NORONEX LIMITED — Capital/Financing Update 2017

Nov 13, 2017

Lustrum Minerals Ltd (ACN 609 594 005) Supplementary Prospectus No. 2

IMPORTANT NOTICE

This Supplementary Prospectus No. 2 is dated 25 October 2017 and is supplementary to the prospectus dated 21 August 2017 and the first supplementary prospectus dated 31 August 2017 (together, the Prospectus ) issued by Lustrum Minerals Ltd ( Company ) in respect of the offer of 25,000,000 Shares at A$0.20 each to raise a total of A$5,000,000 ( Prospectus ).

A copy of this Supplementary Prospectus No. 2 was lodged with ASIC on 25 October 2017 October 2017. None of ASIC, ASX or their respective officers take any responsibility for the content of this Supplementary Prospectus No. 2.

This Supplementary Prospectus No. 2 must be read together with the Prospectus. If there is any conflict between this Supplementary Prospectus No. 2 and the Prospectus, this Supplementary Prospectus No. 2 will prevail. Unless otherwise indicated, terms and abbreviations defined and used in the Prospectus have the same meaning in this Supplementary Prospectus No. 2.

This Supplementary Prospectus No. 2 will be issued with the Prospectus as an electronic prospectus and may be accessed on the Company’s website at http://www.lustrumminerals.com.au/. The Company will send a copy of this Supplementary Prospectus No. 2 to all Applicants who have subscribed for Shares pursuant to the Prospectus prior to the date of this Supplementary Prospectus No. 2.

This Supplementary Prospectus No. 2 and the Prospectus are important documents that should be read in their entirety. If you have any questions about it, you should consult your professional advisers without delay.

1 General

1.1 Purpose of Supplementary Prospectus No. 2

This Supplementary Prospectus No. 2 has been prepared following a request from ASX Limited to apply a revised accounting policy to exploration expenditure assets, by amending the:

• (a) deferred expenditure asset from A$2,857,143 to A$0; and

• (b) deferred tax liability from A$857,143 to A$0.

The Company notes that there has been no material change to its financial position.

1.2 Action required by existing Investors

As the content of this Supplementary Prospectus No. 2 is not considered to be materially adverse to investors, applicants who have already subscribed for Shares

Lustrum Minerals Ltd – Supplementary Prospectus No. 2 To be read with the prospectus dated 21 August 2017 and the first supplementary prospectus dated 31 August 2017 issued by Lustrum Minerals Ltd.

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under the Prospectus prior to the date of this Supplementary Prospectus No. 2 do not need to take any action.

1.3 Content supplemented

The Investigating Accountant’s Report contained at Section 4 of the prospectus dated 21 August 2017 is deleted and replaced with the updated Investigating Accountant’s Report included as Annexure “A” to this Supplementary Prospectus No. 2.

2 Consents to be named

Each of the Directors has given their written consent to being named in this Supplementary Prospectus No. 2 in the context in which they are named and have not withdrawn their consent prior to lodgement of this Supplementary Prospectus No. 2 with ASIC.

HLB Mann Judd has given its written consent to being named as Investigating Accountant and to the inclusion of the updated Investigating Accountant’s Report in this Supplementary Prospectus No. 2 in the form and context in which the report was included. HLB Mann Judd has not withdrawn its consent prior to lodgement of this Supplementary Prospectus No. 2 with ASIC.

HLB Mann Judd has given its written consent to being named as auditor to the Company. HLB Mann Judd has not withdrawn its consent prior to the lodgement of this Supplementary Prospectus No. 2 with ASIC.

3 Director’s authorisation

This Supplementary Prospectus No. 2 is issued by the Company and its issue has been authorised by a resolution of the Directors. The Directors believe that the Prospectus when read together with this Supplementary Prospectus No. 2 contains all the information that would be required by sections 710 and 711 of the Corporations Act and does not contain any material statement that is misleading or deceptive.

Each of the Directors has consented to the lodgement of this Supplementary Prospectus No. 2 with ASIC, in accordance with section 720 of the Corporations Act, and has not withdrawn that consent.

Signed for and on behalf of Lustrum Minerals Ltd

Mr Josh Puckridge Executive Director 25 October 2017

Lustrum Minerals Ltd – Supplementary Prospectus No. 2 To be read with the prospectus dated 21 August 2017 and the first supplementary prospectus dated 31 August 2017 issued by Lustrum Minerals Ltd.

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Annexure A

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25 October 2017

The Board of Directors Lustrum Minerals Ltd Suite 9 330 Churchill Avenue SUBIACO WA 6008

Dear Sirs

INVESTIGATING ACCOUNTANT’S REPORT - LUSTRUM MINERALS LTD

INTRODUCTION

This Investigating Accountant’s Report (“Report”) has been prepared for inclusion in a supplementary prospectus to be dated on or about 25 October 2017 (“Prospectus”) by Lustrum Minerals Ltd (“LML” or “the Company”) in relation to the Company’s proposed listing on the Australian Securities Exchange (“ASX”), comprising an offer of 25,000,000 fully paid ordinary shares at an issue price of $0.20 per share to raise $5,000,000 (before costs) (“Capital Raising” or “Offer”).

This Report has been included in the Prospectus to assist potential investors and their financial advisers to make an assessment of the financial position and performance of the Company. All amounts are expressed in Australian dollars and expressions defined in the Prospectus have the same meaning in this Report.

This Report does not address the rights attaching to the shares to be issued in accordance with the Offer, nor the risks associated with accepting the Offer. HLB Mann Judd (“HLB”) has not been requested to consider the prospects for the Company, nor the merits and risks associated with becoming a shareholder, and accordingly has not done so, nor purports to do so.

HLB has not made and will not make any recommendation, through the issue of this Report, to potential investors of the Company, as to the merits of the Offer and takes no responsibility for any matter or omission in the Prospectus other than the responsibility for this Report.

Further declarations are set out in Section 6 of this Report.

STRUCTURE OF REPORT

This Report has been divided into the following sections:

1. Background information;

2. Scope of Report;

3. Financial information;

4. Subsequent events;

5. Statements; and

6. Declaration.

HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 4 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 WA. Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: hlb@hlbwa.com.au. Website: www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers

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1. BACKGROUND INFORMATION

The Company was registered on 1 December 2015 as Lustrum Minerals Ltd (“LML”) for the purpose of identifying exploration projects in Australia and overseas with the aim of discovering commercially significant minerals deposits. The Company has had minimal trading activity since registration.

On 20 January 2017, the Company entered into a binding share sale agreement with the owners of Consuelo Coal Holdings Pty Ltd (“Consuelo” or “Consuelo”) whereby LML will acquire 100% of the shares on issue in Consuelo upon the Company obtaining conditional approval from ASX for its listing on ASX by way of an Initial Public Offering.

Consuelo was registered on 16 January 2017 and has not traded since registration. Consuelo raised total capital of $1,000 on registration. Consuelo has agreed to purchase 100% of the shares in CFR Consuelo Pty Ltd, ICX Consuelo Pty Ltd, CFR Consuelo 2318 Pty Ltd, ICX Consuelo 2318 Pty and Consuelo Coal EPC 2327 Pty Ltd, (together, “the Consuelo Subsidiaries ” that have the rights to three Exploration Permits (EPC 2332, EPC 2318 and EPC 2327, collectively the “Project”) for Coal in the Bowen Basin of Queensland, Australia. The Consuelo Subsidiaries have also not traded since registration.

Further details are outlined in Section 2.5 of the Prospectus.

The proforma consolidated financial information presented in this Report is the historical financial information of the Company for the period ended 28 February 2017, assuming that the proposed transactions set out in Section 3(b) of this Report had been completed as at that date.

The proforma financial information as set out in Appendix 1 has been prepared using a balance date of 28 February 2017 corresponding to the most recently available financial information, as noted above, both LML and Consuelo have had minimal trading activity since registration and there has not been a material change to the financial position of either entity since that date. For completeness, the audited historical financial information of LML is set out in Appendix 2.

The intended use of the funds raised by the issue of shares under the Prospectus is specified in Section 1.6 of the Prospectus.

2. SCOPE OF REPORT

You have requested HLB to prepare this Report presenting the following information:

• a) the historical financial information of the Company comprising the historical Statement of Financial Position as at 28 February 2017 and the historical Statement of Comprehensive Income, historical Statement of Cash Flows and historical Statement of Changes in Equity for the period to 28 February 2017 as set out in Appendix 2 to this Report; and

• b) the proforma consolidated financial information of the Company comprising the proforma consolidated Statement of Financial Position as at 28 February 2017 and the proforma consolidated Statement of Comprehensive Income, proforma consolidated Statement of Cash Flows and proforma consolidated Statement of Changes in Equity for the period to 28 February 2017 as set out in Appendix 1 to this Report.

The Directors have prepared and are responsible for the historical and proforma consolidated information.

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We disclaim any responsibility for any reliance on this Report or on the financial information to which it relates for any purposes other than that for which it was prepared. This Report should be read in conjunction with the full Prospectus.

The historical financial information and the proforma consolidated financial information are presented in an abbreviated form insofar as they do not include all of the presentation and disclosures required by Australian Accounting Standards and other mandatory professional reporting requirements applicable to general purpose financial reports.

We performed a review of the historical and proforma consolidated financial information of the Company as at 28 February 2017 in order to ensure consistency in the application of applicable Accounting Standards and other mandatory professional reporting requirements in Australia.

Our review of the historical and proforma consolidated financial information of the Company was conducted in accordance with Australian Auditing Standards applicable to assurance engagements. Specifically, our review was carried out in accordance with Auditing Standard on Assurance Engagements ASRE 3450 “Assurance Engagements involving Corporate Fundraisings and/or Prospective Financial Information” and included such enquiries and procedures which we considered necessary for the purposes of this Report.

The review procedures undertaken by HLB in our role as Investigating Accountant were substantially less in scope than that of an audit examination conducted in accordance with generally accepted auditing standards. Our review was limited primarily to an examination of the historical financial information and proforma financial information, analytical review procedures and discussions with senior management. A review of this nature provides less assurance than an audit and, accordingly, this Report does not express an audit opinion on the historical information or proforma information included in this Report or elsewhere in the Prospectus.

In relation to the information presented in this Report:

• a) support by another person, corporation or an unrelated entity has not been assumed;

• b) the amounts shown in respect of assets do not purport to be the amounts that would have been realised if the assets were sold at the date of this Report; and

• c) the going concern basis of accounting has been adopted.

3. FINANCIAL INFORMATION

Set out in Appendix 1 (attached) are:

• a) the historical financial information of the Company comprising the historical Statement of Financial Position as at 28 February 2017 and the historical Statement of Comprehensive Income, historical Statement of Changes in Equity and historical Statement of Cash Flows for the period to 28 February 2017; and

• b) the proforma consolidated Statement of Financial Position of the Company as at 28 February 2017 and the proforma consolidated Statement of Comprehensive Income, proforma consolidated Statement of Cash Flows and proforma consolidated Statement of Changes in Equity of the Company for the period to 28 February 2017 as they would appear after incorporating the following significant events and proposed transactions by the Company subsequent to 28 February 2017:

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• i) the acquisition of all of the issued capital of Consuelo via the initial consideration of :

• a) the payment of up to $500,000 being the reimbursement of expenditure incurred in developing the Project;

• b) the issue of shares to the value of $2,000,000 less the reimbursement at an issue price of $0.20;

• c) the issue of 15,000,000 Class A Performance shares; and

• d) the issue of 15,000,000 Class C Performance shares.

• ii) the issue of the following deferred consideration:

• a) 15,000,000 deferred consideration shares upon the delineation of an “indicated mineral resource” of not less than 100 million tonnes of coal at greater than 5,000 kcal/kg at the Project on or before 30 June 2021; and

• b) 15,000,000 deferred consideration shares upon the delineation of an “indicated mineral resource” of not less than 300 million tonnes of coal at greater than 5,000 kcal/kg at the Project on or before 30 June 2021.

• iii) the issue by the Company pursuant to this Prospectus of up to 25,000,000 ordinary fully paid shares issued at $0.20 each raising $5,000,000, before the expenses of the offer;

• iv) the repayment of borrowings of $2,023; and

• v) the write off against issued capital of the estimated cash expenses of the Offers as outlined in Section 7.6 of the Prospectus of $627,400.

This information is also shown with no amounts being reimbursed resulting in an increase in the cash on hand of $500,000 and an increase in the number of shares issued (an additional 2,500,000) “maximum”.

• c) Notes to the historical financial information and proforma consolidated financial information.

4. SUBSEQUENT EVENTS

There have been no material items, transactions or events subsequent to 28 February 2017 not otherwise disclosed in the Prospectus or this Report which have come to our attention during the course of our review that would require comment in, or adjustment to, the content of this Report or which would cause such information included in this Report to be misleading.

5. STATEMENTS

Based on our review, which was not an audit, we have not become aware of any matter that causes us to believe that:

• a) the historical financial information of the Company as at 28 February 2017 as set out in Appendix 1 of this Report, does not present fairly the financial position of the Company as at that date in accordance with the measurement and recognition requirements (but not all of the disclosure requirements) of applicable Accounting Standards and other mandatory reporting requirements in Australia, and its performance as represented by its results of its operations and its cash flows for the period then ended;

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• b) the proforma consolidated financial information of the Company as at 28 February 2017 as set out in Appendix 1 of this Report, does not present fairly the financial position of the Company as at that date in accordance with the measurement and recognition requirements (but not all of the disclosure requirements) of applicable Accounting Standards and other mandatory reporting requirements in Australia, and its performance as represented by its results of its operations and its cash flows for the period then ended, as if the transactions referred to in Section 3(b) of this Report had occurred during that period; and

• c) the assumptions and applicable criteria used in the preparation of the proforma financial information do not provide a reasonable basis for presenting the significant effects directly attributable to the Offers and do not reflect proper application of those adjustments to the unadjusted financial information.

6. DECLARATION

• a) HLB will be paid its usual professional fees based on time involvement, for the preparation of this Report and review of the financial information, at our normal professional rates.

• b) Apart from the aforementioned fee, neither HLB, nor any of its associates will receive any other benefits, either directly or indirectly, for or in connection with the preparation of this Report.

• c) Neither HLB, nor any of its employees or associated persons has any interest in the Company or the promotion of the Company.

• d) Unless specifically referred to in this Report, or elsewhere in the Prospectus, HLB was not involved in the preparation of any other part of the Prospectus and did not cause the issue of any other part of the Prospectus. Accordingly, HLB makes no representations or warranties as to the completeness or accuracy of the information contained in any other part of the Prospectus.

• e) HLB has consented to the inclusion of this Report in the Prospectus in the form and context in which it appears.

Yours faithfully

HLB MANN JUDD

N G NEILL Partner

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APPENDIX 1 – PROFORMA

LUSTRUM MINERALS LTD STATEMENT OF FINANCIAL POSITION AS AT 28 FEBRUARY 2017

Notes Current assets Cash and cash equivalents 2 Trade and other receivables Total current assets Non-current assets Total non-current assets Total assets Current liabilities Borrowings Total current liabilities Non-current liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital 3 Accumulated losses Total equity	Reviewed Historical Company Proforma Adjustments Consolidated Reviewed Proforma Consolidated Reviewed Proforma (maximum shares) $ $ $ $
	259,316 3,870,577 4,129,893 4,629,893 18,566 - 18,566 18,566
	277,882 3,870,577 4,148,459 4,648,459
	- - - -
	277,882 3,870,577 4,148,459 4,648,459
	2,023 (2,023) - -
	2,023 (2,023) - -
	- - - -
	2,023 (2,023) - -
	275,859 3,872,600 4,148,459 4,648,459
	452,920 5,872,600 6,325,520 6,825,520 (177,061) (2,000,000) (2,177,061) (2,177,061)
	275,859 3,872,600 4,148,459 4,648,459

The above should be read in conjunction with the accompanying notes.

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LUSTRUM MINERALS LTD STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDING 28 FEBRUARY 2017

Corporate compliance costs Corporate advisory and consulting fees Finance costs Exploration expenditure incurred Other expenses Loss from ordinary activities before tax Income tax benefit Loss from ordinary activities after tax Other comprehensive income, net of tax Total comprehensive loss for the period	Reviewed Historical Company Proforma Adjustments Consolidated Reviewed Proforma $ $ $
	(1,176) - (1,176) (75,000) - (75,000) (72) - (72) (100,000) (2,000,000) (2,100,000) - - -
	(176,248) (2,000,000) (2,176,248) - - -
	(176,248) (2,000,000) (2,176,248) - - -
	(176,248) (2,000,000) (2,176,248)

The above should be read in conjunction with the accompanying notes.

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LUSTRUM MINERALS LTD STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDING 28 FEBRUARY 2017

Reviewed historical Issued on registration – 1 December 2015 Loss for the period Other comprehensive income, net of tax 30 June 2016 Loss for the period Other comprehensive income, net of tax Shares issued Share issue costs Balance as at 28 February 2017 Reviewed proforma Acquisition of Consuelo Shares issued pursuant to Prospectus Share issue costs Consolidated Proforma total – 28 February 2017 Addition shares issued for the acquisition of Consuelo (in lieu of cash) Consolidated Proforma total – 28 February 2017 (Maximum)	Issued capital Option Reserve Accumulated losses Total Equity $ $ $ $
	1 - - 1 - - (813) (813) - - - -
	1 - (813) (812) - - (176,248) (176,248) - - - - 500,000 - - 500,000 (47,081) - - (47,081)
	452,920 - (177,061) 275,859
	1,500,000 - (2,000,000) (500,000) 5,000,000 - - 5,000,000 (627,400) - - (627,400)
	6,325,520 - (2,177,061) 4,148,459
	500,000 - - 500,000
	6,825,520 - (2,177,061) 4,648,459

The above should be read in conjunction with the accompanying notes.

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LUSTRUM MINERALS LTD STATEMENT OF CASH FLOWS FOR THE PERIOD ENDING 28 FEBRUARY 2017

Cash flows from operating activities Payments to suppliers & employees Interest received Net cash used in operating activities Cash flows from investing activities Payments for deferred exploration and evaluation assets Net cash used in investing activities Cash flows from financing activities Proceeds from the issue of shares Share issue costs Repayment of borrowings Net cash provided by financing activities Net increase in cash and cash equivalents Cash at the beginning of the period Cash at the end of the period	Reviewed Historical Company Proforma Adjustments Consolidated Reviewed Proforma Consolidated Reviewed Proforma (maximum shares) $ $ $ $
	(93,604) - (93,604) (93,604) - - - -
	(93,604) - (93,604) (93,604)
	(100,000) (500,000) (600,000) (100,000)
	(100,000) (500,000) (600,000) (100,000)
	500,001 5,000,000 5,500,001 5,500,001 (47,081) (627,400) (674,481) (674,481) - (2,023) (2,023) (2,023)
	452,920 4,370,577 4,823,497 4,823,497
	259,316 3,870,577 4,129,893 4,629,893 - - -
	259,316 3,870,577 4,129,893 4,629,893

The above should be read in conjunction with the accompanying notes.

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LUSTRUM MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDING 28 FEBRUARY 2017

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial information has been prepared in accordance with applicable accounting standards including the Australian equivalents of International Reporting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. Material accounting policies have been adopted in the preparation of the historical and proforma consolidated financial information are shown below.

(a) Basis of preparation

The financial statements have been prepared in accordance with the measurement requirements (but not all of the disclosure requirements) of applicable Accounting Standards and other mandatory professional reporting requirements in Australia using the accrual basis of accounting, including the historical cost convention.

Historical cost convention

These financial statements have been prepared under the historical cost convention, and do not take into account changing money values or, except where stated, current valuations of non-current assets. Cost is based on the fair value of the consideration given in exchange for assets.

Critical accounting estimates

The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 1(p).

Going concern

This financial information has been prepared on the going concern basis, which contemplates the continuation of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business.

(b) Cash and cash equivalents

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

(c) Trade and other receivables

Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method, less any allowance for impairment. Trade receivables are generally due for settlement within periods ranging from 15 days to 30 days.

Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by reducing the carrying amount directly. An allowance account is used when there is objective evidence that the Company will not be able to collect all amounts due according to the original contractual terms. Factors considered by the Company in making this determination include known significant financial difficulties of the debtor, review of financial information and significant delinquency in making contractual payments to the Company.

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LUSTRUM MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDING 28 FEBRUARY 2017

1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

• (c) Trade and other receivables (cont’d)

The impairment allowance is set equal to the difference between the carrying amount of the receivable and the present value of estimated future cash flows, discounted at the original effective interest rate. Where receivables are short-term discounting is not applied in determining the allowance.

The amount of the impairment loss is recognised in the statement of other comprehensive income within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the statement of other comprehensive.

• (d) Financial instruments

Financial assets

Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial assets at fair value through profit or loss, loans and receivables, held-tomaturity investments, or available-for-sale investments, as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The Company determines the classification of its financial assets after initial recognition and, when allowed and appropriate, reevaluates this designation at each period-end. All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Company commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the marketplace.

Financial assets at fair value through profit or loss

Financial assets classified as held for trading are included in the category ‘financial assets at fair value through profit or loss’. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on investments held for trading are recognised in profit or loss.

Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Company has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. Investments that are intended to be held-to-maturity, such as bonds, are subsequently measured at amortised cost. This cost is computed as the amount initially recognised minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initially recognised amount and the maturity amount. This calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums and discounts. For investments carried at amortised cost, gains and losses are recognised in profit or loss when the investments are derecognised or impaired, as well as through the amortisation process.

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LUSTRUM MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDING 28 FEBRUARY 2017

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

• (d) Financial instruments (cont’d)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

Available-for-sale investments

Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale or are not classified as any of the three preceding categories. After initial recognition available-for-sale investments are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit or loss.

The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the balance date. For investments with no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions; reference to the current market value of another instrument that is substantially the same; discounted cash flow analysis and option pricing models.

Derecognition of financial assets and financial liabilities

Financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is derecognised when:

• the rights to receive cash flows from the asset have expired;

• the Company retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass-through’ arrangement; or

• the Company has transferred its rights to receive cash flows from the asset and either:

• has transferred substantially all the risks and rewards of the asset, or

• has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Company’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration received that the Company could be required to repay.

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LUSTRUM MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDING 28 FEBRUARY 2017

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(d) Financial instruments (cont’d)

When continuing involvement takes the form of a written and/or purchased option (including a cashsettled option or similar provision) on the transferred asset, the extent of the Company’s continuing involvement is the amount of the transferred asset that the Company may repurchase, except that in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at fair value, the extent of the Company’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

(e) Impairment of assets

The Company assesses at each balance date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or s of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cashgenerating unit is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease).

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

Financial assets carried at cost

If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value (because its fair value cannot be reliably measured), or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the current market rate of return for a similar financial asset.

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LUSTRUM MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDING 28 FEBRUARY 2017

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

• (e) Impairment of assets (cont’d) Available-for-sale investments

If there is objective evidence that an available-for-sale investment is impaired, an amount comprising the difference between its cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to the profit or loss. Reversals of impairment losses for equity instruments classified as available-for-sale are not recognised in profit. Reversals of impairment losses for debt instruments are reversed through profit or loss if the increase in an instrument's fair value can be objectively related to an event occurring after the impairment loss was recognised in profit or loss.

• (j) Exploration and evaluation costs

Mineral exploration and evaluation costs are expensed as incurred. Acquisition costs will normally be expensed but will be assessed on a case by case basis and if appropriate may be capitalised. These acquisition costs are only carried forward to the extent that they are expected to be recouped through the successful development or sale of the tenement. Accumulated acquisition costs in relation to an abandoned tenement are written off in full against the profit and loss in the year which the decision to abandon the tenant is made

Where a decision has been made to proceed with development in respect of a particular area of interes, all future costs are recorded as a development asset.

(f) Trade payables

Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Company prior to the end of the period that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months.

• (g) Employee Entitlements

Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.

(h) Provisions

Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

Investigating Accountant’s Report

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LUSTRUM MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDING 28 FEBRUARY 2017

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(i) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

The fair value of the liability portion of a convertible note is determined using a market interest rate for an equivalent non-convertible note. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or maturity of the note. The remainder of the proceeds is allocated to the conversion option. This is recognised and included in shareholders’ equity, net of income tax effects.

Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

(j) Issued capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a new business are not included in the cost of acquisition as part of the purchase consideration.

• (k) Share-based payment transactions

Equity settled transactions

The Company provides benefits to employees (including senior executives) of the Company in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).

The cost of equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using a blackscholes model.

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Lustrum Minerals Ltd (market conditions) if applicable.

Investigating Accountant’s Report

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LUSTRUM MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDING 28 FEBRUARY 2017

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(k) Share-based payment transactions (cont’d)

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period).

The cumulative expense recognised for equity-settled transactions at each balance date until vesting date reflects:

• the extent to which the vesting period has expired and

• the Company’s best estimate of the number of equity instruments that will ultimately vest.

No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The statement of other comprehensive charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition.

If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.

• (l) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

Revenue is measured at fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties.

Interest income

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. All revenue is stated net of the amount of goods and services tax (GST).

Investigating Accountant’s Report

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LUSTRUM MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDING 28 FEBRUARY 2017

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(m) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(n) Income tax

The charge for current income tax expense is based on the result for the year adjusted for any nonassessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance date or reporting date.

Deferred tax is accounted for in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited to profit or loss except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Company will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

(n) Earnings per share

Basic earnings per share is calculated as net result attributable to members of the Company, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share is calculated as net result attributable to members of the Company, adjusted for:

• costs of servicing equity (other than dividends) and preference share dividends;

• the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and

• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

Investigating Accountant’s Report

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LUSTRUM MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDING 28 FEBRUARY 2017

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

• (o) Critical accounting judgements and key sources of estimation uncertainty

The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised if it affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Exploration and evaluation costs carried forward

Management determines when an area of interest should be abandoned. When a decision is made that an area of interest is not commercially viable, all costs that have been capitalised in respect of that area of interest are written off. In determining this, various assumptions including the maintenance of title, ongoing expenditure and prospectivity are made.

Impairment of available-for-sale financial assets

The Company follows the guidance of AASB 139 ‘Financial Instruments: Recognition and Measurement’ to determine when an available-for-sale financial asset is impaired. This determination requires significant judgement. In making this judgement, the Company evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its cost and the financial health of and short-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flows.

Share-based payment transactions

The Company 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 an external valuer using a Black-Scholes model.

(p) Proforma transactions

The proforma Statement of Financial Position, Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows have been derived from the historical financial information as at 28 February 2017 adjusted to give effect to the following actual or proposed significant events and transactions by the Company subsequent to 28 February 2017:

• i) the acquisition of all of the issued capital of Consuelo via the initial consideration of :

• a) the payment of up to $500,000 being the reimbursement of expenditure incurred in developing the Project;

• b) the issue of shares to the value of $2,000,000 less the reimbursement at an issue price of $0.20;

• c) the issue of 15,000,000 Class A Performance shares; and

• d) the issue of 15,000,000 Class C Performance shares.

Investigating Accountant’s Report

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LUSTRUM MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDING 28 FEBRUARY 2017

(q) Proforma transactions (cont’d)

• ii) the issue of the following deferred consideration:

• a) 15,000,000 deferred consideration shares upon the delineation of an “indicated mineral resource” not less than 100 million tonnes of coal at greater than 5,000 kcal/kg at the Project on or before 30 June 2021; and

• b) 15,000,000 deferred consideration shares upon the delineation of an “indicated mineral resource” of not less than 300 million tonnes of coal at greater than 5,000 kcal/kg at the Project on or before 30 June 2021.

• iii) the issue by the Company pursuant to this Prospectus of up to 25,000,000 ordinary fully paid shares issued at $0.20 each raising $5,000,000, before the expenses of the offer;

• iv) the repayment of borrowings of $2,023; and

• v) the write off against issued capital of the estimated cash expenses of the Offers as outlined in Section 7.6 of the Prospectus of $627,400

This information is also shown with no amounts being reimbursed resulting in an increase in the cash on hand of $500,000 and an increase in the number of shares issued (an additional 2,500,000) “maximum”.

2. CASH AND CASH EQUIVALENTS

Balance as at 28 February 2017 Reimbursement of expenditure in relation to the acquisition of Consuelo Repayment of borrowings Proceeds for issue of shares Share issue costs Proforma balance	Reviewed Historical Company $	Proforma Adjustments Consolidated Reviewed Proforma Consolidated Reviewed Proforma (maximum shares) $ $ $
	259,316 - - - -	- 259,316 259,316 (500,000) (500,000) - (2,023) (2,023) (2,023) 5,000,000 5,000,000 5,000,000 (627,400) (627,400) (627,400)
	259,316	3,870,577 4,129,893 4,629,893

Investigating Accountant’s Report

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LUSTRUM MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDING 28 FEBRUARY 2017

3. ISSUED CAPITAL

Reviewed historical Balance as at 30 June 2016 Shares issue under Information memorandum Share issue costs Balance as at 28 February 2017 Reviewed proforma Shares issued as part consideration for the acquisition of Consuelo Shares issued pursuant to prospectus Share issue costs - cash Consolidated Proforma balance Additional shares issued as consideration for the acquisition of Consuelo Consolidated Proforma balance (Maximum) PERFORMANCE SHARES Reviewed proforma Issue of performance shares as part consideration for acquisition of Consuelo Comprising: Class A Performance shares (i) Class C Performance shares (ii) Proforma balance	Number $
	1 1 5,000,000 500,000 (47,081)
	5,000,001 452,920
	7,500,000 1,500,000 25,000,000 5,000,000 - (627,400)
	37,500,001 6,325,520
	2,500,000 500,000
	40,000,001 6,825,520
	Number $
	30,000,000 - 15,000,000 - 15,000,000 -
	30,000,000 -

4. PERFORMANCE SHARES

No value has been ascribed to the Performance Shares as the Company has not yet reached a stage where it can reliability estimate the likelihood of the milestones being achieved.

• (i) A Class A Performance Share in the relevant class will convert into one Share upon the delineation of an “indicated mineral resource” (as that term is defined in JORC, 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves) of not less than 50 million tonnes of coal at greater than 5,000 kcal/kg at the Project on or before 30 June 2021.

• (ii) A Class C Performance Share in the relevant class will convert into one Share upon the delineation of an “indicated mineral resource” (as that term is defined in JORC, 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves) of not less than 150 million tonnes of coal at greater than 5,000 kcal/kg at the Project on or before 30 June 2021.

Investigating Accountant’s Report

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LUSTRUM MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDING 28 FEBRUARY 2017

5. DEFERRED CONSIDERATION

DEFERRED CONSIDERATION
Reviewed proforma Issue of deferred consideration (shares) as part consideration for acquisition of Consuelo (i), (ii) Proforma balance	Number $
	30,000,000 -
	30,000,000 -

No value has been ascribed to the deferred consideration as the Company has not yet reached a stage where it can reliability estimate the likelihood of the milestones being achieved.

• (i) 15,000,000 shares upon the delineation of an “indicated mineral resource” of (as that term is defined in JORC, 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves) of not less than 100 million tonnes of coal at greater than 5,000 kcal/kg at the Project on or before 30 June 2021; and

• (ii) 15,000,000 Shares upon the delineation of an “indicated mineral resource” (as that term is defined in JORC, 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves) of not less than 300 million tonnes of coal at greater than 5,000 kcal/kg at the Project on or before 30 June 2021.

6. CONTINGENCIES AND COMMITMENTS

The Directors are not aware of any contingencies other than as set out in the Prospectus.

7. RELATED PARTY TRANSACTIONS

Details of Directors’ interests in the Company’s issued capital and transactions with the Company are included in Section 7 of the Prospectus.

Investigating Accountant’s Report – Appendix 2

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APPENDIX 2 – HISTORICAL INFORMATON

LUSTRUM MINERALS LTD STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2016

Current assets Cash and cash equivalents Trade and other receivables Loan receivable Total current assets Non-current assets Deferred exploration and evaluation expenditure Total non-current assets Total assets Current liabilities Borrowings Total current liabilities Non-current liabilities Deferred tax liability Total non-current liabilities Total liabilities Net (liabilities) / assets Equity Issued capital Accumulated losses Total equity	30 June 2016 Audited $
	- 35 -
	35
	-
	-
	35
	847
	847
	-
	-
	847
	(812)
	1 (813)
	(812)

The above should be read in conjunction with the accompanying notes.

Investigating Accountant’s Report – Appendix 2

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LUSTRUM MINERALS LTD STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD FROM REGISTRATION TO 30 JUNE 2016

Corporate compliance costs Corporate fees Finance costs Incorporation costs Loss from ordinary activities before tax Income tax benefit Loss from ordinary activities after tax Other comprehensive income, net of tax Total comprehensive loss for the period	30 June 2016 Audited $
	- - - (813)
	(813) -
	(813) -
	(813)

The above should be read in conjunction with the accompanying notes.

LUSTRUM MINERALS LTD STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD FROM REGISTRATION TO 30 JUNE 2016

	Issued	Accumulated	Total
	Capital	losses	Equity
	Reviewed	Reviewed	Reviewed
	$	$	$
Reviewed historical
Issued on registration – 1 December 2015	1	-	1
Loss for the period	-	(813)	(813)
Other comprehensive income, net of tax	-	-	-
Balance as at 30 June 2016	1	(813)	812

The above should be read in conjunction with the accompanying notes.

Investigating Accountant’s Report – Appendix 2

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LUSTRUM MINERALS LTD STATEMENT OF CASH FLOWS FOR THE PERIOD FROM REGISTRATION TO 30 JUNE 2016

Cash flows from operating activities Payments to suppliers & employees Net cash used in operating activities Cash flows from investing activities Payments for deferred exploration and evaluation assets Net cash used in investing activities Cash flows from financing activities Proceeds from the issue of shares Share issue costs Net cash provided by financing activities Net increase in cash and cash equivalents Cash as at registration Cash at the end of the period	30 June 2016 Audited $
	-
	-
	-
	-
	- -
	-
	- -
	-

The above should be read in conjunction with the accompanying notes.