ELEMENTOS LIMITED — Interim / Quarterly Report 2018

Mar 4, 2018

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ELEMENTOS LIMITED ABN 49 138 468 756

CONSOLIDATED FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2017

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ELEMENTOS LTD – ABN 49 138 468 756

INTERIM FINANCIAL REPORT 2018

Contents

Cautionary Statements ........................................................................................................................................................ 2 Mineral Resources and Ore Reserves ................................................................................................................................ 3 Corporate Information ......................................................................................................................................................... 4 Directors’ Report .................................................................................................................................................................... 5 Auditor’s Independence Declaration ............................................................................................................................... 7 Consolidated Statement of Comprehensive Income for the Half-Year Ended 31 December 2017..................... 8 Consolidated Statement of Financial Position as at 31 December 2017 ................................................................... 9 Consolidated Statement of Changes in Equity for the Half-Year Ended 31 December 2017 .............................. 10 Consolidated Statement of Cash Flows for the Half-Year Ended 31 December 2017........................................... 11 Notes to the Financial Statements for the Half -Year Ended 31 December 2017 .................................................. 12 Directors’ Declaration ......................................................................................................................................................... 18 Independent Auditor’s Review Report ............................................................................................................................ 19

Cautionary Statements

Forward-looking statements

This document may contain certain forward-looking statements. Such statements are only predictions, based on certain assumptions and involve known and unknown risks, uncertainties and other factors, many of which are beyond the company’s control. Actual events or results may differ materially from the events or results expected or implied in any forward-looking statement.

The inclusion of such statements should not be regarded as a representation, warranty or prediction with respect to the accuracy of the underlying assumptions or that any forward-looking statements will be or are likely to be fulfilled.

Elementos undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this document (subject to securities exchange disclosure requirements).

The information in this document does not take into account the objectives, financial situation or particular needs of any person or organisation. Nothing contained in this document constitutes investment, legal, tax or other advice.

Mineral Resources and Ore Reserves

Elementos confirms that Mineral Resource and Ore Reserve estimates used in this document were estimated, reported and reviewed in accordance with the guidelines of the Australian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code) 2012 edition.

Elementos confirms that it is not aware of any new information or data that materially affects the Mineral Resource or Ore Reserve information included in the following announcements:

• “Cleveland Tailings Ore Reserve” released on the 3 August 2015;

• “Cleveland JORC Resource Significantly Expanded” announced to the ASX on 5 March 2014; and

• “Cleveland Open Pit - High-Grade Mineral Resource Defined” announced on 3 March 2015.

The Company also confirms that all material assumptions and technical parameters underpinning the estimates in the Cleveland Mineral Resources and Reserves continue to apply and have not materially changed. Elementos also confirms the form and context in which the Competent Person’s findings are presented have not been materially modified from the date of announcement.

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ELEMENTOS LTD – ABN 49 138 468 756

INTERIM FINANCIAL REPORT 2018

Mineral Resources and Ore Reserves

Tailings Ore Reserve (at 0% Sn cut-off)	Tailings Ore Reserve (at 0% Sn cut-off)	Tailings Ore Reserve (at 0% Sn cut-off)
Category	Tonnage	Sn Grade	Contained Sn	Cu Grade	Contained Cu
Probable	3.7 Mt	0.29%	11,000t	0.13%	5,000t

Table subject to rounding errors; Sn = tin, Cu = copper

Total Tin-Copper
	Mineral Resource	(at 0.35% Sn cut-off)
Category	Tonnage	Sn Grade	Contained Sn	Cu Grade	Contained Cu
Indicated	5.00 Mt	0.69%	34,500t	0.28%	14,000t
Inferred	2.44 Mt	0.56%	13,700t	0.19%	4,600t

Table subject to rounding errors; Sn = tin, Cu = copper

Open Pit Tin-Copper Mineral Resource (at 0.35% Sn cut-off) NOTE: this Open Pit Tin-Copper Mineral Resource is a sub-set of the Total above	Open Pit Tin-Copper Mineral Resource (at 0.35% Sn cut-off) NOTE: this Open Pit Tin-Copper Mineral Resource is a sub-set of the Total above	Open Pit Tin-Copper Mineral Resource (at 0.35% Sn cut-off) NOTE: this Open Pit Tin-Copper Mineral Resource is a sub-set of the Total above	Open Pit Tin-Copper Mineral Resource (at 0.35% Sn cut-off) NOTE: this Open Pit Tin-Copper Mineral Resource is a sub-set of the Total above	Tin-Copper Mineral Resource noted	Tin-Copper Mineral Resource noted
Category	Tonnage	Sn Grade	Contained Sn	Cu Grade	Contained Cu
Indicated	0.80 Mt	0.81%	6,500t	0.27	2,300t
Inferred	0.01 Mt	0.99%	140t	0.34	50t

Table subject to rounding errors; Sn=tin, Cu=copper

Underground Tungsten Mineral Resource (at 0.20% WO3cut-off)1	Underground Tungsten Mineral Resource (at 0.20% WO3cut-off)1	Underground Tungsten Mineral Resource (at 0.20% WO3cut-off)1
Category	Tonnage	WO3Grade
Inferred	4 Mt	0.30%

Table subject to rounding errors; WO3 = tungsten oxide

1 This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.

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ELEMENTOS LTD – ABN 49 138 468 756

INTERIM FINANCIAL REPORT 2018

Corporate Information

Directors and Company Secretary

Mr Andy Greig (Non-executive Chairman) Mr Christopher Dunks (Executive Director) Mr Corey Nolan (Non-executive Director) Mr Calvin Treacy (Non-executive Director) Mr Duncan Cornish (Company Secretary)

Head Office and Registered Office

Elementos Limited Level 10, 110 Mary Street Brisbane QLD 4000 Tel: +61 7 3221 7770 Fax: +61 7 3221 7773 www.elementos.com.au

Auditors

BDO Audit Pty Ltd Level 10, 12 Creek Street Brisbane QLD 4000 Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au

Share Registry

Boardroom Pty Limited Level 12, 225 George Street Sydney NSW 2000 Tel: 1300 737 760 Fax: 1300 653 459 www.boardroomlimited.com.au

Stock Exchange Listing

Australian Securities Exchange Ltd ASX Code: ELT

Australian Business Number

49 138 468 756

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ELEMENTOS LTD – ABN 49 138 468 756

INTERIM FINANCIAL REPORT 2018

Directors’ Report

Your directors submit the financial report on Elementos Limited (the “Company”) and its controlled entities (the “consolidated entity”) for the half-year ended 31 December 2017.

Directors

The following persons were directors of the Company during or since the end of the financial period:

• Andy Greig

• Christopher Dunks

• Corey Nolan

• Calvin Treacy

Review of Operations

The Group’s operating loss for the half-year, after applicable income tax was $441,323. Exploration and evaluation expenditure during the period totalled $490,216.

At 31 December 2017, the Group’s net assets totalled $6,206,324, which included cash assets of $1,058,185.

During the period, the Company’s principal activity was progressing the Cleveland project approval process.

The Company continues to actively progress the Cleveland tin and tungsten project in Tasmania towards development. The global refined tin supply is predicted to be in deficit by 40,000 tonnes per annum by 2020. The Company’s objective is to lower investment risk and move quickly towards production and cash flow, through a low-capital, staged development strategy, commencing with open cut production, with the lowest possible dilution of shareholders. The Tasmanian government is very supportive and working with the Company to progress the Cleveland Project towards development.

Review of Project

Exploration – Cleveland Project, Tasmania, Australia

The Cleveland tin project is located approximately 80kms to the southwest of Burnie in Tasmania. The project has excellent power, water and transport infrastructure in place. Activities during the reporting period have been focused on accurately defining the boundaries and possible extensions to the previously reported open cut resource which contains 800,000 tonnes at 0.81% tin and 0.27% copper. This exploration activity has included geological mapping, sampling, geophysics and diamond drilling, the first modern exploration activities undertaken at Cleveland since 1986. The Company is now establishing a more comprehensive understanding of the geology and mineralisation at Cleveland.

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Figure 1. Cleveland Project Location

At the time of reporting, fifteen diamond drill holes had been completed. Twelve of the completed drill holes were targeted at assessing the potential for extensions to the existing open-cut resource with three targeted at testing ground magnetic anomalies that were detected during a survey completed in early 2017. The drilling programme is being carried out by Low Impact Diamond Drilling Specialists (LIDDS), a company based in Burnie, Tasmania. The drill core is transferred to a processing facility in Waratah where the core is geologically and geotechnically logged prior to sampling using a diamond saw. The samples are then transported to the ALS laboratories in Burnie for analysis. Analytical results from the first nine drill holes included two significant intersections which have the potential to extend the open-cut mineral resource on two of the main tin-copper lode systems previously defined at Cleveland.

The diamond drilling programme has experienced some delays due to bad weather, which have on occasion made vehicle access to the site and drilling operations unsafe to continue.

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ELEMENTOS LTD – ABN 49 138 468 756

INTERIM FINANCIAL REPORT 2018

Capital Raisings

On 29 June 2017, the Company announced that:

• it had received commitments to complete a private placement of 100,000,000 shares to be issued at 0.60 cents per share (and 100,000,000 attaching options having an exercise price of 0.6 cents per option and expiring on 30 June 2018) to raise a total of $600,000 (before costs) ( Placement ); and

• it would proceed with a non-renounceable rights issue to raise up to $1,423,947 (before costs) on the same conditions as the abovementioned Placement, by issuing up to 237,324,456 shares and 237,324,456 attaching options ( Rights Issue ).

On 30 June 2017, 100,000,000 ordinary shares were issued, pursuant to the Placement, raising $600,000 (before costs).

The Rights Issue was made in accordance with section 713 of the Corporations Act with full details set out in a Prospectus sent to Eligible Shareholders on 6 July 2017. The Rights Issue contained a debt conversion facility.

During the half-year ended 31 December 2017, the following events were completed as part of the Placement and Rights Issue:

• The Rights Issue was fully subscribed (after the entitlement and shortfall offers) resulting in 237,324,642 shares and 237,324,642 unlisted options (exercisable at 0.60 cents per option expiring on 30 June 2018) being issued (during August 2017). 45,371,137 of these shares and options were issued to the Company’s Chairman and largest shareholder, Andy Greig, utilising the debt conversion facility to take up his Rights Issue entitlement ($272,226); and

• 100,000,000 unlisted options (exercisable at 0.60 cents per option expiring on 30 June 2018) were issued (in August 2017) pursuant to the Placement.

Also during August 2017, and also as part of the above Placement and Rights Issue, a further 45,371,137 unlisted options (exercisable at 0.60 cents per option expiring on 30 June 2018) were exercised in to 45,371,137 shares by the Company’s Chairman and largest shareholder, Andy Greig, using debt conversion ($272,227).

Between 30 August 2017 and 31 December 2017, 41,047,535 unlisted options (exercisable at 0.60 cents per option expiring on 30 June 2018) were exercised in to 41,047,535 shares, raising $246,285.

Other

The Company continues to be encouraged by the LME tin price, being US$21,500 per tonne at the time of reporting.

The Company continues to review new business development opportunities as they arise.

Subsequent Events

No material matters or circumstances have arisen since the balance date.

Auditor’s Independence Declaration

The auditor’s independence declaration under section 307C of the Corporations Act 2001 is included in this financial report.

Signed in accordance with a resolution of the Board of Directors.

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Corey Nolan, Director 5 March 2018, Brisbane

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ELEMENTOS LTD - ABN 49 138 468 756

INTERIM FINANCIAL REPORT 2018

Auditor’s Independence Declaration

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Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au

Level 10, 12 Creek St Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia

DECLARATION OF INDEPENDENCE BY D P WRIGHT TO THE DIRECTORS OF ELEMENTOS LIMITED

As lead auditor for the review of Elementos Limited for the half-year ended 31 December 2017, I declare that, to the best of my knowledge and belief, there have been:

1. No contraventions of the auditor independence requirements of the Corporations Act 2001 relation to the review; and

2. No contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Elementos Limited and the entities it controlled during the period.

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D P Wright Director

BDO Audit Pty Ltd

Brisbane, 5 March 2018

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BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.

ELEMENTOS LTD – ABN 49 138 468 756

INTERIM FINANCIAL REPORT 2018

Consolidated Statement of Comprehensive Income for the Half-Year Ended 31 December 2017

Note	31 Dec 2017 31 Dec 2016
	$ $
Revenue 2 Less expenses: Corporate and administrative expenses 2 Write-off of exploration and evaluation expenditure 3 Loss before income tax expense Income tax expense Loss for the period attributable to members of the parent entity Other comprehensive income Items that will be reclassified to profit or loss Income tax relating to components of other comprehensive income Other comprehensive income for the period, net of tax Total comprehensive income attributable to members of the parent entity Basic earnings per share (cents per share) Diluted earnings per share (cents per share)	5,820 2,242 (447,143) (395,950) - (60,926)
	(441,323) (454,634) - -
	(441,323) (454,634) - -
	- -
	(441,323) (454,634)
	(0.04) (0.06) (0.04) (0.06)

The accompanying notes form part of this financial statement.

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ELEMENTOS LTD – ABN 49 138 468 756

INTERIM FINANCIAL REPORT 2018

Consolidated Statement of Financial Position as at 31 December 2017

Note	31 Dec 2017 30 June 2017
	$ $
CURRENT ASSETS Cash and cash equivalents Trade and other receivables Total Current Assets NON-CURRENT ASSETS Exploration and evaluation assets 3 Plant and equipment Other Non-Current assets Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 4 Borrowings 10 Total Current Liabilities NON-CURRENT LIABILITIES Borrowings 10 Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 9 Reserves Accumulated losses TOTAL EQUITY	1,058,185 655,868 9,888 284
	1,068,073 656,152 5,235,716 4,745,500 33,708 1,722 7,000 6,000
	5,276,424 4,753,222
	6,344,497 5,409,374
	103,109 68,175 5,467 545,658
	108,576 613,833 29,597 -
	29,597 -
	138,173 613,833
	6,206,324 4,795,541
	15,243,807 13,391,701 133,200 133,200 (9,170,683) (8,729,360)
	6,206,324 4,795,541

The accompanying notes form part of this financial statement.

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ELEMENTOS LTD – ABN 49 138 468 756

INTERIM FINANCIAL REPORT 2018

Consolidated Statement of Changes in Equity for the Half-Year Ended 31 December 2017

	Issued Capital Accumulated Losses Share- Based Payments Reserve Foreign Currency Translation Reserve Total
	$ $ $ $ $
Balance at 1 July 2016 Loss for the period Total comprehensive income Equity issued during the period - Shares issued due to capital raising Share issue transaction costs Transfer of expired options Balance at 31 December 2016 Balance at 1 July 2017 Loss for the period Total comprehensive income Equity issued during the period - Due to capital raising - Following option exercises Share issue transaction costs Transfer of expired options Balance at 31 December 2017	12,407,382 (8,087,967) 261,300 - 4,580,715 - (454,634) - - (454,634)
	- (454,634) - - (454,634) 450,000 - - - 450,000 (14,268) - - - (14,268) - 128,100 (128,100) - -
	12,843,114 (8,414,501) 133,200 - 4,561,813
	13,391,701 (8,729,360) 133,200 - 4,795,541 - (441,323) - - (441,323)
	- (441,323) - - (441,323) 1,423,948 - - - 1,423,948 518,512 518,512 (90,354) - - - (90,354) - - - - -
	15,243,807 (9,170,683) 133,200 - 6,206,324

The accompanying notes form part of this financial statement.

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ELEMENTOS LTD – ABN 49 138 468 756

INTERIM FINANCIAL REPORT 2018

Consolidated Statement of Cash Flows for the Half-Year Ended 31 December 2017

	31 Dec 2017 31 Dec 2016
	$ $
CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Interest received GST refunds Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payments for exploration and evaluation assets Cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Costs associated with share issue Repayment of loan Net cash provided by/(used in) financing activities Net increase/(decrease) in cash held Cash at beginning of period Cash at end of period	(518,906) (424,848) 5,820 2,242 77,481 43,681
	(435,605) (378,925)
	(435,380) (181,787)
	(435,380) (181,787)
	1,404,646 450,000 (126,355) (14,268) (4,989) -
	1,273,302 435,732
	402,317 (124,980) 655,868 467,268
	1,058,185 342,288

The accompanying notes form part of this financial statement.

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ELEMENTOS LTD – ABN 49 138 468 756

INTERIM FINANCIAL REPORT 2018

Notes to the Financial Statements for the Half -Year Ended 31 December 2017

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

These general purpose financial statements for the interim half-year reporting period ended 31 December 2017 have been prepared in accordance with the Corporations Act 2001 and Australian Accounting Standard AASB 134 "Interim Financial Reporting". The historical cost basis has been used.

This interim financial report does not include all notes of the type normally included in the Annual Financial Report. Accordingly, this report is to be read in conjunction with the Annual Report of Elementos Limited (the "Company") and its controlled entities (together the “Group”) as at 30 June 2017, together with public announcements made by the Company during the interim reporting period in accordance with its continuous disclosure obligations.

The accounting policies and methods of computation adopted are consistent with those of the previous financial period as disclosed in the 30 June 2017 Annual Report. There has been no new or revised Australian Accounting Standards issued by the AASB that materially affected the Company in the current period.

Going Concern

The financial statements have been prepared on a going concern basis which contemplates the continuity of normal business activities and the realisation of assets and discharge of liabilities in the ordinary course of business. The ability of the Group to maintain continuity of normal business activities and to pay its debts as and when they fall due is dependent on the ability of the Group to successfully raise additional capital and/or successful exploration and subsequent exploitation of areas of interest through sale or development. The Group has not generated any revenues from operations. During the half-year ended 31 December 2017, the Group raised $1,404,646 of cash through equity raisings and option exercises (before costs and after debt reduction).

Should the Group not be able to raise further capital, dispose of assets if required or manage its expenditure so as to conserve cash over the coming 12 months, there exists a material uncertainty regarding the Group’s ability to continue as a going concern and realise its assets and settle its liabilities and commitments in the normal course of business and at the amounts stated in the financial statements. The financial report does not include any adjustments relating to the recoverability or classification of recorded asset amounts, or to the amounts or classification of liabilities which might be necessary should the Group not be able to continue as a going concern.

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ELEMENTOS LTD – ABN 49 138 468 756

INTERIM FINANCIAL REPORT 2018

NOTE 2: RESULTS FOR THE PERIOD

	31 Dec 2017 31 Dec 2016
	$ $
The following revenue and expense items are relevant in explaining the financial performance for the interim period: Interest received Depreciation ASX, ASIC, share registry expenses Business development and investor relations costs Legal fees Insurances Audit and external accounting/advice fees Interest (related party loan) Employee benefits expense comprises: Salaries and wages Consulting fees Contributions to defined contribution plans Annual leave expensed NOTE 3: EXPLORATION AND EVALUATION ASSETS	5,820 2,242 (6,085) (179) (52,871) (28,742) (120,325) (84,050) (2,801) (4,373) (30,682) (29,696) (50,738) (73,240) - (15,000) (58,594) (22,982) (91,698) (111,615) (13,862) (2,436) 6,156 -
	31 Dec 2017 30 June 2017
	$ $
Exploration and evaluation expenditure carried forward in respect of the areas of interest are: Exploration and evaluation expenditure Movement in exploration and evaluation assets: Opening balance – at cost (1 July) Capitalised exploration expenditure Exploration and evaluation assets disposed of Exploration and evaluation assets written off Security deposit refunds Total exploration and evaluation expenditure Less research and development refunds received Carrying amount at the end of period	5,235,716 4,745,500 4,745,500 4,681,891 490,216 336,373 - - - (60,926) - -
	5,235,716 4,957,338 - (211,838)
	5,235,716 4,745,500

Recoverability of the carrying amount of exploration assets is dependent on the successful development and commercial exploitation of projects, or alternatively through the sale of the areas of interest.

During the year ended 30 June 2017, the Board resolved to relinquish the three remaining Selwyn tenements, resulting on a write-off of $60,926 of capitalised exploration expenditure.

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ELEMENTOS LTD – ABN 49 138 468 756

INTERIM FINANCIAL REPORT 2018

NOTE 4: TRADE AND OTHER PAYABLES

	31 Dec 2017 30 June 2017
	$ $
Current: Trade payables and accrued expenses Employee provisions Total payables (unsecured)	95,383 60,485 7,726 7,690
	103,109 68,175

NOTE 5: COMMITMENTS

Exploration Commitments

The Group has certain obligations to expend minimum amounts on exploration in tenement areas. These obligations may be varied from time to time and are expected to be fulfilled in the normal course of operations of the Group.

The following commitments exist at reporting date but have not been brought to account. If the relevant option to acquire a mineral tenement is relinquished the expenditure commitment also ceases. The Group has the option to negotiate new terms or relinquish the tenements and also to meet expenditure requirements by joint venture or farm-in arrangements.

	31 Dec 2017 30 June 2017
	$ $
Not later than 1 year Later than 1 year but not later than 5 years Total commitment	1,000,000 1,000,000 - -
	1,000,000 1,000,000

NOTE 6: CONTINGENT LIABILITIES

There were no contingent liabilities at the end of the reporting period.

NOTE 7: EVENTS SUBSEQUENT TO REPORTING DATE

There were no events subsequent to reporting date that required disclosure in this financial report.

NOTE 8: SEGMENT REPORTING

Description of Segments

Operating segments have been determined on the basis of reports reviewed by the board of directors and the Chief Executive Office (chief operating decision makers) in assessing performance and determining the allocation of resources. The Group is managed primarily on a geographic basis, that is, the location of the respective areas of interest (tenements) in Australia. Operating segments are determined on the basis of financial information reported to the board of directors which is at the consolidated entity level. The Group does not have any products or services that it derives revenue from. The Group's exploration and development activities in Australia is the Group’s sole focus, primarily focused around tin and copper. The Group's previous exploration activities in Argentina and Chile, have been discontinued and sold.

Accordingly, management currently identifies the Group as having only one reportable segment, being the exploration of mineral assets in Australia. There have been no changes in the operating segments during the half-year. Accordingly, all significant operating decisions are based upon analysis of the consolidated entity as one segment. The financial results from this segment are equivalent to the financial statements of the Group as a whole.

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ELEMENTOS LTD – ABN 49 138 468 756

INTERIM FINANCIAL REPORT 2018

NOTE 9: ISSUED CAPITAL

	31 Dec 2017 30 June 2017
	$ $
(a) Issued and paid up capital Ordinary shares fully paid Share issue costs	15,334,161 13,457,382 (90,354) (65,681)
	15,243,807 13,391,701

Ordinary shareholders are entitled to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amount paid on the shares held. Every ordinary shareholder present at a meeting in person or by proxy is entitled to one vote on a show of hands or by poll. Ordinary shares have no par value.

	31 Dec	2017	31 Dec	2016
	Number of shares	$	Number of shares	$
(b) Reconciliation of issued and paid-up capital
Opening balance as at 1 July	949,297,823	13,391,701	767,479,642	12,407,382
Shares issued (1)	-	-	64,333,636	353,835
Shares issued (2)	-	-	17,484,545	96,165
Shares issued (3)	237,324,642	1,423,948
Shares issued (3)	45,371,137	272,227
Shares issued (4)	41,047,535	246,285
Closing Balance as at 31 December	1,273,041,137	15,334,161	849,297,823	12,857,382

1. On 26 October 2016, 64,333,636 ordinary shares @ $0.0055 each were issued by Elementos Ltd as part of a private placement.

2. On 14 December 2016, 17,484,545 ordinary shares @ $0.0055 each were issued by Elementos Ltd as part of a private placement.

3. On 29 June 2017, the Company announced that:

4. it had received commitments to complete a private placement of 100,000,000 shares to be issued at 0.60 cents per share (and 100,000,000 attaching options having an exercise price of 0.6 cents per option and expiring on 30 June 2018) to raise a total of $600,000 (before costs) ( Placement ); and

5. it would proceed with a non-renounceable rights issue to raise up to $1,423,947 (before costs) on the same conditions as the abovementioned Placement, by issuing up to 237,324,456 shares and 237,324,456 attaching options ( Rights Issue ).

On 30 June 2017, 100,000,000 ordinary shares were issued, pursuant to the Placement, raising $600,000 (before costs).

The Rights Issue was made in accordance with section 713 of the Corporations Act with full details set out in a Prospectus sent to Eligible Shareholders on 6 July 2017. The Rights Issue contained a debt conversion facility.

During the half-year ended 31 December 2017 , the following events were completed as part of the Placement and Rights Issue:

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ELEMENTOS LTD – ABN 49 138 468 756

INTERIM FINANCIAL REPORT 2018

• The Rights Issue was fully subscribed (after the entitlement and shortfall offers) resulting in 237,324,642 shares and 237,324,642 unlisted options (exercisable at 0.60 cents per option expiring on 30 June 2018) being issued (during August 2017). 45,371,137 of these shares and options were issued to the Company’s Chairman and largest shareholder, Andy Greig, utilising the debt conversion facility to take up his Rights Issue entitlement ($272,227); and

• 100,000,000 unlisted options (exercisable at 0.60 cents per option expiring on 30 June 2018) were issued (in August 2017) pursuant to the Placement.

Also during August 2017, and also as part of the above Placement and Rights Issue, a further 45,371,137 unlisted options (exercisable at 0.60 cents per option expiring on 30 June 2018) were exercised in to 45,371,137 shares by the Company’s Chairman and largest shareholder, Andy Greig, using debt conversion ($272,227).

1. Between 30 August 2017 and 31 December 2017, 41,047,535 unlisted options (exercisable at 0.60 cents per option expiring on 30 June 2018) were exercised in to 41,047,535 shares, raising $246,285.

	31 Dec 2017 30 June 2017
	No. of Options No. of Options
(b) Options Unlisted Share Options Balance at the beginning of the reporting period Options issued during the period (refer notes 9(a)3 and 4 above) Options exercised (refer notes 9(a)3 and 4 above) Balance at the end of the reporting period	20,300,000 20,300,000 20,300,000 43,850,000 337,324,642 - (86,418,672) (23,550,000)
	271,205,970 20,300,000

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ELEMENTOS LTD – ABN 49 138 468 756

INTERIM FINANCIAL REPORT 2018

NOTE 10: BORROWINGS

	31 Dec 2017 30 June 2017
	$ $
Current: Unsecured: Loan from related party Accrued interest (on loan from related party) Hire purchase lease Total unsecured current Non-Current: Unsecured: Hire purchase lease Total unsecured non-current	- 500,000 - 45,658 5,467 -
	5,467 545,658
	29,597 -
	29,597 -

On 23 December 2015, the Company executed a loan deed with the Company’s Non-Executive Chairman Mr Andy Greig, a related party, with the following key terms:

• Loan amount = $500,000

• Loan term = 2 years

• Interest rate = 6.0%

• Unsecured

• No conversion rights

• No requirement to repay principal or pay interest during the loan term

• Repayable by the Company at any time (during the loan term)

On 24 February 2017, the Company and Andy Greig agreed to extend the repayment date of the loan to 31 December 2018. All other terms and conditions of the loan remain unchanged.

During the half-year ended 31 December 2017 the loan was repaid in full, as follows:

• Andy Greig subscribed for his full entitlement in the Company’s Rights Issue of 45,371,137 shares and 45,371,137 free attaching unlisted options (exercisable at 0.60 cents per option expiring on 30 June 2018) at a costs of 0.60 cents per share (and free attaching option). Andy Greig utilised the Rights Issue debt conversion facility to take up his Rights Issue entitlement costing $272,227, and reduce his loan by the same amount. Refer notes 9(b)3 above.

• Andy Greig exercised 45,371,137 unlisted options (exercisable at 0.60 cents per option expiring on 30 June 2018) in to 45,371,137 shares paying the exercise price of $272,227 by reducing his loan by the same amount. Refer notes 9(a)3 and 4 above.

• The Company made a final cash payment of $4,989 to pay the residual balance of the loan and any accrued interest.

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ELEMENTOS LTD – ABN 49 138 468 756

INTERIM FINANCIAL REPORT 2018

Directors’ Declaration

The Directors of the Company declare that:

1. The financial statements comprising the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows and notes to the financial statements, are in accordance with the Corporations Act 2001, including:

2. (a) complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001; and

3. (b) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2017 and of its performance for the half-year ended on that date.

4. In the Directors' 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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Corey Nolan Director 5 March 2018 Brisbane

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Tel: +61 7 3237 5999 Level 10, 12 Creek St Fax: +61 7 3221 9227 Brisbane QLD 4000 www.bdo.com.au GPO Box 457 Brisbane QLD 4001 Australia

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INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of Elementos Limited

Report on the Half-Year Financial Report

Conclusion

We have reviewed the half-year financial report of Elementos Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 December 2017, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the half-year then ended, notes comprising a statement of accounting policies and other explanatory information, and the directors’ declaration.

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 the Group is not in accordance with the Corporations Act 2001 including:

• (i) Giving a true and fair view of the Group’s financial position as at 31 December 2017 and of its financial performance for the half-year ended on that date; and

• (ii) Complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

Emphasis of matter – Material uncertainty relating to going concern

We draw attention to Note 1 in the financial report which describes the events and/or conditions which give rise to the existence of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern and therefore the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. Our conclusion is not modified in respect of this matter.

Directors’ responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

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BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.

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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 half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31 December 2017 and its financial 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 the Group, 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.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Group, would be in the same terms if given to the directors as at the time of this auditor’s review report.

BDO Audit Pty Ltd

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D P Wright Director

Brisbane, 5 March 2018

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BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.