ANNUAL Report June 2023 Notes to the Consolidated Financial Statements 41 The following table illustrates outstanding options that have vested and are exercisable at year end: Number outstanding Number vested and exercisable Exercise price Expiry Date Remaining Contractual Life (Years) Issue EQRAF 2,000,000 2,000,000 0.040 01/02/24 0.59 Issue EQRAI 12,000,000 12,000,000 0.060 23/06/24 0.98 Issue EQRAJ 10,000,000 10,000,000 0.060 23/06/24 0.98 Issue EQRAH 22,000,000 22,000,000 0.060 25/05/24 0.90 Issue EQRAG 30,000,000 30,000,000 0.432 19/03/24 0.72 Issue EQRAK 25,000,000 25,000,000 0.065 17/09/23 0.22 Issue EQRAM 28,532,346 28,532,346 0.065 07/11/25 2.36 Issue EQRAN 1,250,000 1,250,000 0.065 31/01/26 2.59 Outstanding at 30 June 2023 130,782,346 130,782,346 (c) Movements in Performance Rights No performance rights were issued nor outstanding at the end of the reporting period. 13. CONVERTIBLE NOTES On 17 September 2021 the Company issued 6,000,000 convertible notes with an aggregate principal value of $6,000,000. The notes are convertible at the option of the noteholders into ordinary shares at a conversion price of $0.065 per share at any time after issuance and up to the close of business on the maturity date. Noteholders have an option to redeem the notes at the end of 2 years at face value plus any accrued interest. Any convertible notes not converted will be redeemed on 17 September 2023 at the principal amount together with accrued but unpaid interest thereon. The notes carry interest at a coupon rate of 7.00% per annum (effective interest rate of 1.4% per month based on a 2-year amortisation period on estimated cashflow timing in line with the 2-year redemption option) which is payable annually in arrears in September. The fair value of the liability component was estimated at issuance date using an “Interest Rate Differential” methodology which discounts the convertible notes’ cash flows at a commercial discount (interest) rate to a present value. The residual amount is assigned as the equity component and is included in reserves. Subsequent to issue, 2,000,000 notes plus accrued interest were converted into 30,832,307 ordinary shares on 28 September, 29 September and 30 September 2021. The noteholders opted for the first year’s interest at the coupon rate of 7% per annum to be converted into 6,300,000 ordinary shares rather than the Company making a cash payment for this amount. The notes are due to expire on 17 September 2023 and the Company is confident that the noteholders will opt to convert to shares rather than being paid in cash, thus reclassifying the liability as equity. The convertible notes issued and converted during the period have been split into liability and equity components as follows: Debt ($) Equity ($) Number Opening balance at 1 July 2022 - - - Nominal value of convertible notes issued on 17 September 2021 2,852,667 1,147,333 4,000,000 Notes converted during the period - - - Balance as at 30 June 2023 2,852,667 1,147,333 4,000,000 EQ Resources Limited Annual Report 2023 83
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