MAGMATIC RESOURCES LIMITED — Annual Report 2017

May 16, 2017

Modeling Resources Pty Ltd

ABN 53 169 211 876

Financial Report - 30 June 2016

Modeling Resources Pty Ltd Directors' Report 30 June 2016

The directors present their report, together with the financial statements, on the company for the year ended 30 June 2016.

Directors

The following persons were directors of the company during the whole of the financial year and up to the date of this report unless otherwise stated:

David J Richardson David W Berrie Rvoko Komatsuzaki Alan J Gibson (appointed 21 January 2016, resigned 25 November 2016)

Principal activities

During the financial year the principal continuing activities of the company consisted of exploration activities for gold and base metals in the East Lachlan region of New South Wales.

Dividends

There were no dividends paid, recommended or declared during the current or previous financial year.

Review of operations

The loss for the company after providing for income tax amounted to \$203,261 (30 June 2015; \$156,857).

Significant changes in the state of affairs

On 27 August 2015, the Company entered into a Tenement Sale and Purchase Agreement with Gold Fields Australia Pty Ltd in relation to 4 exploration projects (consisting of 6 tenements) located in the East Lachlan region of New South Wales. Australia. The acquisition was settled on 17 December 2015 and consideration for the projects consisted of 20% of the share capital of Modeling and an agreement for Gold Fields to maintain a 20% shareholding until such time as Modeling has spent \$3m in exploration of the tenements.

Other than as outlined above, there were no significant changes in the state of affairs of the company during the financial year.

Matters subsequent to the end of the financial year

On 19 September 2016, the Company raised a total of \$500,000 through the issue of convertible notes with a coupon of 5%. The notes are convertible at a 15% discount to the Initial Public Offering (IPO) price of the Company with a maturity date of 30 September 2017.

On 28 October 2016, Magmatic Resources Limited (Magmatic) was incorporated and following a transfer of Modeling shares from existing Modeling shareholders in the Company for shares in Magmatic by way of a scrip for scrip transfer, Modeling became a wholly owned subsidiary of Magmatic.

As at the date of this report, the Company is currently undertaking an IPO process to be listed on the Australian Securities Exchange (ASX) which is expected to be finalised by late February 2017.

Other than as outlined above, no matter or circumstance has arisen since 30 June 2016 that has significantly affected, or may significantly affect the company's operations, the results of those operations, or the company's state of affairs in future financial years.

Likely developments and expected results of operations

Information on likely developments in the operations of the company and the expected results of operations have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the company.

Modeling Resources Pty Ltd Directors' report
30 June 2016

Environmental regulation

The company is not subject to any significant environmental regulation under Australian Commonwealth or State law.

Shares under option

There were no unissued ordinary shares of the company under option outstanding at the date of this report.

Shares issued on the exercise of options

There were no ordinary shares of the company issued on the exercise of options during the year ended 30 June 2016 and up to the date of this report.

Indemnity and insurance of auditor

The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor.

During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity.

This report is made in accordance with a resolution of directors.

On behalf of the directors

71

David W Berrie Director

22 December 2016 Perth

Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

DECLARATION OF INDEPENDENCE BY NEIL SMITH TO THE DIRECTORS OF MODELING RESOURCES PTY LTD

As lead auditor of Modeling Resources Pty Ltd for the year ended 30 June 2016, I declare that, to the best of my knowledge and belief, there have been no contraventions of any applicable code of professional conduct in relation to the audit.

Neil Smith Director

BDO Audit (WA) Pty Ltd

Perth, 22 December 2016

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 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 (WA) 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) in each State or Territory other than Tasmania.

Modeling Resources Pty Ltd Contents 30 June 2016

Contents

Statement of profit or loss and other comprehensive income
Statement of financial position	6
Statement of changes in equity
Statement of cash flows	8
Notes to the financial statements
Directors' declaration	19
Independent auditor's report to the members of Modeling Resources Pty Ltd	20

General information

The financial statements cover Modeling Resources Pty Ltd as an individual entity. The financial statements are presented in Australian dollars, which is Modeling Resources Pty Ltd's functional and presentation currency.

Modeling Resources Pty Ltd is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business are:

Registered office

Level 1 11 Lucknow Place West Perth WA 6005 Principal place of business

Level 1 11 Lucknow Place West Perth WA 6005

A description of the nature of the company's operations and its principal activities are included in the directors' report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of directors, on 22 December 2016. The directors have the power to amend and reissue the financial statements.

Modeling Resources Pty Ltd Statement of profit or loss and other comprehensive income For the year ended 30 June 2016

	Note	2016 \$	2015 \$
Revenue	3	104	365
Expenses Corporate and administrative expenses Exploration and evaluation expenses Other expenses		(71, 354) (132, 011)	(26, 703) (130, 519)
Loss before income tax expense		(203, 261)	(156, 857)
Income tax expense
Loss after income tax expense for the year attributable to the owners of Modeling Resources Pty Ltd		(203, 261)	(156, 857)
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year attributable to the owners of Modeling Resources Pty Ltd		(203, 261)	(156, 857)

Modeling Resources Pty Ltd
Statement of financial position
As at 30 June 2016

	Note	2016 \$	2015 \$
Assets
Current assets
Cash and cash equivalents	5	45,560	12,299
Trade and other receivables	$\sqrt{6}$	11,853	13,846
Other	$\overline{7}$	5,947	2,468
Total current assets		63,360	28,613
Non-current assets
Other	8	10,000	10,000
Property, plant and equipment	$\overline{9}$	27,533	4,054
Exploration and evaluation assets	10	50
Total non-current assets		37,583	14,054
Total assets		100,943	42,667
Liabilities
Current liabilities
Trade and other payables	11	33,581	814
Borrowings	12	440,345	211,700
Total current liabilities		473,926	212,514
Total liabilities		473,926	212,514
Net assets/(liabilities)		(372, 983)	(169, 847)
Equity
Issued capital	13	250	125
Retained profits/(losses)	14	(373, 233)	(169, 972)
Total equity		(372, 983)	(169, 847)

Modeling Resources Pty Ltd
Statement of changes in equity
For the year ended 30 June 2016

	Issued Capital	Retained profits/ (losses)	Total equity
	S		\$
Balance at 1 July 2014	100	(13, 115)	(13, 015)
Loss after income tax expense for the year Other comprehensive income for the year, net of tax.	÷	(156, 857)	(156, 857)
Total comprehensive loss for the year		(156, 857)	(156, 857)
Transactions with owners recorded directly in equity Issue of ordinary shares	25		25
Total transactions with owners recorded directly in equity	25		25
Balance at 30 June 2015	125	(169, 972)	(169, 847)
	Issued Capital	Retained profits/	Total equity
	\$	(losses)	\$
Balance at 1 July 2015	125	(169, 972)	(169, 847)
Loss after income tax expense for the year Other comprehensive income for the year, net of tax		(203, 261)	(203, 261)
Total comprehensive loss for the year		(203, 261)	(203, 261)
Transactions with owners recorded directly in equity Issue of ordinary shares	125		125
Total transactions with owners recorded directly in equity	125		125
Balance at 30 June 2016	250	(373, 233)	(372, 983)

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

Modeling Resources Pty Ltd
Statement of cash flows
For the year ended 30 June 2016

	Note	2016	2015 \$
Cash flows from operating activities
Payments to suppliers and consultants (inclusive of GST) Interest received		(185, 456) 104	(177, 975) 365
Other revenue
GST refunds		16,469
Net cash from operating activities	18	(168, 883)	(177, 610)
Cash flows from investing activities
Tenement security deposits			(10,000)
Payments for property, plant and equipment		(26, 576)	(4, 774)
Net cash used in investing activities		(26, 576)	(14, 774)
Cash flows from financing activities
Proceeds from borrowings		228,645	125,699
Proceeds from issue of shares		75	25
Net cash from financing activities		228,720	125,724
Net increase/(decrease) in cash and cash equivalents		33,261	(66, 660)
Cash and cash equivalents at the beginning of the financial year		12,299	78,959
Cash and cash equivalents at the end of the financial year	5	45,560	12,299

Note 1. Significant accounting policies

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

New. revised or amending Accounting Standards and Interpretations adopted

The company has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Basis of preparation

In the directors' opinion, the company is not a reporting entity because there are no users dependent on general purpose financial statements.

These are special purpose financial statements that have been prepared for the purposes of preparing and distributing financial statements to the owners of Modeling Resources Pty Ltd. The directors have determined that the accounting policies adopted are appropriate to meet the needs of the owners of Modeling Resources Pty Ltd.

These financial statements have been prepared in accordance with the recognition and measurement requirements specified by the Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the disclosure requirements of AASB 101 'Presentation of Financial Statements', AASB 107 'Statement of Cash Flows', AASB 108 'Accounting Policies, Changes in Accounting Estimates and Errors', AASB 1031 'Materiality', AASB 1048 'Interpretation of Standards' and AASB 1054 'Australian Additional Disclosures', as appropriate for for-profit oriented entities.

Historical cost convention

The financial statements have been prepared under the historical cost convention.

Critical accounting estimates

The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2.

Going Concern

During the period, the company incurred a net loss before income tax of \$203,261, experienced net cash outflows from operations of \$168,883 and had a working capital deficiency of \$410,566. As at 30 June 2016 the cash balance is \$45,460. During the period the company acquired 6 tenements which included minimum expenditure commitments.

The Directors have reviewed the cash flow requirements in the next 12 months and recognise that the ability of the company to continue as a going concern is dependent upon the success of the fundraising under the prospectus and continued shareholder support to continue to fund its operational activities.

These conditions indicate a material uncertainty that may cast significant doubt about the company's ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.

The Directors believe there are sufficient funds to meet the company's working capital requirements as at the date of this report.

Note 1. Significant accounting policies (continued)

These financial statements have been prepared on the basis that the company is a going concern, which contemplates the continuity of normal business activity, realisation of assets and settlement of liabilities in the normal course of business for the following reasons:

• The company is currently in the process of completing a prospectus to raise approximately \$5,000,000 in funds; and
• The company has obtained confirmation that the shareholder loans will not be recalled in the next 12 months from the date of this report and continue to provide financial support until the completion of the IPO.

Should the company not be able to continue as a going concern, it may be required to realise its assets and discharge its liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements

The financial report does not include any adjustments relating to the recoverability and classification of recorded assets amounts or liabilities that might be necessary should the entity not continue as a going concern.

Revenue recognition

Revenue is recognised when it is probable that the economic benefit will flow to the company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.

Interest

Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate. which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

Other revenue

Other revenue is recognised when it is received or when the right to receive payment is established.

Income tax

The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

Current and non-current classification

Assets and liabilities are presented in the statement of financial position based on current and non-current classification.

An asset is current when: it is expected to be realised or intended to be sold or consumed in normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within twelve months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current.

A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the purpose of trading: it is due to be settled within twelve months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.

Note 1. Significant accounting policies (continued)

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinguency in payments (more than 60 days overdue) are considered indicators that the trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

Other receivables are recognised at amortised cost, less any provision for impairment.

Property, plant and equipment

Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:

Plant and equipment

3-7 years

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets whichever is shorter.

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the company. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.

Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the company will obtain ownership at the end of the lease term.

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.

Impairment of non-financial assets

Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

Note 1. Significant accounting policies (continued)

Trade and other payables

These amounts represent liabilities for goods and services provided to the company prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

Fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either; in the principle market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interest. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Exploration expenditure

Exploration expenditure is expensed to the statement of profit or loss as incurred and acquisition costs are capitalised as non-current assets. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Where uncertainty exists as to the future viability of certain areas. the value of the area of interest is written off or provided against.

The carrying value of capitalised exploration expenditure is assessed for impairment at the cash generating unity level whenever facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable amounts.

An impairment exists when the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. Any impairment losses are recognised in the profit and loss account.

Borrowings

Loans and borrowings are initially recognised at the fair value of consideration received, net of transaction costs. They are subsequently measured at amortised cost using effective interest method.

Share based payments

Equity-settled share based payments in return for goods and services are measured at fair value of the goods and services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments.

Asset acquisition not constituting a Business

When an asset acquisition does not constitute a business combination, the assets and liabilities are assigned a carrying amount based on their relative fair values in an asset purchase transaction and no deferred tax will arise in relation to the acquired assets and assumed liabilities as the initial recognition exemption for deferred tax under AASB 112 applies. No goodwill will arise on the acquisition and transaction costs of the acquisition will be included in the capitalised cost of the asset.

Issued capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Goods and Services Tax ('GST') and other similar taxes

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Note 1. Significant accounting policies (continued)

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority

Deferred tax

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered

New Accounting Standards and Interpretations not vet mandatory or early adopted

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not vet mandatory. have not been early adopted by the company for the annual reporting period ended 30 June 2016. The company has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.

Note 2. Critical accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.

Provision for impairment of receivables

The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtors financial position.

Provision for impairment of inventories

The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that affect inventory obsolescence.

Estimation of useful lives of assets

The company determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

Impairment of non-financial assets other than goodwill and other indefinite life intangible assets

The company assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at each reporting date by evaluating conditions specific to the company and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.

Note 2. Critical accounting judgements, estimates and assumptions (continued)

Employee benefits provision

As discussed in note 1, the liability for employee benefits expected to be settled more than 12 months from the reporting date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account.

Asset acquisition not constituting a Business

In determining when an acquisition is an asset acquisition and not a business, significant judgement is required to assess whether the assets acquired constitute a business in accordance with AASB3. Under AASB3, a business is an integrated set of activities and assets that is capable of being conducted or managed for the purpose of providing a return, and consists of inputs and processes, which when applied to those inputs has the ability to create outputs.

Note 3. Revenue

	2016	2015
Other revenue Interest	104	365
Other revenue	104	365
Revenue	104	365

Note 4. Expenses

	2016	2015 \$
Profit before income tax includes the following specific expenses:
Depreciation Plant and equipment	3,096	720
Rental expense relating to operating leases Office lease payments	30,333	13,250
Travel expenses Flights and accommodation	10,332	7,839

Note 5. Current assets - cash and cash equivalents

	2016	2015
Cash on hand Cash at bank	700 44,860	125 12,174
	45,560	12,299

Note 6. Current assets - trade and other receivables

	2016	2015
Other receivables - GST receivable	11,853	13,846
	11,853	13,846

Note 7. Current assets - other

	2016	2015 æ
Prepayments	5,947	2,468
	5,947	2,468

Note 8. Non-current assets - other

	2016	2015
Tenement Security Deposits	10,000	10,000
	10,000	10,000

Note 9. Non-current assets - property, plant and equipment

complete the control complete	2016	2015 \$
Plant and equipment - at cost Less: Accumulated depreciation	31,349 (3,816)	4,774 (720)
	27,533	4,054
	27,533	4.054

Note 10. Non-current assets - exploration and evaluation assets

Movement in Exploration and Evaluation Assets	2016	2015
Carrying amount at beginning of year Additions $\overline{\phantom{a}}$	50
Carrying amount at end of year	50

On 27 August 2015, the Company entered into a Tenement Sale and Purchase Agreement with Gold Fields Australia Pty Ltd in relation to 4 exploration projects (consisting of 6 tenements) located in the East Lachlan region of New South Wales. Australia. The acquisition was settled on 17 December 2015. Consideration for the acquisition was the issue of 20% of the issued capital of the Company. Further details outlined in Note 14 - Share based payments.

Note: The ultimate recoupment of costs carried forward for exploration and evaluation is dependent on the successful development and commercial exploitation of sale of the respective areas of interest

Note 11. Current liabilities - trade and other payables

	2016 ъ	2015 Ф
Trade payables Accrued expenses	18,581 15,000	814
	33,581	814

Note 12. Current liabilities - financial liabilities

	2016	2015 ъ
Shareholder Loan - Bilingual Software Pty Ltd Shareholder Loan - Davthea Pty Ltd	237,845 202,500	121,700 90,000
	440,345	211,700

The shareholder loans have been incurred to fund the ongoing exploration activities and general working capital of the Company. The loans are interest free and are not expected to be repaid prior to the Company listing on ASX.

Note 13. Equity - issued capital

	2016 Shares	2015 Shares	2016	2015 ¢
Ordinary shares - fully paid	500	125	250	125

Movements in ordinary share capital during the current and prior financial periods were as follows:

	Shares
Balance as at 1 July 2014	100	100
17 June 2015 - Share Issue	25	25
Balance as at 30 June 2015	125	125
Balance as at 1 July 2015	125	125
21 August 2015 - Share Issue	75	75
17 December 2015 - Share Issue (Project Acquisition)	50	50
7 January 2016 - 2 for 1 Share Split	250
Balance as at 30 June 2016	500	250

Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital.

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Note 13. Equity - retained profits

	2016	2015
Retained losses at the beginning of the financial year Loss after income tax expense for the year	(169,972) (203, 261)	(13, 115) (156, 857)
Retained losses at the end of the financial year	(373, 233)	169,972)

Note 14. Share based payments

Asset purchase

During the period, the company entered into a Tenement Sale and Purchase agreement with Gold Fields Australia Pty Ltd in relation to 4 exploration tenements. The acquisition was settled on 17 December 2015 for a consideration of 50 shares in Modelling Resources (valued at \$1 per share given the fair value of the assets acquired could not be reliably determined due to the nature of early exploration assets.)

Note 15. Contingent liabilities

The company had no contingent liabilities as at 30 June 2016 and 30 June 2015.

Note 16, Commitments

	2016	2015
Exploration Commitments - East Lachlan region, NSW;
Within one year	492,000	28,000
After one year but not more than 5 years	272,285	56,000
More than 5 years
Lease Commitments - Orange exploration office:
Within one year		47,667
After one year but not more than 5 years.
More than 5 years
	764,285	131,667

On 27 August 2015, the Company entered into a Tenement Sale and Purchase Agreement with Gold Fields Australia Pty Ltd in relation to 4 exploration projects (consisting of 6 tenements) located in the East Lachlan region of New South Wales, Australia. The acquisition was settled on 17 December 2015 and consideration for the projects consisted of 20% of the share capital of Modeling and an agreement for Gold Fields to maintain a 20% shareholding until such time as Modeling has spent \$3m in exploration of the tenements.

Note 17. Events after the reporting period

On 19 September 2016. the Company raised a total of \$500,000 through the issue of convertible notes with a coupon of 5%. The notes are convertible at a 15% discount to the Initial Public Offering (IPO) price of the Company with a maturity date of 30 September 2017.

On 28 October 2016, Magmatic Resources Limited (Magmatic) was incorporated and following a transfer of Modeling shares from existing Modeling shareholders in the Company for shares in Magmatic by way of a scrip for scrip transfer. Modeling became a wholly owned subsidiary of Magmatic.

As at the date of this report, the Company is currently undertaking an IPO process to be listed on the Australian Securities Exchange (ASX) which is expected to be finalised by late February 2017.

Other than as outlined above, no matter or circumstance has arisen since 30 June 2016 that has significantly affected, or may significantly affect the company's operations, the results of those operations, or the company's state of affairs in future financial years.

Note 18. Reconciliation of loss after income tax to net cash from operating activities

	2016	2015 \$.
Loss after income tax expense for the year	(203, 261)	(156, 857)
Adjustments for: Depreciation and amortisation	3.096	720
Change in operating assets and liabilities: Decrease/(increase) in trade and other receivables. Increase in prepayments Increase/(decrease) in trade and other payables	1,993 (3, 479) 32,767	13,846) (2, 468) (5, 159)
Net cash from operating activities	(168, 883)	(177, 610)

Modeling Resources Pty Ltd Directors' declaration 30 June 2016

In the directors' opinion:

• the company is not a reporting entity because there are no users dependent on general purpose financial statements. $\bullet$ Accordingly, as described in note 1 to the financial statements, the attached special purpose financial statements have been prepared for the purposes of preparing and distributing financial statements to the owners of Modeling Resources Pty Ltd:
• the attached financial statements and notes thereto comply with the Accounting Standards as described in note 1 to the $\bullet$ financial statements and other mandatory professional reporting requirements;
• the attached financial statements and notes thereto give a true and fair view of the company's financial position as at 30 $\bullet$ June 2016 and of its performance for the financial period ended on that date; and
• there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due ٠ and payable.

Signed in accordance with a resolution of directors.

On behalf of the directors

$111$

David W Berrie Director

22 December 2016 Perth

Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

INDEPENDENT AUDITOR'S REPORT

To the members of Modeling Resources Pty Ltd

Report on the Financial Report

We have audited the accompanying financial report, being a special purpose financial report of Modeling Resources Pty Ltd, which comprises the statement of financial position as at 30 June 2016, the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration.

Directors' Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the financial report, and have determined that the basis of preparation described in Note 1 to the financial report is appropriate to meet the needs of the owners of Modeling Resources Pty Ltd. The directors' responsibility also includes such internal control as the directors determine is necessary to enable the preparation and fair presentation of a financial report that is free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We have conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Australian professional accounting bodies.

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 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 (WA) 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

Opinion

In our opinion the financial report presents fairly, in all material respects, the financial position of Modeling Resources Pty Ltd as at 30 June 2016, and its financial performance and its cash flows for the year in accordance with Australian Accounting Standards to the extent described in Note 1.

Emphasis of matter

Without modifying our opinion, we draw attention to Note 1 in the financial report, which indicates that the ability of the company to continue as a going concern is dependent on the success of the fundraising under the prospectus and the continued financial support from its shareholders. These conditions, along with other matters as set out in Note 1, indicate the existence of a material uncertainty that may cast significant doubt about the company's ability to continue as a going concern and therefore, the company may be unable to realise its assets and discharge its liabilities in the normal course of business.

Basis of Accounting

Without modifying our opinion, we draw attention to Note 1 to the financial report, which describes the basis of accounting. The financial report has been prepared for the purpose of fulfilling the directors' financial reporting responsibilities to meet the needs of the owners of Modeling Resources Pty Ltd. As a result, the financial report may not be suitable for another purpose.

Yours faithfully

BDO Audit (WA) Pty Ltd

Neil Smith Director

Perth, 22 December 2016