AVIRA RESOURCES LTD - Interim / Quarterly Report 2015

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MGT RESOURCES LIMITED

- HALF YEAR FINANCIAL REPORT 31 DECEMBER 2014

ACN 131 715 645

MGT R ESOURCES L IMITED – H ALF -YEAR F INANCIAL R EPORT

	PAGE NO.
Directors’ Report	3-5
Auditor’s Independence Declaration	6
Directors’ Declaration	7
Condensed Consolidated Statement of Profit and Loss and Other Comprehensive Income	8
Condensed Consolidated Statement of Financial Position	9
Condensed Consolidated Statement of Changes in Equity	10
Condensed Consolidated Statement of Cash Flows	11
Notes to the Half-Year Financial Statements	12-21
Independent Review Report to the Members of MGT Resources Limited	22

MGT R ESOURCES L IMITED – H ALF -YEAR F INANCIAL R EPORT

Directors’ Report

Your directors submit their report for the half-year ended 31 December 2014.

Directors

The directors of MGT Resources Limited and its controlled entities (the “Group”) in office during the half year, and until the date of this Report are set out below. Directors were in office for this entire period unless otherwise stated.

Name Particulars Jonathan Paul Back Director, appointed 4 September 2008 and appointed as Chairman 1 February 2010 Gary Kuo Director, appointed 7 January 2011 Hai Jun Li Non-Executive Director, appointed 14 April 2009 Robert Vagnoni Non-Executive Director, appointed 1 February 2011

Principal activities

The principal activities of the consolidated entity during the financial year included exploration and evaluation activities.

Operating and Financial Review (a) Review of Operations

The consolidated net loss for the half-year after providing for income tax was $5,421,495 (2013: loss of $1,595,641).This includes an impairment charge of $4,021,297 for exploration assets (See Note 4).

(b) Significant Changes In State Of Affairs

On 19 December 2014, MGT Resources Limited announced that it had entered into an Investments and Implementation Agreement with Auskong International Mining Investment Co., Limited which, subject to shareholder approval on 16 February 2015 and certain terms and conditions, would result in the Company raising up to $4,200,000 as follows:

(a) Auskong International Mining Investment Co., Limited subscribing for 30,000,000 Shares at an issue price of $0.05 per share via a placement, raising $1,500,000.
(b) Auskong International Mining Investment Co., Limited investing $1,500,000 by subscribing for 50,000,000 unsecured convertible notes with a term of 12 months, interest free at an exercise price of $0.03 per note; and
(c) Auskong International Mining Investment Co., Limited being issued 24,000,000 options in the Company with an exercise price of $0.05 per option and a term of 12 months, raising $1,200,000 if exercised.

The Proposed Investments are conditional on a number of conditions precedent which include the following transactions:

(a) off-market transfer of 20,000,000 shares held by Directors to Auskong International Mining Investment Co., Limited for nil consideration;
(b) off-market transfer of 10,000,000 Shares held by Taimetco International Co., Limited to Auskong International Mining Investment Co., Limited for $0.03 per Share, Taimetco providing to MGT Mining Limited a $1.5 million secured loan and Taimetco terminating its off-take agreement with the Company for a $750,000 settlement sum payable.

MGT R ESOURCES L IMITED – H ALF -YEAR F INANCIAL R EPORT

Directors’ Report

On 11 November 2014, a $250,000 unsecured line of credit between MGT Mining Limited, subsidiary of MGT Resources Limited and Jonathan Back was signed. On 19 December 2014, this line of credit was extended to the earlier of 28 February 2015 and when funds are received from Auskong International Mining Investment Co., Limited following shareholder approval for the purposes of the ASX Listing Rules and Corporations Act 2001 (Cth) as detailed above. During the period from execution to the signing of these accounts, the $250,000 line of credit was not drawn down.

On 19 December 2014, MGT Resources Limited signed addendums to the existing Unsecured Convertible Note Deeds with Armstrong Industries HK Limited, Marvel Network Limited and Cloud Adventurer Limited to allow MGT Resources Limited an option of redeeming all or part of the Unsecured Convertible Notes, prior to the Maturity Date.

There has been minimal exploration activity while the above funding arrangements were being finalised. Once shareholder approval has been granted and the Auskong International Mining Investment Co., Limited funds received, the Group will continue to invest further funds in drilling programs. In light of this, planning has begun for a drilling programme at Pyramid to be conducted after the end of the wet season.

(c) Exploration and Evaluation Activities

There has been minimal exploration activity while the above funding arrangements were being finalised. Despite this, work has continued on the development of a new geological model at the Dalcouth prospect as part of a planned resource estimate update.

Planning has begun for a drilling programme at Pyramid to be conducted after the end of the wet season.

Subsequent events

On 30 January 2015 MGT Mining Limited and the Bar Barrum People #3 and Bar Barrum People #4 signed a Native Title Deed of Variation to the original Native Title Agreement signed on 23 September 2011. The following amendments have been agreed to:

A new definition of the term “Commencement of Commercial Mining Activity” has been included after the definition of “Commencement Date”. “Commencement of Commercial Mining Activity” means the date that commercial scale mining activities under a Mining Lease first commence on the Mining Lease Areas, which may be evidenced by, but is not limited to, the processing of minerals of any type, nature or grade allowed for by, and mined from, the Mining Leases. MGT Mining Limited will pay the Native Title parties a sum of $66,228 in settlement of all outstanding claims that the Native Title Parties might have had against MGT Mining Limited in relation to the monetary payments that would otherwise have been payable by MGT Mining Limited to the Native Title Parties had they been invoiced.

From 1 January 2015 until the Commencement of Commercial Mining Activity, MGT Mining Limited will pay the Native Title Parties an amount equivalent to 3% per year of the total of the monetary payments (CPI adjusted) that would otherwise have been payable by MGT Mining Limited to the Native Title Parties in the preceding twelve month period, had they been invoiced and had the Deed of Variation to Ancillary Agreement not been amended.

Upon Commencement of Commercial Mining Activity, MGT Mining Limited will pay the Native Title Parties the full amount of the total of the monetary payments (CPI adjusted) that would otherwise have been payable by MGT Mining Limited to the Native Title Parties had the Deed of Variation to Ancillary Agreement not been amended.

MGT R ESOURCES L IMITED – H ALF -YEAR F INANCIAL R EPORT

Directors’ Report

On 6 February 2015, the following agreements were signed with Taimetco International Co., Limited:

MGT Mining Limited $1,5000,000 Secured Loan Agreement with Taimetco International Co., Limited with a term of 2 years at an interest rate of 6.5% per annum. Interest accrues and is payable on the earlier of the day on which the principal outstanding is paid in full and the termination date.
MGT Mining Limited General Security Deed with Taimetco International Co., Limited over all present and after acquired tin assets, rights, interests and undertakings.
MGT Resources Limited Deed of Termination with Taimetco International Co., Limited for a settlement sum of $750,000.

The secured loan will be available for drawdown, following the approval of shareholders of MGT Resources Limited at the General Meeting on 16 February 2015 for the Auskong International Mining Investment Co., Limited transactions and other conditions precedent being satisfied.

Taimetco International Co., Limited has agreed that MGT Resources Limited pay the settlement sum amount of $750,000 to MGT Mining Limited as an advance under the $1,500,000 secured loan agreement between Taimetco International Co., Limited and MGT Mining Limited.

Following satisfaction or waiver of all conditions precedent, Taimetco International Co., Limited will advance monies of $750,000 to MGT Mining Limited under the $1,500,000 secured loan agreement. Subsequently, MGT Resources Limited will pay the settlement sum of $750,000 to MGT Mining Limited to terminate the off-take agreement between MGT Resources Limited and Taimetco International Co., Limited and the total amount owing by MGT Mining Limited to Taimetco International Co., Limited under the secured loan agreement will be $1,500,000.

Following shareholder approval at a General Meeting on 16 February 2015, the following transactions occurred:

30,000,000 shares at an issue price of $0.05 per share were issued to Auskong International Mining Investment Co., Limited via a placement, raising $1,500,000 on 17 February 2015.
24,000,000 options in MGT Resources Limited with an exercise price of $0.05 per option and a term of 12 months were issued to Auskong International Mining Investment Co., Limited on 17 February 2015.

There has not been any other matter or circumstance apart from the above, occurring subsequent to the end of the financial period that has significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the Group in future financial years.

Auditor’s independence declaration

The auditor’s independence declaration is included on page 6 of the financial report.

This directors’ report has been made and signed in accordance with a resolution of the directors made pursuant to s.306(3) of the Corporations Act 2001.

On behalf of the Director

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Gary Kuo Director Dated: 24 February 2015

DUNCAN DOVICO

Auditors’ Independence Declaration

In relation to our review of the financial report of MGT Resources Limited and its controlled entities for the half-year ended 31 December 2014, to the best of my knowledge and belief, there have been:

(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and
(ii) no contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of MGT Resources Limited and its controlled entities during the halfyear ended 31 December 2014.

DUNCAN DOVICO RISK & ASSURANCE PTY LIMITED

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Paul Dovico Director

Dated in Sydney, this 24 February 2015

DUNCAN DOVICO RISK & ASSURANCE PTY LIMITED

LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060 PO BOX 1994 , NORTH SYDNEY NSW 2059 T: (02) 9922 1166 F: (02) 9922 2044 E: [email protected] ABN: 39 151 805 275 Liability limited by a scheme approved under the Professional Standards Legislation

MGT R ESOURCES L IMITED – H ALF -YEAR F INANCIAL R EPORT

Directors’ Declaration

The directors of MGT Resources Limited and its controlled entities declare that:

(a) The financial statements and notes of MGT Resources Limited and its controlled entities for the half-year ended 31 December 2014 are in accordance with the Corporations Act 2001, including:
(i) 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; and
(ii) complying with Accounting Standards AASB 134 Interim Financial Reporting.
(b) There are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the directors made pursuant to s.303(5) of the Corporations Act 2001 .

On behalf of the Directors

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Gary Kuo Director Sydney Dated: 24 February 2015

MGT R ESOURCES L IMITED – H ALF -YEAR F INANCIAL R EPORT

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For The Half-Year Ended 31 December 2014

Revenues Other Revenue Expenses Other gains and losses Employee benefits expense Depreciation and amortisation expense Interest expense Impairment loss Administration expense Other expense Loss before tax Income tax (expense) benefit Loss after tax Other comprehensive income Available-for-sale financial assets Total comprehensive income for the half-year Loss for the year is attributable to: Owners of the parent Non-controlling interest Total comprehensive income attributable to: Owners of the parent Non-controlling interest Earnings per share (cents per share) Basic EPS for the half-year Diluted EPS for the half-year	Notes		Consolidated Half-year ended 31/12/2014 31/12/2013 $ $ 17,987 70,103 8,712 4,239 (268,344) (655,616) (206,534) (185,205) (401,858) (327,578) (4,021,297) - (161,040) (170,250) (389,121) (331,334) (5,421,495) (1,595,641) - - (5,421,495) (1,595,641) 468 (1,955) (5,421,027) (1,597,596) (4,914,436) (1,503,641) (507,059) (92,000) (5,421,495) (1,595,641) (4,914,017) (1,505,390) (507,010) (92,206) (5,421,027) (1,597,596) (1.71) (0.50) (1.23) (0.32)	Consolidated Half-year ended 31/12/2014 31/12/2013 $ $ 17,987 70,103 8,712 4,239 (268,344) (655,616) (206,534) (185,205) (401,858) (327,578) (4,021,297) - (161,040) (170,250) (389,121) (331,334) (5,421,495) (1,595,641) - - (5,421,495) (1,595,641) 468 (1,955) (5,421,027) (1,597,596) (4,914,436) (1,503,641) (507,059) (92,000) (5,421,495) (1,595,641) (4,914,017) (1,505,390) (507,010) (92,206) (5,421,027) (1,597,596) (1.71) (0.50) (1.23) (0.32)
	5 10 10			70,103 4,239 (655,616) (185,205) (327,578) - (170,250) (331,334)











				(1,595,641) -

				(1,595,641)
				(1,955)


				(1,597,596)
				(1,503,641) (92,000)
				(1,595,641)
				(1,505,390) (92,206)
				(1,597,596)
				(0.50) (0.32)

The above condensed consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

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Condensed Consolidated Statement of Financial Position As at 31 December 2014

ASSETS Current Assets Cash and cash equivalents Trade and other receivables Inventories Total Current Assets Non-current Assets Exploration and evaluation expenditure Other financial asset Plant and equipment Total Non-current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Borrowings Provisions Total Current Liabilities Non-current Liabilities Borrowings Provisions Total Non-current Liabilities TOTAL LIABILITIES NET (LIABILITIES)/ASSETS EQUITY Issued capital Reserves Retained earnings Non-controlling interest TOTAL EQUITY	Notes		Consolidated 31/12/2014 30/6/2014 $ $ 576,414 2,318,454 179,612 140,005 - 38,166 756,026 2,496,625 4,831,253 8,278,021 2,378 1,910 1,931,711 2,136,704 6,765,342 10,416,635 7,521,368 12,913,260 975,906 934,214 1,495,061 1,488,124 1,224 40,839 2,472,191 2,463,177 7,388,474 7,357,499 106,005 116,016 7,494,479 7,473,515 9,966,670 9,936,692 (2,445,302) 2,976,568 12,917,104 12,917,947 418,489 850,921 (15,698,331) (11,216,725) (82,564) 424,425 (2,445,302) 2,976,568	Consolidated 31/12/2014 30/6/2014 $ $ 576,414 2,318,454 179,612 140,005 - 38,166 756,026 2,496,625 4,831,253 8,278,021 2,378 1,910 1,931,711 2,136,704 6,765,342 10,416,635 7,521,368 12,913,260 975,906 934,214 1,495,061 1,488,124 1,224 40,839 2,472,191 2,463,177 7,388,474 7,357,499 106,005 116,016 7,494,479 7,473,515 9,966,670 9,936,692 (2,445,302) 2,976,568 12,917,104 12,917,947 418,489 850,921 (15,698,331) (11,216,725) (82,564) 424,425 (2,445,302) 2,976,568
	8 5 12 12 9			2,318,454 140,005 38,166




				2,496,625
				8,278,021 1,910 2,136,704





				10,416,635
				12,913,260
				934,214 1,488,124 40,839





				2,463,177
				7,357,499 116,016



				7,473,515
				9,936,692

				2,976,568
				12,917,947 850,921 (11,216,725) 424,425





				2,976,568

The above condensed consolidated statement of financial position should be read in conjunction with the accompanying notes

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Condensed Consolidated Statement of Changes in Equity For The Half-Year Ended 31 December 2014

CONSOLIDATED At 1 July 2014 (Loss) for the period Other comprehensive income Share options expired Share options issued to subsidiary in parent expiring Transactions with Owners in their capacity as owners: Contributions of equity, net of transaction costs Transactions with non- controlling interests At 31 December 2014 At 1 July 2013 (Loss) for the period Other comprehensive income Transfer to retained earnings Share based payment transaction Embedded derivative Transactions with Owners in their capacity as owners: Contributions of equity, net of transaction costs Transactions with non-controlling interests At 31 December 2013	Attributable to equity holders of theparent
	Fully paid ordinary shares Retained Earnings Reserves Non- controlling interests Total equity $ $ $ $ $
	12,917,947 (11,216,725) 850,921 424,425 2,976,568 - (4,914,436) - (507,059) (5,421,495) - - 419 49 468 - 432,659 (432,659) - - - 171 (192) 21 - (843) - - - (843) - - - - -
	12,917,104 (15,698,331) 418,489 (82,564) (2,445,302)
	12,919,634 (7,426,907) 1,202,062 332,004 7,026,793 - (1,503,641) - (92,000) (1,595,641) - - (1,749) (206) (1,955) - 711,843 (711,843) - - - - 227,160 - 227,160 - - 189,847 - 189,847 (844) - - - (844) - (468,731) (252) 468,986 3
	12,918,790 (8,687,436) 905,225 708,784 5,845,363

The above condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes

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Condensed Consolidated Statement of Cash Flow

For The Half-Year Ended 31 December 2014

Cash flows from operating activities Payments to suppliers and employees Interest received Other Net cash flows from (used in) operating activities Cash flows from investing activities Payment for property, plant & equipment Payments for exploration costs Net cash flow from (used in) investing activities Cash flows from financing activities Proceeds from borrowings Interest paid Net cash flow from (used in) financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period		Consolidated 31/12/2014 31/12/2013 $ $ (833,415) (1,079,953) 18,097 29,413 9,348 7,490 (805,970) (1,043,050) - (113,093) (576,070) (1,354,596) (576,070) (1,467,689) - 6,000,000 (360,000) (120,000) (360,000) 5,880,000 (1,742,040) 3,369,261 2,318,454 1,104,967 576,414 4,474,228	Consolidated 31/12/2014 31/12/2013 $ $ (833,415) (1,079,953) 18,097 29,413 9,348 7,490 (805,970) (1,043,050) - (113,093) (576,070) (1,354,596) (576,070) (1,467,689) - 6,000,000 (360,000) (120,000) (360,000) 5,880,000 (1,742,040) 3,369,261 2,318,454 1,104,967 576,414 4,474,228
			(1,079,953) 29,413 7,490




			(1,043,050)
			(113,093) (1,354,596)



			(1,467,689)
			6,000,000 (120,000)



			5,880,000
			3,369,261 1,104,967


			4,474,228

The above condensed consolidated statement of cash flow should be read in conjunction with the accompanying notes

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Notes to the Financial Statements

For The Half-Year Ended 31 December 2014

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

(a) Basis of Preparation

This general purpose condensed financial report for the half-year ended 31 December 2014 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001 .Compliance with AASB 134 Interim Financial Reporting ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting.

The half-year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.

It is recommended that the half-year financial report be read in conjunction with the annual report for the year ended 30 June 2014 and considered together with any public announcements made by MGT Resources Limited during the half-year ended 31 December 2014 in accordance with the continuous disclosure obligations of the ASX listing rules.

The same accounting policies and methods of computation have been followed in this interim financial report as were applied in the most recent annual financial statements.

(b) Changes in Accounting Policies

The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current reporting period.

There are no new and revised standards and amendments or Interpretations effective for the current reporting period that are relevant to the Group.

The Group has not elected to early adopt any of the new standards or amendments that are issued but not yet effective.

2. GOING CONCERN

The half-year financial statements are prepared on a going concern basis, which contemplates the continuation of normal business activity and the realisation of assets and liabilities in the normal course of business.

As at 31 December 2014 the consolidated entity incurred a net loss after tax of $5,421,495, cash outflows from operating and investing activities of $1,382,040 and net liabilities of $2,445,302. The subsequent event note details the funding arrangements approved by shareholders on 16 February 2015. Since, the share placement for $1,500,000 was completed on 17 February 2015. The ability of the Group to continue as a going concern and to pay their debts as and when they fall due is dependent on the further receipt of funding as follows:

Receipt of $1,500,000 in relation to the convertible note to Auskong International Mining Investment Co., Limited approved by shareholders on 16 February 2015.
Receipt of $1,200,000 in relation to the exercising of options in MGT Resources Limited issued on 17 February 2015 to Auskong International Mining Investment Co., Limited with an exercise price of $0.05 per option and a term of 12 month.

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Notes to the Financial Statements For The Half-Year Ended 31 December 2014

Having regard to the above, the Directors have a reasonable expectation that the entity will have adequate resources to continue operating for the foreseeable future. For this reason they continue to adopt the going concern basis in preparation of the accounts.

3. DIVIDENDS PAID OR PROPOSED

No dividends have been provided for or paid at the reporting date (30 June 2014: Nil).

4. SIGNIFICANT EVENTS AND TRANSACTIONS

During the period to 31 December 2014 the following significant events and transactions took place:

MGT Resources Limited announced that it had entered into an Investments and Implementation Agreement with Auskong International Mining Investment Co., Limited which, subject to shareholder approval on 16 February 2015 and certain terms and conditions, would result in the Company raising up to $4,200,000. See Directors’ Report ‘Significant Changes In State Of Affairs’ and Subsequent Event Note 6 for further details.
There has been minimal exploration activity while the above funding arrangements were being finalised. Despite this, work has continued on the development of a new geological model at the Dalcouth prospect as part of a planned resource estimate update.
Following an independent valuation of the tin and gold properties, an impairment loss of $4,021,297 was recognised in the profit or loss. See Note 5 Exploration and Evaluation Assets for more details.

5. EXPLORATION AND EVALUATION ASSETS

Balances at the beginning of the period Tenement impairments Expenditure incurred during the period Balances at the end of the period	31/12/2014 $ 8,278,021 (4,021,297) 574,529 4,831,253	30/6/2014 $ 5,845,931 (70,158) 2,502,248
		8,278,021

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The ultimate recoverability of exploration and evaluation expenditure is dependent upon the successful development and exploitation of the area of interest, or alternatively, by its sale.

During October 2014 an independent valuation of the tin and gold properties were carried out by Veronica Webster Pty Ltd as a requirement of the Independent Expert Report produced by Nexia Court Financial Solutions Pty Ltd to report on the fairness and reasonableness of the Auskong International Mining Investment Co., Limited proposed investment set out in the Notice of Meeting to shareholders dated 15 January 2015, details of which are contained within the subsequent event note.

The Mount Garnet Tin project was valued by referring to a modified discounted-cash-flow-rate-ofreturn to obtain a net present value for the mining project. The gold resources and exploration projects were valued by ‘Expected Value’ methods and the ‘Multiples of exploration expenditure’ method.

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Notes to the Financial Statements For The Half-Year Ended 31 December 2014

The preferred value by Veronica Webster Pty Ltd given to the property, plant and equipment, tin and gold properties was $6,850,000. The value falls within level 3 of the fair value hierarchy due to one or more significant inputs being not based on observable market data. The following assumptions were used in preparing the modified discounted cash flow rate of return to obtain a net present value for the tin properties:

Mined grade – 0.55% Sn
Tin price – Potential project economies were examined at a range of tin prices from US$20,000 to US$30,000.
A$/US$ exchange rate of 0.88
Mine Life – 10 years at 250,000 tonnes per annum, assuming ongoing exploration to support future ore supply
Pre-start capital of $7,200,000 primarily to upgrade the plant to 250,000 tonnes per annum and to construct a new tailings dam
Exploration costs of $3,000,000 ahead of commencement of production, thereafter $1,000,000 per annum for the life of the operation
Environmental costs to obtain requisite environmental approvals of $500,000 over 18 months
Mining strip ratio of 4:1
Mining costs of $19.6/tonne of ore mined
Processing cost of $25.4/tonne milled
Smelter return of 82% (includes charge for impurities)
Plant recovery of 74.8%
Tin concentrate grade of 60%
Discount rate of 20%

The review led to the recognition of an impairment loss of $4,021,297 in the statement of profit or loss.

6. SUBSEQUENT EVENTS

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Notes to the Financial Statements For The Half-Year Ended 31 December 2014

On 6 February 2015, the following agreements were signed with Taimetco International Co., Limited:

MGT Mining Limited $1,5000,000 Secured Loan Agreement with Taimetco International Co., Limited with a term of 2 years at an interest rate of 6.5% per annum. Interest accrues and is payable on the earlier of the day on which the principal outstanding is paid in full and the termination date.
MGT Mining Limited General Security Deed with Taimetco International Co., Limited over all present and after acquired tin assets, rights, interests and undertakings.
MGT Resources Limited Deed of Termination with Taimetco International Co., Limited for a settlement sum of $750,000.

Following shareholder approval at a General Meeting on 16 February 2015, the following transactions occurred:

30,000,000 shares at an issue price of $0.05 per share were issued to Auskong International Mining Investment Co., Limited via a placement, raising $1,500,000 on 17 February 2015.
24,000,000 options in MGT Resources Limited with an exercise price of $0.05 per option and a term of 12 months were issued to Auskong International Mining Investment Co., Limited on 7 February 2015.

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Notes to the Financial Statements For The Half-Year Ended 31 December 2014

7. SEGMENT INFORMATION

MGT Resources Limited (the “Group”) operates predominantly in one business segment and one geographical segment being the mining industry in Australia. The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (the chief operating decision makers) in assessing performance and in determining the allocation of resources.

No revenue from this activity was earned in the six months to 31 December 2014 or the prior period.

8. CASH AND CASH EQUIVALENTS

For the purposes of the Condensed Cash Flow Statement, cash and cash equivalents comprise the following at 31 December 2014:

Cash and cash equivalents 9. ISSUED SHARE CAPITAL Issue of ordinary shares during the half-year Share capital as at beginning of period Share capital as at the end of period Balance as at beginning of period Capital raising costs Share capital as at the end of period	31/12/2014	30/6/2014
	$ 576,414 576,414 31/12/2014 No of shares 288,157,040 288,157,040 31/12/2014 $ 13,646,142 (729,038) 12,917,104	$ 2,318,454
		2,318,454
		30/6/2014 No of shares 288,157,040
		288,157,040
		30/6/2014 $ 13,646,142 (728,195)
		12,917,947

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Notes to the Financial Statements

For The Half-Year Ended 31 December 2014

10. EARNINGS PER SHARE

Basis earning per share Diluted earnings per share Basis earning per share The earning and weighted average number of ordinary share used in the calculation of basis earning per share are as follows: Net loss Earning used in the calculation of basic EPS from continuing operations Weighted average number of ordinary shares for the purpose of basic earnings per share Diluted earnings per share The earning and weighted average number of ordinary share used in the calculation of diluted earning per share are as follows: Net loss Interest expense for the current year relating to the liability component of the convertible bonds Earning used in the calculation of diluted EPS from continuing operations Weighted average number of ordinary shares for the purpose of diluted earnings per share	Half-year ended 31/12/2014 Cents per share (1.71) (1.23) $ (4,914,436) No. 288,157,040 $ (4,914,436) 401,858 (4,512,578) No. 367,345,349	Half-year ended 31/12/2013 Cents per share (0.50) (0.32) $ (1,503,641)
		(1,503,641) No. 288,157,040 $ (1,503,641) 327,578
		(1,176,063) No. 340,579,328

MGT R ESOURCES L IMITED – H ALF -YEAR F INANCIAL R EPORT

Notes to the Financial Statements For The Half-Year Ended 31 December 2014

11. RELATED PARTY TRANSACTIONS

The following table provides the total amount of transactions which have been entered into with related parties during the six month period ending 31 December 2014 and 31 December 2013 as well as balances with related parties as of 31 December 2014 and 30 June 2014:

(a) Subsidiaries

(a) Subsidiaries
		Ownership	Ownership
		interest	interest
	Country of	31/12/2014	30/6/2014
Name of subsidiary	incorporation	%	%
MGT Mining Limited	Australia	89.48%	89.48%
Garimperos Pty Limited (i)	Australia	100.00%	100.00%

i) Garimperos Pty Limited is 100% owned by MGT Mining Limited.

(b) Transactions with related parties

(i) During the period to 31 December 2014, Jonathan Back, provided services to MGT Resources Limited in his capacity as Executive Chairman and Managing Director through his company, Ocean Central Limited for a total value of $20,000.
(ii) Li Hai Jun has accrued fees of $6,250 from MGT Resources Limited for his role as NonExecutive Director during the period to 31 December 2014 and has total accrued fees owing of $37,499.
(iii) Robert Vagnoni has accrued fees of $8,750 from MGT Resources Limited for his role as NonExecutive Director during the period to 31 December 2014 and has total accrued fees owing of $8,750.
(iv) During the period to 31 December 2014, Gary Kuo received a salary of $67,200 and superannuation benefits of $5,700.
(v) On 11 November 2014, a $250,000 unsecured line of credit between MGT Mining Limited, subsidiary of MGT Resources Limited and Jonathan Back was signed. On 19 December 2014, this line of credit was extended to the earlier of 28 February 2015 and when funds are received from Auskong International Mining Investment Co., Limited following shareholder approval for the purposes of the ASX Listing Rules and Corporations Act 2001 (Cth) as detailed in the subsequent event note. During the period from original execution on 11 November 2014 to 31 December 2014, the $250,000 line of credit was not drawn down.
(vi) Refer to Note 11 regarding transactions during the period to 31 December 2014, with Armstrong Industries HK Limited, Cloud Adventurer Limited and Marvel Network Limited.

MGT R ESOURCES L IMITED – H ALF -YEAR F INANCIAL R EPORT

Notes to the Financial Statements For The Half-Year Ended 31 December 2014

12. BORROWINGS

12. BORROWINGS
Current Convertible note (ii) Non-current Convertible note (iii) Convertible note (iv) Convertible note (v)	31/12/2014 $ 1,495,061 1,495,061 1,475,342 2,956,566 2,956,566 7,388,474	30/6/2014 $ 1,488,124
		1,488,124
		1,469,393 2,944,053 2,944,053
		7,357,499

(i) The parent entity, MGT Resources Limited issued convertible notes to Armstrong Industries HK Limited on 11 November 2011 with a principal amount of $1,500,000 and a term of 2 years. Interest on the convertible note is payable at the rate of 8% per annum. The convertible notes may be redeemed or converted into 10,000,000 ordinary shares in the parent entity if the share price is 15 cents per share or less at maturity. The convertible note expired on 11 November 2013 and was rolled into a new convertible note (iii) below.
(ii) The parent entity, MGT Resources Limited issued convertible notes to Armstrong Industries HK Limited on 11 May 2012 with a principal amount of $1,500,000 and a term of 3 years. Interest on the convertible note is payable at the rate of 8% per annum. The convertible notes may be redeemed or converted into 7,500,000 ordinary shares in the parent entity if the share price is 20 cents per share or less at maturity.
(iii) The parent entity, MGT Resources Limited issued convertible notes to Armstrong Industries HK Limited on 11 November 2013 with a principal amount of $1,500,000 and a term of 3 years. Interest on the convertible note is payable at the rate of 8% per annum. The convertible notes may be redeemed or converted into 17,142,857 ordinary shares at a conversion price of $0.0875 per share.
(iv) The parent entity, MGT Resources Limited issued convertible notes to Cloud Adventurer Limited on 19 August 2013 with a principal sum of $3,000,000 and a term of 3 years. Interest on the convertible note is payable at the rate of 8% per annum. The convertible notes may be redeemed or converted into 27,272,727 ordinary shares in the parent entity if the share price is 11 cents per share or less at maturity.
(v) The parent entity, MGT Resources Limited issued convertible notes to Marvel Network Limited on 19 August 2013 with a principal sum of $3,000,000 and a term of 3 years. Interest on the convertible note is payable at the rate of 8% per annum. The convertible notes may be redeemed or converted into 27,272,727 ordinary shares in the parent entity if the share price is 11 cents per share or less at maturity.

The convertible notes have been accounted for in accordance with AASB 139: Financial Instruments: Recognition and Measurement.

MGT R ESOURCES L IMITED – H ALF -YEAR F INANCIAL R EPORT

Notes to the Financial Statements

For The Half-Year Ended 31 December 2014

The net proceeds received from the issue of the convertible notes have been split between the financial liability element and an equity component, representing the residual attributable to the option to convert the financial liability into equity of MGT Resources Limited. The following table is a summary of the information for all the convertible notes issued by MGT Resources Limited.

Proceeds of issue Equity component – value of conversion rights Liability component at the date of issue Interest expense* Interest paid Total Rolled over into new note (iii) Current liability Non- current liability	Convertible note (i) Convertible note (ii) Convertible note (iii) Convertible note (iv) Convertible note (v) $ $ $ $ $ 1,500,000 1,500,000 1,500,000 3,000,000 3,000,000 (26,387) (37,969) (37,969) (75,939) (75,939) 1,473,613 1,462,031 1,462,031 2,924,061 2,924,061 266,387 333.030 133,312 272,505 272,505 (240,000) (300,000) (120,000) (240,000) (240,000)	Total $ 10,500,000 (254,203) 10,245,797 1,277,739 (1,140,000)
	1,500,000 1,495,061 1,475,343 2,956,566 2,956,566 (1,500,000) - - - -	10,383,536 (1,500,000)
	- 1,495,061 1,475,343 2,956,566 2,956,566	8,883,536
		1,495,061 7,388,475
		8,883,536

12.1 Fair value measurement of the Group’s borrowings

The initial fair value of the liability portion of the convertible notes was determined using an estimated market interest rate of 9% which was determined to be an estimate of the benchmark rate for a similar organisation. The liability is subsequently recognised on an amortised cost basis until extinguished on conversion or maturity of the convertible notes. The difference between the principle and the present value component was taken to equity as an equity derivative and not subsequently remeasured.

The fair value of current and non-current convertible notes are based on discounted cash flows using the 9% rate described above. Convertible notes are classified as level 3 (If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3) fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.

MGT R ESOURCES L IMITED – H ALF -YEAR F INANCIAL R EPORT

Notes to the Financial Statements

For The Half-Year Ended 31 December 2014

13. FAIR VALUE OF FINANCIAL INSTRUMENTS

The directors have determined the fair value of its available-for-sale equity securities held using quoted prices on an active market. The fair value of available-for-sale equity securities is therefore classified as Level 1 under the accounting standards.

The fair value of convertible notes is classified as Level 3 under the accounting standards due to there being one or more unobservable inputs. Refer to note 12 for more disclosure.

The directors consider that the carrying amounts of current trade and other receivables and payables recognised in the consolidated financial statements approximate their fair values.

DUNCAN DOVICO

Independent Auditor’s Review Report to the members of MGT Resources Limited

Report on the Condensed Half-year Financial Report

We have reviewed the accompanying half-year financial report of MGT Resources Limited ("the company") and its controlled entities, which comprises the statement of financial position as at 31 December 2014 and statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, other selected explanatory notes and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the half-year end or from time to time during the half-year ended 31 December 2014.

Directors’ responsibility for the half-year financial report

The directors of the company are responsible for the preparation and fair presentation of the halfyear financial report in accordance with Australian Accounting Standards and the Corporations Act 2001 . This responsibility includes: establishing and maintaining internal controls relevant to the preparation and fair presentation of the half-year financial report that it is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2014 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of MGT Resources Limited and its controlled entities during the half-year ended 31 December 2014, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

DUNCAN DOVICO RISK & ASSURANCE PTY LIMITED

LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060 PO BOX 1994 , NORTH SYDNEY NSW 2059

T: (02) 9922 1166 F: (02) 9922 2044 E: [email protected] ABN: 39 151 805 275 Liability limited by a scheme approved under the Professional Standards Legislation

DUNCAN DOVICO

Independence

In conducting our review, we have complied with independence requirements of the Corporations Act 2001 .

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of MGT Resources Limited and its controlled entities is not in accordance with the Corporations Act 2001, including :

(i) 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; and
(ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

Material uncertainty regarding continuation as a going concern

Without qualification to the conclusion expressed above, we draw attention to the note 2 to the financial statement which comment that the ability of the company to continue as a going concern is dependent on the ability of the company to raise additional fund. This condition, along with other matters set forth in note 2, indicate the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern and therefore, the company may be unable to realise its assets and discharge its liabilities in the normal course of business, and at the amounts stated in the financial report.

DUNCAN DOVICO RISK & ASSURANCE PTY LIMITED

==> picture [237 x 85] intentionally omitted <==

Paul Dovico Director

Dated in Sydney, this 24 February 2015

DUNCAN DOVICO RISK & ASSURANCE PTY LIMITED

LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060 PO BOX 1994 , NORTH SYDNEY NSW 2059 T: (02) 9922 1166 F: (02) 9922 2044 E: [email protected] ABN: 39 151 805 275 Liability limited by a scheme approved under the Professional Standards Legislation

AI assistant

AVIRA RESOURCES LTD — Interim / Quarterly Report 2015

64473_rns_2015-02-23_cd72db92-0140-4785-b787-d6e15a2c4516.pdf

MGT RESOURCES LIMITED

Table of Contents

Directors’ Report

Directors

Principal activities

Operating and Financial Review (a) Review of Operations

(b) Significant Changes In State Of Affairs

Directors’ Report

(c) Exploration and Evaluation Activities

Subsequent events

Directors’ Report

Auditor’s independence declaration

Auditors’ Independence Declaration

DUNCAN DOVICO RISK & ASSURANCE PTY LIMITED

Directors’ Declaration

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For The Half-Year Ended 31 December 2014

Condensed Consolidated Statement of Financial Position As at 31 December 2014

Condensed Consolidated Statement of Changes in Equity For The Half-Year Ended 31 December 2014

Condensed Consolidated Statement of Cash Flow

For The Half-Year Ended 31 December 2014

Notes to the Financial Statements

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

(a) Basis of Preparation

(b) Changes in Accounting Policies

2. GOING CONCERN

Notes to the Financial Statements For The Half-Year Ended 31 December 2014

3. DIVIDENDS PAID OR PROPOSED

4. SIGNIFICANT EVENTS AND TRANSACTIONS

5. EXPLORATION AND EVALUATION ASSETS

Notes to the Financial Statements For The Half-Year Ended 31 December 2014

6. SUBSEQUENT EVENTS

Notes to the Financial Statements For The Half-Year Ended 31 December 2014

Notes to the Financial Statements For The Half-Year Ended 31 December 2014

7. SEGMENT INFORMATION

8. CASH AND CASH EQUIVALENTS

Notes to the Financial Statements

For The Half-Year Ended 31 December 2014

10. EARNINGS PER SHARE

Notes to the Financial Statements For The Half-Year Ended 31 December 2014

11. RELATED PARTY TRANSACTIONS

(a) Subsidiaries

(b) Transactions with related parties

Notes to the Financial Statements For The Half-Year Ended 31 December 2014

12. BORROWINGS

Notes to the Financial Statements

For The Half-Year Ended 31 December 2014

12.1 Fair value measurement of the Group’s borrowings

Notes to the Financial Statements

13. FAIR VALUE OF FINANCIAL INSTRUMENTS

Independent Auditor’s Review Report to the members of MGT Resources Limited

Report on the Condensed Half-year Financial Report

Directors’ responsibility for the half-year financial report

Auditor’s Responsibility

DUNCAN DOVICO RISK & ASSURANCE PTY LIMITED

Independence

Conclusion

Material uncertainty regarding continuation as a going concern

DUNCAN DOVICO RISK & ASSURANCE PTY LIMITED

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AVIRA RESOURCES LTD Interim / Quarterly Report 2015