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

CORPORATE DIRECTORY

NON-EXECUTIVE CHAIRMAN

John Hopkins OAM

EXECUTIVE MANAGING DIRECTOR

Russell Clark

NON-EXECUTIVE DIRECTORS

Ronnie Beevor

Nick Clarke

Chris Corbett

Don Newport

Michael Wolley

ALTERNATE DIRECTOR

William Goodwin

(Alternate Director for Mr Wolley)

CHIEF FINANCIAL OFFICER

Richard Lucas

JOINT COMPANY SECRETARIES

Richard Lucas

Pauline Carr

PRINCIPAL & REGISTERED OFFICE

Level 3, 22 Railway Road

SUBIACO WA 6008

AUDITORS

PKF Mack

Level 4, 35 Havelock Street

WEST PERTH WA 6005

LAWYERS

Steinepreis Paganin

Level 4, 16 Milligan Street

PERTH WA 6000

SHARE REGISTER

Security Transfer Registrars Pty Ltd

770 Canning Hwy

APPLECROSS WA 6153

UK DEPOSITORY

Computershare Investor Services PLC

The Pavilions, Bridgwater Road

Bristol BS99 6ZZ

SECURITIES 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

Chairman's Letter

Dear shareholder

It's with a great sense of achievement that I write to you in this Annual Report.

The 2015 financial year has been another transformational one 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") where construction has been completed on schedule and within the budget.

This is a significant achievement and management is congratulated on its efforts to produce this result, and to produce it safely whilst also working successfully with the critical aspects of environmental management and community engagement.

Commissioning of the processing plant is nearing completion, with successful tungsten concentrate production achieved. The subsequent throughput test is underway and the processing plant is expected to be transferred across to Wolf in September 2015. The processing plant will now be gradually ramped to full production, expected in early 2016. 

Whilst the construction of the project has been the primary focus, the Company has also been exploring ways to increase shareholder value, with two initiatives in particular achieving this aim in the last year.

In late 2014, geotechnical drilling was undertaken around the perimeter of the open pit at Drakelands, to better understand the composition of the wall rocks, with a view to steepening the pit walls and accessing more ore. The work was successful and as a result a deeper pit, with steeper walls, has been designed and the ore reserves were increased by 9.5 million tonnes or 34% - a significant increase.

The second initiative considered the operating hours that the processing plant is permitted to work under the planning permission issued in the 1980's in which operating hours were restricted to 5 ½ days per week. Management has worked closely with the Devon County Council and the local Parish Councils and reached agreement that a 6 month trial of 7 days per week operation be undertaken, with a view to continuing this if regulatory requirements, particularly concerning noise, are met.

A 7 days per week operation will result in a better environment to commission the processing plant, where continuous operations are preferable. A continuous operation also has the potential to lift production capability of the mine by around 25% - a very significant increase that would make Drakelands one of the biggest tungsten mines in the western world.

Like many commodity markets, the tungsten market has softened during the course of the last 12 months. Demand from some sectors and countries, such as the automotive industry in Europe and Japan, was steady. However the economic slowdown in China and fall in the oil price, resulted in a reduction in manufacturing and drilling activities globally and reducing the need for tungsten tools and drill bits. On the supply side, unlike some commodity markets such as coal, iron ore and oil, very limited new supply has entered the market in the last year and no substantial new supply, other than Wolf's production, is expected in the coming year.

The fundamentals for the tungsten market remain strong, with demand expected to consolidate and grow, and limited new supply coming to market. The Board remains confident that the tungsten market will strengthen and that Wolf will be well placed when it does, being potentially one of the biggest tungsten producers in the western world.

On behalf of the Board I thank our Managing Director, Russell Clark, and his senior management team Richard Lucas, Rupert McCracken and Jeff Harrison for their tireless efforts to make the Project a reality.

I also take this opportunity to thank our shareholders for their continuing support of the Company and of the Project. The Company raised equity in March of last year at $0.30 per share (16.3p) and it's gratifying to see that Wolf is one of the few resource stocks that has seen its share price rise over the past 12 months.

Chairman's Letter (CONTINUED)

I wrote last year that our aim was to bring the Project in on time and on budget by the third quarter this year. Management has delivered and we look forward to opening the first new metal mine in the United Kingdom for over 45 years in September this year - a terrific achievement.

Yours sincerely

John Hopkins OAM

Non Executive Chairman

Directors' Report

Your Directors present their report on Wolf Minerals Limited ("Wolf" or "the Company") and its controlled entities ("the Group") for the financial year ended 30 June 2015.

DIRECTORS

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

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 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 Group's principal activities during the year.

Operating results

The consolidated loss of the Group after providing for income tax amounted to $8,761,962 (2014: $3,731,574).

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

This year has been another very busy and productive one as we have worked our way through the construction of the Project and into initial production at what is the United Kingdom's first new metal mine in over 45 years.

Corporate Social Responsibility (CSR)

Wolf's values emphasise the importance of safety, the environment and community engagement and it is very pleasing to report advances in all areas.

The site has regularly had over 500 people working at it on a daily basis for the past 12 months, and management of safety has been core. The Lost Time Injury Frequency Rate ("LTIFR") dropped from 13 to 3 over the year, whilst the Total Recordable Injury Frequency Rate ("TRIFR") dropped from 27 to 6, emphasising the success the Company has had in conveying the safety standards required at the site to employees and contractors. The Mining Contractor, CA Blackwell, completed the year without a medical treatment or lost time injury - an excellent achievement given the amount of mobile equipment that has been working at the site. Random drug and alcohol testing has been introduced to the site, with very few issues.

The environmental obligations at the Project site are many and varied, and the team is to be congratulated on meeting the various environmental requirements on schedule and ahead of the commissioning date. These have included noise, dust and water monitoring regimes, the Environment Agency ("EA") approval to commission the Mining Waste Facility, the planting of over 40,000 trees, the building of bat shelters and eel races and the construction of dry stone walls around the site.

Of particular note is the ISO 14001 certification of the site - this recognises that the necessary environmental management systems are in place, which in turn provides comfort to the EA and our local stakeholders.

DIRECTORS' REPORT (CONTINUED)

REVIEW OF OPERATIONS (continued)

Corporate Social Responsibility (CSR) (continued)

We take the proximity of our nearest neighbours very seriously and have two villages, Hemerdon and Sparkwell, within a kilometre of the site. We regularly attend local Parish Council meetings and endeavour to engage with the communities whenever appropriate. To that end there have been a number of open days where the Company has provided bus tours around the site, and these have been particularly well attended with excellent feedback. The Company has also helped with a number of local causes, such as providing defibrillators for each of the village halls. It was particularly pleasing to see the support of the Parish Councils for Wolf to move its operations to 7 days per week, rather than the 5 ½ days per week that was envisaged in the original planning permission. This will initially be for a 6 month trial period, and emphasises the goodwill that exists.

Construction

The primary focus for the year has been the construction of the Project, including the processing plant, the Mining Waste Facility, the laboratory and administration buildings and the necessary power and water infrastructure required at the site.

GR Engineering Services ("GRES") has had an EPC (fixed term, fixed price) contract to build the processing plant. The design of the plant was completed in Australia by GRES, which has since been using English sub-contractors to build the plant. Despite the challenges of an English winter the plant was completed safely, on time, and on budget, with first ore fed into the plant in June this year as part of the wet commissioning process. Following successful commissioning of the processing plant, tungsten concentrate production has commenced.

CA Blackwell constructed the Mining Waste Facility, built from waste rock from the mine to hold the waste material generated by the processing plant. The capacity of the Mining Waste Facility will be increased over the life of the mine, but it was critical that the first stage was completed on schedule to allow for the EA approval processes ahead of commissioning the facility. It is a credit to the team that, despite difficult conditions in the winter, the first stage was completed in time.

SGS is providing laboratory services to the project and again it was critical that the laboratory be built, equipped and manned in time for commissioning. This was achieved with some experienced chemists previously working in Plymouth, joining the Wolf team.

The administration building has been built and occupied, bursting at the seams initially as many or our new employees undertook various training modules. With the management and administration team now established at the mine site, the Plymouth office that was previously being used has been vacated.

Water and power supply is critical to a mine site, and again the team has delivered a number of water storage facilities, dams and ponds, required for water storage and storm water mitigation to manage dirty water generated on the site during storm events.

Ground was broken at the site in March 2014 when construction began. At the end of June 2015, the construction of the site, with all of its various components, was completed allowing commissioning to commence on schedule, a terrific achievement.

Site Team

As we have built the project we have had to hire a new workforce, and establish the culture that we want for the Company as we head into operations and commercial production. Wolf employs 110 people directly, and has been fortunate to have had more than enough suitably qualified applicants for the various roles that were available. We are very pleased with the team we have put together and I am confident that they will continue to deliver on our promises.

DIRECTORS' REPORT (CONTINUED)

REVIEW OF OPERATIONS (continued)

Corporate

The corporate team remains based in Perth, Western Australia, but travels regularly to London and Plymouth as required. Wolf is listed on the ASX, as well as the London AIM exchange and our major shareholders are based in Australia. The team has been enhanced with the addition of a General Manager, Business Development, who will focus on managing arrangements with existing offtake partners and maximising the value of our production streams. Our focus has been on getting the Project built and producing, ahead of looking for other opportunities in the specialty metals sector, with a view to Wolf expanding beyond a single asset company.

Expectations for 2016

As I have explained, the construction of the Project site is complete. Our initial focus in the 2016 financial year will be to complete handover of the processing plant, and then to ramp the throughput up from a 50% level to 100% over a period of 6 months, with full production scheduled for early calendar 2016. In addition, we will concentrate on ensuring that tungsten and tin recoveries are as or better than planned, and that our products meet the required specification. First delivery of tungsten concentrates to our two offtake partners Global Tungsten & Powders and Wolfram Bergbau und Hutten is scheduled for September 2015.

The site has permission to undertake a 6 month trial of 7 day per week operations. It is our goal to have this continue, which has the potential to increase the production of tin and tungsten concentrates by approximately 25%, adding significant shareholder value. We will be working with Devon County Council and the local Parish Councils with the aim of achieving this goal by the end of 2015.

In addition we are working with the Devon County Council to extend the planning permission expiry date, to accommodate the increase in the ore reserves achieved earlier this year.

The development of the Mining Waste Facility capacity to meet production requirements over the life of mine is essential and has been scheduled in advance to minimise working during the winter months. As part of this development, the Lee Moor road which runs along the bottom of the site will have to be relocated and this work will commence in the September quarter, with the aim of completing it within 12 months.

Whilst we are very fortunate to have established and well credentialed customers for our tungsten and tin concentrates, the potential to work 7 days per week in the processing plant provides an opportunity to increase our concentrate production significantly. As we produce on specification concentrates we will be looking to broaden our customer base and further develop our understanding of the tungsten market.

It's been an absolute pleasure to be leading the very capable Wolf team over the past 12 months and I congratulate them, and our contractors, on a job well done. I feel very confident that we will continue to deliver on our promises and that with a buoyant tungsten price, Hemerdon will be a very successful Project.

DIRECTORS' REPORT (CONTINUED)

RESERVES AND RESOURCES STATEMENT 2015

The 2015 Ore Reserves and Mineral Resources of Wolf Minerals Limited are summarised in the table below along with the 2014 Ore Reserves and Mineral Resources for comparison.

All figures reported above a 0.063% W03 cut-off, table subject to rounding errors.

The information in the table above was drawn from the following ASX Releases:

All Mineral Resources and Ore Reserves have been estimated based upon the most up to date information and knowledge available at the time. The Resource and Reserve statements and their accompanying explanatory notes can be viewed at: www.wolfminerals.com.

Hemerdon 2015 Ore Reserves and Mineral Resources Estimate Summary

The 2015 Ore Reserve is 35.7Mt at 0.18% WO3 and 0.03% Sn (reported above a 0.063% WO3 cut-off), and is a 34% increase on the previous Ore Reserve reported in the Definitive Feasibility Study ("DFS") in 2011. It comes as a result of a six hole geotechnical drilling program which targeted the perimeter of the open pit, completed in Q4, 2014 (refer to the announcement dated 1 December 2014). The program has been successful and concluded that the pit walls can be steepened. This has resulted in a pit design revision that takes the pit floor approximately 65 metres deeper, increasing the Ore Reserves by 34% as shown in the table above. This equates to a 34% increase in mine life or around three years (assuming a five and a half day working week).

The geotechnical report was prepared by Mr Ricky Collins of SLR Consultants. SLR has particular expertise in the geotechnical investigation, analysis and design of rock slopes of mines, tips, landfills and dams. Mr Collins is a Technical Director of SLR with over 25 years' experience with mine waste management and geotechnics, focusing on the stability analysis of both soil and rock slopes.

The increase in pit depth is such that it extends into Inferred material below the bottom of the majority of the drill holes in the deposit. As such the current pit design includes granite mineralisation that cannot be reported as Ore Reserves under JORC 2012 guidelines. However, Wolf intends to undertake additional work to increase the confidence of the resource at depth, resulting in the potential to further increase the 2015 Ore Reserves detailed above and further extend the mine life.

DIRECTORS' REPORT (CONTINUED)

RESERVES AND RESOURCES STATEMENT 2015 (continued)

The 2015 revised Ore Reserve is based on work done by Mr Rick Taylor, who is a Chartered Professional Member of The Australasian Institute of Mining and Metallurgy. Mr Taylor is a full time employee of Wolf Minerals Limited, and takes responsibility for the Ore Reserves. He has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for reporting of Exploration Results, Mineral Resources and Ore Reserves" (JORC, 2012). Mr Taylor consents to the inclusion of the above table based on his information in the form and context in which it appears.

The 2015 Ore Resource is 145.2Mt at 0.15% W03 and 0.02% Sn (reported above a 0.063% WO3 cut-off) and is a 64% drop in tonnage due to the criteria required by JORC for the "prospect for eventual economic extraction". The historic metallurgical testwork indicated that recovery of tungsten within the Killas (the meta-sedimentary rocks surrounding the granite body) was possible. However, no further testwork has been completed at this time. Accordingly, Wolf currently considers it prudent to exclude the Killas hosted mineralisation from the resources, to be revisited in the future. Therefore only the granite portion of the resource has been considered.

Once the mine is operational Wolf will look at the metallurgical opportunities available with the Killas, such that it may be available to be included in future Mineral Resource Estimates.

To date, there has been no new data relevant to the resource since the original 2010 estimation and the broader mineral inventory remains unchanged.

In order to establish the conformity of the current resource with JORC Code 2012, SRK prepared the Table 1 of the Code (Checklist of Assessment and Reporting Criteria), which shows that all aspects of the resource estimation were covered in 2010.

The 2015 revised Ore Resource is based on work done by Mr Daniel Guibal, who is a Chartered Professional Fellow of The Australasian Institute of Mining and Metallurgy. Mr Guibal is employed by SRK Consulting and takes responsibility for the Mineral Resource Estimate. He has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for reporting of Exploration Results, Mineral Resources and Ore Reserves" (JORC, 2012). Mr Guibal consents to the inclusion of the table above based on his information in the form and context in which it appears.

CORPORATE GOVERNANCE

Wolf Minerals Limited and its controlled entities are committed to robust corporate governance practices which are appropriate to its size and life stage and which facilitate the Group's long term performance and sustainability as well as protect and enhance the interests of our shareholders and other stakeholders.

We regularly review our governance arrangements and monitor developments in market practice, expectations and regulation.

The Group supports the 3rd Edition of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations and has prepared a Corporate Governance Statement which discloses the extent to which the Company has followed these recommendations.

A copy of the Corporate Governance Statement can be found on the Company's website at http://www.wolfminerals.com.au/irm/content/corporate-governance.aspx

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)

DIRECTORS' REPORT (CONTINUED)

INFORMATION ON COMPANY SECRETARIES (continued)

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 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 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 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 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.

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 or Monte Carlo 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 Group. However, on 21 November 2014 shareholders approved a Directors' Share Plan whereby Non Executive Directors will receive a fixed component of their fees in the form of fully paid Wolf shares. The Directors' Share Plan was designed to retain cash reserves and better align Non Executive Directors' remuneration with the performance of the Group.

The total base fees and Committee fees paid for the year ended 30 June 2015 did not exceed the shareholder approved limit of $800,000.

DIRECTORS' REPORT (CONTINUED)

REMUNERATION REPORT - AUDITED (continued)

The Non Executive Director remuneration packages (inclusive of superannuation) from 1 March 2015 are as follows:

Performance-based remuneration

The Company is a 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

The Company has a Short Term Incentive Plan ("STI") in place for executive and senior management personnel. The STI measurement is 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 had adjusted the size of the STI in response to the Group transitioning into a producer during 2016. A corresponding increase in the LTI ensures that management are aligned with shareholder's interest in building a profitable and consistently performing operation.

In addition to the STI above, there is 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

During the year the Board formalised arrangements to implement a Long Term Incentive Plan ("LTI").

Under the LTI, the Board may grant eligible Wolf employees' rights, known as Performance Rights, which "vest" into Wolf shares at a later date, subject to the satisfaction of performance conditions ("Vesting Conditions") and the conversion of Performance Rights into shares. The Vesting Conditions relate to the relative share price performance versus the AIM Basic Resources Index (for 50% of the rights) and the Total Shareholder Return performance over the vesting period (for 50% of the rights).

The Wolf Board of Directors has ultimate discretion in determining the issue of Performance Rights and other securities under the Company Performance Rights Plan.

The proposed target LTI for the next financial year is as follows:

The proposed LTI for the Managing Director is subject to shareholder approval and will be included in the notice of meeting for the 2015 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 2015, an assessment was made of performance against the agreed KPIs. Payments totalling $391,692 were approved by the Remuneration Committee and the Board to be paid in cash, with the following amounts being paid to key management personnel:

Russell Clark $214,682

Richard Lucas $97,100

Jeffrey Harrison $79,910

(b) Performance rights and options issued as part of remuneration for the year ended 30 June 2015

During the year the Company issued performance rights to executive management under the LTI plan. Two tranches were granted in 2015 to acknowledge performance to date on the Project. Tranche 1 was calculated based on the employee's fixed salary remuneration for the 2014 financial year. Tranche 2 was calculated based on the employee's fixed salary remuneration for the 2015 financial year. The rights were issued to the following key management personnel:

Performance rights

The rights have been valued using the Monte Carlo valuation method. The total value of the performance rights will be recognised in the statement of profit or loss and other comprehensive income on a pro-rata basis over the life of the respective performance rights.

Options

Number Value

Rupert McCracken 850,000 $9,795

The options have been valued using the Black Scholes pricing model.

Refer to Note 23 for further information on the valuation of the rights and options.

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

There were no performance rights or options granted as compensation exercised during the year ended 30 June 2015.

DIRECTORS' REPORT (CONTINUED)

REMUNERATION REPORT - AUDITED (continued)

(d) Shareholdings

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

Mr Goodwin held no shares at 30 June 2015 nor had he owned any during the year.

(d) Options and rights holdings

DIRECTORS' REPORT (CONTINUED)

REMUNERATION REPORT - AUDITED (continued)

(e) Options and rights holdings (continued)

1 Performance rights and options issued as part of remuneration.

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

Key management personnel who do not hold any options at 30 June 2015 nor have held any during the year are not included in the above tables.

(f) Additional information

Performance over the Past 5 Years

The objective of the LTI plan is to reward and incentivise executives in a manner which aligns with the creation of shareholder wealth. The Company's performance over the 2015 financial year and the previous four financial years is 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 2015, and the numbers of meetings attended by each Director were:

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

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.

Significant changes in state of affairs

There were no significant changes in the state of affairs of the Group during the financial year.

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.

Auditor's Independence Declaration

The lead auditor's independence declaration for the year ended 30 June 2015 has been received and can be found on page 25 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 16 September 2015 by the Directors of the Company.

Russell Clark

Director

Date: 16 September 2015

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 2015 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

16 September 2015

West Perth,

Western Australia

Directors' Declaration

The Directors of the Company declare that:

1. The financial statements and notes, as set out on pages 29 to 67, 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 2015 and of the performance for the year ended on that date of the Company and Consolidated Entity;

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: 16 September 2015

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 2015, 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 2015 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 after tax of $8,761,962 (2014:$3,731,574) during the year ended 30June 2015, 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 significant doubt about the consolidated entity's ability to continue as a going concern and therefore the consolidated entity may be unable to realise its asset sand discharge its liabilities in the normal course of business.

Report on the Remuneration Report

We have audited the Remuneration Report included in the directors' report for the year ended 30 June 2015. 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

16 September 2015

WEST PERTH,

WESTERN AUSTRALIA

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015

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 2015

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 2015

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 2015

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 2015

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 "for profit" oriented 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 16 September 2015. 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 the consolidated 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.

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 $8,761,962 for the year ended 30 June 2015 (2014: $3,731,574).

The Notes to the Financial Statements include the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its exposure to liquidity risk.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015

Note 1: Statement of Significant Accounting Policies (continued)

Going Concern (continued)

The Group currently has unused loan funding available of~$5.1m (£2.5 m) under the Senior Debt facility (total facility of~$143m (£70m) with ~$113m (£55m) utilised at 30 June 2015) with UniCredit AG, London Branch; ING Bank N.V.; and Caterpillar Financial SARL. This Senior Debt is secured by the Company's assets and is available to the Company to be drawn down subject to its terms. Loan repayments will be made on a quarterly basis commencing approximately six months after first production.

All financial covenants have been satisfied to date. The bank completion tests under the Senior Debt facilities, scheduled for March 2016, require the Project cash flows (based upon the approved Base Case Financial Model (BCFM)) to satisfy the financial ratios on a quarterly basis over the life of the loan. The latest model based upon current available information indicates that the financial ratios can be met over the life of the loan. Any change in forecast cash flows prior to completion giving rise to a potential breach of the financial ratios could lead to an amendment to the final debt repayment profile over the loan period to better match Project cash flows.

At the date of approval of these Financial Statements, 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 together with forecast tungsten and tin sales receipts to finance the Group's capital and operating expenses and complete the development of the Project.

The Directors have reasonable expectation that the Group has adequate resources to continue in operational existence for at least 12 months from the date of the signing these Financial Statements. Thus they continue to adopt the going concern basis of accounting in preparing the Financial Statements.

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 2015 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 2 to the financial statements.

b. Significant Accounting Estimates, Judgments and Assumptions

The preparation of consolidated 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.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015

Note 1: Statement of Significant Accounting Policies (continued)

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

(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 impact the operations and carrying values of assets and liabilities.

(iii) Estimated impairment of mine development assets (Note 14)

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 Company'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 DFS prepared by the parent undertaking in conjunction with a number of independent experts. The study has been approved by the Directors.

The assessment period used in the report is the updated life of the mine of 11.75 years from the increased reserves, plus the remaining period for commissioning and preparation for full production. Tungsten revenues have been estimated over that period at a price range of US$240 - US$330 per mtu. Tin revenues have been estimated over that period at a price of US$15,000/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 345,000 mtu and 450 tonnes respectively. The life of mine operating cost estimate has been updated to match the mine plan for the new reserves. Royalties have been calculated at 2% of gross sales revenues and corporate income tax at 21%. A discount rate of 8% has been utilised. Based on the calculations, the net present value as at 30 June 2015 after the recoupment of the remaining capital costs of the Project exceeds the carrying value of the mine development asset, 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.

The Financial Statements 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.

(iv) Mine environmental rehabilitation and restoration provision (Note 16)

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 2015 represents management's best estimate of the present value of future rehabilitation costs required.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015

Note 1: Statement of Significant Accounting Policies (continued)

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

(v) Income tax expenses

Judgement is required in assessing whether deferred tax assets and liabilities are recognised on the consolidated 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.

(vi) Production start date

The Company assesses the stage of the Mine development asset to determine when it moves into the production phase, being when the mine including processes and infrastructure facilities are substantially complete and ready for intended use. The Company considers various relevant criteria to assess when the production phase is considered to have commenced. At this point, all related amounts are reclassified from Mine development asset to Mine properties and Property, plant and equipment. Some of the criteria used to identify the production start date include:

• level of capital expenditure incurred compared to the original cost estimate;

• completion of commissioning and testing of the processing facility;

• ability to produce metal in a saleable form.

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.

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.

(i) Freehold land

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

(ii) 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 consolidated statement of comprehensive income during the financial period in which they are incurred.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015

Note 1: Statement of Significant Accounting Policies (continued)

e. Property, Plant and Equipment (continued)

(iii) 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 consolidated 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. 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.

g. 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 consolidated 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.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015

Note 1: Statement of Significant Accounting Policies (continued)

g. Financial Instruments (continued)

(iii) Available-for-sale financial assets (continued)

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 consolidated 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 consolidated 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.

(iv) 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.

(v) Derivative financial instruments

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

Derivatives are classified as current or non-current depending on the expected period of realisation.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015

Note 1: Statement of Significant Accounting Policies (continued)

g. Financial Instruments (continued)

(vi) Cash flow hedges

Cash flow hedges are used to cover the Consolidated Entity's exposure to variability in cash flows that is attributable to particular risk associated with a recognised asset or liability or a firm commitment which could affect profit or loss. The effective portion of the gain or loss on the hedging instrument is recognised directly in equity, whilst the ineffective portion is recognised in profit or loss. Amounts taken to equity are transferred out of equity and included in the measurement of the hedged transaction when the forecast transaction occurs.

Cash flow hedges are tested for effectiveness on a regular basis both retrospectively and prospectively to ensure that each hedge is highly effective and continues to be designated as a cash flow hedge. If the forecast transaction is no longer expected to occur, amounts recognised in equity are transferred to profit or loss.

If the hedging instrument is sold, terminated, expires, exercised without replacement or rollover, or if the hedge becomes ineffective and is no longer a designated hedge, amounts previously recognised in equity remain in equity until the forecast transaction occurs.

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