1. General information and material accounting policies

Chilwa Minerals Limited is a for-profit company limited by shares, incorporated and domiciled in Australia. Its ordinary shares are listed on the Australian Securities Exchange (ASX: CHW). The Company completed its US initial public offering on October 2, 2026, and its American Depositary Shares have traded on the Nasdaq Capital Market since October 1, 2026. Its registered office and principal place of business is Level 28, 140 St George’s Terrace, Perth, Western Australia 6000. The principal activity of the Group during the year was mineral exploration and evaluation at the Chilwa Critical Minerals Project in southern Malawi; the Group has not commenced production and derives no revenue from mining operations.

The material accounting policy information adopted in the preparation of these consolidated financial statements is set out below. These policies have been consistently applied to all years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Chilwa Minerals Limited (the Company) and its subsidiaries (together, the Group).

(a) Basis of preparation

These consolidated financial statements have been prepared in accordance with International Financial Reporting Accounting Standards as issued by the International Accounting Standards Board (IASB).

The financial statements have been prepared on the historical cost basis, except where stated.

Amounts are expressed in Australian dollars, unless otherwise stated, and have been rounded to the nearest dollar.

New and amended standards adopted by the Group

No new or amended IFRS standards or interpretations that became effective for the year ended June 30, 2026 had a material effect on the Group’s financial statements.

New standards and interpretations not yet adopted

IFRS 18 Presentation and Disclosure in Financial Statements is effective for annual reporting periods beginning on or after January 1, 2027 and will apply to the Group from the year ending June 30, 2028. IFRS 18 replaces IAS 1 Presentation of Financial Statements and introduces new requirements for the presentation of the statement of profit or loss, including defined categories and required subtotals, disclosure of management-defined performance measures, and enhanced requirements for the aggregation and disaggregation of information. IFRS 18 will not change the recognition or measurement of any item in the Group’s financial statements and will therefore have no effect on the Group’s reported loss, net assets or cash flows. Management is assessing the presentation and disclosure impacts; from its preliminary assessment, the principal effects are expected to be the classification of the Group’s income and expenses (including interest income and foreign exchange differences) into the new operating, investing and financing categories, and the associated changes to the face of the statement of profit or loss and other comprehensive income and to the notes. The Group does not intend to adopt the standard early. No other standard on issue but not yet effective is expected to have a material impact.

(b) Basis of consolidation

The consolidated financial statements comprise the financial statements of Chilwa Minerals Limited and the entities it controls. Control exists when the Group is exposed to, or has rights to, variable returns from its involvement with an entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is obtained and de-consolidated from the date control ceases. All intercompany balances, transactions and unrealised gains and losses arising within the Group are eliminated in full on consolidation.

(c) Going concern

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

At June 30, 2026 the Group had cash on hand of A$1,072,093 (June 30, 2025: A$687,022) and net current liabilities of A$976,874 (June 30, 2025: A$2,011,061). The Group incurred a loss before income tax for the year ended June 30, 2026 of A$6,881,603 (2025: A$3,363,095) and had a net cash outflow from operating and investing activities of A$11,631,563 (2025: A$10,428,273). The Group has no operating revenue.

The Company completed its initial public offering (IPO) in the United States on October 2, 2026; its American Depositary Shares (ADSs) have been listed on the Nasdaq Capital Market since October 1, 2026. On October 5, 2026 the Company received US$3,143,118 from the IPO, being the gross proceeds of US$3,500,920 less the underwriting discount and the balance of the underwriter’s expenses, and on October 16, 2026 (New York time) the underwriter purchased a further 56,834 ADSs under its over-allotment option for US$317,702 (US$292,286 after the underwriting discount). The letter of financial support provided by Luso Global Mining B.V. on September 30, 2026 ended on completion of the IPO, with no amount drawn.

The directors have prepared a monthly cash flow forecast to October 31, 2027, updated for the completion of the IPO, which indicates that the Group’s cash will fund its budgeted operations in the short term; however, additional capital will be required for the Group to continue with its strategic objectives of advancing exploration of the Chilwa Project in Malawi. No binding commitments for this funding had been received at the date of this report. Under the underwriting agreement for the IPO, the Company may not issue shares before April 2, 2027 without the underwriter’s prior written consent, other than in limited circumstances.

The Group’s dependence on securing this additional funding gives rise to a material uncertainty related to going concern that may cast significant doubt on the Group’s ability to continue as a going concern.

The directors are of the opinion that there are reasonable grounds to believe that the Group will be able to continue as a going concern for the following reasons:

Should the Group be unable to continue as a going concern, it may be required to realise its assets and extinguish its liabilities other than in the normal course of business and at amounts different to those stated in the consolidated financial statements. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Group not continue as a going concern and meet its debts as and when they fall due.

(d) Foreign currency translation

The functional and presentation currency of the Company is Australian dollars. The functional currency of the Malawian subsidiaries is the United States dollar, reflecting the currency in which their costs are predominantly priced and settled and in which the parent funds their activities. On consolidation, the results of foreign operations are translated to Australian dollars at average rates for the period and their financial position at closing rates; share capital and pre-acquisition reserves are translated at historical rates. Exchange differences arising on translation are recognised in other comprehensive income and accumulated in the foreign currency translation reserve. Exchange differences arising on a monetary item that forms part of the Group’s net investment in a foreign operation are recognised in other comprehensive income in the consolidated financial statements and accumulated in the foreign currency translation reserve; they are reclassified from equity to profit or loss on disposal of the net investment. Other foreign currency transactions are translated at the rates prevailing at the transaction dates; monetary items are retranslated at closing rates, with exchange differences recognised in profit or loss.

The Group has assessed the application of IAS 29 Financial Reporting in Hyperinflationary Economies to its Malawian subsidiaries. Their functional currency is the United States dollar, being the currency that most faithfully represents the economic effects of their underlying transactions, and the US dollar is not the currency of a hyperinflationary economy. Hyperinflation accounting therefore does not apply to the Group’s Malawian operations, notwithstanding that cumulative inflation in Malawi exceeds the indicator in that standard; this assessment will be revisited if the underlying facts and circumstances change.

(e) Revenue and other income

Interest income is recognised on an accruals basis using the effective interest method. Laboratory and other income is recognised when the Group satisfies its performance obligations and control of the service has transferred to the customer.

(f) Property, plant and equipment

Items of property, plant and equipment are measured at cost. After initial recognition, plant and equipment is carried at cost less accumulated depreciation and accumulated impairment losses. Depreciation is recognised on a straight-line basis over the estimated useful life of each asset. Depreciation is charged from the date the asset is brought into use, and useful lives and residual values are reviewed at each reporting date.

Property, plant and equipment is assessed for impairment at each reporting date. An asset is impaired when its carrying amount exceeds its recoverable amount, being the higher of fair value less costs of disposal and value in use. Any gain or loss on disposal of an item of plant and equipment is recognised in profit or loss.

(g) Exploration and evaluation expenditure

Exploration and evaluation expenditure encompasses expenditures incurred by the Group in connection with the exploration for and evaluation of mineral resources before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable. For each area of interest, expenditure incurred in the acquisition of rights to explore is capitalised and recognised as an exploration and evaluation asset. Exploration and evaluation costs are carried forward where right of tenure of the area of interest is current and they are expected to be recouped through sale or successful development and exploitation of the area of interest, or where exploration and evaluation activities in the area of interest have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

Exploration and evaluation expenditure is measured at cost at its recognition, and those exploration and evaluation assets acquired in an asset acquisition are recognised at the cost of acquisition and accumulated separately by area of interest. No amortisation is recognised while operations are in the exploration and evaluation phase.

Exploration and evaluation assets are assessed for impairment at the end of each reporting period, and whenever facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount.

The exploration and evaluation asset shall no longer be classified as such when the technical feasibility and commercial viability of extracting a mineral resource are demonstrable or where mineral reserves have been identified. Before reclassification into the mine development asset, exploration and evaluation assets shall be assessed for impairment, and any impairment loss recognised within profit or loss.

(h) Leases

At inception of a contract the Group assesses whether the contract is, or contains, a lease. A right-of-use asset and a corresponding lease liability are recognised at the commencement date, except for short-term leases (12 months or less) and leases of low-value assets, the payments on which are expensed on a straight-line basis. The lease liability is measured at the present value of the outstanding lease payments, discounted using the interest rate implicit in the lease or, where that rate cannot be readily determined, the Group’s incremental borrowing rate; it is subsequently measured at amortised cost using the effective interest method. The right-of-use asset is measured at cost and depreciated on a straight-line basis over the shorter of the lease term and the useful life of the underlying asset — for the Group’s storage facility, over the ten-year lease term.

(i) Employee benefits

Liabilities for wages, salaries and annual leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid. Liabilities for long service leave that are not expected to be settled wholly within 12 months are measured at the present value of expected future payments, having regard to expected future wage levels, experience of employee departures and periods of service. Contributions to defined contribution superannuation and pension plans are expensed as incurred.

(j) Share-based payments

Equity-settled share-based payments are provided to officers, employees, consultants and other advisors. These share-based payments are measured at the fair value of the equity instrument at the grant date.

The fair value of options is determined using the Black-Scholes option pricing model. The Group’s performance rights carry non-market vesting conditions only (note 18).

Equity-settled awards with non-market-based conditions are valued at the grant date using a fair-value measurement that excludes the impact of those conditions, with vesting outcomes assessed separately through expected-vesting estimates. The fair value is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest. At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss over the remaining vesting period, with a corresponding adjustment to the share-based payments reserve.

(k) Financial instruments

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. The Group’s financial assets comprise cash and cash equivalents, the restricted term deposit and receivables other than statutory amounts, all measured at amortised cost. Trade payables, accruals, other payables (other than statutory amounts) and borrowings are measured at amortised cost using the effective interest method. Lease liabilities are measured in accordance with IFRS 16 (note 14). Goods and services tax and other statutory receivables and payables do not arise from contracts and are not financial instruments; they are excluded from the disclosures in note 2. A loss allowance for expected credit losses is recognised on financial assets measured at amortised cost in accordance with IFRS 9.

(l) Income tax

The current income tax for the period is defined as the amount of income taxes payable (recoverable) in respect of the taxable profit (tax loss) for the current accounting period. It also incorporates adjustments to changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered, or liabilities are settled. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose on goodwill or in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax assets to be utilised.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against tax liabilities, and the deferred tax liabilities relate to the same taxable entity and the same taxation authority.

(m) Goods and services tax (GST) and value added tax (VAT)

Revenues, expenses and assets are recognised net of GST and VAT, except where the tax is not recoverable from the taxation authority, in which case it is recognised as part of the cost of acquisition or as part of the expense. Receivables and payables are stated inclusive of GST and VAT. The net amount recoverable from, or payable to, the taxation authority is included as a statutory receivable or payable.

(n) Contributed equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are recognised as a deduction from equity, net of any related income tax benefit. Costs directly attributable to an equity transaction that has not been completed at the reporting date are deferred and recognised as an asset until the transaction completes, at which time they are deducted from equity; they are expensed if the transaction is no longer expected to proceed (notes 9 and 16).

(o) Critical accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts. The key critical accounting judgement is the recoverability of capitalised exploration and evaluation expenditure. The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related licence area itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale.

Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, costs of drilling and production, production rates, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices.

The carrying value of the Group’s projects was reviewed, and no impairment indicators were identified during the 2026 and 2025 financial years in relation to the Group’s tenements.