Kibaran Resources : Annual Report to Shareholders 2016

200Annual Rep1ort 6

Corporate Directory

Robert Pett Non-Executive Chairman Andrew Spinks Managing Director

Grant Pierce Executive Director John Conidi Non-Executive Director Christoph Frey Non-Executive Director

Robert Hodby

338 Hay Street,

Subiaco WA 6008

Telephone: +61 8 6380 1003

Facsimile: +61 8 6380 1026

Internet: www.kibararesources.com

Email: info@kibaranresources.com

Link Market Services Limited

Ground Floor, 178 St Georges Terrace Perth WA 6000

Telephone: +61 8 9211 6652

Facsimile: +61 8 9211 6660

Steinepreis Paganin

Level 4, The Read Buildings, 16 Milligan Street

Perth WA 6000

Telephone: +61 8 9321 4000

Facsimile: +61 8 9321 4333

Ernst & Young

11 Mounts Bay Road, Perth, WA 6000

Telephone: +61 8 9429 2222

Facsimile: +61 8 9429 2435

Westpac Banking Corporation 109 St Georges Terrace, Perth, WA 6000

Borse Frankfurt: FMK Fully paid ordinary shares

Contents

Chairman's Report 2

Review of Operations 4

Board of Directors and Executive Management 18

Directors' Report 20

Remuneration Report 24

Corporate Governance 35

Auditor's Independence Declaration 44

Financial Statements 45

Directors' Declaration 82

Independent Auditor's Report 83

ASX Additional Information 85

1

Chairman's Report

It is a pleasure to be reporting to you for the first time as Chairman of Kibaran Resources Ltd. While new to the company I have known our Managing Director Andrew Spinks and Executive Director Grant Pierce for many years from our time together at Resolute Mining Ltd where I was founding Chairman. I have a high regard for the expertise, experience and energy of the Kibaran team and

the progress and milestones achieved by them at the Epanko Graphite Project.

Compared with other mining projects in which the Kibaran team has been involved, Epanko is technically straight forward. It is relatively low cost with shallow open pit mining and simple metallurgy and processing. It is also located in a sound mining jurisdiction where management has vast operating experience. The feasibility study has been completed to a high standard by GR Engineering, a local firm with an excellent track record in Tanzania, and shows the project to be technically sound and financially robust.

The strengths of the project and high quality of the product are demonstrated by the fact that Kibaran has secured binding agreements covering 100 per cent of Epanko's forecast production.

This is an excellent achievement for a project at Epanko's stage of development and reflects both the strong outlook for graphite demand and the world-class qualities of Epanko's product.

Epanko's status as a premier graphite project is further evidenced by the highly-respected companies which have chosen to be part of it.

The Company has partnered with blue-ribbon German industrial giant ThyssenKrupp, signing a binding offtake agreement, while German bank KfW IPEX-Bank and African resource lender Nedbank are in advanced discussions with Kibaran concerning debt funding for the project.

And in another sign of Epanko's outstanding quality, Kibaran recently announced a binding agreement with Japan's Sojitz Corporation for a further 14,000 tonnes of graphite for the growing lithium-ion battery market in East Asia.

This agreement is considered particularly valuable to Kibaran because it provides the Company with a gateway to the growing lithium-ion battery market via Sojitz. Sojitz is a key

supplier to some of the electronics giants which in turn manufacture the batteries. This market is expanding rapidly and it is already clear that there may soon be an opportunity to increase the capacity of the project to 60,000 tonnes a year to supply the battery market.

In addition to this, Kibaran believes there is also an excellent opportunity to add further value though downstream processing of Epanko graphite making the concentrate into battery grade, or spherical graphite.

These opportunities to add significant value though expansion and downstream processing were the rationale for our recent $10.9 million capital raising, which was overwhelming supported by existing and new institutional investors.

The proceeds will be used to undertake engineering design, mining and project expansion studies and to conduct feasibility work on downstream processing for battery grade graphite and for other high tech products such as graphite foil. It will also allow your management team to accelerate pre development activities at Epanko, including our relocation action plan. Work has already commenced on these activities and significant progress is expected in the next quarter as we move ever closer to project financing and development.

Underpinning this work and achievements to date is a business plan which your board and management team believe is both realistic and achievable. We aim to produce high quality graphite for the non-Chinese markets and meet the growing graphite demand from the battery markets and other high tech applications. Our objective is to do this while aligning our production capacity to our binding agreements. We also seek to do whatever is feasible to add value to our product with downstream processing. This multi-pronged approach is designed to maximise shareholder value.

I believe your Company has made outstanding progress over the past year towards achieving these objectives. On behalf of the Board, I would like to express our appreciation for the efforts and achievements of our management and project team during the year and to you our shareholders for your continued support.

Robert Pett Chairman

2