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ARCHER MATERIALS LIMITED Interim / Quarterly Report 2015

Feb 17, 2015

64478_rns_2015-02-17_a4e1ddf6-961b-4a88-b5bb-f1c8205a4837.pdf

Interim / Quarterly Report

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ARCHER EXPLORATION LIMITED & CONTROLLED ENTITIES ABN 64 123 993 233

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Financial Report Half-year ended 31 December 2014

ARCHER EXPLORATION LIMITED & CONTROLLED ENTITIES ABN: 64 123 993 233

CONTENTS

CONTENTS Page
DIRECTORS’ REPORT 3
AUDITOR’S INDEPENDENCE DECLARATION 6
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 8
STATEMENT OF FINANCIAL POSITION 9
STATEMENT OF CHANGES IN EQUITY 10
STATEMENT OF CASH FLOWS 11
NOTES TO THE FINANCIAL STATEMENTS 12
DIRECTORS’ DECLARATION 15
INDEPENDENT AUDITOR’S REVIEW REPORT 16
CORPORATE DIRECTORY 18

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ARCHER EXPLORATION LIMITED & CONTROLLED ENTITIES ABN: 64 123 993 233

DIRECTORS’ REPORT

Your Directors present the financial report for Archer Exploration Limited and its consolidated entities (“Group”) for the half-year ended 31 December 2014.

Directors

The names of each person who has been a Director during this period and to the date of this report are:

  • Gregory David English

  • Thomas Robin Phillips AM

  • Alice McCleary

  • Gerard Anderson

Company Secretary

  • Damien Connor

Review of Operations

During the half-year ended 31 December 2014 the Group incurred a loss of $329,606 (2013: loss $478,758).

Exploration activities during the six months ended 31 December 2014 focused on exploration of the Group’s Eyre Peninsula Graphite Project which includes the newly acquired EL4662 Waddikee tenement, the Leigh Creek Magnesite deposits and the Spring Creek copper prospect. All projects are located in South Australia.

The following summary lists the operational activities for the half-year ended 31 December 2014:

GRAPHITE

  • Substantial progress was made on studies to support the Campoona Mining Lease Proposal (MLP) planned to be submitted to government around March 2015. As at 31 December 2014 the MLP was estimated at 85% complete with only the final mine plan (including Mine Closure Plan) and tailings design and management remaining to be completed.

  • Archer purchased Waddikee EL4662 from Monax Mining Limited (ASX:MOX) for $300,000. Waddikee is contiguous with and lies to the north of Archer’s graphite interests. The acquisition provided:

  • The Wilclo South graphite deposit with a JORC 2012 Inferred Resource of 6.38 million tonnes grading 8.8% GC (using a 5% GC lower cut-off grade) for over 561,000 tonnes of contained graphite in Resource. The Resource drilling covered just 1.4kms of a ≈ 14 kilometre pronounced linear EM signature.

  • Substantial exploration upside as Waddikee has 7 additional graphite prospects and numerous EM targets not yet drill tested.

  • Large to jumbo flake indicated from petrology at Wilclo, Cut-Snake and Argent.

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ARCHER EXPLORATION LIMITED & CONTROLLED ENTITIES ABN: 64 123 993 233

  • Archer announced Australia’s largest JORC 2012 graphite resource of 8.55Mt @ 9.0 Cg% (based on cut-off grade of 5% Cg) containing 770,800 tonnes of contained graphite.

  • A short scout drilling programme designed to identify those Waddikee graphite prospects capable of delivering large flake graphite commenced late in the period. Results are expected during January/February 2015.

  • Metallurgical process flowsheet designed for Campoona Shaft ores.

  • Chemical cleaning of concentrates achieved purity >98.5% Cg.

  • A composite RC sample (drill hole WG045) from the oxide zone of the Wilclo South graphite deposit produced extra large, large, medium and fine flake graphite at grades of 91-93% Cg. The shape of the recovered flake particles showed a high degree of graphite release from the predominantly quartz gangue, which infers potential for efficient recovery of graphite at relatively coarse grind sizes. Small scale laboratory tests inferred that 42-55% of the graphite is recoverable as flake products. Indicative flake distribution from the oxide profile at Wilclo South is shown in the Table below:

Graphite size
(µm)
Graphite distribution in flake
product (%)
Grade
(% Cg)
Extra large / Jumbo flake +425µm 92.2 5%
Extra large flake
+300µm
91.6 10%
Large flake
+180µm
91.8 29%
Fine & Medium flake +75µm 92.3 56%

Concentrate was recovered through conventional mineral separation processes including grinding in a rod mill, froth flotation, and then sieved into sized fractions before batch beneficiation on a shaking table and Haultain super-panner.

The expectation is that concentrate grades from Wilclo South will improve with further process steps such as light regrinding and re-cleaner stages of flotation and tabling.

  • Research undertaken by the University of Adelaide is part of ongoing collaboration between Archer and the University of Adelaide, School of Chemical Engineering (Prof Dusan Losic Nano Research Group). Archer is sole funding the $200,000 research funding over two years which will confer exclusive rights to license any commercial applications arising from the program.

Graphite samples from the Campoona and Sugarloaf graphite deposits were characterized to determine mineral composition, graphitic carbon concentration and impurities as inputs into optimizing processing conditions for the production of graphene based products.

The research focused on the modification of Sugarloaf graphite and Sugarloaf derived graphene as a mechanism for the capture and slow release of nitrogen, phosphorus and potassium (NPK) and other trace elements to test the materials capability of providing a slow release of nutrients.

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ARCHER EXPLORATION LIMITED & CONTROLLED ENTITIES ABN: 64 123 993 233

Eighteen formulations were prepared using graphene, graphene oxide and expanded graphite. Following pelletizing, release studies will be conducted and monitored over a two-three month period under various leaching conditions. Results will be compared with commercially available products.

  • Archer reached agreement with Samphire Uranium Pty Ltd, a wholly owned subsidiary of Uranium SA Limited, to transfer the title to EL4693 Wildhorse Plain to Pirie Resources Pty Ltd, a wholly owned subsidiary of Archer Exploration Limited. On the 3 February 2015, Archer Exploration Limited issued 250,000 fully paid ordinary shares to UraniumSA Limited, as full consideration payable upon the transfer of title of EL4693 (ASX release 3 February 2015).

MAGNESITE

  • Archer and Foyson Resources Limited entered into a confidential settlement agreement to settle all disputes between them concerning the Leigh Creek Magnesite Project.

  • Ernst & Young completed a strategic review of the Leigh Creek assets.

  • The Leigh Creek Magnesite Project has been offered for sale.

SPRING CREEK

  • Preparations have been made to request access to the historic high grade copper mine (+10% Cu) for the purpose of diamond drill testing. The historic Spring Copper mine occurs on ELA 2014/025 (formerly EL 4249).

Copper mining ceased in 1918 when the mine de-watering pump failed and the mine flooded. The government of the day determined that the operator had 12 months to reactivate the mine or face forfeiture. The mine was handed to SA Water in 1919 and established as the source of water for the town of Wilmington. Water is currently pumped from the mine workings at the Main Shaft.

Archer plans to drill test the copper mineralisation to determine if economic copper exists in the breccia zone. Meetings were held with SA Water regarding access to the mine which is now used to supply water to the township of Wilmington. Further discussions will be held with DEH and SA Water to develop protocols to access and sample the mine workings and to drill two diamond drill holes to test the tenor of remaining oxide copper mineralization.

EVENTS SUBSEQUENT TO REPORTING DATE

  • On the 30 January 2015, $350,102 was received from the Australian Tax Office in respect of the Company’s research and & development tax incentive for the year ended 30 June 2014. A receivable in respect of this amount has been recorded in the statement of financial position for the half year ended 31 December 2014.

  • On the 3 February 2015, Archer Exploration Limited issued 250,000 fully paid ordinary shares to UraniumSA Limited, as full consideration payable upon the transfer of title of EL4693 Wildhorse Plain from Samphire Uranium Pty Ltd (a wholly owned subsidiary of UraniumSA Limited) to Pirie Resources Pty Ltd (a wholly owned subsidiary of Archer Exploration Limited), pursuant to the Wildhorse Plain Agreement dated 12 November 2014. The fair value of the shares issued was $24,500.

There are no further material event subsequent to the half-year ended 31 December 2014.

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ARCHER EXPLORATION LIMITED & CONTROLLED ENTITIES ABN: 64 123 993 233

Auditor’s Declaration

The auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 7 for the half-year ended 31 December 2014.

This report is signed in accordance with a resolution of the Board of Directors.

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Greg English Chairman

Adelaide

Dated this 18[th] day of February 2015

The Archer exploration results reported herein, insofar as they relate to mineralisation, are based on information compiled by Mr. Wade Bollenhagen, Exploration Manager of Archer Exploration Limited. Mr. Bollenhagen is a Member of the Australasian Institute of Mining and Metallurgy who has more than eighteen years experience in the field of activity being reported. Mr Bollenhagen has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity that he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” relating to the reporting of Exploration Results. Mr. Bollenhagen consents to the inclusion in the report of matters based on his information in the form and context in which it appears.

The information in this report that relates to the Campoona Shaft and Central Campoona JORC 2012 Mineral Resource estimation has been prepared by Mr B. Knell who is a Member of the AusIMM and peer reviewed by Dr. C Gee who is also a Member of the AusIMM (CP). Mr Knell is a full time employee of Mining Plus Pty Ltd and Dr. Gee is a full time employee of Mining Plus Pty Ltd., both have more than five years’ experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Knell has consented in writing to the inclusion in this announcement of the Mineral Resource estimation information in the form and context in which it appears. This information was prepared and first disclosed under the JORC Code 2012.

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ARCHER EXPLORATION LIMITED & CONTROLLED ENTITIES ABN: 64 123 993 233

AUDITOR’S INDEPENDENCE DECLARATION

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ARCHER EXPLORATION LIMITED & CONTROLLED ENTITIES ABN: 64 123 993 233

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2014

REVENUES FROM ORDINARY ACTIVITIES
Income
2
EXPENSES FROM ORDINARY ACTIVITIES
Depreciation and amortisation expense
Employee benefits expense
ASX listing and share registry expense
Consulting expense
Other expenses from ordinary activities
LOSS BEFORE INCOME TAX EXPENSE
Income tax benefit
LOSS FOR THE PERIOD
LOSS ATTRIBUTED TO MEMBERS OF THE PARENT ENTITY
Other comprehensive income
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
TOTAL COMPRHENSIVE INCOME ATTRIBUTABLE TO
MEMBERS OF THE PARENT ENTITY
Basic loss per share
Diluted loss per share
CONSOLIDATEDGROUP
31 Dec
31 Dec
2014
2013
$
$
81,363
196,074
(12,199)
(8,820)
(258,672)
(380,296)
(41,713)
(49,034)
(63,373)
(30,000)
(385,114)
(206,682)
(679,708)
(478,758)
350,102
-
(329,606)
(478,758)
(329,606)
(478,758)
-
-
(329,606)
(478,758)
(329,606)
(478,758)
Cents
Cents
(0.4)
(0.6)
(0.4)
(0.6)

The accompanying notes form part of the financial statements.

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ARCHER EXPLORATION LIMITED & CONTROLLED ENTITIES ABN: 64 123 993 233

STATEMENT OF FINANCIAL POSITION – AS AT 31 DECEMBER 2014

NOTES
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Total current assets
NON-CURRENT ASSETS
Property, plant and equipment
Exploration and evaluation expenditure
3
Total non-current assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Short-term provisions
Total current liabilities
NON-CURRENT LIABILITIES
Long-term provisions
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
4
Reserves
Retained earnings
TOTAL EQUITY
CONSOLIDATED GROUP
31 Dec
30 June
2014
2014
$
$
3,045,903
5,565,161
468,982
103,345
3,514,885
5,668,506
1,316,934
1,332,627
11,060,927
9,226,417
12,377,861
10,559,044
15,892,746
16,227,550
324,067
326,615
68,129
180,993
392,196
507,608
79,657
19,337
79,657
19,337
471,853
526,945
15,420,893
15,700,605
15,706,408
15,706,408
235,921
186,027
(521,436)
(191,830)
15,420,893
15,700,605

The accompanying notes form part of the financial statements.

9

ARCHER EXPLORATION LIMITED & CONTROLLED ENTITIES ABN: 64 123 993 233

STATEMENT OF CHANGES IN EQUITY – FOR THE HALF-YEAR ENDED 31 DECEMBER 2014

BALANCE AT 1 JULY 2013
Fair value of performance rights
issued
Shares issued during the period (net
of tax)
Total comprehensive income for the
period
BALANCE AT 31 DECEMBER 2013
BALANCE AT 1 JULY 2014
Fair value of performance rights
issued
Total comprehensive income for the
period
BALANCE AT 31 DECEMBER 2014
Issued
Capital
$
Retained
Earnings
$
Share Based
Payments
Reserve
$
Total
$
15,456,408
101,571
381,701
15,939,680
-
-
123,515
123,515
250,000
-
-
250,000
-
(478,758)
-
(478,758)
15,706,408
(377,187)
505,216
15,834,437
15,456,408
(191,830)
186,027
15,700,605
-
-
49,894
49,894
-
(329,606)
-
(329,606)
15,706,408
(521,436)
235,921
15,420,893

The accompanying notes form part of the financial statements.

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ARCHER EXPLORATION LIMITED & CONTROLLED ENTITIES ABN: 64 123 993 233

STATEMENT OF CASH FLOWS – FOR THE HALF-YEAR ENDED 31 DECEMBER 2014

CASH FLOW FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
Other revenue
NET CASH (USED IN) OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration expenditure
Payment for plant and equipment
Payments for land and buildings
NET CASH (USED IN) INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
NET CASH PROVIDED BY FINANCING ACTIVITIES
Net (decrease) in cash held
Cash at beginning of period
CASH AT 31 DECEMBER 2013
CONSOLIDATEDGROUP
31 Dec
31 Dec
2014
2013
$
$
(772,181)
(657,539)
62,063
157,789
-
37,544
(710,118)
(462,206)
(1,801,640)
(1,101,247)
(7,500)
(485)
-
(16,426)
(1,809,140)
(1,118,158)
-
250,000
-
250,000
(2,519,258)
(1,330,364)
5,565,161
8,555,649
3,045,903
7,225,285

The accompanying notes form part of the financial statements.

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ARCHER EXPLORATION LIMITED & CONTROLLED ENTITIES ABN: 64 123 993 233

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2014

NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

These general purpose interim financial statements for the half-year reporting period ended 31 December 2014 have been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards including AASB 134: Interim Financial Reporting. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards.

This interim financial report is intended to provide users with an update on the latest annual financial statements of Archer Exploration Limited and its controlled entities (the Group). As such, it does not contain information that represents relatively insignificant changes occurring during the half-year within the Group. It is therefore recommended that this financial report be read in conjunction with the annual financial statements of the Group for the year ended 30 June 2014, together with any public announcements made during the half-year.

Significant Accounting Policies

The interim financial statements have been prepared in accordance with the accounting policies adopted in the Group’s last annual financial statements for the year ended 30 June 2014, except for the application of the following standards as of 1 July 2014:

  • AASB 1031: Materiality

  • AASB 2013-9, Conceptual Framework, Materiality and Financial Instruments

  • AASB 2014-2, Amendments to AASB 1053 – Transition to and between Tiers, and related Tier 2 Disclosure Requirements

  • AASB 2014-1, Amendments to Australian Accounting Standards Part A, B and C

These standards make changes to a number of existing Australian Accounting Standards and are not expected to result in a material change to the manner in which the Group’s financial result is determined or upon the extent of disclosures included in future financial reports.

Management has reviewed the new requirements of the above standards and has concluded that there is no effect on the classification or presentation of balances.

NOTE 2 – REVENUE
Interest income
Other income
TOTAL REVENUE
CONSOLIDATED GROUP
6 months to
31 December
2014
$
6 months to
31 December
2013
$
62,063
157,789
19,300
38,285
81,363
196,074

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ARCHER EXPLORATION LIMITED & CONTROLLED ENTITIES ABN: 64 123 993 233

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2014

NOTE 3 – EXPLORATION AND EVALUATIONS
EXPENDITURE
Balance at the beginning of the period
Amounts capitalised during the period
Amounts expensed during the period
Balance at the end of the period
NOTE 4 – ISSUED CAPITAL
31 DECEMBER 2014
(a) issued and paid up capital
Fully paid ordinary shares
(a) Movements in fully paid shares
Balance as at 1 July 2014
Shares issued from vested performance rights
Balance as at 31 December 2014
30 JUNE 2014
(a) issued and paid up capital
Fully paid ordinary shares
(a) Movements in fully paid shares
Balance as at 1 July 2013
Shares issued from the exercise of options
Balance as at 30 June 2014
CONSOLIDATED GROUP
31 December
2014
$
30 June
2014
$
9,226,417
6,421,739
1,834,510
2,889,843
-
(85,165)
11,060,927
9,226,417
Number of
shares
31 December
2014
$
84,207,409
15,706,408
83,612,763
15,456,408
657,646
-
84,207,409
15,706,408
Number of
shares
30 June
2014
$
83,612,763
15,706,408
82,362,763
15,456,408
1,250,000
250,000
83,612,763
15,706,408

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ARCHER EXPLORATION LIMITED & CONTROLLED ENTITIES ABN: 64 123 993 233

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2014

NOTE 5 – SHARE BASED PAYMENTS
Performance Rights
Balance at the beginning of the period
Granted during the period
Vested during the period
lapsed/cancelled during the period
Balance at the end of the period
31 December
2014
30 June
2014
Number of
Performance
Rights
Number of
Performance
Rights
3,410,132
-
-
3,410,132
(657,646)
-
(429,605)
-
2,322,881
3,410,132

The total fair value of for the 3,410,132 rights issued to date is $386,734 and is being expensed over 3 years, commencing on 1 July 2013. An amount of $49,894 has been included in the Statement of Profit or Loss and Other Comprehensive Income under employee benefits expense for the half year ended 31 December 2014 (31 December 2013: $123,515).

NOTE 6 – OPERATING SEGMENTS

The Directors have considered the requirements of AASB 8 - Operating Segments and the internal reports that are reviewed by the chief operating decision maker (the Board) in allocating resources have concluded at this time there are no separately identifiable segments.

NOTE 7 – CONTINGENT LIABILITIES & COMMITMENTS

Since 30 June 2014, the Company paid the outstanding commitment for the purchase of Waddikee EL4662 in July 2014 (ASX release 23 July 2014). There has been no other material change to any contingent liabilities as reported in the 2014 Annual Report.

$390,000 in respect of land acquisition at Campoona has not been paid as at the date of this report. The details and conditions of the purchase are the subject of a Heads of Agreement.

The consolidated entities have minimum expenditure commitments on exploration licenses as per the terms of the exploration licences. If the minimum expenditure on each licence is not met, part of the licence area may be relinquished. There are on-going commitments in relation to the Campoona Graphite project but contracts entered into may be cancelled if circumstances change without the Company incurring financial penalties.

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ARCHER EXPLORATION LIMITED & CONTROLLED ENTITIES ABN: 64 123 993 233

DIRECTORS’ DECLARATION

The Directors of the Company declare that:

  1. The Financial Statements and Notes, as set out on pages 8 to 14 are in accordance with the Corporations Act 2001 , including:

  2. a) complying with Accounting Standard AASB 134 Interim Financial Reporting, and

  3. b) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2014 and of its performance for the half-year ended on that date.

  4. In the Director’s opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

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Greg English Chairman

Adelaide

Dated this 18[th] day of February 2015.

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ARCHER EXPLORATION LIMITED & CONTROLLED ENTITIES ABN: 64 123 993 233

INDEPENDENT AUDITOR’S REVIEW REPORT

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ARCHER EXPLORATION LIMITED & CONTROLLED ENTITIES ABN: 64 123 993 233

INDEPENDENT AUDITOR’S REVIEW REPORT-CONTINUED

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ARCHER EXPLORATION LIMITED & CONTROLLED ENTITIES ABN: 64 123 993 233

CORPORATE DIRECTORY

DIRECTORS

Greg English – Non-Executive Chairman Tom Phillips AM – Non-Executive Director Alice McCleary – Non-Executive Director Gerard Anderson – Managing Director

COMPANY SECRETARY

Damien Connor

REGISTERED OFFICE

Level 1 28 Greenhill Road WAYVILLE SA 5034 Telephone: 08 8272 3288 Fax: 08 8272 3888 Email: [email protected]

SHARE REGISTRY

Computershare Investor Services Pty Ltd Level 5 115 Grenfell Street ADELAIDE SA 5000

AUDITORS

Grant Thornton Audit Pty Ltd Level 1 67 Greenhill Road WAYVILLE SA 5034

SOLICITOR

Piper Alderman Level 16, 70 Franklin Street ADELAIDE SA 5000

BANKERS

National Australia Bank Level 1, 22 King William Street ADELAIDE SA 5000

AUSTRALIAN SECURITIES EXCHANGE

The Company is listed on the Australian Securities Exchange ASX CODE: AXE

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