SUPERIOR RESOURCES LIMITED — Interim / Quarterly Report 2017

Mar 14, 2017

HALF-YEAR REPORT - 31 DECEMBER 2016

Contents

Half-year financial report
Directors' Report
Auditor's Independence Declaration	5
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows	9
Notes to the Financial Statements	10
Directors' Declaration	16
Independent Auditor's Review Report

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2016 and any public announcements made by Superior Resources Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

DIRECTORS' REPORT

Your directors present their report on Superior Resources Limited ("Superior" or "the Company") and the entities it controlled (referred to hereafter as "the Group" or "the consolidated entity") for the half-year ended 31 December 2016.

Directors

The following persons were directors of Superior Resources Limited during the whole of the half-year and up to the date of this report:

P H Hwang (Managing Director)

C A Fernicola (Chairman and Company Secretary) K J Harvey (Non-executive Director)

Results and Review of Operations

The operating loss after income tax of the consolidated entity for the half-year was \$212,091 (2015; loss \$1,867,212).

The reported losses reflect the nature of the consolidated entity's principal activity, being mineral exploration.

Superior Resources Limited's activities during the half year period were focused on the following activities and events:

• 1. progress metallurgical assessment of the Tick Hill tailings storage facility;
• 1. together with Teck Australia Pty Ltd, progress an exploration program on the north west Queensland Nicholson Project;
• 1. new tenement application, EPM26165 ("Cockie South"), was granted on 30 January 2017;
• 1. participated as a shortlisted bidder in a formal sale process for the acquisition of advanced gold projects in Western Australia:
• 1. conducted a placement capital raising campaign and a Share Purchase Plan; and
• 1. identify and engage with third parties in relation to new project opportunities as well as potential joint venture arrangements in relation to the North West Queensland Projects.

TICK HILL TAILINGS PROJECT

Further metallurgical studies were undertaken during the quarter to assess the efficiency of gravity separation (via a Knelson concentrator) on a single 50kg sample of Tick Hill tailings taken from one of the two tailings paddocks (the eastern paddock) located at the historic Tick Hill mine site. Although a gravity concentrate with free gold was produced, the overall gold recovery to concentrate was too low for gravity separation to be considered as an alternate or complementary processing method for the Tick Hill tailings.

Following the gravity test work, further test work has been planned to enable detailed design of a process flowsheet and the determination of a financial model. Discussions with third parties were also commenced to investigate arrangements to minimise the potential capital and operating costs.

The Company continued a process of data review and planning for the preparation of a deep drilling program.

NORTH WEST QUEENSLAND - NICHOLSON PROJECT

The Nicholson Project (EPM15670 and EPM18203), located near the Walford Creek lead-zinc-silvercopper deposit, is considered to have the potential to contain sediment-hosted lead-zinc-silver massive sulphide deposits, similar to the Mount Isa and McArthur River deposits.

Teck Australia Pty Ltd (Teck), a wholly-owned subsidiary of Canada's largest diversified resource company, Teck Resources Limited, commenced exploration work on Superior's Nicholson Project (Project) during the March quarter of 2016. Teck is conducting the work under an Earn-in and Joint

DIRECTORS' REPORT

Venture Agreement (Agreement) with Superior that was entered into during October 2015.

NORTH WEST QUEENSLAND - NICHOLSON PROJECT (continued)

Under the terms of the Agreement. Teck Australia has an exclusive right to earn a 70% interest in the Project by spending \$2,500,000 in accordance with the following structure:

• (Initial Period) incurring \$250,000 minimum expenditure: to be spent on exploration by 30 September 2016; and
• (Earn-In Period) incurring \$2,250,000 in optional expenditure on or before the 31 December 2018.

On 1 September 2016, the Company agreed with Teck to extend the "Initial Period" of Teck's earn-in right under the Agreement to 31 December 2016. All other terms remain unchanged as set out in ASX announcement dated 3 November 2015.

On 8 November 2016, Teck confirmed that it had completed the \$250,000 minimum expenditure requirement for the Initial Period and that it will commit to the Earn-in Period, which requires expenditure of a further \$2,250,000 to be completed on or before 31 December 2018 (refer ASX Announcement 14 November 2016).

At the end of the half year period, Teck had spent an approximate total of \$385,000 on the Project.

Work completed during the half year

In summary, the exploration work that was completed by Teck on the Project during the period consisted of:

• completion of an Aboriginal cultural heritage survey; $\bullet$
• commencement and completion of an Audio-frequency Magnetotellurics (AMT) geophysical survey: and
• completion of preliminary analysis and interpretation of results from the AMT survey

AMT survey

The AMT survey comprised 24 survey stations over three survey lines, totaling 19 kilometres. The survey targeted potential sub-basins identified through the integration of magnetics, seismic and gravity data and focussed on the south-western portions of the two tenements proximal to a key geological structure called the Nicholson River Fault.

The results of the AMT survey will determine if a conductive body is developed within prospective stratigraphy defined by seismic interpretations.

The AMT survey is being undertaken to confirm the presence of key interpreted growth faults which provide conduits for mineralised fluids and to better determine the nature of interpreted sub-basin locations within EPM 15670 and EPM 18203, including the presence and extent of conductive pyritic carbonaceous shale host units.

AMT electro-magnetic survey and imaging techniques provide the potential to map geological structures to depths of 500 meters or more. AMT surveys provide the ability to determine the characteristics of base metal (and other) deposits and anomalies as well as investigate deep geological structures in greater clarity at depth than other geophysical methods.

Preliminary results received

On 12 January 2017, Teck provided Superior with preliminary results from the AMT survey. Although the results received by Superior are preliminary and summary in nature, the Company is very encouraged by

DIRECTORS' REPORT

the results of the survey so far.

NORTH WEST QUEENSLAND - NICHOLSON PROJECT (continued)

Aboriginal cultural heritage

An Aboriginal cultural heritage survey was completed with the Waanyi native title holders. All but four AMT sites were successfully cleared with approval to undertake the AMT survey with the use of Waanyi heritage monitors.

NORTH WEST QUEENSLAND - VICTOR PROJECT

The Company continues to seek interest from third parties in relation to farm-in and joint venture arrangements in respect its other North West Queensland base metals project, the Victor Project.

GREENVALE PROJECT

Subsequent Event - Grant of new Zinc-Gold-Copper tenement - EPM 26165 "Cockie South"

On 30 January 2017 the Department of Natural Resources and Mines granted the Company's new Exploration Permit for Minerals (EPM) application, EPM26165 "Cockie South".

EPM26165 covers the highly prospective Steam Engine Gold Deposit and the Galah Dam Gold-Zinc-Copper Prospect.

The Company commenced preparations to conduct exploration programs on the Steam Engine Gold Deposit and the Galah Dam prospect immediately after landholder access arrangements and native title procedural requirements are finalised and weather permitting.

The exploration programs are aimed to:

• (Steam Engine) enable completion of an initial gold resource estimate: $\bullet$
• (Steam Engine) conduct a reverse-circulation drilling program to extend the known mineralisation and to locate significant widths of higher grade gold within the lesser explored Eastern Ridge lode of the project; and
• (Galah Dam) conduct a reverse-circulation drilling program targeting prospective chargeable sources. The Galah Dam prospect is a large plunging alteration zone with similarities to the nearby Balcooma copper, zinc, lead and silver mine. Previous exploration at Galah Dam had identified gold, zinc and copper mineralisation within the alteration zone.

NEW PROJECT OPPORTUNITIES

Superior continued to actively seek advanced project acquisition and joint venture opportunities.

On 7 July 2016, Superior announced that it was participating as a shortlisted bidder in a formal sale process for the acquisition of an advanced stage gold project. The project was the Lake Carey Gold Project held by Fortitude Gold Pty Ltd (In Liquidation) and located in the Eastern Goldfields of Western Australia. The Company was not successful in acquiring the project.

The Company also evaluated and considered several other gold and other project opportunities that range from strategically significant exploration portfolios through to near development projects.

DIRECTORS' REPORT

CAPITAL RAISING

Placement to Sophisticated Investors

The Company completed a placement to sophisticated investors on 15 July 2016 to raise \$299,000 through an issue of fully paid ordinary shares to sophisticated investors at \$0.008 per new share, with a free attaching option (exercise price \$0.03 expiring 30 June 2019) for every new share subscribed (the Placement). Some of the Directors participated in the Placement for a total of \$64,000. Shareholder approval was obtained at the Company's 2016 AGM for the Directors' subscriptions and the attaching options to the Placement shares.

A total of 29,375,000 shares were issued under the Placement, with the balance of the Placement being issued following shareholder approval at the 2016 AGM. The Placement was made using the Company's existing 15% capacity and shareholder approval was not required in respect of the 29,375,000 shares.

Funds raised under the Placement were used for working capital.

Share Purchase Plan

The Company completed a Share Purchase Plan (SPP) that was offered to existing shareholders on 13 December 2016 to raise \$447,000, resulting in the issue of 89,400,000 shares.

The SPP closed oversubscribed and exceeded the targeted maximum of \$418,000 (refer to ASX announcement dated 14 December 2016).

The funds raised from the SPP will be used to:

• fund the drilling of priority gold, zinc and copper targets at the Company's Greenvale Project (refer ASX announcement dated 2 November 2016);
• progress the Company's objective of acquiring a new gold project; and
• provide working capital. $\bullet$

CASH CONSERVATION

The Company's Board continues to maintain the current cash conservation measures with respect to the Company's operations and administration.

Auditor's Independence Declaration

The lead auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 5.

This report is made in accordance with a resolution of the Board of directors made pursuant to section 306(3) of the Corporations Act 2001.

CA Fernicola Chairman

Brisbane, 14 March 2017

AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF SUPERIOR RESOURCES LIMITED

I declare that, to the best of my knowledge and belief, during the half-year ended 31 December 2016, there have been:

• $(a)$ no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
• $(b)$ no contraventions of any applicable code of professional conduct in relation to the review.

PKF HACKETTS AUDIT

Liam Murphy Partner

Brisbane, 14^th March 2017

PKF Hacketts Audit ABN 33 873 151 348

Level 6, 10 Eagle Street, Brisbane QLD 4000 GPO Box 1568, Brisbane QLD 4001 p +61 7 3839 9733 f +61 7 3832 1407

5 8 East Street, PO Box 862 Rockhampton QLD 4700 p +61 7 4927 2744

+61 7 4927 4317

Liability limited by a scheme approved under Professional Standards Legislation. PKF International Limited administers a network of legally independent firms which carry on separate business under the PKF Name. PKF International Limited is not responsible for the acts or omissions of individual member firms of the network. For office locations visit www.pkf.com.au

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

		Consolidated Half-year
	2016 S	2015 S
Revenue	1,032	1,979
Expenses Accounting and audit fees Depreciation and amortisation Office rent and outgoings Exploration expenditure written off Administration expenses Impairment of available for sale financial assets	(12, 340) (1,998) (5,000) (20, 589) (201, 126)	(8,400) (1,682) (10, 924) (1,680,790) (160, 395) (7,000)
Loss before income tax Income tax benefit	(240, 021) 27,930	(1,867,212)
Loss for the half-year attributable to members of the parent entity	(212,091)	(1,867,212)
Other comprehensive income for the half-year, net of tax (note 8)	70,070
Total comprehensive loss for the half-year attributable to owners of Superior Resources Limited	(142, 021) =======	(1,867,212) $=$ $=$ $=$ $=$ $=$ $=$ $=$
Earnings (loss) per share:	Cents	Cents
Basic earnings (loss) per share Diluted earnings (loss) per share	(0.07) (0.07)	(0.78) (0.78)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

	Consolidated
	31 December 2016	30 June 2016
ASSETS	\$	\$
Current assets
Cash and cash equivalents	470,835	98,472
Trade and other receivables	89,201	66,975
Available-for-sale financial assets	126,000	28,000
Total current assets	686,036	193,447
Non-current assets
Plant and equipment	13,527	13,710
Exploration expenditure Other	2,926,379 27,500	2,835,635 25,000
Total non-current assets	2,967,406	2,874,345
Total assets	3,653,442	3,067,792
	=======	$=$ $=$ $=$ $=$ $=$ $=$ $=$
LIABILITIES Current liabilities
Payables	363,009	360,232
Total current liabilities	363,009	360,232
Non-current liabilities
Payables	235,288	235,288
Total non-current liabilities	235,288	235,288
Total liabilities	598,297	595,520
	=======	=======
Net assets	3,055,145	2,472,272
EQUITY	=======	=======
Contributed equity	8,601,124
Accumulated losses	(5,616,049)	7,876,230 (5,403,958)
Reserves	70,070
Total equity	3,055,145	2,472,272
	=======	=======

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

	Ordinary shares	Accumulated losses	Reserves	Total
	\$	\$	\$	\$
Balance at 1 July 2015	7,766,926	(2,945,397)		4,821,529
Loss for the half-year Other comprehensive income		(1,867,212)		(1,867,212)
Total comprehensive income		(1,867,212)		(1,867,212)
Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs
Balance at 31 December 2015	7,766,926	(4,812,609)		2,954,317
Balance at 1 July 2016	7,876,230	(5,403,958)		2,472,272
Loss for the half-year Other comprehensive income		(212,091)		(212,091)
(note 8)			70,070	70,070
Total comprehensive income		(212,091)	70,070	(142, 021)
Transactions with owners in their capacity as owners: Contributions of equity, net of
transaction costs	724,894			724,894
Balance at 31 December 2016	8,601,124	(5,616,049)	70,070	3,055,145

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

	Consolidated Half-year
	2016 \$	2015 \$
Cash flows from operating activities
Receipts from customers (GST inclusive) Payments to suppliers and employees (GST inclusive) Interest received	17,261 (151, 473) 1,032	12,607 (134, 986) 1,979
Net cash outflow from operating activities	(133, 180)	(120, 400)
Cash flows from investing activities
Payments for exploration expenditure Payments for property, plant and equipment Payment for security deposits	(101, 729) (1, 814) (2,500)	(245, 736) (7, 446) (2,500)
Net cash outflow from investing activities	(106, 043)	(255, 682)
Cash flows from financing activities
Proceeds on issue of shares Payment of capital raising costs Proceeds of loan from related party	602,000 (10, 414) 20,000	80,000
Net cash inflow from financing activities	611,586	80,000
Net increase (decrease) in cash and cash equivalents	372,363	(296, 082)
Cash and cash equivalents at the beginning of the half-year	98,472	359,471
Cash and cash equivalents at the end of the half-year	470,835 =======	63,389 $=$ $=$ $=$ $=$ $=$ $=$ $=$ $=$ $=$ $=$ $=$ $=$ $=$

Non-cash financial activities Refer to note 9(b).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

Note 1 General Information

Superior Resources Limited (the Company) is a company limited by shares, incorporated and domiciled in Australia. The Company's shares are listed on the Australian Securities Exchange.

The registered office of the Company is:

Unit 8, 61 Holdsworth Street Coorparoo QLD 4151 Ph (07) 3847 2887

The principal place of business of the Company is:

Unit 8, 61 Holdsworth Street Coorparoo QLD 4151 Ph (07) 3847 2887

The financial statements are for the Group consisting of Superior Resources Limited and its subsidiaries (the consolidated entity or the Group).

There have been no significant changes in the nature of the principal activities of the Group during the half year.

Note₂ Significant Accounting Policies

$(a)$ Statement of compliance

The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 'Interim Financial Reporting'. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'. The Group is a for-profit entity for the purpose of preparing this report.

This half-year financial report does not include all the notes of the type normally included in an Annual Financial Report and therefore cannot be expected to provide as full an understanding of the financial position and financial performance of the Group as the Annual Financial Report. As a result, this report should be read in conjunction with the 30 June 2016 Annual Financial Report of the Group and any public announcements made in the period by the Group in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX Listing Rules.

The financial statements were approved and authorised for issue by the Directors on 14 March 2017.

$(b)$ Basis of preparation

The financial statements have been prepared on an accrual basis and under the historical cost convention, as modified where applicable by the revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property, plant and equipment and investment property.

The accounting policies and methods of computation adopted in the preparation of the half-year financial statements are consistent with those of the previous financial year and corresponding interim reporting period.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

Note₃ Application of New and Revised Accounting Standards

The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. There has been no material impact on the financial statements by their adoption.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The potential financial impact of these changes is not yet possible to determine.

Note 4 Critical Accounting Estimates and Judgments

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.

Critical judgements in applying the entity's accounting policies

The Group has capitalised exploration expenditure of \$2,926,379 (30 June 2016 \$2,835,635). This amount includes costs directly associated with exploration. These costs are capitalised as an intangible asset until assessment and/or drilling of the permit is complete and the results have been evaluated. These costs include employee remuneration, materials, rig costs, delay rentals and payments to contractors. The expenditure is carried forward until such a time as the area moves into the development phase, is abandoned or sold. Given exploration activities have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of recoverable resources and the difficulty in forecasting cash flows to assess the fair value of exploration expenditure there is uncertainty as to the carrying value of exploration expenditure. The ultimate recovery of the carrying value of exploration expenditure is dependent upon the successful development and commercial exploitation or, alternatively, sale of the interest in the tenements.

Note 5 Going Concern

Notwithstanding that the Group incurred an operating loss after tax of \$240,021 (2015: loss of \$1,867,212) for the six month period to 31 December 2016, these financial statements have been prepared on a going concern basis which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.

The ability of the consolidated entity to continue as a going concern is dependent upon one or more of the following:

• achieving sufficient future cash flows from operations to enable its obligations to be met; $\bullet$
• the success of cost saving initiatives, which include entering into Joint Venture arrangements and $\mathbf{a}$ reducing tenement areas, so as to reduce the carrying and expenditure costs for tenements, and
• obtaining additional funding from capital raising activities. $\bullet$

The Directors acknowledge that to continue the exploration and development of the Group's exploration projects, the budgeted cash flows from operating and investing activities for the future will necessitate further capital raisings. The directors intend to complete a raising during the first calendar half of 2017. In addition. the directors have agreed to retain 50% of their salary payments until the Group has sufficient cash reserves to meet its operational commitments for at least the next 12 months to March 2018.

At the date of this report and having considered the above factors, the directors are confident of achieving the above and that the consolidated entity will be able to continue as a going concern.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

Note 5 Going Concern (continued)

In the event that the Group is unable to satisfy future funding requirements there exists a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern with the result that the Group may be required to realise its assets at amounts different from those currently recognised, settle liabilities other than in the ordinary course of business and make provisions for costs which may arise as a result of cessation or curtailment of normal business operations.

Note 6 Segment Information

The Group operates solely within one segment, being the mineral exploration industry in Australia.

Note 7 Loss for the Half-year

		Half-year
Loss before income tax for the half-year includes the following Items that are unusual because of their nature, size or incidence:	2016	2015
Expenses Exploration expenditure written off	20,589	1,680,790

Note 8 Fair Values of Financial Instruments

Recurring fair value measurements The following financial instruments are subject to recurring fair value measurements:	31 Dec 2016	30 Jun 2016
Available-for-sale financial assets: - Listed equity securities - Level 1	126,000	28,000

The increase in the market value of listed equity securities of \$98,000 during the half-year has been recorded in the asset revaluation reserve net of income tax expense of \$27,930.

Fair value hierarchy

AASB 13 Fair Value Measurement requires disclosure of fair value measurements by level in the fair value measurement hierarchy as follows:

• Level $1$ the instrument has quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2 a valuation technique is used using inputs other than quoted prices within level 1 that are observable for the financial instrument, either directly (ie, as prices), or indirectly (ie. derived from prices)
• Level 3 a valuation technique is used using inputs that are not observable based on observable market data (unobservable inputs).

As Superior Resources Limited only holds listed equity securities, which are measured at the closing bid price at the end of the reporting period, all available-for-sale financial assets fall within Level 1 of the fair value hierarchy.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

Equity Securities Issued Note 9

				31 Dec 2016 Shares	31 Dec 2016 \$
Share capital (a)
Ordinary shares Fully paid				376,537,372	8,601,124
(b)	Movements in ordinary share capital:
Date	Details	Note	Number of Shares	Issue Price	\$
1 Jul 2016	Balance		249,762,372		7,876,230
14 Jul 2016	Issue to sophisticated investors	(c)	29,375,000	0.008	235,000
16 Dec 2016	Issue to Directors	(c)	8,000,000	0.008	64,000
20 Dec 2016	Share Purchase Plan		83,600,000	0.005	418,000
20 Dec 2016	Issue to sophisticated investors		5,800,000	0.005	29,000
	Share issue costs				(21, 106)
31 Dec 2016	Balance		376, 537, 372		8,601,124

A total of \$724,894 was raised of which \$580,894 was received as cash during the half-year (net of share issue costs of \$21,106), \$70,000 was received as cash prior to 1 July 2016, \$64,000 was received by way of offset against amounts owing to related parties and \$10,000 was received by way of offset against an amount owing to a trade creditor.

(c) Share options

On 16 December 2016 the Company issued 37,375,000 options, being a free attaching option to each new share issued to sophisticated investors and Directors on 14 July and 16 December 2016. The options were subject to shareholder approval which was obtained at the Company AGM on 17 November 2016.

The options have an exercise price of 3.0 cents and expire on 30 June 2019. The options carry no dividend or voting rights. Each option is convertible into one ordinary share.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

Note 10 Joint Venture Entities

Tick Hill Gold Project

On 17 June 2013, the Company entered into an Exploration Farm-in and Joint Venture Agreement (JVA) over the Tick Hill Gold Project with Diatreme Resources Limited, subject to certain conditions to be satisfied.

Under the terms of the JVA, the Earn-in Period ended on 31 December 2016. The parties to the JVA may agree on an extension to the Earn-in Period. As at the date of this half-year financial report, the parties are in discussions regarding an extension to the Earn-in Period.

The consolidated entity had not earned any interest in the joint venture as at 31 December 2016.

Nicholson Project Joint Venture

On 3 November 2015 the Company entered into a Farm-in and Joint Venture Agreement with Teck Australia Pty Ltd (Teck) to explore Superior's Nicholson Project (zinc-lead-copper) in north-west Queensland, subject to certain conditions to be satisfied.

During November 2016 Teck confirmed that it had completed the \$250,000 expenditure for the Initial Period per the Joint Venture Agreement and that it will commit to the Earn-In Period which requires expenditure of a further \$2,250,000 on or before 31 December 2018.

Teck had not earned any interest in the joint venture as at 31 December 2016.

Note 11 Commitments for Expenditure

	31 Dec 2016 S	30 Jun 2016
Exploration commitments
Commitments as at 31 December 2016 for payments under exploration permits for minerals in existence at the reporting date but not recognised as liabilities payable is:
Payable within 1 year	732,096	834.633
Payable greater than 1 year	2,489,330	2,978,880
	3,221,426	3.813.513

So as to maintain current rights to tenure of various exploration tenements, the consolidated entity will be required to outlay amounts in respect of tenement exploration expenditure commitments. These outlays, which arise in relation to granted tenements are noted above. The outlays may be varied from time to time, subject to approval of the relevant government departments, and may be relieved if a tenement is relinquished, work program deferred or Joint Venture Agreement concluded.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

Note 12 Contingent Liabilities

There have been no changes in contingent liabilities since the end of the previous annual reporting period, 30 June 2016.

Note 13 Events Occurring After the Reporting Period

On 30 January 2017 the Department of Natural Resources and Mines granted the Company's new Exploration Permit for Minerals application, EPM26165 "Cockie South".

No other matter or circumstance has arisen since the end of the half-year, that has significantly affected, or may affect, the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in future financial years.

DIRECTORS' DECLARATION

In the directors' opinion:

• the consolidated financial statements and notes set out on pages 6 to 15, are in accordance with $1.$ the Corporations Act 2001, including:
• complying with Accounting Standard AASB 134: Interim Financial Reporting; and $a)$
• giving a true and fair view of the consolidated entity's financial position as at 31 December $b)$ 2016 and of its performance for the half-year ended on that date, and
• $2.$ having regard to Note 5 to the financial statements, 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 made pursuant to s.303(5) of the Corporations Act 2001.

CA Fernicola

Chairman

Brisbane, 14 March 2017

INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF SUPERIOR RESOURCES LIMITED

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Superior Resources Limited ("the Company"), which comprises the consolidated balance sheet as at 31 December 2016, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, 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 half-year's end or from time to time during the financial 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 2016 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 Superior Resources Limited and its controlled entity's, 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.

$17$

PKF Hacketts Audit ABN 33 873 151 348

Level 6, 10 Eagle Street, Brisbane QLD 4000 GPO Box 1568, Brisbane QLD 4001 p +61 7 3839 9733 +61 7 3832 1407

8 East Street, PO Box 862 Rockhampton QLD 4700 p +61 7 4927 2744 +61 7 4927 4317

Liability limited by a scheme approved under Professional Standards Legislation. PKF International Limited administers a network of legally independent firms which carry on separate business under the PKF Name. PKF International Limited is not responsible for the acts or omissions of individual member firms of the network. For office locations visit www.pkf.com.au

INDEPENDENT AUDITOR'S REVIEW REPORT - continued TO THE MEMBERS OF SUPERIOR RESOURCES LIMITED

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 Superior 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 2016 and of its performance for the half-year ended on that date; and
• $(b)$ complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

Emphases of Matter regarding Going Concern

Without modifying our opinion expressed above, we draw attention to Note 5 of the financial statements in relation to going concern, there is material uncertainty that may cast significant doubt as to whether the consolidated entity will be able to continue normal business operations and therefore whether the consolidated entity will realise its assets and extinguish its liabilities in the normal course of business and at the amounts recorded in the financial report.

PKF Housett

PKF HACKETTS AUDIT

Liam Murphy Partner

Brisbane, 14^th March 2017