Announcement PDF ABN 38 652 438 385 INTERIM FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 December 2023 INTERIM FINANCIAL REPORT for the half-year ended 31 December 2023 CORPORATE DIRECTORY ................................................................................................ 1 DIRECTORS’ REPORT ...................................................................................................... 2 AUDITOR’S INDEPENDENCE DECLARATION ..................................................................... 9 INDEPENDENT AUDITOR’S REVIEW REPORT .................................................................. 10 DIRECTORS’ DECLARATION .......................................................................................... 12 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ............................................................................................ 13 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION ............................. 14 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY .............................. 15 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS .......................................... 16 NOTES TO THE INTERIM FINANCIAL STATEMENTS ........................................................ 17 CORPORATE DIRECTORY DIRECTORS AUDITORS Ben Phillips (Executive Chairman) Leonardo Pilapil (Technical Director) Patrick Holywell (Non-Executive Director) Hall Chadwick WA Audit Pty Ltd 283 Rokeby Road Subiaco WA 6008 COMPANY SECRETARY SHARE REGISTRY Arron Canicais Automic Share Registry Level 5, 191 St Georges Terrace Perth WA 6000 REGISTERED OFFICE Unit 10, 85-87 Forrest Street Cottesloe WA 6011 POSTAL ADDRESS PO BOX 156 Bull Creek WA 6149 PRINCIPAL PLACE OF BUSINESS Unit 10, 85-87 Forrest Street Cottesloe WA 6011 CONTACT INFORMATION Tel: + (08) 6255 8625 info@norfolkmetals.com.au 1300 288 664 (Local) +61 2 9698 5414 (International) www.automic.com.au BANKER Australia and New Zealand Banking Group Limited 464 Hay Street, Subiaco WA 6008 SECURITIES EXCHANGE LISTING Australian Securities Exchange (ASX) Level 40, Central Park 152-158 St George's Terrace Perth WA 6000 ASX CODE: NFL NFLO NORFOLK METALS LIMITED | 2023 INTERIM FINANCIAL REPORT Page 1 DIRECTORS’ REPORT The directors of Norfolk Metals Limited (ASX:NFL) (Company or Norfolk) present their report, together with the financial statements of the consolidated entity consisting of Norfolk and its controlled entities for the half-year ended 31 December 2023 (Period) and the auditor’s review report thereon. The Interim Financial Report has been prepared in accordance with AASB 134 Interim Financial Reporting. It is recommended that the Directors’ Report be read in conjunction with the annual financial statements for the year ended 30 June 2023 and considered together with any public announcement made by the Company during the Period and up to the date of this report. DIRECTORS The names and particulars of the directors of the Company in office during the Period and until the date of this report are as follows. Directors were in office for the entire Period unless otherwise stated. Director Ben Phillips Leonardo Pilapil Patrick Holywell Position Executive Chairman (Appointed 30 July 2021) Technical Director (Appointed 30 July 2021) Non-Executive Director (Appointed 8 October 2021) The name of the secretary in office at any time during or since the end of the year are: Company Secretary Arron Canicais Position Company Secretary (Appointed 19 August 2021) OPERATING RESULTS The Company has incurred a net loss after tax for the half-year ended 31 December 2023 of $301,884 (31 December 2022: $476,994). REVIEW OF OPERATIONS Norfolk Metals currently holds the Orroroo Uranium Project in South Australia and the Roger River Gold/Copper Project in Tasmania. Orroroo Uranium Project, South Australia The primary achievement for Norfolk during the half year ended 31 December 2023, has been the targeting, planning, local access, additional funding, drill permitting and maiden drill program execution at Orroroo which was completed subsequently. The operations report for Orroroo have included the completion of the drilling post the half year mark to provide a more complete report. This timeline has been broken down into the stages as below. 1. 2. 3. 4. 5. Local Stakeholder Access Targeting and Planning Funding via Placement of A$1m Drill Permitting Approvals Maiden Drill Program Execution NORFOLK METALS LIMITED | 2023 INTERIM FINANCIAL REPORT Page 2 Local Stakeholder Access On the 5th of October 2023 the Company announced successfully executing Land Access Agreements (Agreements) with seven (7) freehold landowners within EL6552. These Agreements had been prepared in order to facilitate the maiden drilling program (Program). The planned Program was to consist of up to twenty (20) RAB (rotary mud) holes up to one hundred and sixty metres (160m) deep within the approved area(s) and pending roadside approvals. Targeting and Planning On the 9th of November 2023 the Company released a “Mineralisation Targeting & Maiden Drill Program” presentation outlining the planning of the Company. The Company noted the uranium source rocks appear to be part of the Adelaidean Basement on the western edge of the modern-day creeks. Possible uranium source rocks could be granites or units such as the Brighton Limestone known to contain levels of uranium. If paleochannels were to be proven to have similar geometries and length than the modern-day creeks, then there could be up to 20km of prospective uranium bearing exploration ground depending on the REDOX conditions within the paleochannels. Figure 1. Targeting and planning for prospective uranium source and target locations Funding via Placement of A$1m Late November 2023 Norfolk Metals announced the Company had received firm commitments from professional and sophisticated investors for a strategic placement (Placement) to raise A$1,000,000 via the issue of 5,000,000 fully paid ordinary shares (Placement Shares) in the Company at an issue price of A$0.20 per Placement Share. The Placement was firmly oversubscribed with several current major shareholders corner stoning the raise to further solidify the top holders position and Company share structure. Whistler NORFOLK METALS LIMITED | 2023 INTERIM FINANCIAL REPORT Page 3 Wealth Management and JP Equities (together, the Key Brokers), with directors and clients of the Key Brokers, being major shareholders in the Company, have been issued a cumulative total of 500,000 unquoted options exercisable at A$0.30 each on or before 29 November 2026 (Broker Options). Drill Permitting Approvals Norfolk received all necessary approvals to commence drilling late November 2023. A formal approval letter was received from the South Australian Department of Energy and Mining (DEM) for the proposed Exploration Program for Environment Protection and Rehabilitation (EPEPR) confirming that Norfolk’s maiden drill program can commence on EL6552 (the Orroroo Project). This milestone approval was the major catalyst for the mobilisation of associated contractors to Orroroo. The approvals were the accumulation of over a year of continuous engagement with the primary stakeholders and landowners of Orroroo and EL6552. Maiden Drill Program Execution The maiden drill program was completed over two phases (Phase 1 and Phase 2) due to the Christmas holiday break. On the 21st of December 2023, the Company announced the initial results of the first twelve (12) holes with a subsequent five (5) holes drilled after Christmas being announced on the 7th of February 2024. Figure 2. Uranium *peak grade occurrences delineated by Norfolk Metals via Phase 1 drilling and February 2023 downhole geophysical survey *peak grade(s) noted are the direct detection of pU308 over a 0.02m interval by Prompt Fission Neutron downhole logging within a composite intersection with a cut-off grade greater than 100ppm pU308. See previous ASX announcement from 27 th February 2023 regarding uranium value reported at Well 7P3 (650ppm pU308). NORFOLK METALS LIMITED | 2023 INTERIM FINANCIAL REPORT Page 4 The 21st of December 2023 announcement noted that towards the completion of drilling at Target areas 1,2 and 4, (see Figure 1.) the second hole at Target 4 (ORMR007) was tested with a Prompt Fission Neutron (PFN) tool across the horizon of elevated gamma returning a value of 147ppm pU308 over 0.36m with a peak reading of 796ppm pU308 (see Figure 2.). This was a positive reconfirmation of the previously reported uranium occurrence via spectral gamma logging of historical Linc Energy drill holes (see ASX announcement on 27th February 2023). Norfolk expanded Phase 1 of the maiden drill program further afield from the initial targets testing the previously released regional REDOX model of the Walloway Basin (see announcement 6th July 2023) within the approved drilling areas of EL6552. Two (2) of five (5) holes drilled returned very encouraging results with peak values of 453ppm pU308 at ORMR008 and 538ppm pU308 at ORMR009 (see Figure 2.) Figure 3. Orroroo Project Regional Cross Section * Please note that some drill holes deliberately omitted for illustration only (scale) On the 7th of February 2024, Norfolk advised that Phase 2 drilling had been completed with a further 5 holes drilled across EL6552, taking the total number of holes completed in the maiden program to seventeen (17). Phase 2 of the program sought to test the palaeochannel model at the Wongway Creek Target (Formerly Target 1) where suitable drill access was available. A total of three (3) holes were drilled along the river traverse of the Wongway Creek Target testing both upstream and downstream regions. One (1) hole was drilled downstream of the No Name Creek Target (formerly Target 3) as well as the Rankin Rd Target (formerly Target 4). The completion of the maiden drill program has successfully delineated uranium NORFOLK METALS LIMITED | 2023 INTERIM FINANCIAL REPORT Page 5 in ten (10) of the seventeen (17) holes providing data for the Company to further develop a geological model of the Walloway Basin (Figure 3). Most importantly, the program interpreted a uranium bearing floodplain (see Figures 3. and 4.) intersected upstream of Wongway Creek which gives Norfolk confidence in the palaeochannel model and future exploration efforts can be planned accordingly. Figure 4. Phase 1 and Phase 2 Drill Location Plan and cross section reference Roger River Gold/Copper Project, Tasmania Exploration Activities During the half year ended 31 December 2023, Norfolk was continuing the work to obtain a better understanding of the copper and gold mineralisation at Roger River to guide the next exploration phase. The Company completed determining if all of the preferred historical soil samples (not sampled for Cu) over the White Water and A2 Prospects could be re-submitted for Cu (multi-elements) analysis. The Company finalised the program submitting 148 historical pulp soil samples along with 98 new surface samples collected on a 200 x 100m grid around A2 covering an area of approximately 1.2km x 1.5km (see Figure 5.) for multi-element analyses to ALS in Burnie, Tasmania. Subsequently, Norfolk was able to receive, interpret and map the results of the soil study. The results show a continuous Cu anomaly around A4 and A5 prospects located along the interpreted fault splay from the RRF (see Figure 6). NORFOLK METALS LIMITED | 2023 INTERIM FINANCIAL REPORT Page 6 Figure 5. Soil study new and historical sample locations This anomalous trend has coincident Pb Zn and Mo anomalies. The RRF also shows a strong continuous As anomaly over the 4km strike length (see Figure 7). Gold mineralisation is mainly associated with iron and arsenic minerals such as pyrite and arsenopyrite. During the oxidation process the arsenic is the more mobile element, moves further away from the source and therefore becomes a useful geochemical pathfinder for gold mineralisation. NORFOLK METALS LIMITED | 2023 INTERIM FINANCIAL REPORT Page 7 Figure 6 and Figure 7: Respectively displaying a Cu soil contour within the interpreted splays and the As soil contour as a continuous anomaly over the RRF structure. CAPITAL MANAGEMENT The Company maintains 38,000,000 fully paid ordinary shares on issue and $3,487,401 in cash as at 31 December 2023. SIGNIFICANT EVENTS AFTER THE BALANCE DATE The directors are not aware of any matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years, except for: On 19 February 2024 the Company issued and allotted 144,289 shares, for a value of $25,500, to a consultant of the Company in lieu of cash settlement of invoices for services rendered. SIGNIFICANT CHANGE IN THE STATE OF AFFAIRS There were no significant changes in the state of affairs of the Group other than as referred to elsewhere in this consolidated half-year report and in the accounts and notes attached thereto. NORFOLK METALS LIMITED | 2023 INTERIM FINANCIAL REPORT Page 8 AUDITOR’S INDEPENDENCE DECLARATION A copy of the auditors’ independence declaration as required under Section 307C of the Corporations Act 2001 in relation to the review for the half-year is set out on page 10 of this report. This report is presented in accordance with a resolution of the Board of Directors and is signed for and on behalf of the directors by: Ben Phillips Executive Chairman Perth, Western Australia this 15th day of March 2024 NORFOLK METALS LIMITED | 2023 INTERIM FINANCIAL REPORT Page 9 To the Board of Directors Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 As lead audit Director for the review of the financial statements of Norfolk Metals Limited for the half year ended 31 December 2023, I declare that to the best of my knowledge and belief, there have been no contraventions of: • • the auditor independence requirements of the Corporations Act 2001 in relation to the review; and any applicable code of professional conduct in relation to the review. Yours Faithfully, HALL CHADWICK WA AUDIT PTY LTD Dated 15th day of March 2024 Perth, Western Australia MARK DELAURENTIS CA Director INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF NORFOLK METALS LIMITED Conclusion We have reviewed the accompanying half-year financial report of Norfolk Metals Limited (“the Company”) and Controlled Entities (“the Consolidated Entity”) which comprises the condensed consolidated statement of financial position as at 31 December 2023, the condensed consolidated statement of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the half-year ended on that date, a summary of significant accounting policies and other selected explanatory notes, and the directors’ declaration. Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Norfolk Metals Limited and Controlled Entities does not comply with the Corporations Act 2001 including: a. Giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2023 and of its performance for the half-year ended on that date; and b. Complying with Accounting Standard AASB 134: Interim Financial Reporting and Corporations Regulations 2001. Basis for Conclusion We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity. Our responsibilities are further described in the Auditor’s Responsibilities for the Review of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants that are relevant to our audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001 which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s review report. Responsibility of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. Auditor’s Responsibility for the Review of the Financial Report Our responsibility is to express a conclusion on the half-year financial report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2023 and its performance for the half-year ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. HALL CHADWICK WA AUDIT PTY LTD Dated 15th day of March 2024 Perth, Western Australia MARK DELAURENTIS CA Director DIRECTORS’ DECLARATION The directors declare that the interim financial statements and notes are in accordance with the Corporations Act 2001: (a) Comply with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001, and other mandatory professional reporting requirements; (b) As stated in Note 1.1, the financial statements also comply with International Financial Reporting Standards; and (c) Give a true and fair view of the financial position of the entity as at 31 December 2023 and of its performance for the half year ended on that date. In the directors’ opinion there are reasonable grounds to believe that Norfolk Metals Limited will be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the directors pursuant to section 303(5)(a) of the Corporations Act 2001. For, and on behalf of, the Board of the Company, Ben Phillips Executive Chairman Perth, Western Australia this 15th day of March 2024 NORFOLK METALS LIMITED | 2023 INTERIM FINANCIAL REPORT Page 13 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the half-year ended 31 December 2023 Half-Year Ended 31 Dec 2023 $ Half-Year Ended 31 Dec 2022 $ 45,805 206 (44,407) (102,000) (78,297) (49,803) (4,990) (68,192) (301,884) (47,967) (117,000) (114,582) (57,538) (4,520) (515) (36,237) (98,841) (476,994) Income tax (benefit)/expense Loss after tax from continuing operations (301,884) (476,994) Other comprehensive loss for the period, net of tax (301,884) (476,994) (0.01) (0.01) Note Interest Income Expenses Administration costs Director fees Professional costs Marketing and investor relations costs Depreciation expense Finance expenses Legal and compliance expenses Share based payment expensed Loss before tax 5 Total comprehensive loss net of tax for the Period Basic and diluted loss per share ($) The Condensed Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes, which form an integral part of the interim financial report. NORFOLK METALS LIMITED | 2023 INTERIM FINANCIAL REPORT Page 14 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2023 Note Current assets Cash and cash equivalents Trade and other receivables Total current assets Non-Current assets Other assets Exploration Assets Plant and Equipment Total Non-Current assets Total assets 2 3 Current liabilities Trade and other payables Other liability Total current liabilities Total liabilities Net assets Equity Issued capital Reserve Accumulated losses Total Equity 4 5 As At 31 Dec 2023 $ As At 30 June 2023 $ 3,487,401 104,512 3,591,913 3,209,542 168,434 3,377,976 59,000 2,474,949 34,814 2,568,763 6,160,676 34,000 1,988,500 39,804 2,062,304 5,440,280 343,847 343,847 343,847 5,816,829 186,804 9,810 196,614 196,614 5,243,666 6,327,285 1,212,865 (1,723,321) 5,816,829 5,524,876 1,140,227 (1,421,437) 5,243,666 The Condensed Statement of Financial Position should be read in conjunction with the accompanying notes, which form an integral part of the interim financial report. NORFOLK METALS LIMITED | 2023 INTERIM FINANCIAL REPORT Page 15 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the half-year ended 31 December 2023 Issued Capital $ Option Reserve 5,534,098 1,081,388 (649,946) 5,965,540 Other Comprehensive loss - - - - Loss for the year - - (476,994) (476,994) Total comprehensive loss for the year - - (476,994) (476,994) Shares issued during the year - - - - Share based payments - 98,841 - 98,841 Balance at 31 December 2022 5,534,098 1,180,229 (1,126,940) 5,587,388 Opening balance 1 July 2023 5,524,876 1,140,227 (1,421,437) 5,243,666 Other Comprehensive loss - - - - Loss for the Period - - (301,884) (301,884) Total comprehensive loss for the Period - - (301,884) (301,884) Shares issued during the year 1,000,000 - - 1,000,000 Capital raising costs (197,591) Note Opening Balance 1 July 2022 Share based payments 5 6,327,285 Total Equity $ (197,591) 128,638 - (56,000) Adjustment of contingent consideration Balance at 31 December 2023 Accumulated Losses $ 1,212,865 128,638 (56,000) (1,723,321) 5,816,829 The Condensed Statement of Changes in Equity should be read in conjunction with the accompanying notes, which form an integral part of the interim financial report. NORFOLK METALS LIMITED | 2023 INTERIM FINANCIAL REPORT Page 16 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS for the half-year ended 31 December 2023 Half-Year Ended 31 Dec 2023 $ Half-Year Ended 31 Dec 2022 $ (173,913) 63,003 (110,910) (428,353) 206 (428,147) (600,208) - (441,605) (16,356) (600,208) (457,961) Net cash generated by financing activities 1,000,000 110,000 (111,213) (9,810) 988,977 37,989 (19,902) 18,087 Net increase in cash and cash equivalents (277,859) (868,021) Cash and cash equivalents at the beginning of the Period Cash and cash equivalents at the end of the Period 3,209,542 3,487,401 4,596,792 3,728,771 Note Cash flows from operating activities Payments to suppliers and employees Interest received Net cash used in operating activities Cash flows from investing activities Payment for exploration activities Loan provided to related party Payment for plant and equipment Net cash (used in) investing activities Cash flows from financing activities Proceeds from issue of shares Proceeds from issue of quoted options Payment of equity issue costs Proceeds from other liability Payment of other liability 2 The Condensed Statement of Cash Flow should be read in conjunction with the accompanying notes, which form an integral part of the interim financial report. NORFOLK METALS LIMITED | 2023 INTERIM FINANCIAL REPORT Page 17 NOTES TO THE INTERIM FINANCIAL STATEMENTS for the half-year ended 31 December 2023 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES 1.1. BASIS OF PREPARATION These interim consolidated financial statements are general purpose financial statements prepared in accordance with the requirements of the Corporations Act 2001, applicable accounting standards including AASB 134 ‘Interim Financial Reporting’, Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board (‘AASB’). Compliance with AASB 134 ensures compliance with IAS 34 ‘Interim Financial Reporting’. This condensed interim financial report does not include full disclosures of the type normally included in an annual financial report. Therefore, it cannot be expected to provide as full an understanding of the financial performance, financial position and cash flows of the Group as in the full financial report. The interim report has been prepared on a historical cost basis, except for the revaluation of certain financial instruments to fair value. Cost is based on the fair value of the consideration given in exchange for assets. The company is domiciled in Australia and all amounts are presented in Australian dollars, unless otherwise noted. The interim financial report was authorised for issue on the 15th of March 2024 by the Directors of the Company. Comparatives When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial period. Statement of compliance The interim financial statements comply with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the interim financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS). The following is a summary of the material accounting policies adopted by the entity in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied. Going concern The financial report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business. The Company incurred a loss for the period of $301,884 (31 December 2022: $476,994) and net cash outflows from operating activities of $110,910 (31 December 2022: $428,146). As at 31 December 2023, the Company had a working capital surplus of $3,248,066 (30 June 2023: $3,181,362). The directors have prepared a cash flow forecast, which indicates that the Group will have sufficient cash flows to meet all commitments and working capital requirements for the 12-month period from the date of signing this financial report. Based on the cash flow forecasts, the directors are satisfied that the going concern basis of preparation is appropriate. NORFOLK METALS LIMITED | 2023 INTERIM FINANCIAL REPORT Page 18 NOTES TO THE INTERIM FINANCIAL STATEMENTS for the half-year ended 31 December 2023 Accounting Policies The same accounting policies and methods of computation have been followed in this interim financial report as were applied in the most recent annual financial statements. The Group has considered the implications of new and amended Accounting Standards and determined that their application to the financial statements is either not relevant or not material. (a) Principles of Consolidation i. Subsidiaries Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed, when necessary, to align them with the policies adopted by the Group. ii. Transactions eliminated on consolidation All intra-group balances and transactions, and any unrealised income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements. iii. Functional and presentation currency The functional currency of the Group is the currency of the primary economic environment in which that entity operates. The financial statements are presented in Australian dollars, which is the Group's functional and presentation currency. (b) Critical Accounting Judgements, Estimates and Assumptions The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are: Exploration expenditure The recoverability of the carrying amount of the exploration and evaluation assets is dependent on the successful development and commercial exploitation, or alternatively, sale of the respective area of interest. The Company capitalises only the initial acquisition costs to obtain right of tenure exploration and evaluation assets. The Company reviews the carrying value of exploration and evaluation expenditure on a regular basis to determine whether economic quantities of reserves have been found or whether further exploration and evaluation work is underway or planned to support continued carry forwar