MEC RESOURCES LIMITED — Interim / Quarterly Report 2016

Feb 25, 2016

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Appendix 4D -Half year report Results for announcement to the market

Appendix 4D -Half year report Results for announcement to the market
Name of Entity	MEC Resources Limited
ABN	44 113 900 020
Half Year Ended	31 December 2015
Previous Corresponding Reporting Period	31 December 2014
$A'000
Revenues from ordinary activities (Loss) from ordinary activities after tax attributable to members Net (loss) for the period attributable to members		down 13% to 13 down 59% to (529) down 59% to (529)
Dividends (distributions)		Amount per security	Franked amount per security
Final dividend Interim dividend		Nil	Nil
Previous corresponding period		N/A	N/A

Please refer to attached accounts for commentary on the results

Other notes to the condensed financial statements

Other notes to the condensed financial statements
Ratios	Current period	Previous corresponding Period
Loss before tax / revenue Consolidated (loss) from ordinary activities before tax as a percentage of revenue	(4178.88)%	(8,854.05)%
Loss after tax / equity interests Consolidated net (loss) from ordinary activities after tax attributable to members as a percentage of equity (similarly attributable) at the end of theperiod	(2.07)%	(5.19)%
NTA Backing	Current period	Previous corresponding Period
Net tangible asset backing per ordinary security	15.8 cps	18.9 cps

Contents

MEC Resources Ltd and its controlled entities

The operating loss for the consolidated entity after tax for the half- year ended 31 December 2015 was $674,943 (2014: $2,347,230).

The net assets of the consolidated entity have decreased by $674,415 to $28,830,270 at 31 December 2015.

Developments during the year included:

Advent Energy Ltd

• On 28 January 2016 Advent Energy announced that the National Offshore Petroleum Titles Administrator (NOPTA) had approved a suspension of the PEP11 Year 2 work program of a 200 km 2D seismic survey and geotechnical studies until 12th August 2016.

MEC Resources Ltd and its controlled entities

Page Number

Contents

Directors’ Report .................................................................................................................................... 1 Auditor Independence Declaration ................................................................................................... 3 Directors’ Declaration ........................................................................................................................... 4 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income ...... 5 Condensed Consolidated Statement of Financial Position ............................................................ 6 Condensed Consolidated Statement of Changes in Equity........................................................... 7 Condensed Consolidated Statement of Cash Flows ....................................................................... 8 Notes to the Financial Statements ...................................................................................................... 9 Independent Auditor’s Review Report ............................................................................................. 16

Company Information

Directors

H Goh – Non-Executive Chairman D L Breeze – Executive Director K O Yap – Non-Executive Director D Ambrosini – Executive Director

Company Secretary

Deborah Ambrosini

Registered Office

Auditor

Nexia Perth Audit Services Pty Ltd Level 3, 88 William Street PERTH WA 6000

Share Registry

Security Transfer Registrars Pty Ltd 770 Canning Highway APPLECROSS WA 6153

14 View Street NORTH PERTH WA 6006

Australian Stock Exchange Listing

Principal Business Address

14 View Street NORTH PERTH WA 6006 Telephone: (08) 9328 8400 Facsimile: (08) 9328 8733 Website: www.mecresources.com.au E-mail: admin@mecresources.com.au

Australian Stock Exchange Limited (Home Exchange: Perth, Western Australia) ASX Code: MMR

Australian Business Number

44 113 900 020

Directors’ Report (continued)

MEC Resources Ltd and its controlled entities

The directors of MEC Resources Ltd (“ MEC Resources ”) submit herewith the financial report for the half year ended 31 December 2015. In order to comply with the provisions of the Corporations Act 2001 , the directors report as follows:

Directors

The names of the directors of the company during or since the end of the period are: H Goh

D L Breeze K O Yap D Ambrosini

Review of Operations

Operating loss for the entity after tax for the half-year ended 31 December 2015 was $674,943 (2014: $2,347,230).

Advent Energy Ltd

• On 28 January 2016 Advent Energy announced that the National Offshore Petroleum Titles Administrator (NOPTA) had approved a suspension of the PEP11 Year 2 work program of a 200 km 2D seismic survey and geotechnical studies until 12th August 2016.

Subsequent Events

On 28 January 2016 Advent Energy announced that the National Offshore Petroleum Titles Administrator (NOPTA) had approved a suspension of the PEP11 Year 2 work program of a 200 km 2D seismic survey and geotechnical studies until 12th August 2016.

On 16 February 2016 MEC investee Advent Energy announced that it had been advised of the suspension of the permit terms of EP 386 in the onshore Bonaparte Basin, north-eastern Western Australia. The WA Department of Mines has granted a suspension of the condition requiring the completion of the existing work commitments for a period of 12 months to 31 March 2017.

Dividends

The Directors recommend that no dividend be paid in respect of the current period and no dividends have been paid or declared since the commencement of the period.

1

Directors’ Report (continued) MEC Resources Ltd and its controlled entities

Auditor’s Independence

The directors received a declaration of independence from the auditor. This is included in the financial report on page 3.

Signed in accordance with a resolution of the directors made pursuant to s306(3) of the Corporations Act 2001 .

On behalf of the Directors

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D L Breeze Executive Director PERTH, 25 February 2016

2

Auditor’s independence declaration under section 307C of the Corporations Act 2001

To the directors of MEC Resources Limited

I declare that, to the best of my knowledge and belief, in relation to the review for the half year ended 31 December 2015, there have been:

• (i) no contraventions of the auditor’s independence requirements as set out in the Corporations Act 2001 in relation to the review; and

• (ii) no contraventions of any applicable code of professional conduct in relation to the review.

Nexia Perth Audit Services Pty Ltd

Amar Nathwani Director

Perth, 25 February 2016

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MEC Resources Ltd and its controlled entities

Directors’ Declaration

The directors declare that:

• (a) in the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and

• (b) in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001 , including compliance with accounting standards and giving a true and fair view of the financial position and performance of the consolidated entity.

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

On behalf of the Directors

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D L Breeze Executive Director PERTH, 25 February 2016

4

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income for the half year ended 31 December 2015 MEC Resources Ltd and its controlled entities

Note Revenue Revenue from ordinary activities 4 Other gains/(losses) 4 Administration expenses Consulting and legal expenses Management services expense Employee Benefits expense Interest expense Insurance expenditure Other expenses Traveling expense Loss before income tax Income tax expense Loss from continuing operations Other Comprehensive Income Total Comprehensive Income for the period Loss attributable to non-controlling interest Loss attributable to members of the parent entity Total Comprehensive Loss attributable to non-controlling interest Total Comprehensive Loss attributable to parent Earnings Per Share - Basic and Diluted (cents per share)	Consolidated 31 December 2015 $ 31 December 2014 $ 12,656 14,602 (57,465) (1,509,722) (72,287) (114,385) (68,238) (173,698) (154,860) (182,193) (234,641) (236,569) (2,251) (1,465) (16,818) (16,246) (50,990) (75,639) (30,049) (51,915)
	(674,943) (2,347,230) - -
	(674,943) (2,347,230) - -
	(674,943) (2,347,230)
	(146,064) (1,054,361)
	(528,879) (1,292,869)
	(146,064) (1,054,361)
	(528,879) (1,292,869)
	(0.29) (0.83)

The accompanying notes form part of these financial statements.

5

Condensed Consolidated Statement of Financial Position as at 31 December 2015

MEC Resources Ltd and its controlled entities

Note Current Assets Cash and cash equivalents 5 Trade receivables Financial assets 10 Other current assets Total Current Assets Non-Current Assets Other non-current assets Evaluation and exploration costs 11 Financial Assets 10 Property, plant & equipment Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Financial Liabilities 12 Short-term provisions Total Current Liabilities Non-Current Liabilities Provisions Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital 6 Option Reserve Accumulated losses Total Equity Attributable to Owners Non-controlling Interest Total Equity	Consolidated
	31 December 2015 $ 30 June 2015 $
	771,028 1,265,571 119,511 69,567 44,867 44,867 24,176 33,018
	959,582 1,413,023
	22,673 127,680 29,022,046 29,024,515 322,086 285,333 2,327 2,952
	29,369,132 29,440,480
	30,328,714 30,853,503
	634,227 545,074 755,700 697,978 88,548 87,016
	1,478,475 1,330,068
	19,969 18,750
	19,969 18,750
	1,498,444 1,348,818
	28,830,270 29,504,685
	25,529,466 25,529,466 523,200 522,672 (25,368,722) (24,839,843)
	683,944 1,212,295 28,146,326 28,292,390
	28,830,270 29,504,685

The accompanying notes form part of these financial statements.

6

Condensed Consolidated Statement of Changes in Equity for the half year ended 31 December 2015

MEC Resources Ltd and its controlled entities

Consolidated Balance at 1 July 2014 Loss attributable to members of the consolidated entity Other comprehensive income Total comprehensive income Shares issued on exercise of options Balance at the half year ended 31 December 2014 Balance at 1 July 2015 Loss attributable to members of the consolidated entity Other comprehensive income Total comprehensive income Share based payments Balance at the half year ended 31 December 2015	Ordinary Share Capital $ Accumulated losses $ Options $ Total attributable to owners S Non- Controlling Interest $ Total Equity $
	24,924,466 (23,072,318) 520,081 2,372,229 29,428,595 31,800,824 - (1,292,869) - (1,292,869) (1,054,361) (2,347,230) - - - - - -
	- (1,292,869) - (1,292,869) (1,054,361) (2,347,230) - - 1,296 1,296 - 1,296
	24,924,466 (24,365,187) 521,377 1,080,656 28,374,234 29,454,890
	25,529,466 (24,839,843) 522,672 1,212,295 28,292,390 29,504,685 - (528,879) - (528,879) (146,064) (674,943) - - - - - -
	- (528,879) - (528,879) - (674,943) - - 528 528 - 528
	25,529,466 (25,368,722) 523,200 683,944 28,146,326 28,830,270

The accompanying notes form part of these financial statements.

7

Condensed Consolidated Statement of Cash Flows for the half year ended 31 December 2015 MEC Resources Ltd and its controlled entities

Note Cash Flows From Operating Activities Payments to suppliers and employees Interest received Net cash used in operating activities Cash Flows From Investing Activities Payment for Property, Plant and Equipment Repayment of loans to other entities Deferred exploration costs Net cash used in investing activities Net decrease in Cash Held Cash At the Beginning Of The Period Cash At The End Of The Period 5	Consolidated 31 December 2015 $ 31 December 2014 $
	(475,560) (472,649) 8,432 14,602
	(467,128) (458,047)
	- - (90,000) (120,000) 62,585 -
	(27,415) (120,000)
	(494,543) (578,047) 1,265,571 1,623,636
	771,028 1,045,589

The accompanying notes form part of these financial statements

8

Notes to the Financial Statements For the half year ended 31 December 2015 MEC Resources Ltd and its controlled entities

1. CORPORATE INFORMATION

The financial report of MEC Resources Ltd (the company) and its controlled entities for the half-year ended 31 December 2015 was authorised for issue in accordance with a resolution of the directors on 25 February 2016.

MEC Resources Ltd is a company incorporated in Australia and limited by shares which are publicly traded on the Australian Securities Exchange.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

The half-year financial report is a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standard AASB 134: Interim Financial Reporting. Compliance with AASB 134 ensures compliance with International Financial Reporting Standards IAS 34 Interim Financial Reporting.

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

The half-year financial report should be read in conjunction with the Annual Financial Report of MEC Resources Ltd as at 30 June 2015.

For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period.

It is also recommended that the half-year financial report be considered together with any public announcements made by MEC Resources Ltd and its controlled entities during the half-year ended 31 December 2015 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001 and the ASX Listing Rules.

(a) Basis of Preparation

Reporting Basis and Conventions

The half-year report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

(b) Significant Accounting Policies

The half-year condensed consolidated financial statements have been prepared using the same accounting policies as used in the annual financial statements for the year ended 30 June 2015.

9

Notes to the Financial Statements For the half year ended 31 December 2015 MEC Resources Ltd and its controlled entities

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(c) Financial Position

The consolidated entity has incurred losses for the year ended 31 December 2015 of $674,943 (2014: $2,347,230). The consolidated entity has cash assets of $771,028 as at 31 December 2015 (30 June 2015: $1,265,571). The consolidated entity had a working capital deficit of $518,793 at 31 December 2015 (30 June 2015 surplus of $82,955)

Included in trade and other payables is a balance of $ 574,495 owing to directors for outstanding fees payable at 31 December 2015 . The directors have reviewed the non-exploration expenditure and commitments for the consolidated entity. The directors as a part of their cash monitoring, have voluntarily suspended cash payments for their director’s fees to conserve cash resources for a period of at least 12 months from the date of the approval of the financial report including any outstanding fees owed at 31 December 2015.

Further the Group has received confirmation that $700,525 of the current financial liabilities from a related entity will not be called for a period of 12 months from the date of this report.

The Group’s subsidiary Advent Energy Ltd, has commitments for its exploration permits of $4,797,500 over the next 15 months under the terms of its application licence in order to maintain tenure. Advent is continually seeking and reviewing potential sources of both equity and debt funding. Advent is currently in negotiations with a number of parties to fund these commitments, however there is no certainty at this stage that those discussions will result in further funding being made available. Refer to note 11 for further details.

The directors have prepared cash flow forecasts that indicate that the consolidated entity will have sufficient cash flows to meet its non-exploration commitments for a period of at least 12 months from the date of this report.

Based on the cash flow forecasts, the directors not calling their outstanding fees and suspending future cash payments , the Company receiving confirmation loans will not be called for a period of 12 months from the reporting date and the monitoring of operational costs, the directors are satisfied that, the going concern basis of preparation is appropriate. The financial report has therefore been prepared on a going concern basis, which assumes continuity of normal business activities and the settlement of liabilities in the ordinary course of business.

For further disclosure concerning the exploration permits and expenditure commitments of the Group and for the uncertainty regarding the ability of the Group to realise the associated capitalised exploration expenditure please refer to Note 11.

.

3. SEGMENT INFORMATION

Identification of reportable segments

The group has identified its operating segments based on the internal reports that are reviewed and used by the managing director and his management team (the chief operating decision makers) in assessing performance and in determining the allocation of resources.

The operating segments are identified by management based on their investment in exploration companies. Discrete financial information about each of these operating segments is reported to the managing director and his management team on at least a monthly basis. Currently, management’s focus is on the exploration program of Advent Energy projects PEP 11 and EP 386/RL1.

10

Notes to the Financial Statements For the half year ended 31 December 2015 MEC Resources Ltd and its controlled entities

The group operates predominantly in one segment, namely investments in mining and resources. These activities are predominantly in Australia.

Accounting policies and inter-segment transactions

The accounting policies used by the group in reporting segments are the same as those contained in note 1 to the accounts and in the prior period.

4. REVENUE, INCOME AND EXPENSES

Revenue Interest revenue : other entities Other gains and losses Net loss on financial assets designated as fair value through profit and loss Loss on exploration assets CASH AND CASH EQUIVALENTS For the purpose of the half-year condensed consolidated statement of cash flows, cash and cash equivalents are comprised of the following: Cash at bank and in hand	Consolidated 31 December 2015 $ 31 December 2014 $
	12,656 14,602
	12,656 14,602
	(57,465) (289,366) - (1,220,356)
	(57,465) (1,509,722)
	Consolidated 31 December 2015 $ 30 June 2015 $
	771,028 1,265,571
	771,028 1,265,571

5. CASH AND CASH EQUIVALENTS

6. CONTRIBUTED EQUITY

Ordinary shares (i) Less :Capital Raising Costs	Consolidated 31 December 2015 $ 30 June 2015 $
	26,559,615 26,559,615 (1,030,149) (1,030,149)
	25,529,466 25,529,466

11

Notes to the Financial Statements For the half year ended 31 December 2015 MEC Resources Ltd and its controlled entities

(i)Fully paid ordinary shares carry one vote per share and carry the right to dividends.

Movement in ordinary shares on issue As at 1 July 2015 Conversion of options Balance as at 31 December 2015	Number $
	182,832,049 25,529,466 - -
	182,832,049 25,529,466

7. CONTINGENT LIABILITIES

There were no contingent liabilities at balance date.

8. COMMITMENTS

Capital Commitments

In order to maintain an interest in the exploration tenements in which the group is involved, the group is committed to meet the conditions under which the tenements were granted.

Group expenditure required to meet the terms of the exploration licences at the reporting date but not recognised as liabilities is as follows:

	Consolidated	Consolidated
	31 December 2015 $	30 June 2015 $
Work Program Commitments – Exploration permits
Payable:
Within one year	1,997,500	4,647,500
Greater than one year less than five years	18,525,000	15,875,000
Total	20,522,500	20,522,500

9. EVENTS AFTER THE BALANCE DATE

On 28 January 2016 MEC investee Advent Energy announced that the National Offshore Petroleum Titles Administrator (NOPTA) had approved a suspension of the PEP11 Year 2 work program of a 200 km 2D seismic survey and geotechnical studies until 12th August 2016.

On 16 February 2016 MEC investee Advent Energy announced that it had been advised of the suspension of the permit terms of EP 386 in the onshore Bonaparte Basin, north-eastern Western Australia. The WA Department of Mines has granted a suspension of the condition requiring the completion of the existing work commitments for a period of 12 months to 31 March 2017.

12

Notes to the Financial Statements For the half year ended 31 December 2015 MEC Resources Ltd and its controlled entities

10. FINANCIAL ASSETS Current Loan receivable – Grandbridge Limited Total Loan receivable – BPH Energy Ltd (b) Loan receivable – Grandbridge Limited Fair Value through Profit and Loss financial assets (a) Investment in BPH Energy Ltd Available for sale financial assets (a) Investment in Molecular Discovery Systems Ltd		Consolidated 31 December 2015 $ 30 June 2015 $
		44,867 44,867
		44,867 44,867 209,078 114,860 - - 43,097 100,562 69,911 69,911
		322,086 285,333

Fair Value of Financial Assets

The methods and valuation techniques used for the purpose of measuring fair value of the company’s financial assets are unchanged compared to the previous reporting period. The levels of the hierarchy are as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

• (a) For financial instruments that are measured at fair value on a recurring basis, Level 1 and Level 3 applies to the company’s non-current Fair Value through Profit and Loss financial assets and available for sale financial assets, respectively.

• (b) On 22 October 2014 MEC Resources entered into a convertible loan agreement with BPH Energy Ltd up to $200,000. Interest is charged monthly at a rate of 8.97% per annum. The funds are to be used for working capital. The loan agreement is convertible at the election of MEC Resources. The issue price on conversion will be the higher of $0.04 cents per share and the average closing price of the Borrower Shares on the ASX over the 5 trading days immediately prior to the date of conversion. On the 18th August 2015 the facility was further extended to a maximum draw down amount of $295,000. As at reporting date the closing balance of the loan including interest accrued to 31 December 2015 was $209,078 (June 2015: $114,860).

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Notes to the Financial Statements For the half year ended 31 December 2015 MEC Resources Ltd and its controlled entities

11. CAPITALISED EXPLORATION COSTS

CAPITALISED EXPLORATION COSTS
Exploration expenditure capitalised Exploration and evaluation phases Reconciliation of movement during the year Opening balance at 1 July Capitalised expenditure – EP 325 Capitalised expenditure – PEP 11 Capitalised expenditure – EP 386 Closing balance	Consolidated 31 December 2015 $ 30 June 2015 $
	29,022,046 29,024,515
	29,022,046 29,024,515
	29,024,515 30,405,290 - 249 (2,469) (1,384,508) - 3,484
	29,022,046 29,024,515

Recoverability of the carrying amount of exploration assets is dependent on the successful exploration and sale of natural gas.

Exploration costs amounting to $nil (2014:$nil) have been included in cash flows from investing activities in the statement of cash flows.

The consolidated group, has commitments for its exploration permits of $4,797,500 over the next 15 months from the reporting date under the terms of its application licences in order to maintain tenure. Of the above commitments $1,997,500 is due within 12 months of the reporting period.

The Group is currently in negotiations with a number of parties to fund these commitments, however there is no certainty at this stage that those discussions will result in further funding being made available. Further management is confident the commitments under the exploration permits or as varied by the relevant authorities will be met. The above conditions indicate the material uncertainty that may affect the ability of the group to realise the carrying value of the capitalised exploration assets in the ordinary course of business.

14

Notes to the Financial Statements For the half year ended 31 December 2015 MEC Resources Ltd and its controlled entities

12. FINANCIAL LIABILITIES

FINANCIAL LIABILITIES
Loans payable Loan from BPH Energy Limited (i) Loan from Grandbridge Limited (i) Loans from other entities (i)	Consolidated 31 December 2015 $ 30 June 2015 $
	41,935 41,935 712,407 654,685 1,358 1,358
	755,700 697,978

(i) Loans payable are unsecured, non-interest bearing and repayable on demand.

15

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

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of MEC Resources Limited and its controlled entities (the “Group”), which comprises the condensed consolidated statement of financial position as at 31 December 2015, the condensed consolidated statement of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the half-year ended on that date, other selected explanatory notes and the directors’ declaration of the Group comprising the Company and the entities it controlled at the half-year end or from time to time during the half-year.

Directors’ Responsibility for the Half-Year Financial Report

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

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group’s financial position as at 31 December 2015 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 MEC Resources 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 . We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of MEC Resources Limited, would be in the same terms if given to the directors as at the time of this report.

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Conclusion

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

• (a) giving a true and fair view of the Group’s financial position as at 31 December 2015 and of its performance for the half-year ended on that date; and

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

Emphasis of Matter

Without modifying our review conclusion we draw attention to Note 11 Exploration Assets to the financial statements, which discloses that the Group, has exploration expenditure commitments under the terms of its exploration permits of $4,797,500 over the next 15 months from the reporting date in order to maintain right of tenure. The Group is currently in negotiations with a number of parties to raise funding for the exploration expenditure: however, there is no certainty at this stage that those discussions will result in further funding being made available. These conditions indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to raise the funding required to meet its exploration commitments under the terms of its exploration licences and realise the related assets in the normal course of business.

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Nexia Perth Audit Services Pty Ltd

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Amar Nathwani Director

Perth 25 February 2016.