STRIKE RESOURCES LIMITED

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Annual Financial Report

Strike Resources Limited and its controlled entities for the year ended 30 June 2015

Strike Resources Limited A.B.N. 94 088 488 724

ASX Code: SRK

Share Registry

Level 11, 216 St George’s Terrace Perth, Western Australia 6000

T | + 61 8 9481 0389 F | + 61 8 9463 6103 E | [email protected] W | www.strikeresources.com.au

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Advanced Share Registry Services 110 Stirling Highway Nedlands Western Australia 6009

T | + 61 8 9389 8033 F | + 61 8 9262 3723 E | [email protected] W | www.advancedshare.com.au

STRIKE RESOURCES LIMITED CONTENTS

CONTENTS ........................................................................................................................................................ 1 CORPORATE DIRECTORY .................................................................................................................................. 2 DIRECTORS’ REPORT......................................................................................................................................... 3 AUDITOR’S INDEPENDENCE DECLARATION .................................................................................................... 16 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ............................ 17 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ................................................................................... 18 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY .................................................................................... 19 CONSOLIDATED STATEMENT OF CASH FLOWS ............................................................................................... 20 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS .............................................................................. 21 DIRECTORS’ DECLARATION ............................................................................................................................. 44 INDEPENDENT AUDITOR’S REPORT ................................................................................................................ 45

Page 1 of 46

STRIKE RESOURCES LIMITED CORPORATE DIRECTORY

Corporate Directory

Directors

Mr Malcolm Richmond Chairman / Non-Executive Director

Mr William Johnson Managing Director

Mr Matthew Hammond Non-Executive Director

Ms Samantha Tough Non-Executive Director

Mr Victor Ho Non-Executive Director

Mr Farooq Khan Alternate Director for Mr Ho

Company Secretary

Registered Office

Web Site

Information Email

Share Registry

Auditors

Stock Exchange Listing

Mr David Palumbo

Level 11, 216 St George’s Terrace Perth, Western Australia, 6000 Telephone: +61 8 9481 0389 Facsimile: +61 8 9463 6103 www.strikeresources.com.au [email protected]

Advanced Share Registry Services 110 Stirling Highway Nedlands, Western Australia, 6009 Telephone: +61 8 9389 8033 Facsimile: +61 8 9262 3723 Email: [email protected] Website: www.advancedshare.com.au

BDO Audit (WA) P/L 38 Station Street Subiaco, Western Australia 6008 Telephone: +61 8 9382 4600 Facsimile: +61 8 9382 4601 Website: www.bdo.com.au

Strike Resource Limited’s shares are listed on the Australian Securities Exchange (“ ASX ”)

ASX Code: SRK

Page 2 of 46

STRIKE RESOURCES LIMITED DIRECTORS’ REPORT

Directors’ Report

Your Directors present their report on the Consolidated Entity consisting of Strike Resources Limited (“ Company ” or “ Strike ”) and the entities it controlled at the end of, or during, the year ended 30 June 2015.

Directors

The following persons were Directors of Strike during the whole of the financial year and up to the date of this report:

Malcolm Richmond Matthew Hammond William Johnson Samantha Tough Victor Ho Farooq Khan

Principal Activities

The principal activities of the Consolidated Entity during the financial year were the pursuit of opportunities for realisation of value from Consolidated Entity’s interest in the Apurimac and Cusco Iron Ore Projects located in Peru, South America and consideration of alternative business strategies.

Dividends

No dividends have been paid or declared during the financial year. At the date of this report, no dividend has been recommended for payment in respect of the reporting period.

Review of Operations

During the year, no activity was undertaken on the Company’s iron ore projects in Peru as the Company continued to examine a range of new strategies for the Company in light of the poor outlook for the iron ore sector and the resources sector in general.

A number of parties expressed interest in the Company’s Peru assets during the year. One conditional purchase offer was received, but the commercial terms offered were considered unacceptable by the Board.

A number of non-core mineral concessions in Peru were allowed to lapse on 30 June 2015, significantly reducing the Company’s annual expenditure commitment in Peru. The Company continues to hold those core concessions in Peru which contain its JORC Resources of iron ore in Apurimac and Cusco, as well as some neighbouring concessions which have strategic value associated with the projects.

Whilst some of these core concessions remain the subject of a number of ongoing legal claims in Peru, the Company remains of the view that these claims are spurious and without merit and the Company’s lawyers in Peru continue to successfully defend against these claims.

The Company continues to conserve its cash resources, holding a balance of approximately $8.37 million in cash as of 30 June 2015. All corporate secretarial, compliance and accounting services are outsourced. The Company has no full time employees (apart from the Managing Director) and the Company holds no long term office lease commitments.

Significant Changes in the State of Affairs

In July 2014, the Company received an offer to acquire its Peru assets. However, the Company was unable to reach an agreement with the party making the offer. On 8 August 2014, the offer was withdrawn.

On 8 April 2015, the Company announced that it has received resolutions from the Peruvian Tax Administrator (“SUNAT”) which have predominately ruled in favour of a claim made by the Company’s subsidiary, Apurimac Ferrum S.A.C. As a result, the Company was able to reverse A$1.1 million of its A$1.7 million accrual that it has previously made for withholdings taxes.

On 30 June 2015 the Company received an unsolicited off-market takeover bid by Bentley Capital Limited (ASX: BEL, “Bentley”) (“the Offer”), whose Chairman, Farooq Khan, is Strike’s Alternative Director to Non-Executive Director Victor Ho (who is also Company Secretary of Bentley). Strike Managing Director, William Johnson is also a Non-Executive Director of Bentley.

Page 3 of 46

STRIKE RESOURCES LIMITED DIRECTORS’ REPORT

Events since the End of the Financial Year

On 2 July 2015 the Company announced that a Takeover Response Committee of Company’s independent directors, being the Chairman, Mr Malcolm Richmond, Ms Samantha Tough and Mr Matthew Hammond had been established to respond to the Offer. The Company also announced that following completion of the Offer (irrespective of the outcome of the Offer), Ms Samantha Tough intended to resign from the Company Board to focus on her other non-executive director roles.

In July 2015, Bentley Capital Limited lodged its Bidder’s Statement relating to the Offer with ASIC and dispatched the same to Strike’s shareholders.

In August 2015, the Company lodged its Target Statement in response to the Offer.

The Bid closed on 2 September 2015 and a total of 52,553,493 shares representing 36.16% of the Company’s issued capital were acquired by Bentley during the bid. Bentley as a consequence is now the Company’s largest shareholder.

Likely Developments and Expected Results of Operations

The Company will continue to pursue opportunities to realise value from its Peru assets. The Company maintains legal title to the key mineral concessions in Peru through payment of appropriate annual fees and penalties, with the next scheduled payments due in June 2016. The Company also continues to ensure that its valuable project drilling cores and samples in Peru are stored securely.

The Company retains a strong balance with cash of approximately $8.37 million. With outsourced accounting and company secretarial services and no long term office lease expenses, corporate overhead is relatively low.

The Company is reviewing alternative business strategies in light of the difficult market conditions facing iron ore and the resources sector in general.

Page 4 of 46

STRIKE RESOURCES LIMITED DIRECTORS’ REPORT

Information on Directors

Malcolm Richmond

Chairman

Appointed 13 July 2011 Previous positions Acting Chairman (3 February 2011 to 13 July 2011) held Non-Executive director (25 October 2006 to 3 February 2011) Qualifications BSc Hons (Metallurgy) and B. Comm. Merit (Econs) ( New South Wales ) Experience Professor Richmond has 30 years’ experience with the Rio Tinto and CRA Groups in a number of positions including: Vice President, Strategy and Acquisitions; Managing Director, Research and Technology; Managing Director, Development (Hamersley Iron Pty Limited) and Director of Hismelt Corporation Pty Ltd. He was formerly Deputy Chairman of the Australian Mineral Industries Research Association and Vice President of the WA Chamber of Minerals and Energy. Professor Richmond has also served as a Member on the Boards of a number of public and governmental bodies and other public listed companies.

He is a qualified metallurgist and economist with extensive senior executive and board experience in the resource and technology industries both in Australia and internationally. His special interests include corporate strategy and the development of markets for internationally traded minerals and metals - particularly in Asia.

Professor Richmond served as Visiting Professor at the Graduate School of Management and School of Engineering, University of Western Australia until January 2012, and is a Fellow of the Australian Academy of Technological Sciences & Engineering, a Fellow of Australian Institute of Mining and Metallurgy and a Member of Strategic Planning Institute (US).

Special Chairman of the Remuneration and Nomination Committee and Chairman of the Audit Committee responsibilities

Relevant Interests in shares and options

Nil

Other current directorships in listed entities

Non-Executive Director of: Argonaut Resources Ltd (appointed March 2012)

Former directorships Advanced Braking Technology Ltd (August 2006 – April 2013) in other listed entities Cuervo Resources Inc (July 2011 – March 2013 ) in past 3 years Water Resources Group Ltd (July 2012 – June 2013)

William Johnson

Appointed

Previous position held

Managing Director

25 March 2013

Executive Director (January 2013 to March 2013) Non-Executive Director (April 2010 to January 2013) Executive Director (July 2006 to April 2010)

Qualifications MA (Oxon), MBA Experience Mr Johnson commenced his career in resource exploration and has held senior management and executive roles in a number of public companies in Australia, New Zealand and Asia. Most recently, Mr Johnson has acted as an executive and non-executive director of a number of ASX listed resource exploration and development companies and brings a considerable depth of experience in business strategy, investment analysis, finance and execution.

Special responsibilities Relevant Interests in shares and options

Other current directorships in listed entities

None

3,000,000 Unlisted Directors’ Options ($0.30, 17 June 2018) 249,273 Shares

Non-Executive Director of: Bentley Capital Limited (appointed March 2009)

Former directorships Orion Equities Limited (February 2003 – May 2013) in other listed entities Cuervo Resources Inc (March 2013 – December 2013) in past 3 years Alara Resources Limited (October 2009 – October 2013)

Page 5 of 46

STRIKE RESOURCES LIMITED DIRECTORS’ REPORT

Information on Directors (continued)

Matthew Hammond

Non-Executive Director

Appointed 25 September 2009

Qualifications

Experience

Special responsibilities

Relevant Interests in shares and options

Other current directorships in listed entities

BA (Hons) (Bristol)

Mr Hammond is the Group Managing Director of Mail.ru, one of the largest European internet businesses. Prior to that he was Group Strategist at Metalloinvest Holdings, where he had responsibility for part of the non-core asset portfolio. Prior to joining Metalloinvest, Mr Hammond was a director at Credit Suisse, where he worked for 12 years as an investment analyst. During his time with Credit Suisse Mr. Hammond was ranked number one 8 times in the Extell, Institutional Investor and Reuters surveys.

Member of the Audit and Remuneration and Nomination Committees

Nil

Managing Director of: Mail.Ru. (appointed April 2011)

Non-Executive director of: Puricore Inc. (appointed May 2010)

Former directorships in other listed entities in past 3 years

Nautilus Minerals Inc (October 2009 – September 2013)

Samantha Tough

Appointed

Qualifications

Experience

Non-Executive Director

23 January 2012

LLB, BJuris (Western Australia), GAICD

Ms Tough is a professional company director and chairman, with more than 14 years’ experience in public and private companies, including four positions as Chairman. She has strong, proven strategic expertise, particularly in identifying and implementing growth strategies for complex and substantial businesses and early-stage propositions.

Ms Tough has served at senior executive level or on the Board in a wide range of industries, including metals and mining in particular iron ore, oil and gas, engineering services, infrastructure, energy and energy efficiency, venture capital, e-commerce, international telecommunications and law. Her previous executive roles include Senior Vice President, Strategic Counsel – Natural Resources at the Commonwealth Bank, General Manager North West Shelf at Woodside Energy Ltd and Director Strategy Hardman Resources Ltd. She also led the Pilbara Power Project on behalf of the Premier's Department. Samantha's involvement in these industries has given her a sound understanding of conducting business internationally.

Special responsibilities

Relevant Interests in shares and options

Other current directorships in listed entities

Member of the Audit Committee

Nil

Non-Executive Director of:

Saracen Mineral Holdings Limited (appointed 1 October 2013) Synergy (appointed 22 October 2014) Molopolo Energy Limited (appointed 29 December 2014) Cape Plc (appointed 1 January 2015)

Chairman of: Aerison Pty Ltd (appointed 2012)

Former directorships in other listed entities in past 3 years

Murchison Metals Ltd (May 2011 - Feb 2012) Southern Cross Goldfields Ltd (July 2007 – 23 September 2013)

Page 6 of 46

STRIKE RESOURCES LIMITED DIRECTORS’ REPORT

Information on Directors (continued)

Victor P. H. Ho

Non-Executive Director

Appointed 24 January 2014

Qualifications

Experience

Special responsibilities

Relevant Interests in shares and options

Other current directorships in listed entities

Former directorships in other listed entities in past 3 years

BCom, LLB (Western Australia), CTA

Mr Ho is a previous Director and Company Secretary of Strike Resources (2000 to 2010) and has been in Executive roles with a number of ASX listed companies across the investments, resources and technology sectors over the past 15+ years. Mr Ho is a Chartered Tax Adviser (CTA) and previously had 9 years’ experience in the taxation profession with the Australian Tax Office and in a specialist tax law firm. Mr Ho has been actively involved in the structuring and execution of a number of corporate, M&A and international joint venture (in South America, Indonesia and the Middle East) transactions, capital raisings and capital management initiatives and has extensive experience in public company administration, corporations’ law and stock exchange compliance and investor/shareholder relations..

Member of the Audit Committee (appointed on 11 March 2015)

Nil

Executive Director of:

Orion Equities Limited (appointed July 2003) Queste Communications Ltd (appointed April 2013)

None

Farooq Khan

Appointed

Qualifications

Experience

Alternate Director for Mr Victor Ho

24 January 2014

LLB, BJuris (Western Australia)

Mr Khan is a qualified lawyer having previously practised principally in the field of corporate law. Mr Khan is a previous Director of Strike Resources (1999 to 2011) and has extensive experience in the securities industry, capital markets and the executive management of ASX-listed companies.

In particular, Mr Khan has guided the establishment and growth of a number of public listed companies in the investment, mining and financial services sectors. He has considerable experience in the fields of capital raisings, mergers and acquisitions and investments.

Special responsibilities

Relevant Interests in shares and options

Other current directorships in listed entities

Member of the Audit Committee (appointed on 11 March 2015)

530,010 Shares (directly)

Executive Chairman of:

Orion Equities Limited (appointed October 2006) Bentley Capital Limited (appointed December 2003)

Executive Chairman and Managing Director of: Queste Communications Ltd (appointed March 1998)

Former directorships in other listed entities in past 3 years

Alara Resources Limited (May 2007 – August 2012)

Page 7 of 46

STRIKE RESOURCES LIMITED DIRECTORS’ REPORT

Company Secretary

David Palumbo

Company Secretary

Appointed 14 August 2013 Qualifications BCom, CA Experience Mr Palumbo is a Chartered Accountant with over six years’ experience in the auditing and financial reporting of ASX listed and unlisted companies. Mr Palumbo has been involved in the listing of junior explorer companies on the ASX and has experience in corporate advisory and company secretarial services. Mr Palumbo is currently Company Secretary of Krakatoa Resources Limited. Mr Palumbo is a Corporate Compliance & Accounting Manager at Mining Corporate.

Meetings of Directors

The numbers of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended 30 June 2015, and the numbers of meetings attended by each director were:

Name of Director	Board Meetings	Board Meetings	Committee Meetings (Audit)	Committee Meetings (Audit)	Committee Meetings (Remuneration/ Nomination)	Committee Meetings (Remuneration/ Nomination)
	Attended	Meetings Held	Attended	Meetings held	Attended	Meetings held
M Richmond	3	4	-	1	-	-
WJohnson	4	4	*	*	-	-
M Hammond	3	4	-	1	-	-
STough	4	4	1	1	**	**
V Ho	-	4	-	-	-	-
F Khan***	4	4	1	1	-	-

Attended by invitation, not a member of the relevant committee
** Not a member of the relevant committee

*** Attended 4 Board Meetings as an alternate director for Mr Ho. Mr Khan was appointed to the Audit Committee on 11 March 2015.

Retirement, Election and Continuance in Office of Directors

Mr Hammond retired as Director by rotation under the Company’s Constitution at the November 2014 AGM and was re-elected at that meeting.

Mr Ho was elected as Non-Executive Director at the November 2014 AGM.

Page 8 of 46

STRIKE RESOURCES LIMITED DIRECTORS’ REPORT

Remuneration Report (Audited)

The Directors are pleased to present the Company’s 2015 remuneration report which sets out remuneration information for Strike Resources Limited’s Non-Executive Directors, Executive Director and other key management personnel.

Key management personnel disclosed in this report

Non-Executive and Executive Directors (see pages 5 to 7 for details about each director)	Non-Executive and Executive Directors (see pages 5 to 7 for details about each director)
M Richmond W Johnson M Hammond S Tough V Ho F Khan	Chairman Managing Director Non-Executive Director Non-Executive Director Non-Executive Director AlternateDirector for Mr Ho

Remuneration Governance (under which details of remuneration committee is disclosed)

The Remuneration and Nomination Committee is a committee of the Board. It is primarily responsible for making recommendations to the Board on:

the necessary and desirable competencies of Directors and the extent to which these are reflected in the Board
suitable candidates for the position of Managing Director, when required
the development and review of Board succession plans
the appointment and re-election of Directors
making recommendations to the Board on policy governing the benefits of the Managing Director and any other Executive Director, including equity-based remuneration
making recommendations to the Board on the specific benefits to be provided to the Managing Director within the policy
conducting an annual review of Non-Executive Directors’ fees and determining whether the limit on the Non-Executive Directors’ fee pool remains appropriate, and
assisting the Managing Director to determine the remuneration (including equity- based remuneration) of Senior Management and advise on those determinations

The purposes of the Remuneration and Nomination Committee are to:

assist the Managing Director and the Board to adopt and implement a remuneration system that is required to attract, retain and motivate the personnel who will enable the Company to achieve long-term success; and
identify appropriate candidates for membership of the Board and, when necessary, identify suitable candidates for the role of Managing Director.

In doing this, the Remuneration and Nomination Committee seeks advice from independent remuneration consultants and consults market and industry surveys. There was no advice received during the current financial year.

Ultimate responsibility for the Company’s remuneration and nomination policies and practices remains with the full Board.

The Corporate Governance Statement provides further information on the role of this Committee.

A copy of Strike’s Remuneration and Nomination Committee Charter can be found on the Company’s website at www.strikeresources.com.au.

Non-Executive Director Remuneration Policy

Fees and payments to Non-Executive Directors reflect the demands which are made on, and the responsibilities of, the directors. The Remuneration and Nomination Committee is responsible to review Non-Executive Directors’ fees annually and makes recommendation to the Board. The Board has also considered the advice of independent market consultants to ensure Non-Executive Directors’ fees and payments are appropriate and in line with the market. The Chair’s fees are determined independently to the fees of Non-Executive Directors’ based on comparative roles in the external market.

Page 9 of 46

STRIKE RESOURCES LIMITED DIRECTORS’ REPORT

Pursuant to the Company’s Constitution, each Director is entitled to receive:

Payment for the performance of extra services and the undertaking of any executive or other work for the Company beyond his or her general duties; and
Payment for travelling and other expenses properly incurred by a Director in attending meetings of the Company or the Board or in connection with the Company’s business.

Historically the Board had resolved to remunerate Non-Executive Directors for work over and above that included in their base Director’s fee under a Special Exertion Policy. Where additional services are approved by the Board the Non-Executive Director is entitled to receive $350 per hour plus reimbursement of expenses.

With the exception of the above Special Exertion Policy, Non-Executive Directors do not receive performancebased pay. The Board had also previously resolved and issued Non-Executive Directors with options at various exercise prices and maturity dates as deemed appropriate at that time, however, in line with Corporate Governance Principles and Recommendations this is no longer the practice.

Directors’ fees

Non-executive Directors’ fees are determined within an aggregate Directors’ fee pool limit, which is periodically recommended for approval by shareholders. The maximum currently stands at $500,000 per annum and was approved by shareholders at the annual general meeting on 25 November 2009.

The Chair’s remuneration was reviewed upon his appointment, in February 2011.

Each Non-Executive Director receives $45,000 per year, except for Ms Tough. Ms Tough receives a higher fee, being the market rate that the Company determined was appropriate at the time she was appointed.

During the year the aggregate fees paid or due to be paid to Non-Executive Directors of the Company were as follows:

Director	Office held	Gross Salary/fees and Superannuation for the Period	Gross Salary/fees and Superannuation for the Period	Gross Salary/fees and Superannuation for the Period	Gross Salary/fees and Superannuation for the Period
		Fees	Special exertions	Superannuation	Total
		$	$	$	$
M Richmond M Hammond1 S Tough2 V Ho3 F Khan4	Chairman Non-Executive Director Non-Executive Director Non-Executive Director AlternateDirector for Mr Ho	70,000 45,000 80,000 11,250 33,750	- - - - -	6,650 - 7,600 1,069 3,206	76,650 45,000 87,600 12,319 36,956

The Director’s fee for Mr Hammond was reviewed in October 2010.
Ms Tough was appointed as a Non-Executive Director on 23 January 2012. Her Director’s fee was approved upon appointment.
Mr Ho was appointed as a Non-Executive Director on 20 January 2014. His Director’s fee was approved upon appointment.
Mr Khan was appointed as an alternate Director for Mr Ho on 20 January 2014.

Retirement Allowances for Non-Executive Directors

In line with the guidance from the ASX Corporate Governance Council on Non-Executive Directors’ remuneration, no Non-Executive Directors receive retirement allowances. Superannuation contributions required under the Australian superannuation guarantee legislation continue to be made and are deducted from the directors’ overall fee entitlements.

Executive Remuneration Policy and Framework

In determining executive remuneration, the Board aims to ensure that remuneration practices are:

competitive and reasonable, enabling the Company to attract and retain key talent
aligned to the Company’s strategic and business objectives and the creation of shareholder value
transparent, and
acceptable to shareholders.

The executive remuneration framework has three components:

base pay and benefits, including superannuation
short-term performance incentives, and
long-term incentives through participation in the Strike Resources Limited Employee Option Plan.

Page 10 of 46

STRIKE RESOURCES LIMITED DIRECTORS’ REPORT

Base Pay and Benefits

Executives receive their base pay and benefits structured as a total employment cost (TEC) package which may be delivered as a combination of cash and prescribed non-financial benefits at the executive’s discretion.

Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. Independent remuneration consultants and/or reports provide analysis and advice to ensure base pay is set to reflect the market for a comparable role. Base pay for executives is also reviewed on promotion.

The Managing Director’s contract was amended during the financial year resulting in a reduction of base pay to $208,000 per annum effective 1 May 2015 and the termination notice period changed from 6 months to 1 month.

There are no guaranteed base pay increases included in the executives’ contracts.

Short-term Incentives

The Managing Director has the opportunity to earn an annual short-term incentive (STI) if predefined targets are achieved. The targets are reviewed annually.

There were no STI targets set by the Remuneration Committee for the Managing Director during 2015 financial year.

The Remuneration and Nomination Committee is responsible for assessing whether the KPIs are met. To assist in this assessment, the Committee receives detailed reports on performance from management which are verified by industry surveys and, where deemed appropriate, independent remuneration consultants. The Committee will make recommendations to the Board to adjust short-term incentives downwards in light of unexpected or unintended circumstances. Other senior executives currently do not have any short term incentives such as cash bonuses included in their employment contracts. The executives’ performance is assessed on an annual basis and bonuses may be awarded on achievement of key performance objectives by recommendation of the Managing Director and at the discretion of the Board.

Long-term Incentives

Long-term incentives are provided to certain employees via the Strike Resources Limited Employee Option Plan which was approved by shareholders at the 6 November 2008 annual general meeting. The Employee Option Plan was subsequently amended on 8 November 2011.

The Strike Resources Limited Employee Option Plan is designed to provide long-term incentives for executives to deliver long-term shareholder returns. Under the plan, participants are granted options which are vested on issue. The Board has discretion to determine the exercise price and maturity date. Participation in the plan is at Board discretion and will often form part of an employment contract.

Director options were granted during the 2013 financial year which contributed to the Managing Director’s long-term incentives.

Share Trading Policy

The Company’s Share Trading Policy regulates all Directors’ and, employees’ of Strike Resources Limited and its subsidiaries, and certain contractors’, dealings in the Company’s securities. The Policy prohibits:

subscribing for, purchasing or selling Company securities or entering into an agreement to do any of those things; and
advising, procuring or encouraging another person (including a family member, friend, associate, colleague, family company or family trust) to trade in Company securities,

whilst in possession of market-sensitive information, prior to disclosure of that information to the market and thereafter until adequate time has elapsed for this to be reflected in the security’s price, in accordance with the Corporations Act 2001 . The Policy also prohibits communicating inside information to any other person when directors, employees of Strike Resources Limited and its subsidiaries, and certain contractors should reasonably know that they may deal in the Company’s securities or encourage another person to do so.

In order to further reduce the risk of inappropriate securities dealing, directors, employees of Strike Resources Limited and its subsidiaries, and certain contractors, must not deal in Company securities without the written consent of the “Trading Officers” nominated in the Company’s Share Trading Policy. Consent will not be given during certain “Prohibited Periods” before key reporting dates or while inside information exists.

Directors, employees of Strike Resources Limited and its subsidiaries, and certain contractors must inform the Company Secretary of all transactions they enter into involving the Company’s securities to enable disclosure to the market, where required.

A copy of Strike’s Share Trading Policy can be found on the Company’s website as www.strikeresources.com.au.

Page 11 of 46

STRIKE RESOURCES LIMITED DIRECTORS’ REPORT

Voting and Comments Made at the Company’s 2014 Annual General Meeting

Strike Resources Limited received more than 98% (2013: 99%) of “yes” votes on its remuneration report for the 2014 financial year. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices.

Detail of Remuneration

The following tables show details of the remuneration received or due to be received by the Directors and the key management personnel of the Consolidated Entity for the current and previous financial years.

	Short-term employee benefits	Short-term employee benefits	Short-term employee benefits	Short-term employee benefits	Post- employme nt benefits	Long- term benefits		Share- based payments	Total

	Cash salary and fees	Cash bonus	Non- monetary benefit	Annual Leave	Super- annuation	Long- service leave	Termination benefits	Options
2015	$	$	$	$	$	$	$	$	$
Non-Executive Directors: M Richmond M Hammond S Tough V Ho F Khan	70,000 45,000 80,000 11,250 33,750	- - - - -	- - - - -	- - - - -	6,650 - 7,600 1,069 3,206	- - - - -	- - - - -	- - - - -	76,650 45,000 87,600 12,319 36,956
Executive Director: WJohnson	376,308	-	-	33,261	35,749	-	-	-	445,318
Total	616,308	-	-	33,261	54,274	-	-	-	703,843

	Short-term employee benefits	Short-term employee benefits	Short-term employee benefits	Short-term employee benefits	Post- employme nt benefits	Long- term benefits		Share- based payments	Total

	Cash salary and fees	Cash bonus	Non- monetary benefit	Annual Leave	Super- annuation	Long- service leave	Termination benefits	Options
2014	$	$	$	$	$	$	$	$	$
Non-Executive Directors: M Richmond M Hammond S Tough V Ho1 F Khan1	70,000 45,000 80,000 5,050 15,151	- - - - -	- - - - -	- - - - -	6,475 - 7,200 480 1,439	- - - - -	- - - - -	- - - - -	76,475 45,000 87,200 5,530 16,590
Executive Director: W Johnson	400,000	-	-	33,187	37,000	-	-	-	470,187
Total	615,201	-	-	33,187	52,594	-	-	-	700,982

Mr Ho was appointed as a Non-Executive Director and Mr Khan was appointed as an Alternate Director for Mr Ho on 20 January 2014.

The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:

Name	Fixed remuneration	Fixed remuneration	At risk - STI	At risk - STI	At risk – LTI #	At risk – LTI #
	2015	2014	2015	2014	2015	2014
Executive Director W Johnson 100% 100% - - - -

Long-term incentives are provided exclusively by way of options, the percentages disclosed also reflect the value of remuneration consisting of options, based on the value of options expensed during the year. Negative amounts indicate expenses reversed during the year due to a failure to satisfy the vesting conditions.

Page 12 of 46

STRIKE RESOURCES LIMITED DIRECTORS’ REPORT

Service Agreements

Appointment to the Board as a Director is via resolution which outlines the Director’s agreed remuneration. The appointment is later ratified by shareholders at the next general meeting. No formal service agreements are executed for Non-Executive Directors. On the appointment to the Board, the Company enters into a deed with each Non-Executive Director to regulate certain matters between the Company and that Non-Executive Director, however Matthew Hammond has not executed such a deed.

Remuneration and other terms of employment for the Managing Director and other key management personnel are formalised in Employment Agreements. The Employment Agreement of the Managing Director provides for the provision of performance-related cash bonuses, which are reviewed annually by the Remuneration and Nomination Committee. No specific cash bonuses are provided in the Employment Agreements of other key management personnel.

The Employment Agreement with the Managing Director may be terminated early by either party with notice period of 1 month. There are no other termination benefits.

Share-based Compensation

There were no options granted to Directors’ or key management person as part of their remuneration during the current year (2014: nil).

Options granted under the plan carry no dividend or voting rights.

When exercisable, each option is convertible into one ordinary share within 5 business days after the exercise.

Shares Provided on Exercise of Remuneration Options

There were no shares issued as a result of the exercise of Directors’ or employee options which were issued as part of remuneration during the current year (2014: nil).

Details of Remuneration: Bonuses and Share-based Compensation Benefits

There were no cash bonuses or share based compensation benefits paid or granted during the current year (2014: nil).

Equity instrument disclosures relating to key management personnel

i. Options holdings

The numbers of options over ordinary shares in the Company held during the financial year by each director of Strike Resources Limited and other key management personnel of the Consolidated Entity, including their personally related parties, are set out below:

	Balance at Balance at	Granted as	Net change	Balance at	Vested and	Unvested
	1 July 2014 appointment	compensation	other1	30 June 2015	exercisable
	2015
	M Richmond - -	-	-	-	-	-
	M Hammond - -	-	-	-	-	-
	W Johnson 3,000,000 -	-	-	3,000,000	3,000,000	-
	S Tough - -	-	-	-	-	-
	V Ho - -	-	-	-	-	-
	F Khan - -	-	-	-	-	-
	Total 3,000,000 -	-	-	3,000,000	3,000,000	-
1.	Figures in “net change other” column represent final holding when the options have been cancelled or have lapsed.

Page 13 of 46

STRIKE RESOURCES LIMITED DIRECTORS’ REPORT

ii. Share holdings[1]

The numbers of shares in the Company held during the financial year by each director of Strike Resources Limited and other key management personnel of the Consolidated Entity are set out below. There were no shares granted during the reporting period as compensation.

2015 M Richmond M Hammond W Johnson S Tough V Ho F Khan Total	Balance at beginning of year Received during the year on the exercise of options Net change other Balance at the end of the year
	100,000 - - 100,000 - - - - 249,273 - - 249,273 - - - - 116,001 - - 116,001 17,441,605 - (16 690 802)2 750,803
	17,906,879 - (16,690,802) 1,216,077

Loans to Key Management Personnel

There were no loans to Key Management Personnel (or their personally-related entities) during the financial year.

Other Transactions with Key Management Personnel

There were no transactions with Key Management Personnel (or their personally-related entities) during the financial year.

This concludes the Audit Remuneration Report

Shares under Options

Unissued ordinary shares of Strike Resources Limited under option at the date of this report are as follows:

Date of options granted	Expiry date	Issue price of shares	Number under option
24 November 2011	23November 2016	$0.36	833,334
24 November 2011	23November 2016	$0.42	833,333
24 November 2011	23 November 2016	$0.56	833,333
5April 2012	23November 2016	$0.36	333,334
5April 2012	23November 2016	$0.42	333,333
5April 2012	23November 2016	$0.56	333,333
18 June 2013	17 June 2018	$0.30	3,000,000

No option holder has any right under the options to participate in any other share issue of the Company.

Insurance of Officer

The Directors have not included details of the nature of the liabilities covered or the amount of premiums paid in respect of a Directors’ and Officers’ liability and legal expenses insurance contract, as such disclosure is prohibited under the terms of the contract.

The Company has entered into deeds of indemnity with each director whereby, to the extent permitted by the Corporations Act 2001, the Company agreed to indemnify each director against all loss and liability incurred as an officer of the Company, including all liability in defending any relevant proceedings.

Environmental Regulation

The Consolidated Entity notes the reporting requirements of both the Energy Efficiency Opportunities Act 2006 (“ EEOA ”) and the National Greenhouse and Energy Reporting Act 2007 (“ NGERA ”).

The Energy Efficiency Opportunities Act 2006 requires an affected company to assess its energy usage, including the identification, investigation and evaluation of energy saving opportunities, and to report publicly on the assessments undertaken, including what action the company intends to take as a result.

The Consolidated Entity has determined that it does not operate a recognised facility requiring registration and reporting under the NGERA and, in any event it would fall under the threshold of greenhouse gas emissions required for registration and reporting. Similarly, the Consolidated Entity’s energy consumption would fall under the threshold required for registration and reporting under the EEOA.

1 The disclosures of share holdings above are in accordance with the accounting standards which require disclosure of shares held directly, indirectly or beneficially by each key management person, a close member of the family of that person, or an entity over which either of these persons have, directly or indirectly control, joint control or significant influence (as defined under Accounting Standard AASB 124 Related Party Disclosures).

2 Refer Appendix 3Y Change of Director’s Interest Notice dated 20 November 2014

Page 14 of 46

STRIKE RESOURCES LIMITED DIRECTORS’ REPORT

The Consolidated Entity is not otherwise subject to any particular or significant environmental regulation under either Commonwealth or State legislation. To the extent that any environmental regulations may have an incidental impact on the Consolidated Entity's operations, the Directors are not aware of any breach by the Consolidated Entity of those regulations.

Proceedings on Behalf of the Company

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

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001 .

Non-audit Services

The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company and/or the Consolidated Entity are important. Details of the amounts paid or payable to the auditor (BDO Audit (WA) Pty Ltd) and to other parties for work performed on behalf of the auditor, for audit and non-audit services provided during the year are set out below.

Auditors of the Consolidated Entity Audit and review of financial statements - BDO Audit (WA) Pty Ltd Auditors of the Peruvian subsidiaries Audit and review of financial statements - BDO Pazos, Lopez de Romana, Rodriguez BDO Tax (WA) Pty Ltd – ITR and FBT	$
	37,500 4,974 17,085
	59,559

During the year the $17,085 was paid or payable for services provided by related practices of the auditor of the parent entity.

The Board of Directors has considered the position and, in accordance with advice received from the Audit Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

all non-audit services have been reviewed by the Audit Committee to ensure they do not impact the impartially and objectivity of the auditor.
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants .

During the year there were $17,085 non-audit fees paid or payable for the services provided by the auditor of the Company, its related practices and non-related audit firms.

Auditor’s Independence Declaration

A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 16.

Auditor

BDO Audit (WA) Pty Ltd continues in office in accordance with section 327 of the Corporation Act 2001 .

This report is made in accordance with a resolution of directors.

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William Johnson

Managing Director 25 September 2015

Page 15 of 46

Tel: +61 8 6382 4600 38 Station Street Fax: +61 8 6382 4601 Subiaco, WA 6008 www.bdo.com.au PO Box 700 West Perth WA 6872 Australia

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DECLARATION OF INDEPENDENCE BY WAYNE BASFORD TO THE DIRECTORS OF STRIKE RESOURCES LIMITED

As lead auditor of Strike Resources Limited for the year ended 30 June 2015, I declare that, to the best of my knowledge and belief, there have been:

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

This declaration is in respect of Strike Resources Limited and the entities it controlled during the period.

==> picture [134 x 86] intentionally omitted <==

Wayne Basford

Director

BDO Audit (WA) Pty Ltd

Perth, 25 September 2015

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees

Page 16 of 46

STRIKE RESOURCES LIMITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Consolidated Statement of Profit or Loss and Other Comprehensive Income

for the year ended 30 June 2015

Note Revenue 5 Reversal of legal accrual Reversal of SUNAT provision 5 Fair value adjustment -financial assets held as fair value through profit and loss Foreign exchange loss Impairment expense 5 Loss on sale of fixed assets Operating expenses Other corporate costs 5 Personnel costs 5 Gain on loss of control of subsidiary Profit/(loss) before income tax Income tax expense 6 Profit/(loss) after income tax for the year Profit/(loss) is attributable to: Equity holders of Strike Resources Limited Other comprehensive income Items that may be reclassified subsequently to Profit or Loss Exchange differences on translation of foreign operations Other comprehensive income/(loss) net of tax Total comprehensive income/(loss) for the year Total comprehensive income/(loss) for the year is attributable to: Equity holders of Strike Resources Limited Earnings / (Loss) per share for the year attributable to the members of Strike Resources Limited Basic earnings/(loss) per share (cents) 24 Diluted earnings/(loss) per share (cents) 24	2015	2014
	$	$
	251,077 235,841 1,097,982 - (24,647) (720,953) - (31,314) (845,969) (615,188) 144,075 (509,096) (8,768) (517,864) (517,864) (281,270) (281,270) (799,134) (799,134) (0.36) (0.36)	609,339 - - (109,616) - (44,077,886) (14,411) (241,090) (3,346,285) (1,504,730) -
		(48,684,679) (76,771)
		(48,761,450) (48,761,450)
		494,292
		494,292
		(48,267,158)
		(48,267,158)
		(33.55) (33.55)

This consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

Page 17 of 46

STRIKE RESOURCES LIMITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Consolidated Statement of Financial Position

as at 30 June 2015

Note Current assets Cash and cash equivalents 7 Trade and other receivables 8 Non-Current assets held for sale 9 Total current assets Non-current assets Property, plant and equipment 10 Exploration and evaluation expenditure 11 Total non-current assets Total assets Current liabilities Trade and other payables 12 Provisions 13 Total current liabilities Total liabilities Net assets Equity Issued capital 14 Reserves 15 Accumulated losses Total equity	2015	2014
	$	$
	8,374,206 7,739 - 8,381,945 1,072 - 1,072 8,383,017 734,214 8,700 742,914 742,914 7,640,103 148,439,925 15,345,944 (156,145,766) 7,640,103	10,350,983 74,328 498,992
		10,924,303
		- -
		-
		10,924,303
		2,414,711 70,355
		2,485,066
		2,485,066
		8,439,237
		148,439,925 15,627,214 (155,627,902)
		8,439,237

This consolidated statement of financial position should be read in conjunction with the accompanying notes

Page 18 of 46

STRIKE RESOURCES LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Consolidated Statement of Changes in Equity for the year ended 30 June 2015

Balance as at 30 June 2013 Total income for the period Current period income/(loss) Other comprehensive income Exchange differences on translation of foreign operations Total comprehensive income/(loss) for the year Transactions with owners in their capacity as owners: Ordinary shares Balance as at 30 June 2014 Total income for the period Current period income/(loss) Other comprehensive income Exchange differences on translation of foreign operations Total comprehensive income/(loss) for the year Transactions with owners in their capacity as owners: Ordinary shares Balance as at 30 June 2015	Contributed Equity Currency Translation Reserve Share-based Payments Reserve Accumulated Losses Total Equity
	$ $ $ $ $
	148,439,925 1,899,896 13,233,026 (106,866,452) 56,706,395 - - - (48,761,450) (48,761,450) - 494,292 - - 494,292
	- 494,292 - (48,761,450) (48,267,158)
	- - - - -
	148,439,925 2,394,188 13,233,026 (155,627,902) 8,439,237 - - - (517,864) (517,864) - (281,270) - - (281,270)
	- (281,270) - (517,864) (799,134)
	- - - - -
	148,439,925 2,112,918 13,233,026 (156,145,766) 7,640,103

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

Page 19 of 46

STRIKE RESOURCES LIMITED CONSOLIDATED STATEMENT OF CASH FLOWS

Consolidated Statement of Cash Flows

for the year ended 30 June 2015

Consolidated Statement of Cash Flows or the year ended 30 June 2015
Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Net cash outflow from operating activities 23 Cash flows from investing activities Exploration and evaluation expenditure Proceeds from disposal of fixed assets Payments for property, plant and equipment Net cash outflow from investing activities Cash flows from financing activities Payments for share issue cost Net cash inflow from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the year Effect of exchange rate changes on cash balance Cash and cash equivalents at year end 7	2015	2014
	$	$
	- (2,069,478) 265,051 (1,804,427) (194,771) 24,029 (1,608) (172,350) - - (1,976,777) 10,350,983 - 8,374,206	161,724 (3,247,511) 467,326
		(2,618,461)
		(1,439,803) - (5,586)
		(1,445,389)
		-
		-
		(4,063,850) 14,414,971 (138)
		10,350,983

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

Page 20 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements

1. Summary of Significant Accounting Policies

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Strike Resources Limited and its subsidiaries.

a. Basis of Preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Strike Resources Limited is a for-profit entity for the purpose of preparing the financial statements.

(i) Compliance with IFRS

The consolidated financial statements of Strike Resources Limited also comply with International Financial Reporting Standards (“ IFRS ”) as issued by the International Accounting Standards Board (IASB).

(ii) New and amended standards adopted by the Consolidated Entity

The consolidated entity has applied the following standards and amendments for the first time for their annual reporting period commencing 1 July 2014:

Interpretation 21 Accounting for Levies
AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets
AASB 2013-4 Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge Accounting
AASB 2014-1 Amendments to Australia Accounting Standards

The consolidated entity also elected to adopt the following standards early:

AASB2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisition of Interests in Joint Operations
AASB 2014-4 Clarification of Acceptable Methods of Depreciation and Amortisation
AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an investor and its Associate or Joint Venture
AASB 2015-1 Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting Standards 2012-2014 Cycle
AASB 2015-3 Amendments to Australian Accounting Standards arising from the withdrawal of AASB 1031 Materiality
AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments

None of the new Standards and amendments to Standards that are mandatory or early adopted for the first time for the financial year beginning 1 July 2014 affected any of the amounts recognised in the current period or any prior period and are not likely to affect future periods. Additionally, they did not significantly affect the Group’s accounting policies or any of the disclosures.

(iii) Early adoption of standards

The Consolidated Entity has not elected to apply any pronouncements before their operative date in the annual reporting period beginning 1 July 2014 apart from the early adoption of AASB 9 ‘Financial Instruments’.

(iv) Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and liabilities at fair value though profit or loss, assets of disposal group held for sale and capitalised exploration and evaluation expenditure.

(v) Critical accounting estimates

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Consolidated Entity’s accounting policies. The area involving a higher degree of judgement or complexity, or area where assumptions and estimates are significant to the financial statements, are disclosed in note 3.

Page 21 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies (continued)

b. Principles of Consolidation

(i) Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Strike Resources Limited (“ Company ” or “ Strike ”) as at 30 June 2015 and the results of all subsidiaries for the year then ended. Strike Resources Limited and its subsidiaries together are referred to in this financial report as Consolidated Entity.

Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

Subsidiaries are fully consolidated from the date on which control is transferred to the Consolidated Entity. They are de-consolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the Consolidated Entity. Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the assets transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the Consolidated Statement of Profit or Loss and Other Comprehensive Income, Statement of Changes in Equity, and Consolidated Statement of Financial Position respectively.

(ii) Changes in ownership interests

The Consolidated Entity treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Consolidated Entity. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of Strike Resources Limited.

When the Consolidated Entity ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for retained interest as an associate. In addition, any amounts previously recognised in Other Comprehensive Income in respect of that entity are accounted for as if the Consolidated Entity had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in Other Comprehensive Income are reclassified to profit or loss.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in Other Comprehensive Income are reclassified to profit or loss where appropriate.

c. Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Managing Director. The Managing Director is responsible for allocating resources and assessing performance of the operating segments.

d. Foreign Currency Translation

(i) Functional and presentation currency

Items included in the financial statements of each company in the Consolidated Entity are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Australian dollars, which is Strike Resources Limited’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation. Foreign exchange gains or losses that relate to borrowings are presented in the Consolidated Statement of Profit or Loss and Other Comprehensive Income within finance costs. All other foreign exchange gains and losses are presented in the Consolidated Statement of Profit or Loss and Other Comprehensive Income on a net basis within other income or operating expenses.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.

Page 22 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies (continued)

(iii) Group companies

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position
income and expenses for Consolidated Statement of Profit or Loss and Other Comprehensive Income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and
all resulting exchange differences are recognised in Other Comprehensive Income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in Other Comprehensive Income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

e. Revenue Recognition

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

The Consolidated Entity recognises revenue when the amount of revenue can be reliably measured. It is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Consolidated Entity’s activities as described below. The Consolidate Entity bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenue is recognised for the major business activities as follows:

(i) Consultancy fees

Revenue from consulting services is recognised in the accounting period in which the services are rendered.

(ii) Sale of goods and disposal of assets

Revenue from the sale of goods and disposal of other assets is recognised when the Consolidated Entity has passed control and the risks and rewards of ownership of the goods/assets to the buyer.

(iii) Interest income

Interest income is recognised using the effective interest method. When a receivable is impaired, the Consolidated Entity reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate.

(iv) Dividends

Dividends are recognised as revenue when the right to receive payment is established. This applies even if they are paid out of pre-acquisition profits. However, the investment may need to be tested for impairment as a consequence, refer note 1(k).

(v) Other revenues

Other revenues are recognised on a receipts basis.

f. Income Tax

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and for unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Page 23 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies (continued)

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities, and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in Other Comprehensive Income or directly in equity. In this case, the tax is also recognised in Other Comprehensive Income or directly in equity, respectively.

g. Leases

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Consolidated Entity as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the Consolidated Statement of Profit or Loss and Other Comprehensive Income on a straight-line basis over the period of the lease.

h. Impairment of Assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which they are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or group of assets (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

i. Cash and Cash Equivalents

For the purpose of presentation in the Consolidate Statement of Cash Flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the Consolidated Statement of Financial Position.

j. Trade Receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the Consolidated Entity will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

The amount of impairment loss is recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectable in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in profit or loss.

k. Investments and Other Financial Assets Classification

The Consolidated Entity classifies its financial assets in the following categories: financial assets at fair value through profit or loss, and loans and receivables. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investment at initial recognition.

Page 24 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies (continued)

(i) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Assets in this category are classified as current assets if they are expected to be settled within 12 months; otherwise they are classified as non-current.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting period which are classified as non-current assets.

Financial assets-reclassification

The Consolidated Entity may choose to reclassify non-derivative trading financial assets out of the held for trading category if the financial asset is no longer held for the purpose of selling it in the near term. Financial assets other than loans and receivables are permitted to be reclassified out of the held for trading category only in rare circumstances arising from a single event that is unusual and highly unlikely to recur in the near term. In addition, the Consolidated Entity may choose to reclassify financial assets that would meet the definition of loans and receivables out of held for trading if the Consolidated Entity has the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification.

Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made. Effective interest rates for financial assets reclassified to loans and receivables are determined at the reclassification date. Further increases in estimates of cash flows adjust effective interest rates prospectively.

Recognition and de-recognition

Regular way purchases and sales of financial assets are recognised on trade-date - the date on which the Consolidated Entity commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Consolidated Entity has transferred substantially all the risks and rewards of ownership.

Measurement

At initial recognition, the Consolidated Entity measures a financial asset at its fair value plus, in case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in the profit or loss.

Loans and receivables are subsequently carried at amortised cost using the effective interest method.

Financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the “financial asset at fair value through profit or loss” category are presented in profit or loss within Other Comprehensive Income or Other Operating Expenses in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income as part of revenue from continuing operations when the Consolidated Entity’s right to receive payments is established. Interest income from these financial assets is included in the net gains/(losses).

Details on how the fair value of financial instruments is determined are disclosed in note 2.

Impairment

The Consolidated Entity assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset (or a group of financial assets) is impaired and the impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

(i) Financial Assets carried at amortised cost

For loans and receivables, the amount of loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the profit or loss.

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 (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.

Page 25 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies (continued)

l. Property, Plant and Equipment

All items of property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Consolidated Entity and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost or re-valued amounts, net of their residual values, over their estimated useful lives or, in the case of leasehold improvements, the shorter lease term as follows:

Computer equipment 33.33% to 66.67% Plant & equipment 12.5%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount note 1(n).

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.

m. Mineral exploration and evaluation expenditure

Exploration and evaluation expenditure incurred is initially capitalised in respect of each identifiable area of interest where the Consolidated Entity has right of tenure. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence or otherwise of economically-recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

Under AASB 6 Exploration for and Evaluation of Mineral Resources , if facts and circumstances suggest that the carrying amount of any recognised exploration and evaluation assets may be impaired, the Consolidated Entity must perform impairment tests on those assets and measure any impairment in accordance with AASB 136 Impairment of Assets . Any impairment loss is to be recognised as an expense. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

n. Trade and Other Payables

These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

o. Employee Benefits

(i) Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables.

(ii) Other long-term employee benefit obligations

The liability for long service leave and annual leave which is not expected to be settled within 12 months after the end of the period in which the employees render the related service is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period on corporate bond rate with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Page 26 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies (continued)

The obligations are presented as current liabilities in the Consolidated Statement of Financial Position if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual settlement is expected to occur.

(iii) Share-based payments

Shared-based compensation benefits are provided to employees via the Strike Resources Limited Employee Option Plan. Information on these schemes is set out in note 25.

p. Employee Benefits (continued)

The fair value of options granted under Strike Resources Limited Employee Option Plan is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted, which includes any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions.

Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-marketing vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss with a corresponding adjustment to equity.

q. Contributed equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are included in the cost of the acquisition as part of the purchase consideration.

r. Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

s. Earnings per Share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares.
by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and
the weighted average number of additional shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

t. Goods and Services Tax (“GST”) (including Value Added Tax – “VAT”)

Revenues, expenses and assets are recognised net of the amount of any associated GST (VAT), unless the GST (VAT) incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST (VAT) receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST (VAT) components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.

u. New Accounting Standards and Interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2015 reporting periods. The Consolidated Entity has elected not to early adopt any Standards or Interpretations.

Page 27 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies (continued)

The Consolidated Entity’s assessment of the impact of these new standards and interpretations is set out below:

Standard / Interpretation	Effective for annual reporting periods beginning on or after	Expected to be initially applied in the financial year ending
AASB 15 ‘Revenue from Contracts with Customers’ and AASB 2014-5 ‘Amendments to Australian Accounting Standards arising from AASB 15’	1 January 2017	30 June 2018
AASB 2014-3 ‘Amendments to Australian Accounting Standards –Accounting for Acquisitions of Interests in Joint Operations’	1 January 2016	30 June 2017
AASB 2014-4 ‘Amendments to Australian Accounting Standards – Clarifications of Acceptable Methods of Depreciation and Amortisation’	1 January 2016	30 June 2017
AASB 2014-6 ‘Amendments to Australian Accounting Standards – Agriculture: Bearer Plants’	1 January 2016	30 June 2017
AASB 2014-9 ‘Amendments to Australian Accounting Standards –Equity Method in Separate Financial Statements’	1 January 2016	30 June 2017
AASB 2014-10 ‘Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture’	1 January 2016	30 June 2017
AASB 2015-1 ‘Amendments to Australian Accounting Standards – Annual improvements to Australian Accounting Standards 2012-2014 Cycle’	1 January 2016	30 June 2017
AASB 2015-2 ‘Amendments to Australian Accounting Standards –Disclosure Initiative: Amendments to AASB 101’	1 January 2016	30 June 2017
AASB 2015-3 ‘Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality’	1 July 2015	30 June 2016
AASB 2015-4 ‘Amendments to Australian Accounting Standards – Financial Reporting Requirements for Australian Groups with a Foreign Parent’	1 July 2015	30 June 2016
AASB 2015-5 ‘Amendments to Australian Accounting Standards –Investment Entities: Applying the Consolidation Exception’	1 January 2016	30 June 2017

There are no other standards that are not yet effective and that are expected to have material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

v. Parent Entity Financial Information

The financial information for the parent entity, Strike Resources Limited, disclosed in Note 26 has been prepared on the same basis as the consolidated financial statements.

2. Financial Risk Management

Financial Risk Management Objectives and Policies

The Consolidated Entity's financial instruments mainly consist of deposits with banks, accounts receivable and payable. The main risks arising from the Consolidated Entity's financial instruments are interest rate risk, foreign exchange risk, credit risk, equity price risk and liquidity risk.

The Board of Directors’ is responsible for the overall internal control framework (which includes risk management) but no cost-effective internal control system will preclude all errors and irregularities. The system is based, in part, on the appointment of suitably-qualified management personnel in conjunction with a range of policies and procedures, which incorporate monitoring and reporting mechanisms, to assist in the management of the various risks to which the business is exposed. The effectiveness of the system is continually reviewed by management and at least annually by the Board.

Page 28 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Entity holds the following instruments.

Variable interest rate Fixed interest rate Non-interest bearing Total	Variable interest rate Fixed interest rate Non-interest bearing Total	Variable interest rate Fixed interest rate Non-interest bearing Total	Variable interest rate Fixed interest rate Non-interest bearing Total
2015 2014 2015 2014 2015 2014 2015 2014
$ $ 195,800 190,525 - - - - - -	$ $ 8,075,000 9,850,000 - - - - - -	$ $ 103,406 310,458 - 61,892 - - - -	$ $ 8,374,206 10,350,983 - 61,892 - - - -
195,800 190,525 - -	8,075,000 9,850,000 - -	103,406 372,350 (84,109) (1,014,613)	8,374,206 10,412,875 (84,109) (1,014,613)
195,800 190,525	8,075,000 9,850,000	19,297 (642,263)	8,290,097 9,398,262

a. Market Risk

i. Foreign Exchange Risk

The Consolidated Entity operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar, Peruvian Nuevo Soles and Canadian dollar.

Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.

The Consolidated Entity has a policy of not hedging foreign exchange risk and therefore has not entered into any hedging against movements in foreign currencies against the Australian dollar, including forward exchange contracts, as at the reporting date and is currently fully exposed to foreign exchange risk.

i. Foreign Exchange Risk

The Consolidated Entity's exposure to foreign exchange risk expressed in Australian dollar at the reporting date was as follows:

Financial assets Cash at bank Receivables Financial assets at fair value through profit or loss Loan receivable Financial liabilities Payables	USD	Others
	2015 2014	2015 2014
	74,044 189,495 - 47,918 - - - - (60,338) (512,303)	- - - - - - - - - -
	13,706 (274,890)	- -

Sensitivity

The Consolidated Entity has performed a sensitivity analysis on its exposure to exchange risk. The management assessment is based upon an analysis of current and future market position. The analysis demonstrates the effect on the current-year results and equity when the Australian dollar strengthened or weakened by 10% (2014: 10%) against the foreign currencies detailed above, with all the other variables held constant.

	2015	2014
	$	$
Change in profit
increase by 10%	1,371	27,489
decrease by 10%	(1,371)	(27,489)
Change in equity
increase by 10%	-	-
decrease by 10%	-	-

Page 29 of 46

STRIKE RESOURCES LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

a. Market Risk (continued)

ii. Interest Rate Risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The Consolidated Entity's exposure to market risk for changes in interest rates relate primarily to investments held in interest-bearing cash deposits.

Cash at bank Term deposit Weighted average interest rates	2015	2014
	$	$
	299,206 8,075,000 8,374,206 2.84%	500,983 9,850,000
		10,350,983
		3.51%

The Consolidated Entity has performed a sensitivity analysis on its exposure to interest rate risk at the reporting date. The management assessment is based upon an analysis of current and future market conditions, in particular comments from the Reserve Bank of Australia on the likely movement of interest rates. The analysis demonstrates the potential effect on the current year results and equity which could result from a change in these risks.

	2015	2014
	$	$
Change in profit
increase by 25bps (2014: 25bps)	20,369	25,101
decrease by 25bps (2014: 25bps)	(20,369)	(25,101)
Change in equity
increase by 25bps (2014: 25bps)	-	-
decrease by 25bps (2014: 25bps)	-	-

b. Credit Risk

Credit risk refers to the risk that a counterparty under a financial instrument will default (in whole or in part) on its contractual obligations resulting in financial loss to the Consolidated Entity. Concentrations of credit risk are minimised primarily by undertaking appropriate due diligence on potential investments, carrying out all market transactions through approved brokers, settling non-market transactions with the involvement of suitably qualified legal and accounting personnel (both internal and external), and obtaining sufficient collateral or other security (where appropriate) as a means of mitigating the risk of financial loss from defaults.

Pursuant to the Cuervo Investment Agreement, the Company holds a pledge over the shares of Minera Cuervo S.A.C., which pledge is exercisable if Cuervo defaults under the Investment Agreement.

The credit quality of the financial assets are neither past due nor impaired and can be assessed by reference to external credit ratings (if available with Standard & Poor's) or to historical information about counterparty default rates:

Cash and cash equivalents AA A+ No external credit rating available Receivables and loans AA A+ No external credit rating available	2015	2014
	$ 8,270,800 - 103,406 8,374,206 - - - 8,374,206	$ 6,981,246 3,100,000 269,737
		10,350,983 58,215 3,116 12,997
		10,425,311

The Consolidated Entity measures credit risk on a fair-value basis. The carrying amount of financial assets recorded in the financial statements, net of any provision for losses, represents the Consolidated Entity’s maximum exposure to credit risk. All receivables noted above, except interest on term deposits, are due within 30 days. None of the above receivables are past due.

Page 30 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

c. Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities to meet obligations when due and to close out the market positions. At the end of the reporting period the Consolidated Entity held deposits of $8,075,000 (2014: $9,850,000) that mature within the next 3 months after 30 June 2015 that are expected to readily generate cash inflows for managing liquidity risk.

The financial liabilities disclosed have the following maturity obligation:

Carrying	Amount	Contractual	Amount
2015	2014	2015	2014
$ 84,109 - - 84,109	$ 276,184 738,429 - 1,014,613	$ 84,109 - - 84,109	$ 276,184 738,429 -
			1,014,613

d. Net Fair Value of Financial Assets and Liabilities

The carrying amounts of financial instruments recorded in the financial statements approximates their fair value determined in accordance with the accounting policies disclosed in Note 3.

e. Fair Value Measurements

The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Consolidated Entity is the current bid price. These instruments are included in level 1.

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

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. Techniques such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

The fair value of financial instruments must be estimated for recognition and measurement or for disclosure purposes.

AASB 7 Financial Instruments : Disclosures requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
(b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2); and
(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).

3. Critical Accounting Estimates and Judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

a. Impairment of Capitalised Exploration and Evaluation expenditure

The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including the Consolidated Entity’s ability to develop the relevant area of interest itself or, if not, whether it can successfully recover the capitalised exploration and evaluation asset through sale.

Factors that could impact the future recoverability include the grade and quantity of mineral resources, future technological changes which impact the cost of mining, future legal changes (including changes to environmental restoration obligations), changes to commodity prices, right of tenure and community approvals or access.

b. SUNAT tax

In June 2014, The Peruvian Tax Administration (“SUNAT”) completed an audit on Apurimac Ferrum S.A (“AF”) relating to Non Resident Income Tax Withholding for the fiscal years 2010 and 2011.

The SUNAT notified AF a set of Resolutions that determine a debt for Non Domiciled Income Tax Withholding and Fine Resolutions as a result of the Audit process.

AF has obtained independent advice in respect to the SUNAT findings identifying that the Company has strong arguments in its defence. As a result, AF has officially lodged a claim against the SUNAT findings.

Page 31 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

In April 2015, AF received resolutions from SUNAT which have predominantly ruled in favour of a claim made by AF. As a result, AF was able to reverse A$1.1 million of its A$1.7 million accrual that is has previously recognised for SUNAT withholding taxes.

SUNAT has requested its audit area to complete a re-audit on several of initial findings believing that insufficient evidence was compiled to support its position. AF plans to appeal this matter to the Tax Administrative Court but will continue to recognise an accrual of A$610,878 for the resolutions subject to further investigation until the dispute is completely resolved.

4. Segment Information

a. Description of segments

Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions.

The Board of Directors considers the business from both a product and a geographic perspective and has identified two reportable segments as follows:

Australia
Peru (Iron Ore)

In April 2014, the Company announced that it was undertaking a full strategic review of all of its assets and has determined to close its office and operations in Peru.

b. Segment information provided to the Board of Directors

The segment information provided to the Board of Directors for the reportable segments for the year ended 30 June 2014 and 30 June 2015 are as follows:

2015	Peru	Australia	Total
Interest revenue Sale of iron ore Other income Inter-segment revenue Other income Adjusted EBITDA Depreciation and amortisation Personnel costs Impairment losses: - Exploration & Evaluation expenditure - Land Total segment assets Total segment liabilities	- - - - - 116,555 - 21,744 (222,194) (470,129) 103,406 (834,274)	251,077 - - - 251,077 (1,371,162) (536) (636,932) 1,583 - 8,279,611 (38,498,846)	251,077 - - - 251,077 (1,254,607) (536) (615,188) (220,611) (470,129) 8,383,017 (39,333,120)

2014	Peru	Australia	Total
Interest revenue Sale of iron ore Other income Inter-segment revenue Other income Adjusted EBITDA Depreciation and amortisation Personnel costs Impairment losses: - Loan to Cuervo Resources Inc. - Exploration & Evaluation expenditure Fair value adjustment – financial assets held at fair value through profit or loss Total segment assets Total segment liabilities	- 129,865 - - 129,865 (49,206,548) (37,721) (880,803) - (43,242,933) - 1,641,801 (3,329,012)	418,462 - 61,012 - 479,524 (4,942,921) (2,395) (623,927) (827,641) (7,312) (109,616) 10,233,180 (39,081,374)	418,462 129,865 61,012 - 609,339 (54,149,469) (40,116) (1,504,730) (827,641) (43,250,245) (109,616) 11,874,981 (42,410,386)

Page 32 of 46

STRIKE RESOURCES LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4. Segment Information (continued)

c. Other segment information

(i) Segment revenue

Segment revenue reconciles to total revenue as per the Consolidated Statement of Profit or Loss and Other Comprehensive Income:

omprehensive Income:
Other income Interest revenue Other income	2015	2014
	$	$
	251,077 - 251,077	418,462 190,877
		609,339

(ii) Adjusted EBITDA

A reconciliation of adjusted EBITDA to operating profit before income tax is provided as follows:

Adjusted EBITDA Intersegment eliminations Depreciation Profit/(loss) before tax from continuing operations	2015	2014
	$	$
	(1,254,607) 746,047 (536) (509,096)	(54,149,469) 5,504,906 (40,116)
		(48,684,679)

(iii) Segment assets and segment liabilities

Reportable segments’ assets and liabilities are reconciled to total assets and liabilities respectively as follows:

Segment assets Intersegment eliminations Total assets as per the Consolidated Statement of Financial Position Segment liabilities Intersegment eliminations Total liabilities as per the Consolidated Statement of Financial Position 5. Profit/(Loss) for the Year (a) Revenue Revenue Interest received – Cash on deposit Foreign exchange gain Sale of iron ore Total revenue and other income (b) Expenses Personnel costs Cash remuneration Annual leave provision Superannuation expense Administration costs Consultancy fees Professional fees Depreciation Other corporate expenses	2015	2014
	$	$
	8,383,017 - 8,383,017 (39,333,120) 38,590,206 (742,914)	11,874,981 (950,678)
		10,924,303
		(42,410,386) 39,925,320
		(2,485,066)

	2015	2014
	$	$
	$ 251,077 - - 251,077 613,232 (54,237) 56,193 615,188 245,220 233,044 536 367,169 845,949	$ 418,462 61,012 129,865
		609,339
		1,454,462 50,268
		1,504,730
		370,297 1,035,545 40,116 1,900,327
		3,346,285

Page 33 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(b) Expenses (continued) Impairment losses Exploration and evaluation Loan to Cuervo Resources Inc. Non-Current assets held for sale Reversal of SUNAT provision*	220,611 - 500,342 720,953 1,097,982	43,250,245 827,641 -
		44,077,886
		-

*Refer to Note 12 for details on SUNAT provision.

6. Income Tax Expense

(a) Income tax expense Current tax Deferred tax (b) Numerical reconciliation between tax expense and pre-tax net profit/(loss) Profit/(loss) from continuing operations before income tax Income-tax expense/(benefit) on above at 30% Increase in income tax due to: Non-deductible expenses and foreign losses Current year tax losses not recognised Movement in unrecognised temporary differences Decrease in income tax expenses due to: Non assessable income Utilisation of prior year tax loss Foreign tax rates differential Foreign jurisdiction withholding tax Income-tax expense attributable to operating profit (c) Deferred tax assets not brought to account On income-tax account Carry-forward tax losses Other Total deferred tax assets not brought to account (d) Deferred tax liability not brought to account On income-tax account Carry-forward tax losses Other Total deferred tax losses not brought to account	2015	2014
	$	$
	8,768 - 8,768 (509,096) (152,729) (9,287) 210,308 62,993 - (108,779) (2,506) 8,768 8,768 9,102,300 12,506,259 21,608,560 - - -	76,771 -
		76,771
		(48,684,679)
		(14,605,403) 1,704,579 1,417,202 11,485,101 (1,479) - - 76,771
		76,771
		9,467,078 12,161,566
		21,628,644
		- - -
	-	-

The deferred tax asset not brought to account for the 2015 and 2014 years will only be obtained if:

i. the Consolidated Entity derives future assessable income of a nature and of an amount sufficient to enable the benefit to be realised;
ii. the Consolidated Entity continues to comply with the conditions for deductibility imposed by tax legislation; and
iii. in relation to Australian carry forward income tax losses the Consolidated Entity is able to meet the continuity of ownership and/or continuity of business tests.

The Company and controlled entities of the Company have not elected to consolidate for taxation purposes and have not entered into a tax sharing and funding agreement in respect of such arrangements.

Page 34 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7. Cash and Cash Equivalents

7. Cash and Cash Equivalents
Cash at bank Term deposits	2015 $ 299,206 8,075,000 8,374,206	2014
		$
		500,983 9,850,000 10,350,983

Risk exposure

The Consolidated Entity’s exposure to interest rate risk is discussed in note 2. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of cash and cash equivalents mentioned above.

8. Trade and Other Receivables

Current: Loan to Cuervo Resources Inc. Provision for impairment Goods and service tax (GST) recoverable in Australia VAT credit & Income Tax Credit Amounts receivable from sundry debtors	2015	2014
	$	$
	5,216,470 (5,216,470) - 7,739 - - 7,739	5,216,470 (5,216,470)
		-
		12,436 1,053 60,839
		74,328

On December 11, 2013 Strike announced it had issued a demand notice for C$5,250,000 plus applicable interest to Cuervo in respect of the Investment Agreement between the two companies, relating to the financing of the Cerro Ccopane project. The demand notice was issued following Strike's concerns regarding the solvency of Cuervo and events of default occurring under the current agreements between the companies. Strike also issued a notice of its intention to enforce its security held over 90% of the shares of the Peruvian company holding the key assets of the project, if the full amount owed to Strike was not paid by December 16, 2013. To date no further action has been undertaken.

Strike is aware that all of the Canadian directors of Cuervo have resigned and the company has been delisted from the Canadian Securities Exchange. Strike is examining its options to recover value as a secured creditor of Cuervo. In this regard, Strike has been advised that the legal and court costs of actively pursuing its claims in Canada and Peru could be considerable. In light of this and the fact that the recoverable value of the Cuervo assets in Peru is questionable under current market conditions, Strike is considering whether to actively pursue its claims.

Refer to Note 2 for the Consolidated Entity’s exposure to credit risk, foreign exchange risk and interest rate risk.

9. Non-Current Assets Held for Sale

Land Property, plant and equipment	2015	2014
	$	$
	- - -	428,912 70,080
		498,992

On 14 April 2014, following a strategic review the Company decided to close its office and operations in Peru. Since determining to suspend its operations in Peru, the Company is actively looking to dispose of its assets in Peru.

During the financial year, the Company impaired all property, plant and equipment which was unable to be sold. The Company continues to hold 886ha block of land in Cusco. An independent valuation of the land determined that the current market in the mining sector limits any probability of value realisation. As such, the directors have impaired the land held to a value of nil.

Page 35 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

10. Property, Plant and Equipment

	Capital WIP Land	Plant and equipment	Leasehold improvements Total
At 30 June 2013 Cost or fair value Accumulated depreciation and impairment Net carrying amount 2014 Consolidated Carrying value at 1 July 2013 Foreign exchange adjustment Cost of asset additions Depreciation expense Cost of asset disposals Accumulated depreciation on disposed assets Reclassification of property, plant and equipment held for sale Carrying value at 30 June 2014 At 30 June 2014 Cost or fair value Accumulated depreciation and impairment Reclassification of property, plant and equipment held for sale Net carrying amount 2015 Consolidated Carrying value at 1 July 2014 Cost of asset additions Depreciation expense Carrying value at 30 June 2015 At 30 June 2015 Cost or fair value Accumulated depreciation and impairment Net carrying amount	280 453,167 - -	460,031 (320,906)	- 913,478 - (320,906)
	280 453,167	139,125	- 592,572
	280 453,167 - (24,255) - - - - - - - - (280) (428,912)	139,125 7,479 5,786 (40,116) (166,669) 124,195 (69,800)	- 592,572 - (16,776) - 5,786 - (40,116) - (166,669) - 124,195 - (498,992)
	- -	-	- -
	280 428,912 - - (280) (428,912)	299,148 (229,348) (69,800)	- 728,340 - (229,348) - (498,992)
	- -	-	- -
	- - - - - -	- 1,608 (536)	- - - 1,608 - (536)
	- -	1,072	- 1,072
	- - - -	1,608 (536)	- 1,608 - (536)
	- -	1,072	- 1,072

Page 36 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

11. Exploration and Evaluation Expenditure

11. Exploration and Evaluation Expenditure
Balance at the beginning of the year Foreign exchange adjustment Exploration and evaluation expenditure additions Impairment loss – exploration and evaluation* Balance at the end of the year	2015	2014
	$	$
	- - 220,611 (220,611) -	41,842,078 158,264 1,249,903 (43,250,245)
		-

*The Consolidated Entity has assessed the carrying amount of the exploration and evaluation in accordance with AASB 6 Exploration for and Evaluation of Mineral Resources and has recognised an impairment expense of $220,611 during the current financial year following the decision to review its commitment to continue sole funding the advancement of its projects in Peru. On 14 April 2014, the Group announced that it was undertaking a full strategic review of all of its assets and due to this it was closing AF’s office and operations in Peru.

The ultimate recoverability of deferred exploration and evaluation expenditure is dependent on the successful development or sale of the relevant area of interest. Refer to Note 1(m) & 3(a).

12. Trade and Other Payables

12. Trade and Other Payables
Current Trade creditors Other creditors and accruals Withholding Tax1	2015	2014
	$	$
	23,771 99,565 610,878 734,214	182,590 761,668 1,470,453
		2,414,711

1 Withholding tax accrual of $610,878 arising from the Peruvian Tax Administration (“SUNAT”) audit on Apurimac Ferrum S.A (“AF”) relating to Non Resident Income Tax Withholding for the fiscal years 2010 and 2011. In June 2014, The Peruvian Tax Administration (“SUNAT”) completed an audit on Apurimac Ferrum S.A (“AF”) relating to Non Resident Income Tax Withholding for the fiscal years 2010 and 2011.

The SUNAT notified AF a set of Resolutions that determine a debt for Non Domiciled Income Tax Withholding and Fine Resolutions as a result of the Audit process.

In April 2015, AF received resolutions from SUNAT which have predominantly ruled in favour of a claim made by AF. As a result, AF was able to reverse A$1.1 million of its A$1.7 million accrual that it has previously recognised for SUNAT withholding taxes.

Details of the Consolidated Entity's exposure to risks arising from current payables are set out in Note 2.

13. Provisions

13. Provisions
Current Provision for employee entitlements – annual leave Other	2015	2014
	$	$
	8,700 - 8,700	53,266 17,089
		70,355

Page 37 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

14. Issued Capital

145,334,268 (2014: 145,334,268) fully-paid ordinary shares	2015 2014
	$ $
	148,439,925 148,439,925

Each fully-paid, ordinary share carries one vote per share and the right to participate in dividends.

Date of movement Movement in ordinary share capital At 1 July 2013 Share issued At 30 June 2014 Share issued At 30 June 2015	No.	$
	145,334,268 - 145,334,268 - 145,334,268	148,439,925 -
		148,439,925
		-
		148,439,925

Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

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

Options

Information relating to the Strike Resources Limited Employee Option Plan, including details of options issued, exercised and lapsed during the financial year and options outstanding at the end of the reporting period, is set out in note 25.

Capital risk management

The Consolidated Entity's objectives when managing capital are to safeguard their ability to continue as a going concern so that they can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure the Consolidated Entity may return capital to shareholders, issue new shares or sell assets to reduce debt. The Consolidated Entity's non-cash investments can be realised to meet accounts payable arising in the normal course of business.

15. Reserves

15. Reserves
Foreign currency translation reserve Share-based payments reserve	2015	2014
	$	$
	2,112,918 13,233,026 15,345,944	2,394,188 13,233,026
		15,627,214

Nature and Purpose of Other Reserves

i. Share-Based Payment

The share-based payments reserve records the consideration (net of expenses) received by the Company on the issue of options. In relation to options issued to Directors and employees for nil consideration, the fair values of these options are included in the share-based payments reserve.

ii. Foreign Currency Translation

Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency translation reserve as described in Note 1(d) and accumulate in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of.

16. Key Management Personnel Disclosures

a. Compensation of Key Management Personnel

Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or payable to each member of the Company’s key management personnel for the year ended 30 June 2015.

Page 38 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The totals of remuneration paid to KMP of the Company during the year are as follows:

Short-term employee benefits Post-employment benefits	2015	2014
	$	$
	649,569 54,274 703,843	615,201 52,594
		667,795

17. Auditors’ Remuneration

17. Auditors’ Remuneration
Auditors of the Consolidated Entity Audit and review of financial statements - BDO Audit (WA) Pty Ltd Auditors of the Peruvian subsidiaries Audit and review of financial statements - BDO Pazos, Lopez de Romana, Rodriguez BDO Tax (WA) Pty Ltd – ITR and FBT	2015	2014
	$	$
	37,500 4,974 17,085 59,559	41,000 4,000 24,021
		69,021

During the year the $17,085 was paid or payable for services provided by related practices of the auditor of the parent entity.

18. Contingent Assets and Liabilities

a. Native Title

The Consolidated Entity's tenements in Australia may be subject to native title applications in the future. At this stage it is not possible to quantify the impact (if any) that native title may have on the operations of the Consolidated Entity.

b. Government Royalties

The Consolidated Entity is liable to pay royalties on production obtained from its mineral tenements/concessions.

c. Directors' Deeds

The Consolidated Entity has entered into deeds of indemnity with Strike Resources Limited Directors, indemnifying them against liability incurred in discharging their duties as Directors/officers of the Consolidated Entity. As at the reporting date, no claims have been made under any such indemnities and, accordingly, it is not possible to quantify the potential financial obligation of the Consolidated Entity under these indemnities.

d. Deferred Consideration to D&C

D&C Group receives the following deferred payments if certain milestones are achieved:

a. US$2 million on Apurimac Ferrum defining a JORC Resource at the Apurimac project of 500 Mt of iron ore with an average grade of at least 55% iron (Fe) or 275 Mt of contained iron at an average grade of 52.5% Fe or above.
b. US$3 million on Apurimac Ferrum S.A achieving environmental and community approvals for the construction of an iron ore mine and associated infrastructure with a design capacity of at least 10Mtpa of iron ore product.
c. US$5 million on formal Apurimac Ferrum Board approval to commence construction of an iron ore project, or the commencement of bulk earthworks for an iron ore processing plant, with a design capacity of at least 10Mtpa of iron ore product (Construction Milestone).

Under the terms of Shootout Settlement Agreement, Apurimac Ferrum S.A will also pay D&C Group the following royalties:

1.5% of the net profits from sales of iron ore.
2% of the proceeds of sales of other metals (on a net smelter return basis).
Or Apurimac Ferrum S.A may extinguish the royalties by paying D&C Group any one of the following amounts (Extinguishment Payment):
US$13 million within 2 years from 20 December 2012, or
US$15 million between 2 and 3 years from 20 December 2012, or
US$20 million between 3 and 4 years from 20 December 2012, or
US$30 million after 4 years from 20 December 2012 but before the Construction Milestone occurs or the 15th anniversary of the agreement (whichever is sooner).

Due to the inherent uncertainty surrounding the achievement and timing of the above milestones, as at 30 June the Company treated the deferred consideration as a contingent liability.

Page 39 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

e. Millenium legal dispute

Strike is the defendant to a number of legal disputes that have been initiated by the original vendor and/or related parties to the vendor of the Apurimac Project. A number of these disputes have already either passed through arbitration or the judicial system in Peru and been awarded in favour of Strike. However, the vendor and/or related parties to the vendor continue to pursue a number of legal avenues (including appeals on previous decisions) in order to frustrate Strike and potentially regain ownership or the Apurimac and Cusco Projects.

Strike does not consider any of the legal actions brought by the vendor and/or related parties to the vendor to have any reasonable basis for success and will continue to defend all claims raised against it.

19. Commitments

a. Lease Commitments

The Company has no lease commitments as at 30 June 2015.

b. Mineral Tenement/Concession/Mining Rights - Commitments for Expenditure

Australian tenements

In order to maintain current rights of tenure to exploration tenements, the holders of Australian mineral tenements are required to outlay lease rentals and meet minimum expenditure commitments. The Company does not currently have any material commitments for expenditure relating to Australian tenements.

Peruvian concessions

The Consolidated Entity is required to pay annual licence fees by 30 June of each year, at rates which vary on an amount per-hectare basis. The total amount of this commitment will depend upon the area of concessions relinquished (if any) and the area of new concessions granted (if any) and therefore cannot be reliably estimated. As a result of finalising the arbitration process with the shareholders of Apurimac Ferrum S.A.(“ AF ”), the Consolidated Entity granted on option over Peruvian tenements held by its subsidiary, Strike Resources Peru S.A.C. Under the terms of the AF Settlement Agreement AF is obliged to make all necessary payments to keep the concessions in good standing. Financial commitments for subsequent periods are contingent upon the continuity of the agreement with AF, future exploration and evaluation results, and as such cannot be reliably estimated.

A number of non-core mineral concessions in Peru were allowed to lapse on 30 June 2015, significantly reducing the Company’s annual expenditure in Peru. The Company continues to hold 14 core concessions in Peru which contain its JORC Resources of iron ore in Apurimac and Cusco, as well as some neighbouring concessions which have strategic value associated with the projects.

Australian heritage protection agreements

These agreements facilitate the preservation of Aboriginal heritage through the protection of Aboriginal sites and objects upon the grant of mining tenements in Western Australia. The Heritage Protection Agreements require the Consolidated Entity to conduct Aboriginal heritage surveys prior to conducting exploration that is not low-impact in nature and detail procedures to be followed if an Aboriginal site is identified.

Agreements with Peruvian landowners and community groups

The Company notes that holding a mineral concession in Peru does not grant automatic access to the surface land. Notwithstanding an easement procedure is contemplated in Peruvian law, in practice, mining companies have to negotiate and enter into private agreements with landowners/community groups in order to have access to their land for the purposes of conducting mining activities (exploration, evaluation, development and mining). Multiple landowners/community groups are affected by the Consolidated Entity’s proposed mining activities on a majority of the Consolidated Entity's Peruvian concessions. To date, approvals have been sought and obtained for drilling on a programme by programme basis.

Obtaining approvals from landowners/community groups can be a complicated and lengthy process. The Consolidated Entity will have to commit funds to community groups and/or landowners to secure land access agreements to develop its Peruvian projects. There can be no guarantees that such approvals will be obtained, or as to the terms upon which they will be obtained. At this stage it is not possible to quantify the potential financial obligation of the Consolidated Entity in this regard.

20. Related-Party Disclosures

Subsidiaries

Interests in subsidiaries are set out in Note 21.

During the year $1,318,656 (2014: $2,811,122) was loaned to subsidiaries to fund exploration activities and concession fees, and for closure costs of Peru office.

Page 40 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

21. Investment in Controlled Entities

21. Investment in Controlled Entities
	Country of	Percentage of
	Incorporation	Ownership
		2015	2014
Strike Finance Pty Ltd	Australia	100%	100%
Strike Australian Operations Pty Ltd	Australia	100%	100%
Strike Operations Pty Ltd (“SOPL”)	Australia	100%	100%
Strike Indo Operations Pty Ltd (“SIOPL”)*	Australia	-	100%
Ferrum Holdings Limited	British Anguilla	100%	100%
Strike Resources Peru S.A.C.	Peru	100%	100%
Apurimac Ferrum S.A.	Peru	100%	100%
Ferrum Trading S.A.C	Peru	100%	100%

Strike Indo Operations Pty Ltd was de-registered on 12 November 2014.

22. Events Occurring after the Reporting Period

On 2 July 2015 the Company announced that a Takeover Response Committee of the Company’s independent directors, being the Chairman, Mr Malcolm Richmond, Ms Samantha Tough and Mr Matthew Hammond had been established to respond to the takeover bid offer made by Bentley Capital Limited as announced on 30 June 2015 (the “Offer”). The Company also announced that following completion of the Offer (irrespective of the outcome of the Offer), Ms Samantha Tough intended to resign from the Company Board to focus on her other non-executive director roles.

In July 2015, Bentley Capital Limited lodged its Bidder’s Statement relating to the Offer with ASIC and dispatched the same to Strike’s shareholders.

In August 2015, the Company lodged its Target’s Statement in response to the Offer.

The Takeover Response Committee has incurred a total cost of approximately $300,000 - $350,000 in relation to the Company’s response to the Offer.

There have been no further changes of significance since then.

23. Reconciliation of Profit after Income Tax to Net Cash Inflow from Operating Activities

(a) Operating (loss) after tax Consulting fees Non cash flows in profit/(loss) from ordinary activities: Depreciation - plant & equipment Gain on loss of control of subsidiary Adjustment for movement in foreign exchange Fair value adjustments Loan to Cuervo Resources Inc. impairment Fair value through profit and loss financial assets Exploration and evaluation impairment Non-Current assets held for sale impairment Loss on sale of fixed assets Loss on sale of held for sale assets Decrease/(increase) in assets: Receivables Increase/(decrease) in liabilities: Trade creditors and accruals Provisions Net cash outflows from operating activities	2015		2014
	$		$
	(517,864) - 536 (144,075) (141,682) - - 220,611 500,342 - - 66,589 (1,727,229) (61,655) (1,804,427)		(48,761,450) - 40,116 - 348,753 827,641 109,616 43,250,245 - 14,411 - 299,070 933,382 319,755
			(2,618,461)

(b) Non-cash investing and financing activities

There were no non-cash investing and financing activities during the current or previous year.

Page 41 of 46

STRIKE RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

24. Earnings/(Loss) per Share

24. Earnings/(Loss) per Share
	2015	2014
	cents	cents
(a) Basic earnings/(loss) per share
From continuing operations attributable to the ordinary equity holders of	(0.36)	(33.55)
the Company
(b) Diluted earnings/(loss) per share
From continuing operations attributable to the ordinary equity holders of	(0.36)	(33.55)
the Company
(c) Reconciliations of earnings/(Losses) used in calculating earnings/(Loss) per share
Loss attributable to the ordinary equity holders of the Company used in
Calculating basic earnings/(loss) per share:
From continuing operations	(517,864)	(48,761,450)
(d) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator
in calculating basic and diluted earnings/(loss) per share	145,334,268	145,334,268

25. Share-Based Payments

The Company has the following options on issue at balance date:

Grant date Expiry date Exercise price $	Balance at start of year Granted during the year Exercised during the year Forfeited during the year Balance at end of the year Vested and exercisable at end of year
Consolidated entity - 2015 24 Nov 11 23 Nov 16 0.36 24 Nov 11 23 Nov 16 0.42 24 Nov 11 23 Nov 16 0.56 5 Apr 12 23 Nov 16 0.36 5 Apr 12 23 Nov 16 0.42 5 Apr 12 23 Nov 16 0.56 18 Jun 13 17 Jun 18 0.30 Weighted-average exercise price	833,334 - - - 833,334 833,334 833,333 - - - 833,333 833,333 833,333 - - - 833,333 833,333 333,334 - - - 333,334 333,334 333,333 - - - 333,333 333,333 333,333 - - - 333,333 333,333 3,000,000 - - - 3,000,000 3,000,000
	6,500,000 - - - 6,500,000 6,500,000
	0.38 - - - 0.38 0.38

Grant date Expiry date Exercise price $	Balance at start of year Granted during the year Exercised during the year Forfeited during the year Balance at end of the year Vested and exercisable at end of year
Consolidated entity - 2014 24 Nov 11 23 Nov 16 0.36 24 Nov 11 23 Nov 16 0.42 24 Nov 11 23 Nov 16 0.56 5 Apr 12 23 Nov 16 0.36 5 Apr 12 23 Nov 16 0.42 5 Apr 12 23 Nov 16 0.56 18 Jun 13 17 Jun 18 0.30 Weighted-average exercise price	833,334 - - - 833,334 833,334 833,333 - - - 833,333 833,333 833,333 - - - 833,333 833,333 333,334 - - - 333,334 333,334 333,333 - - - 333,333 333,333 333,333 - - - 333,333 333,333 3,000,000 - - - 3,000,000 3,000,000
	6,500,000 - - - 6,500,000 6,500,000
	0.38 - - - 0.38 0.38

No options were exercised during the period.

The weighted-average remaining contractual life of share options outstanding at the end of the period was 1.63 years (2014: 2.63 years).

Page 42 of 46

STRIKE RESOURCES LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

26. Parent Entity Information

The following details information related to the parent entity, Strike Resources Limited, at 30 June 2015 and 30 June 2014. The information presented here has been prepared using consistent accounting policies as presented in Note 1.

Note 1.
Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets Contributed equity Accumulated losses Option reserve Total equity (Loss) for the year Other comprehensive income/(loss) for the year Total comprehensive (loss) for the year	2015	2014
	$	$
	8,278,539 1,072 8,279,611 71,698 - 71,698 8,207,913 148,439,925 (153,465,037) 13,233,025 8,207,913 (1,522,957) - (1,522,957)	10,231,293 1,887
		10,233,180
		502,310 -
		502,310
		9,730,870
		148,439,925 (151,942,080) 13,233,025
		9,730,870
		(4,945,316) -
		(4,945,316)

The parent entity does not have any contingent assets or liabilities.

Page 43 of 46

STRIKE RESOURCES LIMITED DIRECTORS’ DECLARATION

Directors’ Declaration

In the Directors’ opinion:

a) The Financial Statements, comprising the Consolidated Statement of Profit or Loss and Other Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of Changes in Equity and Consolidated Statement of Cash Flows and accompanying notes as set out on pages 17-43 above, are in accordance with the Corporations Act 2001 , and:
(i) comply with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting requirements ;
(ii) give a true and fair view of the Consolidated Entity’s financial position as at 30 June 2015 and of its performance for the financial year ended on that date; and
b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and

Note 1 confirms that the Financial Statements also comply with the International Financial Reporting Standards as issued by the International Accounting Standards Board.

The Directors have been given the declarations by the Managing Director (the person who performs the chief executive function) and the Company Secretary (the person who performs the Chief Financial Officer function) as required by section 295A of the Corporations Act 2001.

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

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William Johnson Managing Director 25 September 2015

Page 44 of 46

Tel: +61 8 6382 4600 38 Station Street Fax: +61 8 6382 4601 Subiaco, WA 6008 www.bdo.com.au PO Box 700 West Perth WA 6872 Australia

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INDEPENDENT AUDITOR’S REPORT

To the members of Strike Resources Limited

Report on the Financial Report

We have audited the accompanying financial report of Strike Resources Limited, which comprises the consolidated statement of financial position as at 30 June 2015, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Stat ements, that the financial statements comply with International Financial Reporting Standards .

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

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

Page 45 of 46

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Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of Strike Resources Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

Opinion

In our opinion:

(a) the financial report of Strike Resources Limited is in accordance with the Corporations Act 2001 , including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001 ; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Report on the Remuneration Report

We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2015. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion, the Remuneration Report of Strike Resources Limited for the year ended 30 June 2015 complies with section 300A of the Corporations Act 2001 .

BDO Audit (WA) Pty Ltd

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Wayne Basford

Director

Perth, 25 September 2015

Page 46 of 46

AI assistant

STRIKE RESOURCES LIMITED — Annual Report 2015

65855_rns_2015-09-24_0b320cc7-77e0-4502-8dc2-10de943aca55.pdf

Annual Financial Report

Share Registry

Contents

Corporate Directory

Directors

Auditors

Stock Exchange Listing

Directors’ Report

Directors

Principal Activities

Dividends

Review of Operations

Significant Changes in the State of Affairs

Events since the End of the Financial Year

Likely Developments and Expected Results of Operations

Information on Directors

Malcolm Richmond

Chairman

William Johnson

Managing Director

Information on Directors (continued)

Matthew Hammond

Non-Executive Director

Nil

Samantha Tough

Non-Executive Director

Nil

Information on Directors (continued)

Victor P. H. Ho

Non-Executive Director

Farooq Khan

Alternate Director for Mr Victor Ho

Company Secretary

David Palumbo

Company Secretary

Meetings of Directors

Retirement, Election and Continuance in Office of Directors

Remuneration Report (Audited)

Key management personnel disclosed in this report

Remuneration Governance (under which details of remuneration committee is disclosed)

Non-Executive Director Remuneration Policy

Directors’ fees

Retirement Allowances for Non-Executive Directors

Executive Remuneration Policy and Framework

Base Pay and Benefits

Short-term Incentives

Long-term Incentives

Share Trading Policy

Voting and Comments Made at the Company’s 2014 Annual General Meeting

Detail of Remuneration

Service Agreements

Share-based Compensation

Shares Provided on Exercise of Remuneration Options

Details of Remuneration: Bonuses and Share-based Compensation Benefits

Equity instrument disclosures relating to key management personnel

i. Options holdings

ii. Share holdings[1]

Loans to Key Management Personnel

Other Transactions with Key Management Personnel

This concludes the Audit Remuneration Report

Shares under Options

Insurance of Officer

Environmental Regulation

Proceedings on Behalf of the Company

Non-audit Services

Auditor’s Independence Declaration

Auditor

DECLARATION OF INDEPENDENCE BY WAYNE BASFORD TO THE DIRECTORS OF STRIKE RESOURCES LIMITED

Wayne Basford

BDO Audit (WA) Pty Ltd

Consolidated Statement of Profit or Loss and Other Comprehensive Income

for the year ended 30 June 2015

Consolidated Statement of Financial Position

as at 30 June 2015

Consolidated Statement of Changes in Equity for the year ended 30 June 2015

Consolidated Statement of Cash Flows

for the year ended 30 June 2015

STRIKE RESOURCES LIMITED Annual Report 2015