommendations for the appointment and dismissal of the Head of Internal Audit;
5. to review the Group's financial and accounting policies and practices;
6. to review the external auditor's management letter, any material queries raised by the auditor to management in respect of the accounting records, financial accounts or systems of control and management's response;
7. to ensure that the Board provides a timely response to the issues raised in the external auditor's management letter;
8. to review arrangements employees of the Company can use, in confidence, to raise concerns about possible improprieties in financial reporting, internal control or other matters. The audit committee should ensure that proper arrangements are in place for fair and independent investigation of these matters and for appropriate follow-up action; and
9. to act as the key representative body for overseeing the issuer's relations with the external auditor.

DIRECTORS' RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The financial statements of the Company for the year ended 30 June 2020 have been reviewed by the Board and the Audit Committee and audited by the external auditor, Ernst and Young Australia. The Directors acknowledge their responsibility for preparing the consolidated financial statements of the Company and presenting a balanced, clear and comprehensive assessment of the Group's performance and prospects.

The Directors ensure that the preparation of the consolidated financial statements of the Company are in accordance with statutory requirements and applicable accounting standards. The Directors also ensure the publication of the financial statements of the Company in a timely manner.

EXECUTIVE COMMITTEE

The Board has constituted the Executive Committee and delegated the responsibility of the day-to-day management and has empowered the Executive Committee to implement policies and strategies, for the business activities and operations, internal control and administration of the Group. The Executive Committee carries out all the general powers of management and control of the activities of the Group as vested in the Board, save for those matters which are reserved for the Board's decision and approval pursuant to the written terms of reference of the Executive. The members include the Executive Directors and certain senior management appointed by the Board from time to time. The Executive Committee meets whenever it is necessary to carry out its obligations.

The report of the auditor of the Company about their reporting responsibilities on the financial statements of the Company is set out in the Independent Auditor's Report.

HEALTH, SAFETY, ENVIRONMENT AND SUSTAINABILITY COMMITTEE

The Board has established a Committee to oversee the health, safety, environmental and sustainability activities of the Company. The Committee carries out its duties in accordance with the Terms of Reference, a copy of which is located on the Company's website. The Committee consists of a majority of independent Directors and was comprised of the following members during the year ended 30 June 2020:

The principal duties of the Committee are:

1. reviewing and monitoring the sustainability, environmental, safety and health policies and activities of the Company;
2. encouraging, supporting and counselling management in developing short and long term policies and standards to ensure that the principles set out in the sustainability, environmental, health and safety policies are being adhered to and achieved;
3. regularly reviewing community, environmental, health and safety response compliance issues and incidents to determine, on behalf of the Board, whether the Company is taking all necessary action in respect of those matters and that the Company has been duly diligent in carrying out its responsibilities and activities in that regard;

1. ensuring that the Company monitors trends and reviews current and emerging issues in the field of sustainability, environment, health and safety, and evaluates their impact on the Company; and
2. reviewing and making recommendations to the Board with respect to environmental aspects of expansions, acquisitions and dispositions with material environmental implications.

RISK MANAGEMENT COMMITTEE

The Board has established a Committee to oversee risk and the management and internal control of the processes by which risk is considered for both ongoing operations and prospective actions of the Company. The Committee carries out its duties in accordance with the Terms of Reference, a copy of which is located on the Company's website. The Committee was comprised of the following members during the year ended 30 June 2020:

Whilst the risk management committee was not chaired by an independent director and it does not comprise of a majority of independent directors, the committee was mainly composed of non-executive directors and independent non-executive directors who do not participate in the daily operation of the Group. The Company considers that objectivity can still be maintained with such arrangements.

R i s k m a n a g e m e n t e n c o m p a s s e s a l l a r e a s o f the Company's activities. Once a business risk is identified, the risk management processes and systems implemented by the Company are aimed at providing the necessary framework to enable the business risk to be managed. Management has the

key role of identifying risks and enabling processes for risk management. Senior management are required to report risks identified to the Risk Management Committee or Chief Executive Officer.

The Risk Management Committee will meet periodically to review and ensure that the Company has in place processes to assess and manage specific and general business risks and appropriate mitigation procedures where applicable.

The overall results of this assessment are presented to the Board, in oral and written form, at every Board meeting by the Chairman of the Risk Management Committee, and updated as needed.

The Board reviews the Company's risk management at every Board meeting, and where required, makes improvements to its risk management and internal compliance and control systems.

INTERNAL CONTROL AND RISK MANAGEMENT

The Board has overall responsibility for the Group's system of internal control and for the assessment and management of risk. The Board has conducted a review of and is satisfied with the effectiveness of the system of internal control of the Group.

The Company has outsourced its internal audit function and has engaged an independent management consultancy company to assess the internal control measures of the Group on a yearly basis. The conclusion is that there was no significant weakness in the Company's internal control and risk management systems.

The Board also reviews at least annually the adequacy of resources, qualifications and experience of staff of the Group's accounting and financial reporting function, and their training programmes and budget.

The Executive Directors of the Company report directly to the Board and the Audit Committee, and monitor the existence and effectiveness of the controls in the Group's business operations.

The Executive Directors also discuss the audit plan with the Audit Committee and the external auditors. The audit plan is reassessed during the year as needed to ensure that adequate resources are deployed and the plan's objectives are met. In addition, regular consultation is undertaken with the Group's external auditors so they are aware of the significant factors which may affect their respective scope of work. Reports from the external auditors on relevant financial reporting matter are presented to the Audit Committee, and, as appropriate, to the Board.

For risk management, the Board, the Risk Management Committee, and management have reviewed the Group's financial, operational, compliance and strategic aspects and identified certain risk areas. Certain types of risks and internal control weaknesses have been identified and the relevant measures implemented to mitigate these risks are disclosed under the section 'Management Discussion and Analysis'.

Although the Company is not required to comply with Section 295A of the Australian Corporations Act 2001 (being a company incorporated in Bermuda), the Board requires the Executive Director to state in writing to the Board that:

'The financial records of the Company have been properly maintained and the financial statements comply with the appropriate accounting standards and give a true and fair view of the Company's financial position, and that the opinion has been based on the basis of a sound system of risk management and internal control which is operating effectively'.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted a Securities Trading Policy which applies, inter alia, to all Directors and Key Management Personnel. The Securities Trading Policy complies with the ASX Listing Rules and the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 of the HK Listing Rules. A copy of the Company's Securities Trading Policy is available on the website of the Company.

All directors have confirmed, following a specific enquiry by the Company, that they have complied with the required standard as set out in the Model Code.

AUDITORS' REMUNERATION

The aggregate remuneration in respect of services provided by Ernst and Young Australia for the year ended 30 June 2020 was HK$1,131,000 of which HK $ 944,000 represents annual audit fees, and HK$187,000 for non-audit services.

COMPANY SECRETARY

The Company Secretary is responsible to the Board for ensuring that Board procedures are followed and that the activities of the Board are carried out efficiently and effectively. The Company Secretary assists the Chairman to prepare agendas and Board papers for meetings and disseminates such documents to the Directors and Board Committees in a timely manner. The Company Secretary is responsible for ensuring that the Board is fully briefed on all legislative, regulatory and corporate governance developments when making decisions. The Company Secretary is also directly responsible for the Group's compliance with the continuing obligations of the Listing Rules and The Codes on Takeovers and Mergers and Share Repurchases, including publication and dissemination of the Company's reports, financial statements and interim reports within the period as per the Listing Rules. Also, timely dissemination of announcements and information relating to the Group to the market and ensuring that appropriate notification is made when there are any dealings by Directors in the securities of the Group. The Company Secretary is accountable directly to the Board.

The Company Secretary also advises the Directors on their obligations in respect of disclosure of interests in securities, connected transactions and inside information and ensures that the standards and disclosures required by the Listing Rules are observed.

With respect to the secretarial function of the Group, the Company Secretary maintains formal minutes of the Board meetings and other Board committee meetings.

During the year, Mr Chan Kam Kwan Jason, the Company Secretary of the Company, has undertaken no less than 15 hours of professional training to update his skills and knowledge.

CONTINUOUS DISCLOSURE

The Directors are committed to keeping the market fully informed of material developments to ensure compliance with the ASX, and the HK Listing Rules. The Directors have observed the disclosure requirements of the ASX and the HK Listing Rules, and to ensure accountability at a senior management level for that compliance. A copy of the Communications Strategy and Continuous Disclosure Policy can be found on the Company's website.

COMMUNICATON WITH

SHAREHOLDERS

The Board is committed in providing clear and full performance information of the Group to shareholders and have established a communications strategy, a copy of which can be found on the Company's website. The strategy is designed to promote effective communication with shareholders throughout the year and encourage effective participation at general meetings. In addition to the circulars, notices and financial reports sent to shareholders, additional information of the Group is also available to shareholders on the Company's website.

As well as ensuring timely and appropriate access to information for all investors via announcements to the ASX and SEHK, the Company will also ensure that all relevant documents are released on the website of the Company for the purpose of both stakeholders and shareholders. Copies of all corporate governance policies, charters and terms of references are available on the website of the Company.

Each year the Company's external auditor attends the AGM and is available to answer questions from security holders relevant to the audit.

Shareholders are encouraged to attend the AGM for which at least 20 clear business days' notice is given. The Chairman and Directors are available to answer questions on the Group's business at the meeting. In accordance with the Bye-Laws of the Company, a minimum of 14 days' notice is required for every shareholder meeting and all shareholders shall have statutory rights to call for special general meetings and put forward agenda items for consideration in the general meetings. All resolutions at the general meeting are decided by a poll which is conducted by the Group's branch share register in Hong Kong.

The Group values feedback from shareholders on its effort to promote transparency and foster investor relationships. Comments and suggestions are always welcomed.

SHAREHOLDERS RIGHTS

How shareholders can convene a special general meeting

Subject to Section 74 of the Companies Act 1981 of Bermuda (the "Act") and the Bye-Law 58 of the Company, the Board may whenever it thinks fit call special general meetings, and members holding at the date of deposit of the requisition not less than one-tenth of the paid up capital of the Company carrying the right of voting at general meetings for the Company shall at all times have the right, by written requisition to the Board or the Company Secretary of the Company, to require a special general meeting to be called by the Board for the transaction of any business specified in such requisition; and such meeting shall be held within two months after the deposit of such requisition. If within 21 days of such deposit the Board fails to proceed to convene such meeting the requisitionists themselves may do so in accordance with the provisions of Section 74(3) of the Act.

Procedures for directing Shareholders' Enquiries to the Board

S h a r e h o l d e r s e n q u i r i e s c a n b e d i r e c t e d t o inquiry@brockmanmining.com or by writing to the Company Secretary's office, whose contact details are as follows:

Unit 3903B, Far East Finance Centre, 16 Harcourt Road, Admiralty, Hong Kong.

The enquiries would then be assessed and considered (if appropriate) to put to the Board. Shareholders may also make enquiries with the Board at the general meetings of the Company.

Annual Report 2020

Procedures for Putting Forward Proposals at a General Meeting

Any number of shareholders representing not less than 5% of the total voting rights of the Company on the date of the requisition or not less than 100 shareholders of the Company are entitled to put forward a proposal for consideration at a general meeting of the Company. Shareholders should follow the procedures as set out in Section 79 of the Act for putting forward such proposals.

Provision of Information in Respect of and by Directors Updated information with regard to the change in other Directorships of the Directors of the Company are on our website and in the 2020 Annual Report.

CONSTITUTIONAL DOCUMENTS

There was no significant change in the memorandum and articles of association and the Bye-Laws of the Company during the year. The memorandum and articles of association and the Bye-Laws of the Company are available on the Company's website.

1. ENVIRONMENTAL

A.1 EMISSIONS

During the year, the Group was at minimal spend and retained office space to secure an infrastructure solution for the Marillana project. Mining development is yet to commence and management considers that the emissions and waste generated by any exploration activity would have an insignificant impact on the environment due to the minimal activities undertaken.

G r e e n h o u s e G a s e m i s s i o n s ( ' G H G Emissions') for the reporting period are mainly generated from general direct electricity consumption for office use and indirect emissions resulted from business trips.

Relevant KPls are as shown below:

Note:

Scope 1 emissions come from direct GHG emissions from combustion of fuels in stationary or mobile sources (excluding electrical equipment) to generate electricity, which is not applicable in our case as our developmental a n d p r o d u c t i o n a c t i v i t i e s h a v e y e t t o commence.

Scope 2 emissions come from indirect GHG emissions from the generation of purchased electricity.

Scope 3 emission includes other indirect GHG emissions that occur outside the Company such as emissions from business travel of employees and paper waste disposed at landfill.

The scope during the reporting period covered a gross floor area of 136.94m2

Annual Report 2020

T h e G r o u p c o n t i n u e s t o o p e r a t e a t m i n i m a l s p e n d a n d t a r g e t s a net decrease in emissions prior to the commencement of any future developmental activities.

During the reporting period, no material hazardous or non-hazardous waste was generated as our operations are office based in nature . Waste generated comprised printer toner cartridges, batteries and obsolete computer and printing equipment. These were properly disposed of and recycled. Non-hazardous waste such as general domestic refuse and printing paper from office operations were considered minimal.

As mitigation measures for emissions, the Company implemented the following:

• Encouraged employees to switch off lights and air conditioning.

During the reporting period, the Company has relocated its Australian office, and due to the decreased size of office space and reduced number of employees, there was a slight decrease in electricity consumption and the corresponding carbon footprint.

A.2 USE OF RESOURCES

The Group is committed to promoting an environmentally conscious work e n v i r o n m e n t a n d h a s f o c u s e d o n m e a s u r e s t o m i n i m i s e w a s t e a n d electricity consumption, initiate paper and cartridge recycling, and promoting e l e c t r o n i c c o m m u n i c a t i o n s a n d storage. We promote recycling of office equipment and reduce domestic waste as much as possible.

To reduce consumption of paper, the Group prefers using electronic means to disseminate information via electronic devices and electronic communication systems.

We encourage our office employees to switch off idle lights, air conditioners and other office equipment, and we remind our employees to print and photocopy on both sides of paper if printing is unavoidable. We also encourage our employees to bring their own lunch and reduce purchase of takeaway and beverages and hence reduce the use of plastic disposable utensils. The Group encourages its employees to choose public transportation and carpool to reduce car driving and thus the impact on the environment and transportation. The Group does not own any vehicles and we therefore do not directly produce any greenhouse and hazardous gases from cars used.

Our offices are required to maintain indoor temperature at 24 degree Celsius to ensure efficient use of air conditioning.

The Group also promotes initiatives to mitigate environmental impacts by choosing energy-efficient products by comparing Energy Labels issued by the Electrical and Mechanical Services Department (EMSD)/Energy Rating Labels issued by the Australian Federal Government. As waste electrical and electronic equipment (WEEE) poses severe harm to the environment, the Group encourages all employees to use the WEEE donation or recycle programs.

All employees are responsible and a c c o u n t a b l e f o r o p e r a t i n g i n a n environmentally responsible manner.

The Group's existing business operation does not require any significant water consumption, water usage and any consumption relates to drinking water (including bottled water).

The Group's drinking water consumption for the year amounted to 1.23m3 with a water consumption intensity amounted to approximately 0.21 m3 per employee. We require employees to report immediately whenever damage is found on any of the water facilities.

There is no issue in sourcing water that is fit for purpose whereas the Group considers its water consumption level is reasonable at the current operation level. The Group targets to have a net decrease in water and electricity consumption next year by implementing the measures as discussed above.

Due to the nature of the business, there is no applicable data of packaging material as our operation does not involve the use of any packaging material.

A.3 THE ENVIRONMENT AND NATURAL RESOURCES The Company is committed to the principles of being a good corporate and environmental citizen, and takes careful consideration of environmental, social responsibility and sustainability issues when choosing its vendors. The Group aims to minimise its environmental f o o t p r i n t a n d i t s d i s t u r b a n c e t o natural resources. We anticipate that fines residue storage and waste rock management, water use and discharge, and land management and rehabilitation would be the most important areas of concern once in production and the Group shall closely monitor these aspects, in compliance with its regulatory approvals obtained with key State and Commonwealth environmental approvals that have been received for the Marillana project . Each year, the Company undertakes an annual compliance review and provides a report to the Office of Environmental Protection Authority to declare its compliance status as required.

Brockman is proposing to clear up to 3,785 ha of vegetation to mine and transport ore to Port Hedland by a land infrastructure solution. After rehabilitation, the long-term cleared footprint will be around 60 ha which represents the final open pit void. All other disturbances will be rehabilitated to the satisfaction of the Western Australian Environmental Protection Authority (EPA), Department of Environment and Conservation (DEC) and Department of Mines, Industry, Resources and Safety.

Brockman has previously engaged Ecologia Environment (Ecologia) to prepare the Preliminary Documentation required to assess the project under the Environmental Protection and Biodiversity Conservation Act 1999 (Cth). Most key

Annual Report 2020

environmental approvals are in place and we shall adhere to our proposed plan in the event of commencement of early works. We endeavour to mitigate any environmental disturbance, and apply our monitoring schedule when the project commercialises.

Prior to the commencement of our mine development, environmental approvals for mining or exploration activities are required to be sought in accordance with the Mining Act 1978 and the following approvals are required by the Department of Mines, Industry Regulation and Safety:

1. Programme of work - submission

h a s t o i n c l u d e d e t a i l s o f m e c h a n i s e d e q u i p m e n t a n d potential disruption to the ground during exploration or prospecting for minerals.

1. Mining proposals - details of the proposed mining operation or any changes to be incurred are required to be disclosed.
2. Mine closure plans - such plan

m u s t b e i n c l u d e d t o g e t h e r with any submission on mining proposals, covering all aspects of mine decommissioning and rehabilitation.

The Group adheres to strict compliance of the Mining Act 1978 and other relevant environmental regulations such as the Environmental Protection Act 1986, the Environmental Protection and Biodiversity Conservation Act 1999, the Environmental Protection (Clearing of Native Vegetation) Regulations 2004, the Rights in Water and Irrigation Act 1914, and the Native Title Act 1993.

A.4 Climate Change

Significant changes in the pattern of rainfall over Western Australia have occurred over the past 40 years. Most of the state, especially the northwest, has experienced a trend towards a wetter climate. This poses a certain risk on the mining industry. The southwestern part of the state has become drier, with a 15% reduction in rainfall since the mid-1970s. Waste rock and tailings that are created during the mining and ore refining process can release toxins into the environment if not stored or disposed of properly. In many cases, waste rock and tailings are left out in the open where they are exposed, and toxins can be washed into water systems by rainfall, or can leach into the soil. To mitigate such risk, a detailed mine plan with enhanced tailings and erosion control structure will serve as part of the mine's water management plan.

The most likely source of impact to the surface water environment from discharge is from unplanned flooding or spillages at the sewage treatment facility. However, safeguards are in place to minimise this risk, including:

• Alarms and flashing beacons to warn of failure of mechanical components (pump and blower);
• Alarms to warn to high water levels in the balance tank or irrigation tanks; and
• An emergency overflow between the balance tank and the waste water treatment plant.

In addition, flood protection will be implemented, to ensure floodwaters do not adversely impact waste water facilities.

1. SOCIAL

B.1 EMPLOYMENT AND LABOUR PRACTICES

Employment

W e b e l i e v e t h a t p e o p l e a r e t h e foundation of our businesses, and retaining quality staff is paramount to supporting our business. We aim to retain our staff by offering an employee-friendly working environment, and we make sure our employees are well compensated, not only in terms of remuneration, by facilitating work-life balance for all our employees.

Recruitment

The Group has an established human resources management function covering various aspects of employment. During our recruitment process, employees are hired based on consideration of their experience, qualifications and knowledge. All employees have entered into a written employment contract that outlines conditions of employment which includes job title, job duties, working hours, holidays, remuneration, termination process and benefits agreed to by both parties.

Promotion, compensation and dismissal We motivate employees by promotion and salary increments based on results of regular performance appraisals. Staff dismissal is based on the Hong Kong Employment Ordinance or relevant local laws and regulations, as well as the requirements stipulated in the employment contracts . Apart from offering employees' competitive salary packages, the Group also provides annual bonuses and employee share o p t i o n s t o e l i g i b l e e m p l o y e e s a s incentives to retain our staff.

Working hours, rest periods and benefits

1. five-daywork week arrangement is adopted to facilitate work-life balance. In addition to all rest days and statutory holidays as specified in local laws and regulations, employees are entitled to paid annual, maternity, paternity, marriage and compassionate leave. Employees are also entitled to benefits such as medical benefits, MPF scheme contributions and other benefits subject

t o t h e G r o u p ' s h u m a n r e s o u r c e s management policy.

Equal opportunity, diversity and anti- discrimination

A l l D i r e c t o r s , s e n i o r m a n a g e m e n t and employees of the Company are e x p e c t e d t o c o n d u c t t h e m s e l v e s with integrity, openness, honesty and fairness, and in the best interests o f t h e C o m p a n y . T h e B o a r d h a s established a Code of Conduct, which is supported by a Whistleblower Policy, to guide all Directors, members of senior management and employees. A copy of the Code of Conduct and Whistleblower Policy is available in the corporate governance section of the Company's website.

Annual Report 2020

The Company's recognition of the benefits of diversity where people from different gender, age, ethnicity and cultural backgrounds can bring fresh ideas and perceptions which make the workplace more efficient is reinforced in the Diversity Policy, a copy of which is available in the corporate governance section of the Company's website. This policy outlines specific diversity initiatives designed to facilitate equal employment opportunities and requires the Company to set out specific diversity initiatives and targets with the aim of reporting the progress towards the metrics in the annual report.

These key metrics include:

• Proportion of women appointed as Non-Executive Directors of the Company;

• Proportion of women in senior management;
• Parental leave return rates; and
• Employee turnover.

B.2 HEALTH AND SAFETY

The Company is committed to the development of a sustainable iron ore business in Western Australia that benefits its employees, contractors, suppliers, partners and the community.

W e w i l l a c h i e v e t h i s t h r o u g h t h e effective implementation and proactive management of our commitments and obligation to workplace health and safety, the environment and to the communities in which we operate.

To operate an effective and sustainable iron ore business, the Company will:

• Focus on the elimination and

m a n a g e m e n t o f w o r k p l a c e hazards and risks.

• Act ethically and responsibly in all its interactions.
• Promote a culture which focuses its employees, contractors, suppliers and partners in workplace health and safety as the responsibility of all those who work in its business.
• Provide a workplace free from bullying or discrimination and offering equal opportunity to all employees.
• Work actively through all areas of its business to minimise the actual and potential environmental

i m p a c t o f t h e C o m p a n y ' s activities.

• Respect the rights of the traditional owners and value the indigenous cultural heritage associated with its operations.

Annual Report 2020

W e w i l l i m p l e m e n t s y s t e m s a n d ensure that resources are allocated t o i m p l e m e n t a n d m o n i t o r t h e s e commitments and its legal obligations. Our employees, contractors and partners will be updated on the Company's progress towards these goals.

The policy and the system that support it will be routinely measured to ensure the delivery of our commitments and system improvements made where the need arises.

T h e G r o u p s h a l l o b s e r v e t o o u r Operational Health and Safety ('OHS') Policy for all our activities and our Company's health and safety objectives are summarised as follows:

• Achieve 'Zero Harm' to people, the community and the workplace environment;
• Support, encourage and promote efforts to achieve industry-leading occupational health and safety performance;

Brockman will employ the following principles:

• Everyone has a responsibility for health and safety.
• Hazards should be identified and their risks eliminated or controlled.
• Every task can be done safely.
• Health and safety standards will not be limited to only minimum legal requirements.

These objectives will be achieved by:

• Complying with all applicable laws, regulations and statutory obligations;

With respect to the challenges brought about by the COVID-19 pandemic, we have adopted measures to protect and to enhance workplace safety for all our employees. Cleaning and disinfecting of our offices was performed regularly and we provide masks and hand sanitisers for our employees when they attend work in the office. We require our employees to stay home and self-quarantine if they are sick and we strive to provide a positive environment for our employees due to any sickness.

During the reporting period, the Group had nil work-related fatality and injury resulted in loss days during the reporting period and in each of the past three years (2019: Nil).

• General economic conditions, business cycle of the Group's business and other internal or external factors that may have an impact on the business or financial performance and position of the Company; and
• Other factors that the Board deems appropriate.

The dividend policy will be reviewed from time to time and there is no assurance that a dividend will be proposed or declared in any specific periods.

Distributable reserves

As at 30 June 2020, the Company has no reserve available for distribution to the shareholders.

Pre-emptive rights

There are no provisions for pre-emptive rights under the Company's Bye-laws, or the laws in Bermuda, which would oblige the Company to offer new shares on a pro-rata basis to existing shareholders.

Financial summary

A summary of the results and of the assets and liabilities of the Group for the last 5 financial years is set out on page 93.

Directors

The Directors of the Company during the year and up to the date of this report were:

Non-executive Directors:

Kwai Sze Hoi (Chairman)

Liu Zhengui (Vice Chairman)

Ross Stewart Norgard

Executive Directors:

Colin Paterson

Chan Kam Kwan, Jason (Company Secretary)

Kwai Kwun, Lawrence

Independent Non-executive Directors:

Yap Fat Suan, Henry

Choi Yue Chun, Eugene

David Rolf Welch (appointed on 15 October 2019) Uwe Henke Von Parpart (resigned on 15 October 2019)

In accordance with Clause 87(1) of the Company's Bye-laws Messrs. Colin Paterson, Choi Yue Chun, Eugene and Yap Fat Suan, Henry will be standing for re-election at the forthcoming annual general meeting.

Confirmation of independence

All the independent non-executive directors are appointed for a specific term and will be subject to retirement by rotation and re-election in accordance with the HK Listing Rules and the Bye-Laws of the Company. The Company has received from each of the Independent Non-executive Directors, an annual confirmation of their independence pursuant to Rule 3.13 of the HK Listing Rules.

Directors' and senior management's biographies

Biographical details of the directors of the Company and the senior management of the Group are set out on pages 14 to 15.

Director's Service Contract

None of the directors who are proposed for reelection at the forthcoming annual general meeting has a service contract with the Company which is not determinable by the Company within one year without payment of compensation, other than statutory compensation.

Directors' remuneration

The directors' fees are subject to shareholders' approval at general meetings. Other emoluments are determined by the Company's board of directors with reference to directors' duties, responsibilities and performance and the results of the Group.

Directors' and Chief Executive's interests

As at 30 June 2020, the interests and short positions of the directors and chief executive and their respective associates in the share, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the 'SFO') as recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or otherwise required to be notified to the Company and the SEHK, pursuant to the Model Code for Securities Transactions by Directors of Listed Issues were as follows:

Directors' rights to acquire shares or debentures

Other than as disclosed in the section 'Directors and Chief Executives' interests', at no time during the period was the Company, its holding company, or any of its subsidiaries or fellow subsidiaries, a party to any arrangements to enable the Directors of the Company and their associates to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

Directors' interests in competing business

None of the Directors has any interests in any competing business to the Group.

Directors'/controlling shareholders' interests in transactions, arrangements and contracts that are significant in relation to the Group's business

Details of the related party transactions for the year are set out in Note 31 to the consolidated financial statements. Other than as disclosed therein, no contracts of significance to which the Company, transactions, arrangements and subsidiaries or fellow subsidiaries was party and in which a Director or a controlling shareholder of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the period.

Management contracts

No contracts concerning the management and administration of the whole or any substantial part of the business of the Company were entered into or existed during the year.

Related party transactions

Significant related party transactions entered into by the Group during the year ended 30 June 2020 are disclosed in Note 31 to the consolidated financial statements.

Share capital, share options, warrants and convertible bonds

Details of movements in the Company's share capital and share options during the year are set out in notes 24 and 25 to the consolidated financial statements.

Details of the other equity-linked agreements are including in the section 'Share Options' below.

Purchase, sale or redemption of listed securities

During the year, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the listed securities of the Company.

Permitted indemnity provision

Pursuant to the Bye-Laws of the Company, the Directors shall be indemnified and secured harmless out of the assets and profits of the Company against all losses and liabilities etc which they may incur or sustain by reason of the execution of their duties, provided that this indemnity shall not extend to any matter in respect of any fraud or dishonesty which may attach to any of the directors. The Company has also arranged appropriate directors and officers insurance coverage for the directors and officers of the Group.

Major customers and suppliers

The aggregate operating and administrative expenses attributable to the Group's five largest suppliers were less than 14.26% of total operating and administrative expenses (include exploration and evaluation expenses) for the year. At no time during the year did any Director, or associate of a Director, or any shareholder of the Company, which to the knowledge of the Directors owned more than 5% of the Company's share capital, have any beneficial interests in these customers or suppliers.

Contract of significance

No contracts of significance in relation to the Group's business in which the Company, any of its subsidiaries or fellow subsidiaries, or its parent company was a party and in which a director of the Company had a material interest, whether directly or indirectly, subsisted during or at the end of the year.

Annual Report 2020

Provision of information in respect of any director

During the year, there was no changes to other directorships of the Directors of the Company.

Corporate Governance

The Company is committed to maintain a high standard of corporate governance practices. Information on the corporate governance practices adopted by the Company is set out in the Corporate Governance Report on pages 16 to 29 of the annual report.

Events after the reporting period

Details of the significant events of the Group after the reporting period are set out in note 36 to the consolidated financial statements.

Sufficiency of public float

As at the date of this report, based on information that is publicly available to the Company and within the knowledge of the Directors, there was sufficient public float of the Company's securities as required under the HK Listing Rules.

Auditor

The consolidated financial statements for the financial year ended 30 June 2020 have been audited by Ernst and Young who retire and, being eligible, offer themselves for re-appointment at the forthcoming annual general meeting of the Company.

By order of the Board.

Kwai Sze Hoi

Chairman

Hong Kong, 15 September 2020

At 30 June 2020 the Group held capitalised mining exploration properties in Australia of HK$731,048,000, representing 95% of the Group's total assets.

The carrying value of mining exploration properties is assessed for impairment by the Group when facts and circumstances indicate that these properties may exceed their recoverable amount.

The determination as to whether there are any indicators to require a mining exploration property to be assessed for impairment, involves a number of judgments including whether the Group has tenure, will be able to perform ongoing expenditure and whether there is sufficient information for a decision to be made that the area of interest is not commercially viable. The directors did not identify any impairment indicators.

Given the significance of the capitalised mining exploration properties relative to the Group's total assets and the degree of judgement involved in assessing whether any indicators of impairment exist, we consider this a key audit matter.

Refer to Note 17 in the consolidated financial statements for capitalised mining exploration property balances and related disclosures.

We considered and challenged the Group's assessment as to whether there were impairment indicators present that required the capitalised mining exploration properties to be tested for impairment as at 30 June 2020.

In performing our procedures, we:

• Considered whether the Group's right to explore was current, which included obtaining and assessing supporting documentation such as license agreements;
• Considered the Group's intention to carry out significant ongoing exploration and evaluation activities in the relevant areas of interest which included reviewing the Group's Board approved cashflow forecast and enquiring of senior management and the directors as to their intentions and the strategy of the Group;
• Assessed whether exploration and evaluation data exists to indicate that the carrying value of mining exploration properties is unlikely to be recovered through development or sale; and
• Assessed the adequacy of the disclosures in Note 17 of the consolidated financial statements.

2. Recognition of deferred tax asset

Why significant

At 30 June 2019, the Group recognised a deferred tax asset (DTA) of HK$93,373,000 in its consolidated balance sheet for certain of its Australian carry forward tax losses. This DTA was fully offset against the deferred tax liability (DTL) in the consolidated balance sheet, resulting in a net deferred tax liability of HK$134,172,000. This DTA has continued to be carried forward at 30 June 2020 and offset against the DTL at that date, resulting in

1. net DTL at 30 June 2020 of HK$128,850,000 after accounting for the impact of exchange differences during for the year.

The Group's exploration activities in Australia have generated significant carry forward tax losses. Australian tax laws covering the recoupment of these carry forward tax losses are complex.

Under IFRS, DTAs for carry forward tax losses are only recognised when their recovery is considered probable. This consideration of carry forward tax loss recognition is reassessed at each reporting period.

Given the significant degree of judgement involved in management's assessment as to the ongoing recoverability of the DTA as at 30 June 2020, we consider this a key audit matter.

Refer to Notes 4(c), 13 and 26 in the consolidated financial statements for deferred tax balances and related disclosures.

How our audit addressed the key audit matter

We assessed the Group's decision to continuing to carry the DTA and the methodology for determining the amount of the DTA to be carried forward for compliance with IFRS.

Our audit procedures included the following:

• We assessed the amount of the Group's available carry forward tax losses and the impact of any known or potential limitations that may affect the recoverability of the estimated tax benefit arising from the carry forward tax losses. This work included consultation with our tax specialists;
• We obtained and considered correspondence:
• • Between the Group and the Australian tax authorities, and
  • Between the Group and external tax advisors.
• We assessed the adequacy of the related disclosures in the consolidated financial statements.

Why significant

At 30 June 2020 the Group has recognised a loan payable to Polaris Metals Pty Ltd (Polaris) of HK$21,242,000, representing 13% of the Group's total liabilities.

This loan was originally advanced to the Group in November 2019, when Polaris advanced A$5 million (HK$27.3 million) of the A$10 million (HK$54.6 million) loan that was held in escrow pursuant to the Farm-in and Joint Venture Agreement (FJV) between Brockman Iron Pty Ltd (Brockman Iron) and Polaris.

The loan is unsecured and bears no interest. The terms and amount of repayment vary depending on whether or not one of both of Brockman Iron and Polaris approve a Final Investment Decision (FID) to proceed with the development of the Marillana mine. The Group's expectation in relation to the loan repayment at 30 June 2020 was that both parties plan to approve FID. This has impacted the expected amount and timing of the repayment of this loan and its resulting measurement.

Given the significant degree of judgement involved in the Group's assessment of the likely intentions of both parties regarding FID approval, the resulting amount and timing of repayment of the loan, as well as the appropriate market rate of interest used for the calculation of amortised cost of the loan at 30 June 2020, we consider this a key audit matter.

Refer to Note 23 in the consolidated financial statements for the loan balances and related disclosures.

How our audit addressed the key audit matter

Our audit procedures included the following:

• We assessed whether the funding from Polaris was appropriately recognised and measured in accordance with IFRS 9;
• We considered and challenged the Group's assessment regarding the likely amount and timing of expected repayment of the loan . This included review of correspondence between the Group and Polaris to assess the likely intention of both parties;
• We assessed the market rate of interest used in the determination of the amortised cost calculation for the loan;
• We obtained and reviewed management's calculation of the amortised cost and classification of this loan in accordance with the requirements of IFRS 9;
• We assessed the adequacy of the related disclosures in the consolidated financial statements.

CONSOLIDATED BALANCE SHEET

Annual Report 2020