APPOINTMENT OF VOLUNTARY ADMINISTRATORS was announced on 19 Jun,...

APPOINTMENT OF VOLUNTARY ADMINISTRATORS was announced on 19 Jun, 3 months after the Half-Year Financial Report and Directors’ Report 31 December 2022 was announced on 15 Mar 2023. The report was prepared on the going concern basis by the directors and auditors despite that “as at 31 December 2022 the Group’s current liabilities exceeded current assets by $1,306,752”.

In the March quarterly cash flow report announced on 28 April, they reported 3.75 Estimated quarters of funding available in item 8.7 despite that the residual US$5M owing to Glencore had a maturity date of 30 June 2023.

I would like some explanation from the directors and the auditors.

NOTE 3: GOING CONCERN (Page 11-12 of Half-Year report)

These financial statements have been prepared on the going concern basis, which contemplates the continuation of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business.

As disclosed in the financial statements, during the period the Group incurred a loss after tax of $9,134,997 and had net cash outflows in operating activities amounting to $8,014,533. In addition, as at 31 December 2022 the Group’s current liabilities exceeded current assets by $1,306,752. The above factors indicate a material uncertainty which may cast significant doubt as to the Group’s ability to continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial statements.

The directors have considered the Group’s cash forecast for a period exceeding 12 months from the approval date of these financial statements and concluded that the Group will be able to continue as a going concern and will have sufficient cash resources to meet its working capital requirements and its debts as and when they fall due taking into account the following factors:

• forecast cashflow from operations is expected to improve in the second half of FY2023 on the basis of improvements in processing head grade due to the commencement of mining at the higher grade Mt Carlton United deposit following receipt of regulatory approval during the half-year ended 31 December 2022;

• the Group has flexibility to adjust timing and scope of some of its exploration and evaluation activities as funds are available;

• during the half-year, the Group executed a finance facility agreement with Glencore for a credit facility of US$7 million to provide additional working capital, which was fully drawn down subsequent to reporting date;

• as outlined in Note 15 to the financial statements, subsequent to the reporting date, Navarre entered into a $5.0 million share subscription agreement with The Lind Partners; and

• if necessary, the Company has the ability to raise future capital (pursuant to ASX listing rules 7.1 and 7.1A).

Accordingly, the directors consider it appropriate to adopt the going concern basis in the preparation of these financial statements.