Australian Silica Quartz Group LimitedASX: ASQ

Annual Report to shareholders

Sep 18, 2020 at 7:34 AM UTC · Issued by Australian Silica Quartz Group Limited

ANNUAL REPORT 2020

Front Cover: ASQ drilling silica sand on M70/326

This page: ASQ tenements are strategically located near ports with potential capacity. Albany Port (pictured) has potential capacity for future silica sales.

Corporate Information

ABN 72 119 699 982

DIRECTORS

Robert Nash - Non-Executive Chairman

Luke Atkins - Non-Executive Director

Neil Lithgow - Non-Executive Director

Zhaozhong Wang - Non-Executive Director

CHIEF EXECUTIVE OFFICER & COMPANY SECRETARY

Sam Middlemas

CHIEF FINANCIAL OFFICER

Patrick Soh

REGESTERED OFFICE

Suite 10, 295 Rokeby Road

SUBIACO WA 6008

Telephone +61 8 9200 8200

Facsimile +61 8 9200 8299

Email:admin@asqg.com.au

Web:www.asqg.com.au

SHARE REGISTRY

Automic Group

Level 2, 267 St Georges Terrace

PERTH WA 6000

GPO Box 5193 (all correspondence)

SYDNEY NSW 2001

Phone 1300 288 664 (within Australia)

International +61 (0)2 9698 5414

AUDITORS

Moore Australia Audit (WA)

Level 15, 2 The Esplanade

PERTH WA 6000

Telephone +61 8 9225 5355

Facsimile +61 8 9225 6181

STOCK EXCHANGE LISTING

ASX Code: ASQ

Contents
Corporate Information ........................................................	1
Chairman's Letter to Shareholders 2020 ............................	2
Review of Operations.........................................................	3
Mineral Resources and Ore Reserves	...............................	12
Director's Report...............................................................	15
Auditor's Independence Statement ..................................	25
Statement of Profit or Loss and Other Comprehensive
Income ..............................................................................	26
Statement of Financial Position ........................................	27
Statement of Changes in Equity ........................................	28
Statement of Cash Flow ....................................................	29
Notes to the Financial Statements....................................	30
Directors' Declaration .......................................................	50
Independent Auditor's Report ..........................................	51
ASX Additional Information...............................................	54
Australian Silica Quartz Group Ltd	Financial Report 2020 \| 1

Chairman's Letter to Shareholders 2020

Dear Shareholders,

2020 FINANCIAL YEAR IN REVIEW

During the financial year ending 30 June 2020 and since that time, the Company's focus has been on:

continuing to develop its silica sand projects in Gingin, Albany and Esperance that were commenced in prior financial years with an increasing focus on the Albany prospects;
ongoing work on the marketing and development of the Urban silica sand deposit at Bullsbrook, WA;
investigating the prospect of exploiting mineral resources other than bauxite on some of the Company's established bauxite tenements and identifying new exploration tenements for either internal or joint venture development; and
continuing to explore and maintain our bauxite assets held in the joint venture with our long standing and loyal Chinese joint venture partner, HD Mining.

Silica Sand

Over the course of the last financial year, work continued on detailed metallurgical testing of the silica sand from the Urban Bullsbrook project, comprising spiral and up-current classifier trials to remove heavy mineral and organic material from the product. Preliminary engineering designs have been completed for a planned upgraded plant. It is expected that, once processed through an upgraded plant, a high quality silica sand product will be produced with +99.9% silica content and iron levels of less than 0.006%.

The Company has been in negotiations with a number of potential silica sand customers regarding pricing and terms. Subject to getting offtake commitments of not less than 50,000 tonnes per annum on satisfactory pricing terms, it is anticipated that the Board will then be in a position to authorise the commissioning and installation of an upgraded plant. A trial shipment of a container of 20 tonnes of washed silica sand was purchased by a potential Chinese customer, however it turned out not to be suitable for the proposed end use of that customer, namely engineered stone. The customer is continuing to make enquiries of other end users.

Work continued on negotiating necessary long-term access arrangements for the Gingin, Albany and Esperance silica sand tenements. It is anticipated that necessary access arrangements will be finalised in the near future, which will allow more comprehensive exploration and testwork to be undertaken on the more advanced projects.

Nickel-Copper-PGE Exploration

The Company recently entered into a joint venture agreement with Australian listed DevEx Resources Limited ("DevEx", ASX: DEV) on one of its existing tenements north of Perth which is adjacent to and along strike of the recent Chalice Julimar Ni-Cu-PGE discovery. Preliminary exploration by DevEx has returned encouraging results.

The board and senior management of the Company are optimistic about the current pipeline of projects. The 20/21 year is shaping up as an eventful and positive year for the Company.

More detailed information of the Company's project activities are set out in the Review of Operations contained this annual report.

I would like to thank our staff and the CEO, Sam Middlemas, for their work during the year in keeping the focus on the Company's operational activities and for keeping our operations lean and efficient. I also thank my dedicated fellow board members for their support and hard work during the year.

Finally, again I thank you, the shareholders, for your continued support of the Company. We remain focused developing our projects and building a business that will generate long term shareholder value and returns.

Yours sincerely

Robert Nash

Chairman

2 | Financial Report 2020 Australian Silica Quartz Group Ltd

Review of Operations

SILICA

High grade silica (99.5-99.9% SiO2) and high purity silica (>99.95% SiO2) currently have a wide range of uses and applications. All indications suggest the high grade and high purity silica market is currently growing strongly due to greater demand from the PV Solar, TFT glass, Electronics, Flat Glass and Speciality Glass industries. This is reinforced by the level of enquiries received from qualified end user customers primarily from China and South East Asia.

Australian Silica Quartz Group Limited ("ASQG, or "the Company") has established a range of silica sand and hardrock projects held via exploration licence applications 100% by ASQG's subsidiary Australian Silica Quartz Pty Ltd ("ASQ"). These projects now consist of 8 granted exploration licences and 7 applications covering approximately 1,370 km2 within Western Australia and Queensland.

In addition to its own silica exploration projects ASQG has formed a partnership with an existing local sand producer. In 2019 the Company executed a binding terms sheet with Urban Resources Pty Ltd (Urban) to jointly exploit Urban's Silica Sand deposit located in Bullsbrook, Western Australia. Urban has operated the mine for the last six years and produced over 1Mt from the deposit in the 2018/19 financial year.

Figure 1: ASQG Group Project Locations

Australian Silica Quartz Group Ltd

Financial Report 2020 | 3

Silica Sand Projects

Urban Resources/ASQG Business Venture

Urban's Maralla Rd Silica Sand Mine with silica sand washing plant in operation.

A binding agreement has been executed with Urban Resources Pty Ltd to jointly exploit Urban's Silica Sand deposit located on M70/326 in Bullsbrook, Western Australia, in the same location as the ASQ Gingin Silica Sand Project. The agreement is subject to a number of conditions including completion of legal due diligence. A more detailed formal agreement is currently being finalised.

Under the terms of the agreement, Urban will run the mine operations utilising its current staff and equipment together with the additional equipment to be acquired by ASQ, with each party providing its services at its cost on an open book basis and profits will be split equally. ASQ will run the marketing and sales operations and will fund the additional equipment up to $1.25 million required to purify and upgrade the mined sand.

ASQG have completed a JORC 2012 Inferred Mineral Resource on the raw sand at Urban's Maralla Road tenement M70/326 (refer full detail in the 7 May 2019 announcement Update on Maralla Road Silica Sand Deposit Maiden Resource).

Table 1 - Urban's Maralla Rd March 2019 Inferred Mineral Resource Estimate

Tonnage	SiO2	Fe2O3	Al2O3	CaO	MgO	K2O	TiO2	LOI
Mt	%	%	%	%	ppm	%	%	%

10.7	99.8	0.02	0.01	0.003	24.1	0.003	0.05	0.07

This mineral resource estimate confirms that there is sufficient silica sand of adequate quality at the deposit to support an export operation as contemplated.

4 | Financial Report 2020 Australian Silica Quartz Group Ltd

Up Current Classifier Trials for the M70/326 Silica Sand Products

ASQ has completed metallurgical test work comprising spiral and up-current classifier trials that have shown incorporation of spiral and classifying circuits in the washing plant as contemplated by the completed preliminary engineering design will remove the heavy mineral and organic material from the product. After the installation of an upgrade to the current plant, the mine is expected to produce a high quality sand product with 99.93% silica and iron levels less than 60ppm (refer full detail in the 29 January 2020 announcement Spiral and Classifier Testwork Results for the M70/326 Silica Sand Products).

The Company is in detailed negotiation with multiple potential sand customers. These customers have received samples and negotiations continue regarding pricing and terms.

In Q1 2020 a trial shipment of ASQ- GWW1 silica sand was purchased by a Chinese customer for the purpose of testing suitability for the manufacture of the sand into engineered stone (refer full detail in the 3 April 2020 announcement Trial Shipment of Silica Sand Product ASQ- GWW1 dispatched to China). The Customer advised the sand is unsuitable

for engineered stone due to the traces of heavy mineral and organic material present in the basic washed sand. ASQ remains in contact with the buyer who is pursuing alternate applications.

Bagged washed silica sand product ASQ-GWW1 loaded into a sea container and transported to Fremantle Port for export to China

Gingin, Albany and Esperance Silica Sand Projects

The Gingin Silica Sand Project consists of one granted and one application exploration licences located 20-70km north of Perth, the Albany Silica Sand Project consists of three granted exploration licence and four exploration application licences within 10-85km of the Port of Albany and the Esperance Silica Sand Project consists of two granted exploration licences within 30-60km of the Port of Esperance. Roadside grab samples from the three Silica Sand Projects have returned encouraging results consistent with historically reported grades. Selected samples have been processed by washing, screening and density separation to give an indication of potential product characteristics with results up to 99.94% SiO2 (refer full detail in the 14 December 2017 announcement Silica Sand and Hardrock Silica Quartz Project Updates). Mineral and chemical characterisation of a selected sample from each sand project was carried out at a specialist silica laboratory in Germany indicating the sand should be suitable for the optical glass, glass sand, engineered stone and quartz filler markets. Multiple phases of desktop and field assessments have been completed and priority targets selected. Current efforts are focussed on securing land access to allow drilling and resource estimation to be completed.

Sales Marketing

Through the company's marketing activities ASQ has received more than 50 qualified expressions of interest relating to the company's silica sand and projects to date. Product specification sheets have been distributed to potential customers where applicable and silica sand samples have been delivered to potential domestic and international customers. In excess of 25 groups are currently actively liaising with ASQ on the silica products available now and those products ASQ expects to have available in the future. Ongoing negotiations are continuing with a view to securing offtake for the company's washed sand product or presales of the company's processed high grade silica sand product. Major multinational companies with an interest in securing offtake have visited ASQ's projects in Albany and Gingin, WA. Currently the company is marketing two silica sand products to potential customers. It is planned that the company's product range will increase as additional processing capability is added.

Australian Silica Quartz Group Ltd

Financial Report 2020 | 5

Hardrock Silica Quartz Projects - Western Australia and Queensland

The company has two application exploration licences in the South West of Western Australia and three granted exploration permits in Far North Queensland covering known quartz deposits with the potential to contain high purity silica.

A detailed research and development program is underway utilising samples collected from the company's tenement package. The program is investigating innovative processing techniques that could yield high purity product from high grade silica sand or hardrock quartz material.

ASQ silica quartz testing in the laboratory

BAUXITE

In 2010 the Company entered into a joint venture with HD Mining & Investment Pty Ltd ("HD Mining") a wholly owned subsidiary of the Shandong Bureau No1 Institute for Prospecting of Geology & Minerals (Shandong) to explore for bauxite. The JV provides for HD Mining to fund 100% of exploration and feasibility costs for HD Mining to earn:

a 40% interest in any defined area of exploration on the making a binding commitment by HD Mining to undertake a detailed feasibility study for the commercial mining of the defined area; and
a further 20% interest in a defined area upon completion of the feasibility study and the making by the JV committee of a decision to commence mining.

Bauxite exploration activity by the company and joint venture partner on bauxite projects was limited by fiscal restraints within the Shandong Bureau. Several tenements have been granted Retention Status allowing the company to focus the limited joint venture funds on the assessment for development of the Dionysus Bauxite Resource. Additional work focussed on strategic planning and target generation within the JV land holdings to ensure a pipeline of quality bauxite projects is maintained.

ASQG and its joint venture partner's total bauxite resources stand at 94.7Mt as at 30 June 2020 (refer to Mineral Resources Table 1 for resources details). ASQG considers the current resources have potential for growth and provide opportunities for domestic and export exploitation.

Key resources, located in the eastern and northern Darling Range, display low reactive silica and high available alumina to reactive silica ratios, making them attractive for refining. The majority of alumina present is the trihydrate mineral gibbsite, which enables cost effective, low temperature extraction.

6 | Financial Report 2020 Australian Silica Quartz Group Ltd

ASQG bauxite resources are predominantly located on large private land holdings (typically cleared farmland), in proximity to road and rail infrastructure. Bauxite is shallow, typically with less than 2m of loose overburden, requiring limited pre- stripping, attributes that indicate potential to support long life, low cost bauxite operations.

Athena, Ceres and Dionysus bauxite resources, as described below, are key projects that form part of the joint venture with HD Mining & Investments Pty Ltd (HD Mining). The current joint venture with HD Mining is a Farm-in Agreement that requires HD Mining to fund 100% of all exploration and feasibility costs to earn 60% of the bauxite rights upon a decision to mine.

Dionysus (HD Mining/ASQG JV)

Dionysus is located on one private landholding, approximately 100km north east of Perth, and situated in proximity to existing rail infrastructure providing a link to Kwinana Port. In 2015 the Company completed close spaced drilling confirming continuity of grade and bauxite thickness and commenced the collection of baseline environmental data, with the establishment of a small number of water level monitoring bores. ASQG completed reconnaissance exploration drilling on extensional areas of the Dionysus bauxite resource in early 2017.

Athena & Ceres (HD Mining/ASQG JV)

Athena and Ceres consist of deposits located on a number of private land holdings on exploration licences E70/3179, E70/3180 and E70/3890, between the townships of Wandering, Williams and Pingelly, approximately 120km southeast of Perth.

The Athena resource was upgraded in July 2014 following a phase of growth drilling taking the resource to 36.2Mt (refer full detail on 15 July 2014 announcement 59% Increase in Athena Bauxite Deposit).

The 21.9Mt Inferred Ceres resource was updated in March 2018 (refer full detail in the 23 April 2018 Announcement - 48% increase in Bauxite Resource at Ceres Deposit in Darling Range, WA) following drilling completed in 2017.

Both the Ceres and Athena resources are shallow and display typical bauxite thickness of 1 - 3m and up to 13m. The project area is yet to be constrained by drilling and as such potential remains to further grow these resources subject to additional land access. Athena and Ceres make up a combined resource total in the eastern Darling Range in excess of 50Mt.

E70/3179 and E70/3890 have Retention Status.

Bauxite Exploration Drilling

Australian Silica Quartz Group Ltd

Financial Report 2020 | 7

Figure 2: ASQG Darling Range tenement holding and resource locations

8 | Financial Report 2020 Australian Silica Quartz Group Ltd

NICKEL-COPPER-PGE EXPLORATION

ASQG/DevEx 50/50 Joint Venture - The Sovereign Ni-Cu-PGE Project

The Company has reached Agreement with ASX Listed DevEx Resources Limited to earn-in to ASQ's E70/3405 located along strike from the Chalice Gold Mines Limited ("Chalice", ASX: CHN) Ni-Cu-PGE Julimar discovery in WA (see Figure 3)

"The Sovereign Project" (refer full detail in 1 June 2020 announcement ASQ reaches agreement for funding of exploration on its tenement in Julimar Region, WA).

Preliminary assessment by ASQ identified potential for Ni-Cu-PGE exploration targets to be developed based on regional aeromagnetic data and Geological Survey of Western Australia mapped mafic-ultramafic igneous complexes of the Julimar Intrusive Complex.

ASQ was approached by DevEx, and subsequently reached agreement for DevEx to earn-in to the non-bauxite rights of the tenement by an initial spend of $3m to earn a 50% interest with a minimum spend of $250,000. Once DevEx has earnt its initial 50% interest, ASQ may elect to contribute to further exploration to maintain its 50% interest, or may have DevEx spend an additional $3m to earn a further 20% interest with ASQ diluting.

The Sovereign Project is strategically located to the north of Chalice's Julimar Project and south of Cassini Resources Limited's (ASX: CZI) Yarrawindah Brook Project.

E70/3405 is granted and ASQ have established land access agreements covering the majority of the area of interest. The Project is located on predominantly cleared, broad scale agricultural land 95 km from Perth in the Shire of Victoria Plains.

Figure 3: Location of Julimar North Project with existing Ni-Cu-PGE discoveries on Aeromagnetic RTP image

DevEx have completed re-assay of historical ASQ bauxite drill-hole samples, together with surface rock chip sampling, and has identified elevated nickel, copper and chromium results coincident with the Sovereign magnetic complex. Individual assays have returned values of up to 1,210ppm nickel (Ni), 395ppm copper (Cu), 6,830ppm chromium (Cr) and 83ppb palladium + platinum (Pd+Pt) (refer full details in 19 August 2020 announcement Update on ASQ/DevEx 50/50 JV in Julimar Region, WA).

Australian Silica Quartz Group Ltd

Financial Report 2020 | 9

Figure 4: Nickel (Ni) analysis of pulps from ASQ Bauxite Drilling and Company rock chip sampling

These results are centred around the large 6x7km Sovereign magnetic complex, supporting the interpretation that the airborne magnetics is mapping mafic-ultramafic intrusive rocks of the Julimar Complex, and similar to those rocks that host the recent high-gradeNi-Cu-PGE discovery by Chalice.

DevEx is planning to commence an Airborne Electromagnetic (AEM) Survey in early-September to detect possible massive sulphide zones beneath the weathered bedrock over the entire Sovereign Project area (100km2). Electromagnetic techniques have proven to be effective elsewhere in the region for defining massive sulphide bodies.

In addition to the AEM Survey, DevEx is now planning to drill priority areas within the ASQ Tenement with RAB/Aircore drilling in the coming months. The timing of this drilling program is expected to coincide with results from the AEM Survey and assist with a maiden RC/diamond drilling program later in the year.

10 | Financial Report 2020 Australian Silica Quartz Group Ltd

Figure 5: Copper (Cu) analysis of pulps from ASQ Bauxite Drilling and Company rock chip sampling

RARE EARTH ELEMENTS (REE)

Surface Geochemical sampling by Fiddlers Creek Pty Ltd on E70/4983

Surface geochemical sampling has been undertaken by Fiddlers Creek Pty Ltd ("Fiddlers Creek") targeting a geophysical anomaly with REE potential on ASQG 100% owned Exploration Licence E70/4983 near Mount Barker in the south west of Western Australia following execution of a Letter of Intent between ASQ and Fiddlers Creek which gives Fiddlers Creek the right to conduct preliminary exploration before electing to proceed to a formal joint venture. Final results are pending at the time of reporting.

Australian Silica Quartz Group Ltd

Financial Report 2020 | 11

Mineral Resources and Ore Reserves

The Company has completed an update to its Mineral Resources and Ore Reserves Statement for the twelve months ending June 30, 2020. The Company's total Bauxite Mineral Resources are estimated at 94.7Mt at an average available alumina grade of 31.8%. There has been no increase in total resources from those reported in 2019. The Mineral Resource Statement as at 30 June, 2020 is provided in table 1.

JORC Code 2012 and ASX Listing Rules Requirements

This annual statement has been prepared in accordance with the 2012 Edition of the 'Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' (JORC Code 2012).

Information prepared and first disclosed under the JORC 2004 Edition, and not related to a material mining project, and which has not materially changed since last reported has not been updated.

There have been no material changes to material projects for the purposes of ASX Listing Rules 5.8 and 5.9 and as such Material Information Summaries or JORC Code 2012 Assessment and Reporting Criteria are not provided with this statement.

The Company advises that this material contains summaries of Exploration Results and Mineral Resources as defined in the JORC Code 2012. JORC compliant Public Reports released to the ASX declaring the exploration results or JORC resources referred to can be viewed on both the ASX and the Company websites, free of charge.

Governance

The annual audit of resources and reserves is carried out internally by the Company. The Company ensures that the Mineral Resources and Ore Reserves reviews are subject to appropriate internal controls, and in line with the Company's Mineral Resources and Ore Reserves Policy. The estimation procedures are well established and prepared by competent and qualified professionals. All resources are based on well-founded assumptions, and compliant with Joint Ore Reserves Committee (JORC) guidelines.

Competent Persons Statement

The information in this report that relates to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Nick Algie, a Competent Person who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Algie is a full-time employee of the Company. Mr Algie has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Algie consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this report that relates to specific Mineral Resources is based on and accurately reflects reports prepared or reviewed by the Competent Persons named in Table 1. Mr Senini is a Competent Person and was an employee of the Company at the time of resource estimation and remains Competent Person. Mr Searle is a Competent Person and is a director of Ashmore Advisory Pty Ltd and remains Competent Person. Mr Senini and Mr Searle are members of the Australian Institute of Geoscientists, and have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Each Competent Person consents to the inclusion of material in the form and context in which it appears.

12 | Financial Report 2020 Australian Silica Quartz Group Ltd

Forward Looking Statements

This report may include forward looking statements. Often, but not always, forward looking statements can generally be identified by the use of forward looking words such as "may", "will", "expect", "intend", "plan", "estimate", "anticipate", "continue", or other similar words and may include, without limitation, statements regarding plans, strategies, and objectives of management. Forward looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause the company's actual results, performance and achievements to differ materially from anticipated results, performance or achievements. Forward looking statements are based on the Company and its management's good faith assumptions relating to the financial, market, regulatory and other relevant environments that will exist and affect the company's business and operations in the future. The Company does not give any assurance that the assumptions on which forward looking statements are based will prove to be correct, or that the Company's business or operations will not be affected in any material manner by these or other factors not foreseen or foreseeable by the Company or management or beyond the Company's control. Accordingly, readers are cautioned not to place undue reliance on forward looking statements.

Table 1: Mineral Resource Statement as at 30 June, 2020

Note: The Competent Persons are as follows.

Shaun Searle
Peter Senini

Australian Silica Quartz Group Ltd

Financial Report 2020 | 13

Annual Financial Report

Directors' Report ...........................................................	15
Auditors' Independence Declaration.............................	25
Statement of Profit or Loss and Other Comprehensive
Income ...........................................................................	26
Statement of Financial Position.....................................	27
Statement of Changes in Equity ....................................	28
Statement of Cash Flow.................................................	29
Notes to the Financial Statements ................................	30
Directors' Declaration....................................................	50
Independent Audit Report.............................................	51
ASX Additional Information ...........................................	54

14 | Financial Report 2020 Australian Silica Quartz Group Ltd

Directors' Report

Your directors submit their report on the consolidated entity (referred to hereafter as the Group) consisting of Australian Silica Quartz Group Ltd and the entities it controlled at the end of, or during, the year ended 30 June 2020.

DIRECTORS

The names and details of the Company's directors in office during the financial year and until the date of this report are as follows. Where applicable, all current and former directorships held in listed public companies over the last three years have been detailed below. Directors were in office for this entire period unless otherwise stated.

NAMES, QUALIFICATIONS, EXPERIENCE AND SPECIAL RESPONSIBILITIES

Robert Nash, B Juris LLB, Public Notary (Non-Executive Chairman)

Mr Nash is a lawyer by profession and currently practises as a barrister. He is presently retired from the position of Head of WA Navy Reserve Legal Panel. He has served as a council member of the Law Society of Western Australia for 10 years, a Convenor of the Law Society Education Committee and as a member of the Ethics and Professional Conduct Committees.

Mr Nash joined the board before the Company listed in 2008. He was appointed Chairman in August 2013.

Mr Nash has not held any other listed company directorships in the last 3 years.

Luke Atkins, LLB (Non-Executive Director)

Mr Atkins previously practised as a lawyer and was the principal of Atkins and Co Lawyers, a Perth based legal firm which he owned and managed for seven years. Mr Atkins brings to the Company extensive experience in capital raising and public listed companies.

Mr Atkins is currently Chairman of ASX listed Altech Chemicals Limited (8 May 2007 to current) and has interests in a number of enterprises including agriculture and property development.

Neil Lithgow, MSc, FFin, MAusIMM (Non-Executive Director)

Mr Lithgow is a geologist by profession with over 25 years experience in mineral exploration, economics and mining feasibility studies covering base metals, coal, iron ore and gold.

Mr Lithgow is a non-executive director of Aspire Mining Limited (12 February 2010 to current) and he is a member of the Australian Institute of Mining and Metallurgy and the Financial Services Institute of Australia.

Mr Lithgow has not held any other listed company directorships in the last 3 years.

Zhaozhong Wang, (Non-Executive Director)

Mr Wang is the representative from the Company's substantial shareholder, HD Mining & Investments Pty Ltd ("HD Mining"). Mr Wang is Manager of HD Mining which is a subsidiary of Shandong No1 Geo-mineral Exploration Institute at the Shandong Bureau of Geology in China and is based in Perth, Western Australia.

He is a qualified senior geologist who graduated from the Geological Science Institute of Shandong Jianzhu University in June 1991. He has been involved in geological exploration and survey and was previously in charge of the following Chinese projects: Pingdu Hill Gold, Dawenkou Mazhuang county Gypsum Project, Shandong Longkou Liangjia Coal Project and Laizhou Sanshan Island Gold Project.

He has accumulated geological experience in the Chinese mining industry including gold, copper, coal, iron, gypsum and bauxite.

Mr Wang has not held any listed company directorships in the last 3 years.

Mr Wang has appointed Pengfei Zhao B.SC.Grad Cert Mineral Economic as his alternate director with effect from 1 April 2019.

Australian Silica Quartz Group Ltd

Financial Report 2020 | 15

Directors' Report cont.

CHIEF EXECUTIVE OFFICER & COMPANY SECRETARY

Sam Middlemas, B.Com.,PGrad DipBus., CA (Chief Executive Officer and Company Secretary)

Sam Middlemas is a Chartered Accountant with over 20 years of commercial experience in the mining and resources sector. Sam was formerly a Non-Executive Director of the ASX Listed Elemental Minerals Limited, including Non-Executive Chairman for 3 years, and formally a Non- Executive Director of the ASX listed Rubicon Resources Limited. He has previously worked or consulted for a number of ASX, TSX and AIM listed Companies, acting in roles including Chief Executive Officer, Non-Executive Director, Chief Financial Officer and Company Secretary to a number of listed public companies over the last 20 years.

He was appointed Company Secretary for Australian Silica Quartz Group Ltd on 6 July 2012, and Chief Executive Officer on 21 October 2015. He also acts as Company Secretary and CFO for Ardea Resources Limited.

Interests in the shares, options and performance rights of the Company and related bodies corporate

As at the date of this report, the interests of the directors and their related bodies corporate in the shares, options and performance rights of Australian Silica Quartz Group Ltd were:

	Performance	Ordinary Shares
	Rights

Robert Nash	666,667	330,000

Luke Atkins	1,333,334	22,639,574

Neil Lithgow	666,667	20,366,666

Zhaozhong Wang 1	666,667	19,700,000

Note 1: Mr Wang is the corporate representatives of HD Mining and Investment Pty Ltd, who is the holder of shares in the Company. His alternate Mr Zhao holds no shares or performance rights.

OPERATING AND FINANCIAL REVIEW

OPERATING REVIEW

The Company's main activities during the year continued to be focussed on the Silica Sands projects around Gingin, Albany and Esperance. Preliminary exploration work has commenced on all tenements, and a binding term sheet has been executed with an existing sand producer, Urban Resources Pty Ltd to jointly exploit Urban's silica sand deposit located in Bullsbrook, Western Australia.

Bauxite exploration continued through the Bauxite managed HD Mining Joint Venture ("HDMI") where Bauxite resources at 30 June 2020 stood at 94.7 million tonnes (see table 1 for resource details), and the Silica Sands Project through its wholly owned subsidiary Australian Silica Quartz Pty Ltd.

The Company also entered into two Joint Ventures with ASX Listed Devex Resources Limited, and one with Fiddlers Creek Pty Ltd to explore for other minerals on wholly owned tenements, specifically Ni-Cu-PGE exploration targets where we have been able to complement and enhance our technical skill base, and bring in critical funding options.

There were no significant changes in the nature of the Group's activities during the year.

FINANCIAL REVIEW

The Group has recorded a loss for the period after income tax for the year ended 30 June 2020 of $840,652 (2019: $1,301,942 loss).

Included in the operating loss was expenditure on exploration totalling $588,509 compared to $503,668 in the year ended 30 June 2019. The group does not capitalise exploration expenditure, but writes off the full amount of expenditure incurred each year. Employment Benefits expense was $194,295 (2019: $287,391).

The Group earned $57,249 in interest revenue in the year compared to $113,921 in 2019, that is largely reflective of the company's lower cash balance and decline in interest rates over the course of the past two financial years. The average rate earned on investments during the year was 1.63%, compared to an average rate of 2.57% in 2019. The Group's cash balances reduced by $841,296 over the course of the year.

The Group ended the financial year with cash reserves of $3,275,700 (2019: $4,116,996).

The Cash Flow Statement on page 30 of this Annual Financial Report sets out details of the use of these cash funds and the Group's operating cash flows were able to deliver cost reductions throughout the year.

16 | Financial Report 2020 Australian Silica Quartz Group Ltd

Directors' Report cont.

DIVIDENDS

No dividends were paid or declared during the financial year. No recommendation for payment of dividends has been made.

SHAREHOLDER RETURNS

2020		2019

Basic earnings per share (cents)	(0.39)	(0.61)

Diluted earnings per share (cents)	(0.39)	(0.61)

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

The Company's main focus continues with its work on the Silica Sand projects. It also continues to explore for additional bauxite resources within its existing tenements and more particularly through the HD Mining Joint Venture, and other Joint Ventures for other minerals.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There were no significant changes in the state of affairs of the Group during the financial year.

RISK MANAGEMENT

The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that activities are aligned with the risks and opportunities identified by the Board.

The Company believes that it is crucial for all Board members to be a part of this process, and as such the Board has not established a separate risk management committee.

The Board has a number of mechanisms in place to ensure that management's objectives and activities are aligned with the risks identified by the Board. These include the following:

Board approval of a strategic plan, which encompasses strategy statements designed to meet stakeholders' needs and manage business risk.
Implementation of Board approved operating plans and budgets and Board monitoring of progress against these budgets.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

There has not been any matters or circumstance that have arisen since 30 June 2020 which significantly affected or could significantly affect the operations of the consolidated group in future financial years.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Group is subject to environmental regulation in respect to its exploration activities. The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in compliance with all environmental legislation. The directors of the Group are not aware of any breach of environmental legislation for the year under review.

Australian Silica Quartz Group Ltd

Financial Report 2020 | 17

Directors' Report cont.

REMUNERATION REPORT

The remuneration report is set out under the following main headings:

Principles used to determine the nature and amount of remuneration
Service agreements
Details of remuneration
Share-basedcompensation
Equity instrument disclosures relating to key management personnel
Performance based remuneration
Loans to key management personnel
Other transactions with key management personnel
Additional information

The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.

A Principles used to determine the nature and amount of remuneration

Remuneration Policy

The remuneration policy of the Company has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas affecting the Company's financial results. The Board believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the Company.

The Board's policy for determining the nature and amount of remuneration for Board members and senior executives of the Company is as follows:

The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed by the Board. All executives receive a base salary, which is based on factors such as responsibilities and experience. The executives of the Company outside the directors are also eligible to participate in the Company's Performance Rights Plan as approved by Shareholders in November 2017. The Board reviews executive packages annually by reference to the Company's performance, executive performance and comparable information from industry sectors and other listed companies in similar industries.

The Board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract and retain the highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth.

The Australian based executive directors and executives receive a superannuation guarantee contribution required by the government, which was 9.5% in 2019/2020, and do not receive any other retirement benefits. Board members were awarded Performance Rights that were approved by shareholders at the 2018 AGM.

All remuneration paid to directors and executives is valued at the cost to the Company and expensed. Options or rights are valued using the Black Scholes or binomial option pricing methodology.

The Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and responsibilities. The Board determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting (currently $600,000). Fees for non-executive directors were $20,000 per annum with additional fees payable for membership of other board related committees. The fees are not linked to the performance of the Group, however, to align directors' interests with shareholder interests, the directors are encouraged to hold shares in the Company. Directors were also issued Performance Rights following approval at the 2018 Annual General Meeting.

18 | Financial Report 2020 Australian Silica Quartz Group Ltd

Directors' Report cont.

Company performance, shareholder wealth and directors' and executives' remuneration

Historically, a number of performance rights have been granted to key management personnel and are linked to the company performance through market based performance conditions. There were no rights issued to employees and consultants during the financial year. Details on the proportion of remuneration is detailed in Part F of the remuneration report.

The following table shows the gross revenue, losses and earnings per share for the current and prior year.

	2020	2019

	$	$

Revenue	575,184	538,252

Net profit/(loss)	(840,652)	(1,301,942)

Earnings per share (cents)	(0.39)	(0.61)

B Service agreements

The details of service agreements of the key management personnel of Australian Silica Quartz Group Ltd and the Group are as follows:

Contracted key management personnel are engaged on standard commercial terms.

Luke Atkins - Consultancy agreement.

Term of agreement - Commenced 1 July 2016, subject to a 3 months' written notice period.
Monthly retainer fee of $25,000 for providing business and projects counsel and advice to the Company as and when requested.

Sam Middlemas - Chief Executive Officer - Consultancy agreement.

Term of agreement - Commenced 19 October 2015, subject to a 3 months' written notice period.
Monthly minimum retainer fee of $14,400 for providing Chief Executive Officer Services
Company has provided an interest free loan of $200,000 to reimburse the purchase of shares in Australian Silica Quartz Group Ltd to be repaid earlier of 19 October 2021, or sale of shares, or within 3 months of Consultancy agreement being terminated.

Contracted key management personnel are engaged on standard commercial terms.

C Details of remuneration

Details of the remuneration of the directors, the key management personnel of the Group (as defined in AASB 124 Related Party Disclosures) and specified executives of Australian Silica Quartz Group Ltd are set out in the following table.

The key management personnel of Australian Silica Quartz Group Ltd and the Group include the directors and company secretary as per page 16 &17 above.

The Chief Executive Officer has full authority and responsibility for planning, directing and controlling the activities of the Group. The Exploration Manager has authority and responsibility for planning, directing and controlling the exploration activities of the Group. The Chief Financial Officer has responsibility for planning directing and controlling the financial affairs of the Group, as directed by the Board. Given the size and nature of operations of Australian Silica Quartz Group Ltd and the Group, there are no other employees who are required to have their remuneration disclosed in accordance with the Corporations Act 2001.

Australian Silica Quartz Group Ltd

Financial Report 2020 | 19

Directors' Report cont.

Key management personnel and other executives of Australian Silica Quartz Group Ltd and the Group

										Post-		Share-based
						Short-Term				employment			Total		Percentage of
										Payments
						Subsidiary				benefits					remuneration

															consisting of
			Salary & Fees			Board and		Consultancy				Performance			performance
					committee		Fees				Rights			rights

						fees

			$			$		$		$		$		$		%

2020
Non-Executive Directors
Robert Nash	50,000		20,000	-	6,650	4,240		80,890	5%
Luke Atkins 1	20,000		20,000	300,000	3,800	8,481		352,281	2%
Neil Lithgow	20,000		20,000	-	3,800	4,240		48,040	9%
Zhaozhong Wang 4	20,000		-	-	950	4,240		25,190	17%
Key Management Personnel
Sam Middlemas 2	-		-	175,680	-	4,240		179,920	2%
Nick Algie	180,020		-	-	17,102	4,240		201,362	2%
Patrick Soh 3		-		-	45,739	-	1,060		46,799	2%
Total Remuneration	290,020		60,000	521,419	32,302	30,741		934,482	-

2019
Non-Executive Directors
Robert Nash	50,000		20,000	-	6,650	45,367		122,017	37%
Luke Atkins 1	20,000		20,000	300,000	3,800	90,732		434,532	21%
Neil Lithgow	20,000		20,000	-	3,800	45,367		89,167	51%
Zhaozhong Wang	20,000		-	-	-	45,367		65,367	69%
Key Management Personnel
Sam Middlemas 2	-		-	175,600	-	34,074		209,674	16%
Nick Algie	146,957		-	-	13,961	34,074		194,992	17%
Patrick Soh 3		-		-	38,124	-	8,518		46,642	18%
Total Remuneration	256,957		60,000	513,724	28,211	303,499		1,162,391	-

Notes:

Mr Atkins receives consulting fees through his entity Executive Resource Personnel Pty Ltd.
Mr Middlemas receives consulting fees through his entity Sparkling Resources Pty Ltd.
Mr Soh receives consulting fees through his entity Soh & Associates Pty Ltd.
Mr Wang's alternate director received compensation from the Company during the financial period.

D Share-based compensation

Options or performance rights may be issued to directors and executives as part of their remuneration. The options are not issued based on performance criteria, but are issued to certain directors (determined by the Board) and executives of Australian Silica Quartz Group Ltd to increase goal congruence between executives, directors and shareholders. Performance rights are issued with specific performance criteria required to be achieved. The Company does not have a formal policy in relation to the key management personnel limiting their exposure to risk in relation to the securities, but the Board actively discourages key personnel management from obtaining mortgages in securities held in the Company.

The following performance rights were granted to or vested with key management personnel during the past 3 years (Please see section F regarding vesting or expiry of rights):

	Grant Date	Granted	Vested Number	Date vesting or	Expiry Date	Exercise	Value per	Exercised
		Number	as at 30 June	vested and		Price	performance	Number
			2020	exercisable		(cents)	rights

2019
Performance Rights 1
Tranche 1	23/11/2018	4,833,329	Nil	10 May 2019	10 May 2019	Nil	2.3c	Nil
Tranche 2	23/11/2018	4,833,335	Nil	10 Nov 2019	10 Nov 2019	Nil	0.9c	Nil
Tranche 3	23/11/2018	4,833,336	Nil	10 Nov 2020	10 Nov 2020	Nil	0.1c	Nil

20 | Financial Report 2020 Australian Silica Quartz Group Ltd

Directors' Report cont.

	Grant Date	Granted	Vested Number	Date vesting or	Expiry Date	Exercise	Value per	Exercised
		Number	as at 30 June	vested and		Price	performance	Number
			2020	exercisable		(cents)	rights

2018

Performance Rights 2
Tranche 1	10/11/2017	3,333,331	Nil	10 May 2019	10 May 2019	Nil	4.2c	Nil
Tranche 2	10/11/2017	3,333,334	Nil	10 Nov 2019	10 Nov 2019	Nil	2.54c	Nil
Tranche 3	10/11/2017	3,333,335	Nil	10 Nov 2020	10 Nov 2020	Nil	0.9c	Nil

Notes:

The original performance rights issued to Directors in the prior financial year were amended at the AGM on the 23 November 2018 to account for the capital return such that with the Performance Hurdles for each of the tranches being the 10 day VWAP of the Company's Shares on the Expiry Date exceeding 7.6 cents per share for Tranche 1, 9.7 cents per share for Tranche 2, and 11.8 cents per share for Tranche 3. There were an additional 4,500,000 Performance Rights issued to Executives during the prior financial year on the same revised terms as the Directors' Performance Rights. The Performance Rights terms also changed following each Performance Right would convert into 1.806 fully paid ordinary shares.
The Performance Rights were issued in 3 equal tranches with the Performance Hurdles for each of the tranches being the 10 day VWAP of the Company's Shares on the Expiry Date exceeding 12.6 cents per share for Tranche 1, 14.7 cents per share for Tranche 2, and 16.8 cents per share for Tranche 3. All other terms of the Performance rights were standard terms. These have been replaced by the Performance Rights issued in 2019. The difference between the total fair value of the rights immediately before and after the alteration was an increase of $91,495.

Equity instrument disclosures relating to key management personnel

Option holdings

There were no options over ordinary shares in the Company held during the financial year by each director of Australian Silica Quartz Group Ltd and other key management personnel of the Group (2019: Nil), including their personally related parties.

No Directors or key management personnel hold options in the Company.

(ii) Shareholdings

The numbers of shares in the Company held during the financial year by each director of Australian Silica Quartz Group Ltd and other key management personnel of the Group, including their personally related parties, are set out below. There were no shares granted during the reporting period as compensation.

Ordinary shares	Balance at start of	Received during	Other changes	Balance at end of
	the year	the year on the	during the year	the year
		exercise of options

2020
Directors of Australian Silica Quartz Group Ltd

Robert Nash	330,000	-	-	330,000
Luke Atkins	22,639,574	-	-	22,639,574

Neil Lithgow	20,366,666	-	-	20,366,666
Other key management personnel of the Company
Sam Middlemas	9,215,918	-	-	9,215,918
Nick Algie	209,520	-	-	209,520
2019
Directors of Australian Silica Quartz Group Ltd
Robert Nash	330,000	-	-	330,000
Luke Atkins	22,539,574	-	100,000	22,639,574
Neil Lithgow	20,366,666	-	-	20,366,666

Other key management personnel of the Company
Sam Middlemas	7,706,302	-	1,509,616	9,215,918
Nick Algie	209,520	-	-	209,520

No other Directors or key management personnel have shareholdings in the Company.

Australian Silica Quartz Group Ltd

Financial Report 2020 | 21

Directors' Report cont.

F	Performance Right holdings

The number of performance rights in the Company held during the financial year by each director of Australian Silica Quartz Group Ltd and other key management personnel of the Group, including their personally related parties, are set out below:

	Balance at	Granted as	Lapsed during	Balance at end	Vested and	Unvested
	start of the	compensation	the year	of the year	exercisable
	year

2020
Directors of Australian Silica Quartz Group Ltd
Robert Nash	1,333,334	-	666,667	666,667	-	666,667
Luke Atkins	2,666,667	-	1,333,333	1,333,334	-	1,333,334
Neil Lithgow	1,333,334	-	666,667	666,667	-	666,667
Zhaozhong Wang	1,333,334	-	666,667	666,667	-	666,667

Other key management personnel of the Company
Sam Middlemas	1,333,334	-	666,667	666,667	-	666,667
Nick Algie	1,333,334	-	666,667	666,667	-	666,667
Patrick Soh	333,334	-	166,667	166,667	-	166,667
2019
Directors of Australian Silica Quartz Group Ltd
Robert Nash	2,000,000	-	666,666	1,333,334	-	1,333,334
Luke Atkins	4,000,000	-	1,333,333	2,666,667	-	2,666,667
Neil Lithgow	2,000,000	-	666,666	1,333,334	-	1,333,334
Zhaozhong Wang	2,000,000	-	666,666	1,333,334	-	1,333,334
Other key management personnel of the Company
Sam Middlemas	-	2,000,000	666,666	1,333,334	-	1,333,334
Nick Algie	-	2,000,000	666,666	1,333,334	-	1,333,334
Patrick Soh	-	500,000	166,666	333,334	-	333,334

No other Directors or key management personnel have performance rights in the Company.

G Loans to key management personnel

The Company provided an interest free loan of $200,000 to the Chief Executive Officer, Sam Middlemas to reimburse the purchase of shares in Australian Silica Quartz Group Ltd to be repaid earlier of 19 October 2021, or sale of shares, or within 3 months of Consultancy agreement being terminated. The amount of interest that would have been charged on an arm's-length basis is approximately $5,000 for the 30 June 2020 financial year.

H Other transactions with key management personnel

Luke Atkins provided business and projects advice to Australian Silica Quartz Group Ltd during the year under an agreement and was paid a fee of $300,000 (2019: $300,000). This amount paid was on arm's-length commercial terms and is included as part of the compensation.

The office premises that the Company rents for its registered office and principal place of business is owned by Non-Executive Director, Luke Atkin's Mother. During the year the Company paid $48,995 (2019: $48,995) rent and outgoings on normal commercial terms and conditions.

22 | Financial Report 2020 Australian Silica Quartz Group Ltd

Directors' Report cont.

I Additional information

DIRECTORS' MEETINGS

During the year the Company held 6 meetings of directors. The attendance of directors at meetings of the Board were:

	Directors meetings				Committee meetings
				Audit		Remuneration			Nomination


	Held	Attended	Held	Attended		Held	Attended		Held	Attended

Robert Nash	6	6	2	2	1	1		1	1

Luke Atkins	6	5	2	2	1	1		1	1

Neil Lithgow	6	6	2	2	1	1		1	1

Zhaozhong Wang 1	6	0	N/A	N/A		N/A	N/A		N/A	N/A

Note: (1) Mr Wang's alternate director Mr Zhao attended 6 meetings during the period he was an alternate director.

SHARES UNDER OPTION

There were no options on issue at the end of the financial year and there were no new options issued, or cancelled during the year.

As at 30 June 2020 there were the 5,500,003 (2019 - 11,000,005) performance rights on issue. During the year 5,500,002 performance rights lapsed after failing to meet the performance hurdles.

INSURANCE OF DIRECTORS AND OFFICERS

During or since the financial year, the Company has paid premiums insuring all the directors of Australian Silica Quartz Group Ltd against costs incurred in defending proceedings for conduct other than:

a wilful breach of duty; or
a contravention of sections 182 or 183 of the Corporations Act 2001,

as permitted by section 199B of the Corporations Act 2001. Under the terms and conditions of the insurance contract, the premium paid cannot be disclosed.

NON AUDIT SERVICES

The following non audit services were provided by the entity's auditor, Moore Australia Audit (WA) or associated entities. The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

All non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor;

None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.

Moore Australia (WA) received or are due to receive the following amounts for the provision of non-audit services:

20202019

Taxation services	6,000	7,850

Australian Silica Quartz Group Ltd

Financial Report 2020 | 23

Directors' Report cont.

CORPORATE GOVERNANCE

In accordance with ASX Listing Rule 4.10.3 the Company has elected to publish its corporate governance statement on its website. The corporate governance statement can be found at http://www.asqg.com.au/irm/content/corporate-governance.aspx?RID=325.

AUDITOR'S INDEPENDENCE DECLARATION

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 26.

Signed in accordance with a resolution of the directors.

Robert Nash

Chairman

Perth, 18 September 2020

24 | Financial Report 2020 Australian Silica Quartz Group Ltd

Auditor's Independence Declaration

Australian Silica Quartz Group Ltd

Financial Report 2020 | 25

Statement of Profit or Loss and Other

Comprehensive Income

Year Ended 30 June 2019

	Notes	Consolidated Group

		2020	2019
		$	$

Recoupment of exploration costs	4	176,097	169,293
Other income	4	341,838	255,038
Interest income	4	57,249	113,921
Employee benefits expense		(194,295)	(287,391)
Exploration expenses as incurred		(588,509)	(503,668)
Consultants fees		(415,897)	(444,516)
Administration expenses		(211,255)	(260,234)
Depreciation and amortisation expense		(12,584)	(7,345)
Gain/(loss) on disposal of fixed assets		42,500	(292)
Share-based payments expense	13	(35,796)	(336,748)
Profit / (loss) before income tax	5	(840,652)	(1,301,942)
Income tax expense	6	-	-
Profit / (loss) for the period		(840,652)	(1,301,942)
Other comprehensive income
Other comprehensive income for the period, net of tax		-	-
Total comprehensive income/(loss) for the period		(840,652)	(1,301,942)
Loss for the period is attributable to:
Owners of Australian Silica Quartz Group Ltd		(840,652)	(1,301,942)
Earnings per share
From continuing and discontinued operations:
Basic earnings per share (cents)		(0.39)	(0.61)
Diluted earnings per share (cents)		(0.39)	(0.61)
From continuing operations:
Basic earnings per share (cents)		(0.39)	(0.61)
Diluted earnings per share (cents)		(0.39)	(0.61)

The above statements should be read in conjunction with the notes to the financial statements.

26 | Financial Report 2020 Australian Silica Quartz Group Ltd

Statement of Financial Position

At 30 June 2019

	Notes	Consolidated Group

		2020	2019
		$	$

CURRENT ASSETS
Cash and cash equivalents	7	3,275,700	4,116,996
Trade and other receivables	8	102,928	89,781
TOTAL CURRENT ASSETS		3,378,628	4,206,777

NON CURRENT ASSETS
Other financial assets	9	200,000	200,000
Property, plant and equipment	10	1,915,441	1,926,591
TOTAL NON CURRENT ASSETS		2,115,441	2,126,591
TOTAL ASSETS		5,494,069	6,333,368

CURRENT LIABILITIES
Trade and other payables	11a	58,381	94,472
Provisions	11b	38,086	36,438
TOTAL CURRENT LIABILITIES		96,467	130,910

TOTAL LIABILITIES		96,467	130,910
NET ASSETS		5,397,602	6,202,458

EQUITY
Contributed equity	12	55,914,469	55,914,469
Reserves	13(a)	1,025,588	989,792
Retained earnings / (accumulated losses)	13(b)	(51,542,455)	(50,701,803)
TOTAL EQUITY		5,397,602	6,202,458

The above statements should be read in conjunction with the notes to the financial statements.

Australian Silica Quartz Group Ltd

Financial Report 2020 | 27

Statement of Changes in Equity

Year Ended 30 June 2019

Consolidated Group	Notes		Issued Ordinary		Reserves		Accumulated	Total
	Capital			Losses


			$		$		$	$

Balance at 1 July 2018		55,914,469	653,044	(49,399,861)		7,167,652

Profit for the period		-	-	(1,301,942)		(1,301,942)

Other comprehensive income		-	-	-		-

Total comprehensive income for the period		-	-	(1,301,942)		(1,301,942)

Performance rights issued during the period		-	336,748	-		336,748

Balance at 30 June 2019		55,914,469	989,792	(50,701,803)		6,202,458

Loss for the period			-		-		(840,652)	(840,652)
Other comprehensive income			-		-		-	-
Total comprehensive income for the period			-		-		(840,652)	(840,652)
Performance rights issued during the period			-		35,796		-	35,796
Balance at 30 June 2020			55,914,469		1,025,588		(51,542,455)	5,397,602

The above statements should be read in conjunction with the notes to the financial statements.

28 | Financial Report 2020 Australian Silica Quartz Group Ltd

Statement of Cash Flow

Year Ended 30 June 2019

	Notes	Consolidated Group

		2020	2019
		$	$

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers		496,839	525,467
Payments to suppliers and employees		(862,664)	(927,970)
Payments for exploration expenditure		(577,957)	(526,627)
Interest received		61,420	125,560
NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES	24	(882,362)	(803,570)

CASH FLOWS FROM INVESTING ACTIVITIES
Receipts from insurance claim of property, plant & equipment		42,500	-
Payments for property, plant and equipment		(1,434)	(8,640)
NET CASH INFLOW/ (OUTFLOW) FROM INVESTING ACTIVITIES		41,066	(8,640)

CASH FLOWS FROM FINANCING ACTIVITIES
NET CASH INFLOW FROM FINANCING ACTIVITIES		-	-

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS		(841,296)	(812,210)
Cash and cash equivalents at the beginning of the financial year		4,116,996	4,929,206
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR	7	3,275,700	4,116,996

The above statements should be read in conjunction with the notes to the financial statements.

Australian Silica Quartz Group Ltd

Financial Report 2020 | 29

Notes to the Financial Statements

1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This financial report includes the consolidated financial statements and notes of Australian Silica Quartz Group Ltd and controlled entities ("Consolidated Group" or "Group"). The financial statements were authorized for issue on 17 September 2020 by the directors of the Company.

A Basis of preparation

This general purpose financial report has been prepared in accordance with Australian Accounting Standards and issued by the Accounting Standards Board ("AASB") Interpretations and the Corporations Act 2001. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards.

Compliance with IFRS

Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards ("AIFRS"). Compliance with AIFRS ensures that the financial report of Australian Silica Quartz Group Ltd complies with International Financial Reporting Standards ("IFRS").

Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property, plant and equipment. The financial report is presented in Australian dollars.

B New, revised and amended accounting standards and interpretations adopted

In the year ended 30 June 2020, the directors have reviewed all the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for the current annual reporting period. The directors have also reviewed all new Standards and Interpretations that have been issued but are not yet effective for the year ended 30 June 2020.

The Group had to change its accounting policies as a result of adopting the following standard:

AASB 16: Leases

Impact on adoption of new accounting standard is as follow:

Initial Application of AASB 16: Leases

The Group has adopted the modified retrospective approach under AASB 16: Leases at 1 July 2019. In applying AASB 16 for the first time, the Group has relied on practical expedient to account for operating leases with a remaining lease term of less than 12 months as at 1 July 2019 as short-term leases.

Based on director's assessment, the adoption of AASB 16 did not result in material change to the recognition and measurement of leases and no adjustment to retained earnings was made from the adoption of the standard. Refer to note 1 (i) for updated accounting policies on leases.

30 | Financial Report 2020 Australian Silica Quartz Group Ltd

Notes to the Financial Statements cont.

C Principles of consolidation

Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Australian Silica Quartz Group Ltd ("Company" or "parent entity") as at 30 June 2020 and the results of all subsidiaries for the year then ended. Australian Silica Quartz Group Ltd and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'.

Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results in a deficit balance.

Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

Associates

Associates are entities over which the consolidated entity has significant influence but not control or joint control. Investments in associates are accounted for using the equity method. Under the equity method, the share of the profits or losses of the associate is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in associates are carried in the statement of financial position at cost plus post-acquisition changes in the consolidated entity's share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Dividends received or receivable from associates reduce the carrying amount of the investment.

When the consolidated entity's share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term receivables, the consolidated entity does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

The consolidated entity discontinues the use of the equity method upon the loss of significant influence over the associate and recognises any retained investment at its fair value. Any difference between the associate's carrying amount, fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

D Interests in joint ventures arrangements

Joint arrangements represent the contractual sharing of control between parties in a business venture where unanimous decisions about relevant activities are required.

Separate joint venture entities providing joint venturers with an interest to net assets are classified as a joint venture and accounted for using the equity method. Refer to Note 1(c) for a description of the equity method of accounting.

Joint venture operations represent arrangements whereby joint operators maintain direct interests in each asset and exposure to each liability of the arrangement. The Group's interests in the assets, liabilities, revenue and expenses of joint operations are included in the respective line items of the consolidated financial statements.

Gains and losses resulting from sales to a joint operation are recognised to the extent of the other parties' interests. When the Group makes purchases from a joint operation, it does not recognise its share of the gains and losses from the joint arrangement until it resells those goods/assets to a third party.

Australian Silica Quartz Group Ltd

Financial Report 2020 | 31

Notes to the Financial Statements cont.

E Segment reporting

A business segment is identified for a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. A geographical segment is identified when products or services are provided within a particular economic environment subject to risks and returns that are different from those of segments operating in other economic environments.

F Income tax

The income tax expense or revenue for the period is the tax payable on the current period's taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

G Revenue

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. Any consideration deferred is treated as the provision of finance and is discounted at a rate of interest that is generally accepted in the market for similar arrangements. The difference between the amount initially recognised and the amount ultimately received is interest revenue.

Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods.

Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument.

R&D Tax incentives have been accounted for as government grant revenue. Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and all grant conditions will be met. Where it is expected that a grant will be repaid if certain conditions are met, the liability to repay the grant is recognised as the conditions are met and the liability crystallises.

H Financial Instruments

The Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss.

32 | Financial Report 2020 Australian Silica Quartz Group Ltd

Notes to the Financial Statements cont.

The Group subsequently measures all equity investments at fair value. The Group has not elected to present fair value gains and losses on equity investments in OCI, where there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the group's right to receive payments is established.

As per AASB 9, an expected credit loss model is applied, not an incurred credit loss model as per AASB 139. To reflect changes in credit risk, this expected credit loss model requires the Group to account for expected credit loss since initial recognition.

For trade receivables, The Group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. In measuring the expected credit loss, a provision matrix for trade receivables was used taking into consideration various data to get to an expected credit loss (i.e. diversity of customer base, appropriate groupings of historical loss experience, etc).

I Leases

Accounting policies from 1 July 2019

The Group as lessee

At inception of a contract, the Group assesses if the contract contains a lease or is a lease. If there is a lease present, a right-of-use asset and a corresponding lease liability are recognised by the Group where the Group is a lessee. However, all contracts that are classified as short-term leases (i.e. a lease with a remaining lease term of 12 months or less) and leases of low-value assets are recognised as an operating expenses on a straight-line basis over the term of the lease.

Initially the lease liability is measured at the present value of the lease payments still to be paid at the commencement date. The lease payments are discounted at the interest rate implicit in the lease. If this rate cannot be readily determined, the Group uses the incremental borrowing rate.

Lease payments included in the measurement of the lease liability are as follows:

fixed lease payments less any lease incentives;
variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
the amount expected to be payable by the lessee under residual value guarantees;
the exercise price of purchase options, if the lessee is reasonably certain to exercise the options;
lease payments under extension options, if the lessee is reasonably certain to exercise the options; and
payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.

The right-of-use assets comprise the initial measurement of the corresponding lease liability, any lease payments made at or before the commencement date and any initial direct costs. The subsequent measurement of the right-of-use assets is at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated over the lease term or useful life of the underlying asset, whichever is the shortest. Where a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group anticipates to exercise a purchase option, the specific asset is depreciated over the useful life of the underlying asset.

Where a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group anticipates to exercise a purchase option, the specific asset is depreciated over the useful life of the underlying asset.

Accounting policies applied until 30 June 2019

Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease's inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the asset's useful life and the lease term.

Australian Silica Quartz Group Ltd

Financial Report 2020 | 33

Notes to the Financial Statements cont.

Leases where a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases (note 20). Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

K Cash and cash equivalents

For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value, and bank overdrafts.

L Trade and other receivables

Receivables are recognised and carried at original invoice amount less a provision for expected credit loss (ECL). Bad debts are written- off as incurred.

M Property, plant and equipment

Property

Freehold land and buildings are carried at historical cost less, where applicable, any accumulated depreciation and impairment losses. Increases in the carrying amount arising on revaluation of land and buildings are credited to a revaluation surplus in equity. Decreases that offset previous increases of the same asset are recognised against revaluation surplus directly in equity; all other decreases are recognised in profit or loss.

Plant and equipment

All plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the reporting period in which they are incurred.

Depreciation

The depreciable amount of all fixed assets excluding freehold land, is depreciated using the reducing balance method to allocate their cost, net of their residual values, over their estimated useful lives. Buildings are depreciated on a straight line basis.

The depreciation rates for each class of depreciable assets are:

Plant & equipment	7-67%	Motor vehicles	25-30%
Buildings	2.5%

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

34 | Financial Report 2020 Australian Silica Quartz Group Ltd

Notes to the Financial Statements cont.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount (Note 1(J)).

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement. When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of those assets to retained earnings.

N Tenement acquisition and exploration costs

Tenement acquisition and exploration costs incurred are written off as incurred.

O Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. The amounts are unsecured and are paid on normal commercial terms.

P Employee benefits

(i) Wages and salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12 months of the balance sheet date are recognised in other payables in respect of employees' services up to the balance sheet date and are measured at the amounts expected to be paid when the liabilities are settled.

(ii) Share-based payments

The Group provides benefits to employees (including directors) of the Group in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares ('equity-settled transactions'), refer to Note 26.

The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an internal valuation using a Black-Scholes or binomial option pricing model.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ('vesting date').

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of options that, in the opinion of the directors of the Group, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award.

Q Contributed equity

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.

The amount expended on the on-marketbuy-back of shares is debited to the share capital account to the extent of share capital available. Should the amount expended on on-market share buy-backs exceed the amount of available share capital, the remainder will be debited against distributable reserves.

R Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

Australian Silica Quartz Group Ltd

Financial Report 2020 | 35

Notes to the Financial Statements cont.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

S Goods and Services Tax ("GST")

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.

T New accounting standards for application in future periods

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2020. These standard are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

U Critical accounting estimates and judgements

The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are:

Share based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an internal valuation using a Black-Scholes or binomial option pricing model, using the assumptions detailed in Note 26.

Impairment of assets

The Group assesses impairment at the end of each reporting period by evaluating conditions and events specific to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using estimated net realisable values which incorporate various assumptions such as current indicative values and expected future cash inflows.

36 | Financial Report 2020 Australian Silica Quartz Group Ltd

Notes to the Financial Statements cont.

2 FINANCIAL RISK MANAGEMENT

The Group's activities potentially expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group.

Risk management is carried out by the full Board of Directors as the Group believes that it is crucial for all Board members to be involved in this process. The Chairman, with the assistance of senior management as required, has responsibility for identifying, assessing, treating and monitoring risks and reporting to the Board on risk management.

(a) Market risk

(i) Foreign exchange risk

As all operations are currently within Australia, the Group is not exposed to material foreign exchange risk.

(ii) Price risk

The Group is not exposed to any significant price risk.

(iii) Interest rate risk

The Group is exposed to movements in market interest rates on cash and cash equivalents. The Group policy is to monitor the interest rate yield curve out to six months to ensure a balance is maintained between the liquidity of cash assets and the interest rate return. The entire balance of cash and cash equivalents for the Group and the parent entity $3,275,700 (2019: $4,116,996) is subject to interest rate risk. The proportional mix of floating interest rates and fixed rates to a maximum of six months fluctuate during the year depending on current working capital requirements. The weighted average interest rate received on cash and cash equivalents by the Group and the parent entity was 1.63% (2019: 2.57%).

Sensitivity analysis

At 30 June 2020, if interest rates had changed by -/+ 80 basis points from the weighted average rate for the year with all other variables held constant, post-tax loss for both the Group and the parent entity would have been $28,054 lower/higher (2019: $35,479 lower/higher) as a result of lower/higher interest income from cash and cash equivalents.

(b) Credit risk

Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to the Group.

Credit risk is managed through the maintenance of procedures (such procedures include the utilisation of systems for the approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring of the financial stability of significant customers and counterparties), ensuring to the extent possible, that customers and counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing receivables for impairment.

Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating, or in entities that the Board has otherwise cleared as being financially sound. Where the Group is unable to ascertain a satisfactory credit risk profile in relation to a customer or counterparty, the risk may be further managed through title retention clauses over goods or obtaining security by way of personal or commercial guarantees over assets of sufficient value which can be claimed against in the event of any default.

The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient cash and marketable securities are available to meet the current and future commitments of the Group. Due to the nature of the Group's activities, being mineral exploration, the Group does not have ready access to credit facilities, with the primary source of funding being equity raisings. The Board of Directors constantly monitor the state of equity markets in conjunction with the Group's current and future funding requirements, with a view to initiating appropriate capital raisings as required.

The financial liabilities of the Group and the parent entity are confined to trade and other payables as disclosed in the Balance Sheet. All trade and other payables are non-interest bearing and due within 12 months of the balance sheet date. Given the relative size of the cash reserves, the Group is not currently exposed to any significant liquidity risk.

Australian Silica Quartz Group Ltd

Financial Report 2020 | 37

Notes to the Financial Statements cont.

(d) Fair value estimation

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature.

3	PARENT ENTITY FINANCIAL INFORMATION
(a)	Summary financial information

			2020	2019
			$	$

Current assets		3,378,628	4,206,777
Non-current assets		2,115,486	16,519,463
Total assets		5,494,114	20,726,240


Current liabilities		96,467	130,910
Total liabilities		96,467	130,910

Net assets		5,397,647	20,595,330

Shareholders' equity
Contributed equity		55,914,469	55,914,469
Reserves		1,025,588	989,792
Accumulated profit/(loss)		(51,542,410)	(36,308,931)
Net equity		5,397,647	20,595,330

(Loss)/profit for the year after tax		(15,233,479)	(949,341)

Total comprehensive income/(loss)		(15,233,479)	(949,341)
(b) Guarantees entered into by parent entity

			2020	2019
			$	$

Unconditional performance bonds issued in relation to credit card and rental obligations		-	-

The Company has no Guarantees in place (2019 - $Nil).

Details and estimate of maximum amounts of contingent liabilities for which no provision is included in the accounts are as follows:

20202019

Unconditional performance bonds issued in relation to credit card and rental obligations

The Company has no contingent liabilities (2019 $Nil).

(d) Contractual commitments for the acquisition of property, plant and equipment

The Company has no contractual commitments for the acquisition of property, plant and equipment (2019: Nil).

38 | Financial Report 2020 Australian Silica Quartz Group Ltd

Notes to the Financial Statements cont.

4	REVENUE

		Consolidated Group

		2020	2019
		$	$

Reimbursement of exploration costs	176,097	169,293
R&D Refund	160,398	137,557
ATO cash flow boost	62,500	-
Other revenue	118,940	117,481
Interest	57,249	113,921
		575,184	538,252

5 PROFIT/(LOSS) FOR THE YEAR Expenses

	Consolidated Group

	2020	2019
	$	$

Lease payments	46,080	48,995
Other administration	165,175	211,239
	211,255	260,234

6	INCOME TAX EXPENSE

			Consolidated Group

			2020	2019
			$	$

	(a)	The components of tax expense/(benefit) at 27.5% (2019: 27.5%) 1 comprise:
		Current tax	-	-
		Deferred tax	-	-
		Income tax expense reported in the statement of profit and loss and other comprehensive	-	-
		income


	(b)	Numerical reconciliation of income tax expense/(benefit) to prima facie tax expense/(benefit):
		Profit/(loss) before income tax expense/(benefit)	(840,652)	(1,301,942)

		Prima facie tax expense/(benefit) on profit/(loss) from ordinary activities before income tax at
		27.5% (2019: 27.5%) 1	(231,180)	(358,034)
		Add tax effect of:
		- Non-allowable items	9,916	83,854
		- Revenue losses not recognised	378,788	604,316
			157,524	330,136
		Less tax effect of:
		- Non-assessable items	57,860	37,828
		- Deferred tax balances not recognised	99,664	292,308
		- Over provision for income tax in prior years	-	-
		- Over provision for income tax in prior years - effect of reduction in corporate tax rate	-	-
		- Losses recouped not previously recognised	-	-
		Income tax expense reported in the statement of profit and Loss and other comprehensive
		income	-	-
	(c)	Deferred tax recognised at 27.5% (2019: 27.5%) 1:
		Deferred tax liabilities:
		Accrued interest	(2,084)	(3,230)
		Other	-	(85)

Australian Silica Quartz Group Ltd

Financial Report 2020 | 39

Notes to the Financial Statements cont.

			Consolidated Group

			2020	2019
			$	$

	Deferred tax assets:
	Carry forward revenue losses	2,084	3,315
	Net deferred tax	-	-
(d)	Deferred tax not recognised at 27.5% (2019: 27.5%) 1:
	Deferred tax assets:
	Carry forward losses	14,487,006	14,280,184
	Capital raising and restructuring costs	19,879	30,363
	Property, plant & equipment	66,121	118,427
	Exploration and development	-	25,369
	Provisions and accruals	13,664	15,383
			14,586,670	14,469,726

The tax benefits of the above Deferred Tax Assets will only be obtained if :

the company derives future assessable income of a nature and of an amount sufficient to enable the benefits to be utilised;
the company continues to comply with the conditions for deductibility imposed by law; and
no changes in income tax legislation adversely affect the company in utilising the benefits.

Tax consolidation

(i) Members of the tax consolidated group

Australian Silica Quartz Group Ltd and its wholly owned Australian resident subsidiaries have formed a tax consolidated group with effect from 10 June 2008. Australian Silica Quartz Group Ltd is the head entity of the tax consolidated group.

Tax effect accounting by members of the tax consolidated group Measurement method adopted under UIG 1052 Tax Consolidated Accounting

The group has applied the Stand-Alone Taxpayer approach in determining the appropriate amount of current and deferred taxes recognised by members of the tax consolidated group. Each entity in the group recognises its own current and deferred tax assets and liabilities, except for any deferred tax assets resulting from unused tax losses and tax credits and any current tax liability. Deferred tax assets resulting from unused tax losses and tax credits and the current tax liability are assumed and recognised by the parent entity. The group has not entered into any tax sharing or funding agreements.

Note 1: Reduction in corporate tax rate

The corporate tax rate for eligible companies will reduce from 27.5% to 25% by 30 June 2022 providing certain turnover thresholds and other criteria are met. Deferred tax assets and liabilities are required to be measured at the tax rate that is expected to apply in the future income year when the asset is realised or the liability is settled. The Directors have determined that the deferred tax balances be measured at the tax rates stated.

40 | Financial Report 2020 Australian Silica Quartz Group Ltd

Notes to the Financial Statements cont.

7 CURRENT ASSETS - CASH AND CASH EQUIVALENTS

	Consolidated Group

	2020	2019
	$	$

Cash at bank and in hand	275,700	516,996
Short-term deposits	3,000,000	3,600,000
Cash and cash equivalents as shown in the balance sheet and the statement of cash flows	3,275,700	4,116,996

8 CURRENT ASSETS - TRADE AND OTHER RECEIVABLES

	Consolidated Group

	2020	2019
	$	$

Trade debtors	777	(7,700)
Accrued revenue	12,500	-
Accrued interest income	7,577	11,748
Prepayments	82,074	85,733
	102,928	89,781

The class of assets described as "trade and other receivables" is considered to be the main source of credit risk related to the Group.

The consolidated entity did not consider a credit risk on the aggregate balances after reviewing the credit terms of customers based on recent collection practices.

		Gross Amount			Past due but not impaired
				(days overdue)


			< 30		31-60	61-90	> 90

2020
Trade and debtors		777	777		-	-	-

2019
Trade and debtors	(7,700)	(7,700)	-	79	-

9 NON-CURRENT ASSETS - OTHER FINANCIAL ASSETS

	Consolidated Group

	2020	2019
	$	$

Bonds & security deposits & loans receivable 1	200,000	200,000
	200,000	200,000

Note 1: Loan to CEO under consulting contract. Refer to Note G in Remuneration Report section of the Directors' Report for the terms of the loan

Australian Silica Quartz Group Ltd

Financial Report 2020 | 41

Notes to the Financial Statements cont.

10 NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT

	Consolidated Group

	2020	2019
	$	$

Plant and equipment
Cost	373,749	2,378,616
Accumulated depreciation	(353,308)	(2,347,620)
Net book amount	20,441	30,996

Plant and equipment
Opening net book amount	30,996	29,794
Depreciation charge	(11,989)	(7,147)
Acquisition	1,434	8,640
Disposals	-	(291)
Closing net book amount	20,441	30,996

Motor Vehicles
Cost	4,787	85,023
Accumulated depreciation	(4,787)	(84,428)
Net book amount	-	595
Motor Vehicles
Opening net book amount	595	793
Depreciation charge	(595)	(198)
Closing net book amount	-	595
Property and buildings
Cost	1,959,313	1,959,313
Accumulated depreciation	(64,313)	(64,313)
Net book amount	1,895,000	1,895,000

Property and buildings
Opening net book amount	1,895,000	1,895,000
Closing net book amount	1,895,000	1,895,000

Total Assets
Cost	2,337,849	4,422,952
Accumulated depreciation	(422,408)	(2,496,361)
Net book amount	1,915,441	1,926,591

Total Assets
Opening net book amount	1,926,591	1,925,587
Depreciation charge	(12,584)	(7,345)
Acquisition	1,434	8,640
Disposal	-	(291)
Closing net book amount	1,915,441	1,926,591

Impairment Losses - Property, Plant & Equipment

No impairments were made during the financial year (2019 - Nil).

42 | Financial Report 2020 Australian Silica Quartz Group Ltd

Notes to the Financial Statements cont.

11 CURRENT LIABILITIES

		Consolidated Group

		2020	2019
		$	$

(a)	Trade and other payables
	Trade payables	42,589	65,664
	GST and tax liabilities	(10,608)	(13,770)
	Other payables and accruals	26,400	42,578
		58,381	94,472
(b)	Provisions
	Annual and long service leave provisions
	Opening balance at 1 July	36,438	8,099
	Additional provisions	26,114	42,262
	Amounts used	(24,466)	(13,923)
	Balance at 30 June	38,086	36,438

The provision represents annual leave and long service leave obligations expected to be settled within 12 months of the balance date and are measured at the amounts expected to be paid when the liabilities are settled.

12 CONTRIBUTED EQUITY

			2020	2019

		Notes	Number	$	Number	$
			of securities		of securities

(a)	Share capital
	Ordinary shares fully paid	13b, 13d		55,914,469		55,914,469

	Total contributed equity			55,914,469		55,914,469
(b)	Movements in ordinary share capital

	Beginning of the financial year		214,422,336	55,914,469	214,422,336	55,914,469
	End of the financial year		214,422,336	55,914,469	214,422,336	55,914,469

During the year there were no options issued or on issue.

(d) Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

(e) Capital risk management

The Group's and the parent entity's objectives when managing capital are to safeguard their ability to continue as a going concern, so that they may continue to provide returns for shareholders and benefits for other stakeholders.

Due to the nature of the Group's activities, being mineral exploration, the Group does not have ready access to credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Group's capital risk management is the current working capital position against the requirements of the Group to meet exploration programmes and corporate overheads. The Group's strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required. The working capital position of the Group at 30 June 2020 and 30 June 2019 are as follows:

Australian Silica Quartz Group Ltd

Financial Report 2020 | 43

Notes to the Financial Statements cont.

	Consolidated Group

	2020	2019
	$	$

Cash and cash equivalents	3,275,700	4,116,996
Trade and other receivables	102,928	89,781
Trade and other payables	(58,381)	(94,472)
Working capital position	3,320,247	4,112,305

13 RESERVES AND ACCUMULATED LOSSES

				Consolidated Group

				2020	2019
				$	$

(a)	Reserves
	Share-based payments reserve
	Balance at beginning of year			989,792	653,044
	Performance rights expensed			35,796	336,748
	Balance at end of year			1,025,588	989,792

(b)	Retained earnings / (accumulated losses)
	Balance at beginning of year			(50,701,803)	(49,399,861)
	Net profit/(loss) for the year			(840,652)	(1,301,942)
	Balance at end of year			(51,542,455)	(50,701,803)

		2020		2019

		Number	$	Number	$
		of securities 1		of securities 2
(c)	Movements in performance rights
	Beginning of the financial year	11,000,005	-	10,000,000	-
	Tranche 1 Issues	-	-	2,166,664	262,995
	Tranche 2 Issues	-	-	2,166,668	68,437
	Tranche 3 Issues	-	-	2,166,668	5,316
	Tranche 2 & 3 amortisation	-	35,796	-	-
	Tranche 1 lapsed	(5,500,002)	-	(5,499,995)	-
	End of the financial year	5,500,003	35,796	11,000,005	336,748

Notes:

The original performance rights issued to Directors in the prior financial year were amended at the AGM on the 23 November 2018 to account for the capital return such that with the Performance Hurdles for each of the tranches being the 10 day VWAP of the Company's Shares on the Expiry Date exceeding 7.6 cents per share for Tranche 1, 9.7 cents per share for Tranche 2, and 11.8 cents per share for Tranche 3. There were an additional 4,500,000 Performance Rights issued to Executives and 2,000,000 issued as a share based payment during the prior financial year on the same revised terms as the Directors' Performance Rights. The Performance Rights terms also changed following each Performance Right would convert into 1.806 fully paid ordinary shares.
The Performance Rights were issued in 3 equal tranches with the Performance Hurdles for each of the tranches being the 10 day VWAP of the
Company's Shares on the Expiry Date exceeding 12.6 cents per share for Tranche 1, 14.7 cents per share for Tranche 2, and 16.8 cents per share for Tranche 3. All other terms of the Performance rights were standard terms. These have been replaced by the Performance Rights issued in 2019.

44 | Financial Report 2020 Australian Silica Quartz Group Ltd

Notes to the Financial Statements cont.

14 DIVIDENDS

No dividends were paid during the financial year. No recommendation for payment of dividends has been made.

15 KEY MANAGEMENT PERSONNEL DISCLOSURES

Refer to the remuneration report contained in the directors' report for details of the remuneration paid or payable to each member of the Group's key management personnel ("KMP") for the year ended 30 June 2020.

The totals of remuneration paid to KMP of the company and the Group during the year are as follows:

	Consolidated Group

	2020	2019

	$	$

Short-term benefits	871,439	830,681
Post-employment benefits	32,302	28,211
Share-based payments	30,741	303,499
	934,482	1,162,391

The Company has taken advantage of the relief provided by AASB 2008-4 Amendments to Australian Accounting Standard - Key Management Personnel Disclosures by Disclosing Entities and has transferred the detailed remuneration disclosures to the directors' report. The relevant information can be found in sections A-H of the remuneration report on pages 19 to 24.

Short-term employee benefits

These amounts include fees and benefits paid to the non-executive Chair and non-executive directors as well as all salary, paid leave benefits, fringe benefits, consultancy fees and cash bonuses awarded to executive directors and other KMP.

Post-employment benefits

These amounts are the current-year's superannuation contributions made during the year.

Share-based payments

These amounts represent the expense related to the participation of KMP in equity-settled benefit schemes as measured by the fair value of the options, rights and shares granted on grant date.

16 OPERATING SEGMENTS

The Consolidated Group has adopted AASB 8 Operating Segments with effect from 1 July 2009. AASB 8 which requires operating segments to be identified on the basis of internal reports about components of the Consolidated Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. The Consolidated Group operates in one operating segment and one geographical segment, being mineral exploration in Australia. This is the basis on which internal reports are provided to the Directors for assessing performance and determining the allocation of resources within the Consolidated Group.

Australian Silica Quartz Group Ltd

Financial Report 2020 | 45

Notes to the Financial Statements cont.

17 ASSOCIATES AND JOINT ARRANGEMENTS

HD Mining & Investment Pty Ltd

The Group has entered into a Farm-in arrangement with HD Mining & Investment Pty Ltd ("HDMI") to carry out exploration on tenements, and if warranted, to develop and exploit the tenements and carry out mining operations for the purpose of deriving production of Bauxite from them. HDMI has agreed to fund all costs to earn up to a maximum of 60% Participating Interest.

DevEx Resources Limited

The Group has entered into a Farm-in arrangement with DevEx Resources Limited ("DevEx") to carry out exploration on tenements with the following key terms.

DevEx has the right to earn 50% interest in all non-bauxite rights within the ASQ Tenement by spending up to $3 million within 3 years from commencement of the agreement. This includes a minimum expenditure requirement of $250,000 in the first 12 months.
ASQ retains the bauxite rights for the ASQ Tenement with its existing joint venture partner, HD Mining & Investment Pty Ltd ("HD Mining") ("Bauxite JV").
DevEx can earn an additional 20% in all non-bauxite rights in the ASQ Tenement by spending an additional $3 million within 2 years if ASQ elect to not contribute to exploration expenditure following DEV earning the 50% interest.
Upon DevEx earning its interest in the non-bauxite rights, a joint venture will be formed ("Non-Bauxite JV") and the parties must contribute funds based on their respective interest. Standard dilution clauses will apply to the parties' interests. Should a party's interest dilute to below 10% it shall automatically convert to a 1% net smelter royalty in respect of non-bauxite minerals.
DevEx will manage exploration for the non-bauxite rights during the earn-in period and any subsequent Non-Bauxite JV.
The parties may seek to execute a Split Commodities Agreement in the event of inconsistency between the activities of the bauxite rights and the Non-Bauxite JV.

18 REMUNERATION OF AUDITORS

			Consolidated Group

			2020	2019
			$	$

(a)	Audit services
	Moore Australia Audit (WA) - audit and review of financial reports	20,599	20,343
	Moore Australia Audit (WA) - other audit services	-	900
	Total remuneration for audit services	20,599	21,243

(b)	Non-audit services
	Moore Australia (WA) - taxation services	6,000	7,850
	Total remuneration for other services		6,000	7,850

19 CONTINGENCIES

On 17 January 2019 the Company announced that it had executed a Term Sheet with Urban Resources for operating a direct shipping ore export venture. Included in the terms of this agreement is a contingent liability that the Company has to issue shares to Urban Resources if the following milestones are achieved.

commercially profitable shipments of 20,000 tonnes of silica sand from the Urban Resources Bullsbrook mine through the Fremantle Port to an overseas customer being completed. To receive a payment in shares in the Company equivalent to $250,000 based on the 7 day VWAP on completion of the milestone; and
commercially profitable shipments of 20,000 tonnes of silica sand through the Albany Port to an overseas customer being completed. To receive a payment in shares in the Company equivalent to $250,000 based on the 7 day VWAP on completion of the milestone.

46 | Financial Report 2020 Australian Silica Quartz Group Ltd

Notes to the Financial Statements cont.

20 COMMITMENTS

		Consolidated Group

		2020	2019
		$	$

(a)	Exploration commitments
	The Company has certain commitments to meet minimum expenditure requirements on the
	mineral exploration assets it has an interest in. Outstanding exploration commitments are as
	follows:
	within one year	447,214	495,858
	later than one year but not later than five years	763,042	946,317
	Later than five years	-	-
		1,210,256	1,442,175

(b)	Commercial property lease commitments
	within one year	12,249	12,249
	later than one year but not later than five years	-	-
	Later than five years	-	-
	Aggregate lease expenditure contracted for at reporting date but not recognised as liabilities	12,249	12,249
	The property lease is cancellable with three months notice and rent payable monthly in
	advance.

21 RELATED PARTY TRANSACTIONS

The only Related Party transactions were with members of the board and are disclosed in full in the Directors Report.

22 SUBSIDIARIES

Name	Country of	Date of Incorporation	Class of Shares	Equity Holding1
	Incorporation

				2020	2019
				%	%

Darling Range Pty Ltd	Australia	10 June 2008	Ordinary	100	100
Braeburn Resources Pty Ltd	Australia	24 July 2007	Ordinary	100	100
Darling Range South Pty Ltd	Australia	13 November 2008	Ordinary	100	100
Bauxite Resources Pty Ltd 2	Australia	23 March 2009	Ordinary	100	100
BRL Operations Pty Ltd	Australia	16 February 2009	Ordinary	100	100
BRL Landholdings Pty Ltd	Australia	16 February 2009	Ordinary	100	100

Australian Silica Quartz Pty Ltd 1	Australia	25 March 2009	Ordinary	100	100
VA Holdings Pty Ltd	Australia	13 February 2009	Ordinary	100	100

Australian Silica & Quartz Limited	Australia	27 February 2018	Ordinary	100	100

Notes

Company Changed its name from BRL Other Minerals Pty Ltd
Company Changed its name from Darling Range North Pty Ltd

23 EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

No matters or circumstance have arisen since 30 June 2020 which significantly affected or could significantly affect the operations of the consolidated group in future financial years.

Australian Silica Quartz Group Ltd

Financial Report 2020 | 47

Notes to the Financial Statements cont.

24 CASH FLOW STATEMENT

Reconciliation of net profit or loss after income tax to net cash flows from operating activities

	Consolidated Group

	2020	2019
	$	$


Net profit/(loss) for the year	(840,652)	(1,301,942)

Non cash Items
Depreciation and amortisation	12,584	7,345
Share-based payments expense	35,796	336,748
Net (gain)/loss on disposal of property, plant and equipment	(42,500)	292
	(834,772)	(957,557)

Movements in working capital, net of effects from purchase of controlled entities
(Increase)/ Decrease in trade and other receivables	(13,147)	108,945
Increase/ (Decrease) in trade and other payables	(36,091)	16,703
Increase/ (Decrease) in provisions	1,648	28,339
Net cash inflow/(outflow) from operating activities	(882,362)	(803,570)

25 EARNINGS PER SHARE

Reconciliation of earnings used in calculating earnings per share

Profit or loss attributable to the ordinary equity holders of the Company used in calculating basic and diluted earnings per share

Consolidated Group

	2020		2019

	$		$

	(840,652)		(1,301,942)

(b) Weighted average number of shares used as the denominator

	Consolidated Group

	2020	2019
	Number of shares	Number of shares

Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS	214,422,336	214,422,336
Weighted average number of dilutive options outstanding	-	-
Weighted average number of ordinary shares outstanding during the year used in calculating dilutive EPS	214,422,336	214,422,336

All performance rights on issue are considered anti-dilutive and have not been included in the calculation of diluted earnings per share.

48 | Financial Report 2020 Australian Silica Quartz Group Ltd

Notes to the Financial Statements cont.

26 SHARE-BASED PAYMENTS

Performance Rights

Market based vesting conditions were valued using a hybrid share option pricing model that simulates the share price of the Company as at the test date using a Monte-Carlo model. For non-market based vesting conditions no discount was made to the underlying valuation model. During the year there were no performance rights granted (2019 - 6,500,000). The ongoing amortisation of SBP expense was $35,796 (2019: $336,748) during the year.

On 21 January 2019 the Company issued 2,000,000 million performance shares to Urban Resources limited with details of the issue below.

	Grant Date	Granted	Vested Number	Date vesting or	Expiry Date	Exercise	Value per	Exercised
		Number	as at 30 June	vested and		Price	performance	Number
			2020	exercisable		(cents)	rights

2019
Urban Resources Performance Rights 1
Tranche 1	21/01/2019	666,666	Nil	10 May 2019	10 May 2019	Nil	2.3c	Nil
Tranche 2	21/01/2019	666,667	Nil	10 Nov 2019	10 Nov 2019	Nil	0.9c	Nil
Tranche 3	21/01/2019	666,667	Nil	10 Nov 2020	10 Nov 2020	Nil	0.1c	Nil

Notes:

The Performance Hurdles for each of the tranches being the 10 day VWAP of the Company's Shares on the Expiry Date exceeding 7.6 cents per share for Tranche 1, 9.7 cents per share for Tranche 2, and 11.8 cents per share for Tranche 3.

Australian Silica Quartz Group Ltd

Financial Report 2020 | 49

Directors' Declaration

In the opinions of the directors of Australian Silica Quartz Group Ltd (the "Company"):

the financial statements and notes and the remuneration disclosures that are contained in the Directors' Report, are in accordance with the Corporations Act 2001, including:
1. complying with Australian Accounting Standards and the Corporations Regulations 2001; and
2. giving a true and fair view of the Company's and the consolidated entity's financial position as at 30 June 2020 and of their performance for the financial year ended on that date;

there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable;
the Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive officer and chief financial officer for the financial year ended 30 June 2020; and
note 1 confirms that the financial statements also comply with the International Reporting Standards as issued by the International Accounting Standards Board.
This declaration is made in accordance with a resolution of the directors.

Robert Nash

Chairman

Perth, 18 September 2020

50 | Financial Report 2020 Australian Silica Quartz Group Ltd

Independent Audit Report

Australian Silica Quartz Group Ltd

Financial Report 2020 | 51

Independent Audit Report cont.

52 | Financial Report 2020 Australian Silica Quartz Group Ltd

Independent Audit Report cont.

Australian Silica Quartz Group Ltd

Financial Report 2020 | 53

ASX Additional Information

Additional information required by Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows, the information is current as at 15 September 2020:

(a) Voting rights

All ordinary shares (whether fully paid or not) carry one vote per share without restriction.

(b) Distribution of equity securities

Analysis of numbers of equity security holders by size of holding:

		Ordinary shares

		Number of holders	Number of shares

1 - 1,000	29	9,106
1,001 - 5,000	75	258,930
5,001 - 10,000	176	1,557,004

10,001 - 100,000	541	19,307,778
100,001 and over	129	193,289,518
	950	214,422,336

The number of equity security holders holding less than a marketable parcel of $500 (based on a
7.5 cents price) of securities are:	121	368,121

		Listed ordinary shares

			Percentage of ordinary
Holder name		Number of shares	shares

1. One Managed Investment Funds Ltd (1 A/C)	40,368,020	18.83%
2. HD Mining & Investments Pty Ltd	19,700,000	9.19%
3. Big Fish Nominees Pty Ltd	17,666,666	8.24%
4. Tailrain Pty Ltd (Childrens A/C)	17,016,667	7.94%
5. Jetosea Pty Ltd	15,845,430	5.70%
6. Dilkara Nominees Pty Ltd (Millwood Smith A/C)	12,216,667	5.70%
7. Middlemas Robert Samuel	8,015,918	3.74%
8. HSBC Custody Nominees Australia Ltd	4,902,071	2.29%
9. J P Morgan Nominees Australia Ltd	3,118,926	1.45%
10. Spectral Inv Pty Ltd (Lithgow Family A/C)	2,700,000	1.26%
11. Custodial Services Ltd (Beneficiaries Holding)	2,211,200	1.03%
12. Mrs Annette Atkins	2,207,736	1.03%
13. Mr Dong Xing	2,175,206	1.01%
14. Dilkara Nominees Pty Ltd (BMS Super A/C)	2,000,000	0.93%
15. National Nom Ltd (DB A/C)	1,975,278	0.92%
16. Romsup Pty Ltd (Romadak S/F A/C)	1,700,000	0.79%
17. Mrs Mary Elizabeth Atkins	1,610,000	0.75%
18. Mr Li Wan	1,603,741	0.75%
19. Lake Mcleod Gypsum Pty Ltd	1,530,171	0.71%
20. Citicorp Nominees Pty Limited		1,481,147	0.69%
		160,044,844	74.64%

54 | Financial Report 2020 Australian Silica Quartz Group Ltd

ASX Additional Information cont.

(d) Substantial shareholders

The names of the substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act

2001 are:

	Number of shares

Sandon Capital Pty Ltd	40,360,520
Neil Lithgow and Controlled entities	20,366,666
Annette Atkins, Talrain Pty Ltd (Childrens A/c) & Associates	19,873,512
HD Mining & Investments Pty Ltd	19,700,000
Tailrain Pty Ltd (Childrens A/C) and Luke Atkins	17,016,667
Jetosea Pty Ltd	15,845,430
Dilkara Nominees Pty Ltd (Millwood Smith A/C)	14,516,667

(e) Schedule of interests in mining tenements

ASQG TENEMENTS (100%)

ASQG retain 100% interest in the following tenements (all granted unless marked "Pending")

Tenement	Location	Tenement	Location
Gingin Silica Project		Western Australia Hardrock Quartz Projects

E70/5144	Warbrook (Pending)	E70/5288	Potts Road (Pending)

Albany Silica Project		E77/2684	Lake Seabrook (Pending)

E70/4982	Green Range (Pending)	South Stirling Project

E70/4983	Narrikup	E70/5528 (Pending)	South Stirling

E70/5262	Cheyne	E70/5545 (Pending)	South Stirling East

E70/5270	Ridgetop	E70/5546 (Pending)	Tenterden

E70/5241	Redmond West (Pending)	E70/5547 (Pending)	Kwornicup

E70/5242	Redmond South (Pending)	North Queensland Hardrock Quartz Projects

E70/5243	Redmond East (Pending)	EPM 26702	Mt Eliza

E70/5262	Cheyne	EPM 26727	Pandanus Creek

E70/5270	Ridgetop	EPM 26741	Douglas Range

Esperance Silica Project

E63/1853	Merivale

E63/1962	Merivale East

HD MINING & INVESTMENTS JOINT VENTURE TENEMENTS

The JV requires HD Mining to fund 100% of all exploration and feasibility costs to earn up to 60% of the bauxite rights. HD Mining is currently working towards obtaining 40% interest in the bauxite rights on the tenements below. This will be triggered if HD Mining enters into a binding commitment to undertake a feasibility study on the tenements. Should HD Mining and ASQG make a decision to mine, HD Mining will earn an additional 20% interest in bauxite rights. ASQG maintains 100% interest in other minerals. At the date of this report ASQG still has 100% interest in these tenements.

TenementLocation

Darling Range Tenements (Granted)

E70/3160	Toodyay
E70/3405	Victoria Plains
E70/3179	Congelin
E70/3180	Dattening

E70/3890	Wandering

55 | Financial Report 2020 Australian Silica Quartz Group Ltd

ABN 72 119 699 982

Suite 10 / 295 Rokeby Road SUBIACO WA 6008 admin@asqg.com.au www.asqg.com.au