RIEDEL RESOURCES LIMITED — Interim / Quarterly Report 2014

Mar 4, 2014

FINANCIAL REPORT FOR THE HALF YEAR ENDED

31 DECEMBER 2013

CONTENTS

CORPORATE DIRECTORY
DIRECTORS' REPORT
AUDITOR'S INDEPENDENCE DECLARATION
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
CONDENSED CONSOLIDATED NOTES TO AND FORMING PART OF THE ACCOUNTS 12
DIRECTORS' DECLARATION
INDEPENDENT AUDITOR'S REVIEW REPORT

CORPORATE DIRECTORY

DIRECTORS

Jeffrey Moore Ed Turner Andrew Childs lan Tchacos

COMPANY SECRETARY Sue Symmons

REGISTERED & PRINCIPAL OFFICE

Suite 1 45 Ord Street WEST PERTH WA 6005

Telephone: (08) 9226 0866 Facsimile: (08) 9486 7375

AUDITORS

PKF Mack and Co Level 4 35 Havelock Street WEST PERTH WA 6005

DIRECTORS' REPORT

Your Directors submit the financial report of Riedel Resources Limited (the Company) and controlled entities (the consolidated entity) for the half-year ended 31 December 2013.

DIRECTORS

The names of the directors in office at any time during or since the end of the period are:

lan Tchacos Jeffrey Moore Ed Turner Andrew Childs

COMPANY SECRETARY

Sue Symmons (appointed 1 October 2013) Bruce Franzen (resigned 1 October 2013)

OPERATING RESULTS

The net loss of the consolidated entity for the financial period after provision for income tax was \$4,664,877 (2012: \$753,190).

REVIEW OF OPERATIONS

WESTERN AUSTRALIA

MARYMIA PROJECT

Riedel continued with technical studies, using all of the Company's recent and historic exploration data. to prioritise future exploration work on copper, gold and nickel targets at Marymia (see Figure 1 for current target map).

Subject to the Company sourcing adequate funding, future exploration programmes contemplate a project-wide aerial electromagnetic geophysical survey (VTEM) to test for conductive nickel and copper sulphide deposits and the drilling of the best gold targets using RAB and RC/diamond core techniques.

Figure 1: Marymia Project - Gold, copper and nickel targets

CHARTERIS CREEK PROJECT

On 16 January 2014 Riedel announced that Fortescue Metals Group (ASX: FMG, "Fortescue") through its wholly-owned subsidiary FMG Resources Pty Ltd has entered into a Farm In and Joint Venture Agreement worth up to \$1M over Exploration Licence 45/2763 (see Figure 2 for location of project).

Farm In and Joint Venture Agreement Details

Fortescue can earn a 51% interest in the Tenement by spending \$200,000 on exploration within the Exploration Area within 3 years of the date of signing the Agreement ("Initial Earning Period").

If Fortescue satisfies the expenditure conditions during the Initial Earning Period a Joint Venture with Riedel will be formed.

Fortescue can earn an additional 14% interest (for total interest of 65%) in the Tenement by spending a further \$400,000 on exploration (for total expenditure of \$600,000) within the Joint Venture Area within 3 years of forming the Joint Venture ("Additional Earning Period").

At any time during the Additional Earning Period, after Fortescue has spent no less than \$100,000 on exploration within the Joint Venture Area, Fortescue can elect not to earn any further interest in the Tenement.

Fortescue can earn an additional 15% interest (for total interest of 80%) in the Tenement by spending a further \$400,000 on exploration (for total expenditure of \$1,000,000) within the Joint Venture Area within the Additional Earning Period.

If all milestones are met by Fortescue within the Initial and Additional Earning Periods, Fortescue will have earned an interest of 80% in the Tenement by the expenditure of \$1,000,000 on exploration within the Joint Venture Area.

After Fortescue has satisfied its earning obligations, Fortescue and Riedel will contribute to Joint Venture expenditure in proportion to their interest in the Joint Venture, alternatively standard dilution conditions will apply to non-contributing parties.

If a Joint Venturer's Joint Venture interest reduces to less than 10%, the interest is converted to a 2% Net Smelter Royalty ("NSR") for a period of 5 years from the Royalty Commencement Date and a 0.6% NSR thereafter.

Geological Setting

The Company's 100%-owned tenement is 131km² in area and is located approximately 45km north of Nullagine and 50km south-east of Marble Bar in the Pilbara Region of Western Australia.

The Charteris Creek Project has very favourable geology for the discovery of mineral deposits, as highlighted by the presence of numerous gold, copper, base metals, iron ore and specialty metals discoveries and deposits proximal to the exploration licence (see Figure 2).

Despite the strong similarities between the geological/structural setting at Charteris Creek to that which hosts nearby mineral deposits, only limited exploration has been previously carried out within the tenement.

Figure 2: Charteris Creek Project - Geological Map highlighting known mineral occurrences and deposits

Mineral deposit and mineralisation types that the Company has identified as exploration targets in the tenement include:

• Copper-lead-zinc and copper-molybdenum mineralisation associated with a granodiorite intrusion has been identified in the south-east part of the exploration licence. This mineralisation forms part of a larger cluster of base metal and specialty-metal occurrences related to stockwork mineralisation in the Gobbos Granodiorite.
• Laconia Resources' Lennons Find VHMS deposit (¹ Indicated and Inferred Mineral Resources of 1.85M tonnes @ 5.1% Zn, 1.4% Pb, 0.2% Cu and 82g/t Ag) is located approximately one kilometre to the north of E45/2763. Reconnaissance work by Riedel confirms that the prospective Warrawoona Group host rocks extend into E45/2763.
• The McPhee Creek Iron Ore deposit (²Indicated and Inferred Mineral Resources of 251 million tonnes @ 56.1% Fe) is located approximately 8km along strike to the south of E45/2763 in rocks belonging to the Gorge Creek Group. Regional mapping indicates that the prospective Gorge Creek Group extends further north into E45/2763.
• In 1968³ Conwest Australia reported significant copper intercepts from drilling in porphyry rocks, including 50 feet @ 1.34% Cu from 40 feet in drillhole OS4 and 20 feet @ 1.38% Cu from 130 feet in drillhole OS3. The drilling was carried out several kilometres to the south of E45/2763 in geology analogous to the granitic porphyry within Riedel's exploration licence.
• In 1987 ⁴Concord Mining NL completed exploration within the Bridget, Otways and Gobbos Prospects, located several kilometres to the south and south east of E45/2763. Concord collected 130 stream sediment samples with 20 samples being considered anomalous. Assay results up to 1.5g/t Au at the Otways prospect, 6.92g/t Au east of Gobbos, and 1150 ppm Cu at Gobbos were reported. Encouraging sample results from costean 1 at Otways included 21m @ 3.89% Cu and 2.22g/t Au.
• Numerous small but very high grade gold deposits are located adjacent to the north-western boundary of the tenement in Warrawoona Group rocks and several structures that control, or are associated with these gold deposits, extend into E45/2763.

WEST AFRICA

BURKINA FASO PROJECTS

In January 2014 (subsequent to the end of the reporting period), Riedel elected to not complete the acquisition of five Permits in Burkina Faso and the Company intends to withdraw from West Africa. There were no field activities completed during the six months.

To complete the acquisition of the five Burkina Faso projects the Company had the right (but not the obligation) to make project vendor payments of US\$370,000 by 31 December 2013. The decision to not proceed further with the purchase of the West African projects is consistent with the Company's policy of identifying and adopting prudent cash management measures to most-efficiently constrain near-term expenditure.

^<sup>1 Laconia Resources Limited website - January 2014

Atlas Iron Limited website - DSO Resources and Reserves - January 2014

^<sup>3 Western Australian Mineral Exploration Index (WAMEX) Report No. a1696 4 Western Australian Mineral Exploration Index (WAMEX) Report No. a24511

EVENTS SUBSEQUENT TO REPORTING DATE

There are no other matters or circumstances that have arisen since the end of the financial period that have significantly affected or may significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company, in future years.

AUDITOR'S INDEPENDENCE DECLARATION

The auditor's independence declaration under s 307C of the Corporations Act 2001 is set out on page 7 for the half year ended 31 December 2013.

Signed in accordance with a resolution of the Board of Directors.

Jeffrey Moore Managing Director

Date: 5 March 2014

AUDITOR'S INDEPENDENCE DECLARATION

TO THE DIRECTORS OF RIEDEL RESOURCES LIMITED

In relation to our review of the financial report of Riedel Resources Limited for the half year ended 31 December 2013, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

PKF MACK & CO

SHANE CROSS PARTNER

5 MARCH 2014 WEST PERTH, WESTERN AUSTRALIA

7

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 31 DECEMBER 2013

	Note	31 December 2013 \$	31 December 2012 \$
Interest revenue Other income	4(a) 4(a)	3,553 30,000	13,552
Administration expenses Depreciation and amortisation expense Employee benefits expense Exploration expenditure incurred Impairment of exploration expenditure Other expense		(255, 024) (7,661) (95, 616) (4,340,129)	(391, 885) (21, 424) (344, 127) (8,828) (478)
Loss before income tax	4(b)	(4,664,877)	(753, 190)
Income tax expense
Loss for the period	4(b)	(4,664,877)	(753, 190)
Other comprehensive income Items that maybe reclassified subsequently to profit and loss
Exchange difference on translation of foreign operation Other comprehensive income (net of tax)		(4,690) (4,690)	82,401 82,401
Total comprehensive loss for the period	4(b)	(4,669,567)	(670,789)
Basic loss per share (cents per share)		(4.33)	(0.80)
Diluted loss per share (cents per share)		(4.33)	(0.80)

The accompanying condensed notes form part of these financial statements.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2013

	Note	31 December 2013 \$	30 June 2013 \$
CURRENT ASSETS
Cash and cash equivalents	5	208,504	350,281
Trade and other receivables	6	8,159	16,100
TOTAL CURRENT ASSETS		216,663	366,381
Exploration and evaluation expenditure	$\overline{7}$	4,540,480	8,770,570
Property, plant and equipment		38,232	45,893
TOTAL NON-CURRENT ASSETS		4,578,712	8,816,463
TOTAL ASSETS		4,795,375	9,182,844
CURRENT LIABILITIES
Trade and other payables		33,022	82,324
Convertible notes		358,861	106,585
Provisions			6,914
TOTAL CURRENT LIABILITIES		391,883	195,823
TOTAL LIABILITIES		391,883	195,823
NET ASSETS		4,403,492	8,987,021
EQUITY Issued capital	8
Option reserve		15,094,502 290,941	15,083,730 290,941
Foreign currency translation reserve		453,367	458,057
Share based payments reserve		458,326	383,060
Accumulated losses		(11, 893, 644)	(7, 228, 767)
TOTAL EQUITY		4,403,492	8,987,021

The accompanying condensed notes form part of these financial statements.

$\widetilde{\mathcal{R}}$

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2013

	Issued Capital	Option Reserve	Foreign Currency Translation Reserve	Payments Reserve	Share Based Accumulated Losses	Total
	\$	S	S		\$	\$
Balance at 1 July 2013	15,083,730	290,941	458,057	383,060	(7, 228, 767)	8,987,021
Loss for the period					(4,664,877)	(4,664,877)
Other comprehensive income			(4,690)			(4,690)
Total comprehensive loss for the period			(4,690)	$\qquad \qquad \blacksquare$	(4,664,877)	(4,669,567)
Transactions with owners, recorded directly in equity
Issue of share capital	13,924					13,924
Issue of options				75,266		75,266
Less: share issue costs	(3, 152)					(3, 152)
Balance at 31 December 2013	15,094,502	290,941	453,367	458,326	(11,893,644)	4,403,492
Balance at 1 July 2012	13,193,436	290,941	(204, 259)	164,549	(2,816,529)	10,628,138
Loss for the period					(753, 190)	(753, 190)
Other comprehensive income			82,401			82,401
Total comprehensive loss for the period			82,401		(753, 190)	(670, 789)
Transactions with owners, recorded directly in equity
Issue of share capital	1,753,082					1,753,082
Issue of options				116,979		116,979
Less: share issue costs	(130, 956)					(130, 956)
Balance at 31 December 2012	14,815,562	290,941	(121, 858)	281,528	(3, 569, 719)	11,696,454

The accompanying condensed notes form part of these financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 31 DECEMBER 2013

	Note	31 December 2013	31 December 2012
Cash Flows from Operating Activities		\$	\$
Payments to suppliers and employees Sublease income		(296, 122) 30,000	(598, 055)
Interest received		3,553	18,800
Net cash used in operating activities		(262,569)	(579, 255)
Cash Flows from Investing Activities
Payments for exploration and evaluation		(116, 056)	(1, 244, 842)
Net cash used in investing activities		(116, 056)	(1,244,842)
Cash Flows from Financing Activities Proceeds from issue of shares
Proceeds from issue of convertible note		240,000	1,753,082
Payments for share issue costs		(3, 152)	(130,956)
Net cash provided by financing activities		236,848	1,622,126
Net decrease in cash and cash equivalents held		(141, 777)	(201, 971)
Cash and cash equivalents at beginning of the
reporting period		350,281	897,520
Cash and cash equivalents at end of the reporting
period	5	208,504	695,549

The accompanying condensed notes form part of these financial statements

NOTE 1: REPORTING ENTITY

Riedel Resources Limited (the "Company") is a Company domiciled in Australia.

The address of the Company's registered office is Suite 1, 45 Ord Street, West Perth WA 6005. The half year consolidated financial statements of the Company as at and for the six months ended 31 December 2013 comprises the Company and its subsidiaries (together referred to as the "Group" or "consolidated entity" and individually as "Group entities") and the Group's interest in associates and jointly controlled entities.

The Group primarily is involved in mining and exploration activity.

The half year consolidated financial statements of the Company as at and for the half year ended 31 December 2013 are available upon request.

NOTE 2: BASIS OF PREPARATION

Statement of compliance a)

The half-year consolidated financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 'Interim Financial Reporting' as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'. The half-year report does not include notes of the type normally included in an annual financial report. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2013 and any public announcements made by the Company during the half-year period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

b) Basis of preparation

The half-year consolidated financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

The accounting policies and methods of computation adopted in the preparation of the half-year consolidated financial statements are consistent with those adopted and disclosed in the Group's 2013 annual financial report for the financial year ended 30 June 2013, except for the impact of the Standards and Interpretations described below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

c) Significant accounting judgments and key estimates

The preparation of the half year consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amount of assets and liabilities, income and expenses. Actual results may differ from these estimates.

In preparing these half year consolidated financial statements, significant judgment made by management in applying the Company's accounting policies and key sources of estimation were the same as those that were applied to the financial statements as at and for the year ended 30 June 2013.

NOTE 2: BASIS OF PREPARATION (CONT)

d) Going concern

The half year consolidated financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the normal course of business. The consolidated entity incurred a net loss after tax of \$4,664,877 for the period ended 31 December 2013 (31 December 2012: \$753,190).

The ability of the consolidated entity to continue to pay its debts as and when they are due is dependent upon the consolidated entity successfully raising additional share capital and ultimately developing one of its mineral properties.

The Directors believe it is appropriate to prepare these accounts on a going concern basis because:-

• the Directors have an appropriate plan to raise additional funds as and when it is required. In light of the consolidated entity's current exploration projects, the Directors believe that any additional capital required can be raised in the market; and
• the Directors have an appropriate plan to contain certain operating and exploration expenditure if appropriate funding is unavailable.

The accounts have been prepared on the basis that the consolidated entity can meet its commitments as and when they fall due and can therefore continue normal business activities, and the realisation of assets and liabilities in the ordinary course of business.

$e)$ Adoption of new and revised Accounting Standards

The consolidated entity has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current half-year. The consolidated entity has not early adopted any Accounting Standards or Interpretations.

The following Accounting Standards and Interpretations are most relevant to the consolidated entity:

AASB 10 Consolidated Financial Statements

The consolidated entity has applied AASB 10 from 1 January 2013, which has a new definition of 'control'. Control exists when the reporting entity is exposed, or has the rights, to variable returns (e.g. dividends, remuneration, returns that are not available to other interest holders including losses) from its involvement with another entity and has the ability to affect those returns through its 'power' over that other entity. A reporting entity has power when it has rights (e.g. voting rights, potential voting rights, rights to appoint key management, decision making rights, kick out rights) that give it the current ability to direct the activities that significantly affect the investee's returns (e.g. operating policies, capital decisions, appointment of key management). The consolidated entity not only has to consider its holdings and rights but also the holdings and rights of other shareholders in order to determine whether it has the necessary power for consolidation purposes.

AASB11 Joint Arrangements

The consolidated entity has applied AASB 11 from 1 January 2013. The standard defines which entities qualify as joint arrangements and removes the option to account for joint ventures using proportional consolidation. Joint ventures, where the parties to the agreement have the rights to the net assets will use equity accounting. Joint operations, where the parties to the agreements have the rights to the assets and obligations for the liabilities will account for the assets, liabilities, revenues and expenses separately, using proportionate consolidation.

NOTE 2: BASIS OF PREPARATION (CONT)

$e)$ Adoption of new and revised Accounting Standards (cont)

AASB 12 Disclosure of Interests in Other Entities

The consolidated entity has applied AASB 12 from 1 January 2013. The standard contains the entire disclosure requirement associated with other entities, being subsidiaries, associates and joint ventures. The disclosure requirements have been significantly enhanced when compared to the disclosures previously located in AASB 127 'Consolidated and Separate Financial Statements', AASB 128 Threstments in Associates', AASB 131 'Interests in Joint Ventures' and Interpretation 112 'Consolidation - Special Purpose Entities'.

AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13

The consolidated entity has applied AASB 13 and its consequential amendments from 1 January 2013. The standard does not prescribe when to use fair value. Instead it provides a single robust measurement framework, with clear measurement objectives, for measuring fair value using the 'exit price' and it provides guidance on measuring fair value when a market becomes less active. The 'highest and best use' approach would be used to measure assets whereas liabilities would be based on transfer value.

AASB 127 Separate Financial Statements (Revised)

AASB 128 Investments in Associates and Joint Ventures (Reissued)

The consolidated entity has applied AASB 127 and AASB 128 from 1 January 2013, which have been modified to remove specific guidance that is now contained in AASB 10, AASB 11 and AASB 12.

AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 Cycle

The consolidated entity has applied AASB 2012-5 from 1 January 2013. The amendments affect five Australian Accounting Standards as follows: Confirmation that repeat application of AASB 1 (IFRS 1) 'First-time Adoption of Australian Accounting Standards' is permitted; Clarification of borrowing cost exemption in AASB 1; Clarification of the comparative information requirements when an entity provides an optional third column or is required to present a third statement of financial position in accordance with AASB 101 'Presentation of Financial Statements'; Clarification that servicing of equipment is covered by AASB 116 'Property, Plant and Equipment', if such equipment is used for more than one period; clarification that the tax effect of distributions to holders of equity instruments and equity transaction costs in AASB 132 'Financial Instruments: Presentation' should be accounted for in accordance with AASB 112 'Income Taxes'; and clarification of the financial reporting requirements in AASB 134 Interim Financial Reporting' and the disclosure requirements of segment assets and liabilities.

Operating segments f)

From 1 July 2009, operating segments are identified and segment information disclosed on the basis of internal reports that are regularly provided to, or reviewed by, the consolidated entity's chief operating decision maker which, for the consolidated entity, is the Board of Directors. In this regard, such information is provided using different measures to those used in preparing the statement of profit or loss and other comprehensive income and statement of financial position. Reconciliations of such management information to the statutory information contained in the half year consolidated financial report have been included where applicable.

NOTE 3: OPERATING SEGMENTS

The consolidated entity has identified its operating segments based on the internal reports that are reviewed and used by the chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance.

Operating segments are identified by Management based on the mineral resource and exploration activities in Australia and Burkina Faso. Discrete financial information about each project is reported to the chief operating decision maker on a regular basis.

The reportable segments are based on aggregated operating segments determined by the similarity of the economic characteristics, the nature of the activities and the regulatory environment in which those segments operate.

31 December 2013	Australia S	Burkina Faso S	Unallocated S	Total S
Revenue from external sources			33,553	33,553
Net (profit)/loss before tax	1,831	4,365,192	297,853	4,664,877
Reportable segment assets	4,540,747	(22)	254,650	4,795,375
Reportable segment liabilities	32	3,041	388,810	391,883
31 December 2012	Australia \$	Burkina Faso \$	Unallocated S	Total S
Revenue from external sources Net (profit)/loss before tax	(96)	22,012	13,552 731,274	13,552 753,190
30 June 2013
Reportable segment assets	4,452,386	4,324,480	405,978	9,182,844
Reportable segment liabilities	1,359	2,048	192,416	195,823

NOTE 4: LOSS FROM ORDINARY ACTIVITIES	31 December 2013 \$	31 December 2012 \$
(a) Other revenue
Interest revenue	3,553	13,552
Other income	30,000
	33,553	13,552
(b) Expenses Administration expenses Depreciation and amortisation expense Employee benefits expense Exploration expenditure incurred Impairment of exploration expenditure Other expense	255,024 7,661 95,616 4,340,129 4,698,430 31 December 2013 \$	391,885 21,424 344,127 8,828 478 766,742 30 June 2013 \$
NOTE 5: CASH AND CASH EQUIVALENTS
Cash on hand	1,204	8,272
Cash at bank	207,300	342,009
	208,504	350,281
NOTE 6: TRADE AND OTHER RECEIVABLES
Prepayments		11,672
Trade receivables	8,159
GST (payable)/refundable		4,428
	8,159	16,100
NOTE 7: EXPLORATION AND EVALUATION
EXPENDITURE Exploration and evaluation expenditure reconciliation
Opening balance	8,770,570	10,020,122
Tenement and application fees - at cost
Exploration and development expenditure incurred	264,337	1,750,448
Disposal of tenements
Impairment	(4, 494, 427)	(3,000,000)
Closing balance	4,540,480	8,770,570

The value of the exploration expenditures is dependent upon:

• The continuance of rights to tenure of the area of interest;
• The results of future exploration; and $\bullet$
• The recoupment of costs through successful development and exploitation of the areas of $\bullet$ interest or alternatively by their sale

NOTE 8: ISSUED CAPITAL	31 December 2013 S	30 June 2013 \$
(a) Share Capital
Issued and paid up capital - consisting of ordinary shares	15,842,711	15,828,787
Less: Costs of issue	(748, 209)	(745, 057)
	15,094,502	15,083,730
(b) Movements in ordinary share capital	Number of shares	\$
Opening balance at 1 July 2013	107,489,109	15,083,730
Issue of shares on 17/10/2013	875,137	13,924
Less: capital issue costs		(3, 152)
Closing balance at 31 December 2013	108,364,246	15,094,502
Opening balance at 1 July 2012	79,913,464	13,193,436
Issue of shares on 10/08/2012	16,263,316	1,219,748
Issue of shares on 4/12/2012	7,111,107	533,333
Issue of shares on 7/01/2013	2,222,222	166,667
Issue of shares on 7/05/2013	1,712,333	102,740
Issue of shares on 27/06/2013	266,667	9,600
Less: capital issue costs		(141, 794)
Closing balance at 30 June 2013	107,489,109	15,083,730

NOTE 9: SHARE BASED PAYMENTS

On 14 July 2011, 8,000,000 performance rights were issued under the Company Performance Rights Plan to Jeffrey Moore (Managing Director) and Bruce Franzen (Director) as incentive to align the directors' interests with company objectives. The following issues of securities to related parties were approved by shareholders as follows:

Holder	Number of Performance Rights	Exercise Price
Jeffrey Moore	2,000,000	27 cents
	2,000,000	36 cents
	2,000,000	45 cents
Bruce Franzen	666,667	27 cents
	666,667	36 cents
	666,666	45 cents

The performance rights are exercisable at the conversion price determined at the grant date. The terms and conditions relating to these performance rights including the parameters used to value them are as follows: Performance

	ם כווטוווומווטכ
	Rights
Underlying security spot price	\$0.135
Exercise price	$$0.27 - $0.45$
Volatility	75%
Risk free rate	5.05%
Grant date	26/07/2011
Expiration date	25/07/2014
Expiration period (years)	3 yrs
Number of options	8,000,000
Valuation per option/performance rights	\$0.031-\$0.047
Total performance rights valuation	\$309,333

The total value of the performance rights of \$309,333 are expensed proportionately until 25 July 2014, being the vesting date. The total amount being expensed for the period ended 31 December 2013 is \$51,979 (31 December 2012: \$51,979).

NOTE 10: RELATED PARTY TRANSACTIONS

Other than as disclosed below, arrangements with related parties continue to be in place. For details on these arrangements, please refer to the 2013 Annual Report.

(a) Transactions with key management personnel

Key management personnel continue to receive remuneration in the form of short term benefits and post employment benefits.

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated

NOTE 11: EVENTS SUBSEQUENT TO REPORTING DATE

There are no matters or circumstances that have arisen since the end of the financial period that have significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity, in future years.

NOTE 12: CONTINGENT ASSETS AND LIABILITIES

The Company is not aware of any contingent assets or liabilities.

DIRECTORS' DECLARATION

The directors of the Company declare that:

• $1.$ The financial statements and notes, of the consolidated entity are in accordance with the Corporations Act 2001 including:
• complying with Australian Accounting Standard AASB 134: Interim Financial Reporting and $(a)$ the Corporations Regulations 2001; and
• giving a true and fair view of the consolidated entity's financial position as at 31 December $(b)$ 2013 and of its performance for the half year ended on that date.
• $\overline{2}$ . In the directors' opinion there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Jeffrey Moore Managing Director

Date: 5 March 2014

INDEPENDENT AUDITOR'S REVIEW REPORT

TO THE MEMBERS OF

RIEDEL RESOURCES LIMITED

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Riedel Resources Limited (the Company) which comprises the condensed consolidated statement of financial position as at 31 December 2013, the condensed statement of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the half-year ended on that date, condensed 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 31 December 2013, or during the half year.

Directors' Responsibility for the Half-Year Financial Report

The directors of the Company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with the Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine is necessary to enable the preparation of the halfyear financial report that is free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity's financial position as at 31 December 2013 and its performance for the half year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporation Regulations 2001. As the auditor the Company, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. In accordance with the Corporations Act 2001, we have given the directors' of the Company a written Auditor's Independence Declaration.

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Conclusion

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

• (a) giving a true and fair view of the consolidated entity's financial position as at 31 December 2013 and of its performance for the half-year ended on that date; and
• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

Material Uncertainty Regarding Continuation as a Going Concern

Without qualifying our conclusion, we draw attention to Note 2(d) in the financial report which states that the consolidated entity incurred a net loss of \$4,664,877 during the half year ended 31 December 2013 (31 December 2012: \$753,190) and had negative operating cash flow of \$262,569 (31 December 2012: \$579,255). These conditions, along with other matters as set forth in Note 2(d), indicate the existence of a material uncertainty which may cast significant doubt about the consolidated entity's ability to continue as a going concern and therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business, and at the amounts stated in the financial report.

PKF MACK & CO

SHANE CROSS PARTNER

5 MARCH 2014 WEST PERTH, WESTERN AUSTRALIA