Wolf Minerals Regulatory News (WLFE)

10 September 2014

Wolf Minerals Limited

Annual Report

For the year ended 30 June 2014

Specialty metals development company, Wolf Minerals Limited (ASX: WLF, AIM: WLFE) ("Wolf", "the Company") is pleased to announce its annual report for the financial year ended 30 June 2014.

Highlights for the year include:

· On track to deliver first new metal mine in UK for over 40 years.

· Successful completion of A$182.7 million Fundraise and Share Purchase Plan to finalise funding of the Project through to positive cash flow.

· Construction progressing well - on budget and on schedule. Site clearing and haul road completed with structural concrete placement well advanced.

· Drilling underway of six diamond drill holes to provide geotechnical information to review pit slopes with intention to steepen slopes and increase ore reserves.

· Drakelands Mine on schedule to commence production by Q3 2015.

· Appointment of Russell Clark as Managing Director.

· Appointment of Ronnie Beevor and Nick Clarke as independent directors.

Commenting on the annual results, Wolf Managing Director, Russell Clark said:

"This has been a momentous year for Wolf. We are proud to have taken the Project through the permitting stage, including the first ever permit issued by the Environment Agency in accordance with the European Mining Waste Directive, to the successful fundraise which should take the Project to production and positive cash flow. The construction of the Project is well underway and we look forward to delivering a significant new tungsten mine on budget and on schedule in Q3 2015".

The company's web site has time lapse photography showing both the processing plant site and mine site which can be seen at:

http://www.wolfminerals.com.au/hemerdon-tungsten-and-tin-project/live-stream :

Wolf Minerals Limited

(ABN: 11 121 831 472)

and Controlled Entities

Annual Report

CONTENTS

CORPORATE DIRECTORY...................................................................................................................................................... 1

CHAIRMAN'S LETTER............................................................................................................................................................ 2

DIRECTORS' REPORT.............................................................................................................................................................. 4

AUDITOR'S INDEPENDENCE DECLARATION.............................................................................................................. 22

DIRECTORS' DECLARATION............................................................................................................................................... 23

INDEPENDENT AUDITOR'S REPORT............................................................................................................................... 24

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME.............. 26

CONSOLIDATED STATEMENT OF FINANCIAL POSITION....................................................................................... 27

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY......................................................................................... 28

CONSOLIDATED STATEMENT OF CASHFLOWS.......................................................................................................... 29

NOTES TO THE FINANCIAL STATEMENTS................................................................................................................... 30

ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES........................................................................ 65

CORPORATE GOVERNANCE............................................................................................................................................... 67

Corporate Directory

NON EXECUTIVE CHAIRMAN

John Hopkins

EXECUTIVE MANAGING DIRECTOR

Russell Clark

NON EXECUTIVE DIRECTORS

Ronnie Beevor

Nick Clarke

Chris Corbett

Don Newport

Michael Wolley

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

Steinepreis 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

The 2014 financial year has been transformational for Wolf Minerals Limited ("Wolf" or "the Company") and your Board is very pleased with the progress made at Wolf's core project, the Hemerdon tungsten and tin project ("the Project") in Devon in the South West of England.

Your Board had a number of director changes during the year. Mr Humphrey Hale, Managing Director, resigned in October 2013 following many years with Wolf during which he identified the opportunity at Hemerdon and managed the Company through the definitive feasibility study, permitting applications, property purchases and access to debt funding. We are very proud of what Humphrey achieved during his tenure and wish him the best in his future endeavours.

Following Humphrey's resignation, the Board was very pleased to appoint Russell Clark as Managing Director in October 2013. Russell brings a wealth of operating and project development expertise as well as capital market experience gained during his tenure at Grange Resources and Azimuth Resources. Following a hand over with Humphrey, Russell has shown his capabilities as the project development has continued its momentum towards being a producing mine.

Mr Jim Williams retired in January 2014, after many years' service to the mining industry and almost 5 years on the Wolf Board. We wish him the very best in retirement and thank him for his valuable contribution to the Company in its early years.

Ronnie Beevor joined the Board in September 2013, as an independent director. As a professional director with extensive finance and banking experience, Ronnie brings a wealth of knowledge to the Board and is now the Chairman of the Audit, Risk and Compliance Committee and the Remuneration Committee.

Nick Clarke joined the Board in January 2014, as an independent director. Nick is a mining engineer based in London and brings excellent operating credentials as well as experience and contacts with brokers and investors in the London AIM market.

I'm sure you join me in welcoming the new directors to the Board and in thanking those who have provided valuable service in the past.

This year we have seen Wolf continue to take significant steps towards its goal of becoming a specialty metals producer. In December 2013, the Environment Agency (the "EA") in the UK issued its permit for the Mine Waste Facility. This is the first permit of its kind to be issued by the EA following the European Union's standards being included and is a credit to all those involved, both on the Company side and also on the EA side. To progress the project to a point where construction could take place a number of properties had to be purchased and the lease agreement with the Hemerdon Mining Association had to be finalised. These two steps were completed in February 2014 after which the EPC contractor, GR Engineering Services, was provided access to the site to start construction of the project.

Finalising the funding for the Hemerdon Project has been a key goal this year and we were very pleased to report in May that the necessary equity required to fund the Project through to positive cashflow had been raised. The Board takes this opportunity to thank all shareholders who took part in the fundraising, in particular RCF and Todd Corporation who subscribed for more than their pro-rata share, in what has been a difficult equity market in the resources sector. Wolf is very fortunate to have two large cornerstone shareholders who are very supportive of the Project and the future growth of the Company.

The world tungsten market remains strong with European APT prices currently trading at US$365 - 375 per mtu. Market conditions, particularly in the resources sector, 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 Project on stream.

Chairman's Letter (CONTINUED)

Your Board visited the Project site in July this year and were very happy with the progress being made and with our new employees who are making it happen. Our aim remains to bring the Project in on time and on budget in the third quarter of 2015.

Yours sincerely

John Hopkins

Non Executive Chairman

Directors' Report

Your Directors present their report on Wolf Minerals Limited ("Wolf" or "the Company") and its controlled entities ("the consolidated group") for the financial year ended 30 June 2014.

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

Russell Clark Executive Managing Director (commenced 16 October 2013)

Ronnie Beevor Non Executive Director (commenced 20 September 2013)

Nick Clarke Non Executive Director (commenced 7 January 2014)

Chris Corbett Non Executive Director

Don Newport Non Executive Director

Michael Wolley Non Executive Director

Humphrey Hale Executive Managing Director (resigned 16 October 2013)

Jim Williams Non Executive Director (resigned 7 January 2014)

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 activity of the consolidated group during the financial year was project development, conducted through the wholly owned subsidiary, 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 amounted to $3,731,574 (2013: $4,711,260).

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.

MANAGING DIRECTOR'S REVIEW OF OPERATIONS

As the Chairman has said, this year has been transformational for Wolf as we have moved development of the Hemerdon tungsten and tin project ("the Project") through the feasibility study and debt finance and into a fully funded construction project.

Site preparation

In December 2013, the last of the nearby properties that were required to be purchased as a condition of the Project's planning permission were bought and vacated. This was a challenging and stressful time for the occupants and our thanks to them for working with us in such a cooperative manner.

Also in December, the EA approved the Mine Waste Facility (the "MWF") environmental permit, the first of its type to be issued in the UK. This permit lays out the requirements for the engineering standards applicable to the facility, the remediation required during and after its construction and the various requirements for monitoring and relocating wildlife in the area, in particular a number of species of bats that have been found at the site. In addition, planning permission was received to relocate a number of footpaths and bridleways around the site - work that has since been undertaken, enhancing the standard of bridleways in the area.

Archaeological studies commenced last year have been finalised with some historical artifacts recovered from an area where tin streaming once occurred on the Project site.

In February 2014, the option for a lease over the Project area was exercised with the Hemerdon Mining Association, the representative group for the land owners. Once the lease was in place, work commenced on the site with the clearing of scrub ahead of the bird nesting season being the key priority.

DIRECTORS' REPORT (CONTINUED)

REVIEW OF OPERATIONS (continued)

GR Engineering Services ("GRES"), the West Australia based engineering company responsible for the design and construction of the Project, was given formal access to the site in February to start site clearance and levelling with CA Blackwell, the mining contractor who mobilised at the same time.

In March, the official ground breaking ceremony was held at the site with local dignitaries to commemorate the commencement of construction of the Project. This was an important event with many of our local community stakeholders in attendance and our thanks to Newnham Estate for hosting tea and scones afterwards.

The original concrete processing plant built in World War 1 has gradually been demolished, with resident bats relocated and the resultant concrete being crushed for use as road base in the future. The haul road joining the mining area to the MWF has been constructed enabling the construction of the MWF to commence, using waste rock from the mine site. The bitumen access road to the site was completed in May, allowing easy access to the site and avoiding mud and dirt from the site being distributed on the public roads surrounding the Project.

Financing

The documentation for project financing of £75m, incorporating a £70 million term loan facility and a £5 million bond facility was signed with UniCredit Bank AG, ING Bank N.V. and Caterpillar Financial SARL last year. The deal was recognised in February 2014 when the Company received the European Mining and Metals 2013 Deal of the Year.

In addition to the debt, the Company had to raise sufficient equity to repay a US$75 million bridging loan to Resource Capital Fund V LP ("RCF") and fund the remainder of the construction and commissioning costs.

In May, Wolf successfully completed a capital raise of A$182.9million (£99.2 million) through the issue of 609.7 million shares. Our cornerstone shareholders, RCF and Todd Corporation, contributed to the capital raise, subscribing for more than their pro-rata share and increasing their shareholding percentage as a result.

Funds that were received have been exchanged for the relevant currencies to minimise future exposure to changing foreign exchange rates during construction of the Project. Based on the capital cost estimate, forecast tungsten and tin prices, ore grade, throughput, recovery and ramp up assumptions the Project is now fully funded to positive cashflow - a major achievement in a time when the capital markets are not favourably inclined towards resource projects.

Construction activities

By the end of June, the processing plant site was levelled and major construction activities were underway. Structural concrete is well advanced and the lay down area for equipment has been filling rapidly. Over 150 employees and contractors were working at the site at year end. Structural steel erection will commence in August, and services such as power and water supply are well advanced.

In addition, the MWF footprint has been cleared of topsoil (stockpiled for future restoration projects), and the construction of the main retaining wall has commenced with the aim of completion by early 2015.

Time lapse photography and still photographs of the processing plant site and mine site are available on the Wolf web site.

Site team

The site management team has continued to grow as we head towards production next year. We have a very experienced but small group of project engineers, led by Rupert McCracken, overseeing GRES and ensuring that there is real focus for an on time and on budget delivery of the Project.

In addition the operations team has grown, led by Jeff Harrison, with operational readiness the key focus. We have been very fortunate to attract experienced professionals many of whom hail from nearby or who have worked at mining operations overseas and are taking the opportunity to return to the UK to work.

DIRECTORS' REPORT (CONTINUED)

REVIEW OF OPERATIONS (continued)

The Board takes this opportunity to thank Rupert and Jeff and their teams for the prolonged and dedicated effort they have put in to make the Project happen. The Project and our teams are well regarded in the local community, a result of frequent consultation and working to a very high standard.

Expectations for 2015

The next 12 months will continue to be a critical period for Wolf, with the core focus being an on time and on budget delivery of the Project. Our focus will also be on maintaining high safety and environmental standards as we continue to build the Project.

We expect to have the first stage of the MWF completed early in 2015 and commissioning of the processing plant to commence in the second quarter of the year. Our employee numbers will grow to approximately 200 and our mining contractor will take delivery of a brand new Caterpillar fleet of equipment with which to mine the pit.

We are looking for nearby opportunities to extend or enhance the Project and are in the process of drilling six diamond drill holes around the pit which will provide the information necessary for us to determine the optimum pit wall angles. This work is being undertaken with the view to increasing wall slopes which in turn would create additional reserves and mine life. We expect this work to be completed in the fourth quarter of this year.

As a relative newcomer to the company, I take this opportunity to thank our shareholders, the Board and our employees for their significant effort that will contribute to the first metal mine in England for 45 years being established. This is an incredibly exciting project that has local and national support, and the pride and energy at the site is palpable.

Environmental obligations

The Company has an extensive list of environmental legislation, regulations and guidelines that directly and indirectly apply to the activities of the Project.

The obligations have been captured and recorded in an Environmental and Social Management System ("ESMS"), along with other conditions the Company must comply with contained in individual permits and consents. The ESMS is regularly reviewed and updated resulting in an Environmental and Social Action Plan which is utilised by management to ensure compliance with environmental obligations and reporting.

The Company is aware of its environmental obligations with regards to its development activities and confirms that it complies with all regulations when carrying out any development work.

Significant changes in state of affairs

There were no significant changes in the state of affairs of the Group during the financial year, other than the changes in Directors and the $182.9million capital raise disclosed herein.

NOTES:

§ 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)

INFORMATION ON DIRECTORS (continued)

DIRECTORS' REPORT (CONTINUED)

INFORMATION ON DIRECTORS (continued)

INFORMATION ON COMPANY SECRETARY

DIRECTORS' REPORT (CONTINUED)

REMUNERATION REPORT - AUDITED

The names and positions held by 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 the Group and executives receiving the highest remuneration.

Remuneration policy

The remuneration policy of the Group has been designed to align key management personnel objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific short and long-term incentives based on key performance areas affecting the consolidated group's financial results. The Board 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.

DIRECTORS' REPORT (CONTINUED)

REMUNERATION REPORT - AUDITED (continued)

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 and is reviewed annually by the Remuneration Committee.

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

- All Non Executive Directors receive base fees and Committee fees (inclusive of superannuation).

- 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 Remuneration Committee's responsibilities include reviewing the Group's remuneration framework, evaluating the performance of the Managing Director and monitoring performance of the executive team.

Executive key management personnel

The performance of key management personnel is measured against criteria agreed annually with each executive and is based predominantly on key performance indicators ("KPIs") expected to provide maximum shareholder value. All bonuses and incentives are linked to predetermined performance criteria. The Board may, however, exercise its discretion in relation to approving incentives, bonuses and share based payments. 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 9.5% for 2015 (2014: 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. Options and performance rights are valued using the Black-Scholes methodology.

Non Executive Directors

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.

From 1 January 2014, the Board approved the introduction of Committee fees for Non Executive Directors for their membership of the following Board Committees:

- Remuneration Committee;

- Audit, Risk and Compliance Committee;

- Project Steering Committee.

The approved Committee fees (inclusive of superannuation) are $10,925 per annum for each Chairman and $5,463 per annum for each Committee member. The total base fees and Committee fees paid for the year ended 30 June 2014 did not exceed the shareholder approved limit of $600,000.

DIRECTORS' REPORT (CONTINUED)

REMUNERATION REPORT - AUDITED (continued)

The Non Executive Director remuneration packages (inclusive of superannuation) from 1 January 2014 are as follows:

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.

Short term incentives

During the year the Board introduced a Short Term Incentive Plan ("STI") for executive and senior management personnel. The STI measurement is to be based on KPIs that are set and agreed each year by the Remuneration Committee and the Board.

Based on individual and Company performance, the STI will be paid in cash on a pro-rata basis of the fixed salary remuneration, as follows:

The Remuneration Committee has identified 2015 as a significant year of change for the Group as it moves to complete the Project and generate positive cashflows. As such, the Remuneration Committee believes that a larger STI would be more appropriate in aligning performance with the Group's goals.

In addition to the STI above, the Board also introduced a separate STI for the senior construction management, focused on the successful completion of the Project in 2015. The construction STI will be paid in cash on a pro rata basis of the fixed salary remuneration, as follows:

DIRECTORS' REPORT (CONTINUED)

REMUNERATION REPORT - AUDITED (continued)

Long term incentives

There was no Long Term Incentive Plan ("LTI") in place for the year ended 30 June 2014; however the Board is currently formalising the proposed LTI arrangements as announced for the Managing Director on 29 July 2014.

Under the proposed LTI, the Managing Director and senior managers are provided with performance rights based on a pro rata of their fixed salary remuneration at the date of grant, vesting over defined periods, subject to the attainment of the LTI assessment criteria which are as follows:

- 50% calculated on the Company's relative performance to a peer group of companies, being the AIM Basic Resources Index; and

50% based on the Company achieving absolute Total Shareholder Return ("TSR") targets; where TSR is an annualised percentage change that incorporates both share price appreciation and dividends paid.

The proposed target LTI eligible for the next two financial years is as follows:

Under the proposed LTI, two tranches will be granted in 2015 to acknowledge performance to date on the Project. Tranche 1 will be calculated based on the employee's fixed salary remuneration for the 2014 financial year. Tranche 2 will be calculated based on the employee's fixed salary remuneration for the 2015 financial year.

The Remuneration Committee has identified 2015 as a significant year of change for the Group as it moves to complete the Project and generate positive cashflows. As such, the Remuneration Committee believes that a larger STI would be more appropriate in aligning performance with the Group's goals. This has resulted in Tranche 2 of the LTI being temporarily reduced in the 2015 financial year.

The proposed LTI for the Managing Director is subject to shareholder approval and will be included in the notice of meeting for the 2014 Annual General Meeting.

Key management personnel employment policy

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, Russell Clark, and other key management personnel are formalised in contracts of employment. All key management personnel are permanent employees of Wolf Minerals Limited, except for Jeff Harrison who is employed by Wolf Minerals (UK) Limited, a wholly owned subsidiary.

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

1 Russell Clark commenced on 16 October 2013.

2 Ronnie Beevor commenced on 20 September 2013.

3 Nick Clarke commenced on 7 January 2014

4 Chris Corbett's remuneration is paid to RCF Capital Funds Management Pty Ltd. Mr Corbett is Resource Capital Fund V LP's representative director on the Board.

5 Michael Wolley's remuneration is paid to TTI (NZ) Limited. Mr Wolley is TTI (NZ) Limited's representative director on the Board.

6 Humphrey Hale resigned on 16 October 2013. Salary and fees includes $154,322 of annual and long service leave entitlements paid out upon resignation.

7 Humphrey Hale received a payment of 3 months salary and superannuation upon ceasing employment with the Company in accordance with the terms of his employment contract. The total termination payments to Humphrey Hale did not exceed the statutory limit for such payments.

8 Jim Williams resigned on 7 January 2014.

9 Jeff Harrison commenced as a director of Wolf Minerals (UK) Limited on 14 April 2014. Prior to this he was not considered as key management personnel as defined in AASB 124 Related Party Disclosures.

DIRECTORS' REPORT (CONTINUED)

REMUNERATION REPORT - AUDITED (continued)

(a) Key management personnel remuneration (continued)

Performance income as a proportion of total income

For the year ended 30 June 2014, an assessment was made of performance against the agreed KPIs and STI payments totalling $227,690 were approved by the Remuneration Committee and the Board and paid in cash, with the following amounts paid to key management personnel:

Russell Clark $99,400

Richard Lucas $43,107

Jeff Harrison $32,194

Also during the year, prior to the introduction of the STI, Mr Hale was paid a cash bonus of $350,000 approved by the Remuneration Committee and the Board in its discretion for performance over the past two years in progressing the Company's objectives.

(b) Options and performance rights issued as part of remuneration for the year ended 30 June 2014

During the year, prior to the introduction of the STI, the issue of 147,000 performance rights was approved by the Remuneration Committee and the Board in its discretion for performance over the past two years in progressing the Company's objectives. The rights were issued to the following key management personnel:

Number Value

Rupert McCracken 58,800 $20,874

Richard Lucas 58,800 $20,874

Jeff Harrison 29,400 $10,437

The rights have been valued at the price of Wolf Minerals Limited Ordinary Shares on the date of issue being $0.355. Refer to the Options and rights holding table below for further details.

(c) Shares issued on exercise of compensation options and rights

There were 147,000 rights granted as compensation exercised during the year ended 30 June 2014. The rights were granted on 23 December 2013 and were exercised on 8 May 2014. Refer to the Shareholdings table below for further details.

(d) Shareholdings

The Net Change Other reflected above includes participation in the capital raise completed on 21 May 2014 and on-market purchases.

DIRECTORS' REPORT (CONTINUED)

REMUNERATION REPORT - AUDITED (continued)

(d) Shareholdings (continued)

The Net Change Other reflected above includes on-market purchases.

(e) Options and rights holdings

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

1 Jeff Harrison commenced as a director of Wolf Minerals (UK) Limited on 14 April 2014. Prior to this he was not considered as key management personnel as defined in AASB 124 Related Party Disclosures.

2 Performance rights issued as part of remuneration.

DIRECTORS' REPORT (CONTINUED)

REMUNERATION REPORT - AUDITED (continued)

(f) Additional information

Performance over the Past 5 Years

The objective of the LTI program is to reward and incentivise executives in a manner which aligns with the creation of shareholder wealth. The Company's performance over the 2014 financial year and the previous four financial years are tabulated below:

END OF REMUNERATION REPORT - AUDITED

DIRECTORS' REPORT (CONTINUED)

Meetings of Directors

The numbers of meetings of the Company's Board of Directors and of each Board Committee held during the year ended 30 June 2014, and the numbers of meetings attended by each Director were:

1 Russell Clark commenced on 16 October 2013.

2 Ronnie Beevor commenced on 20 September 2013.

3 Nick Clarke commenced on 7 January 2014.

4 Humphrey Hale resigned on 16 October 2013.

5 Jim Williams resigned on 7 January 2014.

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 $2,644 for each Director.

- John Hopkins

- Russell Clark

- Ronnie Beevor

- Chris Corbett

- Nick Clarke

- Don Newport

- Michael Wolley

- Humphrey Hale

- Jim Williams

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 options or rights are as follows:

No person entitled to exercise an 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 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.

No remuneration for non-audit services was paid to the external auditors during the year ended 30 June 2014.

Auditor's Independence Declaration

The lead auditor's independence declaration for the year ended 30 June 2014 has been received and can be found on page 22 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 9 September 2014 by the Directors of the Company.

_____________________________

Russell Clark

Director

Date: 9 September 2014

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 2014 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

9 September 2014

West Perth,

Western Australia

Directors' Declaration

The Directors of the Company declare that:

1. The financial statements and notes, as set out on pages 26 to 66, 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 2014 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.

_____________________________

Russell Clark

Director

Date: 9 September 2014

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 (the company), which comprises the consolidated statement of financial position as at 30 June 2014, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated 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 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 company'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 company'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 consolidated entity's financial position as at 30 June 2014 and of its 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 indicates that the consolidated entity incurred a net loss of $3,731,574 during the year ended 30 June 2014, and will need to generate positive cash flows from the Hemerdon tungsten and tin project to repay its debt funding facilities. These conditions along with other matters as set forth in Note 1, indicates the existence of a material uncertainty that may cast doubt about the consolidated entity's ability to continue as a going concern and therefore the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business.

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 12 to 19 of the directors' report for the year ended 30 June 2014. 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 2014, complies with section 300A of the Corporations Act 2001.

PKF MACK & CO

SIMON FERMANIS

PARTNER

9 SEPTEMBER 2014

WEST PERTH,

WESTERN AUSTRALIA

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

The accompanying notes form part of these financial statements.

These financial statements are presented in Australian dollars being the Group's functional and presentation currency.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2014

The accompanying notes form part of these financial statements.

These financial statements are presented in Australian dollars being the Group's functional and presentation currency.

CONSOLIDATED Statement Of Changes In Equity

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

The accompanying notes form part of these financial statements.

These financial statements are presented in Australian dollars being the Group's functional and presentation currency.

CONSOLIDATED Statement Of Cashflows

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

The accompanying notes form part of these financial statements.

These financial statements are presented in Australian dollars being the Group's functional and presentation currency.

Notes To ThE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

This financial report includes the consolidated financial statements and notes of Wolf Minerals Limited and its 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 9 September 2014. The Board has the power to amend and reissue the financial statements.

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 if applicable:

· 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.

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.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are set out in Note 1 (b). Estimates and assumptions are continually evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets and liabilities affected in future periods.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Note 1: Statement of Significant Accounting Policies (continued)

Going Concern

The accounts have been prepared on a 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 after tax of $3,731,574 for the year ended 30 June 2014 (2013: $4,711,260).

The Company has arranged a funding package for the Group of £75 million (refer note 16) which has enabled commencement of the 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 equity raised as part of the successful capital raise completed on 21 May 2014. The Group intends to utilise its current cash holding before drawing down on the Senior Secured Loan facility (refer note 16). The Group is fully financed to positive cashflows.

At the date of approval of these accounts, and based upon the budgeted levels of expenditure and Board approved cash flow forecasts, the Directors are satisfied that the Group has sufficient cash and loan facilities to finance the Group's operating expense and the development of the Project. The Directors believe it is appropriate to prepare these accounts on a going concern basis.

Accounting Policies

a. Principles of Consolidation

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by the Consolidated Entity as at 30 June 2014 and the results of all controlled entities for the year then ended.

Subsidiaries are all those entities over which the Consolidated Entity has control. The Consolidated Entity controls an entity when the Consolidated Entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the 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.

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.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Note 1: Statement of Significant Accounting Policies (continued)

b. 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 investments in and loans to subsidiaries

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

(iii) Estimated impairment of mine development assets (Note 13)

The Company tests annually whether the mine development asset has suffered any impairment. The recoverable amount of the cash generating unit ("CGU") has been determined based on value in use calculations which require the use of estimates and assumptions such as long-term commodity prices, discount rates, operating costs, future capital requirements and mineral resource estimates (see below). These estimates and assumptions are subject to risk and uncertainty and therefore there is a possibility that changes in circumstances will impact the recoverable amount. The Project is the Group's only CGU.

In assessing the carrying amounts of its Mine Development asset at the Project, the Directors have used an updated financial model based upon the original Definitive Feasibility Study prepared by the Parent Entity in conjunction with a number of independent experts. The study has been approved by the Directors.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Note 1: Statement of Significant Accounting Policies (continued)

b. Significant Accounting Estimates, Judgments and Assumptions (continued)

(iii) Estimated impairment of mine development assets (Note 13) (continued)

The assessment period used in the model is the anticipated life of the mine of 9.25 years plus the period for construction and preparation for full production. Tungsten revenues have been estimated over that period at a price of US$360/mtu. Tin revenues have been estimated over that period at a price of US$22,000/tonne. These conservative estimates are based on, and are consistent with, external sources of information. The calculation assumes average annual tungsten and tin production of 345,000mtu and 460 tonnes respectively. Total capital expenditure is estimated at £123 million with a life of mine operating cost, after tin credits, of US$109/mtu. The model assumes that future applications to extend the planning permission will be approved. Royalties have been calculated at 2% of gross sales revenues and corporate income tax at 23%, reducing to 21% by 2014, according to the relevant laws in the United Kingdom. A discount rate of 8% has been utilised. Based on the calculations, the net present value after the recoupment of capital costs of the Project is positive therefore no impairment has been recorded.

The recoverable amount is not sensitive to reasonably possible changes in the key assumptions which would cause the carrying amount to exceed the recoverable amount.

(iv) Mine environmental rehabilitation and restoration provision (Note 15)

Rehabilitation costs will be incurred by the Group at the end of the operating life of the Project. The Group assesses its rehabilitation provision at each reporting date. The ultimate rehabilitation costs are uncertain and cost estimates can vary in response to various factors, including estimates of the extent and costs of rehabilitation activities, regulatory changes, inflation rates and changes in discount rates. These uncertainties may result in future actual expenditure differing from the amounts currently provided and there could be significant adjustments to the provisions established which would affect future financial results. The provision as at 30 June 2014 represents management's best estimate of the present value of future rehabilitation costs required.

(v) 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.

c. 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.

d. Receivables

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

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Note 1: Statement of Significant Accounting Policies (continued)

e. 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 ife.

Plant and equipment

Plant and equipment are measured on the cost basis.

The cost of fixed assets constructed within the 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 Group 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.

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.

f. 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 Group 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.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Note 1: Statement of Significant Accounting Policies (continued)

f. Exploration and Evaluation Assets (continued)

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.

g. 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 construction 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.

h. Financial Instruments

(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.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Note 1: Statement of Significant Accounting Policies (continued)

h. Financial Instruments (continued)

(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 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.

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.

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.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Note 1: Statement of Significant Accounting Policies (continued)

i. 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 (h) (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 (h) (iii) available for sale financial assets.

j. 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.

k. 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.

(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.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Note 1: Statement of Significant Accounting Policies (continued)

k. Impairment (continued)

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

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.

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.

The Group recognises a restoration and rehabilitation provision where it has a legal and constructive obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. The nature of these restoration activities includes dismantling and removing structures; rehabilitating the mine; dismantling operating facilities; and restoring, reclaiming and revegetating affected areas.

On initial recognition, the present value of the estimated costs is capitalised by increasing the carrying amount of the related mining asset to the extent that it was incurred as a result of the development or construction of the mine. Any changes to or additional rehabilitation costs are recognised as additions or charges to the corresponding asset and rehabilitation liability when they occur.

Over time, the discounted liability is increased for the change in present value based on the discount rate that reflects current market assessments and the risks specific to the liability. The annual unwinding of the discount is recognised in profit or loss as part of finance costs.

The Group does not recognise the deferred tax asset in respect of the temporary difference on the rehabilitation liability nor the corresponding deferred tax liability in respect of the temporary difference on the rehabilitation asset.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Note 1: Statement of Significant Accounting Policies (continued)

m. Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use (a qualifying asset) are capitalised as part of the cost of the respective asset until the asset is substantially ready for its intended use. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Where funds are borrowed specifically to finance a project, the amount capitalised represents the actual borrowing costs incurred under the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating borrowing costs over the relevant period. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

n. Contributed Equity

Ordinary shares are classified as equity.

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

o. EPS

Basic earnings per share

Basic earnings per share is determined by dividing the net profit after income tax attributable to members of the Group, 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.

p. 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.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Note 1: Statement of Significant Accounting Policies (continued)

p. Foreign Currency Transactions and Balances (continued)

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.

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. These differences are recognised in the statement of comprehensive income in the period in which the operation is disposed.

q. Current/Non-current Classification

Assets and liabilities are presented in the statement of financial position based on current and non-current classification.

An asset is current when: it is expected to be realised or intended to be sold or consumed in normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within twelve months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current.

A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within twelve months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

r. 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.

s. Employee Benefits

(i) 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.

(ii) 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.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Note 1: Statement of Significant Accounting Policies (continued)

s. Employee Benefits (continued)

(iii) Superannuation

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

(iv) 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.

t. Equity-settled Compensation

The group operates equity-settled share-based payment employee share option and performance rights 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 takes into account the exercise price, the term of the option or right, the vesting and performance criteria, the impact of dilution, the non-tradable nature of the option or right, 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 or right. The number of share option and performance rights 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.

u. Income Tax

The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:

- When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or

- When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date.

Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Note 1: Statement of Significant Accounting Policies (continued)

u. Income Tax (continued)

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entity's which intend to settle simultaneously.

v. 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.

w. Comparative Figures

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

x. 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 2014

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)