Announcement PDF ALLIGATOR ENERGY LIMITED AND CONTROLLED ENTITIES ACN 140 575 604 FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2024 Page 1 ALLIGATOR ENERGY LIMITED AND CONTROLLED ENTITIES ACN 140 575 604 DIRECTORS’ REPORT Your directors present their report, together with the financial statements of the Group, being Alligator Energy Limited (“the Company” or “Alligator”) and its controlled entities (“the Group”), for the financial year ended 30 June 2024. Directors The following persons were Directors of the Company during the whole of the financial year and up to the date of this report, unless otherwise stated: Paul Dickson (Chairman) Fiona Nicholls Peter McIntyre (Callum McIntyre appointed as alternate on 1 August 2023) Gregory Hall Principal activities and significant changes in nature of activities The principal activities of the Group are uranium and other energy mineral exploration and their potential future development. There were no significant changes in the nature of the Group’s activities during the year. Dividends There were no dividends paid to members during the financial year. Operating and Financial Review a) Operating Performance During the financial year the Group remained focused on its ESG related operating KPIs including: Operation with one lost time injury and three minor medical treatment incidents No reportable environmental issues Transition from a paper-based Workplace Health, Safety and Environment system to a digital system A Northern Territory DITT, Office of the Supervising Scientist and the Northen Land Council (NLC) audit of Alligator’s Nabarlek North exploration activities was undertaken in early October 2023 with overall findings being positive with only minor recommendations to be incorporated into planning for the 2024 Open engagement and compliance under the Native Title Mining Agreement for Exploration (South Australia) and Exploration Agreements (Northern Territory) with the respective Traditional Owners Compliance with other applicable agreements, regulations and laws Stakeholder engagement sessions were held in January and December 2023, and in February 2024, in relation to the Company’s Retention Lease application for the Samphire Project. Feedback was incorporated into the final submission. Open and regular communications continued with the pastoralists in the area surrounding the Samphire Project where possible, as well as with the Whyalla region community. Page 2 ALLIGATOR ENERGY LIMITED AND CONTROLLED ENTITIES ACN 140 575 604 DIRECTORS’ REPORT (continued) b) Operations for the year Overview It has been an exceptionally busy year across all of Alligator’s operations during the 2024 financial year involving the following key achievements: - Continuing to progress evaluation of the Samphire Uranium Project in South Australia, specifically with infill drilling leading to a revised JORC Resource update and Scoping Study Development of an exploration target range for Samphire Project outside of the current Blackbush JORC Resource Submission of an application for a Retention Lease to conduct a field recovery trial at the Blackbush Deposit (Samphire Project) Conduct of a second-year geochemical testing program and initial targeted RC drilling at the Nabarlek North Project in the Alligator Rivers Uranium Province in the Northern Territory Finalisation of approvals and arranging logistics for inaugural drilling program at the Big Lake Project in the Cooper Basin, South Australia, and Pursuing investment interest in the Company’s nickel cobalt joint venture (Piedmont Project) in northern Italy. In addition, a number of business development opportunities in uranium and energy metals in the Group’s target regions were evaluated culminating in an initial investment and ongoing funding arrangement with EnviroCopper Ltd, a company investigating in-situ recovery of oxide copper deposits in South Australia. Samphire Uranium Project – South Australia (Alligator 100%) A further update to the Mineral Resource Estimate (MRE) for the Blackbush deposit from infill drilling was completed in December 2023 resulting in a 21% increase in the indicated mineral resource estimate to 12.9Mlbs (at an average grade of 754ppm U3O8) and an inferred mineral resource estimate of 4.6Mlbs for a total JORC Resource of 17.5Mlbs U3O8 (at an average graded of 640ppm). The increased confidence in the MRE enabled revision to the March 2023 Scoping Study for the Blackbush deposit in December 2023. The study continues to be based upon the In-Situ Recovery mining (ISR) method with a life of mine production target of 12.3Mlbs (previously 10.0 Mlbs) U3O8 over the same 12year period, with nominal annual target of 1.2Mlbs p.a. (previously 1Mlbs p.a.) for the same 8 years. The enhanced Project economics at a forecast US$75/lb U3O8 realised sales price (previously US$65/lb) and an unchanged A$:US$ exchange rate of 70 cents were as follows*: - Ungeared, real post-tax NPV8 of A$257M (A$244 M - A$270M) up from A$152M Post-tax internal rate of return (IRR) of 42% (40.0% - 44.1%) up from 29% Reduction in payback period by 30% to 2.45 years from start of production Forecast net project cashflow (post Capex and tax) increase of 52% to A$467M (A$443M - A$490M) Favourable average cash operating costs (C1) of A$22.94/lb U3O8 (US$16.06/lb U3O8) with a range of A$21.79/lb - A$24.09/lb and AISC of A$47.58/lb U3O8 (US$33.31/lb U3O8) with range of A$45.20/lb to A$49.96/lb. Page 3 ALLIGATOR ENERGY LIMITED AND CONTROLLED ENTITIES ACN 140 575 604 DIRECTORS’ REPORT (continued) b) Operations for the year (continued) *Ref ASX release 14 December 2023 “Scoping Study Update”: Alligator confirms that all material assumptions underpinning the ‘production target’ or the forecast financial information derived from the ‘production target’ continue to apply and have not materially changed other than the continuing positive outlook for the long-term uranium price The ISR method provides a low impact mining technique, reducing capital, operating costs and environmental impacts, and is easier to rehabilitate. Shallow depth of 60 to 80m reduces well field drilling costs, and resource and exploration upside provides expansion potential. Overall, the Study continues to indicate a globally competitive capital and operating cost profile, with significant optimisation opportunities. The next step in evaluating the development potential of the Project is the conduct of a Field Recovery Trial (FRT) planned for early 2025 (subject to obtaining all approvals). This trial will confirm parameters to be used in a full feasibility study to follow. During the year the Company lodged a Retention Lease (RL) application with the Department for Energy and Mines (DEM) for the purposes of conducting the trial, undertook a public consultation relating to the application and has responded to these submissions and information requests from the DEM. In the June 2024 quarter, the Company completed fabrication of the containerised FRT plant and components which were then transported to a holding facility in Whyalla ahead of obtaining all approvals to commence construction. An Exploration Target Range estimate of 14Mlbs to 75Mlbs of contained eU3O8 (using 250 ppm eU3O8 cut-off) was established during the December 2023 quarter for areas outside of the Blackbush MRE envelope comprising extensions to Blackbush mineralisation, the Plumbush Prospect as well as other areas of known mineralisation: - - In calculating the Exploration Target Range, results show that with 64 kms of interpreted host palaeochannel strike length, only 10% of the prospective system (Blackbush Deposit and portion of Plumbush Prospect) has been well explored, with a further 30% partly drill tested, and 58% (over 37 kms) of the prospective areas of the palaeochannel system remain completely untested, indicating the significant potential for new discoveries in the Project area. Alligator Rivers Uranium Province (ARUP) Tin Camp Creek Tenements (Alligator 98%), Beatrice Tenements (Alligator 100%) and Nabarlek North Tenements (Alligator 100%) During the year Alligator undertook its second geochemical sampling work program at the Nabarlek North Project using regional auger and RAB drilling, completed 15 km2 of gradient IP, 3.4 km of dipole-dipole IP and a 1,398m targeted RC drilling program. Page 4 ALLIGATOR ENERGY LIMITED AND CONTROLLED ENTITIES ACN 140 575 604 DIRECTORS’ REPORT (continued) b) Operations for the year (continued) The RC drilling comprised 9 holes forming a three-fence program (3 holes per fence). This drilling provided critical ties with recently completed geophysics, 2022 – 2023 geochemistry sampling and geological interpretations. As reported in ASX release of 19 December 2023, significant uranium was intercepted in NNRC23-008 returning 3m at 0.12% (1,211ppm) U3O8. This information will form the basis of further investigations during the 2024 dry season work program to understand the potential continuity of U40 Prospect mineralisation into the Nabarlek North Project and aid with broader target generation. Big Lake Uranium Project- South Australia – (Alligator 100%) Alligator secured first-mover status for targeting a conceptual REDOX-controlled ‘roll front’ uranium mineralisation model in the Cooper Basin in December 2021. The geological setting and scale of the Cooper Basin is analogous in many respects with the giant Chu-Sarysu Basin / Uranium Province in Kazakhstan (Jaireth et al, 2008) which produces 40% of the world’s uranium using in-situ recovery (ISR). During the first six months of the year activities focused around drilling approvals for the inaugural program of work, specifically: - Obtaining a Program for Environmental Protection and Rehabilitation (PEPR) approval for the proposed field exploration program from the SA Department for Energy and Mining Undertaking a formal clearance of drill lines with eight members of the Yandruwandha Yawarrawarrka Traditional Landowners Aboriginal Corporation (YYTLOAC). The inaugural drilling program on project commenced late in the financial year, with the objective of calibrating seismic/AEM interpretations with the potential for existence of uranium roll-front systems. By 30 June 2024, twenty holes had been completed for a total of 2,476 m. Unseasonal heavy rains then delayed completion of the program until mid-August 2024. Drilling at one site returned encouraging indicators of paleochannel sands and elevated uranium levels to typical background values. Further holes were planned at this location post year end which culminated in a new uranium discovery (see Post Balance Date Events note). Piedmont Project – Northern Italy – 51% Joint Venture Alligator holds a 51% joint venture interest in one granted exploration licence (two were allowed to lapse during the year) and an interest in three applications, in an historic Nickel-Cobalt-Copper mining area in the Piedmont region, northern Italy. The multiple exploration licences cover a 30km mineralised strike length, containing 17 prospects and old mines containing 0.5% Ni or more, where there has been minimal modern exploration. Page 5 ALLIGATOR ENERGY LIMITED AND CONTROLLED ENTITIES ACN 140 575 604 DIRECTORS’ REPORT (continued) b) Operations for the year (continued) Piedmont Project – Northern Italy – 51% Joint Venture (cont) The Group has elected to focus on Samphire uranium Project development, uranium exploration and applications. Consequently, along with its joint venture partner, a process has been launched to seek investment interest from counter-cyclical nickel/copper investors. Marketing of the opportunity to acquire the Project was still in progress at year end. Investment in EnviroCopper Limited – 7.8% shareholding interest In December 2023, the Company completed terms for an initial investment commitment of $900k in EnviroCopper Ltd (ECL) an unlisted company undertaking early stage ISR test work and trials on two oxide copper projects in South Australia. The transaction also involves Alligator and ECL entering into a Shareholder’s Agreement providing Alligator with an exclusive right to sole fund ECL’s activities and increase its equity ownership in ECL from the initial investment to 50.1% over the next ~4 years. Optional future investment in ECL will be on the following basis: - - - Stage 1 Investment: Following the Initial Investment, in the third quarter of 2024, Alligator may elect to invest a further ~$1.1 million to increase its interest in ECL to 15.6%. Should Alligator elect not to make the Stage 1 Investment, it will offer a 6-month working capital facility to ECL up to a maximum of A$450,000 to allow for alternative funding sources to be pursued. Stage 2A Investment: Following the Stage 1 Investment outcomes and upon receipt of a satisfactory Stage 2A budget programme from ECL, Alligator may elect to invest a further ~$2.0 million to increase its interest in ECL to 26.7%. Stage 2B & 2C Investment: Following the Stage 2A Investment outcomes and upon receipt of satisfactory Stage 2B & 2C budget programmes from ECL, Alligator may elect to invest between A$7.0 million and $8.6 million across two equal tranches (Alligator not obligated to fund both tranches) to increase its interest in ECL to 50.1%. Completion of the transaction occurred on 25 January 2024. Sales & Marketing Consultancy Agreement In early 2024 the Group’s uranium sales and marketing agency arrangements were formally transferred from Traxys North America (Traxys) to Sabasco Ventures LLC, a company controlled by Kevin Smith - the principal uranium trader for Traxys. Kevin’s consulting role with Alligator under the new arrangement has been expanded to include investor relations and business development. He will also be continuing his uranium and energy minerals trading role for Traxys as a consultant. Page 6 ALLIGATOR ENERGY LIMITED AND CONTROLLED ENTITIES ACN 140 575 604 DIRECTORS’ REPORT (continued) b) Operations for the year (continued) Capital raising In late September 2023, Alligator received firm commitments for a placement of A$25.5M (before costs) to institutional investors and sophisticated investors (Placement). Placement occurred via the issue of 491M new ordinary shares at $0.052 per share with one (1) free-attaching option (exercisable at $0.078 and expiring 2 years from the date of issue) for the subscription of every (2) New Shares subscribed. In October 2023, Alligator successfully completed a share purchase plan (SPP) offer raising a further $3.26M, before costs, at an issue price of $0.052 per share. In late November 2023, Alligator, after obtaining Shareholder approval at the 2023 AGM, issued 273,961,390 premium priced options under the terms of both the Placement completed in September 2023 and the SPP outlined above. The options are exercisable at $0.078 each at any time before 28 November 2025. AGE successfully applied for quotation of the Options with ASX which now trade under the code AGEOC. Performance Shares An ASX Listing Rule 6.1 waiver is in place for the issue of Performance Shares under the Big Lake Farm-in and Joint Venture. The waiver granted by the ASX included the following disclosure requirements in each Quarterly, Half Year and Annual Report: Number of Performance Shares on issue at the end of the Year: 30,000,000 Summary of the terms and conditions of the Performance Shares: See Note 13(d) Performance Shares converted or cancelled during the Year: Nil Performance Share milestones met during the Year: Nil The value of the Performance Shares allotted is measured when milestones are met and conversion to Fully Paid Ordinary Shares has occurred. c) Operating Loss The operating loss before tax was $3,451,724 (2023: $2,855,321). The key variances affecting the operating result for the financial year included: · · · A significant interest income for the year as a result of the higher interest rate environment and higher average cash balances on hand; An increase in employee benefits expense largely as a result of the increase in the staff complement (full-time/part-time and casual) from 28 to 41 during the course of the financial year as a result of increased level activity across the Group’s projects. In addition, the Group has now exceeded the threshold and is now liable for State payroll taxes in South Australia, Northern Territory, Queensland, Victoria and Western Australia; An increase in share-based payments as a result of larger employee base and increased eligibility/participation levels in the Employee Share Option Plan. Page 7 ALLIGATOR ENERGY LIMITED AND CONTROLLED ENTITIES ACN 140 575 604 DIRECTORS’ REPORT (continued) c) Operating Loss (continued) · · An impairment provision of $645,345 for the Piedmont Project arising from the decline in the outlook for nickel market and the limited investor interest expressed to date in acquiring the project. Prior year comparative also related to an impairment adjustment for the Piedmont Project; and The Group expensed tenement holding costs incurred during the financial year at its Tin Camp Creek and Beatrice Projects (ARUP) due to a focus in 2023/4 on the nearby Nabarlek North Project where ready access and minimal sandstone cover provides a lower cost alternative. This expenditure related principally to salaries, rentals, royalties and compliance activities and totalled $262,588 (2023: $141,321). d) Financial Position Net assets of the Group totaled $65,853,127 as at 30 June 2024 (2023: $41,441,328) with the increase relating principally to the additional equity capital raised in late 2023 and the resultant expenditure on project related exploration and evaluation and the capital spend on fabricating the processing plant for the FRT. Cash balances as at 30 June 2024 were $28,392,442 (2023: $18,498,329). e) Business strategies and prospects for future financial years Strategy and Business Plan Goals – By 2030: To be a profitable long term Uranium producer, producing between 1 – 2 Mlb p.a. To have a second advanced uranium project moving towards development, and a successful advanced exploration / development project in the energy minerals sector. Alligator’s strategy to achieve the 2030 goals is to advance its key resource and exploration targets, through direct and strategic partner investment, while evaluating and acquiring further uranium or energy minerals interests in target geographic regions. The Samphire Project is now the most advanced in the Company’s portfolio with a JORC compliant Mineral Resource Estimate in place and a positive Scoping Study. Activities are now underway, subject to receipt of all approvals, to complete a field recovery trial in early 2025 as this is expected to underpin completion of a feasibility study, being a low cost ISR style development that has a smaller environmental footprint than conventional style mines. Page 8 ALLIGATOR ENERGY LIMITED AND CONTROLLED ENTITIES ACN 140 575 604 DIRECTORS’ REPORT (continued) e) Business strategies and prospects for future financial years (continued) Strategy and Business Plan (cont.) The Group previously conducted a comprehensive re-evaluation of the regional and local geology for the ARUP region, which has enhanced the understanding of the stratigraphic and structural relationships that we believe are the proven key to mineralisation of large uranium deposits within the ARUP. This highlighted a broad prospective zone running from the western Beatrice project, through the eastern portion of the Tin Camp Creek Project and into the Nabarlek North Project area as high priority for further work. Along this trend, 8 priority areas were highlighted combined with 6 additional target areas within the Alligator licences. The immediate focus in the last three years has been on the lower exploration cost, readily accessible and under-explored Nabarlek Project. This includes investigating the potential for further mineralisation to the north of DevEx Resource’s Limited (ASX: DEV) U40 Prospect into Alligator’s tenement package. The Big Lake Uranium Project is focused on uncovering a new ISR amenable uranium province which contains uranium but has unproven potential. The conceptual exploration model for Big Lake is based on analogous hydrocarbon basins with uranium occurrences in Kazakhstan, Wyoming and Texas in the United States. An inaugural stratigraphic drill program was conducted during the financial year which intersected significant thicknesses of anomalous uranium mineralisation within interbedded palaeochannel sand units in the Namba Formation. The discovery is the first proof of concept that significant uranium is present within the Lake Eyre basin sediments that lie above the hydrocarbon-rich Cooper Basin and within potentially In-Situ Recovery (ISR) amenable host and depths. Alligator has also expanded its energy minerals interest by making a strategic investment in EnviroCopper Ltd (‘ECL’) with optionality to further invest to acquire up to 50.1% of the company over an approximate four-year period. ECL is currently advancing ISR trials for environmentally sustainable copper extraction at its flagship Kapunda copper project and has similar plans at its Alford West copper project. The investment in ECL and resultant collaboration is extremely complimentary to Alligator’s existing and substantial in house ISR expertise and expands Alligator’s ISR footprint to include an additional future indemand commodity. Work on evaluating further uranium and energy mineral opportunities in key target regions continues utilising existing experienced staff and key consultants. Alligator still has one of the few Board, Management and Advisory teams that have discovered uranium projects, taken uranium projects through resource definition and into development, and managed and operated uranium mines. Page 9 ALLIGATOR ENERGY LIMITED AND CONTROLLED ENTITIES ACN 140 575 604 DIRECTORS’ REPORT (continued) e) Business strategies and prospects for future financial years (continued) Research & Development The Group believes that exploration success can be maximized by ensuring multiple high-quality target areas are tested as efficiently as possible with a strong technical focus supported by Research and Development Programs. R&D activities in 2012-2017 focused on identifying and targeting covered and fully-preserved unconformity uranium deposits beneath the covering Kombolgie Sandstone in the ARUP. Along with this, investigation and experimentation are being undertaken on innovative applications of radiogenic isotope geochemical testing and Sub Audio Magnetics (SAM) geophysical techniques. Alligator commenced the collection of water samples in 2013 for initial investigations into spring and water fed radiometric anomalies. The water samples were analysed through ANSTO for radionuclide concentrations with the aim of differentiating uranium and thorium sources. Several samples considered highly anomalous for uranium or Ra226 (Uranium decay chain) highlighted the potential passage of groundwater through a uranium rich source. With indications of ground water passing through a uranium bearing source Alligator is seeking to further research this concept using isotope analysis to aid with the identification of water pathways below Kombolgie sandstone cover. Application of downhole wireline geophysical tools such as Borehole Magnetic Resonance (BMR) and new to the market Spectral Gamma tool has been trialled at Samphire to assess improved methods of determination of key formation characteristics to reduce logging costs compared to industry standard approaches. Alligator is also considering aspects of the field recovery trial at Samphire where new knowledge or know-how could be generated as part of this program of work. This is expected to include aspects such as trialling membrane technology to manage chloride levels, alternate uranium extraction methodologies to ion exchange, accelerated natural attenuation of the field recovery trial aquifer, application of the hydrosmartTM water conditioning system to reduce mineral precipitation within production and disposal wells and application of Drone/AI in weed identification and eradication to improve land management practices. P a g e 10 ALLIGATOR ENERGY LIMITED AND CONTROLLED ENTITIES ACN 140 575 604 DIRECTORS’ REPORT (continued) e) Business strategies and prospects for future financial years (continued) Material Business Risks The Group is subject to the inherent risks which apply to some degree to all participants in the exploration and mining industries. These risks which could impact on the execution of the Group’s strategy include the following: (i) Lack of discovery success Mineral exploration involves a high degree of risk in relation to the probability of the discovery of a significant resource which can be commercially developed. Regardless of the application of experience, technical knowledge and careful evaluation, the discovery of commercial deposits of uranium or other minerals cannot be assured. Alligator strives to reduce exploration risk by ensuring a high level of experience and technical skill is applied to planning and execution of exploration programs. There is also no assurance that if deposits of uranium or other minerals are discovered, commercial development of these resources will occur. The commercial viability of a particular resource is dependent on a number of factors including the quality and nature of the resource and future commodity price and exchange rate fluctuations, factors which are beyond the control of the Company. (ii) Capital requirements Alligator relies on the issue of its equity shares or farm-out/joint venturing or optioning of Alligator's mineral properties to fund its business strategy. There can be no assurance that Alligator will be able to raise such capital or establish such agreements on favourable terms. If Alligator is unable to obtain additional capital, it may be required to reduce the scope of its future exploration programs, which could adversely affect its business, financial condition and results of operation. The ability to raise capital on favourable terms is dependent on a range of factors including the strength of equity and capital markets in Australia and throughout the world, changes in government policies, commodity prices and the prospectivity of the Group’s tenement holdings and identified prospects. (iii) Land Access Issues Aboriginal land access, Aboriginal heritage related concerns and concerns of stakeholders with overlapping tenure e.g. pastoralists and other overlapping licence holders such as renewable energy or hydrogen in South Australia may affect the ability of Alligator to pursue exploration, development and mining on Alligator's properties. Alligator is committed to working with all stakeholders associated with land access for exploration and development in a complimentary and effective manner. P a g e 11 ALLIGATOR ENERGY LIMITED AND CONTROLLED ENTITIES ACN 140 575 604 DIRECTORS’ REPORT (continued) e) Business strategies and prospects for future financial years (continued) (iv) Environmental and Compliance Issues (Sovereign Risk) The current or future operations of Alligator, including mineral exploration or development activities and commencement of production, require permits from governmental authorities and such operations are and will be governed by laws and regulations governing prospecting, development, mining, environmental protection, mine safety, land access and other matters. Such laws and regulations may vary in future. There can be no assurance, however, that all permits which Alligator may require for mineral exploration or construction of mining facilities and conduct of mining operations will be obtainable on reasonable terms or that such laws and regulations would not have an adverse effect on the ability to ultimately secure licencing for a mining project. In relation to current activities, the Group is in compliance with governing laws and regulations and manages these risks through its existing standard operating procedures, Environmental Management Plans, internal audits and direct liaison with regulators and stakeholders along with involvement in peak industry bodies (v) Operational Certain of the Group’s projects are in remote areas where vehicle and air travel remain a significant risk that is mitigated where possible through operating procedures. Workplace health, safety and environment is an inherent industry risk and remains at the forefront of all operational activity through toolbox sessions, pre-starts, Take 5 Risk Assessments, Incident and Hazard reporting, corrective action and mitigation identification and reporting on action close out. Retention and recruitment of experienced personnel also presents challenges particularly given the limited uranium experience and expertise in Australia, particularly in ISR. The risk of cyber security continues to be considered and addressed with appropriate systems and training. f) Significant changes in the state of affairs Other than the items discussed in the review of operations above, there were no significant changes in the state of affairs of the Group during the year. g) Environmental Issues The Group’s operations are subject to environmental regulations in relation to its exploration activities. The Group is compliant with all aspects of these requirements. The Directors are not aware of any environmental law that is not being complied with. h) New Accounting Standards Implemented There were no new Accounting Standards adopted during the year. P a g e 12 ALLIGATOR ENERGY LIMITED AND CONTROLLED ENTITIES ACN 140 575 604 DIRECTORS’ REPORT (continued) i) Matters subsequent to the end of the year In August 2024, the Group announced that the inaugural drilling program at the Big Lake Project in South Australia had identified a significant new uranium discovery with the intersection