RTG Mining Inc. — Interim / Quarterly Report 2016

Nov 14, 2016

Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2016

RTG MINING INC. NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

The interim financial report for RTG Mining Inc. ("RTG" or the "Company") is a general purpose condensed financial report which has been prepared in accordance with the requirements of International Accounting Standard 34 ("IAS 34") as issued by the International Accounting Standards Board. The consolidated financial statements have also been prepared on a historical cost basis and are presented in United States Dollars (US$). These financial statements are the responsibility of management and have not been reviewed by the auditors. The most significant accounting principles have been set out in the audited financial statements and Annual Information Form dated 30 March 2016 for the period ended 31 December 2015 and the related notes thereto. A precise determination of many assets and liabilities is dependent on future events. Therefore, estimates and approximations have been made using careful judgment. Recognising that the Company is responsible for both the integrity and objectivity of the financial statements, management is satisfied that these financial statements have been fairly presented.

For further information please contact:

Nicholas Day Chief Financial Officer and Company Secretary

Telephone: +61 8 6489 2900 Fax: +61 8 6489 2920

RTG MINING INC. CORPORATE DIRECTORY

DIRECTORS:

Michael J Carrick Justine A Magee Robert N Scott David A T Cruse Phillip C Lockyer

SECRETARY:

Nicholas F Day

REGISTERED OFFICE:

Sea Meadow House Blackburne Highway, (PO Box 116) Road Town Tortola VG1110 British Virgin Islands

PRINCIPAL OFFICE:

Level 2 338 Barker Road Subiaco WA 6008

TELEPHONE: +61 8 6489 2900 FACSIMILE: +61 8 6489 2920

BANKERS: Westpac Banking Corporation 130 Rokeby Road Subiaco WA 6008

AUDITORS:

BDO Audit (WA) Pty Ltd 38 Station Street Subiaco WA 6008

STOCK EXCHANGE:

Australian Securities Exchange (ASX) Exchange Code: RTG – CHESS Depository Interests ("CDIs")

Toronto Stock Exchange (TSX) Exchange Code: RTG – Fully paid ordinary shares

SHARE REGISTER:

Australian Register Computershare Investor Services Pty Limited Level 11 172 St Georges Terrace Perth WA 6000

Telephone: + 61 8 9323 2000 Facsimile: + 61 8 9323 2033

Canadian Register Computershare Investor Services Inc. 100 University Ave, 11th Floor Toronto Ontario M5J2Y1 Canada

Telephone: +1 416 263 9449 Facsimile: +1 416 981 9800

LAWYERS

Corrs Chambers Westgarth Level 15 Woodside Plaza 240 St Georges Terrace Perth WA 6000

Blakes, Cassels & Graydon Suite 2600 3 Bentall Centre 59 Burrard Street Vancouver, B.C. Canada V7X 1L3

K & L Gates Level 32 44 St Georges Terrace Perth WA 6000

WEBSITE

www.rtgmining.com

RTG MINING INC. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

UNAUDITED - PREPARED BY MANAGEMENT

		Consolidated
		Three months ended30 Sep2016	30 Sep2015	30 Sep2016	Nine months ended30 Sep2015
Continuing operations	Notes	US$	US$	US$	US$
Other income	3	210,262	404	246,744	1,644
Exploration and evaluation expenditure	4(a)	(83,832)	(103,956)	(405,133)	(243,745)
Business development expenses	4(b)	(298,573)	(216,976)	(787,142)	(893,866)
Foreign exchange gains / (losses)		155,818	(197,550)	129,267	(36,415)
Administrative expenses	4(c)	(871,782)	(566,949)	(2,379,802)	(1,682,449)
Share of associate loss		(297,616)	(610,151)	(831,640)	(1,682,530)
Gain on sale of subsidiary		699,843	-	699,843	-
Impairment expense	4(d)	-	-	-	(3,172,081)
Loss from continuing operations		(485,880)	(1,695,178)	(3,327,863)	(7,709,442)
Income tax benefit		-	-	-	-
Loss for the period		(485,880)	(1,695,178)	(3,327,863)	(7,709,442)
Other comprehensive income for the periodExchange differences on translation of
foreign operations		174,091	140,661	194,085	187,178
Net changes in fair value of financial assets		170,921	-	170,921	-
Total comprehensive loss for the period		(140,868)	(1,554,517)	(2,962,857)	(7,522,264)
Earnings per share for loss attributable to the ordinary equity holders of the company
Basic loss per share (cents)		(0.31)	(1.31)	(2.09)	(5.97)

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Diluted loss per share (cents) (0.31) (1.31) (2.09) (5.97)

RTG MINING INC. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2016

UNAUDITED - PREPARED BY MANAGEMENT

		30 Sep 2016	31 Dec 2015
	Notes	US$	US$
ASSETS
Current Assets
Cash and cash equivalents	5	13,694,804	4,561,717
Trade and other receivables		1,091,486	378,679
Prepayments		54,148	42,138
Total Current Assets		14,840,438	4,982,534
Non-Current Assets
Trade and other receivables		2,000,000	-
Property, plant and equipment		184,648	202,611
Investment in associates	6	79,963,569	80,650,232
Available for sale financial assets		1,670,921	-
Loans to associates	9	9,951,666	7,622,597
Total Non-Current Assets		93,770,804	88,475,440
TOTAL ASSETS		108,611,242	93,457,974
LIABILITIES
Current Liabilities
Trade and other payables		350,864	252,537
Provisions		190,962	142,169
Total Current Liabilities		541,826	394,706
TOTAL LIABILITIES		541,826	394,706
NET ASSETS		108,069,416	93,063,268
SHAREHOLDER'S EQUITY
Issued capital	7(a)	138,377,710	124,708,862
Reserves	7(b)	8,110,734	3,445,571
Accumulated losses		(38,419,028)	(35,091,165)
TOTAL SHAREHOLDER'S EQUITY		108,069,416	93,063,268

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

RTG MINING INC. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

SeNinehsded30bettemmonenpr2016	Issdueitalcap	Acisitioqunreserve	Astseluatiorevanreserve	Shabadresetpaymenreserve	Foigren currencytralationsnreserve	Aclatedcumulosses	Total
	$US	$US	$US	$US	$US	$US	$US
Balan1Ja2015tceanuary	124,708,862	(4,300,157)	-	7,601,285	144,443	(35,091,165)	93,063,268
Oheheivelostr comprenss
foLotheiodssrperfoNet chaintheilable-ngeavar	-	4,300,157	-	-	194,085	()3,327,863	1,166,379
lefinaial atssancsse	-	-	10,9217	-	-	-	10,9217
Tol cheiveinc/taomprensome(los)foheiodtsrper	-	4,300,157	170,921	-	194,085	(3,327,863)	1,337,300
Shaissreue	193904,55,	-	-	-	-	-	193904,55,
Shaisstsreuecos	(1,286,542)	-	-	-	-	-	(1,286,542)
A30Sebe2016ttepmr	138,377,710	-	170,921	7,601,285	338,528	(38,419,028)	108,069,416
NinehsdedSebet30temmonenpr2015	Issdueitalcap	Acisitioqunreserve	Astseluatiorevanreserve	Shabadresetpaymenreserve	Foigren currencytralationsnreserve	Aclatedcumulosses	Total
	$US	$US	$US	$US	$US	$US	$US
Balan1Ja2014tceanuary	113,900,141	(4,300,1)57	-	601,287,5	(101,433)	(283,389)5,5	91,246,447
Oheheivelostr comprenss
Lofotheiodssrper	-	-	-	-	187,178	(7,709,442)	(7,522,264)
Total cheivelosfotheomprenssriodper	-	-	-	-	187,178	(7,709,442)	(7,522,264)
Shaissreue	11,762,803	-	-	-	-	-	11,762,803
Shaisstsreuecos	(94,082)5	-	-	-	-	-	(94,082)5
At30Setebe2015pmr	124,708,862	(4,300,157)	-	7,601,285	85,745	(33,562,831)	94,532,904

UNAUDITED - PREPARED BY MANAGEMENT

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

RTG MINING INC. CONSOLIDATED STATEMENT OF CASH FLOWS

UNAUDITED - PREPARED BY MANAGEMENT

			Three months ended	Nine months ended
	Notes	30 Sep 2016US$	30 Sep 2015US$	US$	30 Sep 2016 30 Sep 2015US$
Cash flows from operating activities
Payments to suppliers and employees		(1,352,163)	(784,723)	(3,116,820)	(2,442,356)
Payments for exploration and evaluation		(83,832)	(103,956)	(405,133)	(243,745)
Other receipts		207,640	-	241,150	-
Interest received		2,622	404	5,595	1,646
Net cash outflow from operatingactivities		(1,255,733)	(888,275)	(3,275,208)	(2,684,455)
Cash flows from investing activities
Payments for property, plant & equipment		(269)	-	(2,433)	-
Loans to associated entities		(1,324,349)	(1,025,380)	(3,079,070)	(2,879,260)
Proceeds from sale of subsidiary		1,450,000	-	1,450,000	-
Net cash inflow / (outflow) from investingactivities		125,382	(1,025,380)	(1,631,503)	(1,159,756)
Cash flows from financing activities
Proceeds from issue of shares		14,955,390	-	14,955,390	11,762,802
Capital raising costs		(1,286,542)	-	(1,286,542)	(954,081)
Proceeds from exercise of options		-	-	-	-
Net cash inflow from financing activities		13,668,848	-	13,668,848	10,808,721
Net increase / (decrease) in cash and cashequivalents		12,568,497	(1,913,655)	8,762,137	5,245,006
Cash and cash equivalents at beginning of theperiod		907,910	9,505,398	4,561,717	2,394,974
Reclassification cash to receivableEffects of exchange rate fluctuations on the		-	-	136,614	-
balances of cash held in foreign currencies		218,397	(274,999)	234,336	(323,236)
Cash and cash equivalents at end ofthe financial period	5	13,694,804	7,316,744	13,694,804	7,316,744

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

UNAUDITED - PREPARED BY MANAGEMENT

1. CORPORATE INFORMATION

The interim financial report of RTG Mining Inc. ("the Company", "RTG", "the Group" or "the Entity") is presented as at 30 September 2016 and for the period 1 January 2016 to 30 September 2016.

RTG was incorporated on 27 December 2012, and is domiciled in the British Virgin Islands. The Company's registered address is Sea Meadow House, Blackburne Highway. (PO Box 116) Road Town, Tortola, British Virgin Islands. Its shares are publicly traded on both the Australian Stock Exchange ("ASX") and the Toronto Stock Exchange ("TSX").

Highlights for the three months to September 30, 2016 included:

• The completion of a private placement to raise circa A$20M before costs which will enable a more aggressive focus on exploration programs.
• The completion of the sale of the Company's interest in the Segilola Gold Project for US$8.5m.
• The receipt of A$274,000 during the quarter as part the Company's Research and Development tax claim from the Australian government. The claims received to date are worth A$319,000.

The nine months to September 2016 included finalising 18 months of detailed work with the Mines and Geosciences Bureau ("MGB") and Department of Environment and Natural Resources ("DENR") resulting in the issue of both the Environmental Compliance Certificate ("ECC") for the Mabilo Project, in the Philippines, together with a renewal of the Exploration Permit, EP-014-2013-V ("Exploration Permit" or "EP").

The Company released its NI 43-101 Technical Report on the Mabilo Project during the nine months following on from the announcement of the Feasibility Study ("FS") on 18 March 2016 on the TSX1. The Mabilo Project is both high grade and low cost underpinning the robust economics presented in the FS including a 33% IRR after tax (43.6% with only a 10% lift in commodity prices) and an equivalent operating cost of US$0.80/lb copper equivalent or US$425/oz gold equivalent for concentrate production at a throughput rate of 1.35mtpa.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Accounting

The interim financial report is a general purpose condensed financial report which has been prepared in accordance with the requirements of International Accounting Standard 34 ("IAS 34") as issued by the International Accounting Standards Board. The consolidated financial statements have also been prepared on a historical cost basis and are presented in United States Dollars (US$).

(b) Significant accounting policies

The interim consolidated financial statements have been prepared using the same accounting policies as used in the financial statements for the period ended 31 December 2015 contained in the audited financial statements for RTG dated 30 March 2016.

	3 monthsended30 Sep 2016	3 monthsended30 Sep 2015	9 monthsended30 Sep 2016	9 monthsended30 Sep 2015
3.OTHER INCOME	US$	US$	US$	US$
Finance income	2,622	404	5,594	1,644
Research and development tax credit received	207,640	-	241,150	-
	210,262	404	246,744	1,644

4. EXPENSES

	3 monthsended	3 monthsended	9 monthsended	9 monthsended
	30 Sep 2016	30 Sep 2015	30 Sep 2016	30 Sep 2015
(a) Exploration & evaluation	US$	US$	US$	US$
Consultants fees	3	7,537	60,757	8,547
Employee benefits	47,384	41,529	130,462	130,001
Travel expenses	36,445	54,890	206,222	105,197
Other	-	-	7,692	-
	83,832	103,956	405,133	243,745
(b) Business development	US$	US$	US$	US$
Travel	121,939	63,132	279,029	451,766
Employee fees	108,460	101,503	302,084	318,573
Other	68,174	52,341	206,029	123,527
	298,573	216,976	787,142	893,866
(c) Administrative expenses	US$	US$	US$	US$
Audit & accounting fees	62,057	(11,889)	195,847	113,419
Employee and directors fees	308,700	277,372	957,655	807,874
Office rental	23,526	42,482	108,714	135,587
Legal fees	251,780	126,244	533,940	282,773
Listing and shareholder reporting costs	56,128	24,046	145,451	165,653
Consultants	77,462	25,466	253,476	50,466
Computer support	6,549	12,866	27,574	30,078

DepreciationInsuranceOther	6,59515,21563,770	6,767-63,595	20,39625,869110,880	21,490-75,109
	871,782	566,949	2,379,802	1,682,449
(d) Impairment expense	US$	US$	US$	US$
Available for sale financial asset	-	-	-	(1,841,854)
Derivative financial asset	-	-	-	(1,330,228)
	-	-	-	(3,172,082)

5. CASH AND CASH EQUIVALENTS

30 Sep 2016US$	31 Dec 2015US$
13,694,804	4,561,717
13,694,804	4,561,717

Cash at bank earns interest at floating rates based on daily bank deposit rates.

6. INVESTMENT IN ASSOCIATES

	30 Sep 2016US$	31 Dec 2015US$
Opening balance	80,650,232	83,197,341
Share of associates net loss	(831,640)	(2,918,461)
Share of foreign currency translation reserve	144,977	371,352
	79,963,569	80,650,232

7. ISSUED CAPITAL AND RESERVES

	30 Sep 2016Number	31 Dec 2015Number
(a) Issued and paid up capital:
Issued and fully paid shares	167,585,577	134,252,237

Movements in contributed equity during the past nine months were as follows:

Ordinary Shares	Number	US$
Opening balance at 1 January 2016	134,252,237	124,708,862
Shares issued under capital raising	33,333,340	14,955,389
Capital raising costs	-	(1,286,541)
Total shares on issue at 30 September 2016	167,585,577	138,377,710
(b) Reserves	30 Sep 2016US$	31 Dec 2015US$
Acquisition reserve	170,921	(4,300,157)
Share based payment reserve	7,601,285	7,601,285
Foreign currency translation reserve	338,528	144,443
	8,110,734	3,445,571

(c) Options

Movements in the number of listed options during the nine month period are as follows:

Number	US$
8,784,687	4,462,085
-	-
-	-
8,784,687	4,462,085

The options on issue were valued using the Black and Scholes method with the following assumptions:

Number of options	8,784,854
Grant date share price	C$1.10
Exercise price	C$1.50
Expected volatility	90%
Option life	3 years
Dividend yield	0.00%
Interest rate	1.2%

8. DIVIDENDS

No dividends have been paid or provided for during the period.

9. LOANS TO ASSOCIATES

On 4 June 2014, RTG completed the implementation of the schemes of arrangement (the "Schemes") to acquire the outstanding securities of Sierra. Pursuant to the Schemes, RTG has acquired a 40% interest in each of Mt Labo Exploration & Development Corporation ("Mt Labo"), St Ignatius Exploration and Mineral Resource Corporation ("St Ignatius"), Bunawan Mining Corporation ("Bunawan") and Oz Metals Exploration and Development Corporation("Oz Metals"), collectively known as the "Associates".

The loan balance for the period to 30 September 2016 was $9.952M, and loan movements throughout the half year have funded the Company's share of costs associated with the following:

• o completion of the Feasibility Study for the Mabilo Project;
• o completion of the NI43-101 Technical Report on the Mabilo Project;
• o conclusion of 18 months of detailed work during the half year, with the issue of both the ECC, together with a renewal of the EP.

	30 Sep 2016US$	31 Dec 2015US$
Loans to associates	9,951,666	7,622,597
	9,951,666	7,622,597

These transactions were undertaken on commercial terms and conditions, except that:

• I. there is no fixed repayment; and
• II. no interest payable on the loans at present.

10. FINANCIAL INSTRUMENTS - FAIR VALUE MEASUREMENT

The Group measures the following assets at fair value on a recurring basis:

• Available-for-sale financial assets
• Derivative financial assets

Fair value hierarchy

IFRS 13 requires disclosures of fair value measurements by level of the following fair value measurement hierarchy.

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 – inputs for the asset or liability that are not based on observable market data (unobserved inputs).

Recognised fair value measurements

The following table presents the Group's assets measured at fair value at 30 September 2016 and 31 December 2015.

At 30 September 2016

	Level 1US$	Level 2US$	Level 3US$	TotalUS$
Available-for-sale financial asset	1,670,921	-	-	-
Derivative financial asset	-	-	-	-
Total financial assets	1,670,921	-	-	-
At 31 December 2015
	Level 1US$	Level 2US$	Level 3US$	TotalUS$
Available for sale financial asset	-	-	-	-
Derivative financial asset	-	-	-	-
Total financial assets	-	-	-	-

Valuation methods and assumptions

Valuation techniques used to derive level 2 and level 3 fair values

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all the specific inputs required to fair value an instrument are observable, the instrument is classified as level 2. If one or more of the significant inputs is not based on market observable data, the instrument is classified as level 3.

The following table presents the changes in level 3 items for the period ended 30 September 2016 and 31 December 2015.

	Available for salefinancial assetsUS$	Derivative financialassetUS$	TotalUS$
Opening balance at 1 January
2016	-	-	-
Additions	1,500,000	-	1,500,000
Movement in fair value	170,921	-	170,921
Total financial assets	1,670,921	-	1,670,921
Impairment	-	-	-
At 30 September 2016	1,670,921	-	1,670,921
	Available for sale	Derivative financial
	financial assets	asset	Total
	US$	US$	US$
Opening balance at 1 January
2015	1,841,854	1,330,228	3,172,082
Movement in fair value	-	-	-
Total financial assets	1,841,854	1,330,228	3,172,082
Impairment*	(1,841,854)	(1,330,228)	(3,172,082)
At 31 December 2015	-	-	-

* During the previous period, the Company reviewed its investment and convertible note in Elephant Copper. The Company has adopted a conservative approach and on the recommendation of the Audit Committee, has decided to impair these assets to nil. The decision was based on a number of factors, including but not limited to, the fall in current market conditions and a lower copper price.

Fair value of other financial instruments not measured at fair value

The carrying amounts of trade receivables and payables are assumed to approximate their fair values due to their short term nature. The loans to associates are currently not carried at fair value, however any potential differences between the carrying value and fair value would be considered immaterial.

11. SEGMENT INFORMATION

The Company's operations are segmented on a regional basis and are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker who is responsible for allocating resources and assessing performance of the operating segments has been defined as the Chief Executive Officer.

The Company operates in a single segment, being mineral exploration and development with its exploration and evaluation held in the Philippines.

Nine months to 30 September 2016
	Philippines	Australia	Other	Consolidated
Results	2016	2016	2016	Total
				2016
	US$	US$	US$	US$
Segment profit/(loss) before
tax	(831,640)	(10,823,356)	8,327,133	(3,327,863)
Other income	-	246,744	-	246,744
Administrative expenses	-	(2,315,561)	(64,241)	(2,379,803)
Foreign exchange	-	(3,945,257)	4,074,524	129,267
Share of associate profit/(loss)	(831,640)	-	-	(831,640)
Other expenses	-	(4,809,282)	4,316,850	(492,432)
Segment profit/(loss) beforeincome tax as per statement
of comprehensive income				(3,327,863)

	Nine months to 30 September 2015

Results	Philippines2015	Australia2015	Other2015	ConsolidatedTotal2015
	US$	US$	US$	US$
Segment profit/(loss) before
tax	(1,682,530)	(2,815,242)	(3,211,671)	(7,709,443)
Other income	-	1,646	-	1,646
Administrative expenses	-	(1,645,203)	(37,246)	(1,682,449)
Foreign exchange	-	(34,072)	(2,343)	(36,415)
Share of associate profit/(loss)	(1,682,530)	-	-	(1,682,530)
Impairment available for sale
financial assets	-	-	(1,841,854)	(1,841,854)
Impairment of derivative
financial assets	-	-	(1,330,228)	(1,330,228)
Other expenses	(243,745)	(893,868)	-	(1,137,613)
Segment profit/(loss) beforeincome tax as per statement
of comprehensive income				(7,709,443)

The following are the geographical locations of the Company's assets:

30 Sep 2016	31 Dec 2015
	US$
89,915,236	88,272,829
15,020,949	5,170,008
3,675,057	15,137
108,611,242	93,457,974
	US$

12. COMMITMENT AND CONTINGENCIES

	30 Sep 2016US$	31 Dec 2015US$
Commitments (1)
Not longer than 1 year	134,718	103,275
Longer than 1 year and not longer than 5 years	220,501	-
	355,219	103,275

(1) The office lease lapsed on June 30, 2016 and an option to extend was negotiated and executed on July 20, 2016 for a (3) year term from July 1, 2016 to June 30, 2019, at the reduced rental of $120,000 per annum with a fixed 4% increment going forward on the review dates: July 1, 2017 and July 1, 2018.

Contingent Liabilities

At 30 September 2016 the Company had no contingent liabilities. (31 December 2015: nil).

13. RELATED PARTY TRANSACTIONS

(a) Controlling entity

The ultimate controlling entity in the wholly owned group is RTG Mining Inc.

(b) Other transactions with related parties

Transactions with related parties consist of companies with directors and officers in common and companies owned in whole or in part by executive officers and directors as follows for the three and nine months ended September 30, 2016:

Coverley Management Services Pty Ltd Consulting as Director

Name Nature of transactions

The Company paid the following fees in the normal course of operation in connection with companies owned by directors.

	Three months endedSeptember 30,		Nine months endedSeptember 30,
	2016$US	2015$US	2015$US	2015$US
Directors fees	12,623	11,461	38,601	41,241
Total	12,623	11,461	38,601	41,241

During the nine months ended September 30, 2016, the Company entered into transactions with related parties in the wholly-owned group:

• Loans of $1,430,529 were advanced to parent inter-company accounts; and
• Loans of $2,329,070 were advanced to Associates, $1,762,277 for costs relating to the Mt. Labo Joint Venture, $554,468 to Bunawan Mining Corporation for the Bunawan Project and $12,325 to Oz Metals Corporation for other Philippines Projects.

These transactions were undertaken on the following terms and conditions:

• there is no fixed repayment; and
• no interest is payable on the loans at present.

14. SUBSEQUENT EVENTS

Exploration License (EP-000033-14-XIII) has been renewed for the Bunawan Project in the Philippines for a further 2 years.

Other than above, no other significant events have occurred subsequent to reporting date that would have a material impact on the consolidated financial statements.