Theta Gold Mines : 2021 FY

2021 ANNUAL REPORT

Contents

Chairman's Letter

Environmental, Social & Governance (ESG)

ENVIRONMENTAL AND LICENSING

COMMUNITY RELATIONS

EXPLORATION & RESOURCES

FINANCIAL

CORPORATE

OUTLOOK

Mining Rights and Applications for Mining Rights

Directors' Report

Directors' Declaration

Financial Statements

Shareholders Information

Page

3

4 Review of Operations

OVERVIEW

FY 2021 HIGHLIGHTS

TGME UNDERGROUND PROJECT PRE FEASIBILITY STUDY PFS FINANCIAL SUMMARY

CAPITAL COSTS ECONOMIC ANALYSIS OPERATING COSTS ORE RESERVE ENVIRONMENTAL AUTHORISATIONS

20

26 Ore Reserve and Mineral Resource Statement

31

34 Corporate Governance Statement

41

51	Remuneration Report
58	(Audited)

60 Auditor Independence Declaration

62

101 Independent Auditor's Report

107

110 Corporate Directory

Chairman's Letter

Dear Fellow Shareholders

On behalf of the Board of Directors, I am pleased to present the 2021 Annual Report for eta Gold Mines Limited (ASX: TGM | OTC: TGMGF). In the last twelve months, the company has changed direction to underground mining initially to deliver a path to gold production with the open pit mines pushed back in the mine schedule. Underground mining will deliver higher-grade ore to the gold plant, a smaller environmental footprint, access to the larger resource (4.5 Moz of underground mineral resources) and increased support from the local community.

e company has 6.1 Moz of gold resources under management. e new multi mine strategy delineated by the Board set a goal of 160,000 ounces per annum over 5 years, o ering a clear growth pro le in production and share value.

Environment, Social and Governance (ESG) is enhanced by the TGME Underground Project. e project is an extension of three existing underground mines. ere will be only minor new environmental disturbance as infrastructure will be placed on the existing footprint, and higher-grade ore will lead to reducing chemical consumption and processing cost per ounce of gold. e social contract with the local population will be further enhanced by mining underground which is well understood in the area. e region has 150 years of underground mining history.

e market capitalisation of the company sits in the top 150 resource companies listed on the ASX. eta has shown an ability to attract large funds to its share register as the project has progressed. 2Invest AG (controlled by Deutsche Balaton AG from Germany) has supported the company with a debt (via issuance of a series of secured bonds)

and equity package post year end.	is is the company's rst major
investment from a European fund.	ere was a steady re-positioning

of the company from exploration to development as the company looks towards the next major transition to a gold producer, now focussed on high-grade underground mining.

e company has adjusted its ve-year plan which targets 6 underground mine developments, TGME Underground Project (Frankfort, Beta, CDM), Rietfontein, Vaalhoek and Glynn's Lydenburg. e open-pit mines will be pushed back in the mine schedule and will be added post permitting, which is su ering from an elongated process. is 6-mine strategy provides the company with a clear organic growth path for the project with access to over 4.5 Moz of underground resources.

e maiden underground mine schedule showed strong project metrics in the April 2021 Pre-feasibility Study and added further value to shareholders. e key project metrics at US$1570 per ounce gold

price shows an increase in production to a peak of 70,000 oz per year, extending the Life of Mine (LOM) to 7.6 years for stage one, with low costs (all-in-Sustaining-Cost (AISC) US$905 per ounce), Internal Rate of Return (IRR) 82% and EBITDA increased over US$60 million from the open pit project to US$241.2 million; at current gold price environment the start-up project would generate signi cantly more pro ts. ese numbers demonstrates that pro table underground mining is achievable across the entire 620sq km gold eld currently under management.

eta has signi cant advantages over its ASX peers with an ability to deliver low-cost gold ounces (at less than US$12 per ounce discovery cost), ownership of its own gold eld and a pipeline of projects which can take eta to a mid-tier producer. We expect an exciting 2022 as we work towards delivering the stage one TGME Underground Project.

is year, the company achieved a tremendous amount, including a new executive team appointed in South Africa with experienced miners CEO Mitford Mundell and COO Jacques Duo Triou, both ex- Harmony candidates, a maiden underground mine schedule, resources and reserves upgrades, and funding from new investors including a recognisable European fund.

Over the next 12 months, the company will work on completing trail mining at the TGME Underground Project, completing the De nitive feasibility Study for the TGME Underground Project, a resource upgrade with increases in the mine schedule to add more gold ounces for shareholders, and early capital expenditure spends including long lead items orders.

We appreciate the continued support from our shareholders, and we welcome new shareholders to the share register. e company looks forward to continuing to deliver good news and positive updates for shareholders in 2022.

ank you for your continued support.

Charles (Bill) Guy

Chairman

29 October 2021

Annual Report 2021

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1

REVIEW OF OPERATIONS

4 Theta Gold Mines Limited

OVERVIEW

eta Gold Mines Limited controls the Eastern Transvaal Gold Fields, where South Africa's gold mining industry began almost 130 years ago.

e Transvaal Gold System sits geological on the eastern side of Bushveld Complex the largest igneous intrusion on earth (Figure 1), where 40-50% of world's gold production came out of the globally-known Witwatersrand Gold eld.

Controls over	Initiating the
62,000 hectares of	operationalisation
gold mining rights	of its development-
ready 6m oz initial
	resource base

Incorporating only	Rapid production	Low initial	Can be self-	A high growth
6 of more than 40	ramp-up over the	development	funded due to	investment
previously	next ve years to	capital	early net cash	opportunity
developed mines	+160koz/a		generation

eta Gold Mines Limited ("the Company" or " eta Gold") is a gold exploration and development company that holds a range of prospective gold assets in a world-renowned South African gold mining region. e Company's shares are dual listed on the Australian Securities Exchange (ASX: TGM) and the OTC Markets in the United States (OTC: TGMGF) with Depository Trust & Clearing (DTC) Eligibility.

e Company's TGME Underground Project consists of Beta, Frankfort, and the CDM Mines. e TGME Underground Project is located next to the historical gold mining town of Pilgrim's Rest, in the Mpumalanga Province, some 370km northeast of Johannesburg by road or 95km north of Nelspruit (the Provincial Capital City).

e Company is currently focused on the big picture strategy to deliver long term organic growth, with projects focusing on the evaluation and permitting of six mines, targeting 160,000 ounces per annum, with the TGME Underground Project

(Phase 1) incorporating the	rst three mines. In April 2021 eta declared a maiden underground mining reserve of
419,000 oz @ 5.49 g/t Gold.	is rst Maiden Underground Prefeasibility Study and Mining Reserve is based on only 16%

of the 4.5m oz Au underground gold resource and incorporates only three mines out of a total of 43 historical mines across the project area.

Annual Report 2021

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