Nemex Resources : 2016 Annual Report

ANNUAL REPORT 2016

In April 2014, the Company entered into a conditional agreement to earn up to a 51% interest in Wavefront Biometric Technologies Pty Ltd ("Wavefront") and its unique biometric technology. Wavefront has developed and patented a biometric technology for reliable and secure authentication of a person's identity, based on capturing data associated with the eye. Nemex currently holds a 40% interest in Wavefront.

As part of its technology development programme Wavefront facilitated a review of the technology through the International Centre for Biometric Research at Purdue University ("Purdue ICBR"), a globally recognised leader in biometric technology analysis.

Purdue ICBR completed testing Wavefront's system (comprising its hardware and testing and analysis software) and Wavefront advised Nemex that Purdue ICBR was unable to independently validate and report on the Wavefront system performance metrics (such as False Acceptance Rate, False Rejection Rate and Equal Error Rate) without further in-depth analysis of the Wavefront software. Purdue ICBR noted Wavefront's system software does not provide data output to calculate performance metrics in a format typically reviewed by Purdue ICBR.

Wavefront has advised the Company it has engaged the services of a software development group based in Australia to upgrade Wavefront's system software to provide data output to calculate performance metrics in a format typically reviewed by Purdue ICBR.

The initial upgrade program, which is ongoing, has allowed image data to be captured and entered into the Wavefront algorithm and the resulting output data to be read in a format that is compatible with many commercial biometric readers.

Wavefront has advised that the initial work conducted has revealed that further refinements of the Wavefront technology should be undertaken before undertaking further independent validation at Purdue ICBR.

The further enhancements are expected to include:

• Development of the front end image capture capability;

• Refine the algorithm in terms of accuracy and possibly speed; and

• Optimization of the multi-modal aspects of the technology by creating an intelligent fusion methodology which could aid in the improvement of performance.

Nemex continues to support Wavefront in its current technology development and will reassess its position once results are received from further independent validation at the International Centre for Biometric Research at Purdue ICBR, currently expected by December 2016.

During the year, Nemex had an interest in two mineral projects:

• The Télimélé DSO iron project in Guinea, where Nemex has identified significant near-surface, high-grade mineralisation. No field work was undertaken at the project during the year due to the spread of the Ebola virus in Guinea. Despite significant efforts Nemex has been unsuccessful to date in securing a partner to assist develop the project and the Board has determined to relinquish this interest as the results to date and the current depressed iron ore price make the likelihood of an economic deposit being defined unlikely.

• The Woodley iron project in Western Australia. GWR withdrew from the Woodley farm-in agreement during the year and Nemex is assessing its options with respect to this project.