STREAMPLAY STUDIO LIMITED — Annual Report 2017

Oct 23, 2017

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ABN: 31 004 766 376

ANNUAL REPORT 2017

CORPORATE DIRECTORY

DIRECTORS Michael Rosenstreich –Executive Chairman and Managing Director Phil Re – Non‐Executive Director John Kenny – Non‐Executive Director

COMPANY SECRETARY Rowan Caren

REGISTERED OFFICE Suite 1, 58 Southside Drive Hillarys WA 6025 Australia POSTAL ADDRESS PO Box 2277 Marmion WA 6020 Australia TELEPHONE +61 8 9246 4483

EMAIL info@arrowheadresources.com.au WEBSITE www.arrowheadresources.com.au AUDITORS HLB Mann Judd Level 4 130 Stirling Street Perth WA 6000 Australia SOLICITORS Steinepreis Paganin Level 4, The Read Buildings 16 Milligan Street Perth WA 6000 Australia SHARE REGISTRY Automic Registry Services Pty Ltd PO Box 7059 Level 2 CLOISTERS SQUARE WA 6850 267 St Georges Terrace Perth WA 6000 Australia www.automic.com.au T: 1300 288 664

AUSTRALIAN STOCK EXCHANGE The Company's securities are quoted on the official list of the ASX Ltd (ASX), the home exchange being: The ASX (Perth) Ltd Level 40, Central Park 152‐158 St Georges Terrace, Perth WA 6000 ASX CODE AR1 FRANKFURT STOCK EXCHANGE The Company's securities are quoted on the Frankfurt Stock Exchange (DEUTSCHE BÖRSE) Börsenplatz 4 60313 Frankfurt / Main Germany FSE CODE GIX

Arrowhead Resources Limited Annual Report 2017

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CONTENTS

CONTENTS
Corporate Directory	2
Chairman’s Report	4
Review of Operations	5
Financial Statements	7
Directors’ Report	9
Auditor’s Independence Declaration	18
Consolidated Statement of Profit or Loss and Other Comprehensive Income	19
Consolidated Statement of Financial Position	20
Consolidated Statement of Cash Flows	21
Consolidated Statement of Changes in Equity	22
Notes to the Financial Statements	23
Directors’ Declaration	49
Independent Auditor’s Report	50
ASX Additional Information	53
Corporate Governance Statement	55

CHAIRMAN’S LETTER

Dear Shareholder

I am pleased to present to you the Annual Report for the 2017 financial year on behalf of the Company. It has been a milestone year with the Company’s announcement in April, 2017 that it will be acquiring the ESports business, Gaming Battle Ground ( GBG ). This follows a long, systematic search for new and viable business opportunities in a range of industry sectors including mining, agri-business and the tech-sector.

Since the execution of a binding Sale and Purchase Agreement for the acquisition of 100% of GBG shares, Arrowhead’s management has been working closely with GBG executives to complete the transaction as quickly as possible whilst carefully navigating the regulatory requirements. I thank you for your patience as we seek to complete the acquisition and capital raising in November, 2017.

The GBG acquisition positions Arrowhead, to be renamed Emerge Gaming Ltd, in an exciting growth industry of ESports, with an established business model, ready for an aggressive roll-out phase. A new ASX code, EM1, has been reserved.

As this transaction was taking shape, the Board sought ways to acknowledge the losses of longstanding shareholders who saw the Company’s flagship asset, the Abu Dabbab Tantalum-Tin-Feldspar project expropriated in March 2015 by its partner, the Government of Egypt, on the cusp of commencing development. To this end a spin-out of the Australian registered holding company, Tantalum International is proposed as part of the overall GBG transaction structure as outlined in the Prospectus lodged on 1 September, 2017. This has been initiated to benefit those longer-term shareholders if the Company wins a financial settlement through its legal claims against the Government of Egypt.

On behalf of the Arrowhead team we look forward to working with the GBG team to complete this transaction as expeditiously as possible. On behalf of the Board I thank you for your ongoing support and interest and I look forward to meeting with many of you at the forthcoming shareholder meeting.

Yours Sincerely

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Mike Rosenstreich Chairman

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REVIEW OF OPERATIONS 2017

The Directors of Arrowhead Resources Limited (Arrowhead or the Company), provide the following review of operations for the financial year ending 30 June 2017.

1. Corporate Strategy

During the year the Board has focused on seeking a new project or business opportunity whilst establishing its case against the Government of Egypt for the expropriation of the Company’s 50% share in the Abu Dabbab Tantalum-Tin-Feldspar project and other assets in early 2015.

1.1 Corporate Affairs

The Company has operated on a minimal expenditure budget whilst management pursued new business and investment opportunities and also sought to build up its case against the Government of Egypt and solicit litigation funding support. The Board is pleased to outline below significant progress on both these objectives.

In June, Mr Jason Peterson resigned a non-executive director and Mr Philip Re was appointed as a replacement.

The Company completed a placement of 22,500,000 shares (on a pre-consolidation basis) to raise $250,000 in October 2017.

A consolidation (1.8:1) of the Company’s shares was completed on 19 October 2017. The adjusted share capital is 136, 593,577 shares.

1.2 Project Generation

Following the loss of its core project, the Abu Dabbab tantalum-tin-feldspar Project the Board recognised that the future of the Company could not be allowed to remain reliant on a legal process for compensation from a foreign government and that in order to restore shareholder value the company had to chart its own course through securing a new project or business opportunity.

On 22 June, 2017 the Company announced the execution of a binding agreement to acquire 100% of the issued capital of Gaming Battle Ground Pty Ltd (ACN 616 572 144) (“ GBG” ). GBG owns and operates an online gaming platform ( “Gaming Battle Ground” ) that facilitates the interaction of gamers around the world to compete against each other, and in tournaments, on some of the most popular international game titles, tapping directly into the large scale of the ESports market. The acquisition is conditional upon completion of due diligence, shareholder approvals and other approvals as detailed in the report to ASX on 22 June, 2017, which at the date of this report is well advanced, with shareholders overwhelmingly approving the transaction at a General Meeting on 9 October, 2017.

This is a complex, multifaceted transaction requiring significant independent advice on the detailed structuring as well as ongoing liaison with, and review by, ASX and ASIC. As at 20 October 2017, significant milestones for the transaction have been met and completion is forecast to occur on 29 November.

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1.3 Exploration

1.3.1 Abu Dabbab Tantalum-Tin-Feldspar Project (Egypt)

Tantalum International Ltd ( TIL ) is a 100% owned subsidiary of Arrowhead and holds all of the Company’s mining assets in Egypt. Arrowhead and its 100% owned subsidiary, ( TIL , intend to jointly prosecute claims against Egypt in proceedings which relate to the alleged expropriation (amongst other claims) of TIL’s 50% interest in the large scale Abu Dabbab Tantalum-Tin-Feldspar project (the Project ), located in southern Egypt, in early 2015. TIL’s interest in the Project (amongst other assets) are held via its 50% equity in Egyptian registered Tantalum Egypt JSC, the holding entity of the Project tenements.

The Funder is a specialist in financing the arbitration and litigation of international disputes. The conditional Arbitration Funding Agreement is subject to full due diligence by the Funder and its external counsel, which is due to be completed by the 15 November, 2017. Given the purpose of the conditional funding support and nature of the underlying legal process the key terms and conditions are “commercial in-confidence”. If the Conditional Arbitration Funding Agreement becomes binding, the arbitration process is successful, an award for compensation is made and the Company successfully recovers the proceeds of its award from Egypt, the Funder will recoup its expenses plus a risk fee which will comprise a proportion of any award.

There is no link between the conditional funding agreement and the acquisition of 100% of the issued capital of GBG; completion of which is subject to completion of a $5 million capital raising and obtaining all necessary regulatory approvals.

The acquisition of GBG remains management’s core focus and to avoid any distraction or incidental financial burden on the incoming management of the “new” company, Arrowhead has signed a management agreement with the directors of TIL ( TIL Directors ), Mr Michael Rosenstreich, Mr Ayman Ayyash and Mr Rowan Caren. The TIL Directors will assume all responsibility for the management and participation in the arbitration process and the regulatory maintenance of the Company without salary or fees but incentivised by a success fee payable from any award.

For clarity; Arrowhead is a joint claimant, but the action will be managed entirely by TIL with the majority of any award funds post the Funder’s payments planned to be distributed to TIL shareholders as outlined in a prospectus lodged with ASX on 1 September, 2017.

1.3.2 Other Exploration Interests

In 2012, Arrowhead executed a sale and purchase agreement with Stellar Resources Ltd (ASX: SRZ) whereby Stellar Resources Ltd acquired the Company’s 40% interest in the Heemskirk Tin Project for 43,528,743 shares in Stellar Resources Ltd and a royalty. The 43,528,743 shares in Stellar Resources Ltd were subsequently sold but the Company retains the Royalty. Under the Minerals Royalty Deed dated 30 January 2012, the royalty receivable by the Company will be calculated as follows:

Net Realised Price per tonne of tin Royalty Percentage

AUD

Less than $25,000 Nil $25,000 - $30,000 1% plus 0.0002% for every $1 the Net Realised Price is over $25,000 $30,000 or more 2%

With the Company’s proposed change in the nature of its business to eSports and noting the strong improvement in the international tin price to approximately US$20,500/tonne or A$26,000/tonne as well as Stellar’s ongoing progress to develop the project, the Company plans to divest the Heemskirk royalty.

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Arrowhead Resources Limited

and its Controlled Entities ABN 31 004 766 376

Financial Report

30 June 2017

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DIRECTORS’ REPORT

Your Directors present their report with respect to the results of Arrowhead Resources Limited ("Arrowhead" or "the Company") and its controlled entities (”the Group”) for the year ended 30 June 2017 ("the Balance Date") and the state of affairs of the Company and the Group at Balance Date.

DIRECTORS

The names of the Directors in office at any time during or since the end of the year are as below. Directors were in office for this entire period unless otherwise stated.

Mr Michael Rosenstreich Mr John Kenny Mr Jason Peterson (resigned 21 June 2017) Mr Phil Re (appointed 21 June 2017)

Names, qualifications, experience and special responsibilities

Michael Rosenstreich – Chairman and Managing Director BSC (Hons), MEE, FAusIMM, MAICD

Mr Rosenstreich was appointed Managing Director on 24 March 2014 and Chairman on 24 April 2015.

Mr Rosenstreich has a technical background and has worked in corporate finance and management of listed companies over the past 30 years including:

• 13 years as an exploration and mine geologist in senior roles;

• 6 years as a resource financier with NM Rothschild & Sons;

• 2 years as a technical consultant with Snowden and independently; and

• 9 years through to 2013 as Managing Director of ASX listed Bass Metals from pre‐IPO stage through exploration success and culminating in over 5 years of base and precious metals production.

During the past three years Mr Rosenstreich has served as a Director of the following listed company: Hexagon Resources Limited – Appointed 17 March 2017

John Kenny – Director (Non‐executive) B Com (Hons), LLB

Mr Kenny was appointed Director on 2 September 1999.

Mr Kenny is a corporate and resources lawyer with a specialised interest in venture capital, initial public offerings and mergers and acquisitions. He has extensive experience in public equity fundraisings and the pricing of equity, debt and derivative securities.

During the past three years Mr Kenny has served as a Director of the following listed company: Winchester Energy Limited* – Appointed 17 March 2014.

Philip Re ‐ Director (Non‐executive) BBus, CA, CSA, MAICD

Mr Re was appointed Non‐Executive Director on 21 June 2017.

Mr Re is the managing director and founder of Regency Corporate, a chartered accountant and corporate advisory business. Mr Re has been a director of a number of publicly listed and unlisted companies and during that time, has been involved in property development and investment, technology, education, mining exploration and production, and renewable energy industry transactions. Mr Re has been directly involved in raising capital, mergers and acquisitions, initial public offerings and reverse takeovers for various ASX listed companies and unlisted property syndicates.

Mr Re is the Chairman and one of the founders of the charity organisation, The Better Life Foundation WA.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

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DIRECTORS’ REPORT

During the past three years Mr Re has served as a Director of the following listed companies: iCollege Limited * ‐ Appointed 1 May 2014

Ausnet Financial Services Limited * - Appointed 19 December 2016; and

Weststar Industrial Limited * - Appointed 28 March 2017.

Jason Peterson

BCom, GDip Fin

Mr Peterson was appointed Non‐Executive Director on 16 December 2015 and resigned 21 June 2017.

Mr Peterson has more than 20 years’ experience in the financial advisory sector, obtained working in both local and international stockbroking companies such as Patersons Securities Limited, Tolhurst Group, and Merrill Lynch. Mr Peterson specialises in corporate structuring, capital raisings, corporate and strategic advice to small and medium size companies and reverse takeovers.

Mr Peterson is a Senior Client Advisor, and a director and 30% shareholder of stock broking firm, CPS Capital Group Pty Ltd.

During the past three years Mr Paterson has served as a Director of the following listed companies: Lithex Resources Limited ‐ Appointed 5 December 2013, Resigned 1 December 2015; and Wolf Petroleum Ltd ‐ Appointed 3 January 2013, Resigned 18 May 2015.

Rowan St John Caren –Company Secretary BCom, CA

Mr Caren was appointed Company Secretary on 15 August 2006.

Mr Caren was employed by the chartered accountancy firm PricewaterhouseCoopers in Australia and overseas for six years and has been directly involved in the minerals exploration industry for a further 19 years. He also provides company secretarial and corporate advisory services to several exploration companies and is a member of Chartered Accountants Australia and New Zealand.

During the past three years Mr Caren has served as a Director of the following listed companies; Top End Minerals Limited * – appointed 19 June 2017.

• denotes current directorship

Interest in Shares and Options of the Company and related bodies corporate

As at the date of this report, the interest of the directors in the shares and options of Arrowhead Resources Limited were:

	Number of	Number of
	Ordinary	Options over
	Shares	Ordinary
		Shares
Mr M Rosenstreich	‐		‐
Mr J Kenny	23,013,272		‐
Mr P Re	‐		‐
Mr J Peterson	17,800,000		‐
Mr R Caren	775,330		‐

OPTIONS

At the date of this report, there were no options on issue.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

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DIRECTORS’ REPORT

MEETINGS OF DIRECTORS

During the financial year, 3 meetings of directors were held. Attendances by each director during the year were as follows:

	Directors'	Meetings
	Eligible to	Attended
	Attend
Mr M Rosenstreich	3	3
Mr J Kenny	3	3
Mr P Re	‐	‐
Mr J Peterson	3	3

PRINCIPAL ACTIVITIES

The principal activities of the entities within the Group during the year were exploration and development of commercially and economically viable mineral resources. There were no significant changes in the nature of the Group's principal activity during the year other than as noted below.

CONSOLIDATED RESULTS

The consolidated operating loss of the Group after providing for income tax amounted to $573,493 (2016: profit of $3,207,465).

Review of Operations

• The Group continued to evaluate project opportunities.

• As announced on 22 June 2017, the Company has entered into a binding share sale agreement (Agreement), pursuant to which the Company has agreed to acquire 100% of the issued capital of Gaming Battle Ground Pty Ltd (GBG) (Proposed Acquisition). The Proposed Acquisition is conditional on the Company obtaining all necessary regulatory and Shareholder approvals to effect the Proposed Acquisition and satisfying all other requirements of ASX for the reinstatement to official quotation of the Company’s Shares on the ASX including the raising of $5 million (among other things). GBG owns and operates an online gaming platform (“Gaming Battle Ground”) that facilitates the interaction of gamers around the world to compete against each other, and in tournaments, on some of the most popular international game titles, tapping directly into the large scale of the eSports market.

Financial Position

The net assets of the Group have decreased by $573,493 from $901,741 at 30 June 2016 to $328,248 at 30 June 2017. As at the Reporting Date the group had working capital of $308,877 (2016: $872,663).

DIVIDENDS

No dividends were declared or paid during the financial year.

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

There were no significant changes in the state of affairs of the Company occurred during the financial year.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years, except as follows;

ARROWHEAD RESOURCES LIMITED

AND CONTROLLED ENTITIES ABN 31 004 766 376

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DIRECTORS’ REPORT

• As announced on 22 June 2017, the Company has entered into a binding share sale agreement (Agreement), pursuant to which the Company has agreed to acquire 100% of the issued capital of Gaming Battle Ground Pty Ltd (GBG) (Proposed Acquisition). The Proposed Acquisition is conditional on the Company obtaining all necessary regulatory and Shareholder approvals to effect the Proposed Acquisition and satisfying all other requirements of ASX for the reinstatement to official quotation of the Company’s Shares on the ASX including the raising of $5 million (among other things). GBG owns and operates an online gaming platform (“Gaming Battle Ground”) that facilitates the interaction of gamers around the world to compete against each other, and in tournaments, on some of the most popular international game titles, tapping directly into the large scale of the eSports market.

FUTURE DEVELOPMENTS

It is unlikely that Arrowhead will regain access to the Abu Dabbab Project or its other interests and assets in Egypt. Arrowhead considers that it will likely need to seek recourse under Egyptian and/or international law (including making a significant claim for financial compensation for the damage it has suffered). Arrowhead will, through its legal counsel, exercise its rights and pursue its claims vigorously. Arrowhead is in advanced discussions with a litigation funder in relation to this matter. Prior to completion of the Proposed Acquisition, the Company proposes to distribute and transfer all of its interest in Tantalum International Pty Ltd (TIPL) to eligible Shareholders of the Company on a pro‐rata basis. It is proposed that TIPL would be an unlisted public company, run by the existing directors of the Company on a success fee basis, subject to approval by AR1 shareholders. This will ensure that Arrowhead shareholders, prior to completion of the Acquisition, retain the rights to the legal action in Egypt pertaining to the alleged expropriation of the Abu Dabbab tantalum‐tin‐feldspar project by the Egyptian Government in 2015.

As announced on 22 June 2017, the Company has entered into a binding share sale agreement (Agreement), pursuant to which the Company has agreed to acquire 100% of the issued capital of Gaming Battle Ground GBG owns and operates an online gaming platform (“Gaming Battle Ground”) that facilitates the interaction of gamers around the world to compete against each other, and in tournaments, on some of the most popular international game titles, tapping directly into the large scale of the eSports market.

The Company intends to change its name to Emerge Gaming Limited and to undertake a consolidation of capital on a 1.8:1 basis.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Group's operations are not currently subject to any significant environmental regulations. However, the board is committed to achieving a high standard of environmental performance, and regular monitoring of potential environmental exposures is undertaken by management. The board considers that the Group has adequate systems in place for the management of its environmental requirements and is not aware of any breach of those environmental requirements as they apply to the Group.

The Group is required to carry out its activities in accordance with the mining laws and regulations in the areas in which it undertakes its exploration activities.

INDEMNITY AND INSURANCE OF OFFICERS

During or since the end of the financial year the Company has given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay an insurance premium as follows:

• The Company has paid premiums to insure any director or officer of Arrowhead Resources Limited against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director or officer of the Company, other than conduct involving a wilful breach of duty in relation to the Company. The amount of the premium is $9,488 (2016: $8,130).

• The Company has entered into “Deeds of Indemnity, Access and Insurance” with directors and officers in which the Company agrees to indemnify the directors and officers in respect of certain liabilities incurred by the director or officer while acting in their capacity for the Company and to insure the director or officer against certain risks they are exposed to as a director or officer of the Company.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

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DIRECTORS’ REPORT

PROCEEDINGS ON BEHALF OF COMPANY

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

NON‐AUDIT SERVICES

No non‐audit services were provided by the Company’s auditor, HLB Mann Judd (“HLB”).

AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 for the year ended 30 June 2017 has been received and can be found on page 18 of the directors’ report.

REMUNERATION REPORT (Audited)

This report details the nature and amount of remuneration for each director of Arrowhead Resources Limited.

Remuneration Policy

The remuneration policy of Arrowhead Resources Limited has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long‐term incentives. The Board of Arrowhead Resources Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the Group, as well as create goal congruence between directors, executives and shareholders.

The Board's policy for determining the nature and amount of remuneration for board members and senior executives of the Group is as follows:

• The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, is developed and approved by the board after seeking professional advice from independent external consultants as required. In the years presented, no external consultants have been used.

• All executives receive a base salary or fee (which is based on factors such as length of service and experience).

• The board reviews executive packages annually by reference to the Group's performance, executive performance and comparable information from industry sectors.

The board policy is to remunerate non‐executive directors at market rates for time, commitment and responsibilities. The board determines payments to the non‐executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. In the current year, no advice was sought. The maximum aggregate amount of fees that can be paid to non‐executive directors is currently fixed at $250,000 with any change in this amount subject to approval by shareholders at the Annual General Meeting. Fees for non‐executive directors are not linked to the performance of the Group. However, to align directors’ interests with shareholder interests, the directors are encouraged to hold shares in the Company.

No relationship exists between the remuneration policy and the Company’s performance.

At the Company’s most recent Annual General Meeting, the remuneration report for the year ended 30 June 2016 was passed with a greater than 75% vote in favour.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

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DIRECTORS’ REPORT

Details of key management personnel

• M Rosenstreich ‐ Chairman and Managing Director J Kenny ‐ Non‐Executive Director P Re ‐ Non‐Executive Director (Appointed 21 June 2017) J Peterson ‐ Non‐Executive Director (Appointed 16 December 2015, resigned 21 June 2017) R Caren ‐ Company Secretary J Starink ‐ Executive Director (Resigned 31 July 2015)

Non‐Executive Director Remuneration

J Kenny ‐ Non‐Executive Director

• Director fees: $36,000 per annum.

• Details of remuneration entitlement on termination: Payment of fees up to the date of termination.

• Additional directors fee of $50,000 in relation to services provided related to GBG transaction to be satisfied by the issue of shares, subject to completion of the GBG transaction.

P Re – Non‐Executive Director

• Director fees: $36,000 per annum.

• Details of remuneration entitlement on termination: Payment of fees up to the date of termination.

J Peterson ‐ Non‐Executive Director – resigned 21 June 2017

• Corporate Advisory fees: $60,000 per annum.

• Details of remuneration entitlement on termination: Payment of fees until the expiry of the Corporate Advisory mandate in December 2017.

• Additional directors fee of $50,000 in relation to services provided related to the Proposed Acquisition to be satisfied by the issue of shares, subject to completion of the GBG transaction.

• Asset Introduction Fee equivalent to 5% of any asset introduced by CPS Capital Group. In relation to the Proposed Acquisition this will be satisfied by the issue of shares and options on a post‐consolidation basis, subject to shareholder approval.

Employment Contracts

M Rosenstreich – Managing Director

• Term of agreement: Until terminated in accordance with the agreement.

• Remuneration: $66,000 per annum. Additional fees of $48,000 were paid in respect of project evaluation, due diligence and corporate evaluation services.

• Period of notice for termination/resignation: One month’s written notice by the consultant. Nil notice by the Company, subject to no termination before completion or termination of the GBG transaction as the case maybe.

• Details of remuneration entitlement on termination: Payment of fees up to the date of termination or payment of three month’s fees in lieu of notice.

R Caren – Company Secretary

• Term of agreement: Until terminated in accordance with the agreement.

• Remuneration: $54,000 per annum. Additional fees of $44,000 were paid in respect of project evaluation, due diligence and corporate evaluation services. Additional fees of $5,000 were paid in respect of financial reports preparation.

• Period of notice for termination/resignation: One month’s written notice by the consultant. Nil notice by the Company, subject to no termination before completion or termination of the GBG transaction as the case maybe.

• Details of remuneration entitlement on termination: Payment of fees up to the date of termination or payment of three month’s fees in lieu of notice.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

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DIRECTORS’ REPORT

Remuneration of key management personnel

Table 1: Remuneration for the year ended 30 June 2017

Key Management Personnel ‐ 30 June 2017 Mr J Kenny Mr P Re1 Mr J Peterson2 Sub‐total Executive Directors Non‐Executive Directors	Short‐term Benefits Cash, salary and commissions Share‐based Payment Shares and Options Post‐ employment Benefits Total Remuneration consisting of shares and options for the year $ $ $ $ % 36,000 ‐ ‐ 36,000 0.00% ‐ ‐ 0.00% ‐ ‐ ‐ ‐ 0.00%
	36,000 ‐ ‐ 36,000
Mr M Rosenstreich	114,000 ‐ ‐ 114,000 0.00%
Sub‐total 114,000 ‐ ‐ 114,000 Other key management personnel	114,000 ‐ ‐ 114,000
Mr R Caren	103,000 ‐ ‐ 103,000 0.00%
Sub‐total Total	103,000 ‐ ‐ 103,000
	253,000 ‐ ‐ 253,000

1 Appointed 21 June 2017. 2 Resigned 21 June 2017.

Table 2: Remuneration for the year ended 30 June 2016

Key Management Personnel ‐ 30 June 2016 Mr J Kenny Mr J Peterson1 Sub‐total Executive Directors Mr M Rosenstreich Mr J Starink2 Sub‐total Other key management personnel Mr R Caren3 Sub‐total Total Non‐Executive Directors

Short‐term Benefits Cash, salary and commissions Share‐based Payment Shares and Options Post‐ employment Benefits Total Remuneration consisting of shares and options for the year $ $ $ $ % 34,667 ‐ ‐ 34,667 0.00% ‐ ‐ ‐ ‐ 0.00% 34,667 ‐ ‐ 34,667 101,200 ‐ ‐ 101,200 0.00% ‐ ‐ ‐ ‐ 0.00% 101,200 ‐ ‐ 101,200 71,000 ‐ ‐ 71,000 0.00% 71,000 ‐ ‐ 71,000 206,867 ‐ ‐ 206,867 fees of $42,000 paid to Mr Caren during the period he was a director of the Company from 1 July 2015 to 16

1. Appointed 16 December 2015 2. Resigned 31 July 2015 3. This amount includes consulting December 2015.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

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DIRECTORS’ REPORT

Compensation Options: Granted and vested during the year (consolidated)

There were no options granted to Directors or other Key Management Personnel during 2016 or 2017.

Table 3: Shares issued on exercise of compensation options (consolidated)

30 June 2017	Shares issued	Paid per share	Unpaid per share
	No.	$	$
Directors
Nil	‐	‐	‐
30 June 2016	Shares issued	Paid per share	Unpaid per share
	No.	$	$
Directors
Nil	‐	‐	‐

Share‐based payment arrangements in existence

There were no share‐based payment arrangements in existence in relation to directors and senior management during the financial year.

During the financial year:

• There were no grants of share‐based payment compensation to directors or senior management.

• No directors or senior management exercised options that were granted to them as part of their compensation.

Option holdings of key management personnel (consolidated)

• There are no options held in Arrowhead Resources Limited by key management personnel.

Table 4: Shareholdings of key management personnel (consolidated)

Shares held in Arrowhead Resources Limited (number) by key management personnel are:

Shareholdings of key management personnel (consolidated) Directors Mr M Rosenstreich Mr J Kenny Mr P Re Mr J Peterson Mr R Caren	Balance 1.7.2016 Net Change Other Balance 30.6.2017 Ord Ord Ord*
	‐ ‐ ‐ 23,013,272 ‐ 23,013,272 ‐ ‐ ‐ 17,800,000 ‐ 17,800,000 775,330 ‐ 775,330
	41,588,602 ‐ 41,588,602

• Net change refers to shares purchased or sold during the financial year. Additionally, it may include the balance of shares held by a director on the date that he ceases to be a director.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

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DIRECTORS’ REPORT

Related party transactions with key management personnel

Related party transactions with key management personnel, other than those already disclosed in this remuneration report, are as follows:

Underwriting fee, based on 6% of the amount raised, paid to CPS Capital Group‐ a company associated with Mr J Peterson Placement fee, based on 6% of the amount raised, paid to CPS Capital Group Corporate advisory fees paid or payable to CPS Capital Group Funds loaned to Arrowhead by Celtic Capital Pty Limited – a company associated with Mr J Peterson. The loan is unsecured and interest was payable at rates between 15% during the year. Interest paid or payable on $100,000 loan from Celtic Capital Pty Limited ‐ a company associated with Mr J Peterson. The loan was unsecured and interest was payable at rates between 15% during the period. Funds repaid to Arrowhead by Celtic Capital Pty Limited Interest paid on loans from Gandel Metals Pty Limited, a company associated with a former director Mr Ian Gandel. The loan was unsecured and interest was payable at rates between 4.83% and 5.33% during the period. Loan and other amounts payable converted into shares by Gandel Metals Pty Limited at an issue price of $0.01 (1 cent) per share, pursuant to shareholder approval. The balance of the amount payable ($3,495,390) was forgiven. Amounts payable converted into shares by Ventureworks JDK Pty Limited ‐ a company associated with Mr John Kenny ‐ at an issue price of $0.01 (1 cent) per share, pursuant to shareholder approval.The balance of the amount payable ($46,666) was forgiven. An amount in respect of the provision of office facilities was paid or payable to Dabinett Corporate Pty Limited – a company associated with Mr R Caren.

2017 2016 $ $ ‐ 85,707 ‐ 17,176 60,000 30,000 ‐ 100,000 ‐ 3,904 ‐ 100,000 ‐ 72,583 ‐ 180,000 ‐ 96,000 ‐ 2,700

[END OF REMUNERATION REPORT]

Signed in accordance with a resolution of the Board of Directors made pursuant to s.298(2) of the Corporations Act 2001 (Cth).

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MB ROSENSTREICH Managing Director

Dated this 1[st] day of August 2017.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

17

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AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the consolidated financial report of Arrowhead Resources Limited for the year ended 30 June 2017, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• b) any applicable code of professional conduct in relation to the audit.

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HLB Mann Judd M R Ohm Chartered Accountants Partner

Perth, Western Australia 1 August 2017

HLB Mann Judd (WA Partnership) ABN 22 193 232 714

Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 6849 | 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

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

18

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2017

Note Continuing Operations Finance revenue 3(a) Gain on disposal of property plant and equipment Other income 3(b) Total income ‐ continuing operations Administration expense Employee benefits expense 3(d) Foreign exchange gain/(losses) Project evaluation expense Depreciation and amortisation Finance costs Total expenses (Loss)/Profit before income tax from continuing operations Income tax expense 4 (Loss)/Profit after income tax for the year from continuing operations Discontinued Operations Gain/(loss) for the year from discontinued operations 23 (Loss)/Profit for the Year Other comprehensive income, net of income tax Exchange rate differences on translating foreign operations Total other comprehensive income Total comprehensive (loss)/profit for the year Profit/(loss) is attributable to: Members of the parent Non‐controlling interest Total comprehensive income/(loss) is attributable to: Members of the parent Non‐controlling interest From continuing and discontinued operations Basic earnings/(loss) per share (cents per share) 5 Diluted earnings/(loss) per share (cents per share) 5 From continuing operations Basic earnings/(loss) per share (cents per share) 5 Diluted earnings/(loss) per share (cents per share) 5 Earnings per share	2017 2016 $ $ 13,791 11,881 ‐ 13,324 ‐ 3,545,689
	13,791 3,570,894
	(208,491) (247,856) (221,228) (266,465) ‐ (1,501) (146,818) (37,572) (9,708) (16,674) (1,039) (77,677)
	(587,284) (647,745)
	(573,493) 2,923,149 ‐ ‐
	(573,493) 2,923,149 ‐ 284,316
	(573,493) 3,207,465
	‐ (290,496)
	‐ (290,496)
	(573,493) 2,916,969
	(573,493) 3,207,465 ‐ ‐
	(573,493) 3,207,465
	(573,493) 2,916,969 ‐ ‐
	(573,493) 2,916,969
	(0.26) 2.38 (0.26) 2.38
	(0.26) 2.17 (0.26) 2.17

The accompanying notes form an integral part of this Consolidated Statement of Profit or Loss and Other Comprehensive Income.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

19

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2017

Note Current Assets Cash and cash equivalents 6 Trade and other receivables 7 Other assets Total Current Assets Non‐Current Assets Property, plant and equipment 8 Total Non‐Current Assets Total Assets Current Liabilities Trade and other payables 9 Provisions 10 Total Current Liabilities Total Liabilities Net Assets Equity Contributed equity 11 Reserves 12(a) Accumulated losses 12(b) Total Equity	2017 2016 $ $ 440,528 963,245 16,963 10,133 3,882 ‐
	461,373 973,378
	19,371 29,078
	19,371 29,078
	480,744 1,002,456
	146,561 94,780 5,935 5,935
	152,496 100,715
	152,496 100,715
	328,248 901,741
	51,584,487 51,584,487 534,662 534,662 (51,790,901) (51,217,408)
	328,248 901,741

The accompanying notes form an integral part of this Consolidated Statement of Financial Position.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

20

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2017

Note Cash flows from operating activities Payments to suppliers and employees Payments for project evaluation Interest received Finance costs Other receipts Net cash flows used in operating activities 6 Cash flows used in investing activities Proceeds from sale of plant and equipment Net cash flows provided by investing activities Cash flows from financing activities Proceeds from issue of fully paid shares Payment of transaction costs Proceeds from borrowing Repayment of borrowing Net cash provided by financing activities Net increase / (decrease) in cash held Net foreign exchange differences Cash and cash equivalents at beginning of the financial year Cash and cash equivalents at end of the financial year 6	2017 2016 $ $ (535,469) (615,794) ‐ ‐ 13,791 11,881 (1,039) (5,095) ‐ 816
	(522,717) (608,192)
	‐ 15,053
	‐ 15,053
	‐ 1,714,728 ‐ (150,663) ‐ 100,000 ‐ (100,000)
	‐ 1,564,065
	(522,717) 970,926 ‐ (16,406) 963,245 8,725
	440,528 963,245

The accompanying notes form an integral part of this Consolidated Statement of Cash Flows.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

21

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2017

As at 1 July 2015	Issued Capital Accumulated Losses Option reserve Foreign Currency Translation Reserve Non‐controlling interest Total Equity $ $ $ $ $ $ 49,531,922 (54,424,873) 534,662 290,496 ‐ (4,067,793)
Currency translation differences Profit for the year Total comprehensive income for the year Transactions with owners in their capacity as owners Issue of share capital Transaction costs Balance at 30 June 2016 Currency translation differences Loss for the year Total comprehensive loss for the year Transactions with owners in their capacity as owners Issue of share capital Transaction costs Balance at 30 June 2017	‐ ‐ ‐ (290,496) ‐ (290,496) ‐ 3,207,465 ‐ ‐ ‐ 3,207,465
	‐ 3,207,465 ‐ (290,496) ‐ 2,916,969
	2,203,228 ‐ ‐ ‐ ‐ 2,203,228 (150,663) ‐ ‐ ‐ ‐ (150,663)
	51,584,487 (51,217,408) 534,662 ‐ ‐ 901,741
	‐ ‐ ‐ ‐ ‐ ‐ ‐ (573,493) ‐ ‐ ‐ (573,493)
	‐ (573,493) ‐ ‐ ‐ (573,493)
	‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
	51,584,487 (51,790,901) 534,662 ‐ ‐ 328,248

The accompanying notes form an integral part of this Consolidated Statement of Changes in Equity.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

22

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

1 CORPORATE INFORMATION

The financial report of Arrowhead Resources Limited for the year ended 30 June 2017 was authorised for issue in accordance with a resolution of the directors on 1 August 2017.

Arrowhead Resources Limited which is the ultimate parent company, is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. The nature of the operations and principal activities of the Group were exploration and development of mineral resources.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation

The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 and applicable Australian Accounting Standards.

The consolidated financial statements have been prepared on the basis of historical cost as explained in the accounting policies below. Historical cost is generally based on the fair values of the consideration given in exchange for goods and services. All amounts are presented in Australian dollars, unless otherwise noted. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share‐based payment transactions that are within the scope of AASB 2, leasing transactions that are within the scope of AASB 117, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in AASB 2 or value in use in AASB 136.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

For the purpose of preparing the financial statements, the consolidated entity is a for‐profit entity.

(b) Going Concern

The financial report has been prepared on a going concern basis which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.

As at 30 June 2017, the Group had available cash and cash equivalents of $440,528 and had incurred a loss for the year then ended of $573,493 and had a net cash outflow from operating activities of $522,717.

The Board considers that the Group is a going concern and recognizes that additional funding is required to ensure it can continue to fund its operations during the twelve‐month period form the date of this report. Such additional funding can be derived from raising additional equity capital to fund the Company’s requirements as and when required.

As announced on 22 June 2017, the Company has entered into a binding share sale agreement pursuant to which the Company has agreed to acquire 100% of the issued capital of Gaming Battle Ground Pty Ltd. This acquisition is conditional upon the raising of $5 million of equity funding (amongst other conditions).

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

23

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

The Directors are satisfied that these conditions will be satisfied and the Company will have sufficient funds for its ongoing activities. Accordingly, the Directors believe that sufficient funding will be enable to allow the Company to continue as a going concern and that it is appropriate to adopt that basis of accounting in the preparation of the financial report.

Should the Company be unable to complete the re‐compliance listing as outlined above or raise additional capital from another source, there is a material uncertainty that may cast significant doubt as to whether it will be able to continue as a going concern and, therefore, whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.

(c) Discontinued Operations

As disclosed in the prior year, the Company’s previously wholly owned subsidiary, Nubian Resources Plc, was voluntarily dissolved on 24 May 2016. The Company has deconsolidated the results of Nubian Resources Plc accordingly.

(d) Statement of Compliance

Compliance with Australian Accounting Standards ensures the financial report, the financial statements and notes comply with International Financial Reporting Standards (“IFRS”).

(e) New Standards and Interpretations Adopted

Standards and Interpretations applicable to 30 June 2017

In the year ended 30 June 2017, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Company and effective for the current annual reporting period.

As a result of this review, the Directors have determined that there is no material impact of the new and revised Standards and Interpretations on the Company and, therefore, no material change is necessary to Group accounting policies.

Standards and Interpretations in issue not yet adopted

The Directors have also reviewed all Standards and Interpretations in issue but not yet adopted for the year ended 30 June 2017. As a result of this review the Directors have determined that there is no material impact, of the Standards and Interpretations in issue but not yet adopted on the Group and, therefore, no change is necessary to Group accounting policies.

(f) Basis of consolidation

The consolidated financial statements comprise the financial statements of Arrowhead Resources Limited and entities (including special purpose entities) controlled by Arrowhead Resources Limited (its subsidiaries).

Control is achieved when the Company:

• has power over the investee;

• is exposed, or has rights, to variable returns from its involvement with the investee; and

• has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist. All inter‐company balances and transactions, including unrealised profits arising from intra‐group transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered.

Subsidiaries are consolidated from the date on which control is transferred to the group and cease to be consolidated from the date on which control is transferred out of the Group. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non‐controlling interests even if this results in the non‐controlling interests having a deficit balance.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

24

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between:

• The aggregate of the fair value of the consideration received and the fair value of any retained interest; and

• The previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non‐ controlling interests.

Refer to Note 2(c) and Note 23 for deconsolidation.

All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit and loss or transferred to another category of equity as specified/permitted by the applicable AASBs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under AASB 139, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

(g) Foreign currency translation

Both the functional and presentation currency of Arrowhead Resources Limited and its Australian subsidiaries is Australian dollars ($AU). Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the statement of financial position date.

All differences in the consolidated financial report are taken to the statement of profit or loss and other comprehensive income with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in the statement of profit or loss and other comprehensive income.

Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity.

Non‐monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the date of the initial transaction. Non‐monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

As at the reporting date the assets and liabilities of overseas subsidiaries are translated into the presentation currency of Arrowhead Resources Limited at the rate of exchange ruling at the statement of financial position date and the statements of profit or loss and other comprehensive income are translated at the weighted average exchange rates for the year. The exchange differences arising on the retranslation are taken directly to a separate component of equity.

On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the statement of profit or loss and other comprehensive income.

(h) Cash and cash equivalents

Cash and short‐term deposits in the statement of financial position comprise cash at bank and in hand and short‐term deposits with an original maturity of three months or less. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

(i) Trade and other receivables

Trade receivables, which generally have 30 day terms, are recognised and carried at original invoice amount which represents fair value at that date less an allowance for any doubtful debts. An allowance of doubtful debts is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

25

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

(j) Other financial assets

Other financial assets in the parent company represent investments in subsidiaries held at cost less any impairment.

(k) Property, plant and equipment

Leasehold improvements, buildings and plant and equipment are stated at cost less accumulated depreciation and any impairment losses recognised.

Depreciation is calculated on a straight‐line basis over the estimated useful life of the asset as follows: Plant and equipment ‐ over 3 to 10 years

Impairment

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash‐ generating unit to which the asset belongs. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash‐generating units are written down to their recoverable amount.

The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. 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 are recognised in the statement of profit or loss and other comprehensive income.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued used of the asset.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the statement of profit or loss and other comprehensive income in the period the item is derecognised.

(l) Recoverable amount of assets

At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.

Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash‐generating unit to which the asset belongs.

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.

(m) Trade and other payables

Trade and other payables are carried at amortised cost and due to their short term nature they are not discounted. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

26

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

(n) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit or loss and other comprehensive income net of any reimbursement.

If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre‐tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

(o) Loans and borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received.

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement.

(p) Contributed equity

Ordinary share capital is recognised at the fair value of the consideration received. Any transaction costs arising on the issue of shares are recognised directly in equity as a reduction of the share proceeds received.

(q) Share‐based payment transactions

The Group provides remuneration to employees (including directors) of the Group in the form of share‐based payment transactions, whereby employees render services in exchange for shares or rights over shares ('equity‐settled transactions').

The cost of these equity‐settled transactions with employees is measured by reference to the fair value at the date at which they are granted. In valuing equity‐settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Arrowhead Resources Limited ('market conditions').

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

• The cumulative expense recognised for equity‐settled transactions at each reporting date until vesting date reflects ‐ (i) the extent to which the vesting period has expired, and (ii) the number of awards that, in the opinion of the directors of the Group, will ultimately vest.

This opinion is formed based on the best available information at balance date. 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.

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

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

27

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

Where 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 increase in the value of the transaction as a result of the modification, as measured at the date of modification.

Where 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 (see Note 5).

(r) Leases

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. All other leases are classified as finance leases. Operating lease payments are recognised as an expense in the statement of profit or loss and other comprehensive income on a straight‐line basis over the lease term. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight‐line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(s) Revenue

Revenue is measured at the fair value of the consideration received or receivable. Interest revenue is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably. Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

(t) Income tax

In principle, deferred income tax is provided on all temporary differences at the statement of financial position date between the tax bases of assets and liabilities and their carrying amounts for the financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences:

• except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry‐forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry‐forward of unused tax credits and unused tax losses can be utilised:

• except where the deferred income tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences

ARROWHEAD RESOURCES LIMITED

AND CONTROLLED ENTITIES ABN 31 004 766 376

28

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the statement of financial position date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of profit or loss and other comprehensive income.

(u) Financial instruments

Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets

Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL), ‘held‐to‐maturity’ investments, ‘available‐for‐sale’ (AFS) financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

Financial assets at FVTPL

Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL.

A financial asset is classified as held for trading if:

• it has been acquired principally for the purpose of selling it in the near term; or

• on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short‐term profit‐taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

• A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if:

• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

• the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

• it forms part of a contract containing one or more embedded derivatives, and AASB 139 ‘Financial Instruments: Recognition and Measurement’ permits the entire combined contract (asset or liability) to be designated as at FVTPL.

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on re‐measurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ‘other gains and losses’ line item in the consolidated statement of profit or loss and other comprehensive income. Fair value is determined in the manner described in Note 21.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

29

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

Loans and receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short‐term receivables when the recognition of interest would be immaterial.

Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period.

For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve.

(v) Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

• where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Cash flows are included in the Cash Flow statement on a gross basis and the GST

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

30

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(w) Employee entitlements

Provision is made for the Company's liability for employee benefits arising from services rendered by employees at balance date. Employee benefits expected to be settled within one year, together with entitlements arising from wages and salaries, annual leave and sick leave, which will be settled within one year, have been measured at the amounts expected to be paid when the liability is settled, plus related on‐costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Contributions are made by the entity to employee superannuation funds and are charged as expenses when incurred.

(x) Derecognition of financial instruments

The derecognition of a financial instrument takes place when the Group no longer controls the contractual rights that comprise the financial instrument, which is normally the case when the instrument is sold, or all the cash flows attributable to the instrument are passed through to an independent third party.

(y) Segment information

Operating segments have been identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance. The chief operating decision maker has been identified as the board of directors of the Company.

(z) Critical accounting judgements and key sources of estimation uncertainty

In the application of Australian Accounting Standards management is required to make judgments, 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 various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision affects both current and future years. There were no critical accounting judgments or key sources of estimation uncertainty with a significant risk of material adjustment in the next year.

Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.

(aa) Financial risk management policy

Details of the Group's financial risk management policy are set out in Note 21.

(bb)Compound financial instruments

The Group evaluates the terms of any financial instrument to determine whether it contains both a liability and an equity component. The separate components of a financial instrument that create a financial liability and grant an option to the holder of the instrument to convert it into an equity instrument are recognised separately on the statement of financial position.

(cc) Comparative figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

31

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

3 REVENUES, OTHER INCOME AND EXPENSES

3 REVENUES, OTHER INCOME AND EXPENSES
Revenue and expenses from continuing operations (a) Revenue Finance revenue (b) Other income Sundry income	2017 2016 $ $ 13,791 11,881
	13,791 11,881
	‐ 3,633
Gain on extinguishment of amounts payable	‐ 3,542,056
(c) Administration expenses Included in administration expenses: Minimum lease payments ‐ operating lease Consultancy expenses (d) Employee benefits expenses Payroll cost As per Statement of Comprehensive Income	‐ 3,545,689
	‐ 5,429 35,850 12,157
	221,228 266,465
	221,228 266,465

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

32

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

4 INCOME TAX

Major components of income tax expense for the years ended 30 June 2017 and 2016 are: Income statement Current income Current income tax charge (benefit) Adjustments in respect of previous current income tax Income tax expense (benefit) reported in income statement A reconciliation of income tax expense (benefit) applicable to accounting profit before income tax at the statutory income tax rate to income tax expense at the company’s effective income tax rate for the years ended 30 June 2016 and 2015 is as follows: Accounting profit (loss) before tax from continuing operations Accounting profit (loss) before income tax At the statutory income tax rate of 30% (2016: 30%) Add: Non‐deductible expenses Temporary differences and losses not recognised Less: Gain on debt forgiveness Tax amortisation of capital raising costs At effective income tax rate 0% (2016: 0%) Unrecognised deferred tax assets/(liabilities) Deferred tax assets/(liabilities) have not been recognised in respect of the following items Trade and other payables Employee benefits Business related costs Foreign exchange Capital losses Tax losses Unrecognised deferred tax assets	2017 2016 $ $ ‐ ‐ ‐ ‐
	‐ ‐
	(573,493) 2,923,149
	(573,493) 2,923,149
	(172,048) 876,945 81,542 44,713 99,546 150,474 ‐ (1,063,092) (9,040) (9,040)
	‐ ‐
	2017 2016 $ $ 6,450 8,964 ‐ 1,781 27,119 36,159 463 450 2,536,172 764,834 3,018,311 2,877,548
	5,588,515 3,689,736

The tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Company can utilise the benefits.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

33

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

5 EARNINGS PER SHARE

5 EARNINGS PER SHARE
	2017 2016 cents cents
Basic earnings per share From continuing operations (0.26) 2.17 From discontinued operations ‐ 0.21 Total basic earnings per share (0.26) 2.38 Diluted earnings per share From continuing operations (0.26) 2.17 From discontinued operations ‐ 0.21 Total diluted earnings per share (0.26) 2.38 (a) Reconciliation of earnings used in calculating earnings per share $ $ The following reflects the income and share data used in the basic and diluted earnings per share computations:	(0.26) 2.17 ‐ 0.21
	(0.26) 2.38
	(0.26) 2.17 ‐ 0.21
	(0.26) 2.38
Loss attributable to ordinary equity holders of the Company from continuing operations used in the calculation of basic earnings per share and diluted earnings per share Loss for the year from discontinued operations used in the calculation of basic earnings per share and diluted earnings per share from discontinued operations (b) Weighted average number of shares used in the denominator Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share	(573,493) 2,923,149
	‐ 284,316
	Shares Shares 223,368,146 134,854,262
	223,368,146 134,854,262

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

34

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

6 CASH AND CASH EQUIVALENTS

6 CASH AND CASH EQUIVALENTS
Cash and cash equivalents Cash at bank and in hand	2017 2016 $ $ 440,528 963,245
	440,528 963,245
Cash at bank and in hand earns interest at floating rates based on daily bank rates. The fair value of cash and cash equivalents is $440,528 (2016: $963,245).

Reconciliation of cash Cash Reconciliation of loss from ordinary activities after income tax to net cash used in operating activities Operating loss after income tax Adjustments for: Depreciation and amortisation Loss on disposal of property plant and equipment Gain on extinguishment of debt (Gain)/Loss from discontinued operation Foreign exchange loss/(gain) Loss on disposal of shares Changes in assets and liabilities : (Increase)/decrease in trade and other receivables (Increase)/decrease in other assets (Decrease)/increase in provisions (Decrease)/increase in trade and other payables Net cash used in operating activities	$ $ 440,528 963,245
	(573,493) 3,207,465 9,708 16,674 ‐ (13,324) ‐ (3,542,056) ‐ (284,316) ‐ 1,501 (6,830) 3,453 (3,882) 5,835 ‐ (29) 51,780 (3,395)
	(522,717) (608,192)

Non‐cash transactions

During the 2017 financial year, the Group did not enter into any non‐cash investing and financing activities which are not reflected in the statement of cash flows.

During the 2016 financial year, the Group did not enter into any non‐cash investing and financing activities which are not reflected in the statement of cash flows, other than as follows;

• The issue of 142,500,000 ordinary shares (on a pre consolidation basis) in the Company at an issue price of $0.001 (0.1 cents) per share to creditors owed a total of $426,540 in satisfaction of all amounts owing;

• The issue of 27,600,000 ordinary shares (on a post consolidation basis) in the Company to creditors at an issue price of $0.01 (1 cent) per share to creditors owed a total of $3,831,000 in satisfaction of all amounts owing.

• The issue of 3,888,889 ordinary shares (on a post consolidation basis) in the Company to creditors at an issue price of $0.018 (1.8 cents) per share to creditors owed a total of $70,000 in satisfaction of all amounts owing

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

35

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

7 TRADE AND OTHER RECEIVABLES (CURRENT)

Trade and other receivables Other receivables	2017 2016 $ $ 16,963 10,133
	16,963 10,133

(i) Trade receivables are non‐interest bearing and are generally on 30‐day terms.

(ii) Other receivables relate to GST receivable from the Australian Taxation Office.

8 PROPERTY, PLANT AND EQUIPMENT

Year ended 30 June 2016 Balance at 30 June 2016 Depreciation charge for the year Balance at 30 June 2017 At 1 July 2016 Cost Accumulated depreciation and impairment Net carrying amount At 30 June 2017 Cost Accumulated depreciation and impairment Net carrying amount		Plant and equipment Total $ $ 29,078 29,078 (9,708) (9,708)
		19,370 19,370
		109,840 109,840 (80,762) (80,762)
		29,078 29,078
		109,840 109,840 (90,469) (90,469)
		19,371 19,371
9 TRADE AND OTHER PAYABLES (CURRENT) Trade and other payables Trade payables and accruals

(i) Trade payables and accruals are non‐interest bearing and are normally settled on repayment terms between 7 and 30 days.

10 PROVISIONS (CURRENT)

Provision for annual leave	2017 2016 $ $ 5,935 5,935
	5,935 5,935

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

36

FOR THE YEAR ENDED 30 JUNE 2017

NOTES TO THE FINANCIAL STATEMENTS

11 CONTRIBUTED EQUITY

Ordinary Shares

Ordinary shares fully paid	2017 2016 $ $ 51,584,487 51,584,487

Fully paid ordinary shares carry one vote per share and carry the right to dividends. Issued capital has no par value.

Balance at 1 July 2015 Issue of shares in satisfaction of amounts payable at $0.001 per share Consolidation of capital 100:1 Issue of shares pursuant to rights issue at $0.01 per share Issue of shares in satisfaction of amounts payable at $0.01 per share Issue of shares pursuant to placement at $0.01 per share Issue of shares in satisfaction of amounts payable at $0.018 per share Share issue costs Balance at 30 June 2016 Balance at 30 June 2017	Number of Shares $ 1,898,122,866 49,531,922 142,500,000 142,500 (2,020,216,425) ‐ 142,845,087 1,428,451 27,600,000 276,000 28,627,729 286,277 3,888,889 70,000 ‐ (150,663)
	223,368,146 51,584,487
	‐ ‐
	223,368,146 51,584,487

There are no unissued ordinary shares of Arrowhead Resources Limited under option.

The capital of the Company was consolidated on the basis of one new share for every 100 existing shares on 1 October 2015.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

37

FOR THE YEAR ENDED 30 JUNE 2017

NOTES TO THE FINANCIAL STATEMENTS

12 RESERVES AND ACCUMULATED LOSSES

(a) Reserves

	Option issue reserve		2017 2016 $ $ 534,662 534,662
			534,662 534,662
			Foreign currency translation reserve Total $ $ 290,496 825,158 (290,496) (290,496) ‐ 534,662 ‐ ‐ ‐ 534,662
Movements in reserves At 1 July 2015 Currency translation differences At 30 June 2016 Currency translation differences At 30 June 2017		Option issue reserve $
		534,662
		‐
		534,662
		‐
		534,662

Nature and purpose of reserves

Option issue reserve

The option issue reserve is used to record items recognised as expenses on grant of share options.

Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. It is also used to record the net investment hedged in these subsidiaries.

(b) Accumulated Losses

Movement in accumulated losses were as follows: Balance 1 July Net profit/(loss) for the year Balance 30 June	2017 2016 $ $ (51,217,408) (54,424,873) (573,493) 3,207,465
	(51,790,901) (51,217,408)

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

38

FOR THE YEAR ENDED 30 JUNE 2017

NOTES TO THE FINANCIAL STATEMENTS

13 INTERESTS IN CONTROLLED ENTITIES

The consolidated financial statements include the financial statements of Arrowhead Resources Limited and the controlled entities listed in the following table:

Country of Incorporation 2017 2016 % % Tantalum International Pty Ltd Australia 100 100 Adobha Resources (Eritrea) Pty Ltd Australia 100 100 Tantalum Egypt JSC Egypt 50 50 Percentage of equity interest held by the Group	2017 2016 $ $ 100 100 100 100 ‐ ‐ Investment
	200 200

Arrowhead Resources Limited is the ultimate Australian parent entity and ultimate parent of the Group.

Tantalum Egypt JSC and Nubian Resources JSC were previously included in the consolidated financial statements on the basis that Arrowhead Resources Limited controlled the activities of Tantalum Egypt JSC by way of Arrowhead’s casting vote on the Board of Directors. Arrowhead no longer controls either Tantalum Egypt JSC or Nubian Resources JSC.

Nubian Resources Plc was dissolved by voluntary dissolution on 24 May 2016.

14 EXPENDITURE COMMITMENTS

(a) Lease expenditure commitments

The Group has not entered into commercial leases for office accommodation. Its office in Perth is based in the office of an officeholder. The Group has no future minimum rentals payable as at 30 June 2017.

(b) Exploration expenditure commitments

The Group has no minimum exploration expenditure commitments in respect to any mining tenements or projects.

(c) Bank guarantee

There are no bank guarantees of the Group at 30 June 2017.

(d) Capital Commitments

There are no capital commitments of the Group at 30 June 2017.

15 CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Contingent Liabilities

The Group did not have any contingent liabilities as at Balance Date.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

39

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

16 SUBSEQUENT EVENTS

No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years, other than as follows;

• As announced on 22 June 2017, the Company has entered into a binding share sale agreement (Agreement), pursuant to which the Company has agreed to acquire 100% of the issued capital of Gaming Battle Ground Pty Limited (GBG) (Proposed Acquisition). The Proposed Acquisition is conditional on the Company obtaining all necessary regulatory and Shareholder approvals to effect the Proposed Acquisition and satisfying all other requirements of ASX for the reinstatement to official quotation of the Company’s Shares on the ASX including the raising of $5 million (among other things). GBG owns and operates an online gaming platform (“Gaming Battle Ground”) that facilitates the interaction of gamers around the world to compete against each other, and in tournaments, on some of the most popular international game titles, tapping directly into the large scale of the eSports market.

17 REMUNERATION OF AUDITORS

The auditor of Arrowhead Resources Limited is HLB Mann Judd (“HLB”).

		2017	2016
Amounts received or due and receivable by HLB Mann Judd for:		$	$
.	an audit or review of the financial report of the entity and any
	other entity in the Group	21,500	22,000
		21,500	22,000
Amounts received by auditors other than HLB Mann Judd for:
.	an audit or review of the financial report of the entity and any
	other entity in the Group	‐	9,278
		‐	9,278
		21,500	31,278

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

40

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

18 RELATED PARTY DISCLOSURES

The following table provides the total amount of transactions which have been entered into with related parties for the relevant financial year:

Underwriting fee, based on 6% of the amount raised, paid to CPS Capital Group‐ a company associated with Mr J Peterson Placement fee, based on 6% of the amount raised, paid to CPS Capital Group Corporate advisory fees paid or payable to CPS Capital Group Funds loaned to Arrowhead by Celtic Capital Pty Limited – a company associated with Mr J Peterson. The loan is unsecured and interest was payable at rates between 15% during the year. Interest paid or payable on $100,000 loan from Celtic Capital Pty Limited ‐ a company associated with Mr J Peterson. The loan was unsecured and interest was payable at rates between 15% during the period. Funds repaid to Arrowhead by Celtic Capital Pty Limited Interest paid on loans from Gandel Metals Pty Limited, a company associated with a former director Mr Ian Gandel. The loan was unsecured and interest was payable at rates between 4.83% and 5.33% during the period. Loan and other amounts payable converted into shares by Gandel Metals Pty Limited at an issue price of $0.01 (1 cent) per share, pursuant to shareholder approval. The balance of the amount payable ($3,495,390) was forgiven. Amounts payable converted into shares by Ventureworks JDK Pty Limited ‐ a company associated with Mr John Kenny ‐ at an issue price of $0.01 (1 cent) per share, pursuant to shareholder approval.The balance of the amount payable ($46,666) was forgiven. An amount in respect of the provision of office facilities was paid or payable to Dabinett Corporate Pty Limited – a company associated with Mr R Caren.

2017 2016 $ $ ‐ 85,707 ‐ 17,176 60,000 30,000 ‐ 100,000 ‐ 3,904 ‐ 100,000 ‐ 72,583 ‐ 180,000 ‐ 96,000 ‐ 2,700

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

41

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

19 KEY MANAGEMENT PERSONNEL COMPENSATION

(a) Details of key management personnel

M Rosenstreich Chairman and Managing Director J Kenny Non‐Executive Director P Re Non‐Executive Director (appointed 21 June 2017) J Peterson Non‐Executive Director (resigned 21 June 2017) R Caren Company Secretary

(b) Compensation of key management personnel

The aggregate compensation made to directors and other members of key management personnel of the Group is set out below:

Short‐term employee benefits Post‐employment benefits Share‐based payments	2017 2016 $ $
	253,000 206,867 ‐ ‐ ‐ ‐
	253,000 206,867

(c) Other transactions with key management personnel

Refer to Note 18 regarding loans from key management personnel to the Company.

20 SEGMENT INFORMATION

(a) Reportable segments

The Group operates predominantly in the mining and exploration industry.

Information reported to the Group’s chief operating decision maker for the purpose of resource allocation and assessment of segment performance is focussed on the type of resources being explored for and evaluated or developed. The Group’s only reportable segment under AASB 8 is corporate.

The corporate segment relates only to the operations of the corporate head office in Perth, Western Australia.

(b) Geographical information

The Group's geographical areas are determined based on the location of the Group's assets and operations. The entire continuing operations relate to the corporate segment which is based in Australia.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

42

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

21 FINANCIAL INSTRUMENTS

(a) Financial risk management policy

The Group's management of financial risk is aimed at ensuring net cash flows are sufficient to:

• meet all financial commitments as and when they fall due, and

• maintain the capacity to fund its forecast project development and exploration strategies.

The Group continually monitors and tests its forecast financial position against these criteria.The Group's principal financial instruments comprise cash and short‐term deposits. The main purpose of these financial instruments is to raise finance for the Group operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. It is, and has been throughout the period under review, the Group's policy that no trading in financial instruments shall be undertaken.

The main risks arising from the Group's financial instruments presently are interest rate risk, foreign currency risk, credit risk, security risk and liquidity risk.

The Group uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels of exposure to interest rate and foreign exchange risk and assessments of market forecasts for interest rate, foreign exchange and commodity prices. Ageing analyses and monitoring of specific credit allowances are undertaken to manage credit risk. Liquidity risk is monitored through the development of future rolling cash flow forecasts.

(b) Interest rate risk

The following table sets out the carrying amount of the financial instruments exposed to interest rate risk:

FINANCIAL ASSETS Interest Bearing Cash at bank Weighted average interest rate Non‐Interest Bearing Cash at bank Trade Receivables Other Assets FINANCIAL LIABILITIES Interest Bearing Unsecured Loan Weighted average interest rate Non‐Interest Bearing Trade and other payables	2017 2016 $ $ 250,000 750,000 2.70% 0.00% 190,528 213,245 16,963 10,133 3,882 ‐
	461,373 973,378
	‐ ‐ ‐ ‐ 146,561 94,780

The following table summarises the sensitivity of financial assets held at balance date to interest rate risk, following a movement of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below.

ARROWHEAD RESOURCES LIMITED

AND CONTROLLED ENTITIES ABN 31 004 766 376

43

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

+1% (100 basis points)	2017 2016 $ $ Post‐tax gain/(loss)/equity increase/(decrease) CONSOLIDATED
	733 2,199

(c) Fair values

Set out below is a comparison by category of carrying amounts and fair values of all of the Group's financial instruments recognised in the financial statements.

	2017 2016 2017 2016 $ $ $ $ Carrying Amount Fair Value
Financial Assets Cash Trade and other receivables ‐ current Other Assets Financial Liabilities Trade and other payables	440,528 963,245 440,528 963,245 16,963 10,133 16,963 10,133 3,882 ‐ 3,882 ‐
	146,561 94,780 146,561 94,780

Cash, cash equivalents and security deposits: The carrying amount approximates fair value because of their short term to maturity

Trade receivables and trade creditors: The carrying amount approximates fair value.

Fair value hierarchy as at 30 June 2017

Financial assets	Level 1	Level 2	Level 3		Total
	$	$	$		$
Cash	440,528	‐		‐	440,528
Trade and other receivables ‐ current	‐	16,963		‐	16,963
Other Assets	‐	3,882		‐	3,882
Total	440,528	20,845		‐	461,373
Financial liabilities
Trade and other payables	‐	146,561		‐	146,561
Total	‐	146,561		‐	146,561

(d) Credit risk

Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, and trade and other receivables. The Group's exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments.

The Group does not hold any credit derivatives to offset its credit exposure.

In addition, receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts is not significant.

There are no significant concentrations of credit risk within the Group.

ARROWHEAD RESOURCES LIMITED

AND CONTROLLED ENTITIES ABN 31 004 766 376

44

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

(e) Liquidity risk

The Group's liquidity position is managed to ensure sufficient funds are available to meet financial commitments in a timely and cost‐effective manner.

The Company continually reviews its liquidity position including cash flow forecast to determine the forecast liquidity position and maintain appropriate liquidity levels.

In addition to commitment disclosure in Note 14, the table below reflects the contractual maturity of financial instruments as at 30 June. Cash flows for financial instruments are presented on an undiscounted basis.

2017	Total <30 days 30‐60 days >60 days AUD Other Aging analysis between Currency of payables
Cash & cash equivalents Trade Receivables Other Assets Trade and Other Payables Other Payables Directors’ Loans	$ $ $ $ $ $ (440,528) (440,528) ‐ ‐ (16,963) (16,963) (3,882) (3,882) ‐ ‐ 146,561 110,800 ‐ 35,761 122,366 24,195 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Total 2016 Cash & cash equivalents Trade Receivables Trade Payables Other Payables Directors’ Loans	(314,812) (350,573) ‐ 35,761 122,366 24,195 Total <30 days 30‐60 days >60 days AUD Other Aging analysis between Currency of payables
	$ $ $ $ $ $ (963,245) (963,245) ‐ ‐ (10,133) (10,133) ‐ ‐ 94,780 59,353 ‐ 35,427 70,585 24,195 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Total	(878,598) (914,025) ‐ 35,427 70,585 24,195

(f) Capital management policy

The Board's policy is to preserve its capital base as much as possible so as to maintain investor, creditor and market confidence and to sustain future development of the business.

There were no changes in the Group's approach to capital management during the year, other than that Group has been able to rely upon equity to finance its capital management, rather than short term debt finance.

Neither the Company nor any of its controlled entities are subject to externally imposed capital requirements.

(g) Foreign Exchange Risk

At 30 June 2017, the Group had the following exposure to foreign currency:

ARROWHEAD RESOURCES LIMITED

AND CONTROLLED ENTITIES ABN 31 004 766 376

45

FOR THE YEAR ENDED 30 JUNE 2017

NOTES TO THE FINANCIAL STATEMENTS

Financial Assets US$ Cash and cash equivalents EGP Cash and cash equivalents Trade Receivables Nakfa Cash and cash equivalents GBP Cash and cash equivalents Trade Receivables Financial Liabilities US$ Trade and other payables EGP Trade and other payables Nakfa Trade and other payables GBP Trade and other payables Net exposure	2017 2016 4,822 4,822 ‐ ‐ ‐ ‐ 185 185 ‐ ‐ ‐ ‐ CONSOLIDATED
	5,007 5,007
	24,195 24,195 ‐ ‐ ‐ ‐ ‐ ‐
	24,195 24,195
	(19,188) (19,188)

The following sensitivity is based on the most significant foreign currency risk exposures in existence at the statement of financial position date, which is the Australian Dollar moving against the US Dollar (USD).

At 30 June 2017, had the Australian Dollar moved, as illustrated in the table below, with all other variables held constant, post tax profit and equity would have been affected as follows:

Judgements of reasonably possible movements

Consolidated AUD/USD +10% AUD/USD ‐10% Parent AUD/EGP +10% AUD/EGP ‐10%	2017 2016 2017 2016 $ $ $ $ Post Tax Loss (Higher)/Lower Equity Higher/(Lower)
	1,761 1,761 1,761 1,761 (2,153) (2,153) (2,153) (2,153) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Foreign exchange rates used during the period were as follows:

	2017	2016
	AUD:USD	AUD:USD
Rate as at 30 June	0.74260	0.74260
Average Rate for year ended 30
June	0.72830	0.72830

(h) Equity price risk

The Group is no longer exposed to equity price risks arising from equity.

ARROWHEAD RESOURCES LIMITED

AND CONTROLLED ENTITIES ABN 31 004 766 376

46

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

22 PARENT ENTITY INFORMATION

The accounting policies of the parent entity, which have been applied in determining the financial information shown below, are the same as those applied in the consolidated financial statements. Refer to Note 2 for a summary of the significant accounting policies relating to the Group.

accounting policies relating to the Group.
	2017 2016 $ $
(a) Financial Position Assets Current assets Non‐current assets Total assets Liabilities Current liabilities Non‐current liabilities Total liabilities Equity Contributed equity Accumulated losses Option issue reserve Total equity	456,369 968,371 ‐ 382
	456,369 968,753
	122,366 70,585 ‐ ‐
	122,366 70,585
	51,584,487 51,584,487 (51,785,146) (51,220,981) 534,662 534,662
	334,003 898,168
	2017 2016 $ $
(b) Financial Performance Loss for the year Other comprehensive income Total comprehensive income	(564,166) 2,927,757 ‐ ‐
	(564,166) 2,927,757

(c) Guarantees entered into by the parent entity in relation to the debts of its subsidiaries

At the Balance Date there are no guarantees entered into by the Parent Entity in relation to the debts of its subsidiaries (2016: Nil).

(d) Contingent liabilities of the parent entity

The Parent Entity did not have any contingent liabilities as at Balance Date, other than as disclosed in Note 15.

(e) Commitments for capital expenditure entered into by the parent entity

The Parent Entity did not have any commitments for capital expenditure as at Balance Date.

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

47

FOR THE YEAR ENDED 30 JUNE 2017

NOTES TO THE FINANCIAL STATEMENTS

23 DISCONTINUED OPERATIONS

Nubian Resources PLC

Nubian Resources PLC
Refer to Note 2(c) for further information. (i) Financial Performance and cash flow information Revenue Expenses Other Profit (loss) before income tax Income tax expense Profit (loss) after income tax of discontinued operation Net cash inflow (outflow) from operating activities Net cash inflow (outflow) from investing activities Net cash inflow (outflow) from financing activities Net (decrease) increase in cash generated by the division	2017 2016 $ $
	‐ 6,248,328 ‐ (686,652) ‐ ‐
	‐ 5,561,676
	‐ ‐
	‐ 5,561,676
	‐ (5,077) ‐ ‐ ‐ ‐
	‐ (5,077)

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

48

DIRECTORS’ DECLARATION

The directors of Arrowhead Resources Limited declare that:

• (a) in the directors’ opinion, the financial statements and notes on pages 8 to 48, and the remuneration disclosures that are contained in the Directors' report, set out on pages 13 to 17, are in accordance with the Corporations Act 2001 , including:

• (i) giving a true and fair view of the Consolidated Entity's financial position as at 30 June 2017 and of its performance, for the year ended on that date; and

• (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and Corporations Regulations 2001.

• (b) in the directors’ opinion, the financial report also complies with International Financial Reporting Standards issued by the International Accounting Standards Board as disclosed in Note 2(d) to the financial statements; and

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

The directors have been given the declarations required by Section 295A of the Corporations Act 2001 .

Signed in accordance with a resolution of the directors pursuant to Section 295(5) of the Corporations Act 2001 .

Dated 1st day of August 2017.

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MB Rosenstreich Managing Director

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

49

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INDEPENDENT AUDITOR’S REPORT

To the members of Arrowhead Resources Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Arrowhead Resources Limited (“the Company”) and its controlled entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2017, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001 , including:

• a) giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial performance for the year then ended; and

• b) complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty relating to going concern

We draw attention to Note 2 (b) in the financial report, which indicates that the Group incurred a net loss of $573,493 during the year ended 30 June 2017. As stated in Note 2 (b), these events or conditions, along with other matters as set forth in Note 2 (b), indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key audit matters

Except for the matter described in the Material Uncertainty Relating to Going Concern section, we have determined that there are no key audit matters to communicate in our report.

HLB Mann Judd (WA Partnership) ABN 22 193 232 714

Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 6849 | 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

ARROWHEAD RESOURCES LIMITED

AND CONTROLLED ENTITIES ABN 31 004 766 376

50

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Information other than the financial report and auditor’s report thereon

The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2017, but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the financial report

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

In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

51

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disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on the Remuneration Report

Opinion on the remuneration report

We have audited the remuneration report included in the directors’ report for the year ended 30 June 2017.

In our opinion, the remuneration report of Arrowhead Resources Limited for the year ended 30 June 2017 complies with section 300A of the Corporations Act 2001 .

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

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HLB Mann Judd M R Ohm Chartered Accountants Partner

Perth, Western Australia 1 August 2017

ARROWHEAD RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

52

ASX ADDITIONAL INFORMATION

AS AT 18 OCTOBER 2017

Shares

A TOTAL EQUITY Shares SECURITIES Totals on Issue 245,868,146

B DISTRIBUTION OF EQUITY SECURITIES 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over No of shareholders holding an unmarketable parcel	74 36 15 84 154
	363 158

C	TOP 20 SHAREHOLDERS		Number	%
1	Ventureworks JDK Pty Ltd		23,013,372	9.36
2	Sunset Capital Management Pty Ltd		20,665,782	8.41
3	Gandel Metals Pty Limited		18,000,000	7.32
4	Situate Pty Ltd		12,860,263	5.23
5	Chetan Enterprises Pty Ltd		11,175,000	4.55
6	Nautical Holdings WA Pty Ltd		9,000,000	3.66
7	Abbotsleigh Pty Ltd		8,627,882	3.51
8	Mr Emile Alfred Nessim		6,000,000	2.44
9	Bolt Consulting Pty Limited		4,700,000	1.91
10	6466 Investments Pty Ltd		4,547,000	1.85
11	Tisia Nominees Pty Ltd		4,000,000	1.63
12	Riverview Corporation Pty Ltd		4,000,000	1.63
13	Mr Nischal Dinesh Jeena		3,350,000	1.36
14	Raven Investment Holdings Pty Limited		3,150,000	1.28
15	Crossbay Pty Limited		3,150,000	1.28
16	Jetmax Trading Pty Ltd		3,000,000	1.22
17	JP Morgan Nominees Aust Limited		2,650,273	1.08
18	Pandros Investments Pty Ltd		2,500,000	1.02
19	Mr Mario Di Lallo & Mrs Alison Valerie Di Lallo <M&A Super Fund	A/c>	2,490,000	1.01
20	BT Portfolio Services Limited		2,217,888	0.90
			149,097,460	60.64
D	SUBSTANTIAL SHAREHOLDERS	Number	%
	Abbotsleigh Pty Ltd	26,627,882	10.83
	Ventureworks JDK Pty Ltd	23,013,272	9.36
	Mr Jason Peterson	20,665,782	8.41
	Situate Pty Ltd, Taveroam Pty Ltd and RW Beale	15,000,000	6.10		53

ASX ADDITIONAL INFORMATION

AS AT 18 OCTOBER 2017

E VOTING RIGHTS

Under the Company's constitution, all ordinary shares carry one vote per share without restriction.

F EXPLORATION INTERESTS

As at 18 October 2017, the Company has an interest in the following tenements:

Country	Project	Tenement	Status	Interest
Egypt	Abu Dabbab	Exploitation Licence 1658	Granted	50%1
Egypt	Abu Dabbab	Exploitation Licence 1659	Granted	50%1
Egypt	Nuweibi	Exploitation Licence 1785	Granted	50%1

Notes:

1. Arrowhead holds 50% of the shares in TE JSC which holds the exploitation licences. The Company may be unable to regain control of Tantalum Egypt’ JSCs Exploitation Licences including the Abu Dabbab Project, as a result of ECMR seeking to dissolve Tantalum Egypt JSC and re-tender the Project’s Exploitation Licences.

54

CORPORATE GOVERNANCE STATEMENT AS AT 30 JUNE 2017

The Group’s Corporate Governance Statement for the year ended 30 June 2017 (which reports against the third edition of the ASX Corporate Governance Council’s Principles and Recommendations) may be accessed from the Company’s website at;

http://www.arrowheadresources.com.au/sample-page/corporate-governance/

Arrowhead Resources Limited Corporate Governance Statement 2017

55