Notes to the Consolidated Financial Statements ANNUAL Report June 2022 Notes to the Consolidated Financial Statements 23 Notes to the Consolidated Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Going Concern Basis for Preparation of Financial Statements These financial statements have been prepared on the going concern basis which contemplates the continuity of normal business activities and the realisation of assets and the discharge of liabilities in the normal course of business. For the full-year ended 30 June 2022, the consolidated entity incurred a total comprehensive loss of $6,063,051 (2021: loss of $4,574,191), incurred cash outflows from operating activities of $3,112,770 (2021: $3,816,722) and had a net working capital deficit of $4,090,968 (2021: $234,358 deficit). The deficit in net working capital is predominately due to the Company funding its capital growth initiatives via shortterm financing facilities such as equipment leases, offtake advance extension and trade payables. It should be noted that whilst the offtake advance facility of $3,266,190 is classified as a current liability, due to the Company not having an unconditional right to defer settlement for at least 12 months after reporting date, it is scheduled to be repaid over the life of the joint venture between EQ Resources Limited and Cronimet Australia Pty Ltd rather than within the next 12 months as depicted on the Balance Sheet. The ability of the Company to continue to adopt the going concern assumption is based upon: - The awarding of a $6,000,000 (including GST) grant from the Critical Minerals Accelerator Initiative (CMAI) (refer ASX announcement “Government Funding for Mt Carbine Critical Minerals Program” dated 28 April 2022) which was re-announced via a media release by the Minister for Resources on 16 September 2022 (refer ASX announcement “Federal Government Funding for Mt Carbine Reconfirmed” dated 19 September 2022); and - Capital raising to cover any delays of incoming funds from above grant to enable the Company to implement the BFS schedule. - The commencement of open-cut mining operations in early 2023; along with - Continued income stream from the Mt Carbine Quarry and the Company’s joint venture with CRONIMET Australia Pty Ltd for the processing of the Mt Carbine tailings and low-grade stockpiles. Should additional funds be necessary the Directors are confident of securing these funds if and when necessary to meet the Company’s obligations as and when they fall due and consider the adoption of the going concern basis to be appropriate in the preparation of these financial statements. (b) Basis of Preparation These general-purpose financial statements have been prepared in accordance with the requirements of the Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. These financial statements have been prepared on a historical cost basis. The financial report is presented in Australian currency. The consolidated entity operates on a for-profit basis. (c) Statement of Compliance The financial statements have been prepared and comply with Australian Accounting Standards. The financial statements also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. (d) Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) as at 30 June each year. Control is defined as entities which the Group has power over and the rights to, or is exposed to, variable returns from its involvement with the entity and has the ability to use its power to affect those returns. 54 EQ Resources Limited Annual Report 2022
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