GREENWING RESOURCES LTD — Interim / Quarterly Report 2019

Mar 10, 2019

HALF-YEAR REPORT For the period ended 31 December 2018

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ABN 31 109 933 995

Australia’s premium graphite producer

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Half-Year Report

For the period ended

31 December 2018

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HALF-YEAR REPORT For the period ended 31 December 2018

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Table of Contents
CORPORATE DIRECTORY	3
DIRECTORS’ REPORT	4
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME	8
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	9
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	10
CONSOLIDATED STATEMENT OF CASH FLOWS	11
NOTES TO THE FINANCIAL STATEMENTS	12
INDEPENDENT AUDITORS REVIEW TO THE MEMBERS OF BASS METALS LTD	29
AUDITOR’S INDEPENDENCE DECLARATION	31
DIRECTORS’ DECLARATION	32

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HALF-YEAR REPORT For the period ended 31 December 2018

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CORPORATE DIRECTORY

DIRECTORS

Mr Richard Stacy Anthon - Non-Executive Chairman Mr Jeffrey Marvin – Non-Executive Director Mr Peter Wright – Executive Director

COMPANY SECRETARY

Mr David Round

CHIEF EXECUTIVE OFFICER

Mr Tim McManus

REGISTERED OFFICE

Level 2, 34 Colin Street West Perth, WA, 6005

GPO Box 1048 Subiaco, Western Australia 6904

Telephone: (07) 3221 0783 Website: www.bassmetals.com.au Email: admin@bassmetals.com.au

LEGAL ADVISORS

HFW Australia Level 15, Brookfield Place Tower 2, 123 St Georges Terrace Perth WA 6000, Australia

SHARE REGISTRY

Computershare Investor Services Pty Ltd Level 2, 45 St Georges Terrace Perth WA 6000 Telephone: 1300 557 010

AUDITORS

Grant Thornton Audit Pty Ltd Level 43, Central Park 152 - 158 St Georges Terrace Perth WA 6000

STOCK EXCHANGE LISTINGS

ASX Ltd (Code: BSM and BSMO)

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HALF-YEAR REPORT For the period ended 31 December 2018

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DIRECTORS’ REPORT

The Directors of Bass Metals Ltd (“the Company” or “Bass”) present their Report together with the financial statements of the Consolidated Entity, being Bass Metals Ltd (“the Company” or “Bass”), it’s Controlled Entities (“the Group”) for the half-year ended 31 December 2018 and the independent auditors report thereon.

Directors

The following persons were Directors of the Company during or since the end of the financial half-year:

Mr Richard Anthon - Non-Executive Chairman Mr Jeffrey Marvin – Non-Executive Director Mr Peter Wright – Executive Director

Consolidated Entities

For the half-year ended 31 December 2018 and the comparative half year, the Company has four subsidiaries, Graphmada Mauritius (registered in Mauritius), Graphmada SARL (registered in Madagascar), Limada SARL (registered in Madagascar) and Bass Metals Holdings Pty Ltd (registered in Australia).

Review of Operations

Overview

The Group’s primary activities during the reporting period were:

• Implementation and Completion of the Stage 1 Operational Optimisation Program for Graphmada, focusing on raising the quality and volume of saleable product, to deliver a consistently higher-value product;

• Ongoing assessment of the Company’s resources in Madagascar with a plan developed to establish an extensive drill and resource upgrade plan for Mahefedok and an initial extensive drill program for the Mahela Project;

• Following initial field work and sampling, the commencement of a scout drill program at the Company’s highly prospective Lithium Project, Millie’s Reward in Madagascar;

• Extensive ongoing development, training and improvement to site operations;

• Extensive engagement continued with a range of parties whom have expressed strong demand for the Company’s future production of concentrate;

• The commencement of sales from the recently completed Stage 1 program with continued sales of the Company’s concentrate to the USA, Europe and the expanding Indian market.

• The successful completion of a Capital Raising in December 2018 to provide ongoing working capital and provide initial funding to meet costs for ongoing expansion and develop plans.

The Company is also currently undertaking an Expansion Project and a range of other tests and independent assessments currently in process. Upon the completion of drilling and the receipt of results and other test work, an assessment will be made on the timing of a proposed second Processing Plant which has the capacity to increase production to greater than 20,000 tonnes per annum.

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HALF-YEAR REPORT For the period ended 31 December 2018

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DIRECTORS’ REPORT (continued)

Community Engagement Program

The Group through its subsidiaries has implemented a Community Engagement Program called Graphmada Care. The program concentrates on the following principals of action:

• Employment : First priority is to hire and train local people, who spend their salaries in the local community.

• Purchasing : Prioritise sourcing equipment and supplies from local providers, creating economic advantages to the local community and indirect employment opportunities.

• Education : Provided materials and transport for the construction of a new school and initiated a school engagement program, encouraging children to attend with subsidised supplies.

• Infrastructure : school, building, road and bridge repair across the region.

• Health : Established a Primary Health Centre with a resident doctor and supplies to handle medical emergencies and primary diseases and also provide basic nutritional, health and sanitation training to the community. We have also commissioned water wells to provide quality drinking water for nearby villages.

Corporate Activities

In December 2018, the Company completed a capital raising with strong support from Institutional and Sophisticated investors. The Company’s Directors also participated in the Capital Raising.

The Capital Raising has provided the Company with additional working capital and also provided funding to allow the Company to continue to develop its expansion plans and further, invest in additional capital and plant and equipment that is required for further expansion.

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HALF-YEAR REPORT For the period ended 31 December 2018

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DIRECTORS’ REPORT (continued)

Equity raisings

• On the 10 August 2018, the Company issued 2,400,000 shares upon exercise of 2.5 cent listed options;

• On the 3 September 2018, the Company issued 1,000,000 shares upon exercise of 2.5 cent unlisted options;

• On the 17 September 2018, the Company issued 10,875 shares upon exercise of 2.5 cent listed options and 2,218,310 shares in lieu of cash upon settlement of geological consulting services;

• On the 26 September 2018, the Company issued 20,400,000 shares upon exercise of 2.5 cent listed options;

• On the 1 November 2018, the Company issued 31,492,492 shares upon exercise of 2.5 cent listed options;

• On the 1 November 2018, the Company issued 900,000 shares upon exercise of 1 cent unlisted options;

• On the 16 November 2018, the Company issued 24,800,000 shares upon exercise of performance rights;

• On the 20 December 2018, the Company issued 214,771,284 shares to institutional, professional and sophisticated investors at 1.25 cents per share raising $2.7 million;

• On the 20 December 2018, the Company issued 66,334 shares upon exercise of 2.5 cent listed options;

• On the 20 December 2018, the Company issued 7,350,000 shares pursuant to the Bass Metals Incentive Scheme at nil consideration to incentivize ad reward employees.

Dividends

No dividends have been paid during the period and no dividends have been recommended by the Directors.

Result for the Financial Half-Year

The loss from ordinary activities after income tax expense for the Group was $3,066,664 (2017: $2,570,027 loss).

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HALF-YEAR REPORT For the period ended 31 December 2018

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DIRECTORS’ REPORT (continued)

Events Subsequent to Reporting Date

Subsequent to reporting date and up to and including the date of this report, the Company has received $339,000 as part of the share placement, announced on 14 December 2018, at an issue price of A$0.0125 per. As some share placement funds are still to be collected, the Company has not yet issued the fully paid ordinary shares.

On 1 March 2019, the Company announced it had completed its maiden drilling and soil sampling programs over its Madagascan Lithium Projects referred to as “Millie’s Reward”. The Lithium Projects are wholly owned by the Company and details regarding the recently completed programs and the Company’s activity, is included in the release of 1 March 2019.

Auditors Independence Declaration

Section 307C of the Corporations Act 2001 requires the Company’s auditors, Grant Thornton Audit Pty Ltd, to provide the directors with a written Independence Declaration in relation to their review of the half year report for the period ended 31 December 2018. This written Auditor’s Independence Declaration is attached to the Auditor’s Independent Audit Report to the members and forms part of this Directors’ Report.

Signed in accordance with a resolution of Directors.

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RA Anthon Chairman Brisbane, Queensland 11 March 2019

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HALF-YEAR REPORT For the period ended 31 December 2018

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2018

Note Sale of concentrate Cost of sales 2b Gross loss Other income 2a Administration expenses 2c Finance costs Foreign currency gain/(loss) 2d Loss before income tax from continuing operations Income tax (expense)/benefit Loss for the period from continuing operations Loss after tax from discontinued operations 3 Loss for the period Other comprehensive income Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations Total comprehensive loss for the period, net of tax Loss attributed to: Continuing operations Discontinued operations Total comprehensive loss attributed to: Equity holders of the parent entity Earnings per share Basic loss per share from operations (cents) 4	31 December 2018 $ 31 December 2017 $ 283,606 1,439 (948,108) (27,133)
	(664,502) (25,694) 27,429 55,239 (2,606,334) (2,299,168) (3,038) (110,263) 509,867 (167,486)
	(2,736,578) (2,547,372) - -
	(2,736,578) (2,547,372) (330,086) (22,655)
	(3,066,664) (2,570,027) (543,936) 58,979
	(3,610,600) (2,511,048)
	(3,280,514) (2,488,393) (330,086) (22,655)
	(3,499,600) (2,511,048)
	(0.12) (0.15)

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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HALF-YEAR REPORT For the period ended 31 December 2018

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2018

Note CURRENT ASSETS Cash and cash equivalents Trade and other receivables 5 Prepayments Inventories 6 Total Current Assets NON-CURRENT ASSETS Restricted cash Trade and other receivables 5 Property, Plant and equipment 7 Exploration and evaluation assets 8 Mine properties 9 Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 10 Borrowings 11 Total Current Liabilities NON-CURRENT LIABILITIES Provisions 12 Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Share capital 13 Reserves 14 Accumulated losses TOTAL EQUITY	31 December 2018 $ 30 June 2018 $ 3,892,783 4,604,427 432,064 424,998 21,376 57,497 2,212,270 1,203,602
	6,558,493 6,290,524
	10,801 18,300 830,500 680,500 4,739,610 5,265,782 1,268,775 894,146 5,975,211 5,489,100
	12,824,897 12,347,828
	19,383,390 18,638,352
	1,174,656 753,705 10,801 18,300
	1,185,457 772,005
	1,113,324 1,113,324
	1,113,324 1,113,324
	2,298,781 1,885,329
	17,084,609 16,753,023
	92,131,705 88,005,521 142,503 917,806 (75,189,599) (72,170,304)
	17,084,609 16,753,023

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

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HALF-YEAR REPORT For the period ended 31 December 2018

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2018

2018	Share Capital	Option Reserve	Foreign Currency	Retained Profits/	Total Equity
			Translation	(Accumulated
			Reserve	Losses)
	$	$	$	$	$
Balance at 1 July 2018	88,005,521	1,150,350	(232,544)	(72,170,304)	16,753,023
Loss for the period	-	-	-	(3,066,664)	(3,066,664)
Other comprehensive income	-	-	(543,936)	-	(543, 936)
Transactions with owners, recorded directly in equity
Shares issued during the period	4,230,516	-	-	-	4,230,516
Cost of shares issued for placement	(288,330)	-	-	-	(288,330)
Expired of options	-	(47,369)	-	47,369	-
Value of keymanagement options exercised	183,998	(183,998)	-	-	-
Balance at 31 December 2018	92,131,705	918,983	(776,480)	(75,189,599)	17,084,609

2017	Share Capital Option Reserve Foreign Currency Translation Reserve Retained Profits/ (Accumulated Losses) Total Equity $ $ $ $ $
Balance at 1 July 2017 Loss for the period Other comprehensive income Transactions with owners, recorded directly in equity Shares issued during the period Cost of shares issued for placement Balance at 31 December 2017	74,219,238 1,150,350 135,123 (67,722,126) 7,782,585
	- - - (2,570,027) (2,570,027) - - 58,979 - 58,979 9,300,084 - - - 9,300,084 (570,070) - - - (570,070)
	82,949,252 1,150,350 194,102 (70,292,153) 14,001,551

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

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HALF-YEAR REPORT For the period ended 31 December 2018

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CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2018

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Net cash used in operating activities Cash flows from investing activities Purchase of property, plant and equipment Payment for exploration and evaluation assets Interest received Payment for deferred acquisition Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Transaction costs on issue of shares Proceeds from issue of convertible notes Repayment of loan funds Interest paid Net cash from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Restricted cash Cash and cash equivalents at the end of the period	31 December 2018 $ 31 December 2017 $ 213,631 40,238 (4,044,870) (2,485,791)
	(3,831,239) (2,445,553) (371,223) (2,683,643) (344,564) (200,222) 22,429 2,239 - (300,000)
	(693,358) (3,181,626) 4,099,461 6,928,807 (283,469) (427,210) - 1,428,000 (7,500) (25,000) (3,038) -
	3,805,454 7,904,597 (719,143) 2,277,418 4,604,427 933,822 7,499 25,000
	3,892,783 3,236,240

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

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HALF-YEAR REPORT For the period ended 31 December 2018

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NOTES TO THE FINANCIAL STATEMENTS

1. General information and statement of compliance

(a) Basis of Preparation

The condensed interim consolidated financial statements (the interim financial statements) of the Group are for the six months ended 31 December 2018 and are presented in Australian Dollars ($AUD), which is the functional currency of the Parent Company. These general purpose interim financial statements have been prepared in accordance with the requirements of the Corporations Act 2001 and AASB 134 Interim Financial Reporting. They do not include all of the information required in annual financial statements in accordance with Australian Accounting Standards, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 June 2018 and any public announcements made by the Group during the half-year in accordance with continuous disclosure requirements arising under the Australian Securities Exchange Listing Rules and Corporations Act 2001.

AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments (2014) became mandatorily effective on 1 January 2018. Accordingly, these standards apply for the first time to this set of interim financial statements. The nature and effect of changes arising from these standards are summarised in the section below and in Note 1(b).

The interim financial statements have been approved and authorised for issue by the Board of Directors on 11 March 2019.

New standards adopted as at 1 July 2018.

AASB 15 Revenue from Contracts with Customers

AASB 15 replaces AASB 118 Revenue, AASB 111 Construction Contracts and several revenue-related Interpretations. The new Standard has been applied as at 1 July 2018 using the modified retrospective approach. Under this method, the cumulative effect of initial application is recognised as an adjustment to the opening balance of retained earnings at 1 July 2018 and comparatives are not restated. In accordance with the transition guidance, AASB 15 has only been applied to contracts that are incomplete as at 1 July 2018. The adoption of AASB 15 did not have a significant impact on the timing or amount of revenue recognised by the Group during the year.

AASB 9 Financial Instruments

AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and Measurement requirements. It makes major changes to the previous guidance on the classification and measurement of financial assets and introduces an ‘expected credit loss’ model for impairment of financial assets.

When adopting AASB 9, the Group has applied transitional relief and elected not to restate prior periods. Rather, differences arising from the adoption of AASB 9 in relation to classification, measurement, and impairment are recognised in opening retained earnings as at 1 July 2018. Further, the Group chose to continue applying the hedge accounting requirements in AASB 139 as permitted by AASB 9.

The adoption of AASB 9 did not have a significant impact on the classification and measurement of financial assets recognised by the Group during the year.

(b) Changes in Significant Accounting Policies

The interim financial statements have been prepared in accordance with the same accounting policies adopted in the Group’s last annual financial statements for the year ended 30 June 2018, except as described below. Note that the changes in accounting policies specified below only apply to the current period. The accounting policies included in the Group’s last annual financial statements for the year ended 30 June 2018 are the relevant policies for the purposes of comparatives.

AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments (2014) became effective for periods beginning on or after 1 January 2018. Accordingly, the Group applied AASB 15 and AASB 9 for the interim period ended 31 December 2018. Changes to the Group’s accounting policies arising from these standards are summarised below:

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HALF-YEAR REPORT For the period ended 31 December 2018

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Revenue

Revenue arises from the sale of Graphite.

To determine whether to recognise revenue, the Group follows a 5-step process:

1. Identifying the contract with a customer

2. Identifying the performance obligations

3. Determining the transaction price

4. Allocating the transaction price to the performance obligations

5. Recognising revenue when/as performance obligation(s) are satisfied

Revenue is recognised either at a point in time or over time, when (or as) the Group satisfies performance obligations by transferring the promised goods or services to its customers.

Financial Instruments

Recognition and derecognition

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted by transactions costs, except for those carried at fair value through profit or loss, which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities are described below.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Classification and initial measurement of financial assets

Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).

Subsequent measurement of financial assets

For the purpose of subsequent measurement, financial assets, other than those designated and effective as hedging instruments, are classified into the following categories upon initial recognition:

• financial assets at amortised cost

• financial assets at fair value through profit or loss (FVPL)

• debt instruments at fair value through other comprehensive income (FVOCI)

• equity instruments at fair value through other comprehensive income (FVOCI)

Classifications are determined by both:

• The entity’s business model for managing the financial asset

• The contractual cash flow characteristics of the financial assets

All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses.

Financial assets at amortised cost

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVPL):

• they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows

• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding

After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments as well as government bonds that were previously classified as held-to-maturity under AASB 139.

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HALF-YEAR REPORT For the period ended 31 December 2018

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Financial assets at fair value through profit or loss (FVPL)

Financial assets that are held within a business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at fair value through profit and loss. Further, irrespective of business model, financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVPL. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply.

Impairment of financial assets

AASB 9’s new impairment model uses more forward-looking information to recognize expected credit losses - the ‘expected credit losses (ECL) model’. The application of the new impairment model depends on whether there has been a significant increase in credit risk.

The Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

In applying this forward-looking approach, a distinction is made between:

• financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’), and

• financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage 2’).

• ‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.

• ‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the second category.

Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.

Trade and other receivables and contract assets

The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss allowance at the amount equal to the expected lifetime credit losses. In using this practical expedient, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.

The Group assess impairment of trade receivables on a collective basis as they possess credit risk characteristics based on the days past due.

All financial assets, except for those at fair value through profit or loss (FVPL) and equity investments at fair value through other comprehensive income (equity FVOCI), are subject to review for impairment at least at each reporting date to identify whether there is any objective evidence that a financial asset or a group of financial assets is impaired.

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HALF-YEAR REPORT For the period ended 31 December 2018

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Financial assets at fair value through other comprehensive income

The Group recognises 12 months expected credit losses for financial assets at FVOCI. As most of these instruments have a high credit rating, the likelihood of default is deemed small. However, at each reporting date the Group assesses whether there has been a significant increase in the credit risk of the instrument.

In assessing these risks, the Group relies on readily available information such as the credit ratings issued by the major credit rating agencies for the respective asset. The Group only holds simple financial instruments for which specific credit ratings are usually available. In the unlikely event that there is no or only little information on factors influencing the ratings of the asset available, the Group would aggregate similar instruments into a portfolio to assess on this basis whether there has been a significant increase in credit risk.

In addition, the Group considers other indicators such as adverse changes in business, economic or financial conditions that could affect the borrower’s ability to meet its debt obligation or unexpected changes in the borrowers operating results.

Should any of these indicators imply a significant increase in the instrument’s credit risk, the Group recognises for this instrument or class of instruments the lifetime expected credit losses.

Classification and measurement of financial liabilities

As the accounting for financial liabilities remains largely unchanged from AASB 139, the Group’s financial liabilities were not impacted by the adoption of AASB 9. However, for completeness, the accounting policy is disclosed below.

The Group’s financial liabilities include borrowings, trade and other payables. The Group has no derivative financial instruments.

Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss.

Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments).

All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income.

(c) Estimates

When preparing the interim financial statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results.

The judgements, estimates and assumptions applied in the interim financial statements, including the key sources of estimation uncertainty were the same as those applied in the Group’s last annual financial statements for the year ended 30 June 2018. The only exception is the estimate of the provision for income taxes and revenue recognition policy which is determined in the interim financial statements using the estimated average annual effective income tax rate applied to the pre-tax income of the interim period.

(d) Significant Events and Transactions

In December 2018, the Company completed a capital raising with strong support from Institutional and Sophisticated investors. The Company’s Directors also participated in the Capital Raising.

The Capital Raising has provided the Company with additional working capital and also provide funding to allow the Company to continue to develop its expansion plans and further, invest in additional capital and plant and equipment that is required for further expansion.

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HALF-YEAR REPORT For the period ended 31 December 2018

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(e) Segment Information

Management currently identifies two service lines as the Group’s operating segments and all other activities are reported within the segment other. These operating segments are monitored by the Group’s chief operating decision maker and strategic decisions are made on the basis of adjusted segment operating results.

Segment information for the reporting period is as follows:

Six months to 31 December 2018 Revenue External customers Interest income Other revenue Inter- segment Segment revenues EBITDAIX Less Depreciation & Amortisation Less interest expense Less impairment expense Less Foreign currency gains/(losses) Segment loss before tax Segment assets*	Graphite Mining	Exploration - Lithium	Other Total	Other Total
	$	$	$	$
	-	-	283,606	283,606
	-	-	22,429	22,429
	-	-	5,000	5,000
	283,606	-	(283,606)	-
	283,606	-	27,429	311,035
	(1,453,833)	(9,352)	(1,368,938)	(2,832,123)
	(405,667)	(4,518)	(1,099)	(411,284)
	-	-	(3,038)	(3,038)
	-	-	-	-
	(133,408)	(5,574)	648,849	509,867
	(1,992,908)	(19,444)	(724,226)	(2,736,578)
	13,914,235	764,973	4,704,182	19,383,390

Six months to 31 December 2017 Revenue External customers Interest income Other revenue Inter- segment Segment revenues EBITDAIX Less Depreciation & Amortisation Less interest Less Foreign currency gains/(losses) Segment loss before tax Segment assets*	Graphite Mining Exploration - Lithium Other Total $ $ $ $
	1,439 - - 1,439 - - 2,239 2,239 48,000 - 5,000 53,000 - - - -
	49,439 - 7,239 56,678
	(1,083,287) - (1,076,636) (2,159,923) (106,005) - (3,695) (109,700) - - (110,263) (110,263) (4,376) - (163,110) (167,486)
	(1,193,668) - (1,353,704) (2,547,372)
	11,748,672 192,930 3,914,723 15,856,325

*EBITAIX - Segment earnings before interest, taxes, depreciation, amortisation, impairment, and foreign currency gains/(losses).

No segment liabilities are disclosed because there is no measure of segment liabilities regularly reported to the chief operating decision maker.

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HALF-YEAR REPORT For the period ended 31 December 2018

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The total presented for the Group’s operating segments reconcile to the key financial figures as presented in its financial statements as follows:

Loss Total reportable segment operating loss Discontinued operations Loss for the period Assets Total reportable segment assets Non-current exploration and evaluation asset held for sale Group assets	Six (6) months to 31 December 2018 Six (6) months to 31 December 2017 $ $
	(2,736,578) (2,547,372) (330,086) (22,655)
	(3,066,664) (2,570,027)
	31 December 2018 31 December 2017 $ $
	19,383,390 15,856,325 - -
	19,383,390 15,856,325

The Group’s revenues from external customers and its non-current assets are divided into the following geographical areas:

Madagascar Mauritius Australia Germany India USA Total	Revenue	Non-current assets Revenue Non-current assets 31 December 2018 Six (6) months to 31 December 2017 31 December 2017 $ $ $
	Six (6) months to 31 December 2018
	$
	-	10,163,106 1,439 7,974,916 1,820,490 - 2,705,483 841,301 - 724,477 - - - - - - - - -
	-
	-
	175,808
	20,213
	87,585
	283,606	12,824,897 1,439 11,404,876

Revenues from external customers in the Group’s domicile, Australia, as well as its major markets have been identified on the basis of the customer’s geographical location.

During 2018, $175,808 or 62% (2017: $1,439 or 100%) of the Group’s revenues depended on a single customer in the graphite mining segment.

17

HALF-YEAR REPORT For the period ended 31 December 2018

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(f) Going Concern

The interim financial report for the half year ended 31 December 2018 has been prepared on the basis of going concern, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

During the period, the entity achieved a loss after tax of $3,066,664 (2017 loss: $2,570,027). Net operating cash outflows were $3,831,239 (2017 outflow: $2,445,553).

• The ability of the Group to continue as a going concern is principally dependent upon one or more of the following:

• the ability of the Group to raise sufficient additional capital in the future;

• the successful sale of its Group’s tenements in Tasmania;

• its ability to achieve a financial return from its subsidiary Graphmada Mauritius.

If the Group is unable to continue as a going concern, it may be required to realise its assets and or settle its liabilities other than in the ordinary course of business and at amounts different from those stated in the financial report.

The Directors will continue to monitor the capital requirements of the Group on a go forward basis and will include additional capital raisings in future periods as required.

18

HALF-YEAR REPORT For the period ended 31 December 2018

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2. Loss for the period The loss for the period is stated after taking into account the following: 2 (a) Other income Interest income Other 2 (b) Cost of sales Direct mine operating expense Depreciation expense Inventory write down to net realisable value Total cost of sales 2 (c) Administration expenses Mine administration expense: Depreciation expense Amortisation of mine properties Employee benefits expense Mine consultancy Repairs and maintenance Other administration expenses Total mine administration expenses Corporate administration: Employee benefits expense Contracting & consulting expenses Share based payment expense Rental expenses Legal expenses Depreciation Director fees Travel expenses Share registry, ASX Other administration expenses Total corporate administration expenses Total administration expenses 2 (d) Foreign currency (gain)/loss Foreign currency (gain)/loss – realised Foreign currency (gain)/loss – unrealised Total foreign currency (gain)/loss	Six (6) months to 31 December 2018 $ Six (6) months to 31 December 2017 $ 22,429 2,239 5,000 53,000
	27,429 55,239
	350,807 8,471 354,518 17,724 242,783 938
	948,108 27,133
	36,079 88,281 19,588 - 440,281 490,705 134,530 85,239 85,532 104,217 492,860 443,158
	1,208,870 1,211,600
	609,482 320,383 71,836 186,486 95,550 - 19,909 18,904 18,540 46,736 1,099 3,695 105,059 75,046 166,188 182,062 112,632 133,014 197,169 121,242
	1,397,464 1,087,568
	2,606,334 2,299,168
	(11,366) 9,975 (498,501) 157,511
	(509,867) 167,486

19

HALF-YEAR REPORT For the period ended 31 December 2018

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3. Loss attributable to discontinued operations

The Company continues to seek a buyer for its Tasmanian capitalised exploration assets. This disposal group was fully impaired during 2017 and is, therefore, carried at nil value having been recognised as Capitalised Exploration and Evaluation Assets Held for Sale in the Statement of Financial Position.

During the current and prior year, care and maintenance expenses relating to this disposal group have been eliminated from profit or loss from the Group’s continuing operations and are shown as a single line item on the face of the statement of profit or loss and other comprehensive income.

Expenses

Expenses
Exploration expenditure expensed Hellyer operating infrastructure – care & maintenance Total expenses	Six (6) months to 31 December 2018 $ Six (6) months to 31 December 2017 $ - 4,162 330,086 18,493
	330,086 22,655

4. Earnings Per Share

(Basic and diluted Earnings Per Share) Loss for the period Weighted average number of ordinary shares used in the calculation of basic earnings per share Basic and diluted loss per share (cents)	Six (6) months to 31 December 2018 $ Six (6) months to 31 December 2017 $ (3,066,664) (2,570,027) 2,529,319,210 1,691,092,536
	(0.12) (0.15)

There is no dilutive potential for ordinary shares as the exercise of options to ordinary shares would have the effect of decreasing the loss per ordinary share and would therefore be non-dilutive.

5. Trade and Other Receivables

Trade and Other Receivables
Current Trade receivables VAT receivable Other receivables Non-current VAT receivable Other security deposits1	31 December 2018 $ 30 June 2018 $ 70,778 - 264,305 329,520 96,981 95,478
	432,064 424,998
	150,000 - 680,500 680,500
	830,500 680,500

Note 1: Security deposits and guarantees associated with the Tasmanian exploration assets held for sale.

6. Inventories

Equipment spares and consumables Ore stockpiles Graphite in circuit Graphite concentrate	31 December 2018 $ 30 June 2018 $ 972,438 873,785 54,972 8,418 73,143 176,808 1,111,717 144,591 2,212,270 1,203,602

20

HALF-YEAR REPORT For the period ended 31 December 2018

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7. Plant & Equipment

The following tables show the movements in property, plant and equipment:

2018 Gross carrying amount Balance 1 July 2018 Additions Reclassification at cost to inventory Reclassification at cost Reclassification to mine properties Balance 31 December 2018 Depreciation and impairment Balance 1 July 2018 Depreciation Reclassification to mine properties Balance 31 December 2018 Carrying amount 31 December 2018 2017 Gross carrying amount Balance 1 July 2017 Additions Reclassification at cost to inventory Reclassification at cost Disposal Balance 31 December 2017 Depreciation and impairment Balance 1 July 2017 Depreciation Disposal Balance 31 December 2017 Carrying amount 31 December 2017		Plant &	Motor Vehicles Capital work inprogress Buildings & Infrastructure	Motor Vehicles Capital work inprogress Buildings & Infrastructure	Motor Vehicles Capital work inprogress Buildings & Infrastructure	Total
		equipment
		$	$ $		$	$
		2,766,727	1,056,596 1,849,719		733,666	6,406,708
		76,852	- 298,556		-	375,408
		-	- (4,185)		-	(4,185)
		1,511,979	- (1,578,746)		66,767	-
		-	- (388,870)		(202,504)	(591,374)
		4,355,558	1,056,596 176,474		597,929	6,186,557
		(478,845)	(443,157) -		(218,924)	(1,140,926)
		(306,138)	(58,246) -		(27,312)	(391,696)
		-	- -		85,675	85,675
		(784,983)	(501,403) -		(160,561)	(1,446,947)
		3,570,575	555,193	176,474	437,368	4,739,610
		Plant & equipment Motor Vehicles Capital work in progress Buildings & Infrastructure Total $ $ $ $ $
		1,058,511 554,107 502,678 733,666 2,848,962 111,742 - 2,866,424 - 2,978,166 - - (294,523) - (294,523) 1,142,269 - (1,142,269) - - (1,394) - - - (1,394)
		2,311,128 554,107 1,932,310 733,666 5,531,211
		(332,471) (382,977) - (148,166) (863,614) (61,681) (19,988) - (28,031) (109,700) 1,189 - - - 1,189
		(392,963) (402,965) - (176,197) (972,125)
		1,918,165 151,142 1,932,310 557,469 4,559,086

All depreciation and impairment charges are included within depreciation, amortisation and impairment of non-financial assets. There were no impairment losses recognised during the current or prior reporting periods.

There were no material contractual commitments to acquire property, plant and equipment at 31 December 2018.

Property, plant and equipment pledged as security for liabilities

There is no fixed and floating charge over any of the assets in the Company.

21

HALF-YEAR REPORT For the period ended 31 December 2018

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8. Exploration and Evaluation Assets

Exploration and Evaluation Assets
Exploration drilling - Mahefedok Graphite Deposit, Madagascar Exploration drilling - Andapa Graphite Deposit, Madagascar Exploration drilling – Mahela deposit Madagascar Lithium mineralisation exploration permits in the Sahatany region in Madagascar	31 December 2018 $ 30 June 2018 $ 568,219 514,226 21,714 21,702 6,684 4,581 672,158 353,637
	1,268,775 894,146

9. Mine Properties

2018	Development Asset1 Rehabilitation Asset2 Mine Development Total
	$ $ $ $
Gross carrying amount
Balance 1 July 2018	5,070,019 419,081 - 5,489,100
Addition, internally developed	- - - -
Reclassification from plant & equipment	- - 505,699 505,699
Net exchange differences	- - - -
Balance 31 December 2018	5,070,019 419,081 505,699 5,994,799
Amortisation
Balance 1 July 2018	- - - -
Amortisation	- (8,737) (10,851) (19,568)
Impairment losses	- - - -
Net exchange differences	- - - -
Balance 31 December 2018	- (8,737) (10,851) (19,568)
Carrying amount 31December 2018	5,070,019 410,344 494,484 5,975,211
2017 Gross carrying amount Balance 1 July 2017 Addition, internally developed Net exchange differences Balance 31 December 2017 Amortisation Balance 1 July 2017 Amortisation Impairment losses Net exchange differences Balance 31 December 2017 Carrying amount 31December 2017	Development Asset1 Rehabilitation Asset2 Mine Development Total $ $ $ $
	5,070,019 403,650 - 5,473,669 - - - - - 6,154 - -
	5,070,019 397,496 - 5,467,515
	- - - - - - - - - - - -
	- - - -
	5,070,019 397,496 - 5,467,515

Note 1: Goodwill arising on acquisition of Graphmada. Note 2: Rehabilitation costs expected to be incurred upon closure of the Graphmada mine in Madagascar.

22

HALF-YEAR REPORT For the period ended 31 December 2018

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10. Trade and Other Payables

Trade and Other Payables
Current Unsecured liabilities: Trade Payables Other payables	31 December 2018 $ 30 June 2018 $ 731,470 481,310 443,186 272,395
	1,174,656 753,705

Other payables are recognised when the Group has identified a present obligation from the result of past events. These amounts include employee payment obligations, professional fees and statutory obligations.

Due to the short-term nature of these payables, their carrying value is assumed to approximate their fair value. Trade payables and other payables are non-interest-bearing and are normally settled on 30 to 60-day terms

11. Borrowings

11.1 Advances received Current Balance at the beginning of the period Over subscription funds received for shares1 Over subscription repaid Short term loan repaid to Stramin Global Resources Plc2 Funds settled upon issue of convertible notes	31 December 2018 $ 30 June 2018 $ 18,300 642,500 1 18,300 (7,500) - - (25,000) - (617,500)
	10,801 18,300

Note 1: Over subscription of capital raising funds received from investors during the reporting period, to be refunded. Note 2: During a previous period, the Group received a short-term non-interest-bearing advance from Stratmin Global Resources of which $25,000 was paid during the prior reporting period.

11.2 Convertible notes Current Balance at the beginning of the period Funds received for convertible notes Interest accrued Convertible notes settled upon issue of shares	31 December 2018 $ 30 June 2018 $ - - - 2,073,500 - 110,263 - (2,183,763)
	- -

During the prior period, on the 15 August 2017, the Company issued 2,073,500 unsecured convertible notes to subscribers, who were predominantly existing major shareholders, Directors and management, with a face value of $1.00 raising $2,073,500 (including costs). All the convertible notes, including accrued interest, were subsequently converted to equity by the issue of shares in the Company on the 5 December 2017.

12. Provisions

Non-Current Restoration and rehabilitation Tasmanian exploration assets Graphmada: Provision for rehabilitation – acquisition of subsidiary Exchange rate movement	31 December 2018 $ 30 June 2018 $ 694,242 694,242 419,082 406,484 - 12,598
	419,082 419,082
	1,113,324 1,113,324

23

HALF-YEAR REPORT For the period ended 31 December 2018

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13. Share Capital

Shares issued and authorised are summarised as follows:

2,761,382,864 (30 June 2018: 2,455,972,569) fully paid ordinary shares

31	December 2018	30 June 2018
	$	$
	92,131,705	88,005,521

Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group in proportion to the number of fully paid ordinary shares. On a show of hands every holder of ordinary shares present at a meeting, in person or by proxy, is entitled to one vote and upon a poll each share is entitled to one vote. The Group has no authorised share capital and the shares have no par value.

The movement in ordinary shares during the financial period are as follows:

Balance at the beginning of the period Issued during the period � Placement to sophisticated investors in Sept 2017 � Non-renounceable rights issue � Deferred placement � Settlement of convertible notes � Placement to sophisticated investors in Dec 2017 � Unlisted Options exercised in Feb 2018 at $0.015 � Listed Options exercised in Mar 2018 at $0.025 � Unlisted Options exercised in Apr 2018 at $0.01 � Listed Options exercised in Apr 2018 at $0.025 � Performance rights vested in Apr 2018 at nil � Listed Options exercised in May 2018 at $0.025 � Unlisted Options exercised in May 2018 at $0.01 (1) � Listed Options exercised in Jun 2018 at $0.025 � Unlisted Options exercised in Jun 2018 at $0.025 � Unlisted Options exercised in Jun 2018 at $0.01 � Fair value of unlisted options exercised Jun 2018 � Listed Options exercised in Aug 2018 at $0.025 � Unlisted Options exercised in Sep 2018 at $0.025 � Listed Options exercised in Sep 2018 at $0.025 � Settlement of geological consulting fees Sep 2018 at $0.025 � Listed Options exercised in Sep 2018 at $0.025 � Listed Options exercised in Nov 2018 at $0.025 � Unlisted Options exercised in Nov 2018 at $0.01 � Performance rights vested in Nov 2018 at nil � ESOP shares issued to employees in Dec 2018 at nil � Listed Options exercised in Sep 2018 at $0.025 � Placement to sophisticated investors in Dec 2018 � Capital raising costs Balance at the end of the period	Six (6) months to 31 December 2018 Year to 30 June 2018 Number of Shares $ Number of Shares $
	2,455,972,569 88,005,521 1,368,146,729 74,219,238 - - 272,727,273 3,000,000 - - 228,024,455 2,508,271 - - 45,454,545 500,000 - - 208,146,936 2,291,813 - - 90,909,090 1,000,000 - - 6,000,000 90,000 - - 11,500 288 - - 25,480,000 254,800 - - 3,176,000 79,400 - - 7,000,000 - - - 117,770,319 2,944,258 - - 1,650,000 16,500 - - 78,475,722 1,961,893 - - 2,100,000 52,500 - - 900,000 9,000 - 10,686 - - 2,400,000 60,000 - - 1,000,000 29,819 - - 10,875 272 - - 2,218,310 55,458 - - 20,400,000 510,000 - - 31,493,492 787,337 - - 900,000 9,000 - - 24,800,000 168,493 - - 7,350,000 95,550 - - 66,334 3,259 - - 214,771,284 2,684,640 - - - (288,330) - (922,439)
	2,761,382,864 92,131,705 2,455,972,569 88,005,521

Cash Financing Activities

(1) Issued to Bizzell Capital Partners in lieu of corporate advisory fees.

24

HALF-YEAR REPORT For the period ended 31 December 2018

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14. Reserves

	Foreign Currency
	Translation	Share Option
	Reserve$	Reserve$	Total$
Balance 1 July 2018	(232,544)	1,150,350	917,806
Reclassification to share capital on exercise of ESOP options	-	(183,998)	(183,998)
Expired ESOP unlisted options	-	(47,369)	(47,369)
Exchange differences on translatingforeign operations	(543,936)	-	(543,936)
Before tax	(543,936)	(231,367)	(775,303)
Tax benefit/(expense)	-	-	-
Net of tax	(543,936)	(231,367)	(775,303)
Balance 31 December 2018	(776,480)	918,983	142,503
	Foreign Currency
	Translation	Share Option
	Reserve$	Reserve$	Total$
Balance 1 July 2017	135,123	1,150,350	1,285,473
Exchange differences on translatingforeign operations	(367,667)	-	(367,667)
Before tax	(367,667)	-	(367,667)
Tax benefit/(expense)	-	-	-
Net of tax	(367,667)	-	(367,667)
Balance 30 June 2018	(232,544)	1,150,350	917,806

Foreign Currency Translation Reserve

The Foreign Currency Translation Reserve is used to recognise exchange differences arising from translation of the financial statements of foreign operations to Australian dollars.

Share Option Reserve

The Share Option Reserve records the items recognised as expense on valuation of employee share options and performance rights.

15. Contingencies

Contingent Liabilities

Millie’s Reward Lithium Project:

During the previous reporting period, the Company entered into a binding Term Sheet with Ruby-Red Madagascar SARL (a Company incorporated in Madagascar) and acquired two contiguous mining permits and the lithium mining rights for a third mining permit in Madagascar, that are prospective for pegmatite-hosted lithium mineralisation.

The consideration payable by the Company includes certain cash payments (refer to the Directors Report) and the requirement to issue Bass Metals Ltd shares to Ruby Red, contingent on the Company achieving the following milestones on the project: a) $US50,000 in shares on the acquisition of the mining permits and completion of the transaction;

b) $US50,000 worth of shares upon establishing a JORC compliant resource of >5 million tonnes at >1.5% Li2O;

c) $US50,000 worth of shares upon the tabling of a feasibility study for Millie’s Reward;

d) $US50,000 worth of shares upon first sales of either Direct Shipping Ore (DSO) or Chemical Grade (>6% Li2O) lithium concentrates.

In addition, the Company is required to pay to Ruby Red a 0.25% concentrate sales royalty on any future lithium concentrate or DSO sales from Millie’s Reward for a period of 12 years from first concentrate or DSO sales, up to US$US2m.

Stratmin Global Resources Plc (“Stratmin”):

As part of the agreement to acquire the Graphmada mine, the Company is required to pay Stratmin a 2.5% (“the Royalty percentage”) royalty. The royalty to be paid is based on the value of gross sales less defined production and other costs with the Royalty percentage applied to this value. The agreement terminates on 1 January 2029 or upon total Royalty payments reaching $5,000,000, whichever occurs first.

25

HALF-YEAR REPORT For the period ended 31 December 2018

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Contingent Assets

No contingent assets exist at reporting date.

16. Share-based Payments

The following share-based payment arrangements existed at reporting date.

• (i) Bass Metals Ltd Employee Share and Option Plan (ESOP) – shares

Outstanding at the beginning of the period Granted Outstanding at the end of the period	31 December 2018 30 June 2018 Number of Shares Fair Value at date ofgrant$ Number of Shares Fair Value at date ofgrant$
	- - - - 7,350,000 0.013 - -
	7,350,000 0.013 - -

ESOP shares were issued pursuant to the Bass Metals Ltd Incentive Plan to incentivise and reward employees and are held in trust by Bass Metals Holdings Pty Ltd on behalf of the employees. The shares were issued for nil consideration. The ASX listed market price per share at the date of issue was $0.013, therefore the shares had a combined fair value of $95,550. Refer to note 13.

(ii) Bass Metals Ltd Employee Share and Option Plan (ESOP) – unlisted options

Outstanding at the beginning of the period Lapsed Exercised Outstanding at the end of the period Exercisable at the end of the period1	31 December 2018 30 June 2018 Number of Options Weighted Average Exercise Price$ Number of Options Weighted Average Exercise Price$
	133,900,000 0.060 136,000,000 0.062 (9,000,000) 0.032 - - (1,000,000) 0.025 (2,100,000) 0.025
	123,900,000 0.063 133,900,000 0.060
	123,900,000 0.063 133,900,000 0.060

Note 1: Total ESOP unlisted options outstanding at the end of the period represents nil (2018: 10,000,000) ESOP Director options issued53,9000,000 (2018: 53,9000,000) ESOP Directors options 2017 and 70,000,000 (2018: 70,000,000) ESOP options issued to Group Executives.

(iii) Performance Rights

Under the ESOP, certain Directors and Group Executives may be granted a right to be issued a share in the future subject to the performance based vesting conditions being met.

The Performance Rights will require Directors and Group Executives to achieve certain Key Performance Indicators as detailed in the Annual Financial Statements of the Group for the year ended 30 June 2018.

Outstanding at the beginning of the period Vested Outstanding at the end of the period	31 December 2018 30 June 2018 Number of Performance Rights Number of Performance Rights
	55,000,000 62,000,000 (24,800,000) (7,000,000)
	30,200,000 55,000,000

26

HALF-YEAR REPORT For the period ended 31 December 2018

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16. Share-based Payments (continued)

Total Company Listed Options

otal Company Listed Options
Outstanding at the beginning of the period Granted Lapsed Exercised Outstanding at the end of the period Exercisable at the end of the period1	31 December 2018 30 June 2018 Number of Options Weighted Average Exercise Price$ Number of Options Weighted Average Exercise Price$
	478,966,580 0.025 344,847,424 0.025 - - 333,552,697 0.025 (424,532,879) 0.025 (54,433,701) 0.025 (199,433,541) 0.025
	- - 478,966,580 0.025
	- - 478,966,580 0.025

Note 1: Total Company listed options outstanding at the end of the period represents nil (30 June 2018: 452,404,309) listed options issued under placement to investors and nil (30 June 2018: 26,512,271) options issued to Directors as part of the investor placement.

Total Company Unlisted Options

tal Company Unlisted Options
Outstanding at the beginning of the period Granted Lapsed Exercised Outstanding at the end of the period Exercisable at the end of the period1	31 December 2018 30 June 2018 Number of Options Weighted Average Exercise Price$ Number of Options Weighted Average Exercise Price$
	144,254,220 0.057 180,384,220 0.049 246,457,165 0.050 - - (18,454,220) 0.022 - - (1,900,000) 0.018 (36,130,000) 0.012
	370,357,165 0.054 144,254,220 0.057
	370,357,165 0.054 144,254,220 0.057

Note 1: Total unlisted options outstanding at the end of the period represents 246,457,165 options issued to investors as part of the placements during the period, nil (2018: 8,254,220) options issued under placement to investors, nil (2018: 2,100,000) options issued to Directors as part of investor placement, nil (2018: 10,000,000 options) ESOP issued to Directors, 53,900,000 (2018: 53,900,000) ESOP Directors options and 70,000,000 (2018:70,000,000) ESOP options issued to Group Executives.

27

HALF-YEAR REPORT For the period ended 31 December 2018

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17. Fair Value Measurement of Financial Instruments

17.1 Fair value hierarchy

The financial instruments recognised at fair value in the statements of financial position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy consists of three levels:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities;

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (as prices) or indirectly (derived from prices); and

• Level 3: Inputs for the asset or liability that is not based on observable market data (unobservable inputs).

The following table shows the levels within the hierarchy of financial assets and liabilities measured at fair value on a recurring basis.

31 December 2018 Financial Assets VAT receivable 31 December 2017 Financial Assets VAT receivable Financial Liabilities Deferred consideration payable	Level 1 Level 2 Level 3 Total $ $ $ $
	- - 414,305 414,305
	Level 1 Level 2 Level 3 Total $ $ $ $
	- - 237,491 237,491
	- - 200,000 200,000

17.2 Measurement of fair value of financial instruments

The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting period.

The carrying amounts of the trade and other receivables, trade and other payables, deferred consideration payable and borrowings are considered to be a reasonable approximation of their fair value.

18. Events Subsequent to Reporting Date

Subsequent to reporting date and up to and including the date of this report, the Company has received $339,000 as part of the share placement, announced on 14 December 2018, at an issue price of A$0.0125 per. As some share placement funds are still to be collected, the Company has not yet issued the fully paid ordinary shares.

On 1 March 2019, the Company announced it had completed its maiden drilling and soil sampling programs over its Madagascan Lithium Projects referred to as “Millie’s Reward”. The Lithium Projects are wholly owned by the Company and details regarding the recently completed programs and the Company’s activity, is included in the release of 1 March 2019.

28

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Central Park, Level 43 152-158 St Georges Terrace Perth WA 6000

Correspondence to: PO Box 7757 Cloisters Square Perth WA 6850

T +61 8 9480 2000 F +61 8 9480 2050 E info.wa@au.gt.com W www.grantthornton.com.au

Auditor’s Independence Declaration

To the Directors of Bass Metals Pty Ltd

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of Bass Metals Limited for the half-year ended 31 December 2018, I declare that, to the best of my knowledge and belief, there have been:

a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

b no contraventions of any applicable code of professional conduct in relation to the audit.

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GRANT THORNTON AUDIT PTY LTD

Chartered Accountants

==> picture [122 x 51] intentionally omitted <==

L A Stella

Partner – Audit & Assurance

Perth, 11 March 2019

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

www.grantthornton.com.au

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation.

==> picture [158 x 31] intentionally omitted <==

Central Park, Level 43 152-158 St Georges Terrace Perth WA 6000

Correspondence to: PO Box 7757 Cloisters Square Perth WA 6850

T +61 8 9480 2000 F +61 8 9480 2050 E info.wa@au.gt.com W www.grantthornton.com.au

Independent Auditor’s Review Report

To the Members of Bass Metals Limited

Report on the review of the half year financial report

Conclusion

We have reviewed the accompanying half year financial report of Bass Metals Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 December 2018, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half year ended on that date, a description of accounting policies, other selected explanatory notes, and the directors’ declaration.

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the half year financial report of Bass Metals Limited does not give a true and fair view of the financial position of the Group as at 31 December 2018, and of its financial performance and its cash flows for the half year ended on that date, in accordance with the Corporations Act 2001 , including complying with Accounting Standard AASB 134 Interim Financial Reporting .

Material uncertainty related to going concern

We draw attention to Note 1 in the financial report, which indicates that the Group incurred a net loss of $3,066,664 during the half year ended 31 December 2018 and, as of that date, the Group had net operating cash outflows of $3,831,239. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern. 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 gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

www.grantthornton.com.au

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation.

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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 2018 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 Bass Metals Limited, 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.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

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L A Stella

Partner – Audit & Assurance

Perth, 11 March 2019

HALF-YEAR REPORT For the period ended 31 December 2018

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DIRECTORS’ DECLARATION

1. In the opinion of the Directors of Bass Metals Ltd (“Company”):

2. a. The consolidated financial statements and notes of Bass Metals Ltd are in accordance with the Corporations Act 2001, including:

   • i. Giving a true and fair view of its financial position as at 31 December 2018 and of its performance, for the half-year ended on that date; and

   • ii. Complying with Australian Accounting Standard AASB134 Interim Financial Reporting; and

3. b. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the Directors.

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RA Anthon Chairman

Brisbane, Queensland 11 March 2019

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