Niuminco : Half Yearly Report

INTERIM REPORT FOR THE HALF YEAR ENDED

31 DECEMBER 2016

Niuminco Group Limited Half Year Interim Report - 31 December 2016

DIRECTORS' REPORT 2

AUDITOR'S INDEPENDENCE DECLARATION 6

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 7

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 8

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 9

CONSOLIDATED STATEMENT OF CASH FLOWS 10

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 11

DIRECTORS' DECLARATION 17

INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS 18

1

Your Directors present their report on the consolidated entity consisting of Niuminco Group Limited ("the Company") and the entities it controlled (together, "the Group"), at the end of, or during the half-year ended 31 December 2016.

DIRECTORS

The following people were Directors of the Company during the half year and up to the date of this report unless otherwise stated:

• Ian Plimer - Independent Chairman

• Tracey Lake - Managing Director

• Neill Arthur - Independent Non-Executive Director (resigned 14 February 2017)

• Matthew Roberts - Independent Non-Executive Director (resigned 14 February 2017)

• Mark Ohlsson - Executive Director (appointed 13 February 2017)

PRINCIPAL ACTIVITIES

Niuminco Group Limited, through its subsidiaries, holds prospective exploration areas and mining leases in Papua New Guinea. These include exploration licences at May River and Bolobip, and mining leases at Edie Creek. The Group also has a controlling 72.54% interest in TNT Mines Limited (TNT), a tin and tungsten exploration company with "brown-field" assets in Tasmania.

OPERATING RESULTS

For the half year ended 31 December 2016 the consolidated loss of the group after income tax amounted to

$1,011,283 (2015: $1,137,198) including non-cash items of depreciation and amortisation $38,057 (2015:

$53,687). Total revenues including sales revenue from gold and silver sales for the period was $321,392 (2015:

$398,189).

REVIEW OF OPERATIONS

Exploration & evaluation May River & Bolobip

A drilling plan was finalised and preparations commenced for a minimum 3 holes (1000 metres) at Bolobip with drilling scheduled for the current half year. Planning for a minimum 3 hole drill program at May River was also advanced, and is planned to follow the Bolobip program.

Edie Creek Mine Mining and Production

Production for the period 1 July to 31 December, 2016 was 5,817.4g (187.1 ounces) of gold and 5,356.7g (172.2

ounces) of silver for total sales of AUD$316,135.

A total of 2,306 wet tonnes of ore was processed at an average grade of 2.5 grams per processed tonne of ore.

At the Surmans vein system significant further development work was undertaken to give future access to higher grade ore.

However, during the period both the grade and quantity of ore mined and processed was negatively impacted by a number of factors. These included lengthy downtime on all three major mining plant items, downtime on the concentrator plant for repairs plus installation and testing of the new cyclone, continuous loss of mains power from mid-August to the present, the ongoing development work at Surmans and Karuka, extremely wet weather and the processing of lower grade ore.

To assist in achieving consistently higher future mining and processing levels in the order of 40 to 60 tonnes per day, a number of critical items of mining plant and processing equipment were purchased during the half year, with delivery taken of a new tip truck and two vibrating feeders. Delivery of the other items, including a roller crusher, 5 tph ball mill and centrifugal concentrator are scheduled over the coming weeks.

At current gold prices and exchange rates the current operating cost break-even production level at Edie Creek is approximately 2,580 grams (83 ounces) of gold per month.

Drilling

The 6 holes diamond core drilling program at the Enterprise vein system at Edie Creek was completed during the half year, confirming a further potential source of high grade material to feed an upgraded processing circuit.

Assay results on the six completed drill holes EDD019, EDD020, EDD021, EDD022, EDD022a (not sampled) and EDD023 were as follows and each of the holes contained a higher grade vein section conforming to the predicted west- dipping vein model:

• EDD 019 intersected 5.4m @ 2.97g/t Au and 94g/t Ag from 8m depth, including: 2m @ 6.89g/t Au and 195g/t Ag from 10m.

• EDD 022 intersected 1.0m @ 13.4g/t Au and 473g/t Ag from 32m and 3.0m @ 4.61g/t Au and 100.3g/t Ag from 38m, including:

  1.0m @ 8.98g/t Au and 88.5g/t Ag from 38m.

• EDD 020 intersected 9m @ 1.07g/t Au and 62g/t Ag from 12m, including: 1m @ 4.06g/t Au and 21g/t Ag from 13m.

• EDD 021 intersected 3.4m @ 2.03g/t Au and 143g/t Ag from 35m, including 2.1m @ 3.04g/t gold and 167g/t Ag from 35m.

• EDD 023 intersected 4.4m @ 1.66g/t Au from 43.4m and 0.30m @ 6.07g/t Au from 53.5m ( a footwall remnant), including:

1.4m @ 3.2g/t Au from 43.4m.

However, despite using HQ drill rods and appropriate drilling techniques, the fractured ground and cavernous veins resulted in the Enterprise drilling yielding less than 50% core recovery of the oxidised veins and an inferred large gold loss.

Therefore, given the repeated confirmation of the vein grade and its continuity, and the nature of the ground, Niuminco's geological team of Professor Ian Plimer, John Nethery and Lewis Koesi agreed that it would not be possible to obtain a JORC resource for this system. However, it will be added as a potential source of high grade material for feeding the upgraded processing circuit.

The Enterprise vein has a strike length of at least 500 metres, a true width of 1.0m to 1.5 m and being continuous to, and open at, a depth of 60 metres

Additionally, the first drill-hole (EDD 024) of the planned 10 hole drilling program of the potential bulk-tonnage Karuka -Enterprise stock-work and diatreme zone was also completed. This target has a strong gold anomaly defined by 1,366 continuous chip samples of weathered rock outcrop in trenches over a cumulative length of 2,732m, which averaged 0.53g/t Au.

Coring was triple-tubed in HQ size rods and drilling muds and polymers were used to enhance core recovery. EDD 024 had shown initial encouraging results using the standard Fire Assay method of 0.55g/t Au for the first 48m assayed from surface. The recognition of coarse gold in on-site panning prompted the re-assay of this section of core samples using the Screen Fire Assay method, which is specifically designed to more accurately assay for coarse free gold.

The Screen Fire Assay results confirmed the presence of coarse gold by showing a threefold increase in weighted average grade to 1.72g/t Au for the first 48m re-assayed and the assays displayed consistent and anomalously high gold values throughout the section.