Europa Metals Regulatory News (EUZ)

1 October 2014

Ferrum Crescent Limited

("Ferrum Crescent", the "Company" or the "Group")

(ASX: FCR, AIM: FCR, JSE: FCR)

Final Results for the Year Ended 30 June 2014

Ferrum Crescent Limited, the ASX, AIM and JSE quoted iron ore developer in Northern South Africa, today announces its final results for the year ended 30 June 2014. These will be posted to Shareholders in due course.

Highlights

· GBP 873,600 (AU$1.5 Million) raising completed in October 2013

· BFS Financing agreement signed with AAI- US$10m scheduled payments of consideration in return for 35% of Moonlight iron ore project

o US$500,000 received; however, AAI subsequently failed to meet further scheduled payments and discussions remain ongoing

· Tom Revy appointed as Managing Director

· Ed Nealon resigns as Executive Chairman and but remains as Chairman

· Mineral Resource estimate for the Moonlight Project updated to the requirements of JORC (2012)

· BFS planning review undertaken and new development schedule announced

· Moonlight Iron Ore Project valuation completed

Financial Overview

· Cash at 30 June 2014 of $738,346 (2013: $548,265 )

· Loss for year of $2,508,799 2014 2013

Earnings (2,508,799) (1,870,747)

Weighted average shares in issue 343,268,696 315,876,561

Basic profit / (loss) per share (cents) (0.75) (0.60)

Post Period

· Negotiations with parties to progress Moonlight BFS

· Independent Mineral Asset Valuation Report for Moonlight Iron Ore Project

A pdf copy of the full Accounts is available as a link to this announcement and on the Company's website (www.ferrumcrescent.com):

http://www.ferrumcrescent.com/IRM/Company/ShowPage.aspx/PDFs/1575-10000000/FullYearStatutoryAccounts 

Commenting on the final results, Chairman Ed Nealon said:

"During 2014 the board of Ferrum decided it was the correct time to progress with work on the Moonlight project's Bankable Feasibility Study. With the potential to produce a premium iron ore product we could now couple Moonlight's development with the regional infrastructure programme being pursued in Northern South Africa by the Government of South Africa. With this in mind we appointed Tom Revy as Managing Director, who has a wealth of experience in major mine development. Both during and post period Tom has made significant progress in re-designing our work schedule and commissioning an independent valuation on Moonlight of US$33m. While AAI's failure to meet their payment schedule was disappointing, having a high value iron-ore project, near infrastructure has allowed us to pursue many other avenues for financing."

The directors accept full responsibility for the information contained in this announcement. The auditor's unqualified report is available for inspection at the Company's registered office in Australia and at the Company's office at Block B, Regent Hill Office Park, cnr Leslie & Turley Rds, Lonehill, 2062 for 28 business days from release of this announcement.

Extracts from the Company's Full, audited Report and Accounts are set out below:

Company and Project Overview

Introduction to the Group

Ferrum Crescent Limited ("Ferrum", "FCR" or the "Company") is an Australian company listed on the Australian Securities Exchange (ASX: FCR), the AIM market of the London Stock Exchange (AIM: FCR) and on the JSE Limited (JSE: FCR).

This reflects the beneficial ownership interests that have been accounted for as at 30 June 2014.

Ferrum seeks to capitalise on the future demand for iron and steel worldwide by producing iron products in the Republic of South Africa, for both the domestic and the export markets.

The Moonlight Deposit (upon which the Moonlight Iron Ore Project or "Moonlight" or the "Project" is based) is a magnetite deposit located on the farms Moonlight, Gouda Fontein and Julietta in Limpopo Province in the north of South Africa (see Figure 2) and it is the main operational focus for the Company. Iscor, which explored the Project in the 1980s and '90s, reported mineralisation, capable of producing a concentrate grading 68.7% iron. At the time, Iscor concluded that the deposit, which was described as comparable to the world's best, was easily mineable due to its low waste-to-ore ratio. The beneficiation attributes of Moonlight ore are extremely impressive, with low-intensity magnetic separation considered suitable for optimum concentration.

Metallurgical tests of Moonlight material, undertaken since by Ferrum, suggest that Iscor's results are conservative, that good metal recoveries can be achieved, and that the resulting concentrates have a high iron content and only negligible impurities, at grind sizes considered to be the industry standard (P80 of 75 microns).

Various key components of the Moonlight Iron Ore Project bankable feasibility study have already been concluded including:

· 30 year Mining Right granted

· Environmental licence (EIA) in place for the Moonlight Project mining area (approved 4 April 2013)

· Metallurgical test work indicates high quality pellets in excess of 69% iron and low deleterious elements possible

In order to advance the BFS economic model, the Moonlight Project Mineral Resource estimate was during the reporting period, reported in terms of the JORC Code (2012). The completion of this work allows the Company to progress with final stage BFS work such as engineering design, connection to local infrastructure and permitting for the pelletising operation.

Moonlight has already had significant amounts of metallurgical process work undertaken on it and the next stage BFS stage for process represents the critical path for the whole Project. As a potential producer of a high-grade iron ore project, final assessment of Moonlight's capability to operate at an industrial scale is all important.

Metallurgists will work with geologists to identify key areas for representative sample selection for advanced testing including a pilot test work programme. Immediate test work will focus on financially optimising grind size vs iron recovery.

Future work will also focus on optimising the pelletising technology process undertaking activity such as temperature profiling and treatment times.

Work to date in mine planning has been based on the contract mining model for site development, overburden removal and general open pit mining activities. A low stripping ratio is expected: 1:1.5 during the early years of operations (relatively shallow dips with occurrence of up to 4 magnetite-bearing zones).

Feasibility requirements that need to be completed include:

· geotechnical drilling, mine design, mine reserve estimation based on certain cut-off estimates and economic criteria and final estimate of mining costs from an adjudicated tender process for a contract mining will be concluded;

· finalising pipeline route for environmental impact study completion;

· optimising pipeline design and costing (finalising rheology / density and particle size distribution)

· finalising negotiations with Eskom (power) for capital costs and tariffs once mining/process demand/schedules are finalised for the anticipated 110-120MW needed; and

· finalising negotiations with Transnet (rail and port) for planning and costing loading / unloading facilities, wagon and locomotive requirements and port handling and storage costs and Transnet reviewing Project infrastructure needs as part of feasibility component and finalising commercial arrangements, as well as securing an area and connection at the port (Richards Bay).

Moonlight Project Concept

Recognising that adding value within the country is a strategic preference for all mining operations within South Africa, Ferrum has consistently looked to planning the Project with beneficiation and other value-adding processes to take place within the country. Project concepts have previously included the production of pig iron at or near the Moonlight site. It has since been recognised by the Company, however, that the most sustainable development concept for the Project is likely to involve mining at site and the production there of an iron ore concentrate, which would be transported by way of slurry pipeline to a manufacturing facility located at a place near a railhead. High quality iron ore pellets (which would be a mixture of direct reduction ("DR") quality pellets, which would be suitable for use in electric arc steel furnaces, and blast furnace pellets) would be transported by rail to local users and to a suitable port facility for export internationally.

Several pelletiser sites and rail and port combinations have been considered, and the Company has continued to seek confirmation from infrastructure providers (including rail, port and power suppliers) of allocation of capacity for the Company. During the 2012 financial year, the South African Government announced that significant capital would be applied in upgrading rail and port facilities that service the Waterberg Region, which is close to where the Moonlight Deposit is situated. These upgrades to rail and port in particular are strategically necessary to unlock the value of the Waterberg Region, where the country's most significant remaining coal reserves are situated. For this reason, rail, power, water and port facilities are all being upgraded as a matter of national priority.

Proposed Rail Upgrades to Waterberg Coal Sources

The figure contains a map showing the planned upgrades to the rail infrastructure that is considered to be the most likely to be used for the Moonlight Project. The pelletising facility would be situated near rail at Thabazimbi, and export product would be railed to Richards Bay and shipped to customers in the Middle East and elsewhere.

http://www.rns-pdf.londonstockexchange.com/rns/1125T_-2014-10-1.pdf

Figure showing Proposed Rail Upgrades to Waterberg Coal Sources

The above figure contains a map showing the planned upgrades to the rail infrastructure that is considered to be the most likely to be used for the Moonlight Project. The pelletising facility would be situated near rail at Thabazimbi, and export product would be railed to Richards Bay and shipped to customers in the Middle East and elsewhere.

The Company in June 2011 entered into an offtake agreement with Swiss based Duferco SA, a leading private company in the trading, mining, and end use of iron and steel products and raw materials for the steel industry. Following due diligence on the mineral assets of the Company, Duferco concluded that the Group should be able to produce direct reduction and/or blast furnace pellets equal to or better than current world best product.

The offtake agreement with Duferco SA covers up to 6 Mpta of anticipated iron ore pellet production from Ferrum Crescent's Moonlight Project. Under the agreement, Ferrum Crescent will sell Duferco all of their production available for export (in total 4.5 Mpta) and will give Duferco a first right of refusal over an additional 1.5 Mpta per year to the extent that the product is not sold domestically, thus allowing Ferrum Crescent to follow a growth strategy at its South African projects.

Environmental

EIAs are currently being prepared for the other areas of the Project including the pellet plant site and pipeline route. It should be emphasised that environmental approvals are in place for all mining activities.

Geology and Mineral Resources

The Mineral Resources are currently located entirely on the farm Moonlight 111LR, with significant potential to expand the resource base within the Project area once all current work is financed and complete.

Mineral Corporation Consultancy Pty Ltd ("The Mineral Corporation") undertook the update of the Mineral Resource estimate, which was previously stated in terms of JORC (2004). The Mineral Corporation updated all of the assumptions used in determining the previous estimate, with respect to the requirements of JORC (2012). It determined that the Mineral Resource classification criteria imposed in the previous estimate were still valid. Furthermore, the additional reporting requirements contained in JORC (2012) have been complied with in the updated Mineral Resource estimate report.

http://www.rns-pdf.londonstockexchange.com/rns/1125T_1-2014-10-1.pdf

Figure of Moonlight Deposit Geological Plan

A summary of the information related to the updated Mineral Resource estimate prepared by The Mineral Corporation is provided below (in accordance with the ASX Listing Rules, Section 5.8.1):

Magnetite mineralisation has been identified in five mineralised zones within Mount Dowe Group rocks in the Central Zone of the Limpopo Mobile Belt. The mineralised zones are interpreted to have been tightly-folded, parallel to the east-northeast to west-southwest orientation of the Limpopo Mobile Belt.

Iron concentrations within the magnetite mineralised zones are interpreted to be parallel with the contacts with the host rocks, and zones of unmineralised material are also found within the mineralised zones.

The Project has been explored in the past by Kumba Iron Ore Limited (KIOL) and more recently by Ferrum Crescent. Drilling data from KIOL and three phases of Ferrum Crescent exploration inform the estimate. The drilling comprised open-hole percussion, reverse circulation (RC) percussion and diamond core drilling and was all drilled in a vertical orientation.

Limited information on the drilling, sampling, sub-sampling or assaying for the historic KIOL data is known, but the RC and diamond drilling portions of the KIOL data have been accepted for the Mineral Resource estimate on the basis of successful borehole twinning analysis, by Ferrum Crescent.

During the Ferrum Crescent exploration, industry standard diamond drilling and RC drilling techniques were used to generate sampling information. Representivity was ensured by appropriate sub-sampling protocols. RC samples (1m-2m) were riffle split on site and diamond core samples were halved with a diamond saw. The Ferrum Crescent drilling, sampling and sub-sampling protocols are considered acceptable for the style of mineralisation.

A total of 122 RC holes and 89 diamond core holes were employed in the Mineral Resource estimate.

For the Ferrum Crescent samples, primary samples and analytical quality assurance and control samples were submitted to Genalysis Laboratory Services (Johannesburg) for analysis by X-Ray Fluorescence techniques, by Intertek Utama Services (Jakarta).The analytical protocols are considered acceptable for the style of mineralisation at the Project.

Samples within each mineralised zone were composited parallel to the dip of the mineralised zone and variograms were calculated and modelled to assess grade continuity. Vertical grade continuity was assessed by downhole variograms. Variogram ranges of between 150m and 250m were obtained in the plane of the mineralised zones and between 7m and 30m in the vertical direction. Grade estimation was by means of Ordinary Kriging, using search parameters aligned with the mineralised zones, into blocks of 50m x 50m x 5m

The drill spacing, surface mapping, structural interpretation, variography and kriging error estimates informed the Mineral Resource classification, which included Inferred, Indicated and Measured Mineral Resources. In areas of well-defined geological structure and modest grade variability, a 100m x 100m drill spacing grid was deemed sufficient for Measured Mineral Resources and the deemed maximum spacing for Inferred Mineral Resources is approximately 300m x 300m. Indicated Mineral Resources are informed by a drill spacing of approximately 200m x 200m.

A block cut-off grade of 16% Fe was selected, based on an Fe concentration which falls between the Fe concentration of the mineralised and unmineralised zones. As the contacts between these zones are generally sharp, the estimate is not sensitive to cut off grade. A geological loss of 5% was applied.

The Mineral Corporation has considered the reasonable prospects for eventual economic extraction of the deposit. This was performed by estimating a maximum stripping ratio which would still provide an acceptable economic return, under a set of benchmarked operating cost and price assumptions. These resulted in a maximum stripping ratio of 3:1 (waste tonne : mineralised tonne). Applying a depth constraint of between 100m and 250m from surface, (depending upon the dip and the number of mineralised zones present), ensured that all mineralisation included in the Mineral Resource estimate is within this maximum stripping ratio criterion.

The Mineral Resource estimate is provided in the table below and the Mineral Resource estimation criteria, as required in JORC (2012) and in Section 5.8.2 of the ASX Listing Rules, are included as an appendix to this release.

\* Tonnes are rounded

Valuation

The Mineral Corporation's independent valuation of the Project placed a value to Moonlight within a range from S$24.8m to US$41.3m, with a preferred value of US$33m. The valuation of the Project used the principles and guidelines of the South African Code for the Reporting of Mineral Asset Valuation (SAMVAL Code).

As Ferrum Crescent considers that it is important for shareholders and investors to read the report in its entirety, a copy of the report has been posted on the Company's website. Additionally, Ferrum Crescent has set out below highlights from the report from The Mineral Corporation.

Introduction

The scope of work determined by Ferrum Crescent required the undertaking of a Mineral Asset Valuation of the Moonlight Project using the principles and guidelines of the SAMVAL Code.

The valuation opinion contained in the report is only for the Mineral Assets of the Company, and excludes the value of any surface infrastructure established at the Moonlight Project, any movable assets which are part of the Project or the balance sheet circumstances of Ferrum Crescent. The effective date of the valuation is 30 April 2014.

All opinions, findings and conclusions expressed in the report are those of The Mineral Corporation and are based on information provided by Ferrum Crescent. These opinions, findings and conclusions can change significantly with new information. Accordingly, the opinions, findings and conclusions contained in the report may also be subject to change.

The report excludes all aspects of legal issues, commercial and financial matters, land titles, agreements, excepting where such aspects may directly influence Mineral Resources and Mineral Asset Valuation of the Moonlight Project.

It is to be noted, however, that mineral projects are inherently risky assets and therefore unknown risks and uncertainties have the potential to materially impact on the future valuations of the Mineral Assets. At this stage, The Mineral Corporation is not aware of any material risks to the Mineral Assets of the Moonlight Project that may impede further development of these assets.

Description of the Mineral Assets

The Moonlight Project is an advanced exploration project for which it is understood that a Feasibility Study is planned. The Moonlight Project comprises three adjacent properties, namely Moonlight 111 LR, Julietta 112 LR and Gouda Fontein 76 LR, which are covered by a valid Mining Right.

The latest Mineral Resource update for the Moonlight Project was compiled by The Mineral Corporation in April 2014. The Mineral Resources are stated in terms of the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code (2012)), and are summarised in the table below. The Mineral Resources were reported using a cut-off grade of 16% Fe, geological losses of 5% and a depth constraint from surface to between 100m and 250m. 

The valuation opinion contained in the report has been estimated on a 100% ownership basis. Furthermore, Inferred Mineral Resources form some part of the basis for this valuation. There is a low level of geological confidence associated with the Inferred Mineral Resources and there is no certainty that further exploration work will result in the determination of additional Indicated or Measured Mineral Resources.

The Project has a well developed concept in place: Ferrum Crescent plans to mine and beneficiate at Moonlight and then pump the magnetite concentrate slurry by pipeline to a manufacturing facility near a railhead at Thabazimbi in Limpopo Province where it is planned to manufacture direct reduction and blast furnace grade pellets. It is anticipated that the exported product will be railed from Thabazimbi to the port of Richards Bay. Ferrum Crescent has an offtake agreement in place with Swiss-based Duferco SA, and it is expected that its direct reduction grade product will find a market with customers using electric arc furnaces to produce steel. It is understood that Ferrum Crescent is shortly to commence with a phased Feasibility Study on this basis.

Valuation Methodology

The SAMVAL Code requires the consideration of two different approaches to the valuation of a mineral asset. As the Project is at an advanced exploration stage, The Mineral Corporation considers that the cash flow valuation approach is not appropriate. The Mineral Corporation does consider the market approach to be appropriate for the stage of project development, and has elected to apply two methods thereof. In addition, the cost approach has also been applied and used to corroborate the market approach. Furthermore the SAMVAL Code precludes the application of certain logic in valuation, such as 'gross in-situ-value' simply determined from the product of the estimate of mineral content and commodity prices(s).

The Market Approach relies on the principle of 'willing buyer - willing seller' and requires that the amount obtainable from the sale of Mineral Asset is determined as if in an arms-length transaction. The Market Approach is often applied to Exploration Properties.

The Mineral Corporation does consider the Market Approach to be appropriate for the current stage of project development, and has elected to apply two methods thereof. These included a comparative transaction approach based on magnetite project transactions which have traded on a 'willing buyer-willing seller' basis and secondly, a comparative Enterprise Value which considers the (debt and cash adjusted) market capitalization-derived valuation of listed companies which own magnetite projects.

These two Market Approach methods derive their value from the price paid by the market for the mineral assets being valued. Exploration Properties by definition have a Mineral Resource estimate as their only asset, and as these Mineral Resource estimates vary in size, it is necessary to normalise the price paid by the market, by the size of the Mineral Resource. A Market Approach which is normalised for the size of the Mineral Resource does not therefore constitute an 'in situ valuation'.

The Cost Approach relies on historical and/or future amounts spent on the Mineral Asset and is quite widely used for Exploration Properties. The Competent Valuator has applied the Cost Approach as a third method to corroborate the Market Approaches applied.

The Market and Cost Approaches applied are the two generally accepted approaches to Mineral Asset Valuation appropriate for projects at this stage of development.

Method 1: Market approach - comparable transactions

The Mineral Corporation holds a database of transaction information from transactions involving magnetite projects or mines since 2005. The price paid per contained Fe tonne (US$/Fe-t) in each transaction has been derived. These prices have been grouped by development category, from Inferred Mineral Resources to Operations.

The Mineral Corporation estimated a transaction price for the Moonlight Project of between 0.30 and 0.90 US$/Fe-t, after normalising for the Projects' development stage, and the iron ore price.

Method 2: Market approach - Comparable Enterprise Value per tonne

The Mineral Corporation considered the value of 12 comparable listed magnetite mining and exploration companies and estimated an Enterprise Value calculated for each from publically available documents. As an advanced exploration project, Moonlight should be compared with other similar projects, rather than operations. The Mineral Corporation considers Ferrum Crescent's "peers" in this regards to have an Enterprise Value per contained Fe tonne of between 0.10 and 0.50 US$/Fe-t

Method 3: Cost approach - historical exploration cost

The Mineral Corporation estimates the total relevant historical exploration expenditure on the Project to be US$22.4m, including US$21.4m by Ferrum Crescent and an estimated US$1.0m by the previous owner's Iscor.

Valuation opinion

The Mineral Corporation's view is that the EV per contained Fe tonne method is probably more cognisant of the current market conditions for publically listed exploration companies than the comparable transactions method. On this basis, The Mineral Corporation valuation range would be between US$25m and US$41m, with a preferred valuation of US$33m, as at 30 April 2014.

The Mineral Corporation / Competent Person's Consent

This information in this statement that relates to Mineral Asset Valuation has been compiled by Stewart Nupen and the Mineral Asset Valuation is signed off according to the 2008 Edition of the South African Code for the Reporting of Mineral Asset Valuation (SAMVAL Code). Mr Nupen is a Fellow of the Geological Society of South Africa, a registered Natural Professional Scientist and has the necessary qualifications, ability and relevant experience to act as a Competent Valuator. The valuation has been peer reviewed by Mr John Murphy. Both Mr Nupen and Mr Murphy are directors of The Mineral Corporation. The Mineral Corporation operates as an independent technical adviser and consultant, providing Mineral Resource evaluation, mining engineering, mineral processing and mine valuation services to the mining industry. The Mineral Corporation has received, and will receive, professional fees for its preparation of this report. However, neither The Mineral Corporation nor any of its directors or staff who contributed to this valuation has any interest in the Mineral Assets reviewed.

The information in this statement that relates to Exploration Targets, Exploration Results and Mineral Resources has been compiled by Stewart Nupen, a Competent Person who is a Fellow of the Geological Society of South Africa and a registered Professional Natural Scientist with the South African Council for Natural Scientific Professionals. Stewart Nupen is employed by The Mineral Corporation, an independent consulting firm to Ferrum Crescent Limited.

Stewart Nupen has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Stewart Nupen consents to the inclusion in this statement of the matters based on his information in the form and context in which it appears.

Community

A baseline socio-economic impact study of the areas occupied by both the Ga-Seleka and Ga-Shongoane communities situated within a 50km radius of the mining right area is well advanced.

Monthly meetings are held with the Royal Council and Traditional Council of both communities as well as updating the Lephalale Municipality on findings and proposed initiatives. Once the study is included an announcement will be made on findings relating to current local skills identification, future employment terms and training needs.

Project Schedule

The following sets out the schedule and significant factors with respect thereto for Moonlight:

· Feasibility study can be completed within 18 months work-time;

· 30 to 36 month construction period expected;

· Schedule coincides with Government infrastructure development plans; and

· Completion of the feasibility is expected to cost approximately A$10 -13m.

· The Moonlight Deposit geological plan is set out in Figure 3.

Corporate

During the reporting period, the Company entered into a legally binding heads of agreement with Anvwar Asian Investment ("AAI"), an entity based in Oman, whereby AAI would purchase a 35% interest in Ferrum Iron Ore (Pty) Ltd ("FIO"), the Group Company that holds the Moonlight Iron Ore Project. After a number of term variations of this letter of intent, Ferrum entered into a new agreement with AAI in March 2014, whereby AAI would pay US$1 million, by way of two tranches of US$500,000, one payable by the end of March 2014 and the second payable by the end of April 2014, thereby earning the right subject to the requisite approvals of the South African Reserve Bank to the issue of FIO shares equalling 35% of the shares of that company, being partly paid, subject to the right to pay an additional US$9 million to become fully paid or to be converted into 3.5% of FIO fully paid. The additional US$9 million had to be paid by the earlier of 31 December 2015 and the completion of the Moonlight BFS.

A second payment of US$500,000 was not received by Ferrum Crescent from AAI within the time frame scheduled under the agreement. Ferrum Crescent has informed AAI of its default AAI remains in default as at the date of this report.

During the year, Ferrum Crescent underwent a period of restructuring. On 19 February 2014, Mr Tom Revy was appointed as managing director, replacing Mr Bob Hair, who remained on the board at that stage as executive director.

Mr Revy is a mining professional with 30 years' experience specialising in operations, project development and corporate management. His appointment brings a wealth of experience in project development and planning to Ferrum Crescent as the Company progresses its bankable feasibility study ("BFS") towards construction readiness. As Development Director at Worley Parsons Mr Revy worked extensively on the Olympic Dam Expansion and undertook key studies for companies such as Anglo American and Codelco. Previously Mr Revy worked at design and construction group, GRDMinproc, working on projects such as the Fortescue Metals phase 2 expansions in Western Australia and on the US$1.8B project Tenke Fungurume project in the DRC.

In April 2014, Mr Andrew Nealon was replaced by Mr Bob Hair as company secretary, who himself resigned as an executive director of the Company. It was also announced that Mr Ed Nealon moved from executive to non-executive Chairman of the Company.

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the year ended 30 June 2014

Consolidated Statement of Financial Position

As at 30 June 2014

This Statement of Financial Position is to be read in conjunction with the accompanying notes.

Consolidated Statement of Cash Flows

For the year ended 30 June 2014

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

Consolidated Statement of Changes in Equity

For the year ended 30 June 2014

Attributable to the equity holders of the Parent

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

Notes to the consolidated financial statements

For the year ended 30 June 2014

Selected notes from the full annual report for period end 30 June 2014

Note 1: Corporate information

The consolidated financial statements of Ferrum Crescent Limited and its subsidiaries (collectively, the Group) for the year ended 30 June 2014 were authorised for issue in accordance with a resolution of directors on 30 September 2014.

Ferrum Crescent Limited, the parent, is a for profit company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange (ASX), the London Stock Exchange (AIM) and the JSE Limited (JSE).

Note 2: Summary of significant accounting policies

(a) Basis of preparation

The Financial Report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and Interpretations and complies with other requirements of the law.

The accounting policies detailed below have been consistently applied to all of the years presented unless otherwise stated. The financial statements are for the consolidated entity consisting of Ferrum Crescent Limited and its subsidiaries.

The Financial Report has also been prepared on a historical cost basis, except for the forward subscription agreement and the available-for-sale (AFS) investments which have been measured at fair value.

All amounts are presented in Australian dollars, unless otherwise noted.

(b) Statement of compliance

The Financial Report complies with Australian Accounting Standards, as issued by the Australian Accounting Standards Board, and complies with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board.

(c)  Adoption of new and revised standards

All new and amended Accounting Standards relevant to the operations of the Group have been adopted from 1 July 2013, including:

· AASB 19 Employee Benefits (Revised 2011)

· AASB 10 Consolidated Financial Statements, AASB 127 Separate Financial Statements

· AASB 11 Joint Arrangements, AASB 128 Investments in Associates and joint Ventures

· AASB 12 Disclosure of Interests in Other Entities

· AASB 13 Fair Value Measurement

The nature and the impact of each new standard/amendment is described below:

AASB 119 (Revised 2011) Employee Benefits

The revised standard changes the definition of short term employee benefit. The distinction between short-term and other long-term employee benefits is now based on whether the benefits are expected to be settled wholly within 12 months after the reporting date.

The change in distinction between short-term and other long-term employee benefits did not have a significant impact on the Group.

(c) Adoption of new and revised standards

AASB 10 Consolidated Financial Statements

AASB 10 establishes a single control model that applies to all entities including special purpose entities. AASB 10 replaces the parts of previously existing AASB 27 Consolidated and Separate Financial Statements that dealt with consolidated financial statements and SIC-12 Consolidation - Special Purpose Entities. AASB 10 changes the definition of control such that an investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. To meet the definition of control in AASB 10, all three criteria must be met, including: (a) an investor has power over an investee; (b) the investor has exposure, or rights, to variable returns from its involvement with the investee; and (c) the investor has the ability to use its power over the investee to affect the amount of the investor's returns.

AASB 10 had no impact on the consolidation of investments held by the Group.

AASB 11 Joint Arrangements

AASB 11 replaces AASB 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities - Non-monetary Contributions by Venturers. AASB 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture under AASB 11 must be accounted for using the equity method.

AASB 11 had no impact on the Group as the Group has no joint arrangements.

AASB 12 Disclosure of Interests in Other Entities

AASB 12 sets out the requirements for disclosures relating to an entity's interests in subsidiaries, joint arrangements, associates and structured entities.

AASB 13 Fair Value Measurement

AASB 13 establishes a single source of guidance under AASB for all fair value measurements. AASB 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under AASB when fair value is required or permitted. AASB 13 also requires specific disclosures on fair values, some of which replace existing disclosure requirements in other standards, including AASB 7 Financial Instruments: Disclosures.

(g) Going concern

The Financial Report has been prepared on a going concern basis and this basis is predicated on a number of initiatives being undertaken by the Group with respect to ongoing cost reductions and funding as set out below.

The Group incurred an operating loss after income tax of $2,587,660 for the year ended 30 June 2014 (2013: $1,901,288). In addition, the Group has net current assets of $133,016 (2013: 1,108,930), which includes the forward subscription agreement, as at 30 June 2014 and shareholders' equity of $952,426 (2013: $1,865,492).

The Group's forecast cash flow requirements for the 15 months ending 30 September 2015 reflects cash outflows from operating and investing activities which takes into account a combination of committed and uncommitted but currently planned expenditure. The Group's forecasts indicates that the Group will need to raise additional working capital during the quarter ending 31 December 2014 to enable it to settle its liabilities as and when they fall due and continue to meet its incurred, committed and currently planned expenditure.

This financial report has been compiled on a going concern basis. In arriving at this position the Directors are satisfied that the Group will have access to sufficient cash as and when required to enable it to fund administrative and other committed expenditure. The Directors are satisfied that they will be able to raise additional funds by either selling existing assets, implementation of strategic joint ventures or via a form of equity raising.

In the event that the Group is unable to raise additional funds to meet the Group's ongoing working capital requirements when required, there is a significant uncertainty as to whether the Group will be able to meet its debts as and when they fall due and thus continue as a going concern.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, nor to the amounts or classification of liabilities that might be necessary should the Group not be able to continue as a going concern.

During the reporting period, the Company entered into a legally binding heads of agreement with Anvwar Asian Investment ("AAI"), an entity based in Oman, whereby AAI would purchase a 35% interest in Ferrum Iron Ore (Pty) Ltd ("FIO"), the Group Company that holds the Moonlight Iron Ore Project. After a number of term variations of this letter of intent, Ferrum entered into a new agreement with AAI in March 2014, whereby AAI would pay US$1 million, by way of two tranches of US$500,000, one payable by the end of March 2014 and the second payable by the end of April 2014, thereby earning the right subject to the requisite approvals of the South African Reserve Bank to the issue of FIO shares equalling 35% of the shares of that company, being partly paid, subject to the right to pay an additional US$9 million to become fully paid or to be converted into 3.5% of FIO fully paid. The additional US$9 million had to be paid by the earlier of 31 December 2015 and the completion of the Moonlight BFS.

A second payment of US$500,000 was not received by Ferrum Crescent from AAI within the time frame scheduled under the agreement. Ferrum Crescent has informed AAI of its default and AAI remains in default as at the date of this report. Accordingly, the first tranche of US$500,000 has been recorded as a current liability.

Note 3: Revenue and expenses

Revenue and Expenses from Continuing Operations

^ Shares based payments set out in the statement of comprehensive income

Unused tax losses set out above have not been recognised due to uncertainty of future taxable profit streams.

Note 7: Earnings per share

There have been no transactions involving ordinary shares or potential shares that would significantly change the number of ordinary shares or potential ordinary shares outstanding between the reporting date and the date of completion of these financial statements.

Potential dilutive shares not included in dilutive earnings per share was nil (2013: nil)

Note 22: Related party transactions

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

Subsidiaries

The consolidated financial statements include the financial statements of Ferrum Crescent Limited and the subsidiaries listed in the following table.

Ferrum Crescent Limited is the ultimate Australian parent entity and the ultimate parent of the Group. Transactions between Ferrum Crescent Limited and its controlled entities during the year consisted of loan advances by Ferrum Crescent Limited. All intergroup transactions and balances are eliminated on consolidation.

Loans to / (from) related parties

The following transactions were undertaken between the Company, executive officers and director-related entities during 2013 and 2014

(1) AUD 68,000 of the 2013 fees were accrued to be converted to shares and on the 13th September 2013 these fees were waived at the Group's Board meeting.

Kofi Morna, a Director of the Company, is also a director and shareholder of Mkhombi AmaMato (Pty) Ltd, who, prior to entering into the BEE subscription agreement had a majority interest in Mkhombi Investments (Pty) Ltd. Upon completion of the subscription agreement detailed in the review of operations section and Note 12 above, Mkhombi AmaMato will directly own 15.6% or approximately 55,208,419 shares in the Company.

Note 23: Cash flow information

Note 26: Subsequent events

During the reporting period, the Company entered into a legally binding heads of agreement with Anvwar Asian Investment ("AAI"), an entity based in Oman, whereby AAI would purchase a 35% interest in Ferrum Iron Ore (Pty) Ltd ("FIO"), the Group Company that holds the Moonlight Iron Ore Project. After a number of term variations of this letter of intent, Ferrum entered into a new agreement with AAI in March 2014, whereby AAI would pay US$1 million, by way of two tranches of US$500,000, one payable by the end of March 2014 and the second payable by the end of April 2014, thereby earning the right subject to the requisite approvals of the South African Reserve Bank to the issue of FIO shares equalling 35% of the shares of that company, being partly paid, subject to the right to pay an additional US$9 million to become fully paid or to be converted into 3.5% of FIO fully paid. The additional US$9 million had to be paid by the earlier of 31 December 2015 and the completion of the Moonlight BFS.

A second payment of US$500,000 was not received by Ferrum Crescent from AAI within the time frame scheduled under the agreement. Ferrum Crescent has informed AAI of its default, and AAI remains in default as at the date of this report.

Table 1

Shareholder spread

Table 2

Top twenty shareholders

ASX Requirements (continued)

Table 3

Substantial shareholders

Voting Rights

The voting rights attached to each class of equity securities are set out below:

(a) Ordinary shares

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Table 4

Tenement schedule as at 30 June 2014: