ASTRON LIMITED — Annual Report 2016

Aug 31, 2016

Astron Corporation Limited

ARBN 154 924 553 Incorporated in Hong Kong, company number 1687414

Preliminary Final Report - Unaudited Year ended 30 June 2016

Contents

• Corporate Directory

• Appendix 4E

• Consolidated Financial Statements

CORPORATE DIRECTORY

Directors

Mr Gerard King (Chairman) Mr Alexander Brown (Managing Director) Mdm Kang Rong (Executive Director)

Company Secretary and Registered Office

McCabe Secretarial Service Limited 16[th] Floor, Wing-On-Centre 111 Connaught Road Central, Hong Kong

Australian Corporate Offices

73 Main Street, Minyip, VIC 3392 Telephone: 61 3 5385 7088 Fax: 61 3 5385 7050

China Business Office

c/- Yingkou Astron Mineral Resources Co Ltd Level 18, Building B, Fortune Plaza 53 Beizhan Road, Shenhe District, Shenyang Liaoning Province, China 110016 Telephone: 86 24 3128 6222 Fax: 86 24 3128 6222

Bankers

Commonwealth Bank of Australia 48 Martin Place Sydney NSW 2000, Australia

Share Registrar

Computershare Investor Services Limited Level 3, 60 Carrington Street Sydney NSW 2001, Australia

Computershare Hong Kong Investor Services Limited

Hopewell Centre, 46[th] floor 183 Queen’s Road East Wan Chai, Hong Kong

Auditors

Grant Thornton Audit Pty Limited Level 17, 383 Kent Street Sydney NSW 2000, Australia

Grant Thornton Hong Kong Limited Level 12, 28 Hennessy Road Wan Chai, Hong Kong

Internet Address

www.astronlimited.com

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Summary of results and commentary

For the Year Ended 30 June 2016

PRELIMINARY FINAL INFORMATION GIVEN TO THE ASX UNDER LISTING RULE 4.3A Name of entity ASTRON CORPORATION LIMITED ARBN 154 924 553 Reporting period Previous corresponding period 30 June 2016 30 June 2015 The information contained in this report should be read in conjunction with the most recent annual financial report. CONTENTS Page Results for announcement to the market 4 Commentary on results 5 Consolidated Statement of Profit or Loss and Other Comprehensive Income 7 Consolidated Statement of Financial Position 9 Consolidated Statement of Changes in Equity 10 Consolidated Statement of Cash Flows 12 Additional information 13

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Summary of results and commentary

For the Year Ended 30 June 2016

RESULTS FOR ANNOUNCEMENT TO THE MARKET

OPERATIONAL HIGHLIGHTS

 Two-stage infill drilling at the Donald and Jackson deposits in 2013 and 2015 substantially increased the Donald Mineral Sands project’s total Measured and Indicated Mineral Resource estimates - the sum of in situ HM tonnes in these two categories increased from 52Mt in the 2011 Mineral Resource estimate to 115Mt in this Mineral Resource estimate (both at 1% HM cut-off) (refer ASX release 7/4/16)

• Continuing optimisation of the Donald Project in terms of optimising mining method, technical process improvement and utilising Chinese equipment to achieve much improved CAPEX and OPEX

• Significant progress taken towards the completion of updated feasibility of the Donald project

• Further work undertaken in Senegal in relation to community acceptance and the application for a mining licence for the Niafarang project, with the public enquiry meetings conducted and Astron being advised that in principle this milestone will be achieved.

• The Research & development program over 2015 resulted in a $595,983 in tax refund brought to account in the current year, the 2016 R&D tax refund is expected to be at least consistent with 2015

• Receipts from the proceeds from the sale of land in China continue

		FINANCIAL HIGHLIGHTS
	Net tangible asset value per share	Down 22.9%		to 29.9 cps
	Revenue from continuing operations	Down (60.3%)		to $1,106,413
	Cash (outflow) from operating activities	Down $1,223,840		to ($2,518,039)
	Loss before tax from continuing operations attributable to
	members	Up $1,169,940		to ($5,004,179)
	Profit after tax attributable to members	Down $12,397,314		to ($4,408,196)
	Total comprehensive income for the year	Down	$22,339,556	to ($6,701,448)

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Summary of results and commentary

For the Year Ended 30 June 2016

COMMENTARY ON RESULTS

Overview

Astron Corporation Limited (Astron HK) is the group’s holding company. Astron HK controls 100% of Astron Limited. Astron Limited in turn controls three wholly owned operating subsidiaries: Donald Mineral Sands Pty Limited (DMS), Yingkou Mineral Resources Company Limited (Resources) and Astron Titanium Yingkou Company Limited (Titanium). Donald holds the Donald mineral sands mining project (Donald Project). Resources and Titanium are Astron’s Chinese operating companies.

Financials

Statement of profit or loss and other comprehensive income

• Total revenue comprising sales, interest received and other income decreased over the prior year. This is due to the sale of Chinese land brought to account in the prior year, reduced interest income from cash on deposit and limited trading in Chinese markets.

• Administration expenditure decreased by $1,622,852 (2015 reduction: $1,332,154). This decrease is due to ongoing expenditure rationalisation.

• Accrued costs associated with Gambia litigation comprise legal fees and associated advisors’ costs (relating to the application for annulment of the award made in favour of Astron that is being pursued by The Gambia).

Statement of financial position

• Available for sale financial assets comprise shares in South American Iron & Steel, Altona Mining, Zambezi Resources and Greenpower Energy. The combined market value of these investments has decreased by $352,614 from 30 June 2015 however this was offset by proceeds from the sale of Altona Mining shares totalling $223,817.

• The increase in intangible assets arises from development expenditure capitalised in respect of the Donald and Senegal Projects.

• Land use rights comprise 50 year land use leases. These leases are capitalised and amortised over the 50 year period.

• The movement in the net asset value from 38.8 cps at 30 June 2015 to 29.9 cps at 30 June 2016 primarily results from the increase in capitalised expenditure into the Donald and Senegal projects.

Operations review

Donald

The development of the Donald project (“DMS”) continued during the period under audit. Progress was made in the following areas:

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Summary of results and commentary

For the Year Ended 30 June 2016

Feasibility study

• DMS has completed the technical aspects of the optimisation of the feasibility study as previously announced and work continues on the capex and opex aspects of the optimisation. Initial indications are that improvements from the updated technical aspects and the use of Chinese equipment will noticeably reduce capex. An updated feasibility study is anticipated to be completed and announced in the 4th quarter of calendar year 2016.

Water

• DMS had assessed that it had a quantity of carryover water surplus to its anticipated requirements. As such DMS traded 5 gigalitres (5,000 megalitres) of water to the Victorian Environmental Water Holder to help protect habitat, water quality and animals in Wimmera and Glenelg waterways and the western rivers.

• DMS was able to contribute to this important environmental cause (at well below DMS's cost) having considered possible impacts of foreseeable future water allocations and DMS's future project commencement needs.

Geology and mining

• Additional 2015 drilling and sampling was undertaken on the Donald and Jackson mineral sands deposits and a Mineral Resource update for the Donald Mineral Sands Project was announced on 7 April 2016.

• Metallurgical and mining optimisation is ongoing.

• The work plan is progressing towards submission, anticipated to be in the 4th quarter of calendar year 2016.

Land

• No further land was purchased during the year.

Funding

• The company continues to consider funding and optimisation options on the basis of its feasibility study while continuing to work towards satisfaction of conditions precedent as per the funding agreement with the China Machinery Engineering Corporation (CMEC) which sets out the parties’ intentions and the process for agreeing on an EPC contract for supply and installation of equipment for the MUP/WCP for the Donald Mineral Sands project and assistance with funding the Project.

China operations

• Work in China continued to test and develop technology to be applied for downstream advancement of Group minerals.

Senegal

• Work continued on the components required to apply for the mining licence which is subject to Government approval, with the public enquiry meetings conducted and Astron being advised that in principle this milestone will be achieved.

America

• Astron continues to seek mineral sands deposits in USA for processing and sale in China.

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the Year Ended 30 June 2016

		Year Ended	Year Ended
		30 June	30 June
		2016	2015
		$	$
Sales revenue Cost of sales Gross (loss)/profit Interest income Other income Distribution expenses Marketing expenses Occupancy expenses Administrative expenses Write (down)/back of stock Impairment of capital works in progress Bad debts provision write back/(expense) Costs associated with Gambian litigation Finance costs Other expenses (Loss)/Profit before income tax expense Income tax benefit Net (loss)/profit for the year Other comprehensive income Items that may be reclassified subsequently to profit and loss (Decrease)/ increase in fair value of available-for-sale financial assets (Decrease)/Increase in Foreign currency translation differences Other comprehensive income for the year, net of tax Total comprehensive income for the year (Loss)/Profit for the year attributable to: Owners of Astron Corporation Limited Total comprehensive income for the year attributable to: Owners of Astron Corporation Limited		467,999 1,984,024 (434,218)(2,048,434)
		33,781 (64,410) 56,929 146,645 581,48511,738,883 (9,085)(42,996) (10,145)(17,624) (9,351)(169,708) (4,463,156)(6,086,008) (171,077) 392,139 -(1,296,742) -613,887 (946,786) (264,460) (10,766) (28,224) (56,008)(14,377)
		(5,004,179) 4,907,005 595,9833,082,113
		(4,408,196)7,989,118
		(151,973)355,706 (2,141,279)7,293,284
		(2,293,252)7,648,990
		(6,701,448) 15,638,108
		(4,408,196)7,989,118 (6,701,448) 15,638,108

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the Year Ended 30 June 2016

	Year Ended	Year Ended
	30 June	30 June
	2016	2015
1. EARNINGS/(LOSS) PER SHARE For profit/(loss) profit for the year
Basic (loss)/profit earnings per share (cents per share)	(3.60) 6.52
2. COMPARISON OF HALF-YEAR RESULTS Consolidated (loss) after tax attributable to owners reported for the first half year Consolidated (loss)/profit after tax attributable to owners reported for the second half year Total consolidated profit/(loss) after tax for the year	(2,018,915) (398,545) (2,389,281) 8,387,663
	(4,408,196) 7,989,118

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Consolidated Statement of Financial Position

Consolidated Statement of Financial Position	Consolidated Statement of Financial Position
As at 30 June 2016
	As at	As at
30 June 2016 $		30 June 2015
		$
ASSETS Current assets Cash and cash equivalents 5,104,594 Term deposits greater than 90-days 60,685 Trade and other receivables 14,603,759 Inventories 730,564 Available-for-sale financial assets 540,237 Current taxassets -		5,796,027 60,325 17,417,179 797,298 892,851 1,186,928
Total current assets 21,039,839		26,150,608
Non-current assets Trade and other receivables - Property, plant and equipment 21,046,191 Intangible assets 69,118,158 Land userights 3,255,981		3,924,922 22,363,317 64,926,815 3,525,124
Total non-current assets 93,420,330		94,740,178
TOTAL ASSETS 114,460,169		120,890,786
LIABILITIES Current liabilities Borrowings - Trade and other payables 3,548,955 Provisions 67,783		1,000,000 2,121,187 77,838
Total current liabilities 3,616,738		3,199,025
Non-current liabilities Deferred tax liabilities 5,079,479 Long-termprovisions 40,000		5,226,361 40,000
Total non-current liabilities 5,119,479		5,266,361
TOTAL LIABILITIES 8,736,217		8,465,386
NET ASSETS 105,723,952		112,425,400
EQUITY Contributed equity 1,605,048 Reserves 11,061,760 Retained earnings 93,057,144 TOTAL EQUITY 105,723,952		1,605,048 13,355,012 97,465,340
		112,425,400

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Consolidated Statement of Changes in Equity

For the Year Ended 30 June 2016

			Financial	Foreign
			Assets	Currency
	Issued	Retained	Available For	Translation
	Capital	Earnings	Sale Reserve	Reserve	Total Equity
Year Ended 30 June 2016	$	$	$	$	$
Equity as at 1 July 2015	1,605,048	97,465,340	861,305	12,493,707	112,425,400
(Loss) for the year	-	(4,408,196)	-	-	(4,408,196)
Other comprehensive income
Decrease in fair value of
available-for-sale financial
assets	-	-	(151,973)	-	(151,973)
Exchange differences on
translationof foreignoperations	-	-	-	(2,141,279)	(2,141,279)
Total comprehensive profit
for theyear	-	(4,408,196)	(151,973)	(2,141,279)	(6,701,448)
Transactions with owners in
their capacity as owners
Returnofcapital	-	-	-	-	-
Total of transactions with
owners in their capacity as
owners	-	-	-	-	-
Equity as at 30 June 2016	1,605,048	93,057,144	709,332	10,352,428	105,723,952

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Consolidated Statement of Changes in Equity

For the Year Ended 30 June 2016

Issued Capital Retained Earnings	Financial Assets Available For Sale Reserve	Foreign Currency Translation Reserve Total Equity $ $ 5,200,423 96,787,292 - 7,989,118 - 355,706 7,293,284 7,293,284
Year Ended 30 June 2015 $ $	$
Equity as at 1 July 2014 1,605,048 89,476,222	505,599
Profit for the year - 7,989,118 Other comprehensive income Increase in fair value of available-for-sale financial assets - - Exchange differences on translation of foreign operations - -	- 355,706 -
Total comprehensive profit for theyear - 7,989,118	355,706	7,293,284 15,638,108
Transactions with owners in their capacity as owners Returnofcapital - -	-	- -
Total of transactions with owners in their capacity as owners - -	-	- -
Equity as at 30 June 2015 1,605,048 97,465,340	861,305	12,493,707 112,425,400

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Consolidated Statement of Cash Flows

For the Year Ended 30 June 2016

	Year Ended	Year Ended
	30 June	30 June
	2016	2015
	$	$
Cash flows from operating activities: Receipts from customers 847,259 2,548,821 Payments to suppliers and employees (4,506,639) (8,024,085) Interest received 58,125 445,184 Interest paid (10,766)(28,064) Dividend received - 167,276 Income taxesreceived/(paid) 1,093,9831,148,989
Net cash(outflow) from operating activities (2,518,039) (3,741,879)
Cash flows from investing activities: Receipts from in short term deposits (360) 7,159,947 Receipts from disposal of investments 223,817 - Receipts from disposal of land receivable 7,033,747 - Acquisition/disposal of property, plant and equipment (151,499) (17,506) Return of capital from other financial assets - 669,104 Construction in works in progress - (27,847) Capitalised exploration, evaluationexpenditure and development costs **(3,828,923) ** (4,013,836)
Net cash inflow from investing activities 3,276,782 3,769,862
Cash flows from financing activities: Borrowings (1,000,000) 1,000,000
Net cash(outflow)/inflow from financing activities (1,000,000) 1,000,000
Net (decrease)/ increase incash held (241,257) 1,027,983
Cash and cash equivalents at beginning of the year 5,796,027 2,905,195 Net foreign exchange differences (450,176) 1,862,849
Cash and cash equivalents at end of theyear 5,104,594 5,796,027

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

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Astron Corporation Limited and its Subsidiaries

ARBN 154 924 553

Additional Information

For the Year Ended 30 June 2016

1. DETAILS OF CONTROLLED ENTITIES

• During the financial year ended 30 June 2016, Carnegie Minerals (Gambia), Inc was incorporated (in Delaware USA) as a wholly-owned subsidiary of Astron Limited.

2. DETAILS OF ASSOCIATES AND JOINT VENTURE ENTITIES

• The Group has no associates or joint venture entities.

3. DIVIDENDS / RETURN OF CAPITAL

• No dividends were paid or proposed for the years ended 30 June 2016 and 30 June 2015. There is no Dividend Reinvestment Plan in operation.

4. ACCOUNTING STANDARDS

• Australian Accounting Standards and International Financial Reporting Standards have been used in preparing the information contained in this Appendix 4E.

5. SIGNIFICANT ACCOUNTING POLICIES

• Accounting policies, estimation methods and measurement bases used in this Appendix 4E are the same as those used in the last annual report and the last half-year report.

6. CONTINGENCIES

The Group contingencies are broadly in line with those disclosed in the last annual report.

7. OTHER INFORMATION REGARDING THE PRELIMINARY REPORT

• The information contained in this Appendix 4E is based on accounts that have not yet been audited.

8. COMPARATIVE INFORMATION

• The comparative financial information has been presented on a consistent basis with the prior year’s audited financial Statements.

9. TRADE AND OTHER RECEIVABLES

At 30 June 2015 the Group reported the disposal of leasehold land in China, there is $12,558,176 (2015: $20,356,248) AUD outstanding and receivable at year end under the terms of the sale contract. There is no other significant information requiring disclosure in the preliminary report.

10. OTHER SIGNIFICANT INFORMATION

There is no other significant information requiring disclosure in the preliminary report.

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