Aurelia Metals : 2022 Annual Report

8%

INCREASE TO

EBITDA $166.5M

(FY21: $154.1M)

FEDERATION

CIVIL AND BOX

90CUT ACTIVITIES

%

COMPLETE

SUCCESFUL

EXPLORATION RESULTS PROVIDEUPSIDEFOR ASSETEXTENSIONS

45%

INCREASE IN

GREAT COBAR CU

RESOURCETO

7.7Mt

DEVELOPMENT

CONSENT RECEIVED

FOR GREAT COBAR FROM

NSW GOVERNMENT

The conveyor at our Peak Mine

CHAIRMAN'S LETTER

-

Dear Shareholders

2022 was an exceptionally challenging year for our Company.

Global markets, our workforce and communities were again impacted by COVID-19, while Australian households and businesses battled with levels of inflation not seen for decades. This was compounded by a rapidly escalating cost environment, supply chain challenges and an exceptionally tight labour market.

The Board and Management of Aurelia recognise that our performance this year was not acceptable. Our operating performance was well below expectations, with metals production and lower than expected gold grades at our Peak and Dargues mines delivering disappointing cashflows and revenues. This resulted in a significant A$95 million (post tax) impairment at Dargues, in recognition of reduced average gold grades and overall reduction in mining inventory.

The Board is presently undertaking a range of programs to address improvements in operational excellence, as well as enhance plant efficiencies, operating costs, and capital management. This work is being carried out by internal and recently introduced external expertise. The Board is actively analysing cost effective options to fund and optimise the development of the outstanding Federation mine with our financiers and strategic partners.

The recently completed Feasibility Study for Federation has highlighted the attractiveness of this quality asset, with potential for high rates of return and rapid project payback. Our work is concentrating on appropriate cost effective financing of the development, whilst minimising our exposure to the challenges of inflation and supply chain delivery.

The Company is in a unique position in having developed infrastructure and mill capacity within the Cobar region which coincides with our exciting exploration acreage.

We will continue to update our shareholders in the coming months and at our forthcoming AGM on these strategic initiatives, in order to restore confidence in the Company's delivery of shareholder value.

We are extremely excited by the potential of our Federation and Great Cobar Projects. These developments will progressively move the Company to a base metals focus over the next few years, growing Aurelia into one of the few diversified mid-cap base metals producers.

As I reflect on my first year as your Chairman, while it was not the year I had hoped for, there were still facets to celebrate:

• EBITDA continued its five-year upward trend with an 8% increase to A$166.5M (FY21: $154.1M).
• In May we received Development Consent for the New Cobar Complex, including the Great Cobar Project, which will secure a further five-year life extension at our Peak Mine.
• At year end, civil works and boxcut activities for the high- grade Federation Project were 90% complete.
• The Company's successful exploration program continued to deliver with some of the best results seen to date at our Federation, Great Cobar and Kairos deposits.
• These results saw the Company's Mineral Resources grow 5% to 29Mt with a 45% increase in Great Cobar copper to 7.7Mt underpinning Peak Mine's future as a material copper producer.
• We maintained our strong balance sheet with A$76.7M cash in the bank, as at 30 June 2022, after repayment of A $38.3M in debt and cash backing of environmental bonds.

Amidst the hard work to deliver in a challenging environment, I am most proud of our efforts to remain true to our sustainable foundation.

Our Total Recordable Injury Frequency Rate (TRIFR) of

8.75 continued a year-on-year reduction, and our safety lead indicator program compliance exceeded 85%. We also introduced our Fatal Hazard Standard, supported by Critical Control Verifications, to test its effective implementation across our sites.

Aurelia recognises superior performance can only be achieved through our people, and high-calibre employees are seeking workplaces that engage, energise and include them.

In FY22, our efforts turned to ensuring we are providing a safe and inclusive environment where employees from all backgrounds can thrive. To this end, we established a permanent Diversity and Inclusion (D&I) Working Group and a three-year D&I Roadmap. Year One chartered our efforts to set targets for female workforce participation rates, as well as develop supportive frameworks, standards, training and actions related to an inclusive culture and employee wellbeing. With acknowledgement the sector can do more to address bullying and harassment, including sexual harassment, our work in this space will include a risk assessment of psycho-social workplace hazards in FY23.

Community consultation and engagement programs were maintained through the year, despite the challenges of COVID-19. Our continuing efforts to foster trusted partnerships with our Traditional Owners and First Nations stakeholders led to discussions about the name of the Federation Project. As a result, we are proud to advise Aurelia will commence a consultation process with these groups to rename the mine with an Indigenous identifier.

In March, a significant rain event at our Dargues Mine forced production to stop to preserve the integrity of the tailings storage facility. In line with our Values, expectations of shareholders and interests of our communities,

Board members travelled to Dargues to inspect the dam. While there, we ensured the appropriate measures to mitigate any risk, and met with the community. I am pleased to say early action by our site operational teams were successful and production commenced a few days later.

Aurelia recognises the ongoing impacts of human activities on climate change and mining Company's like ours need to act quickly and decisively to reduce our carbon footprint. As a result, this year we established a baseline for climate-related disclosures and evaluated opportunities to reduce our carbon emissions. I look forward to seeing this program of work pick up pace in FY23 and beyond.

During the year we continued to pursue our enviable growth prospects with two compelling projects at very high-grade, Federation and Great Cobar. Both will anchor our future as a material base metals producer with coveted copper and zinc - metals that are the foundation of society's progression and transition to a low carbon economy. The change in our commodity mix is occurring at the perfect time, with our shareholders set to benefit from exposure to metals with a strong long term demand forecast.

At year end, the Federation Project was in excellent shape, with the exploration decline awaiting first blast. Regulatory approvals were also well progressed, with public exhibition of the Environmental Impact Statement receiving no negative feedback - a symbol of Hera Mine's exemplary efforts to establish trusted partnerships with the community.

Exploration at Federation during the year uncovered some spectacular results growing geological confidence in the orebody as one of the highest grade deposits in Australia at 16.7% ZnEq. With the orebody remaining open in every direction, we expect material upside with further drilling from underground. We now turn our efforts to finding the right funding solution to take Federation forward into development of what will become Aurelia's most valuable mine.

The fully consented Great Cobar Project is equally impressive, and at 2.8% CuEq, is perhaps one of the highest grade copper deposits in the Country. Great Cobar ore will be timed to ramp up when it can compete with the other very- high grade ore sources at the Peak Mill.

With returns from our organic growth portfolio now clearly in sight and the need to ensure we have the financial capacity to support this growth the Board has chosen not to pay

a dividend this year and continue towards achieving first cashflows from Federation followed by Great Cobar.

On behalf of my fellow Directors, I would also like to take this time to thank Lawrie Conway who retired as Non-Executive Director at the end of the year. Mr Conway was appointed to the Board in June 2017 and contributed enormously to Aurelia as steward of the Audit Committee. We wish him

all the best in his future endeavours. We would also like to warmly welcome Bruce Cox to the Board. As a seasoned industry executive and Non-Executive Director, Bruce is a fantastic appointment and will complement our Board's existing skillset.

I would also like to thank the rest of the Board, the management team and all our employees for their personal contribution during what has been another difficult year, and for continuing to step up and support the Company's long-term prosperity.

Finally, I would like to acknowledge you, our valued shareholders, for your support. While there are many stakeholders, ultimately Aurelia belongs to you. I would like to reiterate the Board and Management's laser focus on improving company performance and value in the coming year.

Peter Botten, AC, CBE

Non-Executive Chairman