VANADIUM RESOURCES LIMITED — Interim / Quarterly Report 2019

Mar 14, 2019

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ABN 47 618 307 887

FINANCIAL REPORT

FOR THE HALF-YEAR ENDED

31 DECEMBER 2018

CONTENTS

Directors' Report	3
Auditor’s Independence Declaration	8
Consolidated Statement of Profit or Loss and Other Comprehensive Income	9
Consolidated Statement of Financial Position	10
Consolidated Statement of Changes in Equity	11
Consolidated Statement of Cash Flows	12
Notes to the Consolidated Financial Statements	13
Directors' Declaration	22
Independent Auditor’s Review Report	23

Tando Resources Limited – Interim Financial Report 2018

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DIRECTORS’ REPORT

The Directors of Tando Resources Limited (“TNO” or “the Company”) present their report, together with the financial statements on the consolidated entity consisting of Tando Resources Limited and its controlled entities for the half-year ended 31 December 2018 (“the Period”).

It is recommended that the Directors’ Report be read in conjunction with the annual financial statements for the period 30 June 2018 and considered together with any public announcements made by the Company during the Period and up to the date of this report.

1. DIRECTORS

The names of the Company’s Directors who held office during the Period and until the date of this report are set out below. The Directors were in office for this entire Period unless otherwise stated.

Director	Position	Duration of Appointment
Mr William Oliver	Managing Director	Appointed 31 March 2017
Mr Jeremy King	Non-Executive Director	Appointed 31 March 2017
Mr Patrick Burke	Non-Executive Director	Appointed 28 June 2017
Mr Luigi Matteucci	Non-Executive Director	Appointed 4 March 2019

2. REVIEW OF OPERATIONS AND ACTIVITIES

During the Period the Company commenced an intensive drilling programme at the SPD Vanadium Project in South Africa. A total of 83 holes for 6002 metres were drilled (51 RC holes and 32 diamond core holes, Figure 1), culminating in the reporting of the maiden Mineral Resource for SPD which comprises 588 million tonnes at a whole rock grade of 0.78% V2O5 (classified as Inferred, see Appendix 2 and ASX release dated 18 December 2018).

The SPD Project is one of the highest grade Mineral Resources reported across the globe (using whole-rock or unprocessed grades) and positions the Company with a unique opportunity to initiate a low-cost, earlycashflow operation. The global Mineral Resources includes a near surface, high grade zone of 87Mt at 1.07% V2O5 and this high-grade zone is the focus of the current engineering and metallurgical studies with a view to selectively mining it and producing a concentrate for sale.

Drilling results reported during the period included (note these are whole-rock, or pre-concentrate grades):

• 8m at 1.35% V2O5 from surface / 0m (VRC049)

• 6m at 1.27% V2O5 from 18.9m (VDD010)

• within a wider interval of 29.9m at 0.78% V2O5 from surface / 0m

• 14.9m at 0.99% V2O5 from 1.5m (VDD009)

• incl. 7m at 1.21% V2O5 from 1.5m

• 11.8m at 1.06% V2O5 from 7.7m (VDD009)

• incl. 5.7m at 1.37% V2O5 from 10.9m

• 14m at 0.98% V2O5 from 0m / surface (VRC043)

• 12m at 0.99% V2O5 from surface / 0m (VRC047)

• incl. 2m at 1.70% V2O5 from 10m

• 11m at 0.99% V2O5 from 17m (VRC040)

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DIRECTORS’ REPORT

• incl. 2m at 1.67% V2O5 from 25m

• 10m at 0.99% V2O5 from 9m (VRC036)

• 10m at 0.95% V2O5 from 17m (VRC037)

• 9m at 1.06% V2O5 from 22m (VRC015)

• incl. 3m at 1.45% V2O5 from 28m

• 11m at 0.98% V2O5 from 24m (VRC019)

• incl. 2m at 1.65% V2O5 from 33m

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Figure 1. Drilling Completed at the SPD Project and selected results (whole-rock/unprocessed).

Recent results are being currently used to update the Mineral Resource and, based on the consistency between adjacent drillholes, both in analytical results and in the geological sequence, should enable a high proportion of the Mineral Resource to be upgraded into the Indicated category when the Mineral Resource is updated. In addition, increased detail from infill drilling will enable higher-grade massive magnetite layers to be better delineated, increasing the potential for selective mining to meet offtake specifications. Given the mineralisation outcrops at surface in the project area it is expected to be amenable to open pit mining (Figure 2).

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Tando Resources Limited – Interim Financial Report 2018

DIRECTORS’ REPORT

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Figure 2. Cross Section showing drilling results at SPD Project.

The Company recently reported concentrate grades derived from its drill samples as follows:

• 25m at 2.42% V2O5 from 23m (VRC008)

• 34m at 2.32% V2O5 from 21m (VDD001)

• 35m at 2.15% V2O5 from 23m (VRC003)

• 38m at 2.13% V2O5 from 93m (VRC010)

• 35m at 2.11% V2O5 from 47m (VRC001)

• 24m at 2.16% V2O5 from 0m / surface (VRC002)

The concentrate results demonstrated that a vanadium concentrate grading well over 2 per cent V2O5 can be produced by simple magnetic separation of high-grade samples (>1% V2O5 unprocessed) from SPD. The mass recovery from such intervals is excellent at > 40%. Metallurgical testwork is currently underway on wide diameter drill core samples from the project, aiming to replicate these results on a larger, process plant scale. The concentrate analysis is high quality with low levels of silica and alumina and concentrate samples, along with specifications, have been provided to potential offtake partners for their review.

Tando has continued to test a number of targets outside the project area from which high grade surface samples were returned. Recent drilling at the NE Target has returned a substantial intersection of lithologies similar to the lithologies which host the mineralisation at the SPD Resource – with VHD006 intersecting interlayered magnetite and magnetite gabbro from surface to 150m depth (broken only by a 3m dolerite dyke, refer Figure 3).

This follows a previous hole (VHD005) which intersected a 25m zone, including a 7m zone of massive magnetite. Magnetite and magnetite gabbro are well established as the host for mineralisation at SPD and its surrounds. It should be noted that these are downhole widths, not true widths, with VHD005 being an inclined hole and VHD006 a vertical hole (as shown on Figure 3)

Assays are anticipated in 4 weeks but the presence of these lithologies provides encouragement that the NE Target represents a new satellite zone of surface mineralisation within the SPD project. The NE Target is located some 4km north-east of the Mineral Resource (Figure 2) and, should assays confirm the presence of mineralisation in this area, would represent a new area to be evaluated as a potential feed source to the main project.

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Tando Resources Limited – Interim Financial Report 2018

DIRECTORS’ REPORT

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Figure 3 Section through VHD005 and VHD006.

3. SIGNIFICANT CHANGES TO THE STATE OF AFFAIRS

On 27 of September 2018, the Company completed Milestone 1 and acquired 24.26% of the SPD Vanadium Project in South Africa.

This was by the way of the consideration of 25,756,503 shares and 32,430,001 options.

4. FINANCIAL RESULTS

The financial results of the consolidated entity for the half-year ended 31 December 2018 are:

	31-Dec-18	30-Jun-18
Cash and cash equivalents ($)	1,924,445	4,336,356
Net assets ($)	12,422,715	5,708,616

	31-Dec-18	31-Dec-17
Net loss after tax ($)	(3,191,754)	(570,701)
Loss per share (cents)	(1.77)	(4.99)

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Tando Resources Limited – Interim Financial Report 2018

DIRECTORS’ REPORT

5. EVENTS OCCURRING AFTER REPORTING DATE

On 4 March 2019 Mr Luigi Matteucci was appointed as a non-executive director of the Company. There are no other matters or circumstances which have arisen since the end of the half-year which significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in subsequent financial periods.

6. AUDITOR’S INDEPENDENCE DECLARATION

The lead auditor’s independence declaration under s 307C of the Corporations Act 2001 is set out on page 8 for the half-year ended 31 December 2018.

This report is signed in accordance with a resolution of the Board of Directors.

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William Oliver Managing Director 15 March 2019

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Tando Resources Limited – Interim Financial Report 2018

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AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the review of the financial report of Tando Resources Limited for the half-year ended 31 December 2018, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• (ii) any applicable code of professional conduct in relation to the review.

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RSM AUSTRALIA PARTNERS

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Perth, WA Dated: 15 March 2019

TUTU PHONG Partner

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TANDO RESOURCES LIMITED

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE HALF-YEAR ENDED 31 DECEMBER 2018

Note Other income Consulting and legal fees Director fees Company secretary and financial management Share and company registry fees Other expenses Share based payment expenses 3 Professional fees Travel expenses Share of losses of associates accounted for using the equity method 4 (Loss) before income tax for the period Income tax expense (Loss) after income tax for the period Total comprehensive (loss) for the year attributable to members of Tando Resources Limited (Loss) per share for the year attributable to the members of Tando Resources Limited: Basic and diluted loss per share	31-Dec-18 31-Dec-17 $ $
	29,990 2,336
	(571,389) (220,474)
	(228,939) (78,500)
	(64,500) (45,750)
	(66,007) (77,666)
	(36,400) (33,441)
	(2,104,739) (80,837)
	(46,473) (29,250)
	(101,141) (7,119)
	(2,156) -
	(3,191,754) (570,701)
	- -
	(3,191,754) (570,701)
	(3,191,754) (570,701)
	(1.77) (4.99)

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

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TANDO RESOURCES LIMITED

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2018

Note ASSETS Current Assets Cash and cash equivalents Trade and other receivables Total Current Assets ASSETS Non-Current Assets Exploration and evaluation assets 5 Investments accounted for using the equity method 6 Plant and equipment Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Other payables Total Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 7 Reserves Accumulated losses TOTAL EQUITY	31-Dec-18 30-Jun-18 $ $ 1,924,445 4,336,356 125,677 134,605
	2,050,122 4,470,961
	3,012,628 1,320,686 7,826,361 - 8,253 -
	10,847,242 1,320,686
	12,897,364 5,791,647
	222,593 83,031 252,056 -
	474,649 83,031
	474,649 83,031
	12,422,715 5,708,616
	11,107,678 6,640,448 6,116,608 677,985 (4,801,571) (1,609,817)
	12,422,715 5,708,616

The Consolidated Statement of Financial Position should be read in conjunction with the notes to the financial statements.

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TANDO RESOURCES LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE HALF YEAR ENDED 31 DECEMBER 2018

At 1 July 2018 Loss for the period Total comprehensive income/(loss) for the year after tax Transactions with owners in their capacity as owners: Conversion of options Shares issued in lieu of services provided Share-based payment transactions Purchase of 24.26% of the SPD Vanadium Project Balance at 31 December 2018 At 1 July 2017 Loss for the period Total comprehensive income/(loss) for the year after tax Transactions with owners in their capacity as owners: Issue of share capital Share issue costs Issue of listed options Share-based payment transactions Balance at 31 December 2017	Issued Capital Reserves Accumulated Losses Total Equity $ $ $ $
	6,640,448 677,985 (1,609,817) 5,708,616
	- - (3,191,754) (3,191,754)
	- - (3,191,754) (3,191,754)
	82,625 - - 82,625 6,000 1,120,720 - 1,126,720 589,050 395,061 - 984,111 3,789,555 3,922,842 - 7,712,397
	11,107,678 6,116,608 (4,801,571) 12,422,715
	330,001 - (6,456) 323,545
	- - (570,701) (570,701)
	- - (570,701) (570,701)
	4,750,000 - - 4,750,000 (350,500) - - (350,500) - 121,250 - 121,250 - 80,837 - 80,837
	4,729,501 202,087 (577,157) 4,354,431

The Consolidated Statement of Changes in Equity should be read in conjunction with the notes to the financial statements.

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TANDO RESOURCES LIMITED

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE HALF YEAR ENDED 31 DECEMBER 2018

	31-Dec-18 31-Dec-17
	$ $
Cash flows from in operating activities
Payments to suppliers and employees	(730,962) (131,783)
Interest received	36,018 2,336
GST refund	4,902 (113,244)
Net cash flows used in operating activities	(690,042) (242,691)
Cash flows from investing activities
Payments for capitalised exploration and evaluation	(1,669,545) (821,177)
Payments for costs related to the acquisition of 24.26% of the SPD Vanadium Project	(116,120) -
Payments for plant and equipment	(8,490) -
Payments for costs related to acquisition of VMS Resources Pty Ltd	- (50,000)
Cash acquired upon acquisition of subsidiaries	- 1,200
Net cash flows used in investing activities	(1,794,155) (869,977)
Cash flows from financing activities
Proceeds from the issue of shares	82,625 4,500,000
Share issue costs	- (350,500)
Payment of loan receivable	(10,339) -
Proceeds from option entitlement issue	- 2,500
Net cash flowsprovided by financing activities	72,286 4,152,000
Net (decrease) / increase in cash and cash equivalents	(2,411,911) 3,039,332
Cash and cash equivalents at the beginningof theyear	4,336,356 287,612
Cash and cash equivalents at the end of theyear	1,924,445 3,326,944

The Consolidated Statement of Cash Flows should be read in conjunction with the notes to the financial statements.

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TANDO RESOURCES LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF-YEAR ENDED 31 DECEMBER 2018

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These general purpose financial statements for the interim half-year reporting period ended 31 December 2018 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'.

These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2018 and any public announcements made by the company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the policies stated below.

New or amended Accounting Standards and Interpretations adopted

The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

The following Accounting Standards and Interpretations are most relevant to the consolidated entity:

AASB 9 Financial Instruments

The consolidated entity has adopted AASB 9 from 1 July 2018. The standard introduced new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent consideration recognised in a business combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch. For financial liabilities designated at fair value through profit or loss, the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management activities of the entity. New impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2018

TANDO RESOURCES LIMITED

AASB 15 Revenue from Contracts with Customers

The consolidated entity has adopted AASB 15 from 1 July 2018. The standard provides a single comprehensive model for revenue recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduced a new contract-based revenue recognition model with a measurement approach that is based on an allocation of the transaction price. This is described further in the accounting policies below. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts with customers are presented in an entity's statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Customer acquisition costs and costs to fulfil a contract can, subject to certain criteria, be capitalised as an asset and amortised over the contract period.

Impact of adoption

AASB 9 and AASB 15 were adopted using the modified retrospective approach and as such comparatives have not been restated. There was no impact on the financial position or performance of the consolidated entity from the adoption of AASB 9 and AASB15.

Associates

Associates are entities over which the consolidated entity has significant influence but not control or joint control. Investments in associates are accounted for using the equity method. Under the equity method, the share of the profits or losses of the associate is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in associates are carried in the statement of financial position at cost plus post-acquisition changes in the consolidated entity's share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Dividends received or receivable from associates reduce the carrying amount of the investment.

When the consolidated entity's share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term receivables, the consolidated entity does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

The consolidated entity discontinues the use of the equity method upon the loss of significant influence over the associate and recognises any retained investment at its fair value. Any difference between the associate's carrying amount, fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

Revenue recognition

The consolidated entity recognises revenue as follows:

Revenue from contracts with customers

Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated entity: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised.

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Tando Resources Limited – Interim Financial Report 2018

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2018

TANDO RESOURCES LIMITED

Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are initially recognised as deferred revenue in the form of a separate refund liability.

Sale of goods

Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which is generally at the time of delivery.

Rendering of services

Revenue from a contract to provide services is recognised over time as the services are rendered based on either a fixed price or an hourly rate.

Interest

Interest revenue is recognised as interest accrues using the effective interest method.

Other revenue

Other revenue is recognised when it is received or when the right to receive payment is established.

Trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days.

The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.

Other receivables are recognised at amortised cost, less any allowance for expected credit losses.

Investments and other financial assets

Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being avoided.

Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off.

Financial assets at fair value through profit or loss

Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss.

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Tando Resources Limited – Interim Financial Report 2018

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2018

TANDO RESOURCES LIMITED

Financial assets at fair value through other comprehensive income

Financial assets at fair value through other comprehensive income include equity investments which the consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition.

Impairment of financial assets

The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain.

Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.

For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss.

NOTE 2: OPERATING SEGMENTS

The directors have considered the requirements of AASB 8 – Operating Segments and the internal reports that are reviewed by the Chief Operating Decision Maker (the Board of Directors) in allocating resources and have concluded that at this time there are no separately identifiable operating segments.

The consolidated entity has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources. The information presented in the financial report in the same information that is viewed by the Board of Directors.

The consolidated entity is currently operating in one business segment being an administrative entity in the exploration sector and two geographic segments being Australia and South Africa.

2018	Australia South Africa Total
	$ $ $
Other revenue	29,990 - 29,990
Total segment revenue	29,990 - 29,990
Loss before income tax expense	(3,189,598) (2,156) (3,191,754)
Total Segment Assets	3,459,639 9,437,725 12,897,364
Total Segment Liabilities	474,649 - 474,649

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NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2018

TANDO RESOURCES LIMITED

NOTE 3: SHARE BASED PAYMENT EXPENSE

On 27 September 2018, the Company issued 3,465,001 ordinary shares for consideration for the 100% acquisition of Steelpoort Pty Ltd.

On 26 September 2018, 9,240,000 options were issued as consideration for services provided by the lead manager.

On 26 September 2018, the Company issued 32,340,001 options as consideration to vendors for its investment in Vanadium Resources Pty Ltd for its interest in the Vanadium Resources project.

The grant date of the options was 16 August 2018 which is the date the acquisition was finalised.

The Company has measured the fair value of the unlisted options granted by adapting a Black-Scholes option pricing model using the inputs below:

Grant date shareprice	0.170
Exerciseprice	0.108
Expected volatility	100%
Grant date	20 August 2018
Expirydate	26 September 2021
Dividendyield	0.00%
Risk free rate	2.02%

	31-Dec-18 31-Dec-17
	$ $
Option expense recognised	395,061 80,837
Consideration under milestone 1 for the acquisition of Steelpoort Pty Ltd	589,050 -
Consideration for lead manager	1,120,628 -
	2,104,739 80,837
Options recognised as an Investment in Associate	3,922,842 -
	3,922,842 -

NOTE 4: SHARE OF PROFITS OF ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD

	31-Dec-18 31-Dec-17
	$ $
Share of loss - associates	2,156 -
	2,156 -

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TANDO RESOURCES LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE HALF-YEAR ENDED 31 DECEMBER 2018

NOTE 5: EXPLORATION & EVALUATION EXPENDITURE

NOTE 5: EXPLORATION & EVALUATION EXPENDITURE	NOTE 5: EXPLORATION & EVALUATION EXPENDITURE
		31-Dec-18 30 Jun-18
		$ $
Opening Balance		1,320,686 -
Acquisition of VMS Resources Pty Ltd		- 356,747
Exploration cost capitalised duringtheperiod		1,691,942 963,939
		3,012,628 1,320,686
NOTE 6: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
		31-Dec-18 30 Jun-18
		$ $
Investment in associate (refer to note 10)		7,826,361 -
NOTE 7: ISSUED CAPITAL
		31-Dec-18 30 Jun-18
		$ $
Issued and paid up Capital
Ordinary Shares Fully Paid		11,107,678 6,640,448
Movement in ordinary shares on issue Balance at the beginning of the period Capital raising costs Consideration shares for acquisition of VMS Resources Pty Ltd Conversion of options at $0.25 Issue of Shares - $0.40 placement Capital raising costs Share split capital restructure Conversion of options at $0.054 Consideration for Steelpoort Pty Ltd Consideration for services provided Consideration for 24.26% of Vanadium Resources Pty Ltd Balance at the end of period	31 December 2018 No. of Shares $	30 June 2018 No. of Shares $
	166,260,491 6,640,448 - - - - - - - - - - - - 1,530,092 82,625 3,465,001 589,050 40,000 6,000 22,291,502 3,789,555	6,750,001 330,001 22,500,000 4,500,000 - (350,500) 1,250,000 250,000 407,300 101,825 5,000,000 2,000,000 - (210,787) 165,891,7361 - 368,760 19,909 - - - - - -
	193,587,086 11,107,678	166,260,491 6,640,448

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Tando Resources Limited – Interim Financial Report 2018

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2018

TANDO RESOURCES LIMITED

NOTE 8: CONTINGENCIES AND COMMITMENTS

The consolidated entity can acquire up to 73.95% interest in Vanadium Resources Pty Ltd for its interest in Vanadium Project by meeting a series of milestones comprising the establishment of a JORC-compliant Measured Resource, and completion of Scoping, Pre-feasibility and Definitive Feasibility Studies (see Table below for details).

Vanadium Resources Pty Ltd No. of Consideration Shares to be issued Vanadium Resources Pty Ltd No. of Consideration Options to be issued Vanadium Resources Pty Ltd (Cash consideration in South African Rand) Steelpoort consideration shares No. of Transaction Options to be issued % of Interest in SPD Vanadium Project Status	Milestone 1: Satisfaction of Conditions Precedent Milestone 2: Measured Resource Milestone 3: Scoping Study Milestone 4: Pre- Feasibility Study Milestone 5: Definitive Feasibility Study
	22,291,502 (issued 27 September 2018) 21,598,502 16,170,001 - 21,021,002 - - - 32,340,001 20,559,006 $1,576,866 $221 $181,270 $263,402 $388,640 3,465,001 (issued 27 September 2018) 6,930,000 3,465,001 4,620,003 9,240,004 32,430,001 (issued 27 September 2018) - - - -
	24.26% 27.79% 36.98% 51.77% 73.95%
	Completed Pending Pending Pending Pending

Other than the above, there are no changes in the consolidated entity’s exploration commitments from 30 June 2018.

NOTE 9: CONTROLLED ENTITIES

NOTE 9: CONTROLLED ENTITIES
Name of entity	Country of incorporation	Class of Share	Equity Holding 31-Dec-18	Equity Holding 30-Jun-18
VMS Resources Pty Ltd	Australia	Ordinary	100%	100%
Steelpoort Pty Ltd	Australia	Ordinary	100%	-%

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Tando Resources Limited – Interim Financial Report 2018

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2018

TANDO RESOURCES LIMITED

NOTE 10: INTERESTS IN ASSOCIATE

Interests in associates are accounted for using the equity method of accounting. Information relating to associates that are material to the consolidated entity are set out below:

			Ownership Interest
			31-Dec-18 30 Jun-18
	Name Principle place of business		% %
	Vanadium Resources PtyLtd South Africa		24.26 -
			24.26 -
	Summarise financial information
			Vanadium Resources Pty Ltd
			31-Dec-18 30 Jun-18
	Summarised statement of financial position		$ $
	Current assets		619,168 -
	Total assets		619,168 -
	Non- current liabilities		691,296 -
	Total liabilities		691,296 -
	(Net Liabilities)		(72,128) -
			31-Dec-18 31-Dec-17
	Summarised statement of profit or loss and other comprehensive income		$ $
	Revenue		10,506
	Expenses		19,392 -
	Profit/(loss)before income tax		(8,886) -
	Income tax expense		- -
	Profit/(loss) after income tax		(8,886) -
	Other comprehensive income/(loss)		- -
	Total comprehensive income/(loss)		(8,886) -
			31-Dec-18 30-Jun-18 $ $ 7,828,517 - (2,156) - 7,826,361 -
	Reconciliation of the consolidated entity’s carrying amount
	Opening carrying amount
	Share of loss after income tax
	Closingcarryingamount

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Tando Resources Limited – Interim Financial Report 2018

TANDO RESOURCES LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2018

NOTE 11: DIVIDENDS

No dividends were paid or proposed to be paid to members during the half-year ended 31 December 2018.

NOTE 12: ACQUISITION

On the 18 July 2018, the Group announced the completion of the acquisition of 100% of the issued capital of Steelpoort Pty Ltd. The Company is dormant, with no inputs or outputs were acquired, the acquisition was assessed as an asset acquisition rather than a business combination.

The deemed consideration was the issue of 3,465,001 shares.

On initial recognition, the fair value of shares issued has been determined by reference to the market value at date of acquisition.

Purchase consideration was as follows:

Purchase consideration was as follows:
	2018
	$
Value of Share Consideration issued	589,050
Net assets acquired are as follows:
	2018
	$
Recognised as share base payment expense	589,050

NOTE 13: EVENTS AFTER THE END OF THE INTERIM PERIOD

On 4 March 2019 Mr Luigi Matteucci was appointed as a non-executive director of the Company.

There are no other matters or circumstances which have arisen since the end of the half-year which significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in subsequent financial periods.

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Tando Resources Limited – Interim Financial Report 2018

DIRECTORS’ DECLARATION FOR THE HALF-YEAR ENDED 31 DECEMBER 2018

TANDO RESOURCES LIMITED

In the directors' opinion:

• the attached financial statements and notes comply with the Corporations Act 2001, Australian Accounting Standard AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other mandatory professional reporting requirements;

• the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at 31 December 2018 and of its performance for the financial half-year ended on that date; and

• there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of directors made pursuant to section 303(5)(a) of the Corporations Act 2001.

On behalf of the directors

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William Oliver Managing Director 15 March 2019

Tando Resources Limited – Interim Financial Report 2018

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INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF TANDO RESOURCES LIMITED

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Tando Resources Limited which comprises the statement of financial position as at 31 December 2018, the statement of profit or loss and other comprehensive income, statement of changes in equity and 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 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 2018 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 Tando 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.

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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 Tando 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 Tando 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 2018 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 .

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RSM AUSTRALIA PARTNERS

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Perth, WA Dated: 15 March 2019

TUTU PHONG Partner