STRIKE RESOURCES LIMITED — Interim / Quarterly Report 2015

Mar 12, 2015

Half-Year Financial Report

Strike Resources Limited and its controlled entities for the half year ended 31 December 2014 ended 2014

Strike Resources Limited ASX Code: SRK Share Registry A.B.N. 94 088 488 724

Level 11, 216 St Georges Terrace Advanced Share Registry Services Perth Western Australia 6000 110 Stirling Highway Nedlands Western Australia 6009

T | + 61 8 9481 0389 T | + 61 8 9389 8033 F | + 61 8 9463 6103 F | + 61 8 9262 3723 E | info@strikeresources.com.au E | admin@advancedshare.com.au W | www.strikeresources.com.au W | www.advancedshare.com.au

Contents

CORPORATE DIRECTORY 2
DIRECTORS' REPORT 3
AUDITOR'S INDEPENDENCE DECLARATION 4
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 5
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 6
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 7
CONSOLIDATED STATEMENT OF CASH FLOWS 8
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 9
DIRECTORS' DECLARATION 14
AUDITOR'S INDEPENDENT REVIEW REPORT 15

Corporate Directory

Directors	Mr Malcolm RichmondChairman / Non-Executive Director
	Mr William JohnsonManaging Director
	Mr Matthew HammondNon-Executive Director
	Ms Samantha ToughNon-Executive Director
	Mr Victor HoNon-Executive Director
	Mr Farooq KhanAlternate Director for Mr Victor Ho
Company Secretary	Mr David Palumbo
Registered Office	Level 11, 216 St George's TerracePerth, Western Australia, 6000Telephone:+61 8 9481 0389Facsimile:+61 8 9463 6103
Website	www.strikeresources.com.au
Information Email	info@strikeresources.com.au
Share Registry	Advanced Share Registry Services110 Stirling HighwayNedlands, Western Australia, 6009Telephone:+61 8 9389 8033Facsimile:+61 8 9262 3723Email:admin@advancedshare.com.auWebsite: www.advancedshare.com.au
Auditors	BDO Audit (WA) Pty Ltd38 Station StreetSubiaco, Western Australia 6008Telephone:+61 8 9382 4600Facsimile:+61 8 9382 4601Website:www.bdo.com.au
Stock Exchange Listing	Strike Resource Limited's shares are listed on the AustralianSecurities Exchange ("ASX")
	ASX Code: SRK

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 half-year ended 31 December 2014.

Directors

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

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

Review of Operations

Since suspending its operations in Peru during the first half of 2014, the Company has not undertaken any further work in its main iron ore assets in Peru.

The decision to suspend activity in Peru was made taking account of a number of factors, including negative market sentiment towards resource juniors with high capital cost projects, the slide in iron ore prices and some difficult local community issues in Peru that were frustrating attempts to advance the project in a timely way.

As a result of this decision, the Company closed its office in Peru and the Managing Director, who had relocated to Peru the previous year, returned to Perth. The company has taken steps to minimise its ongoing expenses whilst the Board of Directors considers future options for Strike.

Several companies undertook due diligence the Company's Peru projects during 2014. However, no offers were received that the Board considered to be sufficiently attractive to present to shareholders. Since the cost of maintaining the key exploration concessions and assets relating to the projects in Peru is relatively low, the Company will continue to hold these for the time being and examine opportunities to realise value from them.

Strike is in the fortunate position to still have sufficient cash in the bank to explore other opportunities. An independent consultancy was engaged during the year to analyse and present to the Board of Directors a range of options relating to future directions for the Company. The Board of Directors continues to review and discuss these options with representatives of the Company's major shareholders.

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 4.

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

William Johnson Managing Director 13 March 2015

Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

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

As lead auditor for the review of Strike Resources Limited for the half-year ended 31 December 2014, I declare that, to the best of my knowledge and belief, there have been:

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

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

Wayne Basford Director

BDO Audit (WA) Pty Ltd Perth, 13 March 2015

Consolidated Statement of Profit or Loss and Other Comprehensive Income

for the half-year ended 31 December 2014

31 December31 December20142013Note$$3Revenue181,464217,752422,42168,221Other income203,885285,973(75, 934)Occupancy costsFinance costs(6,935)(7, 444)Personnel costsCash remuneration(267, 656)(726, 218)Corporate costsProfessional fees(226, 909)(549, 652)Other corporate expenses(196, 535)(1,212,546)Foreign exchange gain/(loss)(21, 264)196,105Impairment loss5Exploration and evaluation costs(457)(43,795,794)Loan to Cuervo Resources Inc.(827, 641)(109, 616)Financial assets at fair value through profit or lossSundry debtors(135, 686)Loss on disposal of fixed assets(10, 460)Reversal of legal accrual232,721Profit/(Loss) before income tax(283, 150)(46,968,913)Income tax expense(9, 128)Profit/(Loss) for the half year(283, 150)(46,978,041)Other comprehensive incomeItems that will be reclassified to profit or lossExchange differences on translation of foreign operations1,100,878(226, 534)Other comprehensive (loss) for the half year1,100,878(226, 534)Total comprehensive profit/(loss) for the period, net ofincome tax attributable to the owners(509, 684)(45,877,163)Basic profit/(loss) per share from profit/(loss) from continuingoperations attributable to the ordinary equity holders of theCompany(0.19)(32.32)Diluted earnings per share from profit/(loss) from continuingoperations attributable to the ordinary equity holders of theCompany(0.19)(32.32)		Consolidated

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

Consolidated Statement of Financial Position

as at 31 December 2014

	Consolidated
	31 December	30 June
	2014	2014
Note	$	$
	9,801,542	10,350,983
		74,328
		498,992
	10,366,851	10,924,303
5
	10,366,851	10,924,303
6	2,437,298	2,414,711
		70,355
	2,437,298	2,485,066
	2,437,298	2,485,066
	7,929,553	8,439,237
$\overline{7}$	148,439,925	148,439,925
	15,400,680	15,627,214
	(155, 911, 052)	(155, 627, 902)
	7,929,553	8,439,237
		53,029512,280

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

Consolidated Statement of Changes in Equity

for the half-year ended 31 December 2014

	Contributedequity	Currencytranslationreserve	Share-basedpaymentsreserve	AccumulatedLosses	Total equity
Consolidated entity	$	$	$	$	$
At 1 July 2013Total comprehensive income for the period	148,439,925	1,899,896	13,233,026	(106, 866, 452)	56,706,395
Loss for the half-yearOther comprehensive income				(46,978,041)	(46,978,041)
Exchange differences on translation of foreignoperations		1,100,878			1,100,878
Total comprehensive income/(loss) for thehalf year		1,100,878		(46,978,041)	(45,877,163)
Transactions with owners in their capacityas owners:
Issue of shares
At 31 December 2013	148,439,925	3,000,774	13,233,026	(153, 844, 493)	10,829,232
At 1 July 2014Total comprehensive income for the period	148,439,925	2,394,188	13,233,026	(155, 627, 902)	8,439,237
Loss for the half-yearOther comprehensive income				(283, 150)	(283, 150)
Exchange differences on translation of foreignoperations		(226, 534)			(226, 534)
Total comprehensive income/(loss) for thehalf year		(226, 534)		(283, 150)	(509, 684)
At 31 December 2014	148,439,925	2,167,654	13,233,026	(155, 911, 052)	7,929,553

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

Consolidated Statement of Cash Flows

for the half-year ended 31 December 2014

	31 December	31 December
	2014	2013
Note	$	$
Cash flows from operating activities
Payments to suppliers and employees	(711, 997)	(1,434,444)
Net cash (outflow) from operating activities	(711,997)	(1,434,444)
Cash flows from investing activities
Payments for exploration and evaluation expenditure		(1,047,484)
Interest received	140,135	240,950
Proceeds from disposal of fixed assets	22,421	1,476
Net cash inflow/(outflow) from investing activities	162,556	(805, 058)
Net decrease in cash and cash equivalents held	(549, 441)	(2,239,502)
Cash and cash equivalents at the beginning of the financialyear	10,350,983	14,414,971
Effect of exchange rate changes on cash held		39,201
Cash and cash equivalents at end of the period	9,801,542	12,214,670

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

Notes to the Consolidated Financial Statements

for the half-year ended 31 December 2014

$\mathbf 1$ . Basis of preparation of half-year report

The accounting policies applied by the Group in these half-year financial statements are consistent with the financial statements for the year ended 30 June 2014.

Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2014 reporting period and have not been applied in these financial statements. Strike Resources Limited is continuing to assess the impact of these standards and interpretations.

$2.$ Segment information

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)*

*On 14 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.

Segment information provided to the Board of Directors

The segment information provided to the Board of Directors for the reportable segments for the half-year 31 December 2014 and 31 December 2013 are as follows:

Half-year 2014	Peru	Australia	Total
Interest revenue	$\overline{\phantom{0}}$	181,464	181,464
Revenue interest	-	181,464	181,464
Adjusted Loss	9,549	(271, 392)	(261, 843)
Total segment assets	766,671	9,787,007	10,553,678
Total segment liabilities	(2,707,031)	(38, 897, 440)	(41,604,471)

$2.$ Segment information (continued)

Half-year 2013	Peru	Australia	Total
Interest revenue	-	217,752	217,752
Revenue interest		217,752	217,752
Adjusted Loss	(45,334,007)	(6,995,655)	(52, 329, 662)
Total segment assets 30 June 2014	1,641,801	10,233,180	11,874,981
Total segment liabilities 30 June 2014	(41,908,076)	(502,310)	(42,410,386)

Other segment information

(i) Adjusted Loss

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

	31 December2014$	31 December2013$
Adjusted LossIntersegment eliminationsDepreciationOther income	(261, 843)(28, 233)(15, 495)22,421	(52,329,662)5,385,807(26, 025)967
Profit/(loss) before tax from continuing operations	(283, 150)(283, 150)(283,150)	(46,968,913)(46,968,913)(46,968,913)

2. Segment information (continued)

(ii) Segment assets and segment liabilities

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

	31 December	30 June
	2014	2014
	$	'S
Segment assets	10,553,678	11,874,981
Intersegment eliminations	(186,827)	(950,678)
Total assets as per the Consolidated Statement of Financial Position	10,366,851	10,924,303
Segment liabilities	(41,604,471)	(42,410,386)
Intersegment eliminations	39, 167, 173	39,925,320
Total liabilities as per the Consolidated Statement of Financial
Position	(2,437,298)	(2,485,066)

The amounts provided to the Board of Directors with respect to total assets are measured in a manner consistent with that of the financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset.

$31$ Revenue

	31 December	31 December
	2014	2013
	$	$.
Interest received - term deposits	181,464	217,752

$4.$ Other Income

Other income

Profit on disposal of fixed assets	22.421
Other income	$\overline{\phantom{0}}$	68.221
	22.421	68.221

5. Exploration and Evaluation Expenditure

	31 December2014$	30 June2014
Beginning balance		41,842,078
Foreign Exchange adjustment		158.264
Exploration and evaluation expenditure additions	457	1,249,903
Impairment loss - exploration and evaluation	(457)	(43,250,245)
Ending balance

1 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 $457 during the half year. 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.

Trade and Other Payables $6.$

	31 December2014$	30 June2014$
Current
Trade creditors and accruals	57,653	88,458
Legal fees $1$	684,808	855,800
Withholding tax 2	1,694,837	1,470,453
	2,437,298	2,414,711

1 Amount payable to Miranda and Amado Abogados for legal fees incurred in defending claims against the Company's concessions over the past three years. The payable was settled subsequent to period end, resulting in a reversal of legal provision of $232,721 recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income for the half year ended 31 December 2014.

2 Withholding tax accrual of $1,694,837 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. The SUNAT notified AF of a set of Resolutions that determine a debt owing for Non Domiciled Income Tax Withholding and Fine Resolutions. 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. At the date of this report, AF is yet to receive a resolution from SUNAT regarding the claim. Should the SUNAT deny AF's claiming arguments, AF plans to appeal all findings before the Administrative Tax Court.

$\mathbf{7}$ . Contributed Equity

	31 December2014$	30 June2014$
145,334,268 (2013: 145,334,268) fully-paid ordinary shares	148,439,925	148,439,925

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

$7.$ Contributed Equity (continued)

	Date ofmovement	No.	'S
Movement in ordinary share capital
At 1 July 2013		145,334,268	148,439,925
Shares issued
At 30 June 2014		145,334,268	148,439,925
Share issued
At 31 December 2014		145,334,268	148,439,925

Dividends 8.

No dividends were paid or provided for during the half-year ended 31 December 2014.

$91$ Contingent Assets and Liabilities

Cerro Ccopane

The Cerro Ccopane project, located approximately 20km to the north of the company's Cusco project in Peru was previously operated and held by Canadian listed company Cuervo Resources Inc ("Cuervo"). 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 financing of the Cerro Ccopane project provided by Strike. 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 has been made aware that all of the Canadian directors of Cuervo have resigned and the company is at risk of being wound-up by the Ontario government. Strike is examining its options to recover value as a secured creditor of Cuervo.

Since the last annual reporting date, there has been no other change in any contingent assets or contingent liabilities.

$10.$ Commitments

No new commitments have been entered into by the Group since 30 June 2014.

$11.$ Related party transactions

a. Subsidiaries

Interests in subsidiaries are set out below.

During the period $8,696 (30 June 2014: $2,811,122) was loaned to subsidiaries.

Investment in Controlled Entities

	Country of	Percentage ofOwnership
	Incorporation
		2014	2013
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%	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%

$12.$ Events occurring after the reporting period

There have been no significant events occurring after the reporting date.

Directors' Declaration

In the Directors' opinion:

• $1.$ the consolidated financial statements and notes as set out on pages 6 to 13 are in accordance with the Corporations Act 2001, including:
  • a) complying with Accounting Standards, the Corporations Regulations 2001, and other mandatory professional reporting requirements, and
  • b) giving a true and fair view of the Consolidated Entity's financial position as at 31 December 2014 and of its performance for the half-year ended on that date, and
• 1. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

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

$f$ the state

William Johnson Director 13 March 2015

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

INDEPENDENT AUDITOR'S REVIEW REPORT

To the members of Strike Resources Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Strike Resources Limited, which comprises the consolidated statement of financial position as at 31 December 2014, 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 half-year ended on that date, notes comprising a statement of accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the half-year's end or from time to time during the half-year.

Directors' Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with 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 half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity's financial position as at 31 December 2014 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Strike Resources Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

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

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. 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 review report.

Conclusion

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

• (a) giving a true and fair view of the consolidated entity's financial position as at 31 December 2014 and of its performance for the half-year ended on that date; and
• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

BDO Audit (WA) Pty Ltd

Wayne Basford Director

Perth, 13 March 2015