Wolf Minerals Regulatory News (WLFE)

Wolf Minerals Limited

(ABN: 11 121 831 472)

and Controlled Entities

Annual Report

CONTENTS

CORPORATE DIRECTORY

CHAIRMAN'S LETTER

DIRECTORS' REPORT

AUDITOR'S INDEPENDENCE DECLARATION

DIRECTORS' DECLARATION

INDEPENDENT AUDITOR'S REPORT

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED STATEMENT OF CASHFLOWS

NOTES TO THE FINANCIAL STATEMENTS

ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES

CORPORATE GOVERNANCE

Corporate Directory

NON EXECUTIVE CHAIRMAN

John Hopkins

EXECUTIVE MANAGING DIRECTOR

Humphrey Hale

NON EXECUTIVE DIRECTORS

Jim Williams

Don Newport

Chris Corbett

Michael Wolley

Ronnie Beevor

CHIEF FINANCIAL OFFICER

COMPANY SECRETARY

Richard Lucas

PRINCIPAL & REGISTERED OFFICE

Level 3, 22 Railway Road

SUBIACO WA 6008

AUDITORS

PKF Mack & Co

Level 4, 35 Havelock Street

WEST PERTH WA 6005

LAWYERS

Steinpreis Paganin

Level 4, 16 Milligan Street

PERTH WA 6000

SHARE REGISTRAR

Security Transfer Registrars Pty Ltd

770 Canning Hwy

APPLECROSS WA 6153

UK DEPOSITORY

Computershare Investor Services PLC

The Pavilions, Bridgwater Road

Bristol BS99 6ZZ

STOCK EXCHANGE LISTINGS

Australian Securities Exchange

(Home Exchange: Perth, Western Australia)

Code: WLF

Alternative Investment Market

London Stock Exchange

Code: WLFE

BANKERS

National Australia Bank

50 St Georges Terrace

PERTH WA 6000

WEBSITE

www.wolfminerals.com.au

Chairman's Letter

Dear Shareholder

Thank you for the continued support that you have provided the Company in what has been an extremely difficult equity market. We are very pleased with the Company's progress over the last year, moving from an explorer/developer to a developer/constructor.

In the first quarter of 2013 the Company brought together a complex funding arrangement that has allowed Wolf to advance the Hemerdon Project towards development. This funding package is truly international with European Banks, US and European offtakers, US and New Zealand based strategic shareholders and a commercial guarantee from the German government.

As part of this funding package, the Company secured a bridging loan from Resource Capital Funds, our largest shareholder, which has enabled us to move ahead of our tungsten peers. We will be refinancing this bridge facility prior to drawing the senior debt from the Banks. We look forward to your support in this future raising. The Company is committed to increasing shareholder value and working strategically to minimise dilution to shareholders.

Wolf's share performance on the AIM market has been strong with nearly double the liquidity of Wolf on the ASX market. These new shareholders have maintained a combined stake of over 10% of the shares in the Company.

The funding package has enabled Wolf to commence its construction contract with GR Engineering Services (GRES) in June 2013, which means that, with all things going to schedule GRES will hand over the completed processing plant to Wolf in June 2015.

The world tungsten market has strengthened this year with European APT prices currently trading above US$400. Market conditions have made it difficult for mining companies in general to secure funding and many potential tungsten developers are struggling to advance their projects. This has resulted in significant delays to these projects, which points to a shortfall in the tungsten market at a time when the Company is scheduled to bring the Hemerdon Project on stream.

We are excited about the Company's future over next 2 years as we develop the Hemerdon Project into production.

Yours sincerely

John Hopkins

Non Executive Chairman

Directors' Report

Your Directors present their report on the Company and its controlled entities for the financial year ended 30 June 2013.

Directors

The names of Directors in office at any time during or since the end of the financial year are:

John Hopkins Non Executive Chairman

Humphrey Hale Executive Managing Director

Jonathan Downes Non Executive Director (resigned 11 June 2013)

Adrian Byass Non Executive Director (resigned 27 June 2013)

Jim Williams Non Executive Director

Don Newport Non Executive Director

Chris Corbett Non Executive Director

Michael Wolley Non Executive Director (commenced 11 June 2013)

Ronnie Beevor Non Executive Director (commenced 20 September 2013)

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

Principal activities

The principal activities of the consolidated group during the financial year were mineral exploration and development, conducted through Wolf Minerals (UK) Limited.

There were no significant changes in the nature of the consolidated group's principal activities during the financial year.

Operating results

The consolidated loss of the consolidated group after providing for income tax and eliminating minority equity interests amounted to $4,711,260 (2012: $5,425,552).

Dividends paid or recommended

The Directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a dividend to the date of this report.

REVIEW OF OPERATIONS

Summary

The 12 months to the end of June 2013 represented a period of significant achievement and progress for Wolf Minerals, as the Company formally transitioned from explorer-developer into a developer and constructor at its core asset, the Hemerdon tungsten and tin project, in the south west of the United Kingdom. The milestones achieved over the year served to keep Wolf firmly ahead of its global peer group of aspiring tungsten miners. In early 2013 Wolf completed a major funding package for the Hemerdon project which included; an equity capital raise, senior debt provided by a syndicate of European Banks and a bridging finance facility plus a royalty sale on all future output from the project from the Company's largest shareholder, Resource Capital Funds (RCF). This funding package enabled Wolf to start the project's Engineering Procurement and Construction (EPC) contract and award the Mining Contract. Given current difficult conditions in the Capital Markets this is a testament to the quality of the Hemerdon Project.

In addition, the first drawdown of funds provided by RCF, enabled the Company to purchase the majority of the properties located around the Hemerdon project site, which are required for the commencement of the project, and commence recruitment of the senior management team that will operate the mine in the future. Negotiations for the few remaining properties are ongoing and the Company hopes to finalise these shortly.

As part of the ongoing work on site at Hemerdon, the Company completed the link road project which was a pre-requisite to commence the mine development. The link road forms a part of public road infrastructure, and was designed to remove a long-term constriction in the local traffic network, and also benefit other mining operations in the area. Wolf considers that this represents a considerable benefit to the local community and is pleased to have been able to contribute to overall road safety in the Hemerdon area. Progress also continued on the program of 

Directors' Report (CONTINUED)

REVIEW OF OPERATIONS (continued)

archaeological work at the project area and a number of water permits for the mining and processing operations were secured. During the year, Wolf also opened its UK head office, at the Tamar Science Park in Plymouth.

The following is an outline of key milestones and events achieved by the Company during the 2012-13 financial year. 

A$216.5 million funding package finalised

In May the Company finalised documentation for a funding package for the Hemerdon project totalling ~A$216.5 million.

The package comprised:

§ £75 million (A$127.5 million) senior debt facilities from UniCredit Bank AG London Branch, ING Bank N.V. and Caterpillar Financial SARL, and

§ US$82 million (A$89 million) funding from Resource Capital Fund V L.P. (RCF)

The finalisation of this funding package provided funds for Wolf to commence the Engineering, design and procurement elements of the EPC contract and purchase properties required for the Hemerdon project development. It will also provide additional working capital for Wolf during the construction phase.

The RCF funding was drawn first, and Wolf received the first drawdown of funds from RCF in June 2013.

£75 million senior debt facilities finalised

Documentation was signed with UniCredit Bank AG, ING Bank N.V. and Caterpillar Financial SARL for £75 million in senior debt finance facilities, incorporating a £70 million term loan facility and a £5 million Bond facility.

The financing structure included a portion of the senior debt facilities being supported by a guarantee provided by the German government's Untied Loan Guarantee Scheme (Ungebundener Finanzkredit ("UFK")) and a loan guarantee under similar terms by Wolf's tungsten off-take partners; Wolfram Bergbau und Hütten AG and Global Tungsten & Powders Corp.

Together, these guarantees will cover approximately 50% of the senior loan facility. The senior debt facility has a term of 7.5 years and repayments are to be made quarterly, commencing approximately six months after first production. The provision of these senior debt facilities is subject to completion of conditions precedent customary for a financing of this nature including repayment of the RCF Bridge Finance Facility prior to first drawdown of the loan.

US$82 million RCF Funding Package

In December 2012 the Company entered into a binding agreement with RCF for the provision of a total funding package of $US82 million for the development of the Hemerdon project.

This funding represents the balance of funds required to take the Hemerdon project in to production, and will allow Wolf to proceed with development, construction and commissioning of the project. Shareholder approval was granted to accept this facility at an EGM held on 24 January 2013. This agreement has been of fundamental importance in allowing Wolf to move ahead of its international peer group of aspiring tungsten producers and secure a premier long term future for the Hemerdon mine as one of the only Tungsten mines to be built in the near term. This will allow Wolf to participate in what is anticipated to be a strong price environment going forward given the strong supply/demand fundamentals currently prevailing in the world tungsten market.

Directors' Report (CONTINUED)

REVIEW OF OPERATIONS (continued)

The RCF funding package comprises:

§ A US$75 million (A$81.5 million) 12 month secured Bridge Finance Facility; and

§ US$7M (A$7.6 million) consideration for the purchase of a 2% Royalty by RCF on gross revenues from all metals and minerals produced from the Hemerdon project.

The Bridge Facility has a maturity date of 12 months from the date of satisfaction of conditions precedent for the initial draw down which occurred in June 2013. Bridge Facility monies are payable in full on the maturity date. The Bridge Finance Facility is secured over the Company's Hemerdon project and the Company is prevented from drawing down any further debt until it is repaid (in accordance with the terms of the agreement).

First drawdown of US$82 million funding package from RCF

In June 2013 the Company completed the first drawdown of funds from the US$82 million RCF funding package.

Wolf received the first drawdown, of US$10 million, from the Bridge Finance Facility, plus the US$7 million consideration for the 2% Royalty. The funds are being utilised to commence the EPC Contract, continue the purchase of properties at the Hemerdon site (required under the terms of the Hemerdon project's planning permission) and to support Wolf's development costs and provide general working capital.

Binding Tungsten Off-take agreements completed

In May 2013, Wolf also executed binding tungsten off-take agreements with Wolfram Bergbau und Hütten AG, Austria, and Global Tungsten & Powders Corp., Pennsylvania, USA.

The Company was delighted to complete binding agreements with its off-take partners, which represented another major milestone in the project's pathway to production.

Under the off-take agreements Wolf will supply 80% of the Hemerdon project's expected average, annual tungsten concentrate output (as outlined in the project's DFS) for a minimum period of five years, extendable under mutual consent.

Wolf will supply wolframite concentrates grading 65% tungsten trioxide. Pricing for concentrates will be calculated based on the European Ammonium Para-Tungstate (APT) price, published by Metal Bulletin. A discount on commercial terms will be applied to the prevailing European APT price, to take into account treatment charges and administration.

The Hemerdon mine is expected to produce an average of 345,000 metric tonne units (mtu's) of tungsten trioxide in concentrates per annum and approximately 450 tonnes of tin in concentrates per annum.

New strategic investor

In February 2013 the Company completed a placement to raise A$20.3 million as part of the funding package required to bring the Hemerdon project to production. TTI (NZ) Limited acquired a 19.9% interest in the Company via its participation in the placement. TTI (NZ) Limited subscribed for 39,410,000 shares in Wolf Minerals. TTI (NZ) Limited is a wholly owned subsidiary of the Todd Corporation Limited, a private New Zealand-based company with a diversified portfolio of business interests. As part of its investment, TTI (NZ) Limited was entitled to nominate a Director to join the Wolf board and Michael Wolley was appointed as a Non-executive Director on 11 June 2013.

Funds provided by this placement are being used to provide working capital to commence the Hemerdon project, repay a $6 million loan facility to RCF and purchase properties around the Hemerdon site.

Importantly, the placement also satisfied a key condition of the US$75 million Bridge Finance Facility and US$7 million royalty provided by RCF.

Directors' Report (CONTINUED)

REVIEW OF OPERATIONS (continued)

£75 million EPC Contract at Hemerdon commenced

The first drawdown of the RCF funding package facilitated the formal commencement of development at the Hemerdon project and allowed the project's £75 million (A$127.5 million) EPC contract to commence.

The EPC Contract is a fixed price, fixed term contract for the design, construction and commissioning of a 3Mtpa tungsten and tin mineral processing plant, plus associated infrastructure, and forms the key component of the Hemerdon project. The Contract was awarded to Australian resource sector engineering, consulting and contracting company GR Engineering Services Limited, and is for a term of 24 months from the commencement date.

The EPC Contract compares very well with the project's Definitive Feasibility Study (DFS) estimate, which outlined £77 million (A$130.9 million) for the contract scope.

£85 million Mining Services Contract awarded for Hemerdon Project

In July 2013, Wolf awarded the Mining Services contract for the Hemerdon project. The contract valuewas £85 million (A$144.5 million). The Blackwell contract is an earthmoving contract and relates specifically to mining.

The Contract is made up of two parts:

§ Phase 1; Mining pre-strip and Mine development, and

§ Phase 2; Mine production.

The Contract term for Phase 1 is 11 months from the commencement date. Phase 2 has a five year term from completion of Phase 1. Wolf will advise of the contract's formal commencement date, which is currently expected to be March 2014 (dependent on progress of the project schedule).

Wolf tendered the Contract in the UK and internationally and received 11 quality bids, which were evaluated on the basis of quality and price. The contract was awarded to CA Blackwell (Contracts) Limited (Blackwell) on this basis. Blackwell's contract pricing confirmed the strength of the project's base case financial model and also compared very well with Wolf's Definitive Feasibility Study (DFS) estimate, of £85.5 million (~A$145.4 million).

Construction of Hemerdon Link Road completed and road opened

In July 2013, Wolf reported that construction of the Hemerdon Project Link Road had been completed, and that the road was open.

The road was officially opened on 27 July by Councillor John Hart, Leader of Devon County Council, Wolf Managing Director Humphrey Hale, MP for Devon South West Gary Streeter and representatives from the communities of Plymouth and the South Hams as well as Sparkwell and Lee Moor parishes.

The Link Road is a 600 metre long public access road, which was constructed as part of Wolf's planning permission for the development of the Hemerdon project. The road is designed to remove a long-term constriction in the local traffic network. It is also intended to benefit other local extractive operations and create a long term piece of infrastructure to support safe and efficient transportation in the local area.

Construction of the Link Road began in January 2013 and was the first major infrastructure work completed in the development path to bring the Hemerdon into production.

The Link Road was constructed by Bardon Contracting, an Aggregate Industries UK Ltd. business. The road will now be adopted by Devon Highways.

Key environmental approvals received

In September 2012 the Company received a set of key environmental approvals for the Hemerdon project from the Environment Agency (EA), with the granting of seven water permits covering the entire operation of the mine.

Directors' Report (CONTINUED)

REVIEW OF OPERATIONS (continued)

These include the abstraction of the required volume of water for the processing plant and the discharge of water from pit dewatering.

Wolf had been required to seek additional permits from the EA prior to the commencement of operations at Hemerdon, as a pre-requisite to operating the mine. These included the water licenses, and a waste dump license that satisfies the EU Mine Waste Directive. The company is making good progress on all outstanding licenses and is expecting to receive these over the next few months.

The granting of the water permits represented a further indication of the continued progress achieved by Wolf in the development of the Hemerdon project into a world class tungsten and tin mining operation.

Property acquisitions at Hemerdon Project site

Under the terms of the Company's planning permission for the Hemerdon project, it is required to purchase a number of properties in and around the Hemerdon site necessary to develop the project. To date, Wolf has purchased a number of the requisite properties and negotiated 'options to purchase' with the majority of remaining landowners.

Having received first funds from the RCF funding package Wolf exercised all of the 'options to purchase' previously negotiated with landowners and will continue to work to finalise purchase agreements with the remainding landowners.

Archaeological work at Hemerdon Project site

Archaeological work at the Hemerdon site continued during the year and remains ongoing. Work is being carried out in line with a pre-approved plan agreed with the Devon County Council and English Heritage, the English government's statutory body responsible for the historic environment.

The archaeological work program has been designed to so that clearance can be given for operational areas ahead of development. No material issues have been uncovered to date and the program is progressing according to schedule.

New UK head office established

In November 2012, the Company moved into its new UK head office, at the Tamar Science Park in Plymouth.

The Tamar Science Park is located close to the Hemerdon project site. Wolf's establishment of its new UK base is another key milestone in its development plans for the Hemerdon project.

It is anticipated that the Hemerdon Project will generate 230 direct jobs, plus many more indirect jobs, when in full production, and will inject millions of Pounds into the local economy and provide an environment to develop new skills in the region.

Tamar Science Park is a focal point for business innovation and growth in the south west region of the UK. It houses around 80 businesses, which employ a total of more than 650 staff with a combined turnover in excess of £95 million.

Senior management personnel appointed

During the year Wolf continued to strengthen its senior management team, to support the Company's ongoing development of the Hemerdon project. In the March quarter the Company appointed an Environmental Manager for the project and subsequent to the end of the financial year, in August, confirmed a number of additional senior management appointments. These included; Commercial and Financial Manager, Mineral Planning and Estates Manager, Civil Superintendent, Construction Manager, Human Resources Manager plus Plant and Infrastructure Manager.

In addition to these positions, Wolf also finalised the appointments of a Mine Manager, Health and Safety Manager and Process Plant Manager. These appointments are scheduled to commence their roles in September and October 2013.

Directors' Report (CONTINUED)

REVIEW OF OPERATIONS (continued)

The Company is pleased with the high calibre of personnel it has recruited to its management team. Further management and requisite personnel appointments will be made in due course to meet the development and construction requirements of the project.

Changes to Wolf board of directors

During or since the end of the financial year, the Company announced a number of changes to its board.

In June 2013, Mr Michael Wolley was appointed to the board as a non-executive director. Mr Wolley is TTI (NZ) Limited's board nominee. TTI (NZ) is one of Wolf's major shareholders, having acquired a 19.9% interest in the

Company via the placement in December 2012. As part of its strategic investment it was entitled to nominate a Director to join the Wolf board. Mr Wolley is a highly experienced mining executive who has First Class Honours in Chemical and Materials Engineering from the University of Auckland, and is the former chief operating officer of rare earths developer Lynas Corporation. He has also held senior executive roles with Mobil Australia and BlueScope Steel China. Mr Wolley is vice-president, minerals for TTI's parent company, Todd Corporation, which is a major, private New Zealand-based company with a diverse range of business interests.

At the same time, Mr Jonathan Downes, a founder of the Company, stepped down from the board to focus on his other commitments.

Also in June 2013, another of Wolf's founding board members, Mr Adrian Byass, stepped down from the board, to concentrate on his other business activities. The Board would like to extend its gratitude to Mr Downes and Mr Byass for the guidance and insight they provided over the past six and a half years.

In September 2013, Mr Ronnie Beevor was appointed to the board as a non-executive director. Mr Beevor has had an extensive involvement in the natural resources industry, both in Australia and internationally. He is a Director of Ampella Mining Limited, Bullabulling Gold Limited, Unity Mining Limited and Chairman of Bannerman Resources Limited and EMED Mining Public Limited. Ronnie has an Honours Degree in Philosophy, Politics and Economics from Oxford University in the UK and qualified as a chartered accountant in London in 1972.

Tungsten price at long term highs

The past year saw a period of strong tungsten prices as a result of the favourable supply/demand fundamentals currently prevailing in the tungsten market. The tungsten price is currently at long-term highs as shown by the Ammonium Para-Tungstate (APT - the industry standard price index), which is trading above US$400 per mtu and has risen nearly $100 per mtu since December 2012.

The strong tungsten price is another major positive factor for Wolf as it moves in to the development phase of the Hemerdon Project, and a continuing, strong APT price will make the project's base-case financial model even more robust. This is especially true given that the project feasibility study was constructed using an APT price of $360 per mtu.

The Company is of the view that the outlook for the tungsten price is positive. Tungsten is classified as one of 14 critical minerals by the EU and is an essential component in the production of hardened metals. Global tungsten demand is forecast to grow at 6-7% per annum, from 81,084t tungsten trioxide (W03) in 2010 to 111,602t WO3 in 2015, (Roskill report April 2011). The Company expects that many potential new sources of supply will not be constructed due to difficult global financial conditions. As a result Wolf expects to benefit from a potential supply shortfall as it brings Hemerdon into production in 2015.

NOTES:

§ All currency conversions are based on indicative prevailing exchange rates on 9 September 2013.

§ A Metric Tonne Unit (mtu) is equal to ten kilograms and is a standard weight measure used by the tungsten industry.

DIRECTORS' REPORT (CONTINUED)

INFORMATION ON DIRECTORS

DIRECTORS' REPORT (CONTINUED)

INFORMATION ON DIRECTORS (continued)

DIRECTORS' REPORT (CONTINUED)

INFORMATION ON DIRECTORS (continued)

DIRECTORS' REPORT (CONTINUED)

REMUNERATION REPORT - AUDITED

Names and positions held of consolidated and parent entity key management personnel in office at any time during the financial year are:

This report details the nature and amount of remuneration for each key management person of Wolf Minerals Limited, and for the executives receiving the highest remuneration.

Remuneration policy

The remuneration policy of Wolf Minerals Limited has been designed to align key management personnel objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas affecting the consolidated group's financial results. The board of Wolf Minerals Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best key management personnel to run and manage the consolidated group, as well as create goal congruence between directors, executives and shareholders.

The board's policy for determining the nature and amount of remuneration for key management personnel of the consolidated group is as follows:

- The remuneration policy, setting the terms and conditions for the key management personnel, was developed by the board.

DIRECTORS' REPORT (CONTINUED)

REMUNERATION REPORT - AUDITED (continued)

- All key management personnel receive a base salary (which is based on factors such as length of service and experience), superannuation, fringe benefits, options and performance incentives.

- The board reviews key management personnel packages annually by reference to the consolidated group's performance, executive performance and comparable information from industry sectors.

The performance of key management personnel is measured against criteria agreed bi-annually with each executive and is based predominantly on the forecast growth of the consolidated group's profits and shareholders' value. All bonuses and incentives must be linked to predetermined performance criteria. The board may, however, exercise its discretion in relation to approving incentives, bonuses and options. The policy is designed to attract the highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth.

Key management personnel are also entitled to participate in the employee share, option and performance rights arrangements.

The key management personnel receive a superannuation guarantee contribution required by the government, which is currently 9.25%, and do not receive any other retirement benefits. Some individuals, however, have chosen to sacrifice part of their salary to increase payments towards superannuation.

All remuneration paid to key management personnel is valued at the cost to the Company and expensed. Shares given to key management personnel are valued as the difference between the market price of those shares and the amount paid by the key management personnel. Options and performance rights are valued using the Black-Scholes methodology.

The board policy is to remunerate Non Executive Directors at market rates for time, commitment and responsibilities. The board determines payments to the Non Executive Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to Non Executive Directors is subject to approval by shareholders at the Annual General Meeting. Fees for Non Executive Directors are not linked to the performance of the consolidated group. However, to align Directors' interests with shareholder interests, the Directors are encouraged to hold shares in the Company and are able to participate in the employee option plan.

Performance-based remuneration

The Company is an exploration and development entity and therefore speculative in terms of performance. Consistent with attracting and retaining talented executives, Directors and senior executives are paid market rates associated with individuals in similar positions, within the same industry. The board does not endorse the use of bonus payments for Directors and senior executives at this point in time. Performance incentives will be issued in the event that the entity moves from an exploration to a producing entity, and key performance indicators such as growth and profits will be used as measurements for assessing board performance.

Company performance, shareholder wealth and Director and executive remuneration

The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives by the issue of options and performance rights to the majority of Directors and executives to encourage the alignment of personal and shareholder interests.

Key management personnel remuneration policy

The board's policy for determining the nature and amount of remuneration of key management for the group is as follows:

The remuneration structure for key management personnel is based on a number of factors, including length of service, particular experience of the individual concerned, and overall performance of the Company. The contracts for service between the Company and key management personnel are on a continuing basis, the terms of which are not expected to change in the immediate future. The employment conditions of the Managing Director, Humphrey Hale and other key management personnel are formalised in contracts of employment. All key management personnel are permanent employees of Wolf Minerals Limited.

The standard employment contract states a three-month resignation period for key management personnel. The Company may terminate an employment contract without cause by providing one to three months' written notice or making payment in lieu of notice, based on the individual's salary component.

DIRECTORS' REPORT (CONTINUED)

REMUNERATION REPORT - AUDITED (continued)

(a) Key management personnel remuneration

Performance income as a proportion of total income

No bonuses were paid to executives or Non Executive Directors during the year.

(b) Options and performance rights issued as part of remuneration for the year ended 30 June 2013

No options or rights were issued as part of remuneration for the year ending 30 June 2013.

DIRECTORS' REPORT (CONTINUED)

REMUNERATION REPORT - AUDITED (continued)

(c) Shares issued on exercise of compensation options

There were no options exercised during the year that were granted as compensation options.

(d) Shareholdings

Number of shares held by key management personnel

The Net Change Other reflected above includes on-market purchases.DIRECTORS' REPORT (CONTINUED)

REMUNERATION REPORT - AUDITED (continued)

(e) Options and rights holdings

The Net Change Other reflected above includes those options that have expired without being exercised during the year.

¹ Performance rights issued as part of remuneration.

DIRECTORS' REPORT (CONTINUED)

Meetings of Directors

During the financial year, 19 meetings of Directors (including committees of Directors) were held. Attendances by each Director during the year were as follows:

The Remuneration Committee did not meet during the year.

Indemnifying officers

During or since the end of the financial year the Company has given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay insurance premiums as follows:

The Company has paid premiums to insure each of the following directors against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of Director of the Company, other than conduct involving a willful breach of duty in relation to the Company. The amount of the premium was approximately $2,673 for each Director.

- Humphrey Hale

- John Hopkins

- Jonathan Downes

- Adrian Byass

- Chris Corbett

- Ian Bruce

- Jim Williams

- Don Newport

- Michael Wolley

- Ronnie Beevor

The Company has not indemnified the auditor or paid any insurance premium on behalf of the auditor.

DIRECTORS' REPORT (CONTINUED)

Options

At the date of this report, the unissued ordinary shares of Wolf Minerals Limited under option are as follows:

No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other body corporate.

Proceedings on behalf of Company

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

The Company was not a party to any such proceedings during the year.

Non-audit services

The board of Directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the services disclosed below did not compromise the external auditor's independence for the following reasons:

- all non-audit services are reviewed and approved by the board prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and

- the nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.

The remuneration for non-audit services paid to the external auditors during the year ended 30 June 2013 is $3,750. This remuneration related to the preparation and lodgement of the annual income tax return.

Auditor's Independence Declaration

The lead auditor's independence declaration for the year ended 30 June 2013 has been received and can be found on page 19 of the Directors' report.

This report is made in accordance with a resolution of the Board of Directors. These financial statements were authorised for issue on 27 September 2013 by the Directors of the Company.

_____________________________

Humphrey Hale

Managing Director

Date: 27 September 2013

Auditor's Independence Declaration

UNDER SECTION 307C OF THE CORPORATIONS ACT 2001

TO THE DIRECTORS OF WOLF MINERALS LIMITED

I declare that, to the best of my knowledge and belief, during the year ended 30 June 2013 there have been:

i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

ii. no contraventions of any applicable code of professional conduct in relation to the audit.

PKF Mack & Co

S Fermanis

Partner

27 September 2013

West Perth,

Western Australia

Directors' Declaration

The Directors of the Company declare that:

1. The financial statements and notes, as set out on pages 23 to 58, and the remuneration disclosures in the Directors Report designated audited are in accordance with the Corporations Act 2001 and:

a. comply with Accounting Standards and the Corporations Regulations 2001; and

b. give a true and fair view of the financial position as at 30 June 2013 and of the performance for the year ended on that date of the Company and consolidated group;

c. the financial statements are in compliance with International Financial Reporting Standards, as stated in note 1 to the financial statements.

2. The Managing Director and Chief Financial Officer have each declared that:

a. the financial records of the Company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001;

b. the financial statements and notes for the financial year comply with the Accounting Standards; and

c. the financial statements and notes for the financial year give a true and fair view;

3. In the Directors' opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

_____________________________

Humphrey Hale

Director

Date: 27 September 2013

INDEPENDENT AUDITOR'S REPORT

TO THE MEMBERS OF

WOLF MINERALS LIMITED

Report on the Financial Report

We have audited the accompanying financial report of Wolf Minerals Ltd, which comprises the statement of financial position as at 30 June 2013, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of Wolf Minerals Ltd (the company) and the consolidated entity. The consolidated entity comprises the company and the entities it controlled at the year's end or from time to time during the financial year.

Directors' Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the 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 financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.

Auditor's Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Opinion

In our opinion:

(a) the financial report of Wolf Minerals Ltd is in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the company's and consolidated entity's financial positions as at 30 June 2013 and of their performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and

(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Emphasis of Matter

Without modifying our opinion, we draw attention to Note 1 in the financial report, which indicated that the consolidated entity incurred a net loss after tax of $(4,711,260) (2012: $(5,425,552)) during the year ended 30 June 2013. These conditions, along with other matters as set for in Note 1, indicate the existence of a material uncertainty that may cast significant doubt about the company and consolidated entity's ability to continue as a going concern and therefore, the company and consolidated entity maybe unable to realise its assets and discharge its liabilities in the normal course of business.

The financial report of the consolidated entity does not include any adjustments in relation to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the company and/or the consolidated entity not continue as going concerns.

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 12 to 16 of the directors' report for the year ended 30 June 2013. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion, the Remuneration Report of Wolf Minerals Ltd for the year ended 30 June 2013, complies with section 300A of the Corporations Act 2001.

PKF Mack & Co

S Fermanis

Partner

27 September 2013

West Perth,

Western Australia

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

The accompanying notes form part of these financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2013

The accompanying notes form part of these financial statements.

CONSOLIDATED Statement Of Changes In Equity

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

The accompanying notes form part of these financial statements.

CONSOLIDATED Statement Of Cashflows

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

The accompanying notes form part of these financial statements.

Notes To ThE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

This financial report includes the consolidated financial statements and notes of Wolf Minerals Limited and controlled entities ('Consolidated Entity' or 'Group'), and the parent entity disclosure for Wolf Minerals Limited as an individual parent entity ('Parent Entity').

Wolf Minerals Limited is a listed public company, trading on the Australian Securities Exchange and Alternative Investment Market of the London Stock Exchange, limited by shares, incorporated and domiciled in Australia.

Basis of Preparation

The accounting policies set out below have been consistently applied to all years presented.

Statement of Compliance

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (AASBs) including Australian Interpretations and other pronouncements adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001 for profit orientated entities. The consolidated financial report of the Group and the financial report of the Company comply with International Financial Reporting Standards (lFRSs) and interpretations adopted by the International Accounting Standards Board (IASB).

The consolidated financial statements were authorised for issue by the Board of Directors on 27 September 2013.

Basis of Measurement

The consolidated financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position:

· derivative financial instruments are measured at fair value

· financial instruments at fair value through profit or loss are measured at fair value

· available-for-sale financial assets are measured at fair value

· liabilities for cash-settled share-based payment arrangements are measured at fair value

· the defined benefit asset is measured as the net total of the plan assets, plus unrecognised past service cost and unrecognised actuarial losses, less unrecognised actuarial gains and the present value of the defined benefit obligation.

Functional and Presentation Currency

These consolidated financial statements are presented in Australian dollars, which is the Company's functional currency.

The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, all financial information presented in Australian dollars has been rounded to the nearest dollar unless otherwise stated.

Use of Estimates and Judgements

The preparation of financial statements in conformity with AASBs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Going Concern

The accounts have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the normal course of business. The Group incurred a loss of $4,711,260 for the year ended 30 June 2013 (2012: $5,425,552).

The ability of the Company and the Group to continue to pay its debts as and when they fall due is dependent upon the Company successfully raising additional share capital and ultimately developing the Hemerdon project.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Note 1: Statement of Significant Accounting Policies (continued)

Going Concern (continued)

The Company has arranged a funding package for the Group of A$216.5 million (refer note 16) which has enabled commencement of the Hemerdon project, which is expected to be generating positive operational cashflows in 2015. The Group is able to fund its working capital as part of this package. The funding package is secured by the Group's assets.

The Group is currently funded through the 12 month Bridge Finance facility which matures on 9 May 2014. As part of the financing arrangements, the Bridge Finance facility is required to be repaid prior to accessing the senior debt facilities which will be used to complete construction of the Hemerdon project. The Company will need to raise equity in order to repay the Bridge Finance facility.

The Directors believe it is appropriate to prepare these accounts on a going concern basis. The Directors have an appropriate plan to raise additional funds, and based on the strength of the Hemerdon project believe it is able to raise the additional funds required. Furthermore, the strength of the Hemerdon project has been validated by completion of the financing arrangements and having offtaker agreements and guarantees from the offtakers and the German government over the senior debt facilities. These factors combined with a proven track record of being able to raise equity as and when required support the Directors' assessment.

The accounts have been prepared on the basis that the entity can meet its commitments as and when they fall due and can therefore continue normal business activities, and the realisation of assets and liabilities in the ordinary course of business.

a. Significant accounting estimates, judgments and assumptions

The preparation of financial statements requires management to make judgments and estimates relating to the carrying amounts of certain assets and liabilities. Actual results may differ from the estimates made. Estimates and assumptions are reviewed on an ongoing basis.

The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next accounting period are:

(i) Share based payment transactions

The consolidated entity measures the cost of equity settled transactions by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of share options and performance rights is determined by an external valuer using an appropriate valuation model.

(ii) Impairment of exploration and evaluation assets and investments in and loans to subsidiaries

The ultimate recoupment of the value of exploration and evaluation assets, the company's investment in subsidiaries, and loans to subsidiaries is dependent on the successful development and commercial exploitation, or alternatively, sale, of the exploration and evaluation assets.

Impairment tests are carried out on a regular basis to identify whether the asset carrying values exceed their recoverable amounts. There is significant estimation and judgement in determining the inputs and assumptions used in determining the recoverable amounts.

The key areas of judgement and estimation include:

- Recent exploration and evaluation results and mineral resource estimates;

- Environmental issues that may impact on the underlying tenements;

- Fundamental economic factors that have an impact on the operations and carrying values of assets and liabilities.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Note 1: Statement of Significant Accounting Policies (continued)

a. Significant accounting estimates, judgments and assumptions (continued)

(iii) Income tax expenses

Judgement is required in assessing whether deferred tax assets and liabilities are recognised on the statement of financial position. Deferred tax assets, including those arising from temporary differences, are recognised only when it is considered more likely than not that they will be recovered, which is dependent on the generation of future assessable income of a nature and of an amount sufficient to enable the benefits to be utilised.

(iv) Classification of investments

The group has decided to classify investments in listed securities as available for sale. These securities are accounted for at fair value. Any increments or decrements in their value at year end are charged or credited to the revaluation reserves.

b. Exploration and Evaluation Assets

Exploration and evaluation costs, including the costs of acquiring licences, are capitalised as exploration and evaluation assets on an area of interest basis. Costs incurred before the Consolidated Entity has obtained the legal rights to explore an area are recognised in the statement of comprehensive income.

Exploration and evaluation assets are only recognised if the rights of interest are current and it is expected that the expenditure will be recovered through the successful development and exploitation of an area of interest, or by its sale; or exploration activities are continuing in an area and activities have not reached a stage which permits a reasonable estimate of the existence or otherwise of economically recoverable reserves.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

An impairment exists when the carrying amount of capitalised exploration and evaluation expenditure relating to an area of interest exceeds its recoverable amount. The asset is then written down to its recoverable amount. Any impairment losses are recognised in the statement of comprehensive income.

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified from exploration and evaluation expenditure to development assets and depreciated over the life of the mine.

Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining permits. Where applicable, such costs are determined using estimates of future costs, current legal requirements and technology on an undiscounted basis.

c. Development Assets

Capitalised mining development costs include expenditures incurred to develop new ore bodies to define further mineralisation in existing ore bodies, to expand the capacity of a mine and to maintain production. Mining development also includes costs transferred from exploration and evaluation phase once contruction and development commences in the area of interest.

Amortisation of mining development is computed by the units of production basis over the estimated proved and probable reserves. Proved and probable mineral reserves reflect estimated quantities of economically recoverable reserves which can be recovered in the future from known mineral deposits. These reserves are amortised from the date on which production commences. The amortisation is calculated from recoverable proven and probable reserves and a predetermined percentage of the recoverable measured, indicated and inferred resource. This percentage is reviewed annually.

Restoration costs expected to be incurred are provided for as part of development phase that give rise to the need for restoration.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Note 1: Statement of Significant Accounting Policies (continued)

d. Principles of Consolidation

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by Wolf Minerals Limited ('company' or 'parent entity') as at 30 June 2013 and the results of all controlled entities for the year then ended. Wolf Minerals Limited and its controlled entities together are referred to in this financial report as the consolidated entity. The effects of all transactions between entities in the consolidated entity are eliminated in full.

Subsidiaries are all those entities over which the consolidated entity has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the consolidated entity controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the consolidated entity.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. All controlled entities have a June financial year end.

A list of controlled entities is contained in Note 10 to the financial statements.

e. Income Tax

The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the reporting date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on either accounting profit or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

f. Property, Plant and Equipment

Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses.

Freehold land

Freehold land is recognised at historic cost and is not depreciated as it has an indefinite useful economic life.

Plant and equipment

Plant and equipment are measured on the cost basis.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset's employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred.

Depreciation

The depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding freehold land, is depreciated on a diminishing value basis over the asset's useful life to the consolidated entity commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets are:

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of comprehensive income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

g. Financial Instruments

The consolidated entity classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at each reporting date.

(i) Financial assets at fair value through profit or loss

This category has two sub-categories; financial assets held for trading, and those designated at fair value through profit or loss on initial recognition. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. The policy of management is to designate a financial asset if there exists the possibility it will be sold in the short term and the asset is subject to frequent changes in fair value. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the reporting date.

(ii) Loans and receivables

Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the consolidated entity provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. Loans and receivables are included in receivables in the statement of financial position.

(iii) Available-for-sale financial assets

Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date.

Purchases and sales of investments are recognised on trade-date being the date on which the consolidated entity commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership.

Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value. Loans and receivables are carried at amortised cost using the effective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' category are included in the statement of comprehensive income in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non monetary securities classified as available-for-sale investments revaluation reserve are recognised in equity in the "available for sale revaluation reserve". When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the statement of comprehensive income as gains and losses from investment securities.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

g. Financial Instruments (continued)

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the consolidated entity establishes fair value by using valuation techniques. These include reference to the fair values of recent arm's length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and option pricing methods refined to reflect the issuer's specific circumstances.

The consolidated entity assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss, is removed from equity and recognised in the statement of comprehensive income. Impairment losses recognised in the statement of comprehensive income on equity instruments are not reversed through the statement of comprehensive income.

Fair value

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the consolidated entity is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. The consolidated entity uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments.

The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the consolidated entity for similar financial instruments.

h. Impairment

(i) Financial Assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the effective interest rate. 

An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its fair value. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised either in the statement of comprehensive income or revaluation reserves in the period in which the impairment arises.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

h. Impairment (continued)

(ii) Exploration and Evaluation Assets

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable amount at the reporting date.

Exploration and evaluation assets are tested for impairment in respect of cash generating units, which are no larger than the area of interest to which the assets relate.

(iii) Non-financial Assets Other Than Exploration and Evaluation Assets

The carrying amounts of the Consolidated Entity's non-financial assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset's recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated at each reporting date.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the statement of comprehensive income. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units, then to reduce the carrying amount of the other assets in the unit on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exits. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss has been recognised.

i. Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of each of the group's entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity's functional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the statement of comprehensive income, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the statement of comprehensive income.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

i. Foreign Currency Transactions and Balances (continued)

Group companies

The financial results and position of foreign operations whose functional currency is different from the group's presentation currency are translated as follows:

- Assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;

- Income and expenses are translated at average exchange rates for the period; and

- Retained profits are translated at the exchange rate prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the group's foreign currency translation reserve in the statement of financial position, Theses differences are recognised in the statement of comprehensive income in the period in which the operation is disposed.

j. Employee Benefits

a. Wages, salaries and annual leave

Liabilities for wages, salaries and annual leave expected to be settled within one year of the reporting date are recognised in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

b. Employee benefits payable later than one year

Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

c. Superannuation

Contributions are made by the consolidated entity to superannuation funds as stipulated by statutory requirements and are charged as expenses when incurred.

d. Employee benefit on costs

Employee benefit on costs, including payroll tax, are recognised and included in employee benefits liabilities and costs when the employee benefits to which they relate are recognised as liabilities.

e. Options

The fair value of options granted is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date.

The fair value at grant date is independently determined using the Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

k. Equity-settled compensation

The group operates equity-settled share-based payment employee share and option schemes. The fair value of the equity to which employees become entitled is measured at grant date and recognised as an expense over the vesting period, with a corresponding increase to an equity account. The fair value of shares is ascertained as the market bid price. The fair value of options is ascertained using a Black-Scholes pricing model which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at each reporting date such that the amount recognised for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

l. Provisions

Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

m. Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of 12 months or less, and bank overdrafts.

n. Revenue and Other Income

Interest revenue is recognised as it accrues. Dividend revenue is recognised when the right to receive a dividend has been established.

o. Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

p. Receivables

Collectibility of trade debtors is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful debts is raised when some doubt as to collection exists.

q. EPS

Basic earnings per share

Basic earnings per share is determined by dividing the net profit after income tax attributable to members of the company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

r. Contributed Equity

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a business, are included in the cost of the acquisition as part of the purchase consideration.

s. Investments

Interests in listed and unlisted securities are initially brought to account at cost.

Controlled entities are accounted for in the consolidated financial statements as set out in note 1(a).

Other securities are included at fair value at reporting date. Unrealised gains/losses on securities held for short term investment are accounted for as set out in Note 1 (f) (i) financial assets at fair value through profit or loss. Unrealised gains/losses on securities held for long term investment are accounted for as set out in Note 1 (f) (iii) available for sale financial assets.

t. Acquisition of Assets

The purchase method of accounting is used for all acquisitions of assets regardless of whether equity instruments or other assets are acquired. Cost is determined as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus incidental costs directly attributable to the acquisition.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

u. Borrowing Costs

Transaction costs associated with financial instruments are initially capitalised and then deducted from the initial amount recognised as a financial liability at amortised cost.

v. Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

w. New standards and interpretations not yet adopted

The following Australian Accounting Standards have been issued or amended and are applicable to the annual financial statements of the consolidated group (or the company) but are not yet effective. This assumes the following have not been adopted in preparation of the financial statements at the reporting date.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The Group does not anticipate early adoption of any of the above reporting requirements and has not determined the financial impact of these standards.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

¹In return for a consideration of US$7 million, the Company granted to Resource Capital Fund V LP a Royalty mineral right that equates to 2% of gross revenues from all metals and minerals produced from the Hemerdon project. This will become payable on a quarterly basis once the mine has started production.

The construction of the link road is a condition of the planning permission for the Hemerdon Project. The group is required to construct the road for public adoption by Devon County Council. During the year, all expenditure incurred in constructing the link road has been expensed to the statement of profit or loss and other comprehensive income on the basis that the future economic benefits of the road are not directly attributable to the group. Refer to Note 19 Commitments for further details of contracted expenditure to complete the construction and adoption of the road.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

NOTE 4: INCOME TAX EXPENSE (continued)

The tax benefits of the above Deferred Tax Assets will only be obtained if:

(a) The company derives future assessable income of a nature and an amount sufficient to enable the benefits to be utilised; and

(b) The company continues to comply with the deductibility conditions imposed by the Income Tax Assessment Act 1997 and its overseas equivalent; and

(c) No change in income tax legislation adversely affects the company in utilising the benefits.

NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION

a. Names and positions held of consolidated and parent entity key management personnel in office at any time during the financial year are:

Key management personnel remuneration has been included in the Remuneration Report section of the Directors Report.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION (continued)

b. Options and performance rights holdings