TUNGSTEN MINING NL — Interim / Quarterly Report 2020

Mar 4, 2020

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Half Year Financial Report 31 December 2019

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Contents

Contents
	Page
Corporate directory	2
Directors’ report	3
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
Condensed notes to the consolidated financial statements	9
Directors’ declaration	16
Auditor’s independence declaration	17
Independent auditor’s review report	18

1

Tungsten Mining NL • Half Year Financial Report 31 December 2019

Corporate directory

Board of directors:

Gary Lyons (Non-executive Chairman) Tan Sri Dato' Tien Seng Law (Non-executive Deputy Chairman) Chew Wai Chuen (Non-executive Director) Kong Leng (Jimmy) Lee (Non-executive Director) Teck Siong Wong (Non-executive Director) Russell Clark (Non-executive Director) Wai Cheong Law (Alternate Director)

Chief executive officer:

Craig Ferrier

Company Secretaries:

Mark Pitts Simon Borck

Principal and registered office:

Auditors:

Stantons International

Level 2, 1 Walker Avenue West Perth WA 6005 Telephone: +61 8 9481 3188 Facsimile: +61 8 9321 1204

Bankers:

National Australia Bank Limited Level 1, 1238 Hay Street West Perth WA 6005

Share registry:

Automic Group Level 2, 267 St Georges Terrace Perth, WA 6000 Telephone: +61 2 8072 1400

Level 4, 46 Colin Street West Perth WA 6005

Solicitors:

Telephone: +61 8 9486 8492 Facsimile: +61 8 6117 4039 Email: info@tungstenmining.com Website: www.tungstenmining.com

Postal address:

PO Box 452 West Perth WA 6872

Bennett + Co Ground Floor, BGC Centre 28 The Esplanade Perth WA 6000 Telephone: +61 8 6316 2200 Facsimile: +61 8 6316 2211

ABN:

67 152 084 403

Issued capital as at 31 December 2019:

Fully paid ordinary shares: 769,164,272 Unlisted options: 16,000,000

Parent entity:

Tungsten Mining NL

Stock exchange:

Australian Securities Exchange Limited

ASX company code:

TGN

2

Tungsten Mining NL • Half Year Financial Report 31 December 2019

Directors’ Report

Your directors submit their report for Tungsten Mining NL (‘the Company’ or ‘the Parent’) and for the Group, being the Company and its controlled entities, for the half year ended 31 December 2019.

Directors

The names of the Company’s Directors in office during the half-year and until the date of this report are set out below. Directors were in office for the entire period unless otherwise stated.

Gary Lyons Non-executive Chairman Tan Sri Dato' Tien Seng Law Non-executive Deputy Chairman Kong Leng (Jimmy) Lee Non-executive Director Chew Wai Chuen Non-executive Director Teck Siong Wong Non-executive Director Russell Clark Non-executive Director Wai Cheong Law Alternate Director

Mr Clark was appointed to the Board, as a non-executive director on 11 February 2020.

Company Secretaries

Mark Pitts Simon Borck

Dividends

No amounts have been paid or declared by way of dividend by the Company during the half year or in the period to the date of this report.

Principal activities

The principal activity of the Company and its subsidiaries during the course of the half year continued to be the exploration and evaluation of mining projects.

Operating results

The net loss of the Group for the half year to 31 December 2019 was $7,883,208 (Dec 2018: $11,198,237).

During the period, net cash used in operating and investing activities totalled $7,347,998 (Dec 2018: $21,328,348). Net cash flow from financing activities was $1,205,702 for the period (Dec 2018: $24,528,144), this amount included $1,208,149 (Dec 2018: $422,000) in proceeds from exercised options.

Review of operations

The Group continues to implement its strategy directed at building a tungsten business of scale, growing its resource inventory during the period to 37 million MTU’s (metric tonne units) of WO3 (tungsten trioxide) and a further 57,000 tonnes of Mo (molybdenum), 850,000 ounces of Au (gold) and 35 million ounces of Ag (silver). This very substantial increase in resource inventory follows an updated Mulgine Trench Mineral Resource estimate. Not only has there been a substantial increase in contained tungsten and molybdenum, but it also defined a maiden resource for other potential by-products of gold and silver.

The Mt Mulgine Project remains the highest priority development project for the Group, responsible for the majority of activity during the period with the advancement of its pre-feasibility study. These activities included the following:

• Progression of resource infill drilling;

• Completion of an updated Mineral Resource Estimate for the Mulgine Trench Deposit by independent resource consultants, Optiro;

• Development of project site water strategy;

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Tungsten Mining NL • Half Year Financial Report 31 December 2019

Directors’ Report

Review of operations (continued)

• Continuation of metallurgical test work program;

• Commencement of process engineering study for the design of the processing plant;

• Completion of power supply options study;

• Re-submission of revised NVCP application in support of the clearing envelope identified for the Mulgine Hill deposit.

During the period 40,271,617 fully paid shares in the Company were allotted on the exercise of $0.03 unlisted options, raising $1,208,149 before costs.

On 11 February 2020 Mr Russell Clark was appointed to the Board, as a non-executive director.

Events subsequent to balance date

There have been no matters or circumstances that have arisen since 31 December 2019 that have significantly affected or may significantly affect:

• (a) the Group’s operations in future years; or

• (b) the results of those operations in future years; or

• (c) the Group’s state of affairs in future years.

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 17.

Signed in accordance with a resolution of the Directors.

Gary Lyons Chairman

Perth, 5[th] March 2020

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Tungsten Mining NL • Half Year Financial Report 31 December 2019

Consolidated statement of profit or loss and other comprehensive income

For the half year ended 31 December 2019

	Consolidated
	December 19 December 18
Note	$ $
Other Income 3 324,415 382,643 Administration expenses (588,222) (707,688) Exploration expenses 4 (6,010,009) (3,455,787) Occupancy expenses - (24,000) Remuneration expenses (1,609,392) (344,113) Share-based payments 5 - (7,049,292) Loss before income tax (7,883,208) (11,198,237) Income tax expense/benefit - - Loss for the period (7,883,208) (11,198,237) Other comprehensive income Items that will not be reclassified subsequently to profit or loss - - Items that may be reclassified subsequently to profit or loss - - Other comprehensive income after tax - - Total comprehensive loss after tax (7,883,208) (11,198,237) Loss attributable to members of the Parent (7,883,208) (11,198,237) Total comprehensive loss attributable to members of the Parent (7,883,208) (11,198,237) Basic loss per share in cents (1.08) (1.57) Diluted loss per share is not shown as it would not reflect an inferior position.	324,415 382,643 (588,222) (707,688) (6,010,009) (3,455,787) - (24,000) (1,609,392) (344,113) - (7,049,292)
	(7,883,208) (11,198,237) - -
	(7,883,208) (11,198,237)
	- - - -
	- -
	(7,883,208) (11,198,237)
	(7,883,208) (11,198,237)
	(7,883,208) (11,198,237)

The above statement should be read in conjunction with the accompanying notes.

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Tungsten Mining NL • Half Year Financial Report 31 December 2019

Consolidated statement of financial position

As at 31 December 2019

	Consolidated
	December 19 June 19
Note	$ $
Current assets Cash and cash equivalents Trade and other receivables Other assets Total current assets Non-current assets Exploration and evaluation 6 Plant and equipment 7 Right-of-use assets 12 Total non-current assets Total assets Current liabilities Trade and other payables Lease Liabilities 13 Provisions 14 Total current liabilities Non-current liabilities Lease Liabilities 13 Provisions 14 Total non-current liabilities Total liabilities Net assets Equity Issued capital 8 Shares to be issued 8 Reserves 9 Accumulated losses Total equity	27,641,221 33,783,517 167,645 214,509 407,171 306,029
	28,216,037 34,304,055
	19,707,196 19,707,196 2,733,982 2,742,772 859,520 968,122
	23,300,698 23,418,090
	51,516,735 57,722,145
	817,391 478,031 164,740 196,160 402,272 231,796
	1,384,403 905,987
	749,224 774,936 432,631 434,914
	1,181,855 1,209,850
	2,566,258 2,115,837
	48,950,477 55,606,308
	81,723,389 80,533,512 37,500 - 7,851,718 7,851,718 (40,662,130) (32,778,922)
	48,950,477 55,606,308

The above statement should be read in conjunction with the accompanying notes.

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Tungsten Mining NL • Half Year Financial Report 31 December 2019

Consolidated statement of changes in equity

For the half year ended 31 December 2019

	Issued Capital Shares to be issued Reserves Accumulated Total Losses
	$ $ $ $ $
Balance at 1 July 2019 Loss for the period Other comprehensive income Total comprehensive loss for the period Shares issued on exercise of share options Share issue transaction costs Shares to be issued on exercise of share options Balance as at 31 December 2019 Balance at 1 July 2018 Loss for the period Other comprehensive income Total comprehensive loss for the period Shares issued Shares issued on exercise of share options Share issue transaction costs Share-based payments Balance as at 31 December 2018	80,533,512 - 7,851,718 (32,778,922) 55,606,308
	- - - (7,883,208) (7,883,208) - - - - -
	- - - (7,883,208) (7,883,208)
	1,208,149 - - - 1,208,149 (18,272) - - - (18,272) - 37,500 - - 37,500
	81,723,389 37,500 7,851,718 (40,662,130) 48,950,477
	56,005,180 18,194,634 802,426 (19,762,486) 55,239,754
	- - - (11,198,237) (11,198,237) - - - - -
	- - - (11,198,237) (11,198,237)
	25,438,254 (18,194,634) - - 7,243,620 422,000 - - - 422,000 (1,330,088) - - - (1,330,088) - - 7,049,292 - 7,049,292
	80,535,346 - 7,851,718 (30,960,723) 57,426,341

The above statement should be read in conjunction with the accompanying notes.

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Tungsten Mining NL • Half Year Financial Report 31 December 2019

Consolidated statement of cash flows

For the half year ended 31 December 2019

	Consolidated
	December 19 December 18
	$ $
Cash flows from operating activities Payments to suppliers and employees Interest received Other proceeds Net cash (used in) operating activities Cash flows from investing activities Payments for property, plant & equipment Acquisition of subsidiary Security Deposits Net cash (used in) investing activities Cash flows from financing activities Proceeds from exercise of share options Proceeds from issue of shares Payments for share issue costs Net cash from financing activities Net increase/(decrease) in cash Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period	(7,559,860) (4,895,022) 328,184 310,567 60,000 45,000
	(7,171,676) (4,539,455)
	(66,135) (1,708,819) (85,187) (14,912,264) (25,000) (167,810)
	(176,322) (16,788,893)
	1,208,149 422,000 - 25,438,254 (2,447) (1,332,110)
	1,205,702 24,528,144
	(6,142,296) 3,199,796 33,783,517 34,130,400
	27,641,221 37,330,196

The above statement should be read in conjunction with the accompanying notes.

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Tungsten Mining NL • Half Year Financial Report 31 December 2019

Condensed notes to the financial statements

NOTE 1: BASIS OF PREPARATION OF THE HALF-YEARLY FINANCIAL REPORT

The consolidated financial report is a general purpose condensed financial report for the half-year ended 31 December 2019, which has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001 and this financial report was authorised for issue in accordance with a resolution of the directors on 5[th] March 2020.

It is recommended that the half-year consolidated financial statements be read in conjunction with the annual financial report for the year ended 30 June 2019 and considered with any public announcements made by Tungsten Mining NL during and subsequent to the half-year ended 31 December 2019 in accordance with continuous disclosure obligations of the ASX Listing Rules .

The half-year consolidated financial statements do not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full and understanding of the financial performance, financial position and financing and investing activities of the Group as the full financial report.

The half-year consolidated financial statements have been prepared on the basis of accrual accounting and historical costs.

Changes in accounting standards

The Group has considered the implications of new and amended Accounting Standards effective for annual reporting periods beginning on or after 1 July 2019 but determined that their application to the financial statements is either not relevant or not material.

NOTE 2: SEGMENT REPORTING

The Group has based its operating segments on the internal reports that are reviewed and used by the executive management team in assessing performance and in determining the allocation of resources.

The Group currently does not have production and is only involved in exploration. As a consequence, activities in the operating segment are identified by management based on the manner in which resources are allocated, the nature of the resources provided and the identity of the manager and country of expenditure. Information is reviewed on a whole of entity basis.

Based on these criteria the Group has only one operating segment, being exploration, and the segment operations and results are reported internally based on the accounting policies as described in Note 1 on a whole of entity basis.

NOTE 3: OTHER INCOME

	Consolidated
	December 19 December 18
	$ $
Interest income	264,415 382,643
Management fee	60,000 -
	324,415 382,643

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Tungsten Mining NL • Half Year Financial Report 31 December 2019

Condensed notes to the financial statements

NOTE 4: EXPLORATION EXPENSES

	Consolidated	Consolidated
	December 19	December	18
	$		$
Exploration expenditure	6,010,009	3,455,787

Prefeasibility on Mt Mulgine

The increased exploration expenditure in the current period predominately relates to prefeasibility activities undertaken on the Mt Mulgine Tungsten project.

NOTE 5: SHARE-BASED PAYMENTS

	Consolidated
	December 19 December 18
	$ $
Unlisted options issued to Directors Shares issued under loan funded share scheme with Directors Total share-based payments for the period	- 52,972 - 6,996,320
	- 7,049,292

NOTE 6: EXPLORATION AND EVALUATION

		Consolidated
		December 19 June 19
		$ $
Capitalised exploration and evaluation		19,707,196 19,707,196
	Mt Mulgine Big Hill Kilba Watershed Hatches Creek Total
	$ $ $ $ $ $
Opening net carrying value Acquisitions Closing net carrying value	1,193,546 158,625 1,000,000 15,548,896 1,806,129 19,707,196 - - - - - -
	1,193,546 158,625 1,000,000 15,548,896 1,806,129 19,707,196

Mineral acquisition costs

The Group capitalises the acquisition costs in accordance with its accounting policy for exploration and evaluation expenditure. The ultimate recoupment of acquisition costs carried forward in the exploration and evaluation phases are dependent on the successful development and commercial exploitation or sale of the respective areas.

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Tungsten Mining NL • Half Year Financial Report 31 December 2019

Condensed notes to the financial statements

NOTE 7: PLANT AND EQUIPMENT

				Consolidated	Consolidated
				December 19	June 19
				$	$
Plant and equipment				2,733,982	2,742,772

	The following table illustrates the movement	The following table illustrates the movement	in carrying value of Plant and equipment
		Processing Plant	Office Equipment Exploration Equipment Computer Software		Total
		$	$ $ $		$
	Opening net carrying value Cost of additions Depreciation charge Closing net carrying value	2,485,247 - -	120,606 99,475 37,444 1,873 17,839 - (15,974) (7,159) (5,369)		2,742,772 19,712 (28,502)
		2,485,247	106,505 110,155 32,075		2,733,982

Processing Plant

In prior financial years, the Group acquired a dismantled mineral processing facility and relocated it from its location in the Pilbara to storage in a laydown area adjacent to the Golden Dragon gold processing plant operated by Minjar Gold for total consideration of $795,347.

Also, during the previous financial year, the Group acquired two new x-ray ore sorters. Total consideration for the ore sorters and acquisition costs was $1,658,050 with a remaining balance, not yet incurred.

This Processing Plant, the processing facility and ore sorters, are not currently being depreciated as neither are in use.

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Tungsten Mining NL • Half Year Financial Report 31 December 2019

Condensed notes to the financial statements

NOTE 8: ISSUED CAPITAL

		Consolidated
Ordinary shares fully paid Shares to be issued (issued on 7 January 2020)		December 19 June 19
		$ $
		81,723,389 80,533,512
		37,500 -
		81,760,889 80,533,512

The following table illustrates the movement in ordinary shares

		$ Number
	Balance at the beginning of period Shares issued at $0.03 on exercise of options Shares to be issued at $0.03 on exercise of options Costs incurred in issuing shares Balance at end of period	80,533,512 728,892,655 1,208,149 40,271,617 37,500 - (18,272) -
		81,760,889 769,164,272

Unlisted options exercised

During the period 40,271,617 fully paid shares were allotted on the exercise of $0.03 unlisted options, raising $1,208,149 before costs.

Shares to be issued

During the period a further 1,250,000 $0.03 unlisted options were exercised. These unlisted options were subsequently allotted into fully paid shares after the period end, raising $37,500 before costs.

NOTE 9: RESERVES

	Consolidated
	December 19 June 19
	$ $
Share option reserve Loan-funded share scheme reserve	855,398 855,398 6,996,320 6,996,320
	7,851,718 7,851,718

Movement in share options reserve

The following table illustrates the share-based payments expense, number and weighted average exercise prices (WAEP) of, and movements in, share options during the period.

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Tungsten Mining NL • Half Year Financial Report 31 December 2019

Condensed notes to the financial statements

NOTE 9: RESERVES (CONTINUED)

	Number WAEP $
At 1 July 2018 Vesting expense of Director/Employee options Free-attaching options issued under share placement Employee options exercised Free-attaching options exercised during the year At 30 June 2019 At 1 July 2019 Free-attaching $0.03 options exercised during the year Free-attaching $0.03 options expired during the year Free-attaching $0.60 options expired during the year At 31 Dec 2019	80,651,748 $ 0.124 802,426 - - 52,972 14,963,679 $ 0.600 - (9,250,000) $ 0.044 - (501,701) $ 0.030 -
	85,863,726 $ 0.216 855,398
	85,863,726 $ 0.216 855,398 (41,521,617) $ 0.030 - (695,050) $ 0.030 - (27,647,059) $ 0.600 -
	16,000,000 $ 0.044 855,398

The following table illustrates outstanding options that have vested and are exercisable at period end:

	Number outstanding Number vested and exercisable Exercise price Expiry date Remaining contractual life
Director options Tranche 1 Tranche 2 Tranche 3 Outstanding at period end	3,200,000 3,200,000 $0.03 23 Dec 20 0.98 years 3,200,000 3,200,000 $0.04 23 Dec 20 0.98 years 9,600,000 9,600,000 $0.05 23 Dec 20 0.98 years
	16,000,000 16,000,000

The following table illustrates outstanding limited recourse loan funded shares that have 100% vested in the prior year and are held in escrow at period end:

	Number granted Fair value of loan- funded shares Purchase Price Purchase (grant) date Loan expiry date Remaining contractual life
Loan funded shares issued in prior years	16,000,000 $6,996,320 $0.478 26 Jul 18 26 Jul 28 8.58 years 16,000,000 $6,996,320

There was no movement to these shares during the period.

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Tungsten Mining NL • Half Year Financial Report 31 December 2019

Condensed notes to the financial statements

NOTE 10: CONTROLLED ENTITIES

Tungsten Mining NL is the ultimate parent entity of the consolidated group. The following were controlled entities at period end and have been included in the consolidated financial statements. All shares held are ordinary shares.

Subsidiaries	Country of Incorporation	Percentage Interest Held 31 December 2019	Percentage Interest Held 30 June 2019	Date Acquired/ Incorporated
SM3-W Pty Ltd	Australia	100	100	13/12/2012
Pilbara Tungsten Pty Ltd	Australia	100	100	30/11/2015
Mid-West Tungsten Pty Ltd	Australia	100	100	30/11/2015
North Queensland Tungsten Pty Ltd	Australia	100	100	09/08/2018
Territory Tungsten Pty Ltd	Australia	100	100	01/03/2019

NOTE 11: CONTINGENT LIABILITIES

The Group is not aware of any significant contingencies since the last annual reporting date.

NOTE 12: RIGHT OF USE ASSETS

	Consolidated
	December 19 June 19
	$ $
Cost Accumulated depreciation Carrying value at end period Opening net carrying value Additions Depreciation charge for the year Closing net carrying value	1,086,019 1,086,019 (226,499) (117,897)
	859,520 968,122
	968,122 - - 1,086,019 (108,602) (117,897)
	859,520 968,122

Property leases

The above right-of-use assets and lease liabilities relate to certain property leases entered into during the prior year by the Group (refer Note 13).

The right-of-use asset is measured at the amount equal to the lease liability at the inception of the lease and then this cost is amortised over the life of the lease.

Right-of-use assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability

• any lease payments made at or before the commencement date less any lease incentives receive

• any initial direct costs,

• and restoration costs

Right-of-use assets are being depreciated over the lease term on a straight-line basis which is five years for both leases in place at 31 December 2019. If the Group is reasonably certain to exercise a purchase option, the rightof-use asset is depreciated over the underlying asset’s useful life.

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Tungsten Mining NL • Half Year Financial Report 31 December 2019

Condensed notes to the financial statements

NOTE 13: LEASE LIABILITIES

	Consolidated
	December 19 June 19
	$ $
Current Property lease liability Non-current Property lease liability Total lease liabilities	164,740 196,160
	164,740 196,160
	749,224 774,936
	749,224 774,936
	913,964 971,096

Property Leases

The above lease liabilities and right-of-use assets (refer Note 12) relate to certain property leases entered into during the prior year by the Group.

The lease liability valuation was calculated at lease inception from the total lease payment obligations being discounted using the Group’s incremental borrowing rate. An incremental borrowing rate of 5.68% was based on a secured interest rate that would be apply if finance was sought for an amount and time period equivalent to the lease requirements of the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period.

NOTE 14: PROVISIONS

	Consolidated
	December 19 June 19
	$ $
Current Provision for rehabilitation Provision for employee annual leave Provision for employee long service leave Non-current Provision for rehabilitation Provision for employee long service leave Total Provisions	171,529 20,000 174,187 156,022 56,556 55,774
	402,272 231,796
	420,000 425,000 12,631 9,914
	432,631 434,914
	834,903 666,710

NOTE 15: EVENTS SUBSEQUENT TO BALANCE DATE

There have been no matters or circumstances that have arisen since 31 December 2019 that have significantly affected or may significantly affect:

• (a) the group’s operations in future years; or

• (b) the results of those operations in future years; or

• (c) the group’s state of affairs in future years.

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Tungsten Mining NL • Half Year Financial Report 31 December 2019

Directors’ Declaration

In accordance with a resolution of the directors of Tungsten Mining NL, I state that:

In the opinion of the Directors:

• (a) The financial statements and notes of the Group are in accordance with the Corporations Act 2001, including:

• i. Giving a true and fair view of the financial position as at 31 December 2019 and the performance for the half-year ended on that date of the Group; and

• ii. Complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

• (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.

On behalf of the Board,

Gary Lyons Chairman Perth, 5[th] March 2020

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Tungsten Mining NL • Half Year Financial Report 31 December 2019

Auditor’s independence declaration

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Tungsten Mining NL • Half Year Financial Report 31 December 2019

Independent auditor’s review report

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Tungsten Mining NL • Half Year Financial Report 31 December 2019

Independent auditor’s review report

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Tungsten Mining NL • Half Year Financial Report 31 December 2019