VERITY RESOURCES LIMITED — Interim / Quarterly Report 2017

Apr 26, 2017

27 APRIL 2017

ASX:BML

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ASX ANNOUNCEMENT

QUARTERLY REPORT TO 31 MARCH 2017

ABN:

HIGHLIGHTS DURING THE QUARTER:

96 122 995 073

 Cobalt review:

Issued Capital:

1,462,315,814 ordinary shares

Directors:

Mr Patrick Volpe (Chairman) Mr Matt Hudson (Non-Executive Director) Mr Steve Groves (Non-Executive Director)

Registered Office:

Suite 506, Level 5

1 Princess Street, Kew Victoria, Australia, 3101

Contact:

p: +61 (3) 9855 1885 e: info@botswanametals.com.au

About Botswana Metals Limited:

BML is exploring for nickel , copper , cobalt , tantalum and lithium within its 1,500 square kilometre exploration portfolio . These “ New world Metals ” are becoming increasingly important as the world switches to cleaner sources of energy.

The company announced a maiden JORC Inferred Resource of 2.38Mt at 0.72% Ni, 0.21% Cu, and 0.73g/t PGE + Au on 28 April 2015 from drilling within a small 185 square kilometre section of its exploration portfolio in which it had entered a joint venture with BCL. At the time cobalt was not included in the resource calculation.

Historical drilling outside of the joint venture ground has intercepted further nickel as well as significant intercepts of copper and cobalt .

• over 1.5km of Cobalt mineralisation confirmed at shallow depth (open to the east and west of Maibele )

• High grade shallow intercepts at Airstrip Copper Prospect including grades of 917ppm Co (ACRC006) and 1,020ppm Co (ACRC022).

• Airstrip , Maibele North , Maibele Extension , and Takane are four of many targets with Cobalt potential.

 Lithium, Tantalum + Tin:

• Independent laboratory analysis of recent soil sampling program received revealed anomalous levels of Lithium (Li), Tantalum (Ta), and Tin (Sa), which warrants further exploration and follow up analysis.

 Nickel and Copper:

• Squid conductor at Hole 94 which previously intercepted 6.82m of massive and semi-massive sulphides at 0.75% Ni, 0.25% Cu + PGEs and Cobalt (ASX release 13/01/2015) at Maibele was reviewed.

• Reviewing downhole and Squid electromagnetic (EM) surveys which revealed a large conductive anomaly that is adjacent to Hole MARD0094 at Maibele and has not yet been drill tested by the joint venture.

 Copper and Silver:

• Reviewing Copper and Silver prospects at Dibete

• Reviewing Copper prospects at Airstrip Copper

• Placement heavily oversubscribed:

• Successful placement of 250 million shares at 0.2 cents ($0.002) per share to professional and sophisticated investors raised $500,000 before costs.

 Board Changes :

• Appointment of Mr. Steven Groves to the Board.

• Resignation of Mr. Massimo Cellante

A soil sampling program detected traces of lithium and tantalum which warrant further exploration.

Large tracts of BML’s exploration portfolio remain unexplored.

 BCL Provisional Liquidation

• The Board has received written advice that KPMG, the Provisional Liquidator appointed to BCL Limited (“BCL”), is in confidential discussions but no more information is at hand as to who the party or parties are, despite recent media speculation. The status of those negotiations, and whether BML is affected by any outcome from those negotiations, is not known by BML.

Botswana Metals Limited

Suite 3, 16 Cotham Road, Kew, Victoria 3101 P: +61 3 9855 1885 F: +61 3 9855 2885 Email: info@botswanametals.com.au

www.botswanametals.com.au

ABN 96 122 995 073

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The Board of Botswana Metals (‘BML’ or ‘the Company’) is pleased to outline the below activities for the quarter ended 31 March 2017 (‘Quarter’).

BOARD CHANGES

Appointment of Mr Steven Groves

Mr Steven Groves was appointed as a non-executive Director of the Company in February 2017.

Mr Groves has a Bachelor of Applied Geology (Honours) and completed a Master’s of Economic Geology at the University of Tasmania. He is also a member of the Australian Institute of Geoscientists.

He has had over 20 years of geological experience in the mining industry including exploration and management roles with BHP Billiton (ASX: BHP), Newcrest Mining Limited (ASX: NCM), A-Cap Resources Limited (ASX: ACB) and Botswana Metals Limited.

Steve was based in Botswana for six years where he led several geological teams in his roles as Exploration Manager intermittently with A-Cap Resources Limited and BML.

The Board is delighted to have appointed Steve to the Board as he brings a wealth of experience and local knowledge of Botswana.

Resignation of Mr Massimo Cellante

Mr Cellante resigned as a non-executive Director of the Company in February 2017 due to other commitments. The Board records its sincere appreciation to Mr Cellante for his service and acknowledges his extremely valuable contribution to the Company. The Board wishes him well with his future endeavours.

PLACEMENT CLOSED HEAVILY OVERSUBSCRIBED

Foxfire Capital Pty Ltd successfully placed 250 million fully paid ordinary shares at 0.2 cents ($0.002) per share to raise $500,000 for the Company. The issue was well supported and closed oversubscribed on Friday 17 February 2017. The Directors resolved to issue the shares on that date.

Botswana Metals Limited

Suite 3, 16 Cotham Road, Kew, Victoria 3101 P: +61 3 9855 1885 F: +61 3 9855 2885 Email: info@botswanametals.com.au

www.botswanametals.com.au

EXPLORATION ACTIVITIES:

BML has directed its focus on “ New World Metals ” which are essential ingredients in modern battery technologies. The surging demand for lithium-ion batteries has created a significant requirement for high-grade cobalt (Co) and lithium (Li), which has seen global shortages of these vital inputs.

Cobalt:

Cobalt Prices have recently increased to over US$55,000 (AUD$73,000) per tonne.

1 Year Cobalt (US$ per tonne), as at 24 April 2017

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Source: Infomine: http://www.infomine.com/investment/metal-prices/cobalt/1-year/

The recent surging demand for cobalt has led BML to conduct an in-depth review over its historical drilling data, focussing on potential cobalt intercepts in addition to the cobalt results announced on 30 April 2016.

Historical drilling results has confirmed cobalt mineralisation over at least 1.5km open at depth , with a cutoff of 900ppm (see figure 1). This included intercepts at Airstrip Copper, to the west of Maibele including:

• Hole ACRC006: 917ppm from 30m depth; and

• Hole ACRC022 1,020ppm from 54m depth

Botswana Metals Limited

Suite 3, 16 Cotham Road, Kew, Victoria 3101 P: +61 3 9855 1885 F: +61 3 9855 2885 Email: info@botswanametals.com.au

www.botswanametals.com.au

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Figure 1: 1.5km of Cobalt Strike

The Company also noted that several drill holes from drilling at Takane and Maibele were previously not assayed for cobalt. The presence of a drill intercept of .21m at 4,790ppm from 141m (MADD0015) in the existing drill core have prompted the Company to assay those drill cores.

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HOLE INTERVAL (m) GRADE (ppm) FROM (m)
MADD57 26.00m 891ppm 94m
including 6.47m 1,145ppm
including 9.57m 1,169ppm
MADD58 29.00m 565ppm 125m
including 1.85m 1,451ppm
including 1.43m 1,392ppm
MADD59 19.00m 595ppm 68m
including 0.80m 2,155ppm
including 1.00m 1,373ppm
MADD86 12.32m 625ppm 125m
MADD82 9.80m 986ppm 100m
MADD78 7.30m 533ppm 103m
MADD85 6.95m 1,003ppm 132m
MADD63 1.27m 1,079ppm 171m
MADD147 0.50m 3,200ppm 189m
MADD129 1.00m 1,300ppm 200m
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Table 1: Highlights from previously announced cobalt intercepts

Botswana Metals Limited

Suite 3, 16 Cotham Road, Kew, Victoria 3101 P: +61 3 9855 1885 F: +61 3 9855 2885 Email: info@botswanametals.com.au

www.botswanametals.com.au

Lithium, Tantalum and Tin

The Company received the results of independent laboratory analysis of samples tested from the recent soil sampling program.

The program was undertaken to help establish the accuracy of in-house handheld XRF analysis and the results have revealed anomalous levels of Lithium (Li), Tantalum (Ta) and Tin (Sn).

The best results included:

Lithium: 72ppm 33ppm (in two different areas)

Tantalum: 39.3ppm (considered highly anomalous)

Tin: 155ppm 130ppm

The anomalous results often occur coincident with elevated levels of all three elements which is a pattern that could be expected if they are related to mineralised pegmatites (Figure 2).

The peak levels of Li, Ta and Sn from this limited analysis are similar in tenor to those recorded from soil sampling in other areas of the world where Li, Ta and Sn mineralised pegmatites occur.

These anomalies were identified from 86 samples submitted from a total of 1700 soil samples collected over 8 km in the Maibele area. Samples were collected at 50m intervals from 42, 1km long lines spaced 200m apart to be analysed in-house with the companies handheld INNOVEX XRF unit.

These highly encouraging results (Figure 2) show the potential for the area to host Tantalum, Lithium and Tin mineralisation and warrant detailed follow up work. The 86 samples selected for laboratory analysis were from only 5 of the 42 lines of soils collected and the elevated levels of Li, Ta and Sn span across the approximately 5km tested.

The independent Laboratory results for geochemical analysis of soils sampled in a second area south of Maibele (Figure 3), is also currently under interpretation by BML and will be reported to the market when completed.

Botswana Metals Limited

Suite 3, 16 Cotham Road, Kew, Victoria 3101 P: +61 3 9855 1885 F: +61 3 9855 2885 Email: info@botswanametals.com.au

www.botswanametals.com.au

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Figure 2: Map showing the 5 anomalous areas identified for follow up detailed exploration. Note that in each area, at least two of the three elements of Li, Ta and Sn are elevated, as would be expected in a zoned mineralised pegmatite body. The limited laboratory analysis was undertaken as a check on the accuracy of handheld XRF analysis undertaken by BML in the field. Interpretation of the results in this regard is still ongoing. The 86 samples submitted for analysis are coloured by their Sn content in ppm. The minor black dots represent the 1700 soil samples collected, most of which are yet to be laboratory analysed.

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Figure 3: Map showing soil sampling grids planned over all BML’s tenements based on historic stream sediment sampling anomalies (coloured spots)

Botswana Metals Limited Suite 3, 16 Cotham Road, Kew, Victoria 3101 P: +61 3 9855 1885 F: +61 3 9855 2885 Email: info@botswanametals.com.au www.botswanametals.com.au

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Figure 4: Location of BML’s PLs in eastern Botswana in relation to the world class Li-Ta pegmatite Bikita mine in Zimbabwe. The Bikita Mine lies just to the north of the LMZ and it is interpreted that the LMZ would contain re-worked equivalent rocks to those that host the Bikita Mine.

BCL PROVISIONAL LIQUIDATION:

The Board can confirm that it has received written advice that KPMG, the Provisional Liquidator appointed to BCL Limited (“BCL”), is in confidential discussions but no more information is at hand as to who the party or parties are, despite media speculation.

The status of those negotiations, and whether BML is affected by any outcome from those negotiations, is not known by BML.

When KMPG are in a position to advise further they will be contacting BML as the JV partner for three prospecting licences PL 110/94, PL 111/94 and PL 54/98.

BCL and BML previously agreed to proceed to a Bankable Feasibility Study (BFS) ahead of applying for a mining licence, for the Maibele North JORC minable resource based on “open pit mining” (ASX announcement 26 June 2016). This decision followed a pre-feasibility study report prepared by WorleyParsons received by BCL. The recent increase in the Cobalt price is expected to have a positive impact on the resource statistics.

Botswana Metals Limited

Suite 3, 16 Cotham Road, Kew, Victoria 3101 P: +61 3 9855 1885 F: +61 3 9855 2885 Email: info@botswanametals.com.au

www.botswanametals.com.au

No decision was made by BCL and BML as to the underground mining opportunities, however the Board can confirm that the JV was focused on continuing exploration to expand the known underground resource. (refer ASX announcement 27 June 2016).

BCL has previously advised BML that it has spent the required AUD $4M to earn a 40% interest in the three PLs, subject only to completion of the necessary formalities required under the JV agreement (refer ASX announcement 27 June 2016).

BCL was to fund to the end of a BFS to earn a 70% interest in the three PLs under the JV agreement.

As the Board receives further information it will advise the ASX and shareholders accordingly.

BOTSWANA METALS LIMITED EXPLORATION OVERVIEW

Location Map and Schedule of Prospecting Licences held by BML.

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Figure 4: Location of Botswana Metals Limited Exploration portfolio in Botswana.

Botswana Metals Limited

Suite 3, 16 Cotham Road, Kew, Victoria 3101 P: +61 3 9855 1885 F: +61 3 9855 2885 Email: info@botswanametals.com.au

www.botswanametals.com.au

Exploration areas held in Botswana

The Company holds the following prospecting licences in Botswana:

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Tenement Renewal / Percentage Title Holder Comment
Expiry Date Holding
Magogaphate 31/03/2018 100 African Metals (Pty) Farm-in
PL 110/94 Ltd agreement with
BCL Ltd
Mokoswane 31/03/2018 100 African Metals (Pty) Farm-in
PL 111/94 Ltd agreement with
BCL Ltd.
Takane 31/03/2018 100 African Metals (Pty) Farm-in
PL 54/98 Ltd agreement with
BCL Ltd
Shashe South 30/09/2016 100 African Metals (Pty) Renewal
PL 059/2008 Ltd application
submitted
30/06/16
PL 193/2016 30/09/2019 100 African Metals (Pty) Granted during
Ltd September 2016
quarter.
PL 194/2016 30/09/2019 100 African Metals (Pty) Granted during
Ltd September 2016
quarter.
PL 195/2016 30/09/2019 100 African Metals (Pty) Granted during
Ltd September 2016
quarter.
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There were no changes in the tenements held during the quarter.

Additional Tenement Information:

African Metals (Pty) Ltd is a wholly owned subsidiary of the Company.

Minerals Holdings (Botswana) Pty Ltd holds a 5% net profit share interest in PL 110/94, PL 111/94 & PL 54/98.

PL 110/94, PL 111/94 and PL 54/98 have been extended for a further two years to 31 April 2018.

On 1 April 2014 a Farm-In Joint Venture agreement with BCL Limited became effective where BCL Limited can earn an initial 40% interest in 3 PLs based on making certain expenditure commitments. If BCL Limited funds to the end of a Bankable Feasibility Study then BCL can earn a 70% equity interest in the 3 JV PL’s being 110/94, 111/94 and 54/98.

Botswana Metals Limited

Suite 3, 16 Cotham Road, Kew, Victoria 3101 P: +61 3 9855 1885 F: +61 3 9855 2885 Email: info@botswanametals.com.au

www.botswanametals.com.au

BCL Limited was placed in Provisional Liquidation during October 2016. KPMG were appointed Provisional Liquidator of BCL Limited and related companies by the courts on the 9[th] of October 2016. The Provisional Liquidator has communicated with BML during the quarter and reported that they are assessing the status of the affairs of BCL Limited that will include the JV agreement between BML and BCL. Once this review has been completed (which is expected in the first of quarter of 2017), BML will be advised of the outcome.

During June 2016, the Botswana Government, through the Department of Mines, granted an extension to the three of BML’s JV licences PL 110/94, PL 111/94 and PL 54/98 for a period of two years effective from 1 April 2016 to 31 March 2018. A renewal application for a further 2-year period in accordance with the Mines and Minerals Act 1999 was submitted for PL 59/2008 to the Department of Mines. In the March 2015 quarter, the company applied for several new applications for Prospecting Licences with the Department of Mines in Botswana. Three of these were granted during the September quarter (see section above) and the remainder are pending processing. The new licences are highlighted in light blue and those pending are highlighted in light green in the Figure 5 below.

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Figure 5: BML exploration tenement portfolio in Botswana. Prospecting Licences subject to the Joint Venture with BCL are shaded light blue.

Patrick Volpe Chairman

Botswana Metals Limited

Suite 3, 16 Cotham Road, Kew, Victoria 3101 P: +61 3 9855 1885 F: +61 3 9855 2885 Email: info@botswanametals.com.au

www.botswanametals.com.au

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

+Rule 5.5

Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16

Name of entity

BOTSWANA METALS LIMITED ABN Quarter ended (“current quarter”) 96 122 995 073 31 MARCH 2017

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Consolidated statement of cash flows Year to date
Current quarter (9 months)
$A’000 $A’000
1. Cash flows from operating activities
1.1 Receipts from customers
1.2 Payments for
(a) exploration & evaluation (114) (267)
(b) development
(c) production
(d) staff costs
(e) administration and corporate costs (127) (378)
1.3 Dividends received (see note 3)
1.4 Interest received ) 1)
1.5 Interest and other costs of finance paid
1.6 Income taxes paid
1.7 Research and development refunds
1.8 Other (provide details if material) ) 2)
1.9 Net cash from / (used in) operating (241) (642)
activities
2. Cash flows from investing activities
2.1 Payments to acquire:
(a) property, plant and equipment (3)
(b) tenements (see item 10)
(c) investments
(d) other non-current assets
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• See chapter 19 for defined terms

1 September 2016

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

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Consolidated statement of cash flows Year to date
Current quarter (9 months)
$A’000 $A’000
2.2 Proceeds from the disposal of:
(a) property, plant and equipment
(b) tenements (see item 10)
(c) investments
(d) other non-current assets
2.3 Cash flows from loans to other entities
2.4 Dividends received (see note 3)
2.5 Other (provide details if material)
2.6 Net cash from / (used in) investing (3)
activities
3. Cash flows from financing activities
3.1 Proceeds from issues of shares 500) 500)
3.2 Proceeds from issue of convertible notes
3.3 Proceeds from exercise of share options
3.4 Transaction costs related to issues of (32) (32)
shares, convertible notes or options
3.5 Proceeds from borrowings
3.6 Repayment of borrowings
3.7 Transaction costs related to loans and
borrowings
3.8 Dividends paid
3.9 Other (provide details if material)
3.10 Net cash from / (used in) financing 468) 468)
activities
4. Net increase / (decrease) in cash and
cash equivalents for the period
4.1 Cash and cash equivalents at beginning of
period 83) 487)
4.2 Net cash from / (used in) operating (241) (642)
activities (item 1.9 above)
4.3 Net cash from / (used in) investing activities (3)
(item 2.6 above)
4.4 Net cash from / (used in) financing activities 468) 468)
(item 3.10 above)
4.5 Effect of movement in exchange rates on
cash held
4.6 Cash and cash equivalents at end of 310 ) 310 )
period
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• See chapter 19 for defined terms 1 September 2016

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

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5. Reconciliation of cash and cash Current quarter Previous quarter
equivalents $A’000 $A’000
at the end of the quarter (as shown in the
consolidated statement of cash flows) to the
related items in the accounts
5.1 Bank balances 310) 83)
5.2 Call deposits
5.3 Bank overdrafts
5.4 Other (provide details)
5.5 Cash and cash equivalents at end of 310 ) 83 )
quarter (should equal item 4.6 above)
6. Payments to directors of the entity and their associates Current quarter
$A'000
6.1 Aggregate amount of payments to these parties included in item 1.2 97)
6.2 Aggregate amount of cash flow from loans to these parties included
in item 2.3
6.3 Include below any explanation necessary to understand the transactions included in
items 6.1 and 6.2
Fees paid to Directors or their associated companies for director 63)
services and management and corporate services
Fees paid to a company of which a Director is a shareholder of, and 28)
consultant to for capital raising services
Fees paid to a company controlled by relatives of a Director for 6)
clerical and administrative services
7. Payments to related entities of the entity and their Current quarter
associates $A'000
7.1 Aggregate amount of payments to these parties included in item 1.2
7.2 Aggregate amount of cash flow from loans to these parties included
in item 2.3
7.3 Include below any explanation necessary to understand the transactions included in
items 7.1 and 7.2
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• See chapter 19 for defined terms 1 September 2016

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Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

8.	Financing facilities available Add notes as necessary for an understanding of the position Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000
8.1	Loan facilities
8.2	Credit standby arrangements
8.3	Other (please specify)
8.4	Include below a description of each facility above, including the lender, interest rate and
	whether it is secured or unsecured. If any additional facilities have been entered into or are
	proposed to be entered into after quarter end, include details of those facilities as well.

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9. Estimated cash outflows for next quarter $A’000
9.1 Exploration and evaluation 50
9.2 Development
9.3 Production
9.4 Staff costs
9.5 Administration and corporate costs 100
9.6 Other (provide details if material)
9.7 Total estimated cash outflows 150
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10. Changes in Tenement Nature of interest Interest at Interest
tenements reference beginning at end of
(items 2.1(b) and and location of quarter quarter
2.2(b) above)
10.1 Interests in mining
tenements and
petroleum tenements
lapsed, relinquished
or reduced
10.2 Interests in mining
tenements and
petroleum tenements
acquired or increased
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• See chapter 19 for defined terms 1 September 2016

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Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: 27 April 2017 (Company secretary)

Print name: Ramon Jimenez

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. See chapter 19 for defined terms 1 September 2016

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