Announcement PDF Tesoro Gold Ltd (Previously Tesoro Resources Limited) ABN 91 106 854 175 Annual Report for the year ended 30 June 2022 TABLE OF CONTENTS Corporate Directory 2 Chairman’s Letter 3 Directors’ Report 5 Auditor’s Independence Declaration 33 Consolidated Statement of Profit or Loss and Other Comprehensive Income 34 Consolidated Statement of Financial Position 35 Consolidated Statement of Changes in Equity 36 Consolidated Statement of Cash Flows 37 Notes to the Financial Statements 38 Directors’ Declaration 67 Independent Auditor’s Report 68 ASX Additional Shareholder Information 72 Tenements Schedule 76 CORPORATE DIRECTORY Tesoro Gold Ltd (previously Tesoro Resources Limited) is an Australian listed company focused on the acquisition, exploration and development of commercially significant resource projects in Chile, with a focus on gold. For more details visit www.tesorogold.com.au. DIRECTORS Mr John Toll (Non-Executive Chairman) Mr Zeffron Reeves (Managing Director) Mr Linton Putland (Executive Director – Mining and Development) Mr Geoffrey McNamara (Non-Executive Director) Ms Kristie Young (Non-Executive Director) JOINT COMPANY SECRETARIES Ms Shannon Coates Ms Sarah Wilson REGISTERED OFFICE Suite 5 62 Ord Street WEST PERTH WA 6005 AUDITORS RSM Australia Partners Level 32 Exchange Tower 2 The Esplanade PERTH WA 6000 SHARE REGISTRAR Automic Pty Ltd Level 5 191 St Georges Terrace PERTH WA 6000 GPO Box 5193, SYDNEY, NSW 2000 Telephone: 1300 288 664 (within Australia) Email: hello@automic.com.au SECURITIES EXCHANGE LISTING Australian Securities Exchange Limited (Home Exchange: PERTH, Western Australia) Codes: ASX: TSO, TSOO OTCQB: TSORF 2|P a g e Tesoro Gold Ltd Chairman’s Letter Dear Fellow Shareholders, On behalf of the Board of Directors, it is my pleasure to present the 2022 Annual Report for Tesoro Gold Ltd (“Tesoro” or “the Company”). The Company’s El Zorro Gold Project (“El Zorro”) has continued to deliver outstanding exploration success during the year, which resulted in a material update to the Mineral Resource Estimate (“MRE”) at the Ternera Gold Deposit, as well as identification of numerous new exploration targets across the Company’s significant landholding in Chile. Building on the significant momentum created during the prior year, exploration activities continued throughout 2022 at an accelerated rate, with a total of 307 holes for 103,510 metres now having been drilled at El Zorro, since Tesoro commenced exploration in 2017. In parallel with this work, the Company also undertook an extensive regional mapping and sampling program which has identified wide zones of surface gold anomalism similar to the Ternera Gold Deposit over a prospective strike length of 33km, confirming El Zorro as a new Chilean Intrusive Related Gold System (“IRGS”) district. On the back of successful infill and extensional drilling programs completed since July 2021 when the Company’s maiden MRE was published, Tesoro delivered an updated MRE at the Ternera Gold Deposit in May 2022, totalling 30.5Mt @ 1.12 g/t for 1.1Mozs (0.3g/t Au cut-off) (“Updated Mineral Resource Estimate”). These highlights included the following: • • • • Increased total ounces by +66% to 1.1 Moz; Increased mineral resource grade by +36% to 1.12g/t Au; Increased indicated resources by +570% to 503koz at 1.18g/t; and 46% of the mineral resource estimated classified as Indicated. The Updated Mineral Resource Estimate also included multiple continuous higher grade gold zones, resulting in an MRE of 715Koz at 2.31g/t when using a 1g/t cut-off, demonstrating the potential for high-grade open pit mining at the Ternera Gold Project. Drilling activities have recently recommenced with the objective of further increasing the Tenera Gold Deposit MRE, as well as testing several of the recently identified regional targets, to better understand the potential scale of the broader El Zorro Gold Project. Whilst a significant amount of activity has occurred over the past 12 months, it has done so against a challenging operating environment with everyone in the global community having to continue to deal with the on-going impacts of COVID-19. I am pleased to report that the policies and procedures that the Company’s staff put in place, have enabled us to safely navigate these challenges to date, however it is critical that we remain vigilant and agile to continue to address new challenges as they inevitably arise. Another key focus over the past 12 months has been ensuring the framework is in place, and necessary steps taken to ensure the Company’s environmental, social and governance responsibilities are being upheld. Although this is a long-term commitment, and on-going process which will continue to evolve as the Company grows, our projects are advancing and with it, our footprint is increasing. The Company is proud of the advancements we have made to date in this regard. 3|P a g e Tesoro Gold Ltd Chairman’s Letter I would like to take this opportunity, on behalf of the Board, to thank all our Shareholders for their ongoing support. I would also like to thank the staff, management, contractors, and my fellow Directors, particularly our newest Directors, Linton Putland and Kristie Young, for their ongoing efforts. We are committed to progressing the El Zorro Gold Project and growing the Company by identifying and testing new targets, increasing our resources, and progressing towards development, through high-quality exploration and technical studies for the benefit of all Tesoro shareholders. John Toll Chairman Tesoro Gold Ltd 4|P a g e Tesoro Gold Ltd Directors' report 30 June 2022 The Directors present their report, together with the financial statements, of the Group (referred to hereafter as the “Consolidated Entity” or “the Group”) and the entities it controlled at the end of, or during, the financial year ended 30 June 2022. Directors The following persons were Directors of Tesoro Gold Ltd (previously Tesoro Resources Limited) during, or since the end of the financial year: John Toll Zeffron Reeves Linton Putland Geoffrey McNamara Kristie Young Non-Executive Chairman Managing Director Executive Director – Mining and Development (appointed 14 September 2021) Non-Executive Director Non-Executive Director (appointed 14 September 2021) Information on Directors John Toll Non-Executive Chairman B Comm, CA Mr Toll brings valuable experience as a partner of Azure Capital Limited, a leading corporate advisory firm based in Perth, Western Australia. Mr Toll has over 15 years’ experience in corporate advisory across a range of industries including mining, technology and, general industrials. He has advised local and international clients on transactions ranging from mergers and acquisitions, private capital raisings for early stage companies through to strategic and transformation financings for established businesses. Mr Toll has a Bachelor of Commerce, has completed the Institute of Chartered Accountants CA Program and a Graduate Diploma in Applied Finance. Zeffron Reeves Managing Director BSc (Hons) (Applied Geology), MBA, MAIG Mr Reeves is a geologist with over 20 years’ experience in the resources sector working on mineral resource projects through all facets of development from greenfield exploration, discovery, definition and feasibility, construction, production to closure. Mr Reeves was Managing Director of ASX listed Metallum Ltd (now Kopore Metals Ltd) which had several development and operational projects in Chile. He has also held senior management positions with Cleveland Mining Ltd and Ashburton Minerals Ltd, developing projects in Brazil. Mr Reeves has a Bachelor of Applied Geology (Honours), a Master of Business Administration from Curtin University and is a member of the Australia Institute of Geoscientists. Linton Putland Executive Director – Mining and Development (appointed 14 September 2021) BEng, MSc (Economics) Mr Putland holds degrees in Mining Engineering (Bachelor of Engineering, Western Australian School of Mines) and a Masters of Science (Mineral Economics, Western Australian School of Mines) with more than 30 years’ experience in mining operations, joint ventures and corporate management in Australia, Africa and the Americas, over a wide range of commodities. Mr Putland is principal of LJ Putland & Associates, a private mining consultancy company which was founded in 2002, providing advisory and consultancy services in mining project and company evaluation and due diligence appraisals with a focus on corporate growth. During this period, he has also been Managing Director of a privatelyowned exploration company with joint venture interests in Africa. Prior to this he held corporate and senior management roles in IAMGOLD, Aurion Gold, Delta Gold and Pancontinental Mining. He is a Member of AusIMM and a Graduate Member of AICD. 5|P a g e Tesoro Gold Ltd Directors' Report 30 June 2022 Geoffrey McNamara Non-Executive Director BSc (Applied Geology), AusIMM, FINSIA, AICD Mr McNamara is a geologist with over 30 years of international resource sector experience, operational roles include Project Manager, Senior Mine Geologist and Mine Geologist for Ivanhoe Mines, Lion Ore International and Western Mining Corporation. Previously he worked in Private Equity (FUM USD800 million) and as a Director of Societe General’s Mining Finance team in New York. Geoffrey holds a Bachelors degree in Geology and a Graduate Diploma in Applied Finance and Investment from the Financial Services Institute of Australasia. He is a member of the Australian Institute of Company Directors (AICD) and the Australasian Institute of Mining and Metallurgy (AusIMM). Kristie Young Non-Executive Director (appointed 14 September 2021) BEng (Mining) Hons, GAICD Ms Young holds a Bachelor of Engineering (Mining) Hons from the University of Queensland and a Post Graduate Diploma of Education (Mathematics & IT) from the University of Western Australia. She is a graduate of the AICD and holds a Cert IV HR from the Australian HR Institute. Ms Young’s more than 20 years’ experience includes technical engineering, project evaluation, strategy, business development, growth, marketing, commercial, client management, consulting, governance and human resources. Prior to her Non-Executive Director portfolio career, she held senior growth and Business Development Director roles with leading professional services firms PwC and EY. As a mining engineer she worked with Mt Isa Mines, Plutonic Gold, Hammersley Iron, Gunpowder Copper, New Hampton Goldfields and Surpac. Joint Company Secretaries Shannon Coates LLB, BJuris, AGIA, ACIS, GAICD Ms Coates is a qualified lawyer, Chartered Secretary and graduate of the AICD’s Company Directors course. She has more than 25 years’ experience in corporate law and compliance, is an Executive Director of national corporate advisory firm Emerson CoSec, and is currently company secretary to a number of ASX listed companies with a strong focus on resources. Sarah Wilson (appointed 14 September 2021) Ms Wilson is a Company Secretary with national corporate advisory firm Emerson CoSec and has over 10 years’ experience in company secretarial, corporate advisory and corporate governance roles, which have included the provision of company secretarial services to a number of resource companies. Ms Wilson holds a Certificate in Governance Practice and is a Certified Member of the Governance Institute of Australia. She is currently company secretary to a number of ASX listed companies with a strong focus on resources. Directorships of Other Listed Companies Directorships of other listed companies held by Directors currently and in the 3 years immediately before the end of the financial year are as follows: Director John Toll Zeffron Reeves Linton Putland Geoffrey McNamara Kristie Young Principal activities Company Culpeo Minerals Ltd Rincon Resources Ltd WA Kaolin Limited Breaker Resources Limited Pacific Energy Limited Azumah Resources Limited Culpeo Minerals Ltd Rincon Resources Ltd Cora Gold Ltd Alita Resources Ltd Lithium Australia Limited ChemX Materials Ltd Primero Group Ltd Period of Directorship 25 July 2018 - current 07 August 2018 – 15 November 2021 20 May 2020 – 20 September 2022 16 August 2018 – current 18 October 2016 – 28 November 2019 18 July 2018 – 14 November 2019 25 July 2018 - current 07 August 2018 – 6 December 2021 09 October 2017 - 19 November 2019 14 December 2018 – 18 December 2019 22 December 2020 – current 26 May 2021 - current 18 August 2020 – 24 February 2021 6|P a g e Tesoro Gold Ltd Directors' Report 30 June 2022 The principal activities of the Company and its subsidiaries are the acquisition, exploration and development of commercially significant resource projects in Chile. The Company currently holds interests in Chile, namely the El Zorro Gold Project in Chile, which is prospective for gold. Operating results The loss, after tax, attributable to the Group for the financial year ended 30 June 2022, amounted to $5,349,228 (2021: $5,570,786). Dividends No dividends were paid or declared since the start of the financial year. No recommendations for payment of dividends have been made. Directors’ Interests in Shares, Options and Performance Rights At the date of this report, the following represents the shares, options and performance rights holdings of the Directors of the Company: Directors John Toll1 Zeffron Reeves2 Linton Putland3 Geoffrey McNamara4 Kristie Young Total 1. 2. 3. 4. Ordinary shares Direct Indirect 375,710 375,710 3,671,696 65,224,417 33,610,546 102,506,659 Performance Rights Direct Indirect 4,550,000 4,550,000 18,450,000 10,000,000 21,610,000 50,060,000 3,671,696 Fully Paid Ordinary Shares are held by Mr John Toll as trustee for the Toll Family Discretionary Trust. 65,224,417 Fully Paid Ordinary Shares and 18,450,000 performance rights are held by Mr Zeffron Charles Reeves as trustee for the Palin Trust. 10,000,000 performance rights are held by Mr Linton Putland as trustee for the Putland Family Trust. 33,610,546 Fully Paid Ordinary Shares are held by Tanamera Resources Pte Ltd (a company registered in Singapore). Geoffrey McNamara is the sole director and shareholder of Tanamera Resources Pte Ltd. 21,610,000 performance rights are held by Linkwood Holdings Pte Ltd (a company registered in Singapore). Geoffrey McNamara is a director and substantial shareholder of Linkwood Holdings Pte Ltd. 7|P a g e Tesoro Gold Ltd Directors' Report 30 June 2022 REVIEW OF OPERATIONS Tesoro holds interests in the highly prospective El Zorro Gold Project (“El Zorro” or “The Project)” located within the Coastal Cordillera of Chile. El Zorro is favourably located and demonstrates significant scale and gold grades. Throughout FY2022, Tesoro has focussed on delineating and expanding existing gold resources at El Zorro. Drilling has produced exceptional results culminating in the delivery of an updated Mineral Resource Estimate (MRE) at the Ternera Gold Deposit (Ternera) of 1.1 million ounces of gold, as announced on 23 May 2022. Throughout the year, the Company also completed first pass mapping and sampling work, significantly expanding the district potential for delineating additional gold resources at El Zorro. Work also progressed on mining and development studies including the completion of detailed metallurgical test work programs and preliminary mining studies. El Zorro Project Ternera Updated Mineral Resource Ternera occurs within Tesoro’s El Zorro Project which covers a total concession holding area of approximately 570km2, located approximately 130km north of Copiapo City, in Region III (Atacama) in northern Chile. The Ternera Deposit is 13km inland from the Pacific Ocean, 57km by road from the port of Caldera and is well supported by existing road, power, and water infrastructure. Figure 1 – El Zorro Project Location Map – El Zorro Gold Project Concessions in red, Ternera Gold Deposit shown at the yellow diamond. 8|P a g e Tesoro Gold Ltd Directors' Report 30 June 2022 Tesoro commenced work on the Project in 2017 and has subsequently drilled 300 diamond drill holes (>100,000m), at El Zorro and defined 1.1Moz of gold resources at Ternera. The Ternera updated MRE was announced on the 23 May 2022 and now stands at 1.1 million ounces at a grade of 1.12g/t Au using a 0.3g/t Au cut-off grade with 46% of the MRE being classified as Indicated, refer Table 1. Table 1 – El Zorro Gold Project, Ternera Gold Deposit updated MRE reported at various cut-offs within a AU$2,500 (US$1,800) per ounce optimised pit shell. El Zorro is located within the Coastal Cordillera of Chile where Tesoro has delineated the Ternera Gold Deposit. At Ternera, gold mineralisation is predominately hosted within numerous intermediate intrusions and associated quartz and sulphide veins, veinlets, and alteration within faulted and strongly altered tonalitic intrusions (El Zorro Tonalite or EZT). The EZT intrusions have intruded Permian aged basement sedimentary sequences. Gold mineralisation at Ternera has been classified as an Intrusive Related Gold System (IRGS) which is a new style of gold mineralisation, previously undescribed in Chile. Tesoro has discovered additional gold targets in the El Zorro District which exhibit similar styles of gold mineralisation. Figure 2 – El Zorro Gold Project Ternera District Map and targets showing highlighted >1g/t first pass channel sample results reported in this announcement (width/Au g/t), demonstrating the large-scale nature of the El Zorro mineralisation system. 9|P a g e Tesoro Gold Ltd Directors' Report 30 June 2022 Mineralisation within the updated MRE has been classified according to JORC 2012 code and has been reported with an US$1,800/oz optimised pit shell. The MRE area has been drilled at sufficient drill density to be classified as indicated resources with 503koz’s or 46% of the total resource being classified as indicated. In addition, multiple, continuous, higher-grade gold zones have been defined, resulting in a Mineral Resource Estimate of 715koz’s at 2.31g/t using a 1g/t Au cut-off, demonstrating the potential of Ternera being suited to high-grade open pit mining scenarios. Gold mineralisation remains open in all directions and further drilling is planned to continue resource expansion and test potential Ternera repeats. Figure 3 – Ternera Gold Deposit Block Model Section 7036175N (looking north) showing MRE block model and US$1,800/oz optimised open pit shell. Red = indicated classification, green = inferred classification 10 | P a g e Tesoro Gold Ltd Directors' Report 30 June 2022 Figure 4 – Ternera Gold Deposit Block Model Section 7036175N (looking north) showing MRE block model and US$1,800/oz optimised open pit shell. Block model coloured to gold grade. Figure 5 – 3D view looking northwest of the Ternera updated MRE block model, US$1,800pit shell and drilling with selected drill highlights (downhole width/Au g/t) showing extensions requiring further drilling for resource classification. Orange, red and pink blocks below the optimised pit shell are >1.50g/t and currently are not reported in this MRE. These areas highlight high grade extensions with future underground mining potential below the optimised pit shell. 100m grid. 11 | P a g e Tesoro Gold Ltd Directors' Report 30 June 2022 Exploration Potential During the year the Tesoro exploration team undertook significant surface mapping and sampling programs to further expand the prospectivity of the Project. Gold mineralisation at El Zorro, and within the Ternera Gold Deposit is associated with a series of intrusive rocks called the El Zorro Tonalite (EZT). The EZT occurs as intrusions, typically as dykes, sills and as swarms. The 1.1-million-ounce Ternera Gold Deposit is predominantly hosted within a swarm of EZT dykes. District and regional mapping at El Zorro has identified outcropping EZT intrusive rocks extending over 33km, the EZT is the favourable host and likely source of gold mineralisation at El Zorro. The widespread occurrence of the rocks confirms El Zorro as a new Chilean IRGS Gold District, the first of its kind discovered in Chile. Tesoro’s concessions cover approximately 60km of prospective strike (Figure 6). Work completed during the year confirmed that the EZT is fertile for gold over at least a 12km strike (Figure 2) with two new, highlight prospective targets having been defined, Kitsune and Calderillas (Figure 7 and 8). These targets are characterised by strike extensive dyke swarms of the EZT coincident with broad gold zones up to 45m wide in outcrop. Both targets exhibit similar gold anomaly patterns and tenor to the surface expression of gold mineralisation at Ternera. Figure 6 – El Zorro Gold Project Concession Area (blue). Yellow indicates mapped surface outcrop of El Zorro Tonalite bodies, the main gold host rock at El Zorro. Datum PSAD56 19.S 12 | P a g e Tesoro Gold Ltd Directors' Report 30 June 2022 Figure 7 – Kitsune simplified geology and surface gold channel samples >0.10g/t Au map showing large scale gold anomalism associated with EZT outcrops and NW trending faults. Datum PSAD56 19S. Figure 8 – Calderillas simplified geology and surface gold channel samples >0.10g/t Au map showing large scale gold anomalism associated with EZT outcrops. Datum PSAD56 19S. 13 | P a g e Tesoro Gold Ltd Directors' Report 30 June 2022 Metallurgical Test Work The Company completed a second program of detailed metallurgical test work program (Phase 2) from the Ternera Gold Deposit, which was designed to assess the gravity recovered gold component and cyanide leaching characteristics over a range of gold grades using different grind sizes to allow the selection of the most appropriate grind size for future processing. The Phase 2 test work was completed using sea water. The Phase 2 test work was conducted on representative samples from the various mineralised zones at Tenera over a range of grades. A total of 526kg of samples selected from the various mineralised zones that lie within the optimisation pit shell that was used to constrain the Tenera MRE. • The test programme successfully determined a simple processing method for recovering gold from the Ternera gold deposit with the optimal results being: • Bond Ball Mill work index (Bwi) = 20.4 kWh/t (from Phase 1 Test Work Program); • A leach feed grind size distribution of P80 = 150µm; • Cyanide consumptions of 0.5kg/t; • Lime consumption of 4.0kg/t; • Gravity recovery of 45%; • Overall Au recovery of 94.5%; and • Test work undertaken using seawater. The Phase 2 metallurgical results confirm high gravity and cyanide leach gold recoveries from Ternera material using conventional gravity and CIL processes at a coarse grind size. Information was also produced to provide guidance on expected reagent usage to achieve these recoveries at a level appropriate for use in a Scoping Study level of assessment for the project. These results provide the basis for a very simple, generic, preliminary processing flowsheet for the project (Figure 9). Figure 9 – El Zorro Gold project – preliminary Process Plant Flowsheet 14 | P a g e Tesoro Gold Ltd Directors' Report 30 June 2022 CORPORATE El Zorro Ownership On 24 March 2021, Tesoro advised that its 95% owned Chilean subsidiary, Tesoro Mining Chile SpA (TMC), has increased its ownership of El Zorro to 85%. Tesoro previously advised on 1 March 2021 that the original Purchase Option Agreement had been terminated and the JV company, El Zorro S.C.M., would operate on a fully diluting basis going forward. At a shareholders’ meeting of El Zorro S.C.M. held on 11 February 2021, it was resolved that an additional capital contribution of approximately CLP$4.3 billion in total (approximately AU$7.6 million) be made to the El Zorro S.C.M. to support the approved workplan and budget. The minority shareholder (Wanaco SpA) in the JV company elected not to participate and TMC has now contributed AU$7.6 million to increase its ownership to 85%. On 26 August 2021, the Company announced that it had been served notice of dispute initiated by Wanaco SpA, lodged with 7th Civil Court de Santiago de Chile. Wanaco is disputing the valuation and the procedure followed for the capital increase approved in the Shareholders Meeting of El Zorro S.C.M held on 11 February 2021. Tesoro is confident that the capital increases were appropriately valued and duly approved under Chilean corporate and mining law and the dispute initiated by Wanaco is vexatious and with no legal basis. El Zorro Concession Holdings During the year the El Zorro concession holding area was increased by approximately 22km2. Tesoro Mining Chile Ltda’s 85% owned El Zorro S.C.M has purchased a group of contiguous concessions adjoining the existing El Zorro concessions which cover the northern extensions of the highly prospective El Zorro Tonalite (Figure 10). The El Zorro Tonalite is the main gold host rock at El Zorro. El Zorro S.C.M acquired 100% of the new concessions for a total consideration of CLP56 million (approximately AU$96,000). 15 | P a g e Tesoro Gold Ltd Directors' Report 30 June 2022 Figure 10 – El Zorro Gold Project concession map. Pale blue are existing El Zorro Project concessions, red are newly acquired concessions and green highlights the gold prospective zone, PSAD56/19S datum. Capital Raising Activities On 27 October 2021, the Company announced it had received firm commitments for a private placement to raise approximately AU$4.3 million at $0.085 per share, and a Share Purchase Plan (SPP) to raise up to $3 million on the same terms. The Company closed the SPP on 6 December 2021 having received valid applications for $211,454. On 14 June 2022, the Company announced it had received firm commitments for a private placement to raise approximately $5.4 million. In conjunction with the Placement, on 7 July 2022 the Company issued subscribers in the Placement, one (1) attaching option exercisable at $0.11 each and expiring 7 July 2025, for every two (2) shares issued pursuant to the Placement. 16 | P a g e Tesoro Gold Ltd Directors' Report 30 June 2022 Change of name As approved by Shareholders at a General Meeting on 28 April 2022, the Company changed its name from Tesoro Resources Limited to Tesoro Gold Ltd. Director Appointments On 14 September 2021, Mr Linton Putland and Ms Kristie Young were appointed as Executive Director – Mining and Development and Non-Executive Director, respectively. A summary of Mr Putland’s and Ms Young’s experience is on pages 5 and 6. COVID-19 Impact All the Company’s staff and contractors, including those on site at the El Zorro Project in Chile are safe. The Company has implemented procedures to ensure all staff and contractors remain safe and healthy during the COVID-19 pandemic, including regular testing, altered rosters and strict quarantining procedures. As at the date of this report, the Company’s operations at the El Zorro Project have not been directly affected by COVID-19 restrictions in Chile, however the Company continues to monitor this closely with the health and wellbeing of all staff and contractors’ priority. Meetings of Directors The number of meetings of the Company’s Board of Directors (‘the Board’) and of each Board committee held during the year ended 30 June 2022 were: 1. John Toll Zeffron Reeves Linton Putland1 Geoffrey McNamara Kristie Young1 Appointed 14 September 2021. Attended 8 8 7 8 7 Board meetings Eligible to attend 8 8 7 8 7 The full Board currently undertakes all nomination, remuneration, audit and risk functions. Shares As at the date of this report, there are 853,480,779 fully paid ordinary shares on issue. Options As at the date of this report, there are 62,989,494 unissued ordinary shares of Tesoro Gold Ltd under option as detailed below: Issued Date 7 July 2022 Number on Issue 62,989,494 Expiry date 7 July 2025 Exercise Price $0.11 During the year ended 30 June 2022, nil shares were issued upon the exercise of options. 17 | P a g e Tesoro Gold Ltd Directors' Report 30 June 2022 Performance Rights As at the date of this report, there are 54,610,000 performance rights on issue which will vest subject to meeting applicable performance criteria. During the year ended 30 June 2022, 98,262,854 performance rights vested. 48,202,854 were converted into fully paid ordinary shares prior to 30 June 2022 with 50,060,000 converting to fully paid ordinary shares on 11 July 2022. 7,908,551 performance rights issued to Chilean employees lapsed unvested on 31 January 2022. Financial Position The Group had a total issued capital of $48,945,881 (2021: $37,156,675) at the end of the reporting period. During the financial year, the Group had a net increase in contributed equity of $11,789,206 (2021: $22,657,495) net of share issue costs as a result of capital raisings during the year. As at 30 June 2022, the total assets for the Group are $31,106,942 (2021: $29,858,632) and total liabilities (being trade and other payables, lease liabilities and provisions) amount to $987,238 (2021: $1,873,701). The Directors believe the Group is in a strong financial position to pursue the current operations. Significant changes in the state of affairs There were no significant changes in the state of affairs of the Group during the financial year. Matters subsequent to the end of the financial year On 4 July 2022, the Company announced an update to the surface sampling and mapping programs at the Company’s El Zorro Gold Project. On 8 July 2022, the Company announced the commencement of a drilling program at the Ternera Gold Deposit, El Zorro Gold Project. On 18 July 2022, the Company announced a notice of meeting for 17 August 2022, to seek ratification for recent share and option issues. On 23 August 2022, the Company entered into an At-the-Market Subscription Agreement (ATM) with Acuity Ca