METRO MINING LIMITED — Annual Report 2016

Sep 20, 2016

Chairman's Report

I would like to thank Shareholders for their ongoing support. Your Board is confident 2017 will produce the results we have been working toward. "

Once again it my pleasure to provide an introduction to the Annual Report to Metro Mining Shareholders.

A quick review of our ASX Announcements since the last AGM is testimony to how busy your Board, the Executive and the Metro Team have been this year and this has been reflected in our increased market capitalisation and share price. The CEO will expand upon this in his report.

Whilst there has been a great deal of activity our focus has remained steadfastly on the Bauxite Hills Project.

As our highest priority, the Metro team has worked tirelessly to minimise the timing impact of a full EIS for the Bauxite Hills Project. Throughout the year we have constantly reminded Government of the importance of maintaining strict timeframes of the licensing process.

Corporate Directory Whilst industry analysts predict Australia will remain the dominant bauxite exporter to China over the coming years, in these days of extremely low ocean freight costs, Guinea is emerging as a key supplier. Ever mindful of worldwide demand and production dynamics, we are determined not to miss the present window of opportunity.

Whilst Australia's bauxite mines currently provide over a quarter of global seaborne supply it is important for the State and the Country that this market dominance is not lost, and it is time for the emergence of another independent bauxite supplier.

Interestingly, China's bauxite imports have jumped from 2.2Mtpa to 50 Mtpa over the past decade and it is predicted this boom will continue as the auto industry increasingly drives aluminium global demand. As they strive to make vehicles lighter for electric cars, but also for fuel efficiency in traditional automobiles, the use of aluminium in car bodies is predicted to reach 75% of total world production by 2025. We are obviously well placed to take advantage of the continued strong demand for bauxite.

In tandem to progressing Bauxite Hills, we concluded negotiations that ultimately led to strategic financing being provided by the well regarded UK equity fund Greenstone Resources. This resulted in an equity investment of \$8.9M for a 19.98% shareholding.

Greenstone has made a significant investment in your Company and has conditionally committed to substantial additional financial backing for the development of Bauxite Hills. I welcome Greenstone to the Metro Board and I am confident their expertise will add substantially to the Company. In doing so, I also acknowledge the ongoing support of all shareholders.

Late last year we made a takeover offer for Gulf Alumina Ltd which was aimed at combining two very similar operations to form a significant bauxite entity on western Cape York. The synergies were obvious to many and Metro is now Gulf's largest shareholder with a holding of 22%. We continue to discuss future direction with Gulf Alumina's Board.

Metro believes Myanmar is one of Asia's great unexplored mineral frontiers and for the past few years we have been reviewing exploration opportunities there. In June 2016, via a 100% owned Myanmar subsidiary, Metro signed a JV Agreement to acquire 80% of the Mahar San Project, which is highly prospective for zinc, gold, silver and lead mineralisation. While it is not a key focus, Metro looks forward to exploring this exciting opportunity in a burgeoning mining jurisdiction in the future.

Again, I would like to thank Shareholders for their support. Your Board is confident 2017 will produce the results we have all been working toward.

I sincerely thank my fellow Board Members and the Metro team, led by Simon Finnis, for their dedication and hard work throughout an extraordinary and challenging year.

Sincerely,

Stephen Everett | Chairman

CEO's Report

Our mantra has always been "performance and results" and this year we have " succeeded in achieving a great deal.

It is with great pleasure that I report to you on the

activities of the past year, a year that has seen a considerable amount of time and effort devoted to bringing our flagship Bauxite Hills Project to development and operation.

We have worked hard in continuing to develop Metro Mining into a creditable, professional and forward thinking company. In an environment where the mining industry worldwide is going through a myriad of challenges this has been no easy task.

However, our mantra has always been "performance and results" and this year we have succeeded in achieving a great deal; including:

• Publishing a significant mining Reserve of 48.2million tonnes
• Successfully raising A\$5.6 Million at \$0.08 via a Placement and Entitlement Offer
• A non-binding MoU with Xinfa for 1Mtpa of bauxite (50% of annual production based on the 2Mtpa case)
• Corporate Directory Finalising the Bauxite Hills DFS for 2 Mtpa and immediately undertaking an increased production scenario PFS at 4Mtpa
• Launching an off market takeover offer for neighbouring Gulf Alumina
• Gaining vital Native Title and Land Access Agreements
• Signing Transhipping Agreements
• A signed JV to Acquire 80% of the Myanmar VMS Project
• Strategic financing with Greenstone Resources
• Submitting the Bauxite Hills Environment Impact Statement (EIS)

Last year, when the State Government Department of Environment & Heritage Protection (DEHP) advised that an EIS was required for Bauxite Hills we set ourselves an aggressive schedule designed to achieve the task within the shortest period possible. I congratulate my team and our consultants for the manner in which they have approached the challenge. We have met all our targets, however a delay to the approvals process has occurred which, when coupled with the disruption that will be caused by the wet season in 2017, means we anticipate a six month delay to our first shipping target. We are now actively planning for our first shipment in Q2 2018.

I am delighted to report that, having secured Native Title Agreements, we have held the first meeting of our Native Title Liaison Committee.

Our Agreement includes a Cultural Heritage Management Plan for the Project area, employment and training opportunities for traditional owners, business development and contracting opportunities for Ankamuthi businesses and payment of mining benefits to both the Ankamuthi People and OMAC for the life of the mine. Land rehabilitation is included as an integral part of the Agreement, with progress being continually reviewed by the Committee. We look forward to growing the already strong relationship with all stakeholders to deliver long term benefits to all concerned.

Our Bauxite Hills Project has advanced considerably this year. In addition to the Government approvals process a lot of work has been done in preparing for the start of site construction and mining operations.

Throughout the year, we worked hard to present Metro in a professional manner to Shareholders and potential financiers both here and overseas. It was through these efforts that we were introduced to UK based Greenstone Resources.

CEO's Report

The Greenstone Resources' investment was a transformational deal from which both Metro and Greenstone will benefit considerably. Their initial investment will take Metro through to a decision to mine and the follow on commitment means the equity portion of the funding required to construct Bauxite Hills is greatly de-risked.

We will also benefit from the experience the Greenstone team "bring to the table" with regards to technical, financial and development advice. Greenstone's due diligence was very thorough and, again, the Metro team put in an enormous amount of work and effort during that process. It is a great credit to all concerned that we have reputable third party validation of our project and its trajectory towards production.

While a malaise was present and surrounded the coal industry for much of the year, we see a bright future and we have maintained the key coal tenements, whilst divesting those no longer required.

Our investment in Myanmar, through our wholly owned subsidiary has been strategic and aimed at providing additional, perhaps significant, opportunities for Metro once operations have commenced at Bauxite Hills. The multi-element nature of the mineralisation there shows potential for an attractive discovery.

I would like to convey my appreciation to our small and dedicated Metro team for their willingness to multi task and pitch-in, often under extremely testing circumstances, in order for us to achieve results.

I sincerely thank the Board for their guidance and assistance.

I particularly thank all shareholders for their ongoing support.

Sincerely

Simon Finnis Chief Executive Officer

Board of Directors

Stephen Everett Independent Non-Executive Chairman

Stephen Everett has more than 40 years Board and management experience in resources in Australia and overseas. Former Chair of Agrimin Ltd, IronRidge Resources Ltd, Australian Solomons Gold Ltd, BeMaX Resources NL and JMS Civil & Mining Pty Ltd.

Mark Sawyer Non-Executive Director

Mark Sawyer is Senior Partner and co-founder of Greenstone Capital LP. He is Director of Greenstone Management Ltd and a member and co-Chair of the Investment Committee. Formerly he was Xstrata plc co-head of group business development. Mark joined the Metro Board July 2016.

Dongping Wang Non-Executive Director

Dongping Wang is Chair of DADI Engineering Development Group, China's largest coal industry engineering group. He is a highly renowned coal processing expert and a prominent figure in the Chinese coal industry.

Philip Hennessy Independent Non-Executive Director

Phil Hennessy has over 30 years corporate financial experience and was KPMG Qld Chairman for 13 years. He is an Independent Company Director and Advisor and serves on both public and private boards across the resources, financial services, property and manufacturing sectors.

Jijun Liu Non-Executive Director

Jijun Liu is the Managing Director of China Xinfa Group Corporation Ltd one of China's largest alumina-aluminium enterprises . Mr Liu is also a member of various Chinese Government committees.

Lindsay Ward Independent Non-Executive Director

Lindsay Ward has 25+ years industry experience holding executive positions in mining, exploration, mineral processing, ports and rail. He is CEO of the Tasmanian Gas Pipeline and previously GM Patrick Ports & Pacific National Bulk Rail.

George Lloyd Independent Non-Executive Director

George Lloyd has over 30 years resource industry experience including senior executive and board member roles of listed and unlisted companies with interests in minerals, energy, industry services and corporate finance. He is Chairman of Ausenco Ltd.

Bauxite Hills Project

at the Bauxite Hills Project in Q2 2018.

Bauxite Hills is located on the Cape York Peninsula in far north Queensland. It is approximately 95km north of the Weipa within the world-renowned bauxite province.

With a Direct Shipping Ore (DSO) resource of 65.3 million tonnes* and a mine life in excess of 13 years, Bauxite Hills has been classified as a Project of Regional Significance by the Queensland Government.

Key Milestones

Over the past year Metro has achieved several key milestones for the project. These include:

• August 2015: An off-take Memorandum of Understanding with Xinfa, one of the largest integrated aluminium companies in China and a Metro shareholder.
• November 2015: 2Mtpa Definitive Feasibility Study (DFS) completed and based on the 2Mtpa Pre-Feasibility Study (PFS) completed in February 2015.
• January 2016: Native Title and Land Access Agreements secured with the Ankamuthi People and the Old Mapoon Aboriginal Council (OMAC), respectively.

Bauxite Hills – Project

• January 2016: A 4 Mtpa Pre-Feasibility Study (PFS) was completed based on the 2015 2Mtpa DFS. The expanded facility doubled production at Bauxite Hills and delivered very positive financial results.
• February 2016: Successful negotiation and execution of a transhipment contract with BTS Pty Ltd
• March 2016: 22% strategic stake in Gulf Alumina Limited secured.
• May 2016: Acceptance of Metro Mining's Environmental Impact Statement by the Queensland Government Department of Environment & Heritage Protection (DEHP).
• July 2016: Secured strategic financing with Greenstone Resources LP.

Operational Simplicity

A simple mining operation facilitates a quick start-up from the commencement of project development.

The quality and nature of the bauxite is suitable for export as Direct Shipping Ore (DSO). A DSO operation allows the development of a low capital, low operating cost mine by avoiding significant costs associated with beneficiated bauxite production.

*Refer ASX Release 05 Nov '15 | ** Refer ASX Release 27 Jan '16

METRO MINING LIMITED ANNUAL REPORT 2016 | 8

Bauxite Hills – Project

These include reduced infrastructure, no requirement for tailings dams and significantly reduced water and energy costs.

Mining operations are simple using front end loaders and trucks. The material is unconsolidated and therefore no blasting is required.

Bauxite will be hauled to the port on the Skardon River, loaded onto barges and then transported approx 10 kilometres offshore where it will be

transhipped onto bulk carriers for export.

Mine operations have been designed to have a minimum impact on the environment. Topsoil and overburden will be stripped ahead of mining and returned to the mined out areas.

All operational activities will take place during an 8 month period throughout the dry season, which is typically from March to December each year.

Bauxite Hills 4Mtpa Pre-Feasibility Study Key Outcomes

RESULTS**	PFS 4Mtpa*	Assumption**	PFS 4Mtpa*
NPV (10% DR, Real, after tax)	A\$582M	Annual Production Rate (Steady	4.0Mt
NPV (15% DR, Real, after tax)	A\$440M	State)
IRR	156%	LOM Production	49.1Mt
Payback Period	1.2 years	Mine Life	13 years
Total LOM Revenue	A\$2.93B	Bauxite Price (FOB)	US\$38.60-45.40/t
LOM Average Annual EBITDA	A\$133.6M	Exchange Rate (AUD/USD)	0.75
LOM Average Annual NPAT	A\$91.6M	Discount Rate	10% / 15%
LOM Average Operating Margin	A\$33.66/t	Pre-Mining Development CAPEX	A\$40.1M
LOM Average OPEX (ex-Royalties)	A\$18.80/t	Deferred and Sustaining CAPEX	A\$4.8M
LOM Total Operating Costs (OPEX)	A\$26.07/t	Working Capital	A\$4.0M

*Metro Confirms all material assumptions underpinning production target & corresponding financial information continue to apply and have not materially changed as per Listing Rule 5.19.2 | ** For more detailed CAPEX /OPEX information refer ASX Release 27 Jan 2016

Agreement with Traditional Owners

Metro finalised a significant life-of-mine Native Title and Land Access Agreement for the Bauxite Hills Project in January this year.

The agreement, reached jointly with the Ankamuthi People and the Old Mapoon Aboriginal Corporation (OMAC), was a key milestone in the pre-development phase of the Bauxite Hills Project.

The Agreement set a sound foundation for a long term positive relationship with the Ankamuthi People, Traditional Owners and OMAC – the Trustee owner of the land.

The Agreement includes a Cultural Heritage Management Plan for the project area, employment and training opportunities for Traditional Owners, business development and contracting opportunities for Ankamuthi businesses and payment of mining benefits to both the Ankamuthi People and OMAC for the life of the mine.

Metro also committed to employment and training targets and will work with stakeholders and contractors to ensure these are met.

In addition, Metro will work with the stakeholders to identify business opportunities for the Ankamuthi and other local enterprises.

A Liaison Committee comprising all parties will ensure ongoing communication and cooperation.

The mining benefits to the Traditional Owners and Trustee are based on a percentage of the free-on-board (FOB) price received per tonne of bauxite and will be used to fund long term programs and benefits to a broad cross section of the Ankamuthi People and their organisations.

Land rehabilitation is included as an integral part of the Agreement, with progress being continually reviewed by the Committee.

The Agreement confirms excellent community support for the Bauxite Hills Project and Metro looks forward to growing the already strong relationship with all stakeholders to deliver long term benefits to all concerned.

Bauxite Hills – Project

Environmental Approvals

Gaining both State and Federal Government approvals for the Bauxite Hills Project has continued to be the major focus for 2016.

In September last year, the State Department of Environment and Heritage Protection (EHP) provided notice that an Environmental Impact Statement (EIS) would be required for the Project, shortly followed by the Commonwealth Department of the Environment (DotE) confirming they would utilise the existing EIS assessment bilateral agreement between Queensland and the Commonwealth to assess the project.

Given the extensive field works and stakeholder engagement already undertaken for the initial Environmental Authority application the additional works required for the EIS was minimal and the Project's EIS has proceeded along an optimised timeframe. The draft Terms of Reference (TOR) went out for public comment between 7 Dec 2015 – 3 Feb 2016 and EHP provided the final TOR on 23 Feb 2016.

Metro Mining developed the EIS addressing all the relevant TOR conditions and submitted the EIS to EHP on 08 April 2016. The EIS for the Project went out for public comment between 19 May – 29 June 2016.

A total of 19 submissions were received in response to the EIS public comment stage, shortly after the reporting period for this Annual Report. It is noted that nine (9) of the 19 submissions received were either supportive of the project, or had no specific concerns, and the remaining ten(10) submissions were requests for additional information and clarification on a range of environmental matters.

The Project EIS contains comprehensive detail on the existing environmental values at the site, based on extensive monitoring and baseline field surveys, along with assessment of potential environmental impacts and proposed management and mitigation plans.

An electronic copy of the EIS is available on the Metro Mining website www.metromining.com.au A Supplementary EIS is being developed in response to these public submissions, with final environmental approvals predicted in the first half of 2017.

Other Exploration Activities

Myanmar

with excellent potential… Queensland Western Cape York Surat Basin

Other Exploration Activities – Western Cape York

Metro Mining controls approximately 1,300sq km of bauxite exploration tenements in western Cape York, a region world-renowned for high-quality, export-grade bauxite.

Within this area Metro has nine (9) granted Exploration Permits for Minerals (EPMs), two (2) EPM Applications (EPMA) and eleven (11) Mining Lease Applications (MLAs).

Over the past ten years, Metro has undertaken systematic exploration programs over a number of bauxite plateaus.

In addition the Company has outlined significant Direct Shipping Ore (DSO) resources at its Bauxite Hills Project.

As well as the BH2, BH4 and BH5 plateaus located to the south and east of the Bauxite Hills Project Metro has also identified bauxite resources at its Musgrave project. Re-analyses of raw bauxite drill hole samples from BH2 established its suitability as an export quality DSO deposit.

Metro Mining Limited is planning initial reconnaissance-style exploration programs over other potentially bauxitic plateaus at its Northern Cape York Project in the Vrilya Point area. Any areas deemed to have bauxite potential will be followed up with future drilling programs.

Central Queensland

Metro Mining also holds two (2) granted Exploration Permits for Minerals (EPM) over a Central Queensland bauxite project located west of Bundaberg.

Western Cape York Metro's Cape York Bauxite Projects

METRO MINING LIMITED ANNUAL REPORT 2016 | 13

Bauxite Hills Resources & Reserves

Area	Category	DSO2			DSO Bauxite Qualities (Dry Basis)
		Tonnes (Mt)1	Total Al2O3 (%)	THA3 (%)	Total SiO2 (%)	RxSi4 (%)
BH1 & 6	Measured Resource (Dry In-situ)	41.8	51.0	39.2	11.0	6.1
BH1 & 6	Indicated Resource (Dry In-situ)	8.3	49.3	37.1	14.0	6.8
BH1 & 6	Inferred Resource (Dry In-situ)	3.4	48.4	35.9	14.8	7.2
TOTAL RESOURCE		53.6	50.6	38.6	11.7	6.3
BH1 & 6	Proved Reserve5 (ROM @ 10% Moisture)	41.8	50.7	38.6	10.9	6.3
BH1 & 6	Probable Reserve6 (ROM @ 10% Moisture)	6.4	49.3	36.8	13.4	6.9
TOTAL MARKETABLE ORE RESERVES		48.2	50.5	38.4	11.2	6.4
BH2	Indicated	11.7	49.1	37.4	15.7	6.7

1 BH1, 2 & 6 tonnages are calculated using the following default bulk densities determined from a program of sonic drilling: BH1-1.6g/cm3, BH6 - 2g/cm3 & BH2 -1.92g/cm3|2 DSO (Direct shipping ore) is defined as bauxite that can be exported directly with minimal processing & beneficiation| 3 THA is trihydrate available alumina (gibbsite alumina + kaolinite alumina – low temp desilication product (DSP) alumina) at 150C|4 RxSi is reactive silica at 150C|5 Proved Reserve - is incl in BH1 & 6 Measured resource|6 Probable Reserve - is included in BH1 & 6 Indicated resource

Other Resources in Western Cape York

Area Category		In-situ1 dry tonnes	Dry Beneficiated2 tonnes	Beneficiated bauxite qualities3
		(Mt)	(Mt)1	Total Al2O3	Total SiO2
Musgrave	Indicated	2.2	1.6	52.8	11.2
BH4	Inferred	2	1.1	49	11.3
BH5	Inferred	1.8	0.9	50	10.7

1The tonnages are calculated using a bulk density of 1.8 | 2 Beneficiated tonnes are determined from the % recovery of material greater than 1.2mm based on laboratory screening of each sample | 3 Beneficiated bauxite qualities are based on analyses of samples with material greater than 1.2mm

Bauxite – Exploration & Mining Tenement Schedule

Tenement	Project Name	Holder/ Applicant	Status (Expiry date)	Area Ha (MLAs) No Sub Block (EPM)	Commodity Targeted
MLA 20572	Pisolite Hills 1	Cape Alumina P/L	Application	12311.4	Bauxite-Kaolin
MLA 20573	Pisolite Hills 2	Cape Alumina P/L	Application	3207.8	Bauxite-Kaolin
MLA 20574	Pisolite Hills 3	Cape Alumina P/L	Application	3885.5	Bauxite-Kaolin
MLA 20612	Port Musgrave	Cape Alumina P/L	Application	1050.3	Bauxite
MLA 20676	Bauxite Hills 1	Aldoga Minerals P/L Cape Alumina P/L	Application	2317.91	Bauxite
MLA 20687	Bauxite Hills 2	Aldoga Minerals P/L Cape Alumina P/L	Application	1647	Bauxite
MLA 20688	Bauxite Hills 6 East	Aldoga Minerals P/L Cape Alumina P/L	Application	531	Bauxite
MLA 20689	Bauxite Hills 6 West	Aldoga Minerals P/L Cape Alumina P/L	Application	2052	Bauxite
MLA 100047	Port Haul Road	Aldoga Minerals P/L Cape Alumina P/L	Application	45.23	Infrastructure
MLA 100048	BH1 Haul Road	Aldoga Minerals P/L Cape Alumina P/L	Application	34.1	Infrastructure
MLA 100051	Bauxite Hills Port	Aldoga Minerals P/L Cape Alumina P/L	Application	51.31	Infrastructure
EPM 14547	Pisolite Hills	Cape Alumina P/L	Granted (19/4/2021)	48	Bauxite
EPM 15278	Pisolite Hills North	Cape Alumina P/L	Granted ( Expiry date 29/9/2019)	53	Bauxite
EPM 15376	Ducie River	Cape Alumina P/L	Granted (Expiry date 29/9/2019)	29	Bauxite
EPM 15848	Toondoon	Cape Alumina P/L	Granted (Expiry date 22/5/2018)	6	Bauxite
EPM 15984	Port Musgrave	Cape Alumina P/L	Granted (Expiry date 23/2/2019)	4	Bauxite
EPM 16899	Skardon River	Cape Alumina P/L	Granted (Expiry date 16/12/2019)	14	Bauxite
EPM 17499	Eucid	Cape Alumina P/L	Granted (Expiry date 30/10/2017)	4	Bauxite
EPM 25877	Central Cape York	Cape Alumina P/L	Granted (Expiry date 12/07/2021)	50	Bauxite
EPM 25878	Northern Cape York	Cape Alumina P/L	Granted (Expiry date 12/07/2021)	86	Bauxite
EPM 25879	Southern Cape York	Cape Alumina P/L	Granted (Expiry date 12/07/2021)	82	Bauxite
EPMA 15985	Penefather	Cape Alumina P/L	Application	45	Bauxite
EPMA 26144	Skardon West	Cape Alumina P/L	Application	8	Bauxite

Corporate Directory Other Exploration Activities – Coal

Bundi Project (EPC 1164, 1251 & 1609)

The Bundi Project is located near the town of Wandoan, Queensland and immediately south of Glencore's proposed Wandoan Open Cut Mine development and New Hope Coal's proposed Elimatta Mine.

The proposed Bundi Project mining area is in the northern part of EPC1164, including several sub-blocks from the adjoining EPC1251 & EPC1609. It is focused on the down-dip extensions of the Kogan and Macalister Seams where coal thickness and quality meets specification identified as having potential for export grade Thermal Coal.

Initial assessment of the different working sections suggests it may be possible to produce an export quality coal without the need for a wash plant. These opportunities will be assessed as part of future mining studies.

Following the Company's decision to minimise expenditure on the coal assets all field work has been suspended and staff numbers reduced.

All coal tenements are in good standing and limited work on enhancements to the geological model is planned for 2017.

Columboola Joint Venture (EPC 1165)

The Columboola Project is a joint Venture (JV) between SinoCoal Resources P/L (51%) and Metro Mining Ltd (49%) and is located near Miles.

The JV is targeting the down dip extensions of the Macalister coal seams currently being mined by Yancoal at the neighbouring Cameby Downs thermal coal deposit.

All necessary information associated with the project from previous years' work has been collated and submitted for application of the Columboola JV under a Mineral Development Licence (MDL). This action is consistent with Metro Mining's strategy to minimise expenditure during the coal downturn whilst keeping the tenement in good stead for future development when the thermal coal market recovers and coal seam gas activity subsides.

No exploration or field work is planned for the remainder of 2016 or 2017.

Other Exploration Activities – Coal

Coal Resource and Tenements

Project	Metro Mining		Resources (Mt)		Reserves	JORC
	Ownership	Indicated	Inferred	Total	(Mt)
Bundi (incl Juandah)	100%	296	1705.6	2001.6		2012
Columboola	49%	242.6	1515.0	1757.6		2012
Goombi	49%	4.9	13.8	18.7	26.2	2004
TOTAL		543.5	3234.4	4047.9	26.2

MTE ASX Announcement 24 October 2013 – Bundi Project Update

MTE ASX Announcement 19 July 2012 – Bundi Resource Upgrade and Project Update

MTE ASX Announcement 6 September 2012 – Maiden Indicated Resource for Columboola JV plus 26% increase in Inferred Resource

MTE ASX Announcement 19 December 2012 – Goombi Maiden Reserve Announced

Tenement	Project Name	Holder/ Applicant	Status (Expiry date)	Area Ha (MLAs) No. Sub Block (EPC)	Commodity Target
MDLA 3003	Columboola	SinoCoal Resources 51% Metro Mining Ltd 49%	Application (24/06/15)	24560Ha (Contained within EPC 1165)	Coal
EPC 1164	Wandoan West	Bundi Coal Project P/L	Granted (12/12/07)	129	Coal
EPC 1251	Wandoan West 2	Bundi Coal Project P/L	Granted (17/09/08)	19	Coal
EPC 1609	Wandoan West 3	Bundi Coal Project P/L	Granted (30/01/12)	5	Coal
EPC 1165	Columboola	SinoCoal Resources 51% Metro Mining Ltd 49%	Granted (10/12/07)	168	Coal

Other Exploration Activities – Myanmar

Agreement to Acquire 80% of the Mahar San VMS Project

Whilst maintaining a key focus on the development of the Bauxite Hills Project, over the past few years Metro Mining has been reviewing greenfields and brownfields exploration opportunities in Myanmar.

Myanmar is one of Asia's great unexplored mineral frontiers with potential for world-class porphyry copper-gold systems as well as a variety of styles of base metal and tin/tungsten mineralization. There has been virtually no modern exploration targeting these commodities and deposit styles undertaken in Myanmar.

Metro engaged an Australian led Myanmar based geological consulting company to conduct technical reviews of potential opportunities. This process led to the identification of Mahar San as a very prospective project.

Metro, via a 100% owned Myanmar subsidiary, signed a joint venture agreement (JVA) to acquire 80% of the Mahar San VMS project which is highly

prospective for zinc, copper, gold, silver and lead mineralization in Volcanic Massive Sulphide settings.

The project requires minimal cash commitments and Metro is engaged in discussions with potential funding parties who have a focus on Myanmar.

The Mahar San project is located in the Sagaing Region of northern Myanmar, approximately 220 km north-northwest of Mandalay.

It consists of four concessions: three 'small mining' concessions for, 16 – 20 hectares each, and an enveloping, larger exploration concession, covering 7.5 km² . Small-scale mining of gold and copper mineralisation has been intermittently undertaken from three small open-pits since 2010. Gold mining ceased in 2013 and the mining of deeper copper sulphide mineralisation was commenced with a small amount copper metal produced from small leach pads.

For further details of our joint venture and initial exploration results please refer to our comprehensive 10 June 2016 ASX Announcement.

Corporate News

Greenstone's Investment in Metro

Greenstone agreed to invest \$8.9 Million via a two tranche placement of 105 million shares at 8.5 cents per share. The Greenstone investment represented a 27% premium to the last closing price of Metro shares at the time of the agreement.

Greenstone becomes a 19.98% shareholder of Metro Mining and, subject to terms and conditions, has announced it is also willing to provide up to an additional US\$20 Million of follow-on equity funding to support financing the Bauxite Hills Project into production.

The Agreements contain customary anti-dilution provisions enabling Greenstone to maintain its equity interest in Metro on the issue of further shares. Metro has also granted Greenstone customer nomination rights enabling Greenstone the right to nominate customers to purchase bauxite production pro-rata to Greenstone's shareholding in Metro on an arms' length basis and on no less favourable terms than could be achieved elsewhere. Greenstone's customer nomination rights are only exercisable after Bauxite Hills has been in production for four years.

Both the anti-dilution and the customer nominations rights are subject to certain exceptions and are contingent upon Greenstone retaining at least a 10% interest in Metro.

Corporate Directory Bauxite Hills Project About Greenstone

Greenstone Resources LP is a specialist mining and metals private equity fund based in Guernsey, Channel Islands. Greenstone invests in post exploration development projects and supports management teams in bringing projects into production.

The Greenstone team has over 100 years of real industry experience in the resource sector, with particular expertise in developing and operating mines globally, including specific expertise in the alumina and aluminium industry.

Greenstone's approach to investing is to develop a collaborative relationship with management leveraging upon in-house skills, expertise and global networks to add value to projects.

Gulf Alumina Limited Merger Offer

Metro Mining has acquired a strategic 22% stake in its Bauxite Hills neighbour Gulf Alumina Limited via an off market takeover offer announced in December 2015.

Metro considered the proposed combination offered an opportunity to create greater value for shareholders of both companies by co-developing the adjacent projects at Skardon River.

Metro has a proven Board and Management Team which has rapidly advanced the company's Bauxite Hills Project. The aim of the takeover offer was to create a leading independent Cape York focused Australian bauxite company. Gulf's largest and key founding shareholder accepted the Metro offer.

The projects are highly complementary given their similar resource base, potential production scale, mining and export methods, shared permitting regime and Native Title Partners and the same potential end market customers.

Gulf shareholders were initially offered 3.3 shares in Metro for every 1 Gulf share they owned. Had the Offer been successfully completed Gulf shareholders would have owned approx 44% of the merged group.

On 26 May 2016 Metro improved the Offer to 3.9 Metro shares for every 1 Gulf share, subject only to Metro obtaining a relevant interest in at least 40% of Gulf. In formulating the Increased Offer Consideration, Metro said it had regard to the implied share exchange ratio in Gulf's Independent Expert's Report (IER) based on a 'merger of equals' and 'like-for-like' valuation approach. The IER was attached to Gulf's 2nd Supplementary Target's Statement dated 16 May 2016.

Metro considered the improved offer of 3.9 Metro shares for each Gulf share was fair and attractive for Gulf shareholders, especially when taking into account the potential benefits of the merger and given this reflected the merger of equals ratio calculated by Gulf's Independent Expert. In June 2016 Metro announced the closure of its offer.

As Gulf Alumina's largest shareholder, Metro will consider any further opportunities to take advantage of the significant potential synergies that are available by combining the two companies' projects.

DISCLAIMER

Corporate Directory Statements and material contained in this Report, particularly those regarding possible or assumed future performance, production levels or rates, commodity prices, resources or potential growth of Metro Mining Limited, industry growth or other trend projections are, or may be, forward looking statements. Such statements relate to future events and expectations and, as such, involve known and unknown risks and uncertainties. Graphs used in the presentation (including data used in the graphs) are sourced from third parties and Metro Mining has not independently verified the information. Metro Mining is at an early development stage and while it does not currently have a operating bauxite mine it is taking early and preliminary steps (such as but not limited to Prefeasibility studies etc.) that are intended to ultimately result in the building and construction of an operating mine at its project areas. Although reasonable care has been taken to ensure that the facts stated in this Presentation are accurate and or that the opinions expressed are fair and reasonable, no reliance can be placed for any purpose whatsoever on the information contained in this document or on its completeness. Actual results and developments may differ materially from those expressed or implied by these forward looking statements depending on a variety of factors. Nothing in this Report should be construed as either an offer to sell or a solicitation of an offer to buy or sell shares in any jurisdiction.

Competent Person's Statement: Technical information about the Bauxite Hills Project and information in this report that relates to Exploration Results is based on information compiled by Neil McLean who is a consultant to Metro Mining and a Fellow of the Australian Institute of Mining and Metallurgy (F.AusIMM). Mr McLean has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr McLean consents to the inclusion in the report of the matters based on information in the form and context in which it appears.

The information in this report that relates to Mining and Reserves is based on information compiled by MEC Mining and reviewed by Edward Bolton, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy. The information in this report to which this statement is attached that relates to the "Metro Mining – Bauxite Hills" Reserve Estimate based on information compiled by Edward Bolton, a consultant to Metro Mining and a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy. Edward Bolton is full-time employee of MEC Mining Pty Ltd. Edward Bolton has sufficient experience that is relevant to the style of mineralization, type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Edward Bolton consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

With reference to resources in the Metro Mining Thermal Coal Resource in the Surat Basin. Information in this Report relates to the Compilation of existing data and Exploration Results is based on information compiled by Mr Ed Radley who is a Member of the Australian Institute of Mining and Metallurgy (MAusIMM) (Membership No 300512). Mr Ed Radley is an independent Geological Resource Consultant retained by Metro Mining Limited. Mr Ed Radley has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Radley has consented in writing for inclusion in this announcement the matters based on the information in the form and context it appears. The JORC Code 2004 Information has not been updated to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.

Principal Registered Office in Australia: L8, 300 Adelaide St, Brisbane, Q 4000 | GPO Box 10955 Adelaide St, Brisbane Q 4000 P: +61 7 3009 8000 F: +61 7 3221 4811 E: info@metromining.com.au Share Registry: Link Market Services L15, 324 Queen St Brisbane,

Q, 4000 | P: +61 2 8280 7454

Auditor: BDO Audit Pty Ltd, L 18, 300 | Queen St Brisbane, Q, 4000

Stock Exchange Listing: Metro Mining Limited shares are listed on the Australian Securities Exchange (ASX) Limited

ASX Code: MMI | www.metromining.com.au

Metro Mining Limited and controlled entities

(formerly MetroCoal Limited) ABN 45 117 763 443

Financial Statements for the Year Ended 30 June 2016

Metro Mining Limited
Corporate directory
30 June 2016

Directors	Mr Stephen Everett - Independent Chairman Mr Philip Hennessy - Independent Non-Executive Director Mr George Lloyd - Independent Non-Executive Director Mr Lindsay Ward - Independent Non-Executive Director Mr Dongping Wang - Non-Executive Director Mr Jijun Liu - Non-Executive Director Mr Mark Sawyer - Non-Executive Director (appointed 28 July 2016) Mr Xiaoming Yuan - Alternate Director for Dongping Wang Mr Ken Xiao - Alternate Director for Jijun Liu
Company secretary	Mr S Waddell
Assistant company secretary	Ms A Treble
Notice of annual general meeting	The annual general meeting of Metro Mining Limited will be held at: Level 2, 200 Mary Street Brisbane, QLD 4000 Date: 22 November 2016 Time: 11 am.
Registered office	Level 8, 300 Adelaide Street Brisbane, Queensland 4000 T +61 7 3009 8000 F +61 7 3221 4811
Principal place of business	Level 8, 300 Adelaide Street Brisbane, Queensland 4000
Share register	Link Market Services Limited Level 15, 324 Queen Street Brisbane QLD 4000
Auditor	BDO Audit Pty Ltd Level 10, 12 Creek Street Brisbane QLD 4000
Stock exchange listing	Metro Mining Limited shares are listed on the Australian Securities Exchange (ASX code: MMI)
Website address	www.metromining.com.au

The directors present their report on the consolidated entity (referred to herein as the 'consolidated entity' or the 'Group') consisting of Metro Mining Limited (the 'Company' or 'parent entity') and its controlled entities for the financial year ended 30 June 2016:

Directors

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

Mr S Everett	Mr J Liu
Mr P Hennessy	Mr M Sawyer (Appointed 28 July 2016)
Mr G Lloyd	Mr X Yuan (Alternate for Mr D Wang)
Mr L Ward	Mr K Xiao (Alternate for Mr J Liu)
Mr D Wang

Review of operations

During the financial year, the Group progressed the development of the Bauxite Hills Project on western Cape York Peninsula, maintained its coal tenements and continued investigation into new opportunities for the Group in South East Asia, specifically in Myanmar.

Bauxite Hills Project

The Bauxite Hills project (the 'Project') continued to be the primary focus for the Group's activities in the current financial year. A number of significant milestones in the development of the Project were achieved:

• The Group achieved a key milestone for the granting of the Project mining leases with the execution of a Native Title and Land Access Agreement with the Ankamuthi People, the traditional owners, and the Old Mapoon Aboriginal Corporation ('OMAC'), the trustee owner of the Project land. The agreement provides for the cultural and heritage management of the Project area, the provision of employment and training opportunities for traditional owners, business development and contracting opportunities for Ankamuthi businesses and the payment of mining benefits to both the Ankamuthi people and OMAC for the life of the Project. The mining benefits are based on a percentage of the free-on-board price received per tonne of bauxite and will be used to fund long term programs for the benefit of the recipients.
• On 11 July 2016, the Company announced that Greenstone Resources II L.P. ('Greenstone'), a specialist mining and metals private equity fund based in Guernsey, Channel Islands, agreed to make an initial \$8.9 million investment in the Company (the 'Initial Investment') to be used by the Group to advance the development of the Project and for working capital. The agreement with Greenstone also provides the potential for a further equity investment by Greenstone of up to \$US20 million to be used by the Group for construction of the Project.

The Initial Investment was priced at \$0.085 per share, a 27% premium to the closing share price prior to the announcement. It comprises two tranches. The first tranche of 94,800,000 new ordinary shares settled on 28 July 2016 for gross proceeds of \$8.058 million. The second tranche of 10,200,000 new ordinary shares requires the approval of shareholders. On settlement of the Initial Investment, Greenstone will hold 19.94% of the issued share capital of the Company.

• In April 2016, the Group submitted an Environmental Impact Statement ('EIS') for the Project to the Queensland Government Department of Environment and Heritage Protection. The EIS addresses both State and Commonwealth requirements with respect to the potential environmental, social and economic impacts of the Project. The lodgement of the EIS marks the commencement of the Queensland Government's assessment phase for the Project under the bilateral agreement with the Commonwealth Department of Environment.
• The Group entered into an agreement with a transhipment contractor for the provision of transhipment services relating to the Project. The contractor will provide all tugs and barges required for barging bauxite ore up the Skardon River and loading bulk carriers in the Gulf of Carpentaria, allowing the Group to minimise capital expenditure in this area. The utilisation of a proven and experienced transhipment contractor delivers a low cost and low risk solution that negates the need for dredging or bed levelling of the Skardon River.

Review of operations (continued)

In addition to these key areas of achievement, the Group has continued to make progress towards:

• The finalisation of a 4Mtpa Definitive Feasibility Study for an expanded production facility; and
• The finalisation of an offtake agreement with Xinfa, one of the largest integrated aluminium companies in China and a shareholder in the Company.

In December 2015, the Company announced a takeover offer to acquire all of the issued capital of Gulf Alumina Limited ('Gulf'), an unlisted public company that holds bauxite tenements adjacent to the Project. On closure of the takeover bid on 16 June 2016, the Company had secured a 21.8% strategic stake in Gulf. Although significantly less than the uptake envisaged at the time the transaction was announced, the Company is now Gulf's largest shareholder and is in a good position to negotiate future collaboration between the two companies and to secure potential synergies between the two projects.

Other Bauxite Interests

During the year the Group received the final cash instalment of \$825,000 for the sale of the Hey Point bauxite tenements to Green Coast Resources Pty Ltd ('GRC'), taking the total consideration for the transaction to \$1,575,000. The original agreement for the sale of the Hey Point Tenements was signed in June 2013 by Cape Alumina Limited, a wholly-owned subsidiary of the Company and the sale terms were modified in 2015.

Under the terms of the sale agreement with GRC, the Group is entitled to royalties of $3 - 4\%$ of gross proceeds from all bauxite sold from the Hey Point tenements. No royalty income was received in the current financial year; however, GCR has confirmed that it produced just over 100,000 tonnes of bauxite up to 30 June 2016.

Coal

The continuing depressed price for coal has resulted in the Group focussing its attention on the development of the Bauxite Hills project. The Bundi coal tenements were partially impaired in a prior financial year due to project development delays and the effect of coal prices. The board has again reviewed the fair value of these tenements by reference to current, relevant, market data and the enterprise value of similar resources. Based on this review, the board believes that the Bundi project has a fair value of \$5 million and, accordingly, a \$4,503,540 impairment of this asset has been recorded. The Norwood and Dalby West coal tenements were sold during the year for a total of \$50,000.

Other than the expenditure required to maintain the Bundi coal tenements, the Group incurred no expenditure on its coal interests during the financial year. It is unlikely that a further significant investment in the Group's coal interests will be made until such time as the market for coal improves.

Myanmar

During the financial year, the Group incorporated wholly-owned subsidiaries in Singapore and Myanmar through which to pursue new opportunities in South East Asia. The Group's interests in the current financial year have been specifically focussed on prospective projects in Myanmar.

The Group engaged an Australian led, Myanmar based, geological consulting company to conduct reviews of potential opportunities in Myanmar. This process led to the identification of the Mahar San copper project as a prospective project for the Group.

The Mahar San project is located in the Sagaing region of northern Myanmar, approximately 220 kilometres northwest of Mandalay. It lies within the Mesozoic to Tertiary Central Volcanic Magmatic Arc that is prospective for various styles of copper, gold and base metal mineralisation.

The project consists of four concessions: three 'small mining' concessions for copper of 16 to 20 hectares each and an enveloping, larger copper exploration concession covering 7.5 square kilometres. Small scale mining of gold and copper mineralisation has been intermittently undertaken from three small open pits since 2010. Gold mining ceased in 2013 and the mining of deeper copper sulphide mineralisation was commenced with a small amount of copper metal produced from small leach pads.

The Group believes that the application of modern exploration techniques to better assess the area for gold, copper and other base metal mineralisation provides an attractive opportunity for the Group. To this end, Metro Resources and Exploration Co. Ltd, the Group's wholly-owned Myanmar based subsidiary, entered into a Joint Venture Agreement ('JVA') with Mahar San Company covering the exploration and mining of the Mahar San project.

Review of operations (continued)

Under the terms of the JVA, the joint venturers will establish a joint venture company to which the Group will contribute US\$50,000 for an 80% interest and Mahar San Company will contribute its tenements. The Group will also review funding options to enable the joint venture company to undertake drilling, resource definition, feasibility studies and other evaluations of the project area. With the introduction of funding participants, the Group believes that the Mahar San project can be progressed without distracting management attention or diverting funds from the development of the Bauxite Hills project which is the Group's primary objective.

Review of financial condition

The loss for the Group after providing for income tax was \$6,833,798 (30 June 2015: \$2,773,292) including impairment of \$4,503,540 (30 June 2015: \$nil) in relation to the Group's exploration and evaluation expenditures.

As at 30 June 2016, the Group had cash and cash equivalents and term deposits of \$2.68 million (2015: \$3.1) million), total current liabilities of approximately \$1.2 million (2015: \$0.8 million) and net assets of \$16.4 million (2015: \$14.6 million).

The Group used \$3.8 million (2015: \$2.49 million) in its exploration activities during the year. In addition, a research and development tax offset of \$0.6 million was received during the year (2015: \$0.5 million). The tax offset was subsequently amended to \$0.4 million and, as a result, the Group will refund \$0.2 million of the tax offset received.

Subsequent to financial year end, the Group entered into a strategic financing agreement with Greenstone Resources II LP ('Greenstone') which will provide the Group with access to approximately \$8.9 million in initial funding to advance the Bauxite Hills project. Subject to the satisfaction of certain conditions, the agreement with Greenstone provides the Group with the potential for additional funding of up to US\$20 million to be used in developing the Bauxite Hills project and for working capital. Refer to discussion of matters subsequent to financial year end and to note 29 for further information on this agreement.

Significant changes in the state of affairs

During the financial year, the Group incorporated new wholly owned subsidiaries in Singapore and Myanmar. It is the Group's intention to assess further exploration and development opportunities in Myanmar through these entities.

Matters subsequent to the end of the financial year

Agreement for Strategic Financing of the Bauxite Hills Project

On 12 July 2016, the Company announced that it had executed binding documentation ('Agreements') with Greenstone Resources II LP ('Greenstone') whereby Greenstone will take up 105 million ordinary shares in the Company, representing a 19.94% interest. Subject to the satisfaction of certain conditions, the Agreements also provide the Company with potential ongoing strategic and financial support for the development of the Bauxite Hills Project (the 'Project'). The initial placement of 105 million shares at 8.5 cents per share (the 'Placement') will raise A\$8.958 million in funding for construction of the Project. Greenstone is a specialist mining and metals private equity fund based in Guernsey, Channel Islands.

The Placement will be undertaken in two tranches:

• 94,800,000 shares issued to raise a total of A\$8,058 million (the 'First Tranche'); and $\bullet$
• 10,200,000 shares issued to raise a total of A\$0.9 million (the 'Second Tranche').

The First Tranche, which does not require shareholder approval based on the Company's available placement capacity, was settled was on 28 July 2016.

The Second Tranche is subject to shareholder approval. An extraordinary meeting of shareholders will be held on 30 August 2016 to ratify the issue of the Second Tranche.

The Agreements further provide that, subject to a satisfactory construction decision in respect of the Project and agreement on structure and terms, Greenstone is willing to make an additional equity investment of up to US\$20 million in the Company to be utilised in construction of the Project and for working capital.

Matters subsequent to the end of the financial year (continued)

The Agreements contain anti-dilution provisions to enable Greenstone to maintain its equity interest in the Company on issue of further shares. The Agreements also provide Greenstone with customer nomination rights whereby the Group has agreed to grant Greenstone the right to nominate customers to purchase bauxite production, pro-rata to Greenstone's shareholding in the Company, on an arm's length basis and on no less favourable terms than could be achieved elsewhere. The customer nomination rights are only exercisable after the Project has been in production for four years. Both the anti-dilution and, subject to certain exceptions, the customer nomination rights, are contingent upon Greenstone retaining at least a 10% interest in the Company.

Issue of Ordinary Shares

On 25 July 2016, the Company issued 891,132 new fully paid ordinary shares to shareholders of Gulf Alumina Limited who had accepted the terms of the off-market takeover bid by the Company for shares in Gulf Alumina Limited (the 'Takeover Bid'). Under the terms of the Takeover Bid, shareholders in Gulf Alumina Limited were offered 3.3 fully paid ordinary shares in the Company for every one ordinary share held in Gulf Alumina Limited.

Appointment of Director

On 28 July 2016, Mr Mark Sawyer was appointed to the board of directors of the Company as the representative of Greenstone. Refer to Information on Directors at page 10 for a summary of Mr Sawyer's qualifications and experience.

Further developments, prospects and business strategies

The primary area of strategic focus for the Group is the development of the Bauxite Hills project. The Group will also continue to assess new opportunities for exploration in Myanmar. It is unlikely that a further significant investment in the Group's coal interests will be made until such time as the market for coal improves. However, the Group will continue to maintain its coal assets in good stead.

Environmental requlation

The Group is subject to environmental regulations under the laws of Queensland where it holds mining tenements. The directors have put in place strategies and procedures to ensure that the Group manages its compliance with environmental regulations. The directors are not aware of any breaches of any applicable environmental regulations.

Dividends paid or recommended

There were no dividends paid or returns of capital by the Company during the financial year ended 30 June 2016. The directors do not recommend the payment of a dividend and no amount has been declared or paid by way of a dividend since 30 June 2016 and to the date of this report.

Additional information

The earnings of the Group for the five years to 30 June 2016 are summarised below:

	2016	2015	2014	2013	2012
Income	1.015.000	473.518	712.711	1.052.206	1.058.264
Net loss after tax	(6,833,798)	(2,773,292)	(15,694,963)	(735,086)	(10, 854, 933)

The factors that are considered to affect total shareholders' return are summarised below:

	2016	2015	2014	2013	2012
	s	s	S	S	\$
Share price at financial year end (A\$)	0.07	0.06	0.03	0.05	0.23
Basic loss per share (cents per share)	(1.83)	(1.07)	(7.45)	(0.35)	(5.53)

Shares under option

At the date of this report, the unissued ordinary shares of the Company under option are as follows:

Grant date	Expiry date	Exercise price	Number of options
12/01/2015	11/01/2017	\$0.06	10,750,000
15/12/2015	14/12/2017	\$0.15	2,500,000
05/05/2016	05/05/2018	\$0.04	1,047,493
Total number of shares under option			14,297,493

Option holders do not have any rights to participate in any issues of shares or other interests of the Company or any other entity.

There have been no options granted over unissued shares or interests in any controlled entity within the Group since the end of the reporting period.

No shares in the Company were issued on the exercise of options during the year ended 30 June 2016.

For details of options issued to directors and executives as remuneration, refer to the Remuneration Report.

Indemnity and insurance of officers

Each of the directors and the secretary of the Company have entered into a Deed with the Company whereby the Company has provided certain contractual rights of access to books and records of the Company to those directors and secretary. The Company has insured all of the directors and officers of Metro Mining Limited. The contract of insurance prohibits the disclosure of the nature of the liabilities covered and amount of the premium paid. The Corporations Act 2001 does not require disclosure of the information in these circumstances.

Indemnity and insurance of auditor

Other than the standard indemnities, the Company has not otherwise, during or since 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.

Proceedings on behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

Non-audit services

Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 20 to the financial statements.

The directors are satisfied that the provision of non-audit services during the financial year, by the auditor, or by another person or firm on the auditor's behalf, is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

The directors are of the opinion that the services as disclosed in note 20 to the financial statements do not compromise the external auditor's independence for the following reasons:

• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and $\bullet$ objectivity of the auditor, and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.

Officers of the Company who are former audit partners of BDO Audit Pty Ltd

There are no officers of the Company who are former audit partners of BDO Audit Pty Ltd.

Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 21 of the financial report.

Information on directors

Name: Title: Qualifications: Experience and expertise:	Stephen Everett Independent non-executive chairman Bachelor of Engineering (Chem Eng. Honours), MAICD Mr Everett has forty years management and board experience in the resources and construction industries and has held chairman and non-executive director positions on government development boards and private, ASX listed and TSX listed companies.
	Mr Everett has also held senior executive positions included managing director and chief executive officer of private and publicly listed companies.
Other current directorships:	None.
Former directorships (in the last 3 years):	Chairman of Agrimin Limited (formerly Global Resources Corporation Limited) $\bullet$ Appointed April 2009, Resigned April 2016; Chairman of IronRidge Resources Limited. Appointed May 2011. ۰ Resigned October 2012; and Chairman of Cape Alumina Limited. Appointed May 2014, $\bullet$ Resigned February 2015.
Special responsibilities. Interests in shares: Interests in options:	Member of the Audit, Risk and Remuneration Committee. 2,794,052 ordinary shares. 500,000 options.
Name: Title: Qualifications: Experience and expertise:	Philip Hennessy Independent non-executive director Bachelor of Business Mr Hennessy has over 30 years corporate experience, is a Chartered Accountant and holds a Bachelor of Business degree. Mr Hennessy has been involved with all aspects of corporate financing and company reconstruction across a variety of industries including construction, manufacturing, mining, professional services, agriculture and financial services. Mr Hennessy was chairman of KPMG Qld for 13 years prior to retiring in 2013.
	Mr Hennessy's knowledge and experience assists the Company in driving good governance, its financial responsibilities, cohesive and effective collaboration, effective processes and communications with shareholders and stakeholders.
Other current directorships:	Blue Sky Alternatives Access Fund Limited. Appointed 15 April 2014; and ٠ Collection House Limited. Appointed 28 August 2013.
Former directorships (in the last 3 years):	None.
Special responsibilities: Interests in shares: Interests in options:	Chairman of the Audit, Risk and Remuneration Committee. 1,785,715 ordinary shares. 500,000 options.

Information on directors (continued)

Name: Title: Qualifications:	George Lloyd Independent non-executive director Bachelor of Engineering Science (Industrial Engineering), Master of Business
Experience and expertise:	Administration Mr Lloyd has over 30 years resource industry experience including senior executive and board member roles of listed and unlisted companies with interests in minerals, energy, industry services and corporate finance.
	Mr Lloyd holds a Bachelor of Engineering Science (Industrial Engineering) and a Master of Business Administration, both from the University of NSW. He is also a graduate of the Stanford Executive Program. Mr Lloyd is a Fellow of the Australian Institute of Company Directors (AICD) and a Fellow of the Australasian Institute of Mining and Metallurgy (AuslMM).
Other current directorships:	Ausenco Limited. Appointed 13 May 2005
Former directorships (in the last $3$ years):	Cape Alumina Limited. Resigned December 2014 ۰ Pryme Energy Limited. Resigned December 2015
Special responsibilities: Interests in shares: Interests in options:	None. 867,442 ordinary shares. 500,000 options.
Name: Title: Qualifications: Experience and expertise:	Lindsay Ward Independent non-executive director Graduate Diploma of Business Management, Bachelor of Applied Science (Geology), Diploma of Mining, GAICD Mr Ward is an experienced senior executive having worked for over 30 years in a broad range of industries including mining, exploration, ports, mineral processing, rail haulage, electricity generation, gas transmission, alternative waste treatment,
	transport and logistics at general manager, chief executive officer, managing director, non-executive director and chairman level. Mr Ward is currently chief executive officer of Palisade Asset Management with responsibility for a range of infrastructure assets including gas transmission pipelines, wind farms, rural livestock exchanges, alternative waste treatment plants and a power station. Prior to this, Mr Ward was managing director of Dart Mining NL (ASX:DTM), a Victorian based exploration and development company.
	Mr Ward holds a Bachelor of Applied Science (Geology) Honours and the Institute Medal, a Graduate Diploma of Business Management and a Diploma of Mining. Mr Ward is a Graduate Member of the Australian Institute of Company Directors (GAICD).
Other current directorships:	None.
Former directorships (in the last 3 years):	Dart Mining NL. Appointed May 2011. Resigned December 2013; and Cape Alumina Limited. Appointed May 2014. Resigned February 2015. ۰
Special responsibilities: Interests in shares: Interests in options:	Member of Audit, Risk and Remuneration Committee. 553,572 ordinary shares. 500,000 options.

Information on directors (continued)

Name: Title: Qualifications: Experience and expertise:	Dongping Wang Non-executive director Bachelor of Coal Preparation Mr Wang graduated from the China University of Mining and Technology (CMUT) in 1981 with a bachelor degree in coal processing technology. For many years Mr Wang was process plant manager, and later director of operations, at Pingshuo Antaibao coal mine; a World Bank funded USA - China joint venture project. Mr Wang then became general manager of Long-Airdox (Tianjin) where from 1997 he was instrumental in introducing modern coal process technology from Australia to China. Mr Wang became general manager of Schenck (Tianjin) and worked there from 2001 until 2007.
	Mr Wang then helped establish the Dadi Engineering Development Group, now China's largest engineering group in the coal industry. Mr Wang has worked at the highest level within the Chinese coal industry for over 30 years and is a highly renowned coal processing expert, and a prominent figure in the Chinese coal Mr Wang brings extensive management experience and an intimate industry. knowledge of modern coal process technology to the Company.
	Mr Wang is chairman of the Dadi Engineering Development Group which, together with associated entities, holds 62,263,295 ordinary shares in the Company.
Other current directorships:	None.
Former directorships (in the last 3 years):	None.
Special responsibilities: Interests in shares: Interests in options:	None. None other than as noted above. 500,000 options.
Name: Title: Qualifications: Experience and expertise:	Jijun Liu Non-executive director Mr Liu is the managing director of the China Xinfa Group Corporation Limited which controls one of the largest alumina-aluminium enterprises in China. Mr Liu is also a member of various government committees. He studied thermal power plant engineering at Shandong Power Junior College. Mr Liu is an employee of China Xinfa Group Corporation Limited which, together with associated entities, holds 22,571,507 ordinary shares in the Company.
Other current directorships:	None.
Former directorships (in the last 3 years):	Cape Alumina Limited. Resigned January 2015.
Special responsibilities: Interests in shares: Interests in options:	None. None other than as noted above. None.

Information on directors (continued)

Name: Title: Qualifications: Experience and expertise:	Mark Sawyer Non-executive director LLB (Hons) Mr Sawyer co-founded Greenstone in 2013 after a 16 year career in the mining sector. Prior to establishing Greenstone, Mr Sawyer was general manager and co- head Group Business Development at Xstrata plc where he was responsible for originating, evaluating and negotiating new business development opportunities. Prior to Xstrata plc, Mr Sawyer held senior roles at Cutfield Freeman & Co, a boutique corporate advisory firm in the mining industry, and at Rio Tinto plc. Mr Sawyer holds a law degree and is also a graduate of the College of Law program (First Class Honours). Mr Sawyer is a director and a joint 50% owner of Greenstone Management Limited (GML). GML is the indirect owner of 100% of Greenstone Management (Delaware) II LLC which holds 94,800,000 ordinary shares in the Company as at the date of this report.
Other current directorships:	North River Resources Plc; and ۰ Heron Resources Ltd. ۰
Former directorships (in the last 3 years):	None.
Special responsibilities: Interests in shares: Interests in options:	Member of the Audit, Risk and Remuneration Committee. None other than as noted above. None.
Name: Title: Qualifications: Experience and expertise:	Xiaoming Yuan Alternate director for Mr Dongping Wang Bachelor of Mining Engineering Mr Yuan is managing director of Dadi Australia and chairman of Aury Australia. As the representative of the Dadi Engineering Development Group Mr Xiaoming delivers support and assistance to the board and Company from the major shareholder.
	Mr Yuan is a graduate of mining engineering from China University of Mining and Technology (CUMT) with over 20 years experience in the roles of mining engineer, business development, project management and corporate management for mining, construction and equipment manufacturing companies both in China and internationally.
Other current directorships:	None.
Former directorships (in the last 3 years):	None.
Special responsibilities: Interests in shares: Interests in options:	None. None. None.

Information on directors (continued)

Name: Title: Qualifications: Experience and expertise:	Ken Xiao Alternate director for Mr Jijun Liu Bachelor of Science, Bachelor of Engineering, Master of Information Technology Mr Xiao holds a Bachelor of Science majoring in computing and a Bachelor of Engineering in computing from the University of Newcastle. He is also holds a Master of Information Technology from Queensland University of Technology.
	Mr Xiao is a consultant to China Xinfa Group Corporation Limited which, together with associated entities, holds 22,571,507 ordinary shares in the Company.
Other current directorships:	None.
Former directorships (in the last 3 years):	Cape Alumina Limited, Alternate Director. Resigned January 2015.
Special responsibilities: Interests in shares: Interests in options:	None. 51,491 ordinary shares. None.

'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships in all other types of entities, unless otherwise stated.

'Former directorships (in the last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships in all other types of entities, unless otherwise stated.

Company Secretary

Mr Waddell was appointed as Company Secretary on 19 May 2014.

Mr Waddell's resources experience was gained over nine years with Anglo Coal and eight years with Rio Tinto Alcan (RTA) in a wide variety of senior roles across multiple sites. Mr Waddell has a deep understanding of the global bauxite, alumina and resources sectors. Prior to joining Metro Mining Limited, Mr Waddell was Head of Finance for the Monash Energy project in Victoria's La Trobe Valley.

Mr Waddell holds a Bachelor of Business from the Queensland University of Technology and is a Fellow of the Certified Practicing Accountants and an Associate Member of the Governance Institute of Australia. Mr Waddell has also completed numerous post graduate courses including a Graduate Diploma in Applied Corporate Governance, Company Directors Course with the Australian Institute of Company Directors (AICD), and Post Graduate Diploma of Purchasing and Materials Management with the RMIT.

Meetings of directors

The number of meetings of the Company's board of directors and of each board committee held during the year ended 30 June 2016, and the number of meetings attended by each director were:

			Audit, Risk and
	Full Board		Remuneration Committee
	Attended	Held	Attended	Held
Mr S Everett	21	21	4	4
Mr P Hennessy	20	21	4	4
Mr G Lloyd	19	21	$\overline{\phantom{a}}$	э.
Mr L Ward	20	21	4	4
Mr D Wang	$\overline{\phantom{a}}$	21	÷.	$\blacksquare$
Mr J Liu	$\sim$	21	÷	$\sigma$
Mr X Yuan (alternate for Mr D Wang)	19	21	÷.	$\sim$
Mr K Xiao (alternate for Mr J Liu)	18	21

'Held' represents the number of meetings held during the time the director held office or was a member of the relevant committee.

Remuneration report

The remuneration report, which has been audited, outlines the director and executive remuneration arrangements for the consolidated entity and the Company in accordance with the requirements of the Corporations Act 2001 and its Regulations.

The remuneration report is set out under the following main headings:

• $\overline{A}$ Principles used to determine the nature and amount of remuneration
• B Details of remuneration
• $\overline{C}$ Service agreements
• D Cash bonuses and share-based payments
• E Options granted as remuneration
• F Key management personnel shareholdings
• G Other transactions with key management personnel

A. Principles used to determine the nature and amount of remuneration

The Company's policy for determining the nature and amount of emoluments of key management personnel. including board members and other key management personnel of the Company is set out below.

The remuneration structure for key management personnel, excluding non-executive directors, is set by the board of directors (the 'board') and is based on a number of factors including market remuneration for comparable companies, particular experience of the individual concerned and overall performance of the Company. The contracts for service between the Company and key management personnel are on a continuing basis, the terms of which are not expected to change in the immediate future. The consolidated entity retains the right to terminate contracts immediately by making payment as allowed under the termination provisions provided in the individual's contact of employment. Upon retirement or termination key management personnel, excluding non-executive directors, are paid employee benefits accrued to date of retirement or termination. Other than as outlined in Section C, no other termination benefits are payable under service contracts. Any options issued which are not exercised on or before the date of termination lapse three (3) months after termination.

The objective of the consolidated entity's and Company's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and conforms to the market best practice for delivery of reward. The board ensures that executive reward satisfies the following key criteria for good reward governance practices:

• competitiveness and reasonableness; $\ddot{\bullet}$
• acceptability to shareholders; and $\bullet$
• transparency. $\bullet$

The board is responsible for determining and reviewing remuneration arrangements for its directors and executives. The performance of the consolidated entity and Company depends on the quality of its directors and executives. The remuneration philosophy is to attract, motivate and retain high performance and high quality personnel.

The board has structured an executive remuneration framework that is market competitive and complementary to the reward strategy of the organisation.

Alignment to shareholders' interests:

• focuses on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and $\bullet$ delivering constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value; and
• attracts and retains high calibre executives.

Alignment to program participants' interests:

• rewards capability and experience; $\bullet$
• reflects competitive rates of remuneration in respect of skills and responsibility;
• provides a clear structure for earning rewards; and ۰
• provides recognition for contribution.

Principles used to determine the nature and amount of remuneration (continued) Α.

In accordance with best practice corporate governance, the structures of non-executive directors' remunerations and executives' remunerations are separate.

Non-executive directors' remuneration

Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors. Non-executive directors' fees and payments are reviewed annually by the board. The board has also agreed where necessary to seek the advice of independent remuneration consultants to ensure non-executive directors' fees and payments are appropriate and in line with the market. The chairman's fees are determined independently to the fees of other non-executive directors based on comparative roles in the external market.

ASX listing rules require that the aggregate non-executive directors' remuneration shall be determined periodically by a general meeting. The most recent determination was at the annual general meeting held on 18 November 2010, where the shareholders approved an aggregate remuneration of \$350,000.

Executive remuneration

The consolidated entity and Company aim to reward executives with a level and mix of remuneration based on their position and responsibility, and which is both fixed and variable.

The executive remuneration and reward framework has four components:

• base pay and non-monetary benefits; $\bullet$
• share-based payments: $\bullet$
• cash bonuses; and
• other remuneration such as superannuation and long service leave.

The combination of these comprises the executive's total remuneration.

Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, is reviewed annually by the board, based on individual and business unit performance, the overall performance of the consolidated entity and comparable market remunerations.

Executives can receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle benefits) where it does not create any additional costs to the consolidated entity and adds additional value to the executive. As the consolidated entity is in exploration and not production phase, there is no direct relationship between the Company's financial performance and the level of remuneration paid to key management personnel.

Short-term incentives ('STI') include cash bonuses. Long-term incentives ('LTI') include long service leave and share-based payments. The Company has established the Metro Mining Employee Share Option Plan ('ESOP') to enable the issue of shares or options in the Company to employees of the Company to assist in the retention and motivation of employees. Under the ESOP, the Company may offer shares or options over unissued shares in the Company. Shares are awarded to executives generally over a period of three years based on long-term incentive measures. These LTI's include specific goals that have been given a high level of importance in relation to the future growth of the group. Performance conditions generally include progressing the Company's projects toward production, and funding the Company by disposals of non-core assets, either by sale or otherwise, on satisfactory terms.

Consolidated entity performance and link to remuneration

The link between remuneration, Company performance and shareholder wealth generation is tenuous, particularly in the exploration and development stage of a minerals company. Share prices are subject to the influence of international metal and coal prices and market sentiment towards the sector, and increases or decreases may occur independently of executive performance or remuneration. The Company may issue options to provide an incentive for key management personnel which, it is believed, is in line with industry standards and practice. It is also believed to align the interests of key management personnel with those of the Company's shareholders.

Unless otherwise stated, service agreements do not provide for pre-determined compensation values or the manner of payment. Compensation is determined in accordance with the general remuneration policy. The manner of payment is determined on a case by case basis and is generally a mix of cash and non-cash benefits as determined by the board.

Α. Principles used to determine the nature and amount of remuneration (continued)

Except in so far as directors and key management personnel hold options over shares in the Company, there is no relationship between remuneration policy and the Company's performance. The majority of bonus and incentive payments are at the discretion of the board.

At the end of the year, the board compares the actual performances of the executives and executive directors against the performance conditions set by the board for those individuals and assesses whether or not the conditions have been met. This method of assessment was chosen as it provides the board with an objective assessment of the individual's performance.

The board reviews the performance conditions to gauge their effectiveness against achievement of the set goals, and adjusts future years' incentives as they see fit, to ensure use of the most cost effective and efficient methods.

The Company has not used a remuneration consultant during the year.

B. Details of remuneration

Amounts of remuneration

Details of the remuneration of directors and other key management personnel (defined as those who have the authority and responsibility for planning, directing and controlling the activities of the consolidated entity) of Metro Mining Limited are set out in the following tables.

The key management personnel ('KMP') of the consolidated entity consists of the directors of Metro Mining Limited and executives for the period of their tenure as outlined below:

• $\bullet$ Mr Stephen Everett - Independent Chairman
• Mr Philip Hennessy Independent Non-Executive Director $\ddot{\bullet}$
• Mr George Lloyd Independent Non-Executive Director $\bullet$
• Mr Lindsay Ward Independent Non-Executive Director $\blacksquare$
• Mr Dongping Wang Non-Executive Director é
• Mr Jijun Liu Non-Executive Director $\bullet$
• Mr Xiaoming Yuan Alternate Director for Dongping Wang $\bullet$
• Mr Ken Xiao Alternate Director for Jijun Liu ٠
• Mr Simon Finnis Chief Executive Officer $\bullet$
• Mr Mike O'Brien Project Director $\bullet$
• Mr Scott Waddell Chief Financial Officer and Company Secretary ٠

Remuneration expense details for the year ended 30 June 2016

The following Table of Benefits and Payments represents the components of the current year and comparative year remuneration expenses for each member of KMP of the consolidated entity. Amounts have been calculated in accordance with Australian Accounting Standards.

B. Details of remuneration (continued)

		Short-term benefits		Post employment benefits	Long-term benefits	Share-based payments
	Cash salary		Non-	Super-	Long serv.	Equity-
	And fees	Bonus	monetary	annuation	leave	settled	Total
2016	\$	\$	S	\$	\$	\$	S
Non-Executive Directors:
Mr S Everett	86,000	Ξ				4,338	90,338
Mr P Hennessy	50,228	$\blacksquare$	÷	4,772		4,338	59,338
Mr G Lloyd	45,000	÷.	$\overline{\phantom{a}}$		÷	4,338	49,338
Mr L Ward	45,662	÷.	٠	4,338	¥.	4,338	54,338
Mr D Wang	22,500	$\blacksquare$	$\blacksquare$	-	۰	4,338	26,838
Mr J Liu	45,000	÷.	۰	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	45,000
Mr X Yuan	22,500		$\overline{a}$			$\sim$	22,500
Mr K Xiao						×
Other KMP
Mr S Finnis	275,001	42,145	۰		۰	46,195	363,341
Mr M O'Brien	263,114	٠.	÷		٠	$\frac{1}{2}$	263,114
Mr S Waddell	224,091	$\frac{1}{2}$	$\blacksquare$	21,289	$\blacksquare$	$\blacksquare$	245,380
	1,079,096	42,145	۰	30,399		67,885	1,219,525

			Post employment	Long-term	Share-based
		Non-
And fees	Bonus	monetary	annuation	Leave	settled	Total
	\$	S	s	S	S	S
82,800						82,800
33,105			3,145			36,250
11,250	٠				$\overline{\phantom{a}}$	11,250
52,339		٠	4,319		$\overline{a}$	56,658
22,500	۰	¥			÷	22,500
22,500		۰				22,500
13,125	×,	÷,			$\overline{\phantom{a}}$	13,125
6,936			659			7,595
6,812	$\overline{\phantom{a}}$	Ξ.	220	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	7,032
						10,304
130,450					35,977	166,427
384,035			35,000		29,981	449,016
254,092	$\overline{\phantom{a}}$	۰	24,139		29,981	308,212
1,029,370	ш	a,	68,360	u	95,939	1,193,669
	Cash salary Non-Executive Directors: 9,426		Short-term benefits	benefits Super- 878	benefits Long serv.	payments Equity-

B. Details of remuneration (continued)

The proportion of remuneration linked to performance and the fixed proportion is as follows:

		Fixed remuneration		At risk - STI	At risk - LTI
	2016	2015	2016	2015	2016	2015
	%	%	%	%	$\%$	%
Non-Executive Directors
Mr S Everett	95	100			5
Mr P Hennessy	93	100			7
Mr G Lloyd	91	100			9
Mr L Ward	92	100			8
Mr D Wang	84	100			16
Mr J Liu	100	100
Mr X Yuan	100	100
Mr K Xiao	٠	$\overline{\phantom{a}}$	۳	-
Mr A Gillies		100
Mr J Haley		100		$\overline{a}$		$\sim$
Mr R Finch	۰	100		$\qquad \qquad -$	-	Ξ
Other KMP
Mr S Finnis	75.7	78	11.6	Ξ	12.7	$22 \overline{ }$
Mr M O'Brien	100	93	۰	$\overline{\phantom{a}}$		7
Mr S Waddell	100	90.3		¥	A)	9.7

Securities received that are not performance related

No members of KMP are entitled to receive securities that are not performance-based as part of their remuneration package.

C. Service agreements

Remuneration and other terms of employment for key management personnel, other than directors, are formalised in service agreements. Details of these agreements are as follows:

Name:	Mr Simon Finnis, employed through contract arrangement
Title:∶	Chief Executive Officer ('CEO')
Agreement commenced:	30 January 2016
Term of agreement:	Until terminated in accordance with the provisions of the agreement.
Details:	The key terms of this agreement are as follows:
	(a) The term is ongoing whilst Mr Finnis is CEO.
	(b) Annual service fee of \$275,004, subject to annual review by the board.
	Annual bonus of up to 35% of annual service fee based on agreed key (C). performance indicators:

• Environmental approval for the Bauxite Hills project (30% of bonus);
• Capital raising of an amount greater than \$3 million (15% of bonus);
• Offtake agreement for at least 2 million tonnes per annum (15% of bonus);
• Project financing offers sufficient to construct the Bauxite Hills project (25% of $\bullet$ bonus); and
• Board reporting for HSE, HR and Statutory Compliance (15% of bonus).

The bonus is paid as 50% cash and 50% as performance rights or options.

(d) The agreement may be terminated at any time by either party giving three (3) months notice. In the event of a change of control of the Company, the contractor may elect to terminate the agreement. In these circumstances, six (6) months of the monthly service fee will become due and payable.

C. Service agreements (continued)

Name:	Mr Scott Waddell
Title:	Chief Financial Officer and Company Secretary
Term of agreement:	The agreement can be terminated by either party giving three (3) months notice.
Details:	The key terms of this agreement are as follows:
	The term is ongoing whilst Mr Waddell is Chief Financial Officer; (a)
	Base remuneration is \$245,380 per annum, including superannuation, and is (b) subject to annual review by the board;
	Mr Waddell is also entitled to participate in Metro Mining Limited Employee Share (c) Option Scheme, subject to the approval of the board.
Name:	Mr Michael O'Brien, employed through contract arrangement
Title:	Project Director
Agreement commenced:	12 January 2015, extended 12 January 2016
Term of agreement:	The agreement can be terminated by either party giving 14 days notice.
Details	The key terms of this agreement are as follows:
	(a) Term 12 months.
	The base remuneration is \$1,500 per day, based on a 4 day week. (b)

Key management personnel have no entitlement to termination payments in the event of removal for misconduct.

Cash bonuses and share-based payments D.

The terms and conditions relating to options and bonuses granted as remuneration during the year to KMP are as follows:

							Percentage		Range for
	Remuneration	Grant	Grant	Reason	Percentage	Percentage	Remaining	Expiry	Future
	Type	Date	Value	Granted	Vested/Paid	Forfeited	Unvested	Date	Payments
Name			\$		$\%$	%	%
Non-Executive Directors
Mr S Everett	Options	15/12/15	16.016	(i)	W.	Ξ	100	14/12/17	N/A
Mr P Hennessy	Options	15/12/15	16.016	(i)	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	100	14/12/17	N/A
Mr G Lloyd	Options	15/12/15	16.016	(i)	Ħ.	$\equiv$	100	14/12/17	N/A
Mr L Ward	Options	15/12/15	16.016	(i)	$\bullet\bullet$	$\rightarrow$	100	14/12/17	N/A
Mr D Wang	Options	15/12/15	16.016	(i)	÷.	u.	100	14/12/17	N/A
Other KMP
Mr S Finnis	Options	05/05/16	46.194	(i)	96.0	4.0	$\sim$	05/05/18	N/A
	Cash
Mr S Finnis	Bonus	05/05/16	42.145	(i)	87.6	12.4	$\overline{\phantom{a}}$	N/A	N/A

• The options have been granted subject to the Company obtaining a mining licence for the Bauxite Hills $(i)$ Project. The options vest in full, and are exercisable, on the date the mining licence is granted. No amounts were paid by the recipients on grant of the options.
• (ii) The options and a cash bonus were granted in accordance with the recipient's terms of engagement and on satisfaction of the key performance indicators outlined in the recipient's service contract.

Ε. Options granted as remuneration

The number of options over ordinary shares in the parent entity held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below:

	Balance at Beginning		Granted		Exercised		Lapsed (i)	Balance at End
	Of Year	Issue		Value		Value		Of Year
	Number	Date	Number	\$	Number	\$	Number	Number
Non-Executive
Directors
Mr S Everett	1,000,000	15/12/15	500,000	16,016			1,000,000	500,000
Mr P Hennessy	$\overline{\phantom{a}}$	15/12/15	500,000	16,016	۰.		-	500,000
Mr G Lloyd	$\overline{a}$	15/12/15	500,000	16,016			ä.	500,000
Mr L Ward	۰	15/12/15	500,000	16,016	÷.		۰	500,000
Mr D Wang	500,000	15/12/15	500,000	16,016	÷		500,000	500,000
Mr J Liu	$\blacksquare$	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	×	ш	W.	¥
Mr X Yuan		۰	≛	$\sim$	÷.		۰
Mr K Xiao		$\blacksquare$	$\overline{a}$	۳	۰
Other KMP
Mr S Finnis	3,000,000	05/05/16	1,047,493	46,194			$\overline{\phantom{a}}$	4,047,493
Mr M O'Brien	2,500,000	¥					$\overline{\phantom{a}}$	2,500,000
Mr S Waddell	2,500,000						×	2,500,000
	9,500,000		3,547,493	126,274		÷.	1,500,000	11,547,493

(i) The lapsed options were granted on 20 November 2012.

		Vested		Unvested
	Balance at End of Year Number	Exercisable Number	Unexercisable Number	Total at End of Year Number
Non-Executive Directors
Mr S Everett	500,000			500,000
Mr P Hennessy	500,000		۰	500,000
Mr G Lloyd	500,000	÷	z,	500,000
Mr L Ward	500,000		۰	500,000
Mr D Wang	500,000	$\qquad \qquad$	۰	500,000
Mr J Liu		$\overline{\mathbb{Z}}$	÷,	7
Mr X Yuan		ü, $\overline{\mathfrak{D}}$	٠
Mr K Xiao
Other KMP
Mr S Finnis	4,047,493	4,047,493
Mr M O'Brien	2,500,000	2,500,000
Mr S Waddell	2,500,000	2,500,000
	11,547,493	9,047,493		2,500,000

The fair value of options granted as remuneration and as shown in the above table has been determined in accordance with Australian Accounting Standards and will be recognised as an expense over the relevant vesting period to the extent that the conditions necessary for vesting are satisfied.

Ε. Options granted as remuneration (continued)

Description of options issued as remuneration

Details of the options granted as remuneration to key management personnel are as follows:

Grant Date	Issuer	Entitlement on Exercise	Dates Exercisable	Exercise Price	Value Per Option at Grant Date	Amount Paid / Payable By Recipient
		1:1 Ordinary	From vesting
	Metro Mining	Shares in Metro	date until
15/12/2015	Limited	Mining Limited	14/12/2017	\$0.15	\$0.032	\$0
		1:1 Ordinary	From vesting
	Metro Mining	Shares in Metro	date until
05/05/2016	Limited	Mining Limited	05/05/2018	\$0.04	\$0.044	\$0

Option values at grant date were determined using the Black-Scholes method.

Key management personnel shareholdings F.

The number of ordinary shares in Metro Mining Limited held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is as follows:

	Balance at Beginning	Granted as Remuneration	Issued on Exercise of	Other Changes	Balance at End
	Of Year	During the Year	Options	During the Year	Of Year
Non-Executive Directors
Mr S Everett	2,444,795		$\ddot{\phantom{0}}$	349,257	2,794,052
Mr P Hennessy	1,562,500		W.	223,215	1,785,715
Mr G Lloyd	759,011	÷	۰	108,431	867,442
Mr L Ward	375,000	۰	$\bullet$	178,572	553,572
Mr D Wang			$\blacksquare$
Mr J Liu	$\overline{\phantom{a}}$	۰.	÷.	۳
Mr X Yuan		۰	$\overline{a}$
Mr K Xiao	45,052	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	6,439	51,491
Other KMP
Mr S Finnis	740,000		$\overline{\phantom{0}}$	175,715	915,715
Mr M O'Brien	1,064,356		۰	30,735	1,095,091
Mr S Waddell	276,923		$\overline{\phantom{a}}$	99,561	376,484
	7.267.637		$\blacksquare$	1.171.925	8.439.562

G. Other transactions with key management personnel and / or their related parties

There were no other transactions conducted between the consolidated entity and key management personnel or their related parties, apart from those disclosed above relating to equity and compensation, that were conducted other than in accordance with normal employee, customer or supplier relationships on terms no more favourable than those reasonably expected under arm's length dealings with unrelated parties.

The Directors' Report, incorporating the Remuneration Report, is signed in accordance with a resolution of the board of directors:

Shiri

S Everett Chairman 30 August 2016 Brisbane

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

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

DECLARATION OF INDEPENDENCE BY A J WHYTE TO DIRECTORS OF METRO MINING LIMITED

As lead auditor of Metro Mining Limited for the year ended 30 June 2016, I declare that, to the best of my knowledge and belief, there have been:

• 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
• 1. No contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Metro Mining Limited and the entities it controlled during the year.

A J Whyte Director

BDO Audit Pty Ltd

Brisbane: 30 August 2016

Metro Mining Limited Financial report For the year ended 30 June 2016

Contents	Page
Consolidated statement of comprehensive income	23
Consolidated statement of financial position	24
Consolidated statement of changes in equity	25
Consolidated statement of cash flows	26
Notes to the financial statements	27
Directors' declaration	53
Independent auditor's report to the members of Metro Mining Limited	54

General information

The financial report covers Metro Mining Limited as a consolidated entity consisting of Metro Mining Limited and the entities it controlled. The financial report is presented in Australian dollars, which is Metro Mining Limited's functional and presentation currency.

The financial report consists of the financial statements, notes to the financial statements and the directors' declaration.

Metro Mining Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Level 8, 300 Adelaide Street Brisbane QLD 4000

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

The financial report was authorised for issue, in accordance with a resolution of directors, on 30 August 2016. The directors have the power to amend and reissue the financial report.

Metro Mining Limited
Consolidated statement of comprehensive income
For the year ended 30 June 2016

			Consolidated
	Note	2016	2015
		S
Other income	4	1,015,000	473,518
Expenses
Occupancy expenses		(135, 486)	(138, 763)
Employee benefits expense	5	(1,082,471)	(1,209,406)
Depreciation	10	(27, 818)	(45, 199)
Impairment of exploration and evaluation assets	12	(4,503,540)
Other expenses	5	(2, 198, 992)	(2, 141, 478)
Results from operating activities		(6,933,307)	(3,061,328)
Finance income (net)		99,509	288,036
Loss before income tax benefit from continuing operations		(6,833,798)	(2,773,292)
Income tax benefit	6
Loss after income tax benefit for the year		(6,833,798)	(2,773,292)
Other comprehensive income Items that will be reclassified to profit or loss
Foreign currency translation differences		(3, 145)
Total comprehensive income for the year, net of tax		(6,836,943)	(2,773,292)
Total comprehensive income for the year attributable to:
Owners of the Company		(6,836,943)	(2,488,090)
Non-controlling interests			(285, 202)
Total comprehensive income for the year		(6,836,943)	(2,773,292)
		Cents	Cents
Basic loss per share	18	(1.83)	(1.07)
Diluted loss per share	18	(1.83)	(1.07)

The accompanying notes form part of these financial statements.

Metro Mining Limited
Consolidated statement of financial position As at 30 June 2016

			Consolidated
	Note	2016	2015
Assets		\$	\$
Current assets
Cash and cash equivalents	$\overline{7}$	2,684,309	3,116,546
Trade and other receivables	8	361,205	127,570
Other assets		6,161	2,289
Total current assets		3,051,675	3,246,405
Non-current assets
Available for sale financial assets	9	3,975,733
Property, plant and equipment	10	10,344	25,180
Exploration and evaluation assets	12	10,586,825	11,992,694
Other assets		7,560	91,424
Total non-current assets		14,580,462	12,109,298
Total assets		17,632,137	15,355,703
Liabilities
Current liabilities
Trade and other payables	13	1,115,388	727,500
Employee benefits	14	85,848	43,128
Total current liabilities		1,201,236	770,628
Total liabilities		1,201,236	770,628
Net assets		16,430,901	14,585,075
Equity
Contributed equity	15	56,105,993	47,491,109
Reserves	16	3,734,767	3,670,027
Accumulated losses		(43, 409, 859)	(36, 576, 061)
Total equity		16,430,901	14,585,075

The accompanying notes form part of these financial statements.

t, t, 9 Translation Currency Foreign Reserve မာ ۱ t. а 45, 149, 187 Contributed	5,586,507 Reserves Options SA	Change in Subsidiary Interest of Reserve
					$\frac{1}{2}$
			Accumulated	Controlling	Controlling	Total
			Losses	Interest	Interest	Equity
		ക		ΨH	₩	49
			(34,087,971)	16,647,723	581,725	17,229,448
			(2,488,090)	(2,488,090)	(285, 202)	(2.773, 292)
	ŧ.
	$\pmb{\cdot}$		(2,488,090)	(2,488,090)	(285, 202)	(2,773,292)
	128,919			128,919		128,919
2,341,922		(2,045,399)		296,523	(296, 523)
2,341,922	128,919	(2,045,399)		425,442	(296, 523)	128,919
47,491,109	5,715,426	(2,045,399)	(36, 576, 061)	14,585,075		14,585,075
47,491,109	5,715,426	(2,045,399)	(36,576,061)	14,585,075		14,585,075
J $\pmb{\ast}$	ı	ī,			t.	(6, 833, 798)
(3, 145) Œ,	٠	э		(3, 145)	Ü,	(3, 145)
(3, 145) ×		J.	(6,833,798)	(6,836,943)	٠	(6,836,943)
						9,153,672
						(538, 788)
	67,885		£,			67,885
8,614,884	67,885			8,682,769		8,682,769
ဂ (3, 14) 56,105,993	5,783,311	(2,045,399)	(43, 409, 859)	16,430,901		16,430,901
9,153,672 (538, 788)				(6,833,798)	9,153,672 67,885 (538, 788) (6,833,798)

The accompanying notes form part of these financial statements.

25

Metro Mining Limited
Consolidated statement of cash flows
For the year ended 30 June 2016

2015 \$ 432,025 (3,510,128) 284,346 (2,793,757) (22, 850) (2,493,273)
377,086
527,091
(1,611,946)
(4,405,703)
7,522,249
3,116,546

The accompanying notes form part of these financial statements.

Note 1. Significant accounting policies

Material 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.

Basis of preparation

These general purpose financial statements have been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board and International Financial Reporting Standards as issued by the International Accounting Standards Board. The consolidated entity is a for-profit entity for financial reporting purposes under Australian Accounting Standards.

Historical cost convention

The financial statements have been prepared under the historical cost convention except for the revaluation of selected non-current assets and financial assets and financial liabilities for which the fair value basis of accounting has been applied.

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 consolidated entity'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.

Parent entity information

In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 28.

Principles of consolidation

The consolidated financial statements incorporate all of the assets, liabilities and results of the parent. Metro Mining Limited, and all of its subsidiaries.

Subsidiaries are entities that the parent controls. The parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity, and has the ability to use its power to affect those returns. The effects of potential exercisable voting rights are considered when assessing whether control exists. Subsidiaries are fully consolidated from the date on which control is transferred to the parent. They are deconsolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. Refer to the Business Combinations accounting policy for further details. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

Operating segments

Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the chief operating decision makers ('CODM'). The CODM are responsible for the allocation of resources to operating segments and for assessing their performance.

Revenue recognition

Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity 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 rate 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.

Government grants

Grants from the government are recognised at their fair value where there is reasonable assurance that the grant will be received and the consolidated entity will comply with all the attached conditions. Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate. Government grants relating to the purchase or development of assets, including exploration and evaluation activities, are deducted from the carrying value of the 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 year is the tax payable on that period's taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax losses and under and over provision in prior years, where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:

• When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or $\bullet$ liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or
• When the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

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 recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority or either the same taxable entity, or different taxable entities which intend to settle simultaneously.

Note 1. Significant accounting policies (continued)

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions and other shortterm, 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

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

Joint ventures

A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. Investments in joint ventures are accounted for in the parent entity financial statements using the cost method, less any impairment, and in the consolidated financial statements using the equity method. Under the equity method, the share of the profits or losses of the joint venture is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Income earned from joint venture entities is recognised as revenue in the parent entity's profit or loss, whilst in the consolidated financial statements they reduce the carrying amount of the investment.

Investments and other financial assets

Investments and other financial assets are measured at either amortised cost or fair value, depending on their classification. Classification is determined based on the purpose of the acquisition and subsequent reclassification to other categories is restricted. The fair values of quoted investments are based on current bid prices. For unlisted investments, the consolidated entity establishes fair value by using valuation techniques. These include the use of recent arm's length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are carried at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the asset is derecognised or impaired.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets, principally equity securities, that are either designated as available-for-sale or not classified as any other category. After initial recognition, fair value movements are recognised directly in the available-for-sale reserve in equity. Cumulative gain or loss previously reported in the available-for-sale reserve is recognised in profit or loss when the asset is derecognised or impaired.

Impairment of financial assets

The consolidated entity assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired. Objective evidence includes significant financial difficulty of the issuer or obligor; a breach of contract such as default or delinguency in payments; the lender granting to a borrower concessions due to economic or legal reasons that the lender would not otherwise do; it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; the disappearance of an active market for the financial asset; or observable data indicating that there is a measurable decrease in estimated future cash flows.

Note 1. Significant accounting policies (continued)

The amount of the impairment allowance for loans and receivables carried at amortised cost 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. If there is a reversal of impairment, the reversal cannot exceed the amortised cost that would have been had the impairment not been recognised. The reversal of impairment is reversed to profit or loss.

Available-for-sale financial assets are considered impaired when there has been a significant or prolonged decline in value below initial cost. Subsequent increments in value are recognised directly in the available-for-sale reserve.

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. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the consolidated entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment over its expected useful life as follows:

20% per annum

33% per annum

• Plant and equipment
• Software/IT hardware

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

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

Exploration and evaluation assets

Exploration and evaluation expenditure in relation to separate areas of interest for which rights of tenure are current is carried forward as an asset in the statement of financial position where it is expected that the expenditure will be recovered through the successful development and exploitation of an area of interest, or by its sale; or exploration activities are continuing in an area and activities have not reached a stage which permits a reasonable estimate of the existence or otherwise of economically recoverable reserves. Where a project or an area of interest has been abandoned, the expenditure incurred thereon is written off in the year in which the decision is made.

Restoration, rehabilitation and environmental expenditure

Costs of site restoration for development activities are provided for over the life of the area of interest. When development commences, site restoration costs would include the dismantling and removal of mining plant, equipment and building structure, waste removal, and rehabilitation of the site in accordance with clauses of mining permits. Such costs will be determined using estimates of future costs, current legal requirements and technology on an undiscounted basis.

Estimates of future costs are reassessed at least annually. Changes in estimates relating to areas of interest in the exploration and evaluation phase are dealt with retrospectively, with any amounts that would have been written off or provided against under the accounting policy for exploration and evaluation immediately written off.

Restoration from exploration drilling is carried out at the time of drilling and accordingly no provision is required.

Note 1. Significant accounting policies (continued)

Impairment of non-financial assets

Where applicable, goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other 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 to sell 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.

Trade and other payables

These amounts represent liabilities for goods and services provided to the consolidated entity 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 not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

Borrowings

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

Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the loans or borrowings are classified as non-current.

The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the statement of financial position, net of transaction costs.

On the issue of the convertible notes the fair value of the liability component is determined using a market rate for an equivalent non-convertible bond and this amount is carried as a non-current liability on the amortised cost basis until extinguished on conversion or redemption. The increase in the liability due to the passage of time, is recognised as a finance cost. The remainder of the proceeds are allocated to the conversion option that is recognised and included in shareholders' equity as a convertible note reserve, net of transaction costs. The carrying amount of the conversion option is not re-measured in the subsequent years. The corresponding interest on convertible notes is expensed to profit or loss.

Finance costs

Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred, including interest on short-term and long-term borrowings.

Provisions

Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.

Employee benefits

Wages and salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12 months of the reporting date are recognised in current liabilities in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

Share-based payments

Equity-settled share-based compensation benefits are provided to directors and employees.

Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price.

The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using the Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.

The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.

If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.

If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.

If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.

Contributed equity

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.

Dividends

Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.

Business combinations

The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired.

The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.

On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the consolidated entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-date.

Where the business combination is achieved in stages, the consolidated entity re-measures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss.

Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not re-measured and its subsequent settlement is accounted for within equity.

The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any noncontrolling interest in the acquiree and the fair value of the consideration transferred and the fair value of any preexisting investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in the acquirer.

Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value.

Investments in associates

Associates are those entities in which the consolidated entity has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the consolidated entity holds between 20 and 50 percent of the voting power of another entity.

Investments in associates are accounted for using the equity method (equity-accounted investees) and are initially recognised at cost. The cost of the investment includes transaction costs.

The consolidated financial statements include the consolidated entity's share of the profit or loss and other comprehensive income of equity-accounted investees, after adjustments to align the accounting policies with those of the consolidated entity, from the date that significant influence commences until the date that significant influence ceases.

When the consolidated entity's share of losses exceeds its interest in an equity-accounted investee, the carrying amount of that interest, including any long-term investments that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the consolidated entity has an obligation or has made payments on behalf of the investee.

Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to the owners of Metro Mining Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

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.

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.

New accounting standards for application in future periods

Accounting standards issued by the AASB that are not yet mandatorily applicable to the consolidated entity, together with an assessment of the potential impact of such pronouncements on the consolidated entity when adopted in future periods, are discussed below:

AASB 9: Financial Instruments and associated amending standards (applicable to annual reporting periods $\bullet$ beginning on or after 1 January 2018).

The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and includes revised requirements for the classification and measurement of financial instruments, revised recognition and de-recognition requirements for financial instruments and simplified requirements for hedge accounting.

The key changes that may affect the consolidated entity on initial application include certain simplifications to the classification of financial assets, simplifications to the accounting of embedded derivatives and the irrevocable election to recognise gains and losses on investment in equity instruments that are not held for trading in other comprehensive income. AASB 9 also introduces a new model for hedge accounting that will allow greater flexibility in the in the ability to hedge risk, particularly with respect to hedges of non-financial items.

Although it is anticipated that the adoption of AASB 9 may have an impact of the consolidated entity's financial instruments, it is impracticable at this stage to provide a reasonable estimate of such impact.

New accounting standards for application in future periods (continued)

AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods beginning on or after 1 January 2018, as deferred by AASB 2015-8: Amendments to Australian Accounting Standards -Effective Date of AASB 15)

When effective, this Standard will replace the current accounting requirements applicable to revenue with a single, principles-based model. Except for a limited number of exceptions, including leases, the new revenue model will apply to all contracts with customers as well as non-monetary exchanges between entities in the same line of business to facilitate sales to customers and potential customers.

The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. To achieve this objective, AASB 15 provides the following fivestep process:

• Identify the contract(s) with a customer;
• Identify the performance obligations in the contract(s);
• Determine the transaction price;
• Allocate the transaction price to the performance obligations in the contract(s); and $\overline{a}$
• Recognise revenue when (or as) the performance obligations are satisfied.

The transitional provisions of this Standard permit an entity to either: restate the contracts that existed in each prior period presented per AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors (subject to certain practical expedients in AASB 15); or recognise the cumulative effect of retrospective application to incomplete contracts on the date of initial application. There are also enhanced disclosure requirements regarding revenue.

Although it is anticipated that the adoption of AASB 15 may have an impact on the consolidated entity's financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact.

AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019)

When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related interpretations. AASB 16 introduces a single lease accounting model that eliminates the requirement for leases to be classified as operating or finance leases.

The main changes introduced by the new Standard include:

• Recognition of a right-to-use asset and liability for all leases (excluding short term leases with less than 12 months tenure and leases relating to low-value assets);
• Depreciation of right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components;
• Variable lease payments that depend on an index or a rate are included in the initial measurement of the lease liability using the index or rate at the commencement date;
• Be applying a practical expedient, a lessee is permitted to elect not to separate non-lease components $\overline{a}$ and instead account for all components as a lease; and
• Additional disclosure requirements. $\overline{\phantom{a}}$

The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of initial application.

Although it is anticipated that the adoption of AASB 16 will impact the consolidated entity's financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact.

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 within the next financial year are discussed below:

Available-for-sale financial assets - note 9

AASB 128: Investments in Associates and Joint Ventures states that where an entity holds 20% or more of the voting power of an investee, it is presumed that the entity has significant influence over the investee and the investment should be accounted for using the equity method. During the year ended 30 June 2016, the Company acquired a 21.8% interest in Gulf Alumina Limited ('Gulf'), an unlisted public company. Although, prima facie, Gulf would be considered an associate of the Company, management does not believe that Gulf meets the AASB 128 definition of an associate for the following reasons:

• The board of directors of Gulf, together with other large shareholders, control more than 50% of the voting $\bullet$ power of Gulf;
• The Company's stake in Gulf does not entitle the Company to a position on the board of directors of Gulf; and $\bullet$
• The Company has no access to information pertaining either to the operations of Gulf, or to its financial position.

Management has judged that the Company is not in a position to exercise any influence over the operational and financial decisions of Gulf. Therefore, management does not consider Gulf an associate of the Company and the investment in Gulf has not been accounted for at 30 June 2016 using the equity method.

The carrying value of the investment in Gulf at 30 June 2016 is the amount paid by the Company to acquire the 21.8% interest in Gulf. The following are the key judgements that have been applied to determine that the fair value of the investment in Gulf at 30 June 2016 cannot be reliably determined and, therefore, should be recognised at cost at 30 June 2016:

• Gulf is an unlisted public company and has no active market for its shares; $\bullet$
• The Company has no access to data or financial records held by Gulf; and $\bullet$
• Gulf is a high risk investment being a mining exploration company in pre-project approval phase and without financing. Valuations for high risk investments are volatile and the range of possible valuations is wide.

Management has determined that, for the above reasons, it is not possible to determine a reliable fair value for the investment in Gulf at 30 June 2016.

Impairment of exploration and evaluation assets - note 12

Exploration and evaluation costs have been capitalised on the basis that the consolidated entity will commence commercial production in the future, from which time the costs will be amortised in proportion to the depletion of the mineral resources. Key judgements are applied in considering costs to be capitalised which include determining expenditures directly related to these activities and allocating overheads between those that are expensed and capitalised. In addition, costs are only capitalised that are expected to be recovered either through successful development or sale of the relevant mining interest. Factors that could impact the future commercial production at the mine include the level of reserves and resources, future technology changes, which could impact the cost of mining, future legal changes and changes in commodity prices. To the extent that capitalised costs are determined not to be recoverable in the future, they will be written off in the period in which this determination is made.

Share-based payment transactions - note 24

The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Black-Scholes model or Monte Carlo simulation taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.

Note 3. Operating segments

Identification of reportable operating segments

The consolidated entity has identified its operating segments based on the internal reports that are reviewed and used by the board of directors (chief operating decision makers) in assessing performance and determining the allocation of resources. Financial information provided to the board is currently at the consolidated level.

The consolidated entity is managed primarily on a geographic basis; that is the location of the respective areas of interest (tenements). Areas of interest in Australia and Myanmar are not currently identified as separate operating segments. Activity in Myanmar in the current financial year relates solely to business development and is insignificant in comparison to the activity of the consolidated entity as a whole. Accordingly, management currently identifies the consolidated entity as having only one reportable segment, being exploration for coal and bauxite. All significant operating decisions are based upon analysis of the consolidated entity as one segment. The financial results from this segment are equivalent to the financial statements of the consolidated entity as a whole.

The consolidated entity does not have any products or services that it derives revenue from.

	Consolidated
	2016	2015
Note 4. Revenue	S
Other income
Profit on sale of interests in mining tenements (i)	875,000	250,000
Administration fees and recharge of expenses	140,000	228,158
Other income		(4,640)
Total other income	1,015,000	473,518

(i) \$825,000 in income was recognised by the consolidated entity in relation to the sale of the Hey Point bauxite tenements on western Cape York Peninsula. The original agreement for the sale of the Hey Point tenements was settled by Cape Alumina Limited, a wholly owned subsidiary of the Company, in June 2013. The total consideration received for the sale was \$1,575,000 and the right to receive royalties of 3-4% of gross proceeds from all bauxite sold from these tenements. The income recognised for the year ended 30 June 2016 is the final instalment of the sales price. No royalty income was received for the year ended 30 June 2016 as the Hey Point project is still under development.

A further \$50,000 in income was received from the sale of the Norwood and Dalby West coal tenements.

Note 5. Expenses

Loss before income tax includes the following specific expenses:

Employee benefits expense
Salaries, wages, fees and provisions	982,935	1,020,333
Share based payments	67,885	128,919
Superannuation contributions	31,651	60,154
Total employee benefits expense	1,082,471	1,209,406
Other expenses
ASX and share registry costs	85,141	257,662
Professional fees	1,442,260	595,990
Other expenses	671,591	1,287,826
Total other expenses	2,198,992	2,141,478

	Consolidated
	2016	2015
Note 6. Income tax	S
Numerical reconciliation of income tax benefit to prima facie tax payable	(6,833,798)	(2,773,292)
Income tax using the Company's domestic tax rate of 30% (2015: 30%) Amounts that are not deductible/(taxable) in calculating taxable income:	(2,050,139)	(831,988)
- Tax consolidation with Cape Alumina		740,297
Other permanent differences $\qquad \qquad \blacksquare$	254,429	43,515
Current year losses for which no deferred tax asset was recognised $\blacksquare$	2,073,281	48,176
Under-provision in respect of prior years $\qquad \qquad \blacksquare$	(277, 571)
Total income tax expense/(benefit)
Unrecognised deferred tax assets
Deductible temporary differences	2,785,622	2,751,727
Tax losses carried forward	14,279,264	12,564,521
Tax losses and temporary differences brought to account to reduce the
deferred tax liability	(3,343,266)	(3,667,909)
Total unrecognised deferred tax assets	13,721,620	11,648,339

Deferred tax liabilities

Deferred tax liabilities comprise the estimated expense at the applicable rate of 30% on the following items:

Exploration and evaluation expenditure	3.389.437	3.676.372
Other temporary differences	(46, 171)	(8.463)
Deferred tax asset attributable to tax losses and temporary differences
brought to account to reduce the deferred tax liability	(3,343,266)	(3,667,909)

The deductible temporary differences and tax losses do not expire under current tax legislation. A deferred tax asset has not been recognised in respect of these items because it is not certain that future taxable profit will be available against which the consolidated entity can utilised the benefits therefrom.

Management believes that \$15,970,826 (tax effect: \$4,791,248) of the gross unused tax losses available to the consolidated entity would be unlikely to pass either the continuity of ownership test or the same business test at the present time. Accordingly these tax losses are not included in the unrecognised deferred tax asset balance above of \$13,721,620.

The consolidated entity has no franking credits.

	Consolidated
	2016	2015
Note 7. Current assets - cash and cash equivalents	S	S
Cash at bank	1,453,031	1,575,795
Cash on deposit	1,231,278	1,540,751
Total current assets - cash and cash equivalents	2,684,309	3,116,546
Note 8. Current assets - trade and other receivables
Trade debtors	108,779	57,056
Other receivables	248,983	64,467
Interest receivable	3,443	6,047
Total current assets - trade and other receivables	361,205	127,570
Impairment of receivables
The consolidated entity does not have any impaired receivables.

Note 9. Non-current assets - available-for-sale financial assets

Investment in unlisted entity	3,975,733

During the financial year, the Company announced a takeover offer to acquire all of the issued shares in the unlisted company Gulf Alumina Limited ('Gulf'). Under the terms of the offer, Gulf shareholders were entitled to receive 3.3 new ordinary shares in the Company for every 1 Gulf share held. At the close of the offer, the Company had acquired a 21.8% interest in Gulf. Settlement of acceptances required the issue of 62,927,172 new ordinary shares in the Company. Of these, 62,036,040 were issued to Gulf shareholders prior to the end of the financial year (refer note 15). A further 891,132 shares have been issued to Gulf shareholders subsequent to year end (refer note $29$ ).

Note 10. Non-current assets - property, plant and equipment

265,073	282,006
(254, 729)	(256, 826)
10.344	25.180

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

	Plant and
	Equipment	Total
Consolidated	S	S
Balance at 1 July 2014	72,053	72,053
Additions	22,850	22,850
Disposals	(24, 524)	(24, 524)
Depreciation expense	(45,199)	(45,199)
Balance at 30 June 2015	25,180	25,180
Balance at 1 July 2015	25,180	25,180
Additions	12,982	12,982
Depreciation expense	(27, 818)	(27, 818)
Balance at 30 June 2016	10,344	10,344

Note 11. Non-current assets - investments in associate

Information relating to associates is set out below:

		Ownership Interest			Consolidated
	Country of	2016	2015	2016	2015
Name of company	incorporation	$\%$	$\frac{0}{0}$
Tenement to Terminal Pty Ltd	Australia	20	20		$\sim$

Tenement to Terminal Pty Ltd was formed to develop a new coal terminal in Gladstone. The investment was fully impaired in a prior year.

	Consolidated
	2016	2015
Note 12. Non-current assets - exploration and evaluation
Exploration and evaluation - at cost	10.586.825	11.992.694

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

	Exploration
	& evaluation	Total
Consolidated	s
Balance at 1 July 2014	9,472,006	9,472,006
Expenditure during the year	3,047,779	3,047,779
Research and development tax offset	(527,091)	(527,091)
Balance at 30 June 2015	11,992,694	11,992,694
Expenditure during the year	3,547,090	3,547,090
Research and development tax offset	(449, 419)	(449, 419)
Impaired during the year	(4,503,540)	(4,503,540)
Balance at 30 June 2016	10,586,825	10,586,825

The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent upon successful development and commercial exploitation or sale of the respective areas of interest. The consolidated entity resolved to impair the Columboola, Norwood and Dalby West coal tenements to nil in the year ended 30 June 2014 on the basis that there was unlikely to be any further exploration activity in the near term. The Norwood and Dalby West tenements were sold by the consolidated entity during the year ended 30 June 2016 for \$50,000 (refer note 4). The consolidated entity still holds title to the Columboola coal tenement and is of the view that the tenement is potentially prospective for future development (refer note 27).

In the year ended 30 June 2014, the Bundi coal tenements were partially impaired due to the delay in development and the decision to stop significant expenditure. The delay in development was due to rail and port infrastructure issues as well as depressed coal prices. The consolidated entity remains unlikely to make any further investment in the Bundi project until the market for coal improves and there is a plan in place to resolve the infrastructure issues.

In the current year, the board has reassessed the fair value of the Bundi coal tenements by reviewing recent Surat Basin coal transactions, other relevant market data and the enterprise value of similar resources. Based on this review, the board has assigned the Bundi project a fair value of \$5 million and, accordingly, a further \$4,503,540 impairment of this asset has been recorded.

Consolidated
2016	2015
761,010	145,934
354.378	581,566
1,115,388	727,500

Refer to note 23 for detailed information on financial instruments.

Note 14. Current liabilities - employee benefits

Annual leave
--------------	--

85,848 43,128

	Consolidated		Consolidated
	2016	2015	2016	2015
Note 15. Equity - contributed	Shares	Shares	S	5
Ordinary shares - fully paid	420,571,896	288,717,999	56,105,993	47,491,109
Ordinary shares
Balance at beginning of period	288,717,999	208,883,663	47,491,109	45,149,187
Shares issued during the year:
• 15 Dec 2014 Takeover of Cape Alumina Ltd		79,834,336		2,341,922
$-16$ Jul 2015 Share placement	25,000,000	Ξ	2,000,000
Non-renounceable rights issue $\bullet$ 4 Sep 2015	15,359,723	÷	1,544,088
$8$ Sep 2015 Non-renounceable rights issue	29,458,134	÷	2,041,340
Investment in Gulf Alumina Ltd • 4 Dec 2015	8,250,000		561,000
Investment in Gulf Alumina Ltd 15 Apr 2016 $\bullet$	53,786,040	Ξ	3,007,244
Transaction costs recognised during the year			(538, 788)
Balance at end of the period	420,571,896	288,717,999	56,105,993	47,491,109

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.

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

Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.

Share buy-back

There is no current on-market share buy-back.

Capital risk management

The consolidated entity's objectives when managing capital are:

• to safeguard its ability to continue as a going concern so that it can provide returns for shareholders and benefits for other stakeholders; and
• to maintain an optimum capital structure to reduce the cost of capital.

In common with many other exploration companies, the parent entity raises finance for the consolidated entity's exploration and appraisal activities in discrete tranches.

	Consolidated
	2016	2015
Note 16. Equity - reserves
Options reserve	5,783,311	5.715.426
Change in interest of subsidiary	(2,045,399)	(2,045,399)
Foreign currency translation reserve	(3, 145)
Total equity - reserves	3,734,767	3.670.027

	Foreign Currency Translation	Options	Change in Interest of Subsidiary	Total Reserves
Consolidated	\$	\$	s
Balance at 1 July 2014	۳	5,586,507		5,586,507
Options granted during the year	$\blacksquare$	128,919		128,919
Change in interest of subsidiary			(2.045, 399)	(2,045,399)
Balance at 30 June 2015		5,715,426	(2,045,399)	3,670,027
Options granted during the year		67,885		67,885
Translation of foreign subsidiaries	(3, 145)			(3, 145)
Balance at 30 June 2016	(3, 145)	5,783,311	(2,045,399)	3,734,767

Foreign currency translation reserve

The foreign currency translation reserve records exchange differences arising on translation of foreign controlled subsidiaries.

Options reserve

The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration and the value of other options issued.

Change in interest of subsidiary reserve

The reserve is used to recognise the movement in the carrying amounts of controlling and non-controlling interests to reflect their relative interests in the subsidiary arising from a change in ownership interest.

Note 17. Equity - dividends

Dividends

There were no dividends paid or declared during the current or previous financial year. There were no franking credits at 30 June 2016 (2015: nil).

	Consolidated
	2016	2015
Note 18. Loss per share	S
Loss after income tax attributable to the owners of the Company	(6,833,798)	(2,488,090)
		Consolidated
	2016	2015
	Number	Number
Weighted average number of ordinary shares used in calculating
basic and diluted loss per share	373,214,165	259,523,842

		Consolidated
	2016	2015
Note 18. Loss per share (continued)	Cents	Cents
Basic loss per share	(1.83)	(1.07)
Diluted loss per share	(1.83)	(1.07)

			Consolidated
Note 19. Reconciliation of loss after income tax to net cash	Note	2016	2015
used in operating activities		\$	S
Loss after income tax benefit for the year		(6,833,798)	(2,773,292)
Adjustments for:
Depreciation and amortisation	10	27,818	45,199
Options expense	16	67,885	128,919
Impairment of exploration and evaluation assets	12 2	4,503,540
Profit on sale of exploration and evaluation assets	4	(875,000)
Change in operating assets and liabilities:
(Increase)/decrease in trade and other receivables		(12, 751)	(25, 953)
(Increase)/decrease in prepayments		(142, 124)	4,903
Increase/(decrease) in trade and other payables		442,498	(126, 870)
Increase/(decrease) in employee benefits		42,834	(46, 663)
Net cash used in operating activities		(2,779,098)	(2,793,757)

Note 20. Remuneration of auditors

During the financial year the following fees were paid or payable for services provided by BDO Audit Pty Ltd, the auditor of the Company, and its related practices:

Audit services - BDO Audit Pty Ltd Audit or review of the financial report

Audit or review of the financial report	55,285	59,027
Other services - BDO (QLD) Pty Ltd
Taxation services	105,497	83,992
Corporate services	1,870	11,658
Total other services	107,367	95,650
Total remuneration of auditors	162,652	154,677

Note 21. Commitments for expenditure

Lease commitments - operating
Committed at the reporting date but not recognised as liabilities:
Within one year	194.364	140.818
One to five years	138.737	100,739
Total commitments for expenditure	333.101	241,557

The operating lease commitment comprises rent payable for the Company's office lease and lease of office equipment

Note 22. Contingent liabilities

Contingent Liabilities

Certain tenements in which the consolidated entity has an interest may be subject to native title or similar claims. The position regarding the likely success and impact on the consolidated entity's operations is unknown at balance date. It is management's intention to continue to work through these matters if such an agreement can be negotiated successfully.

Other than the above, the consolidated entity does not believe it has any contingent liability arising from any possible Native Title or other claim.

Note 23. Financial risk management

The consolidated entity's financial instruments consist mainly of deposits with banks, accounts receivable and payable and loans to and from subsidiaries.

Significant accounting policies

Each category of financial instruments is measured in accordance with AASB139: Financial Instruments: Recognition and Measurement, as detailed in the accounting policies to these financial statements (refer note 1).

Financial risk management policies and objectives

Risk management is carried out under policies set by the board of directors. The board provides principles for overall risk management, as well as policies covering specific areas. The board monitors the financial risk relating to the operations of the consolidated entity. The consolidated entity does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The overall risk management program focuses on the unpredictability of the finance markets and seeks to minimise the potential adverse effects on the financial performance. Risk management is carried out under the oversight of the board of directors.

Specific financial risk exposures and management

The main risks the consolidated entity is exposed to through its financial instruments are credit risk, liquidity risk and market risk relating to interest rate risk and other price risk. The consolidated entity does not hedge these risk exposures.

There have been no substantive changes in the types of risks the consolidated entity is exposed to, how these risks arise, or the board's objectives, policies and processes for managing or measuring the risks from the previous period.

Credit risk

Credit risk is managed on a consolidated entity basis. Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to the consolidated entity.

The consolidated entity has a strict code of credit risk management, including obtaining agency credit information, confirming references and setting appropriate credit limits. The consolidated entity obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The consolidated entity does not hold any collateral. The consolidated entity is not exposed to any material credit risks and only trades with credit-worthy third parties.

Note 23. Financial risk management (continued)

Liquidity risk

Liquidity risk arises from the possibility that the consolidated entity might encounter difficulty in settling its debts or otherwise meeting its obligations relating to financial liabilities.

Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able it to pay debts as and when they become due and payable.

The consolidated entity manages liquidity risk by maintaining adequate reserves and by continually monitoring forecast and actual cash flows and cash balances. The parent entity raises equity for the consolidated entity's exploration and appraisal activities in discrete tranches.

At 30 June 2016 the only financial liabilities of the consolidated entity are trade payables and accruals. All trade payables and accruals have a contractual maturity of 6 months or less.

Financial liability and financial asset maturity analysis

The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

		Within 1 Year	Total
	2016	2015	2016	2015
Consolidated	\$	\$	\$	\$
Financial liabilities due for payment
Trade payables	761,010	145,934	761,010	145,934
Other payables	354,378	581,566	354,378	581,566
Total contractual and expected outflows	1,115,388	727,500	1,115,388	727,500
Financial assets – cash flows realisable
Cash and cash equivalents	2,684,309	3,116,546	2,684,309	3,116,546
Trade and other receivables	361,205	127,570	361,205	127,570
Total anticipated inflows	3,045,514	3,244,116	3,045,514	3,244,116
Net (outflow)/inflow on financial instruments	1.930.126	2.516.616	1.930.126	2.516.616

The cash flows in the maturity analysis above are not expected to occur significantly earlier than disclosed.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the consolidated entity's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return.

The consolidated entity's activities expose it primarily to the financial risks of changes in interest rates on its cash and cash equivalents and term deposits. It is the policy of the consolidated entity to manage its risks by continuously monitoring interest rates. There has been no change to the consolidated entity's exposure to market risks or the manner in which it manages and measures the risk from the previous period.

Foreign currency risk

The consolidated entity undertakes purchase transactions in foreign currencies, predominantly in US dollars and Singapore dollars. The consolidated entity is currently unhedged due to the immateriality of these purchases but will look to manage this risk should these purchases become more material in the future.

Note 23. Financial risk management (continued)

Price risk

The consolidated entity is not exposed to any material price risk. As the Company continues to develop its Bauxite Hills project, it will look to manage this risk should this exposure become more material in the future.

Interest rate risk

Interest rate risks are caused by fluctuations in interest rates which, in turn, are due to market factors.

Interest rate sensitivity

The consolidated entity's main interest rate risk arises from cash and cash equivalents. The sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the consolidated entity profit/loss before taxes through a decrease or an increase of 0.25% (2015: 0.25%) in interest rates at 30 June 2016 is an increase/decrease in cash and cash equivalents of \$6,711 (2015: \$28,757).

Fair values

Fair value estimation

The fair values of financial assets and financial liabilities are presented in the following table and can be compared to their carrying amounts as presented in the statement of financial position.

		Consolidated		Consolidated
		Carrying amount	Fair value	Carrying amount	Fair value
	Note	2016 Ş	2016 \$	2015 5	2015
Assets
Cash and cash equivalents		2,684,309	2,684,309	3,116,546	3,116,546
Trade and other receivables	8	361,205	361,205	127,570	127,570
Available-for-sale financial assets (i)	9	3,975,733	3,975,733
Total assets		7,021,247	7,021,247	3,244,116	3,244,116
Liabilities
Trade payables	13	761,010	761,010	145,934	145,934
Other liabilities	13	354,378	354,378	581,566	581,566
Total liabilities		1,115,388	1,115,388	727,500	727,500

(i) The fair value of available-for-sale financial assets as at 30 June 2016 cannot be reliably determined by reference to an observable market value. In the judgment of management, and having regard to all relevant available information, the carrying amount of available-for-sale financial assets does not exceed the fair value. Refer to note 2.

Note 24. Share-based payments

Employee share option plan

The Company has established the Metro Mining Employee Share Option Plan ('ESOP') to enable the issue of shares or options in Metro Mining Limited to employees of the Company to assist in the retention and motivation of employees. Under the ESOP, the Company may offer shares or options over unissued shares in the Company.

Features of the ESOP are as follows:

• The persons who are eligible to participate in the ESOP are full-time or part-time continuing employees of the Company or an associated body corporate of the Company, or their nominee, who have been selected by the board to participate in the ESOP ('Participants');
• The Company is entitled under the terms of the ESOP to determine a period that any shares or options offered $\bullet$ under the ESOP will be unable to be transferred by Participants ('Disposal Restrictions');

Note 24. Share-based payments (continued)

Employee share option plan (continued)

• The Company is entitled to determine, at its discretion, any conditions which may apply to the offer of shares or options (including the issue price, exercise price, vesting conditions and Disposal Restrictions);
• Where options subject to Disposal Restrictions are exercised, the resulting shares will be subject to the balance of the Disposal Restrictions:
• The options may be exercised wholly or in part by notice in writing to the Company received at any time during the relevant exercise period together with a cheque for the exercise price for those options for cancellation by the Company;
• The Company shall allot the number of shares the subject of any exercise notice and apply for listing of the shares issued as a result:
• Shares issued on the exercise of the options will rank paripassu with all existing shares of the Company from the date of issue; and
• The number of shares which may be acquired on the exercise of an option and the exercise price will be adjusted, as is appropriate, following any pro-rata bonus issue, rights issue, reconstruction or re-organisation of the issued ordinary capital of the Company.

The maximum number of shares and options that may be offered to Participants under the ESOP is 5% of the issued capital of the Company at the time.

Quotation of options on the ASX will not be sought; however quotation of shares (not subject to Disposal Restrictions) issued under the ESOP will be sought. The Company will apply for quotation of shares arising upon the exercise of options.

Options granted to key management personnel

Options granted to key management personnel are as follows:

Grant date	Number
12 January 2015	8.000.000	(i)
15 December 2015	2,500,000	(ii)
05 May 2016	1,047,493	(iii)

• $(i)$ Options granted on 12 January 2015 vested on the grant date and are exercisable from that date.
• Options granted 15 December 2015 have been granted subject to the Company obtaining a mining licence for $(ii)$ the Bauxite Hills Project. The options vest in full, and are exercisable, on the date the mining licence is granted.

(iii) Options granted on 5 May 2016 vested on grant date and are exercisable from that date.

A summary of the movements of all options issued is as follows:

	$\sim$		Balance at			Expired/	Balance at
Grant	Expiry	Exercise	the start of			forfeited/	the end of
date	date	price	the year	Granted	Exercised	other	the year
2016
20/11/12	11/07/15	\$0.235	1,000,000	÷	$\overline{\phantom{a}}$	(1,000,000)	$\blacksquare$
20/11/12	11/07/15	\$0.50	500,000	蛋	u.	(500,000)	na i
12/01/15	11/01/17	\$0.06	10,750,000	÷.	÷.	$\rightarrow$	10,750,000
15/12/15	14/12/17	\$0.15	$\overline{\phantom{a}}$	2,500,000	$\equiv$	$\blacksquare$	2,500,000
05/05/16	05/05/18	\$0.04	$\sim$	1,047,493		$\sim$	1,047,493
Total 2016 options			12,250,000	3,547,493		(1,500,000)	14,297,493

Note 24. Share-based payments (continued)

Grant date 2015	Expiry date	Exercise price	Balance at the start of the year	Granted	Exercised	Expired/ forfeited/ other	Balance at the end of the year
20/11/12	11/07/15	\$0.235	1,000,000	۳.	Œ.	Œ.	1,000,000
20/11/12	11/07/15	\$0.50	1.000.000	œ.	當	(500.000)	500,000
12/01/15	11/01/17	\$0.06	$\sim$	10.750,000	$\blacksquare$	$\blacksquare$	10.750,000
Total 2015 options			2.000.000	10,750,000		(500,000)	12,250,000

The weighted average remaining contractual life of options outstanding at the end of the financial year was 0.8 years (2015: 1 year). 11,797,493 options are exercisable at the end of the financial year.

For options granted during the current financial year the valuation model inputs used to determine the fair value at the grant date are as follows:

		Share price				Risk-free	Fair value
Grant date	Expiry date	at grant date	Exercise price	Expected volatility	Dividend vield	interest rate	at grant date
15/12/15	14/12/17	\$0.074	\$0.15	113.359%		2.07%	\$0.32
05/05/16	05/05/18	\$0.071	\$0.043	92.399%	-20	2.08%	\$0.044

Included under employee benefits expense in the statement of comprehensive income is \$67,885 (2015: \$128,919) which relates to equity-settled share-based payment transactions.

Note 25. Related party transactions

Parent entity

Metro Mining Limited is the ultimate parent entity.

Subsidiaries

Interests in subsidiaries are set out in note 26.

Joint ventures

Interests in joint ventures are set out in note 27.

Key management personnel

The totals of remuneration paid to key management personnel of the Company and the consolidated entity during the year are as follows: ر
المسلم المالية التي

	Consolidated
	2016
Short-term employee benefits	1,121,241	1.029.369
Post-employment benefits	30,399	68,360
Share-based payments	67.885	95.939
Total compensation to directors and KMP	1,219,525	1,193,668

Refer to the remuneration report contained in the directors' report for details of the remuneration paid or payable to each member of the consolidated entity's key management personnel for the year ended 30 June 2016.

Short-term employee benefits

These amounts include fees and benefits paid to the board of directors as well as all salary, paid leave benefits, fringe benefits and cash bonuses awarded to executive directors and other key management personnel.

Note 25. Related party transactions (continued)

Post-employment benefits

These amounts are superannuation contributions made during the year.

Share-based payments

These amounts represent the expense related to the participation of key management personnel in equity-settled benefit schemes as measured by the fair value of options granted on grant date.

Note 26. Interests in subsidiaries

Information about principal subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1.

The subsidiaries listed below have share capital consisting solely of ordinary shares which are held directly by the consolidated entity. The proportion of ownership interests held equals the voting rights held by the consolidated entity. Each subsidiary's country of incorporation is also its principal place of business.

Marchael Installation

		Equity noiging
Country of	2016	2015
Incorporation	%	%
Australia	100	100
Australia	100	100
Australia	100	100
Australia	100	100
Australia	100	100
Australia	100	100
Australia	100	100
Australia	100	100
Singapore	100	$\overline{\phantom{a}}$
Myanmar	100	$\blacksquare$

Company name changed from Huge Energy Pty Ltd to Metro International Holding Pty Ltd on 22 Sep 2015. $(i)$

• (ii) Company name changed from Norkay Pty Ltd to Metro Bauxite Hills Operations Pty Ltd on 22 Sep 2015.
• (iii) Company name changed from Sigma Kaolin Pty Ltd to Metro Bauxite Hills Holding Pty Ltd on 22 Sep 2015.
• (iv) Incorporated in Singapore by the consolidated entity on 12 Aug 2015.
• (v) Incorporated in Myanmar by the consolidated entity on 17 Mar 2016.

Non-controlling interests

During the prior financial year, the consolidated entity acquired the remaining interest in Cape Alumina Pty Ltd.

	Cape Alumina Pty Ltd
	2016
	S
Statement of comprehensive income
Revenue		245,360
Loss after income tax		(675, 444)
Other comprehensive income
Total comprehensive income		(675, 444)
Loss allocated to non-controlling interests		(285, 202)

Note 26. Interests in subsidiaries (continued)

Non-controlling interests (continued)

		Cape Alumina Pty Ltd
	2016	2015
Statement of financial position
Total current assets		946,380
Total non-current assets		7,640,081
Total assets		8,586,461
Total current liabilities		343,478
Total non-current liabilities		2,763,926
Total liabilities		3,107,404
Net assets		5,479,057
Equity
Contributed equity		33,951,774
Reserves		702,098
Accumulated losses		(29, 174, 815)
Total equity		5,479,057
Statement of cash flows
Cash flows from operating activities		(527, 027)
Cash flows from investing activities		(2,749,196)
Cash flows from financing activities		2,763,926
Net increase/(decrease) in cash and cash equivalents		(512, 297)

Note 27. Interests in joint ventures

Columboola joint venture

In April 2010, the Company entered into a Joint Venture Agreement ('JVA') with China Coal Import & Export Company ('CCIEC'), a wholly-owned subsidiary of China National Coal Group Corp. Under the terms of the JVA, CCIEC acquired a 51% interest the consolidated entity's EPC 1165 Columboola in the Surat Basin, Queensland, for an agreed expenditure commitment of A\$30 million on EPC 1165. The funds will be used for exploring and evaluating the potential for future commercialisation options within the Columboola tenement. The opportunity also exists for participation in the consolidated entity's other tenements. Exploration was commenced in 2011. The Columboola JVA requires a minimum expenditure of A\$4 million within the first two years of the JVA and this amount has been expended. Approximately A\$25 million has been expended on this project to date.

Mahar San joint venture

On 12 May 2016, Metro Resources and Exploration Co. Limited ('Metro Resources'), a wholly-owned subsidiary of the Company, entered into a Joint Venture Agreement ('Agreement') with Mahar San Group Company Limited ('Mahar San') to jointly undertake copper exploration and mining activities at the Yar Taung mine, located in the Sagaing region of Upper Myanmar. Under the terms of the Agreement, Metro Resources and Mahar San will establish a joint venture company to which Metro Resources will contribute US\$50,000 to acquire an 80% interest in the ordinary share capital of the joint venture company. Metro Resources will also arrange the funding to enable the joint venture company to undertake drilling, resource definition, feasibility studies and other evaluations of the project area. Mahar San will contribute its interest in the Yar Taung copper mine and exploration concession to the joint venture.

Note 27. Interests in joint ventures (continued)

Mahar San joint venture (continued)

Metro Resources and Mahar San will also enter into a loan agreement under which Metro Resources will make a loan available to Mahar San to fund all costs incurred by Mahar San in setting up the joint venture company, including the amount of US\$12,500 required by Mahar San to subscribe for a 20% interest in the ordinary share capital of the joint venture company.

Note 28. Parent entity information

Set out below is the supplementary information about the parent entity:

	Parent
	2016	2015
	S	S
Statement of comprehensive income
Loss after income tax	(7, 297, 853)	(1,824,082)
Total comprehensive income	(7, 297, 853)	(1,824,082)
Statement of financial position
Total current assets	2,426,748	2,300,025
Total non-current assets	17,330,225	15,406,483
Total assets	19,756,973	17,706,508
Total current liabilities	1,092,699	427,150
Total non-current liabilities
Total liabilities	1,092,699	427,150
Net assets	18,664,274	17,279,358
Contributed equity	56,105,993	47,491,109
Reserves	5,783,311	5,715,426
Accumulated losses	(43,225,030)	(35,927,177)
Total equity	18,664,274	17,279,358

Contingent liabilities

Refer to note 22 for details of contingent liabilities.

Capital commitments - Property, plant and equipment

The parent entity had no capital commitments for property, plant and equipment at 30 June 2016 or 30 June 2015.

Significant accounting policies

The accounting policies of the parent entity are consistent with those of the consolidated entity which are disclosed in note 1.

Note 29. Events occurring after the reporting date

Agreement for Strategic Financing of the Bauxite Hills Project

On 12 July 2016, the Company announced that it had executed binding documentation ('Agreements') with Greenstone Resources II LP ('Greenstone') whereby Greenstone will take up 105 million ordinary shares in the Company, representing a 19.94% interest. Subject to the satisfaction of certain conditions, the Agreements also provide the Company with potential ongoing strategic and financial support for the development of the Bauxite Hills Project (the 'Project'). The initial placement of 105 million shares at 8.5 cents per share (the 'Placement') will raise A\$8.958 million in funding for construction of the Project. Greenstone is a specialist mining and metals private equity fund based in Guernsey, Channel Islands.

The Placement will be undertaken in two tranches:

• 94,800,000 shares issued to raise a total of A\$8.058million (the 'First Tranche'); and
• 10,200,000 shares issued to raise a total of A\$0.9 million (the 'Second Tranche'). $\blacksquare$

The First Tranche, which does not require shareholder approval based on the Company's available placement capacity, was settled was on 28 July 2016.

The Second Tranche is subject to shareholder approval. An extraordinary meeting of shareholders will be held on 30 August 2016 to ratify the issue of the Second Tranche.

The Agreements further provide that, subject to a satisfactory construction decision in respect of the Project and agreement on structure and terms. Greenstone is willing to make an additional equity investment of up to US\$20 million in the Company to be utilised in construction of the Project and for working capital.

The Agreements contain anti-dilution provisions to enable Greenstone to maintain its equity interest in the Company on issue of further shares. The Agreements also provide Greenstone with customer nomination rights whereby the consolidated entity has agreed to grant Greenstone the right to nominate customers to purchase bauxite production, pro-rata to Greenstone's shareholding in the Company, on an arm's length basis and on no less favourable terms than could be achieved elsewhere. The customer nomination rights are only exercisable after the Project has been in production for four years. Both the anti-dilution and, subject to certain exceptions, the customer nomination rights are contingent upon Greenstone retaining at least a 10% interest in the Company.

Issue of Ordinary Shares

On 25 July 2016, the Company issued 891,132 new fully paid ordinary shares to shareholders of Gulf Alumina Limited who had accepted the terms of the off-market takeover bid by the Company for shares in Gulf Alumina Limited (the 'Takeover Bid'). Under the terms of the Takeover Bid, shareholders in Gulf Alumina Limited were offered 3.3 fully paid ordinary shares in the Company for every one ordinary share held in Gulf Alumina Limited.

Appointment of Director

On 28 July 2016, Mr Mark Sawyer was appointed to the board of directors of the Company as the representative of Greenstone. A summary of Mr Sawyer's qualifications and experience is presented in the Directors' Report.

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

In accordance with a resolution of the directors of Metro Mining Limited, the directors of the Company declare that:

• the financial statements and notes, as set out on pages 23 to 52, are in accordance with the Corporations Act $1.$ 2001 and:
• comply with Australian Accounting Standards which, as stated in accounting policy note 1 to the financial a. statements, constitutes compliance with International Financial Reporting Standards; and
• give a true and fair view of the financial position as at 30 June 2016 and of the performance for the year $b₁$ ended on that date of the consolidated entity;
• in the directors' opinion there are reasonable grounds to believe that the Company will be able to pay its debts $2.$ as and when they become due and payable; and
• the directors have been given the declarations required by s 295A of the Corporations Act 2001 from the Chief $3₁$ Executive Officer and the Chief Financial Officer.

On behalf of the board of directors

John

S Everett Chairman

30 August 2016 Brisbane

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

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

INDEPENDENT AUDITOR'S REPORT

To the members of Metro Mining Limited

Report on the Financial Report

We have audited the accompanying financial report of Metro Mining Limited, which comprises the consolidated statement of financial position as at 30 June 2016, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the year's end or from time to time during the financial year.

Directors' Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the 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 financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.

Auditor's Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We 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 about 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 of the financial report that gives a true and fair view 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 Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Metro Mining Limited, would be in the same terms if given to the directors as at the time of this auditor's report.

Opinion

In our opinion:

(a) the financial report of Metro Mining Limited is in accordance with the Corporations Act 2001, including:

• i. giving a true and fair view of the consolidated entity's financial position as at 30 June 2016 and of its performance for the year ended on that date; and
• ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; and

(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 12 to 19 of the directors' report for the year ended 30 June 2016. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion, the Remuneration Report of Metro Mining Limited for the year ended 30 June 2016 complies with section 300A of the Corporations Act 2001.

BDO Audit Pty Ltd

A J Whyte Director

Brisbane, 30 August 2016

Metro Mining Limited Shareholder information 30 June 2016

The shareholder information set out below was applicable as at 26 August 2016.

a) Distribution of equitable securities

Analysis of number of equitable security holders by size of holding:

	Number of
	holders of
	ordinary
Category (size of holding):	shares
1,000 1 to	610
1,001 to 5,000	552
5,001 to 10,000	295
10,001 to 100,000	764
100,001 and over	237
	2,458

The number of shareholdings held in less than marketable parcels is 1,035.

b) 20 largest shareholders - ordinary shares

	Ordinary shares
		% of total
	Number	shares
	held	issued
Greenstone Management (Delaware) II Lic	94,800,000	18.36
Balanced Property Pty Ltd	71,994,181	13.95
Joyday Pty Ltd	35,071,040	6.79
Dadi Engineering Development (Group) Co. Ltd.	28,800,000	5.58
Netwealth Investments Limited	24,557,155	4.76
Mr Gregory Ian Willims	21,508,415	4.17
China Xinfa Group Corporation Limited	20,327,883	3.94
Dadi Engineering Development (Group) Hong Kong Co. Ltd	18,450,000	3.57
Bondline Limited	16,050,223	3.11
J P Morgan Nominees Australia Limited	15,033,172	2.91
Dadi (Australia) Engineering Co Pty Ltd	15,013,295	2.91
Ms Qing Xia	12,220,211	2.37
Equity & Permanent Investment Capital Limited	11,550,000	2.24
Remond Holdings Pty Limited	4,541,741	0.88
ABN AMRO Clearing Sydney Nominees Pty Ltd	3,713,473	0.72
HSBC Custody Nominees (Australia) Limited	2,972,603	0.58
Mr Clifford Malcolm Arnold Pratt	2,800,000	0.54
Prima Group Holdings Pty Ltd	2,794,052	0.54
Mr Aaron Dean Street & Mrs Susan Street	2,763,744	0.54
Mr Leigh David Kalazich	2,458,888	0.48
	407.420.076	78.94

c) Unquoted equity securities

Options over unissued shares

	Number on issue	Number of holders
Options issued under the Metro Mining Employee Share Option Plan	14,297,493	11

d) Substantial holders

The names of the substantial shareholders listed in the Company's register are:

	Ordinary shares
	% of total
	Number	shares
	held	issued
Greenstone Management (Delaware) II Llc	94,800,000	18.36
Balanced Property Pty Ltd	71,994,181	13.95
Dadi Engineering Development (Group) Co. Ltd and related entities	62,263,295	12.06
Joyday Pty Ltd	35,071,040	6.79

e) Voting rights

The voting rights attached to ordinary shares are set out below:

Ordinary shares

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.

There are no other classes of equity securities.