Shree Minerals Ltd
Annual Report 2016

Plain-text annual report

S H R E E M I N E R A L S L I M I T E D ACN 130 618 683 2016 ANNUAL REPORT S H R E E M I N E R A L S L T D TABLE OF CONTENTS Corporate Directory Directors’ Report Auditors’ Independence Confirmation Statement of Profit or Loss and other Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Independent Auditor’s Report Shareholder Information Corporate Governance Statement 1 2 16 17 18 19 20 21 46 47 49 51  C O R P O R A T E D I R E C T O R Y DIRECTORS Rajesh Bothra Sanjay Loyalka Andy Lau Amu Shah COMPANY SECRETARY Sanjay Loyalka REGISTERED OFFICE Unit 2 The Pines Business Centre 88 Forrest Street Cottesloe WA 6011 Ph: Fax: info@shreeminerals.com www.shreeminerals.com (08) 92861509 (08) 93855194 SOLICITORS Steinepreis Paganin Level 4 16 Milligan St Perth WA 6000 AUDITORS Stantons International Level 2, 1 Walker Avenue West Perth WA 6005 Ph: (08) 94813188 Fax: (08) 9321 1204 BANKERS Commonwealth Bank of Australia St Georges Tce Perth WA 6000 SHARE REGISTRY Boardroom Pty Limited Level 12 225 George Street Sydney NSW 2000 Ph: +61 (02) 9290 9600 Fax: +61 (02) 9279 0664 . Page 1  D I R E C T O R S ’ R E P O R T The Directors present this report together with the financial report of Shree Minerals Ltd (‘the Company’) for the year ended 30th June 2016 and the auditor’s report thereon. DIRECTORS The names of the Directors in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Mr Rajesh Bothra , Non Executive Director, appointed as Non Executive Chairman 27/7/2016 Mr Sanjay Loyalka, Executive Chairman up to 27/7/2016. Continuing as Director & Company Secretary Mr Andy Lau, Non Executive Director Mr Amu Shah, Non Executive Director COMPANY SECRETARY Mr Sanjay Loyalka PRINCIPAL ACTIVITIES The principal activities of the Company during the financial year consisted of mineral exploration, development and mining. OPERATING RESULTS The net loss of the Company after providing for income tax amounted to $1,152,604 (2015: $10,693,932) . DIVIDENDS PAID OR RECOMMENDED The Directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a dividend to the date of this report. REVIEW OF OPERATIONS AND ACTIVITIES Highlights:    The estimated C1 costs (US$ per DMT CFR North China) reduced in the current environment to approximately US$ 54 ( compared to US$ 88 as at year end June 2014 & US$ 63 at year end June 2015) for Company’s Iron Ore products (Fines & Lump). Share Placement completed in early July 2016 for appx $2.8 million as per approval in Shareholders meeting on 16th June 2016. Steps initiated at the end of April to crush and transport Iron Ore inventory to Port in preparedness to making shipment. Shipment of 29,282 tonnes made in August 2016.  NBR project continues under care and maintenance.  Steps continue to conserve resources. Page 2  D I R E C T O R S ’ R E P O R T Nelson Bay River Iron Ore Project (“NBR Project”) Iron Ore Markets remain challenging ( ref chart below) . Due to delays in the Environmental Approval process the mine was delayed by some 2 years and as such did not start until late 2013 which pushed the Project out to the bottom of commodity price cycle. Unfortunately, the start up coincided with a marked decline in iron ore prices. This rendered the project uneconomic and it was placed on care and maintenance in June 2014. As the NBR project has been planned for a phased development, a normal approval timeframe would have had the project well placed to execute the DSO phase of the project at the right point in the cycle. This would have underwritten the capital for the magnetite phase to produce Dense Media Magnetite (DMM) for use in the coal washery industry, which enjoys a stable price cycle and is economically viable even in the current downturn. During these very difficult & challenging times, the company has placed emphasis on steps to contain costs and preserve value by:  The estimated C1 costs (US$ per DMT CFR North China) reduced in the current environment to approximately US$ 54 ( compared to US$ 88 as at year end June 2014 & US$ 63 at year end June 2015) for Company’s Iron Ore products (Fines & Lump). Initiatives are being explored to lower the costs further. Exploration activities have been curtailed.    Business Development opportunities being pursued. Project Development The development of Nelson Bay River (NBR) Iron Ore project involves three stages. The first stage is to develop a relatively shallow open cut mine to produce direct shipping grade ore. This direct shipping ore (DSO) only requires crushing and screening to produce the DSO products. During the financial year 2013-14, DSO stage 1 was commenced. Page 3  D I R E C T O R S ’ R E P O R T Stage two involves the continuation of mining of the DSO to the north. Here the DSO is composed of lower grade material, which is considered to have the potential to produce a commercial product by beneficiation (BFO). Stage three of the project involves the open cut mining of the deep magnetite orebody beneath the DSO resource cap. This magnetite ore will require processing to produce saleable magnetite products. Earlier studies demonstrated that the magnetite ore could produce two products, a dense media magnetite (DMM) product, suitable for coal washery applications, or a blast furnace pellet (BFP) magnetite product. Suppliers are few in number for the higher value DMM product and mining generally occurs on a small scale. This would suit the Nelson Bay Iron Project as studies to-date have reflected a stable market and pricing for the DMM as an industrial mineral for the eastern seaboard of Australia where domestic production is not adequate to meet demand forcing coal mining companies to resort to imports , thereby confirming the long-term value potential of the NBR project. Resource & Reserves Mineral Resources & Reserves Estimates, summarised by JORC classification are as follows: The in situ DSO Mineral Resource Estimates, September 2015 Category Tonnes Measured Indicated Inferred Total 300,000 190,000 150,000 640,000 Fe % 57.6 57.5 57.3 57.5 Al2O3 % P ppm S ppm SiO2 % LOI % 1.3 1.4 1.2 1.3 947 919 945 938 362 377 421 380 9.2 9.3 10.0 9.4 6.4 6.3 6.2 6.4 (Nominal 54% Fe cut off; average density 3t/m3; minor rounding errors) BFO Resource Estimates 2012 Category Inferred Total Tonnes 730,000 730,000 Fe % 46.8 46.8 Al2O3 % 2.7 2.7 P ppm 180 180 S ppm 680 680 SiO2 % 23.7 23.7 LOI % 4.7 4.7 (30% Fe cut off; average density 3t/m3; minor rounding errors) “This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.” Skarn Dyke Global Iron Resource Estimates (Includes Magnetite Resource) Category Indicated Inferred Total M Tonnes 1.8 9.5 11.3 Iron % 38.6 35.9 36.3 (30% Fe cut off; fresh rock material; minor rounding errors) “This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.” Page 4  D I R E C T O R S ’ R E P O R T Skarn Dyke Recoverable Magnetite Resource Estimates Category Indicated Inferred Total M Tonnes 1.7 6.1 7.8 DTR Mag % Magnetite Kt 38.5 38.2 38.3 667 2,324 2,991 (20% DTR cut off; average density 3.71t/m3; fresh rock material; minor rounding errors) “This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.” Magnetite Resource Estimate Concentrate Grades Category Indicated Inferred Fe % 66.4 64.3 Al2O3 % 0.16 0.31 S % 0.21 0.42 SiO2 % 4.6 6.0 Total 0.22 “This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.” 65.5 0.30 5.2 The in situ DSO Ore Reserve Estimates for the Southern DSO pit, September 2015 Category M tonnes Fe % Al2O3 % P % S % SiO2 % LOI % Proved Probable Total 0.27 0.19 0.46 56.5 56.5 56.5 1.4 1.5 1.4 0.091 0.035 0.092 0.036 0.091 0.035 8.7 8.8 8.7 6.5 6.5 6.5 (Minor rounding errors; cut off based on a nominal 54% Fe; default density of 3t/m3) The information in this report that relates to Mineral Resources is based on information evaluated by Mr Simon Tear, who is a Member of The Australasian Institute of Mining and Metallurgy (MAusIMM). And who has sufficient experience 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’ (“the JORC Code”). Mr Tear is a Director of H&S Consultants Pty Ltd and he consents to the inclusion in the report of the Mineral Resources in the form and context in which they appear. The information in this report that relates to Ore Reserve Estimates for the Nelson Bay deposit is based on information evaluated by Mr Richard Beazley who is a Member of The Australasian Institute of Mining and Metallurgy and a Chartered Professional (MAusIMM CP(Min)) and who has sufficient experience 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 (the “JORC Code”). Mr Richard Beazley is the Principal of Altair Mining Consultancy Pty Ltd and consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Page 5  D I R E C T O R S ’ R E P O R T Development & Production As the project was under care & maintenance during the year there was no production or mine development activities. Steps were initiated in end April 2016 to crush and transport Iron Ore inventory to Port in preparedness to making shipment , expected in quarter commencing July 2016. The mining & production figures are as per Table 1. Table 1 Waste Stripping Ore Mining Ore Crushing & screening Transportation to Port Sales Approvals Year ending 30/06/2016 0 0 20,059 23,908 0 Year ending 30/06/2015 0 0 0 0 0 BCM Tonnes Tonnes Tonnes Tonnes As previously announced, the variation of the Environment permit in Nov’13 by EPA to allow a temporary PAF rock dump for DSO south pit was rendered invalid in a judicial review by Court in Dec’14. Our understanding is that the Court case ( to which the Company was not a party ) and decision thereof was on procedural legality relating to decision making of permit amendment rather than any environmental impact or issue. Shree in consultation with Tasmanian Government authorities has investigated various options including preparing a management plan for relocating the current PAF dump to within southern end of Southern DSO (SDSO) pit , making a new development application from the Circular Head Council for a Permit to construct a PAF Waste Rock Dump (WRD) within the SDSO pit boundaries and including the previously permitted WRD. In March 2016, the EPA advised that as the proposal is considered an integral aspect of the mine, Shree should apply for a new permit for the mine. Shree has during the quarter submitted a draft NOI with EPA such that the new permit when granted, will replace the existing permit. Shree is in discussions with the EPA and the Circular Head Council to finalise the application. The major reasons for a new permit is: I. because the SDSO pit is only 25% complete, there is insufficient space for the PAF WRD to be stored below surface and ultimate flood level of the pit; and II. Moving the PAF WRD in the pit below ultimate flood level of the pit, prior to completion of mining of the pit , may result in contravention of the Mineral Resources Development Act . III. PAF storage above ground level in a safe environmental manner is universally practiced throughout the world by almost all open cut mines and with adequate procedures like truck dumping, compaction, alkali addition etc will meet Best Practice Environmental Management (BEMP); and IV. While , there are no adverse effects on the surrounding environment by disposal of PAF rock in an above surface storage dump , under the current legislative framework in Tasmania there is no simple procedure / mechanism which applies to an application to amend an extant planning permit. In consequence, there is little choice but to make a new development application for precisely the same approved development and use, but which specifies a different methodology for disposal of the PAF rock. All government approvals (other than variation pertaining to temporary PAF rock permit for DSO south pit) for the project remain valid. These include the Mining Lease, Federal Government Environmental Approval and Tasmanian Government’s Environment & Development permits (etc). Page 6  D I R E C T O R S ’ R E P O R T Tenements The mining tenements held at the end of the reporting period and their locations are as following : Mine Lease/ Exploration License 3M/2011 EL41/2004 EL42/2008 Locality Remarks Nelson Bay River Nelson Bay River Mt.Sorell 100% Shree Minerals Ltd 100% Shree Minerals Ltd 100% Shree Minerals Ltd  The mining tenements acquired and disposed of during the period and their location. NIL  The beneficial percentage interests held in farm-in or farm-out agreements at the end of the period. NIL  The beneficial percentage interests in farm-in or farm-out agreements acquired or disposed of during the period. NIL EXPLORATION Consequent to the challenging Iron Ore Price environment, the Exploration activities have been curtailed to conserve the cash resources. OTHER TENEMENTS Shree Minerals’ exploration activities for the year in review were confined to those referred to in this report. However, the Company can report that all other tenements remain in good standing and meet statutory requirements. OUTLOOK The NBR project is being developed in a phased philosophy with the initial plan to mine the DSO resource to export iron ore over the first couple of years at low capital expenditure to be followed by the magnetite resource to produce dense media magnetite (DMM) used for the coal washery industry. Studies to-date have reflected a stable market and pricing for DMM as an industrial mineral in Eastern Seaboard of Australia with domestic production not being adequate to meet demand resorting to imports, thereby confirming the long- term value potential of the NBR project. Steps have been taken to conserve the resources as well as reduce cash costs while having the necessary preparedness to respond to improving price cycle when it emanates. The company believes the long term demand for the commodity remains robust due to growing urbanisation of the global population particularly in China. Page 7  D I R E C T O R S ’ R E P O R T SIGNIFICANT CHANGES IN STATE OF AFFAIRS In the opinion of the Directors, there were no other significant changes in the state of affairs of the Company that occurred during the financial year under review other than those disclosed in this report. FINANCIAL POSITION The net assets of the Company are $1,541,340 (2015: $1,513,909) AFTER BALANCE DATE EVENTS Share Placement completed in early July 2016 for $2.8 million as per approval in Shareholders meeting on 16th June 2016. Shipment of Iron Ore of 29,282 tonnes was made in August 2016. FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES The Company intends to continue to pursue its goals to acquire and explore mineral deposits and explore prospective tenements. ENVIRONMENTAL REGULATIONS The Company holds various exploration & mining licences to regulate its activities in the State of Tasmania, Australia. These licences include conditions and regulations with respect to the rehabilitation of areas disturbed during the course of its activities. As far as the Directors are aware, there has been no known breach of the Company’s licence conditions other than those disclosed in this report. The implementation of best practice social and environmental practices, well beyond simple compliance, has been an integral part of Company's philosophy. The company in discussions with the regulatory authorities is also looking at innovative work towards implementing / developing best environment management practices. The company has also voluntarily committed to research to enhance the understanding of orchid biology in north-western Tasmania, as a best practice environmental management contribution to orchid science. The research will assist with the ongoing management and protection of threatened orchid species in north-western Tasmania. Shree Minerals also recognises the opportunities that the presence of our project creates to support Devil Facial Tumour research. Hence, Devil numbers around the mine site are monitored as part of the mine’s operational monitoring of the effectiveness of its devil (and quoll) impact mitigation measures, and these observations will be valuable data for the Save the Tasmanian Devil Program (STDP). DIRECTORS’ INTERESTS Mr S Loyalka Mr A Lau Mr A Shah Mr R Bothra Total ORDINARY SHARES FULLY PAID 26,474,078 0 4,884,230 172,621,723 203,980,031 OPTIONS 0 0 0 0 0 Page 8  D I R E C T O R S ’ R E P O R T In early July 2016 , Share placement was made to RB Investments (Pte) Ltd (an entity associated with Mr R Bothra) for for appx $2.8 million by issue of 142,184,223 shares to increase total number of shares held by RB investments (Pte) Ltd to 172,621,723 (as per approval in Shareholders meeting on 16th June 2016). INFORMATION ON DIRECTORS Mr Rajesh Bothra, Non Executive Chairman Director of Shree Minerals Ltd since June 2014 Mr Rajesh Bothra is based in Singapore and is a share-holder and Managing Director of major electronic and consumer electronic company with revenue of US$1 Billion. He has rich experience of management and leadership skills. He also has interests in real estate, hospitality, natural resources and media Industry. Mr Rajesh Bothra brings with him a wealth of international experience & networks. Directorship in other listed companies in last 3 years : N/A Mr Sanjay Loyalka, Director and Company Secretary, FAIM, MAICD, ACA, B Com (Hons) Director of Shree Minerals Ltd since April 2008 Mr Sanjay Loyalka has experience in various functional roles including CEO, General Management, and Corporate finance experience in mining and metals, manufacturing, and logistics based industries in a multinational environment. Mr Loyalka is the founder of Investment advisory firm IACG Pty Ltd in Australia which has been engaged in cross border M&A, strategic consulting as well as a mineral commodity trading business. As the founding CEO and Managing Director, he was instrumental in the development of the Aditya Birla Group’s operations within Australia. He led the acquisition of Nifty and Mount Gordon Copper mines, successful development of the Nifty Sulphide project (a remote site, 2.5 million TPA underground mine, concentrator plant and associated infrastructure) and operational restructure of Mount Gordon Copper Operations. These led to a successful listing of the Company on the Australian Securities Exchange under an IPO raising $300 million and inclusion in the ASX S&P 300 index. Mr Loyalka has been a member of the Executive Council of Chamber of Minerals & Energy (Western Australia) in 2005 and 2006. Directorship in other listed companies in last 3 years : N/A Mr Andy Lau, Independent Non Executive Director, MBA Director of Shree Minerals Ltd since Nov 2009 Mr Andy Lau is a professional engineer and held senior management responsibilities for over 10 years in computer information and financing industry. Mr Lau holds a MBA and graduate majoring in Computer Technology and held the certificates of MCSE, MCDBA, MCP, and CCNA. He worked for a number of large international companies in securities, venture capital, and high-tech industries. Directorship in other listed companies in last 3 years : N/A Mr Amu Shah, Non Executive Director Director of Shree Minerals Ltd since March 2011 Mr Amu Shah is a director and shareholder in various businesses ranging from retail trade, distribution of office and stationery products, services to the mining industry, manufacturing, and property development and ownership. Mr Amu Shah is the Honorary Consul for Kenya in Perth. Mr Amu Shah has extensive international and local business experience. Directorship in other listed companies in last 3 years : N/A Page 9  D I R E C T O R S ’ R E P O R T REMUNERATION REPORT (AUDITED) The full Board fulfils the roles of remuneration committee and is governed by the Company’s adopted remuneration policy. The information provided in this remuneration report has been audited as required by Section 308 (3c) of the Corporations Act 2001. Remuneration Policy This policy governs the operations of the Remuneration Committee. The Committee shall review and reassess the policy at least annually and obtain the approval of the Board. General Director Remuneration Shareholder approval must be obtained in relation to the overall limit set for non-executive directors’ fees. The Directors shall set individual Board fees within the limit approved by shareholders. Shareholders must also approve the framework for any broad based equity based compensation schemes and if a recommendation is made for a director to participate in an equity scheme, that participation must be approved by the shareholders. Executive remuneration The Company’s remuneration policy for executive directors and senior management is designed to promote superior performance and long-term commitment to the Company. Executives receive a base remuneration which is market related, and may be entitled to performance based remuneration at the ultimate discretion of the Board. Overall remuneration policies are subject to the discretion of the Board and can be changed to reflect competitive market and business conditions where it is in the interests of the Company and shareholders to do so. Executive remuneration and other terms of employment are reviewed annually by the Remuneration Committee having regard to performance, relevant comparative information, and expert advice. The Committee’s reward policy reflects its obligation to align executive’s remuneration with shareholders’ interests and to retain appropriately qualified executive talent for the benefit of the Company. The main principles of the policy are: a. b. reward reflects the competitive market in which the Company operates; individual reward should be linked to performance criteria; and c. Directors and executives should be rewarded for both financial and non-financial performance. The total remuneration of executives and other senior managers consists of the following: a. salary - directors , executives and senior manager receive a fixed sum payable monthly in cash; b. bonus - directors , executives and nominated senior managers are eligible to participate in a profit participation plan if deemed appropriate; c. Long-term incentives - directors, executives, and nominated senior managers may also participate in employee share-option schemes, with any option issues generally being made in accordance with thresholds set in plans approved by shareholders. The Board however, considers it appropriate to retain the flexibility to issue options to executives outside of approved employee option plans in exceptional circumstances; and d. Other benefits - directors, executives and senior managers are eligible to participate in superannuation schemes and other appropriate additional benefits. Remuneration of other executives consists of the following: Page 10  D I R E C T O R S ’ R E P O R T a. salary - senior executive receives a fixed sum payable monthly in cash; b. bonus - each executive is eligible to participate in a profit participation plan if deemed appropriate; c. long term incentives - each senior executive may, where appropriate, participate in share option schemes which have been approved by shareholders; and d. Other benefits – senior executive are eligible to participate in superannuation schemes and other appropriate additional benefits. Non-executive remuneration Shareholders approve the maximum aggregate remuneration for non-executive directors. The Remuneration Committee recommends the actual payments to directors and the Board is responsible for ratifying any recommendations, if appropriate. The maximum aggregate remuneration approved for non-executive directors is currently $200,000. It is recognised that non-executive directors’ remuneration is ideally structured to exclude equity-based remuneration. However, whilst the Company remains small and the full Board, including the non-executive directors, are included in the operations of the Company more intimately than may be the case with larger companies the non-executive directors are entitled to participate in equity based remuneration schemes. All directors are entitled to have their indemnity insurance paid by the Company. Profit participation plan Performance incentives may be offered to directors, executives, and senior management of the Company through the operation of a profit participation plan at the ultimate discretion of the Board. Currently, there is no such plan under practice for last 5 years. Details of remuneration Key Management Personnel (KMP) comprises the executive and non- executive directors only during FY2015. The remuneration for Key Management Personnel of the Company during the year and the previous year was as follows: 2016 Short-term Employee Benefits Post- employment Benefits Cash, salary, Directors Fees Cash profit share, bonuses Non- cash benefits Allowances Super- annuation Other Long- term Benefits Share Based Payments Mr S Loyalka 292,237 Mr Andy Lau 30,000 Mr Rajesh Bothra 30,000 Mr Amu Shah 27,397 379,634 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 27,763 0 0 2,603 30,366 0 0 0 0 0 % Performance Based Total 320,000 30,000 30,000 30,000 410,000 0 0 0 0 0 0 0 0 0 0 NB: The remuneration report has been prepared on an accruals basis. To conserve cash resources of the company during the period the operations are under suspension, the key managerial personnel have voluntarily elected to take reduced drawings of their remuneration. Consequently, the total amount payable to directors for remuneration at 30 June 2016 amounted to $470,000 ( 2015 : $ 187,500) for outstanding director remuneration. Page 11  D I R E C T O R S ’ R E P O R T Short-term Employee Benefits Post- employment Benefits 2015 Cash, salary, Directors Fees Cash profit share, bonuses Non- cash benefits Allowances Super- annuation Other Long- term Benefits Share Based Payments Total % Performance Based Mr S Loyalka 292,906 Mr Andy Lau 30,000 Mr Amu Shah 27,460 Mr Rajesh Bothra 30,000 380,366 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 27,094 0 2,540 0 29,634 0 0 0 0 0 0 0 0 0 0 320,000 30,000 30,000 30,000 410,000 0 0 0 0 0 NB: For financial years ended June 2016 and 2015 the KMPs held the positions and dates of change in responsibilities as following: Mr. Rajesh Bothra: Non Executive Director, appointed as Non Executive Chairman 27/7/2016 Mr. S Loyalka: Executive Chairman upto 27/7/2016. Continuing as Director & Company Secretary . Mr. Andy Lau: Non Executive Director Mr. Amu Shah: Non Executive Director Options, Performance shares & Shares issued as part of remuneration fo r the year ended 30 June 2016 There were no Options, Performance shares and Shares issued as part of remuneration for the year ended 30 June 2016. Please refer to Note 19 for further information. Shares Issued on Exercise of Compensation Options No options granted as compensation in prior periods were exercised through the period or the previous period. Number of Shares Held by Key Management Personnel 30 June 2016 Key Management Person Balance 1 July 2015 Received as Compensation Options Exercised Net Change Other Balance on Resignation Balance 30 June 2016 Mr Sanjay Loyalka 26,474,078 0 Mr Andy Lau Mr Amu Shah Mr Rajesh Bothra 0 0 4,884,230 0 30,437,500 0 61,795,808 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 26,474,078 0 4,884,230 30,437,500 61,795,808 Consequent to Share Placement completed in July 2016 , the interest of Mr.Rajesh Bothra increased to 172,621,723 Shares. Page 12  D I R E C T O R S ’ R E P O R T Number of Options Held by Key Management Personnel 30 June 2016 Key Management Person Balance 30 June 2015 Granted as compensation Options Exercised Net Change Other Balance 30 June 2016 Total Vested 30 June 2016 Total Exercisable 30 June 2016 Total Unexercisable 30 June 2016 Mr Sanjay Loyalka Mr Amu Shah Mr Andy Lau Mr Rajesh Bothra 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Number of Share Performance Rights Held by Key Management Personnel 30 June 2016 Key Management Person Balance 30 June 2015 Granted as compensation Net Change Other Balance 30 June 2016 Total Vested 30 June 2016 Total Exercisable 30 June 2016 Total Unexercisable 30 June 2016 Mr Sanjay Loyalka Mr Amu Shah Mr Andy Lau Mr Rajesh Bothra 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 On 30 June 2015, Mr.Mahendra Pal ( Director till 27th June 2014) held 869,111 share performance rights. The Performance Rights vest in three tranches to Mr Mahendra Pal on 31 October 2013, 31 October 2014 and 31 October 2015 respectively. The number of Performance Rights to be vested on each of those dates is one (1) Performance Right for every one (1) tonne of DSO Iron Ore sold over the three years ending on 30 June 2013, 30 June 2014 and 30 June 2015 respectively, subject to issue of maximum of 1,000,000 Performance Rights in aggregate.   For the year ended 30 June 2013 there was nil tonnes of DSO Iron Ore sold. For the year ended 30 June 2014 there was 130,889 tonne of DSO Iron Ore sold. Consequently, 130,889 Performance Rights vest on 31 October 2014. For the year ended 30 June 2015 there was nil tonnes of DSO Iron Ore sold.  Consequently, 869,111 Performance Rights expired on 31 October 2015. No other Key Management Personnel held any share performance rights on 30 June 2016. Employment contracts of directors and senior executives The employment arrangements for Rajesh Bothra are as follows : Term : to retire by rotation at least once every 3 years .   Remuneration : comprising Fees of $30,000 per annum (not subject to GST) . Page 13  D I R E C T O R S ’ R E P O R T  Termination : Mr.Bothra may resign from the office by notice in writing to the Company. He may also cease to be a director if any of the disqualifying events prescribed in the Constitution occur. In addition , Mr.Bothra’s appointment is subject to re-election by shareholders at least every 3 years The employment arrangements for Sanjay Loyalka are as follows: Term : of five-year tenure that commenced in May 2013.   Remuneration : comprising salary and superannuation totalling $320,000 per annum.  Termination : Mr.Loyalka may resign from the office by notice in writing to the Company . He may also cease to be a director if any of the disqualifying events prescribed in the Constitution occur. The employment arrangements for Amu Shah are as follows : Term : to retire by rotation at least once every 3 years.   Remuneration : comprising salary and superannuation totalling $30,000 per annum.  Termination : Mr.Shah may resign from the office by notice in writing to the Company. He may also cease to be a director if any of the disqualifying events prescribed in the Constitution occur. In addition , Mr.Shah’s appointment is subject to re-election by shareholders at least every 3 years. The employment arrangements for Andy Lau are as follows : Term : to retire by rotation at least once every 3 years.   Remuneration : comprising Fees of $30,000 per annum (not subject to GST).  Termination : Mr.Lau may resign from the office by notice in writing to the Company. He may also cease to be a director if any of the disqualifying events prescribed in the Constitution occur. In addition, Mr.Lau’s appointment is subject to re-election by shareholders at least every 3 years. END OF REMUNERATION REPORT Meetings of Directors During the financial year, 6 formal meetings of Directors (including committees of directors) were held. Attendances by each Director during the year were as follows: Director Sanjay Loyalka Andy Lau Amu Shah Rajesh Bothra Board Meetings Meetings attended 6 5 5 2 Meetings held whilst in office 6 6 6 6 The full Board fulfils the role of remuneration, nomination, and audit committees. Indemnifying Officers or Auditor The Company has paid insurance premiums in respect of directors’ and officers’ liability and legal expenses insurance contracts for current and former directors, executive officers and secretary. The directors have not included details of the premium paid in respect of the directors’ and officers’ liability and legal expenses’ insurance contracts, as such disclosure is prohibited under the terms of the contract. Options At the date of this report, the unissued ordinary shares of Shree Minerals Limited under option are NIL. Page 14  D I R E C T O R S ’ R E P O R T Proceedings on Behalf of Company No person has applied for leave of Court to bring any proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for taking responsibility on behalf of the Company for all or any part of these proceedings. The Company is not a party to any other proceedings as at date of this report. Non-audit Services The Board of Directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons:   all non-audit services are reviewed and approved by the audit committee 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. Fees of $ 0 (2015: $6,250) for Taxation services (compliance and consulting) being the non-audit services that were paid/payable to related practices of the external auditors during the year. Auditor’s Independence Declaration The lead auditor’s independence declaration for the year ended 30 June 2016 has been received and can be found on page 16 of annual report. Signed in accordance with a resolution of the Board of Directors. Sanjay Loyalka Director Signed in Perth the 28th day of September 2016. Page 15 Stantons International Audit and Consulting Pty Ltd trading as Chartered Accountants and Consultants 28 September 2016 Board of Directors Shree Minerals Limited Unit 2, The Pines Business Centre 88 Forrest Street Cottesloe WA 6011 Dear Directors RE: SHREE MINERALS LIMITED PO Box 1908 West Perth WA 6872 Australia Level 2, 1 Walker Avenue West Perth WA 6005 Australia Tel: +61 8 9481 3188 Fax: +61 8 9321 1204 ABN: 84 144 581 519 www.stantons.com.au In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Shree Minerals Limited. As Audit Director for the audit of the financial statements of Shree Minerals Limited for the year ended 30 June 2016, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. Yours faithfully STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International) (An Authorised Audit Company) Samir Tirodkar Director West Perth, Western Australia Liability limited by a scheme approved under Professional Standards Legislation Page 16 S H R E E M I N E R A L S L T D STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016 Revenue from continuing operations Sales Income Interest Other Income Reversal of derivative financial liability Expenses from continuing operations Cost of sales including care and maintenance Impairment of inventory Finance charges Employee and consulting fees Regulatory costs Occupancy and communication Foreign exchange loss Accounting and legal Fees Impairment of exploration tenements Prov for impairment of mine development Prov for impairment of plant & equipment Prov for impairment of deferred mine waste Provision for doubtful debt Other expenses Loss before income tax Income tax benefit Loss for the year Other comprehensive income Comprehensive loss for the year Note 30-Jun-16 $ 30-Jun-15 $ 3 3C 7A 9 0 38,600 0 352,596 (365,703) (693,599) (14,128) (458,786) (16,072) (32,845) (100,694) (48,180) (179,941) 0 0 0 47,824 (30,104) (121,305) 53,876 673 0 (579,111) (749,316) (370,196) (452,359) (28,244) (37,127) (280,815) (229,154) 0 (7,342,313) (214,687) (1,077,831) (238,302) (106,318) (1,501,032) (11,772,529) 348,428 1,078,596 (1,152,604) (10,693,933) 0 0 (1,152,604) (10,693,933) Earnings per share for (loss) attributable to ordinary equity holders of the company: Basic & diluted (loss) cents per share (0.81) (7.74) The accompanying notes form part of these financial statements. Page 17 S H R E E M I N E R A L S L T D STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2016 Assets Current Assets Cash and cash equivalents Trade and other Receivables Inventory Total Current Assets Non-Current Assets Exploration and evaluation Mine Development Other Assets Plant and equipment Total Non-Current Assets Total Assets Liabilities Current Liabilities Trade and other payables Loans Provisions Total Current Liabilities Non-Current Liabilities Rehabilitation Provision Other Payables Loans Total Non-Current Liabilities Total Liabilities Net Assets Equity Contributed equity Share applications Reserves Retained profits (losses) Total Equity Note 6 7 7A 9 9A 6A 8 10 10B 10A 10A 11 11 12 30-Jun-16 $ 1,405,004 184,931 1,264,347 2,854,282 121,330 1,583,647 865,590 46,198 2,616,765 5,471,047 2,369,548 3,542 18,180 2,391,270 1,499,300 39,137 0 1,538,437 3,929,707 30-Jun-15 $ 1,105,998 245,719 1,319,506 2,671,223 296,947 1,583,647 865,590 40,892 2,787,076 5,458,299 2,418,303 10,071 13,174 2,441,548 1,499,300 0 3,542 1,502,842 3,944,390 1,541,340 1,513,909 15,063,424 1,210,922 284,587 (15,017,593) 15,094,311 0 284,587 (13,864,989) 1,541,340 1,513,909 The accompanying notes form part of these financial statements. Page 18 S H R E E M I N E R A L S L T D STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2016 Issued Share Retained Note Capital Applications Losses $ $ $ Share based option reserve $ Total $ BALANCE AT 1 JULY 2014 13,591,891 0 (3,171,057) 284,587 10,705,421 Total comprehensive loss for the year 0 0 (10,693,932) 0 (10,693,932) Shares issued during the year 1,623,467 Capital raising costs (121,047) 0 0 0 0 0 1,623,467 0 (121,047) BALANCE AT 30 JUNE 2015 15,094,311 0 (13,864,989) 284,587 1,513,909 BALANCE AT 1 JULY 2015 15,094,311 0 (13,864,989) 284,587 1,513,909 Total comprehensive loss for the year Shares issued during the year Share Applications 0 0 0 0 1,210,922 Capital raising costs (30,887) 0 0 (1,152,604) 0 (1,152,604) 0 0 0 0 0 0 1,210,922 0 (30,887) BALANCE AT 30 JUNE 2016 15,063,424 1,210,922 (15,017,593) 284,587 1,541,340 The accompanying notes form part of these financial statements. Page 19 S H R E E M I N E R A L S L T D STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2016 Cash flows from operating activities (including exploration) Sales receipts Payments to suppliers and employees (inclusive of GST) Interest received Research and Development tax concession Other Income Note 30-Jun-16 $ 30-Jun-15 $ (48,345) (1,199,645) 40,621 348,428 0 (383,971) (2,629,294) 43,576 1,078,596 673 Net cash inflow/(outflow) from operating activities (including exploration) 15 (858,941) (1,890,420) Cash flows from investing activities Payment for plant and equipment Proceeds from sale of plant and equipment Payment for mineral exploration Deferred Mine Waste Received from security deposits Payment for mine development Net cash inflow/(outflow) from investing activities Cash flows from financing activities (6,185) 0 (4,323) 0 0 0 (10,508) (877) 16,819 (33,307) 0 77,797 32,374 92,806 Proceeds from issues of shares and other equity securities 0 1,623,467 Share applications Payments for share issue costs Borrowings Net cash inflow from financing activities 1,210,922 (30,887) (11,580) 1,168,455 0 (121,047) (782,806) 719,614 Net increase /(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year 299,006 1,105,998 (1,078,000) 2,183,998 Cash and cash equivalents at the end of the financial year 1,405,004 1,105,998 The accompanying notes form part of these financial statements. Page 20 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES This financial report includes the financial statements and notes of Shree Minerals Limited, a Company domiciled and incorporated in Australia. Statement of Compliance The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The financial report includes the separate financial statements of the Company. Accounting standards include Australian equivalents to International Financial Reporting Standards (“AIFRS”). Compliance with AIFRS ensures that the financial statements and notes thereto comply with International Financial Reporting Standards (“IFRS”). Shree Minerals Limited is a for-profit entity for the purpose of preparing the financial statements. The financial report is presented in Australian currency. Basis of Preparation Historical cost convention The financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. Going concern These financial statements have been prepared on a going concern basis and, as a result, the financial report for the year ended 30 June 2016 does not include any adjustments relating to the recoverability and classification of the recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern. The company continues maintaining a close watch over Iron Markets for an appropriate window to recommence shipments of inventory on hand. Accordingly, steps were taken in end of April to crush and transport the iron ore to port in preparedness for shipment. Shipment of 29,282 tonnes made in August 2016. Significant efforts have been made to preserve cash and reduce costs and secure additional finance, however material uncertainties over the future cash flows exist. The Company continues to engage with its stakeholders and continues to monitor opportunities from interested investors to raise additional equity for the business. In addition, the Company continues to focus efforts on improving liquidity through: the implementation of further cost improvement initiatives; continuation of voluntary payroll reductions ;and    Re-commencement of operations as per Iron Ore Price environment. The Company also carefully manages discretionary expenditure in line with the Company’s cash flow. The financial report has therefore been prepared on a going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. Should the Company be unable to continue as a going concern, it may be required to realise assets Page 21 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 and extinguish liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements. The significant accounting policies set out below have been applied in the preparation and presentation of the financial report for the year ended 30 June 2016 and comparative information. New and amended standards adopted by the Company for these financial statements A number of new or amended standards became applicable for the current reporting period, however, the Company did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards. a. Income Tax The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income). Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses. Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. R&D tax credits are accounted for when received. b. Property, Plant and Equipment Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment Plant and equipment are measured on the cost basis. Page 22 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 The carrying amount of plant and equipment is reviewed by directors first when indicators of impairment exist and thereafter annually to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. The cost of fixed assets constructed within the company 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 profit or loss statement during the financial period in which they are incurred. Depreciation The depreciable amount of all fixed assets including building and capitalised lease assets, but excluding freehold land, is depreciated on a straight-line basis over their useful lives to the consolidated 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: Class of Fixed Asset Plant and equipment Office equipment Depreciation Rate 33% 20% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the profit or loss. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. c. Exploration, Evaluation and Development Expenditure Exploration and evaluation costs Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable resources. Accumulated costs in relation to an abandoned area are written off in full against profit or loss in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are transferred to Mine Properties and amortised over the life of the area according to the rate of depletion of the economically recoverable resources (refer to Mine Properties below). Page 23 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 A regular review for impairment is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. 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. Such costs have been determined using estimates of future costs, current legal requirements and technology on a discounted basis. Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site. d. Mine Development Mine development represent the accumulation of all exploration, evaluation and development expenditure incurred in respect of a project in which mining has commenced or in the process of commencing. When further development expenditure is incurred in respect of mine property after the commencement of production, such expenditure is carried forward as part of the mine property only when substantial future economic benefits are thereby established, otherwise such expenditure is classified as part of the cost of production. Amortisation is provided on a unit of production basis (other than restoration and rehabilitation expenditure detailed below) which results in a write off of the cost proportional to the depletion of the proven and probable mineral reserves. The company defers waste stripping costs for matching costs with the related economic benefits. Stripping costs incurred in the period are deferred to the extent that the current period ratio exceeds the life of mine or pit ratio. Such deferred costs are then charged in subsequent periods, the ratio falls short of the life of mine or pit ratio. The life of mine or pit ratio is obtained by dividing the volume of waste mined either by the volume of ore mined. The life of mine or pit waste-to-ore ratio is a function of an individual mine's pit design and therefore changes to that design will generally result in changes to the ratio. Changes to the life of mine or pit ratio are accounted for prospectively. Deferred stripping costs are included in Mine development costs. The net carrying value is reviewed regularly and to the extent to which this value exceeds its recoverable amount, the excess is either fully provided against or written off in the financial year in which this is determined. The Group provides for environmental restoration and rehabilitation at site which includes any costs to dismantle and remove certain items of plant and equipment. The cost of an item includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs when an item is acquired or as a consequence of having used the item during that period. This asset is depreciated on the basis of the current estimate of the useful life of the asset. In accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets an entity is also required to recognise as a provision the best estimate of the present value of expenditure required to settle the obligation. The present value of estimated future cash flows is measured using a current market discount rate. e. Leases Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that is transferred to the company, are classified as finance leases. Page 24 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred. Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term. f. Financial Instruments Recognition and Initial Measurement Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention. Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below. Derecognition Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. Classification and Subsequent Measurement (i) Financial assets at fair value through profit or loss Financial assets are classified at fair value through profit or loss when they are held for trading for the purpose of short term profit taking, where they are derivatives not held for hedging purposes, or designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Realised and unrealised gains and losses arising from changes in fair value are included in profit or loss in the period in which they arise. (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 and are subsequently measured at amortised cost using the effective interest rate method. Page 25 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the group’s intention to hold these investments to maturity. They are subsequently measured at amortised cost using the effective interest rate method. (iv) Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are either designated as such or that are not classified in any of the other categories. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. (v) Financial Liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest rate method. Derivative instruments Derivative instruments are measured at fair value. Gains and losses arising from changes in fair value are taken to the income statement unless they are designated as hedges. Fair value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. Impairment At each reporting date, the group assess whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether impairment has arisen. Impairment losses are recognised in the income statement. g. Impairment of Non Financial Assets At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. 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 for which the estimates of future cash flows have not been adjusted. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease. Page 26 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase. Interests in Joint Operations h. The Company’s share of the assets, liabilities, revenue and expenses of joint operations are included in the appropriate items of the financial statements. i. Employee Benefits Provision is made for the company’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. 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. Those cash flows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash flows. Equity-settled compensation The group operates equity-settled share-based payment employee share and option schemes. The fair value of the equity to which employees become entitled is measured at grant date and recognised as an expense over the vesting period, with a corresponding increase to an equity account. The fair value of shares is ascertained as the market bid price. The fair value of options is ascertained using a Black–Scholes pricing model which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at each reporting date such that the amount recognised for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest. j. 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. k. 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 3 months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet l. Revenue Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. All revenue is stated net of the amount of goods and services tax (GST). The following criteria are also applicable to other specific revenue transactions: Page 27 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 Iron Ore Sales Contract terms for the Company’s sale of Iron Ore allow for a price adjustment based on final assay results of the ore for Fe content and other trace elements at the discharge port to determine the final content. Recognition of sales revenue for these commodities is based on the most recently determined estimate of Fe content and other trace elements (based on load port assay results) and the spot price at the date of shipment, with a subsequent adjustment made upon final determination. The terms of Iron Ore sales contracts contain provisional pricing arrangements whereby the selling price for Iron Ore is based on prevailing spot prices on a specified period around the date of shipment to the customer (the “quotation period”). Adjustments to the sales price occur based on movements in quoted market prices up to the date of final settlement. m. Inventories Crushed Ore at site and port and run of mine ore stockpiles are physically measured or estimated and valued at the lower of cost or net realisable value. Net realisable value is the estimated selling price (in the ordinary course of business assuming sales are made at the end of the reporting period such that applicable price for the next month to coincide with time it reaches customer’s discharge port), less estimated costs of completion and costs of selling final product. Cost is determined using the weighted average method and comprises direct purchase costs and an appropriate portion of fixed and variable overhead costs, including depreciation and amortisation, incurred in converting materials into finished goods. n. 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 (“ATO”). 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. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. o. Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. p. Critical Accounting Estimates and Judgments The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. The Group’s mining and exploration activities are subject to various laws and regulations governing the protection of the environment. The Group recognises management’s best estimate for asset retirement obligations in the period in which they are incurred. Actual costs incurred in the future periods could differ materially from the estimates. Additionally, future changes to environmental laws and regulations, life of mine estimates and discount rates could affect the carrying amount of this provision. Page 28 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 Key Judgements – Ore reserve and resource estim ates The Group estimates its ore reserves and mineral resources based on information compiled by Competent Persons (as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Resources (the JORC Code). These are taken into account in the calculation of depreciation, amortisation, impairment, deferred mining costs, rehabilitation and environmental expenditure. In estimating the remaining life of the mine for the purposes of amortisation and depreciation calculations, due regard is given, not only to remaining recoverable ore contained in reserves and resources , but also to limitations which could arise from the potential for changes in technology, demand, and other issues which are inherently difficult to estimate over a lengthy time frame. Where a change in estimated recoverable ore over the remaining life of the mine is made, depreciation and amortisation is accounted for prospectively. The determination of ore reserves and remaining mine life affects the carrying value of a number of the Group’s assets and liabilities including deferred mining costs and the provision for rehabilitation. Key Judgements – Units-of-production depreciation Estimated recoverable ore over the remaining life of the mine are used in determining the depreciation and / or amortisation of mine specific assets. This results in a depreciation / amortisation charge proportional to the depletion of the anticipated remaining life of mine production. Each item’s life, which is assessed annually, has regard to both its physical life limitations and to present assessments of economically recoverable ore over the remaining life of the mine of the mine property at which the asset is located. These calculations require the use of estimates and assumptions, including the amount of recoverable ore over the remaining life of the mine and estimates of future capital expenditure. Key Judgements – Inventories Costs incurred in or benefits of the productive process are accumulated as Crushed Ore at site and port and run of mine ore stockpiles. Net realisable value tests are performed at least annually and represent the estimated future sales price of the product based, less estimated costs to complete production and bring the product to sale. Stockpiles are measured by estimating the number of tonnes added and removed from the Stockpile. Stockpile tonnages are verified by periodic surveys. Key Judgements – Deferred exploration and evaluation expenditure Exploration and evaluation costs are carried forward where right of tenure of the area of interest is current. These costs are carried forward in respect of an area that has not at balance sheet date reached a stage that permits reasonable assessment of the existence of economically recoverable reserves, refer to the accounting policy stated in note 1(c). The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgment in determining whether it is likely that future economic benefits are likely either from future exploitation or sale or where activities have not reached a stage which permits a reasonable assessment of the existence of reserves. The determination of a Joint Ore Reserves Committee (JORC) resource is itself an estimation process that requires varying degrees of uncertainty depending on sub- classification and these estimates directly impact the point of deferral of exploration and evaluation expenditure. The deferral policy requires management to make certain estimates and assumptions about future events or circumstances, in particular whether an economically viable extraction operation can be established. Estimates and assumptions made may change if new information becomes available. Key Judgements – Mine Development expenditure Mine Development expenditure are carried forward in respect of each identifiable area of interest where a mineable resource has been established and published as per JORC guidelines and has reached a stage that Page 29 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 permits reasonable assessment that necessary steps to commence a mining development for that area have been commenced. Refer to the accounting policy stated in note 1(d). The net carrying value of each area of interest is reviewed using long term commodity price forecasts from within the range of forecasts by Industry analysts as per note 1(d). Key Judgements Share based payment transactions The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model or other appropriate methodology. Key Judgements Impairment of Property, Plant and Equipment The Company assesses each asset at the end of each reporting period to determine whether any indication of impairment exists. Where an indicator of impairment exists, an estimate of the recoverable amount is made, which is considered to be the higher of the fair value less costs to sell and Value In Use (VIU). Future cash flows VIU calculation use pre-tax free cash flows based on projections approved by the Company. The key operating assumptions and their basis of estimation are:    Future production based on latest mine plan available Commodity price forecast derived from public available information and a range of external global commodity forecasters; and Future cost of production and future capital expenditure Discount rate The discount rate applied to the cash flow projections has been assessed to reflect the time value of money and the perceived risk profile of the industry. These estimates and assumptions are subject to risk and uncertainty. Therefore, there is a possibility that changes in circumstances will impact these projections, which may impact the recoverable amount of assets. q. Operating segments Identification and measurement of segments – AASB 8 requires the ‘management approach’ to the identification measurement and disclosure of operating segments. The ‘management approach’ requires that operating segments be identified on the basis of internal reports that are regularly reviewed by the entity’s chief operating decision maker, for the purpose of allocating resources and assessing performance. This could also include the identification of operating segments which sell primarily or exclusively to other internal operating segments. r. Accounting standards not yet effective Refer to note 20 for accounting standards not yet effective. Page 30 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 2: KEY MANAGEMENT PERSONNEL COMPENSATION Key management personnel remuneration has been included in the Remuneration Report section of the Directors Report. Total amount payable including valuation of share based payments was as following: Short term employee benefits Salaries including bonuses Total short term employee benefits Long service leave Total other long-term benefits Superannuation Total post-employment benefits Total remuneration 2016 $ 379,634 379,634 0 0 30,366 30,366 410,000 2015 $ 380,366 380,366 0 0 29,634 29,634 410,000 The remuneration report has been prepared on an accruals basis. To conserve cash resources of the company during the period the operations are under suspension, have voluntarily elected to take reduced drawings of their remuneration. Consequently, the total payment made during the year ended 30 June 2015 and 30 June 2016 was $222,500 and $127,500 respectively and the amount payable to directors for remuneration at 30 June 2016 amounted to $470,000 for outstanding director remuneration. NOTE 3: SALES INCOME There were no sales during the financial year ended 30/6/2016 (2015: -$121,305). NOTE 3A: EXPENSES INCLUDED IN INCOME STATEMENT 30-June-16 $ Depreciation of plant and equipment 879 Employee benefit expenses Operating lease rental expenses 60,250 28,982 30-June-15 $ 36,308 77,602 28,800 Page 31 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 3B: AUDITOR’S REMUNERATION 30 June 2016 30 June 2015 Remuneration paid or payable of the auditor for: – Auditing or reviewing the financial report- Stantons International – Auditing or reviewing the financial report of prior period , as per accruals - Grant Thornton – Taxation services and corporate services- Grant Thornton $ 20,055 18,489 0 38,544 $ 0 20,000 6,250 26,250 NOTE 3C: REVERSAL OF DERIVATIVE FINANCIAL LIABILITY 30 June 2016 30 June 2015 There was a provision done in the books for deemed derivative financial liability in the previous year based on interpretation of contracts in hand. Since the contract has now expired , the provision has been reversed as no longer required. – Reversal of provision for deemed derivative liability 352,596 $ $ 0 NOTE 4: INCOME TAX a. Income tax expense Current tax (R&D offset) Deferred tax Deferred income tax expense included in income tax expense comprises: (Increase) / decrease in deferred tax assets Increase / (decrease) in deferred tax liabilities Page 32 30 June 2016 30 June 2015 $ $ (348,428) - (348,428) (112,089) 112,089 - (1,078,596) - (1,078,596) 146,216 (146,216) - S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 b. Reconciliation of income tax expense to prima facie tax payable The prima facie tax payable on loss from ordinary activities before income tax is reconciled to the income tax expense as follows: Prima facie tax expense/(benefit) on operating profit/(loss) at 30% Add / (Less) Tax effect of: Non-deductible expenses Deferred tax asset not brought to account Research & Development Offset Income tax attributable to operating loss The applicable weighted average effective tax rates are as follows: Balance of franking account at year end c. Deferred tax assets Provisions Other Set-off deferred tax liabilities Net deferred tax assets d. Deferred tax liabilities Exploration expenditure Mine development costs Set-off deferred tax assets Net deferred tax liabilities e. Deferred Tax Assets Provisions (balance of DTA) Tax Effect of Tax losses - offset to DTA. Tax Effect of Unused tax losses for which no deferred tax asset has been recognised Total (450,310) (3,531,738) 335 449,975 (348,428) (348,428) Nil Nil 1,494,627 55,186 (1,549,814) - 36,399 1,513,415 (1,549,814) - 879,830 - 2,735,910 3,615,740 61 3,531,677 (1,078,596) (1,078,596) Nil Nil 1,365,508 72,217 (1,437,725) - 89,084 1,348,641 (1,437,725) - 1,070,206 - 2,176,839 3,247,045 Page 33 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 5: EARNINGS PER SHARE a. Earnings used to calculate basic EPS b. Weighted average number of ordinary shares outstanding during the year used in calculating basic and diluted EPS 30 June 2016 30 June 2015 $ $ (1,152,604) (10,693,933) Number of Shares Number of Shares 142,184,223 138,214,041 Options totalling NIL (2015: NIL) and Share Performance Rights totalling NIL (2015: 869,111) are anti – dilutive and not included in the calculation of diluted earnings per share. NOTE 6: CASH AND CASH EQUIVALENTS Cash at bank and in hand NOTE 6A: OTHER ASSETS Cash deposits supporting Guarantees for Rehabilitation Bonds NOTE 7: TRADE AND OTHER RECEIVABLES Interest receivable Prepayments Provision for Doubtful debts Other receivables GST and ABN withholding tax receivables NB: At the reporting date, none of the trade and other receivables were past due or impaired. 30 June 2016 30 June 2015 $ $ 1,405,004 1,105,998 30 June 2016 30 June 2015 $ 865,590 $ 865,590 30 June 2016 30 June 2015 $ $ 20,360 28,657 0 61,356 74,558 184,931 22,379 460,448 (238,302) 623 571 245,719 Page 34 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 7A: INVENTORIES Iron ore ( crushed & uncrushed ) at cost Impairment FY2014 (diminution in value at net realisable value) Impairment FY2015 (diminution in value at net realisable value) Impairment FY2016 (diminution in value at net realisable value) Iron ore (crushed & uncrushed) at net realisable value 30 June 2016 30 June 2015 $ $ 3,315,988 (608,726) (749,316) (693,599) 1,264,347 2,677,549 (608,726) (749,316) 0 1,319,506 NOTE 8: PLANT & EQUIPMENT a. Movements in Carrying Amounts Movement in the carrying amounts for each class of plant and equipment between the beginning and the end of the current financial year Opening balance at 1 July 2014 Additions Disposals Provision for Impairment(ref Note20) Reclassification / adjustment Depreciation Plant & Equipment $ 300,507 877 0 (214,687) 19,113 (68,485) Motor Vehicles $ 54,373 0 (25,692) 0 (19,113) (6,001) Total $ 354,880 877 (25,692) (214,687) 0 (74,486) Balance at 30 June 2015 37,325 3,567 40,892 At Cost Accumulated depreciation/impairment Losses 345,489 (308,164) 30,067 (26,500) 375,556 (334,664) Balance at 30 June 2015 Additions Disposals Depreciation Balance at 30 June 2016 37,325 6,185 0 (879) 42,631 3,567 0 0 0 3,567 40,892 6,185 0 (879) 46,198 At Cost Accumulated depreciation/impairment Losses 351,675 (309,044) 30,067 (26,500) 381,742 (335,544) Balance at 30 June 2016 42,631 3,567 46,198 Page 35 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 9: EXPLORATION EXPENDITURE Exploration and evaluation phase expenditure capitalised 30 June 2016 30 June 2015 $ 121,330 $ 296,947 Movements Opening balance Exploration capitalised Impairment / relinquishment Balance 296,947 4,324 (179,941) 121,330 263,640 33,307 0 296,947 The value of the Company’s interest in exploration expenditure is dependent upon the:  the continuance of the economic entity rights to tenure of the areas of interest;  the results of future exploration; and  The recoupment of costs through successful development and exploitation of the areas of interest, or alternatively, by their sale. The exploration properties may be subjected to claim(s) under native title, or contain sacred sites, or sites of significance to Aboriginal people. As a result, exploration properties or areas within the tenements may be subject to exploration restrictions, mining restrictions and/or claims for compensation. At this time, it is not possible to quantify whether such claims exist, or the quantum of such claims. NOTE 9A: MINE DEVELOPMENT Opening Balance Mine Development Costs Deferred Mine Waste Amortisation – Mine Development Provision for Impairment Transferred from Exploration 30-Jun-16 $ 1,583,647 0 0 0 0 0 1,583,647 30-Jun-15 $ 10,036,165 (32,374) 0 0 (8,420,144) 0 1,583,647 Page 36 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 10: TRADE AND OTHER PAYABLES Current Trade creditors Other creditors Voluntary deferred employee payments (i) Advance (ii) 30 June 2016 30 June 2015 $ $ 168,409 80,995 470,000 1,650,144 2,369,548 175,913 483,429 187,500 1,571,461 2,418,303 Note (i) : To conserve cash resources of the company during the period the operations are under suspension, the directors have voluntarily elected to take reduced drawings of their remuneration and the balance is deferred till the cash flow situation of the company improves. Consequently, as at 30 June 2016, the amount of $470,000 remains outstanding for remuneration Note (ii) : Trade and other payables include an advance received from Singapore based, Frost Global Pte Ltd (“Frost Global”). The Company had in May 2013 entered into an Off-take Agreement for its Nelson Bay River Iron Ore DSO products for 800,000 tonnes with Frost Global. As a part of the agreement, Frost Global was to provide funding of US$4 million by way of advance towards the supply of Iron Ore to be repaid by deduction from gross sale proceeds from each of the first 8 shipments (of appx 42,000 tonnes +/- 10%) of Iron Ore to Frost Global. The company has received US $3 million in this regard (in total including US$2 million during the financial year ended 30th June 2014) from Frost Global to-date and has made 3 shipments to Frost Global to- date wherein US $ 1.125 million has been adjusted to-date. Further cash repayments totalling US$0.45 million have been made during the year ended 30 June 2015. Additionally, there is an outstanding Debtors balance of US$ 0.141 million due from Frost Global. Consequently, the net outstanding advance amount from Frost Global of US$ 1.284 million (A $1.65 million) is included under current liabilities. The company has paid off US$ 1.284 million, after balance sheet date in early July 2016. NOTE 10A: TRADE AND OTHER PAYABLES Non-Current Loan Other payables (i) 30 June 2016 30 June 2015 $ 0 39,137 39,137 $ 3,542 0 3,542 (i) Tasmanian Government has by a deed , deferred royalties for the period of two years from first production to be repaid in 12 equal quarterly instalments beginning 28 Feb 2016. The instalments which are due after 12 months from the date of this report are shown as non- current. Page 37 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 10B: REHABILITATION PROVISION Opening Balance Arising during the year Write back of unused provisions Unwinding of Discount Utilisation Closing Balance NOTE 11: CONTRIBUTED EQUITY 30 June 2016 30 June 2015 $ $ 1,499,300 1,499,300 0 0 0 0 0 0 0 0 1,499,300 1,499,300 30 June 2016 30 June 2015 $ $ 142,184,223 (2015: 142,184,223) Fully paid ordinary shares 15,063,424 15,094,311 The Company has issued capital amounting 142,184,223 (2015: 142,184,223) with no par value as at 30/06/2016. Share Placement completed in early July 2016 for appx $2.8 million by issue of 142,184,223 shares to increase total number of shares to 284,368,446 (as per approval in Shareholders meeting on 16th June 2016). Movements Opening balance Shares issued Options exercised and to be allotted Capital raising costs Closing balance Share Application (funds received for shares not yet allotted – allotted & issued after balance sheet date in July 2016) (a) Ordinary Shares At the beginning of the reporting period Shares issued during the period – – 9 September 2014 31 October 2014 At reporting date (on 30th June) Page 38 15,094,311 0 0 (30,887) 15,063,424 1,210,922 13,591,891 1,623,467 0 (121,047) 15,094,311 0 Number of Shares Number of Shares 142,184,223 121,760,000 0 0 20,293,334 130,889 142,184,223 142,184,223 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 (b) Options Opening balance Expired during the year Closing balance (c) Share Performance Rights (“SPR”) Opening balance Vested/ Shares issued Expired during the year Closing balance Number of Options Number of Options 30 June 2016 30 June 2015 0 0 0 0 0 0 Number of SPR Number of SPR 30 June 2016 30 June 2015 869,111 0 (869,111) 0 1,000,000 (130,889) 0 869,111 The Performance Rights vest in three tranches on 31 October 2013, 31 October 2014 and 31 October 2015 respectively as one (1) Performance Right for every one (1) tonne of DSO Iron Ore sold over the three years ending on 30 June 2013, 30 June 2014 and 30 June 2015 respectively. For the year ended 30 June 2015 there was nil tonnes of DSO Iron Ore sold. Consequently, 869,111 Performance Rights expired on 31 October 2015. (d) Capital risk management The Company’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they may continue to provide returns for shareholders and benefits for other stakeholders. Due to the nature of the Company’s activities, being mineral exploration, the Company does not have ready access to credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Company’s capital risk management is the current working capital position against the requirements of the Company to meet exploration programmes and corporate overheads. The Company’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required. The working capital position of the Company at 30 June 2016 and 30 June 2015 are as follows: Cash and cash equivalents Trade and other receivables Inventories Trade and other payables and provisions Working capital position 30 June 2016 30 June 2015 $ 1,405,004 184,931 1,264,347 (2,391,270) 463,012 $ 1,105,998 245,719 1,319,506 (2,441,548) 229,675 Page 39 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 12: ACCUMULATED LOSSES AND RESERVES a. Accumulated Losses At the beginning of the reporting period Net loss At reporting date b. Option Reserve 30 June 2016 30 June 2015 $ $ 13,864,989 1,152,604 15,017,593 3,171,056 10,693,933 13,864,989 The option reserve records items recognised as expenses on valuation of share based payments including employee options. Please refer note 19 for more information. During the year nil (2015: nil) options and nil (2015: nil) Share Performance Rights were issued. NOTE 13: COMMITMENTS a. The Company has tenements rental and expenditure commitments of: Payable: – not later than 12 months – between 12 months and 5 years – greater than 5 years 30 June 2016 30 June 2015 $ $ 10,000 10,000 0 0 0 0 b. The Company has other rental and expenditure commitments of $19,200 within the next 12 months, NIL between 12 months and 5 years and NIL beyond 5 years. This pertains to office lease. The rental expenditure incurred during the year was $ 28,800 ( 2015: $ 28,800) NOTE 14: CONTINGENT LIABILITIES AND CONTINGENT ASSETS The company has currently met all the expenditure commitments relating to tenement exploration activities as required under the exploration licenses granted by Mineral Resources Tasmania. The Directors are not aware of any other contingent liabilities or contingent assets other than mentioned elsewhere in the financial report. Page 40 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 15: CASH FLOW INFORMATION (a) Reconciliation of Cash Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows: 30 June 2016 $ 30 June 2015 $ Cash at Bank and in Hand 1,405,004 1,105,998 (b) Reconciliation of Cash Flow from Operations with Operating Loss after Income Tax Operating loss after income tax Non-cash flows: Tenement impairment/relinquishment Depreciation and amortisation Prov Impairment Def Mine Waste Prov for impairment of plant & equipment Prov for impairment of deferred mine waste Provision for doubtful debt Changes in assets and liabilities (Increase)/decrease in trade and other receivables (Increase)/decrease in inventory Increase/(decrease) in operating liabilities (1,152,604) (10,693,933) 179,941 879 0 0 0 (47,824) 107,930 55,159 (2,422) 0 74,486 1,077,832 214,687 7,342,314 238,302 (65,838) 749,316 (827,587) Net Inflow/ (outflow) from operations (858,941) (1,890,420) NOTE 16: RELATED PARTY TRANSACTIONS There are no related party transactions except for remuneration payments to employees in normal course of business. Disclosures relating to key management personnel compensation are set out in Note 2 to the financial statements, and in the Remuneration Report contained within the Directors Report. NOTE 17: FINANCIAL INSTRUMENTS a. Financial Risk Management The Company’s financial instruments consist mainly of deposits with banks and accounts receivable and payable. The main purpose of non-derivative financial instruments is to raise finance for the Company’s operations. Derivatives are not currently used by the Company for hedging purposes. The Company does not speculate in the trading of derivative instruments. Page 41 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 i. Treasury Risk M anagement The senior executives of the Company meet on a regular basis to analyse currency and interest rate exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts. ii. Financial Risks The main risks the Company is exposed to through its financial instruments are interest rate risk, liquidity risk and credit risk. Interest rate risk The Company does not have any debt that may be affected by interest rate risk. Sensitivity analysis At 30 June 2016, if interest rates had changed by -/+ 75 basis points from the weighted average rate for the year with all other variables held constant, post-tax loss for the Company would have been $5,410 lower/higher (2015 $4,356 lower/higher) as a result of lower/higher interest income from cash and cash equivalents. Liquidity risk The Company manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised borrowing facilities are maintained. Credit risk The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the balance sheet and notes to the financial statements. The Company does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the economic entity. b. Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. All financial assets and financial liabilities of the Company and the parent entity at the balance date are recorded at amounts approximating their carrying amount. The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Company is the current bid price. The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. c. Interest Rate Risk The Company’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rate for each class of financial assets and financial liabilities comprises: Page 42 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 18: OPERATING SEGMENTS The company operates predominately in one segment involved in mineral exploration & development. Geographically, the consolidated entity is domiciled and operates in one segment being Australia. In accordance with AASB 8 Operating Segments, a management approach to reporting has been applied. The information presented in the Statement of Comprehensive Income and the Statement of Financial Position reflects the sole operating segment. NOTE 19: SHARE-BASED PAYMENTS No share based payments were made in either the current financial year or the prior financial year. NOTE 20: ACCOUNTING STANDARDS NOT YET EFFECTIVE A number of new standards, amendments to standards and interpretations issued by the AASB which are not yet mandatorily applicable to the company have not been applied in preparing these financial statements. Those which may be relevant to the Group are set out below. The company does not plan to adopt these standards early.  AASB 9 Financial Instruments and associated Amending Standards (applicable for annual reporting period commencing 1 January 2018) The Standard will be applicable retrospectively (subject to the comment on hedge accounting below) and includes revised requirements for the classification and measurement of financial instruments, revised recognition and derecognition requirements for financial instruments and simplified requirements for hedge accounting. Key changes made to this standard that may affect the Group on initial application include certain simplifications to the classification of financial assets, simplifications to the accounting of embedded derivatives, and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. The directors anticipate that the adoption of AASB 9 will not have a material impact on the Group’s financial instruments.  AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods commencing on or after 1 January 2018). When effective, this Standard will replace the current accounting requirements applicable to revenue with a single, principles-based model. Except for a limited number of exceptions, including leases, the new revenue model in AASB 15 will apply to all contracts with customers as well as non-monetary exchanges between entities in the same line of business to facilitate sales to customers and potential customers. The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. To achieve this objective, AASB 15 provides the following five-step process: - identify the contract(s) with a customer; - identify the performance obligations in the contract(s); Page 43 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 - determine the transaction price; - allocate the transaction price to the performance obligations in the contract(s); and - recognise revenue when (or as) the performance obligations are satisfied. This Standard will require retrospective restatement, as well as enhanced disclosures regarding revenue. The directors anticipate that the adoption of AASB 15 will not have a material impact on the Group’s revenue recognition and disclosures.  AASB 16: Leases (applicable to annual reporting periods commencing on or after 1 January 2019). AASB 16 removes the classification of leases as either operating leases or finance leases for the lessee effectively treating all leases as finance leases. Short term leases (less than 12 months) and leases of a low value are exempt from the lease accounting requirements. Lessor accounting remains similar to current practice. The directors anticipate that the adoption of AASB 15 will not have a material impact on the Group’s recognition of leases and disclosures.  AASB 2014-3: Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations [AASB 1 & AASB 11] AASB 2014-3 amends AASB 11 Joint Arrangements to provide guidance on the accounting for acquisitions of interests in joint operations in which the activity constitutes a business. The amendments require: (a) the acquirer of an interest in a joint operation in which the activity constitutes a business, as defined in AASB 3 Business Combinations, to apply all of the principles on business combinations accounting in AASB 3 and other Australian Accounting Standards except for those principles that conflict with the guidance in AASB 11 (b) the acquirer to disclose the information required by AASB 3 and other Australian Accounting Standards for business combinations This Standard also makes an editorial correction to AASB 11. The directors anticipate that the adoption of these amendments will not have a material impact on the financial statements.  AASB 2014-9: Amendments to Australian Accounting Standards – Equity Method in Separate Financial Statements (AASB 2014-9 applies to annual reporting periods beginning on or after 1 January 2016. Early adoption permitted). AASB 2014-9 amends AASB 127 Separate Financial Statements, and consequentially amends AASB 1 First- time Adoption of Australian Accounting Standards and AASB 128 Investments in Associates and Joint Ventures, to allow entities to use the equity method of accounting for investments in subsidiaries, joint ventures and associates in their separate financial statements. AASB 2014-9 also makes editorial corrections to AASB 127. Page 44 S H R E E M I N E R A L S L T D NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 The directors anticipate that the adoption of these amendments will not have a material impact on the financial statements.  Other standards not yet applicable There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions 21: AFTER BALANCE SHEET DATE EVENTS A share Placement was completed in early July 2016 for approximately $2.8 million as per approval in Shareholders meeting on 16th June 2016. A shipment of Iron Ore of 29,282 tonnes was made in August 2016 for an approximate value of US$ 1.188 million. NOTE 22: COMPANY DETAILS The registered office and principal place of business of the Company is: Unit 2, the Pines Business Centre 888 Forrest Street Cottesloe WA 6011 Ph: (08) 92861509 Fax: (08) 93855194 Page 45 S H R E E M I N E R A L S L T D DIRECTORS’ DECLARATION 1. in the opinion of the directors of Shree Minerals Limited (‘the Company’): (a) The financial statements and notes as set out on pages 17 to 45 are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the financial position of the Company as at 30 June 2016 and of its performance, as represented by the results of its operations and its cash flows, for the financial year ended on that date; and (ii) complying with Australian Accounting Standards, the Corporations Regulations 2001, and other mandatory professional reporting requirements; and (b) The audited remuneration disclosures included in the Directors’ report for the year ended 30 June 2016, comply with section 300A of the Corporations Act 2001. (c) Having regard to matters as set forth in Note 1, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. (d) The Company has included in the notes to the financial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards. 2. The directors have been given the declarations required by Section 295A of the Corporations Act from the chief executive officer and chief financial officer for the financial year ended 30 June 2016. Dated at Unit 2, The Pines Business Centre, and 88 Forrest Street, Cottesloe, WA 6011 this 28th day of September 2016. Signed in accordance with a resolution of the directors: _______________________ Sanjay Loyalka Director Page 46 Stantons International Audit and Consulting Pty Ltd trading as Chartered Accountants and Consultants PO Box 1908 West Perth WA 6872 Australia Level 2, 1 Walker Avenue West Perth WA 6005 Australia Tel: +61 8 9481 3188 Fax: +61 8 9321 1204 ABN: 84 144 581 519 www.stantons.com.au INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SHREE MINERALS LIMITED Report on the Financial Report We have audited the accompanying financial report of Shree Minerals Limited, which comprises the statement of financial position as at 30 June 2016, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the company 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 and fair presentation 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 is free from material misstatement, whether due to fraud or error. In note 1, the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial report, comprising the financial statements and notes, complies 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. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. Our audit did not involve an analysis of the prudence of business decisions made by directors or management. 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. 47 Liability limited by a scheme approved under Professional Standards Legislation Auditor’s opinion In our opinion: (a) the financial report of Shree Minerals Limited is in accordance with the Corporations Act 2001, including: (i) (ii) giving a true and fair view of the company’s financial position as at 30 June 2016 and of its performance for the year ended on that date; and complying with Australian Accounting Standards and the Corporations Regulations 2001. (b) the financial report also complies with International Financial Reporting Standards as disclosed in note 1. Report on the Remuneration Report We have audited the remuneration report included in pages 10 to 14 of the directors’ report for the year ended 30 June 2016. 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 Auditor’s opinion In our opinion the Remuneration Report of Shree Minerals Limited for the year ended 30 June 2016 complies with section 300A of the Corporations Act 2001. STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International) (An Authorised Audit Company) Samir Tirodkar Director West Perth, Western Australia 28 September 2016 48 S H R E E M I N E R A L S L T D SHAREHOLDER INFORMATION ADDITIONAL INFORMATION The following additional information not shown elsewhere in the report is required by the Australian Securities Exchange Ltd in respect of listed public companies only. This information is current as at 19th September 2016. SUBSTANTIAL SHAREHOLDERS The company has received substantial shareholder notices from; – Mr Sanjay Loyalka (26,474,078 ordinary shares) – Oceania Coal Resources NL (15,000,000 ordinary shares) – China Alliance International Holdings Group (23,223,632 ordinary shares) – RB Investments Pte Ltd (172,621,723 shares) ISSUED SECURITIES Refer note 11 of the financial statements. VOTING RIGHTS The voting rights attached to the Fully Paid Ordinary shares of the Company are: 1. At a meeting of members or classes of members each member entitled to vote may vote in person or by proxy or by attorney; and 2. On a show of hands every person present who is a member has one vote, and on a poll every person present in person or by proxy or attorney has one vote for each ordinary share held. DISTRIBUTION SCHEDULE – SHAREHOLDINGS AS AT 19th SEPTEMBER 2016 Security Classes Fully Paid Ordinary Shares Holdings Ranges 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 100,001-99,999,999,999 Totals Holders Total Units % 4 15 174 165 58 416 431 56,247 1,707,929 6,235,798 276,368,041 284,368,446 0.000 0.020 0.601 2.193 97.187 100.000 UNMARKETABLE PARCELS There are 245 unmarketable parcels as at 19th September 2016 totalling 2,587,261 ordinary shares. Page 49 S H R E E M I N E R A L S L T D SHAREHOLDER INFORMATION 20 LARGEST SHAREHOLDERS AS AT 19th SEPTEMBER 2016 Holder Name RB INVESTMENTS PTE LTD IACG PTY LTD CHINA ALLIANCE INTERNATIONAL HOLDINGS GROUP LIMITED OCEANIA COAL RESOURCES NL MEGAWILD ENTERPRISES PTY LTD ULLAPOOL INVESTMENTS PTY LTD ROSECLIFF HOLDINGS PTY LTD EXPORT MARKETING (BVI) LTD MR SAHIB INDERJIT SINGH CLAREMONT HOLDINGS LIMITED MR MICHAEL LEE ANGHIE & MRS SANDY MICHELLE ANGHIE MR AMRIK SINGH HEER MRS RENU KUMAR & DR ASOK KUMAR SANJAY NAGNATH MUKHEDKAR & ASHWINI DAVRAY PRIMO FINANCIAL GROUP INC DR DEEPAK NARAN CHETAN KARIA CITICORP NOMINEES PTY LIMITED TANDON SUPERANNUATION SERVICES PTY LTD MR SANJAY KUMAR LOYALKA Balance 172,621,723 25,809,078 % 60.704% 9.076% 23,223,632 15,000,000 4,525,000 4,400,000 4,375,000 2,500,000 1,915,150 1,687,500 1,600,000 1,500,000 1,458,334 1,284,064 1,250,000 1,000,000 767,032 603,166 583,334 565,000 8.167% 5.275% 1.591% 1.547% 1.538% 0.879% 0.673% 0.593% 0.563% 0.527% 0.513% 0.452% 0.440% 0.352% 0.270% 0.212% 0.205% 0.199% Total 266,668,013 93.776% Page 50 S H R E E M I N E R A L S L T D CORPORATE GOVERNANCE STATEMENT This statement outlines the main corporate governance practices in place during the financial year. The Directors on behalf of the shareholders monitor the business affairs of the Company. For this, they formally have adopted a Corporate Governance Charter, which is designed to encourage Directors and other Shree personnel to focus their attention on accountability, risk management, and ethical conduct. The Company has adopted the following policies, protocols, and corporate governance structures:  Structure of Board and Committees  Nominations and Remuneration Committee Charter  Audit and Risk Management Committee Charter  Board Members’ Code of Conduct  Conflict of Interest Protocol  Group Code of Conduct/Values  Risk Management Policy  Policy on the Trading of Company’s Shares  Release of Price Sensitive Information  Board Calendar (Strategic Governance Issues)  Board and Management Performance Enhancement Policy This statement describes Shree Minerals Ltd’s position in relation to each of the recommendations set by the ASX Corporate Governance Council (“Recommendations”). The Recommendations are set out in the ASX Corporate Governance Council’s Corporate Governance Principles and recommendations (3rd Edition) so as to ensure that its practices are largely consistent with those Recommendations from time to time. The Corporate Governance Charter will be reviewed and adjusted, as required, on an on-going basis including in line with the ASX Corporate Governance Council amendments to the Recommendations. The Company is committed to implementing high standards of corporate governance. In determining what those high standards should involve the Company has turned to the ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations. The Company is pleased to advise that the Company’s practices are largely consistent with those ASX guidelines. Unless disclosed below, all the best practice recommendations of the ASX Corporate Governance Council have been applied for the entire financial year ended 30 June 2016. Board Composition The skills, experience, and expertise relevant to the position of each director who is in office at the date of the annual report and their term of office are detailed in the director’s report. Page 51 S H R E E M I N E R A L S L T D CORPORATE GOVERNANCE STATEMENT The Board sets out below its “if not why not” report in relation to those matters of corporate governance where the Company’s practices depart from the Recommendations RECOMMENDATION SHREE MINERALS LIMITED CURRENT PRACTICE 1.1 The role of the Board and Management. 1.2 Appointment and re-election of Board members. 1.3 Written agreements. 1.4 Company Secretary 1.5 Diversity 1.6 Board Evaluation 1.7 Performance evaluation of senior executives 2.1 Nomination Committee 2.2 Board and skills matrix Board Satisfied. at Charter www.shreeminerals.com in the Corporate Governance Statement. available is Satisfied. Procedures For Selection And Appointment Of Directors is available at www.shreeminerals.com in the Corporate Governance Statement. Satisfied. All directors and senior executives are provided with formal letter of appointment which sets out the terms and conditions of appointment including their duties , rights , responsibilities and expectations. Satisfied. The company secretary is accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board. Not satisfied. The company considers that given the current small size of the company’s operations where there are very few employees, this objective is not practical to be achieved till such time that the company’s operations are increased. Accordingly, the company has not established a policy concerning diversity. It is the policy of the Board to conduct annual evaluations of its effectiveness and that of individual Directors. Whilst the performance of the Board is appraised on an ongoing basis, during the year no formal appraisal was conducted. Whilst the performance of management is appraised on an ongoing basis. During the year no formal appraisal of management was conducted. Not satisfied. The Board consider that given the current size of the board (4), this function is efficiently achieved with full board participation. Accordingly, the Board has not established a nomination committee. Satisfied. The Board has been formed so that it has effective to adequately discharge its responsibilities and duties given its current size and scale of operations. composition, commitment size and Please also refer to the Procedures For Selection And is available at Appointment Of Directors which Page 52 S H R E E M I N E R A L S L T D CORPORATE GOVERNANCE STATEMENT RECOMMENDATION SHREE MINERALS LIMITED CURRENT PRACTICE www.shreeminerals.com in the Corporate Governance Statement. 2.3 2.4 Size and Composition of the Board Disclosed in the Directors report. A majority of the board should be directors. independent Not Satisfied. Due to the size of the company and its operations the Board has determined increasing the size of the Board to achieve this would not be efficient. 2.5 The chair should be an independent director. Not Satisfied. Due to the size of the company and its operations Mr Rajesh Bothra is Non Executive Chairman. 2.6 Induction Program. 3.1 Companies should have a code of conduct and disclose the code or a summary of the code . 4.1 The board should establish an audit committee. 4.2 The board should receive assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the corporations Act is founded on a sound system of risk management and internal control and that the system is operating in relation to effectively financial reporting risks. in all material respects 4.3 External Auditor at AGM 5.1 Make timely and balanced disclosure Page 53 Nan informal induction process exists and is facilitated by the Chairman. The process includes the new Directors meeting with the other Board members and the senior management in order to gain an insight into the key issues and culture of the Company. Satisfied. The Code of conduct is available at www.shreeminerals.com in the Corporate Governance Statement. Not satisfied. The Board consider that given the current size of the board, this function is efficiently achieved with full board participation. Accordingly, the Board has not established an audit committee. Satisfied. declaration pursuant to the 2016 financial period. The Board has received a section 295A The Company has ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit. Satisfied. Continuous disclosure policy is available at www.shreeminerals.com in the Corporate Governance statement. S H R E E M I N E R A L S L T D CORPORATE GOVERNANCE STATEMENT RECOMMENDATION 6.1 Information on website 6.2 Investor relations 6.3 Security holders meetings 6.4 Electronic communication 7.1 Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies. 7.2 Implementation of risk management systems and risk review. 7.3 Internal Audit function 7.4 Sustainability risks. Page 54 SHREE MINERALS LIMITED CURRENT PRACTICE The company has provided information about itself and its governance to investors via its website. Shareholders communication strategy Satisfied. is available at www.shreeminerals.com in the Corporate Governance statement. The Company has adopted the ASX Guidelines for Notice of Meetings. is available at Shareholders communication strategy www.shreeminerals.com in the Corporate Governance statement. The Board consider that given the current size of the board, this function is efficiently achieved with full board participation. Accordingly, the Board has not established a Risk committee. Risk management at program www.shreeminerals.comin the Corporate Governance statement. available is The Board is responsible for reviewing annually its risk management system. The review for this year is yet to be completed. Given the size of the current operations, currently there is no internal audit activity undertaken. The Company manages its exposure to economic risk and environmental risk while it does not consider that it currently has any material exposure social sustainability risks, however will monitor the exposure. to External Risk factors that materially have an impact include : 1. Fluctuations in commodity prices and impacts of ongoing global economic volatility may negatively affect our results, including cash flows and asset values. 2. Currency exchange rate fluctuations 3. Financial : Liquidity & cash flow risks 4. 5. Unexpected natural and operational Increased costs catastrophes EPA Tasmania has notified the company that that the variation of the Environment permit in Nov’13 to allow a temporary PAF rock dump for DSO south pit has been rendered invalid in a judicial review by the Court in Dec’14. The original permit remains valid, and without variation. As a consequence, the current PAF storage S H R E E M I N E R A L S L T D CORPORATE GOVERNANCE STATEMENT RECOMMENDATION SHREE MINERALS LIMITED CURRENT PRACTICE temporary dump is not compliant. To resolve the issue, the Company is in discussions with the EPA and the Circular Head Council to finalise application for a new permit when granted, will replace the existing permit. All government approvals (other than variation pertaining to temporary PAF rock permit for DSO south pit) for the project remain valid. These include the Mining Lease, Federal Government Environmental Approval and Tasmanian Government’s Environment & Development permits (etc). licences its activities The Company holds various exploration & mining licences in the State of Tasmania, to regulate Australia. These conditions and regulations with respect to the rehabilitation of areas disturbed during the course of its activities. As far as the Directors are aware, there has been no known breach of the Company’s licence conditions other than those disclosed in the Directors report. include implementation of best practice The social and environmental practices, well beyond simple compliance, has been an integral part of Company's philosophy. The company in discussions with the regulatory authorities is also looking at innovative work towards implementing / developing best environment management practices. The company has also voluntarily committed to research to enhance the understanding of orchid biology in north- western Tasmania, as a best practice environmental management contribution to orchid science. The research will assist with the ongoing management and protection of threatened orchid species in north-western Tasmania. Shree Minerals also recognises the opportunities that the presence of our project creates to support Devil Facial Tumour research. Hence, Devil numbers around the mine site are monitored as part of the mine’s operational monitoring of the effectiveness of its devil (and quoll) impact mitigation measures, and these observations will be valuable data for the Save the Tasmanian Devil Program (STDP). The Company recognises the importance of identifying and managing risks and ensuring appropriate control measures are in place. 8.1 The board should establish a remuneration committee. Not Satisfied. The Board consider that given the current size of the board, this function is efficiently achieved with full board participation. Accordingly, the Board has not Page 55 S H R E E M I N E R A L S L T D CORPORATE GOVERNANCE STATEMENT RECOMMENDATION SHREE MINERALS LIMITED CURRENT PRACTICE established a remuneration committee. 8.2 Executive versus non- executive remuneration. Current Remuneration policies are set out Company’s Remuneration Report. in the 8.3 Equity based remuneration. Securities The at www.shreeminerals.com in the Corporate Governance statement. available Policy is Other Information Further information relating to the company’s corporate governance practices and policies has been made publicly available on the company’s web site at www.shreeminerals.com. Page 56 

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