Tanami Gold NL : Annual Financial Statements

TANAMI GOLD NL

DIRECTORS' REPORT. 3

LEAD AUDITOR'S INDEPENDENCE STATEMENT. 14

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME. 15

CONSOLIDATED STATEMENT OF FINANCIAL POSITION. 16

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY. 17

CONSOLIDATED STATEMENT OF CASH FLOWS. 18

NOTES TO THE FINANCIAL STATEMENTS. 19

DIRECTORS' DECLARATION. 40

INDEPENDENT AUDITOR'S REPORT. 41

2

The Directors present their report together with the consolidated financial report of the Consolidated Entity, being the Company and its subsidiaries for the year ended 30 June 2017 and the auditor's report thereon.

1. Directors

   The Directors of the Company at any time during or since the end of the financial year are:

   Non-Executive Chairman - Gerard J McMahon (appointed 23 April 2013 as a Non-Executive Director and Chairman as of 6 June 2013)

   Mr Gerard McMahon is admitted as a Barrister in Hong Kong and New South Wales and has been living and working in Hong Kong for over 35 years. He is a Non-Executive Chairman of ASX listed Oriental Technologies Investment Limited (appointed 1999), Non-Executive Director of Hong Kong listed Guangnan (Holdings) Limited (appointed 2000), and Non-Executive Director of Indonesian Investment Fund Limited (appointed 2001) a company listed on the Irish Stock Exchange. Mr McMahon is also a consultant to Asian Capital (Corporate Finance) Limited, a Hong Kong based corporate finance and advisory firm which he co-founded. Over the past 30 years, Mr McMahon has been a Director of other listed Companies in the Asia Pacific region which are involved in the banking, manufacturing, retailing, information technology, medical, telecoms & mining industries. Mr McMahon's past experience includes extensive involvement in Hong Kong's Securities and Futures Commission as Chief Counsel, Member and Executive Director and is specialised in Hong Kong company law, securities and banking law and takeovers and mergers regulations.

   Special responsibilities - Member of the Audit Committee and the Remuneration and Nomination Committee.

   Non-Executive Director - Arthur G Dew, B.A., L.L.B. (appointed 2 December 2011)

   Mr Dew is a non-practising Barrister with a broad range of corporate and business experience and has served as a Director, and in some instances Chairman of the Board of Directors, of a number of publicly listed companies in Australia, Hong Kong and elsewhere. He is Chairman and Non-Executive Director of Hong Kong listed companies Allied Group Limited, Allied Properties (H.K) Limited and APAC Resources Limited and is a Non-Executive Director of Hong Kong listed SHK Hong Kong Industries Limited. He is also Non-Executive Chairman of ASX listed company's Dragon Mining Limited and Tian An Australian Limited (previously known as PBD Developments Limited).

   Special responsibilities - Mr Dew was a Member of the Audit Committee and the Remuneration and Nomination Committee until 6 June 2013.

   Non-Executive Director - Carlisle C Procter, B.Ec, M.Ec, FFin, (appointed 9 December 2011)

   Mr Carlisle Procter graduated from the University of Sydney with a Bachelor's Degree and a Master's Degree in Economics. He is a fellow of the Financial Services Institute of Australasia (FFin.). Based in Australia, Mr Procter worked in the Reserve Bank of Australia for over 30 years, holding various senior management positions. Since leaving the Reserve Bank, he has worked as a consultant to the International Monetary Fund and the Asian Development Bank, and has also undertaken private consulting work in the Philippines, Indonesia and Papua New Guinea. Mr Procter has been a Non-Executive Director of a number of public companies. He is a Non-Executive Director of ASX listed company Dragon Mining Limited.

   Special responsibilities - Chairman of the Audit Committee and Member Remuneration and Nomination Committee.

   Non-Executive Director - Brett Montgomery (appointed 6 February 2013)

   Mr Brett Montgomery has extensive experience in the management of publicly listed mining companies having previously been the Managing Director of Kalimantan Gold NL, a Director of Grants Patch Mining Limited and Chairman and Joint Managing Director of Eurogold Limited. Mr Montgomery was appointed a Non-Executive Director of Magnum Gas and Power Limited on 9 October 2008 (resigned 19 August 2016) and Non-Executive Director of EZA Corporation Ltd on 19 November 2014 (resigned 18 January 2016) and Non-Executive Director of Bard1 Life Sciences Limited (formerly Eurogold Limited) on 17 November 2014.

   Special responsibilities - Member of the Audit Committee and Chairman of the Remuneration and Nomination Committee.

2. Company Secretary Pauline Collinson was appointed Company Secretary on 18 July 2013 and has over 25 years' experience in the mining industry.
3. Directors' Meetings

   Directors	Boarding Meetings		Audit Committee Meetings		Remuneration and Nomination Committee Meetings
   Eligible to attend	Attended	Eligible to attend	Attended	Eligible to attend	Attended
   Mr G McMahon	5	5	2	2	-	-
   Mr A Dew	5	5	2	2	-	-
   Mr C Procter	5	5	2	2	-	-
   Mr B Montgomery	5	5	2	2	-	-
   Mr M Wong*	5	-	2	-	-	-

   *Mr M Wong is alternate director to Mr A Dew.

4. Nature of Operations and Principal Activities

   The Company is a no liability company and is domiciled and incorporated in Australia. The principal activity of the Consolidated Entity during the course of the financial year was gold exploration. The Company's exploration centres are situated in the Tanami Desert straddling the Western Australian and Northern Territory border. The Company's main undertaking, the Central Tanami Project ("CTP") in the Northern Territory is located adjacent to the Tanami Track approximately 90 kilometres east of Coyote and is the subject of an unincorporated joint venture with Northern Star Resources NL.

5. Operating and Financial Review

As previously announced, the Company and Northern Star Resources Limited ("NST") have formed an unincorporated joint venture ("JV") to advance the Company's CTP.

In accordance with the JV, management of the exploration activities at the Company's CTP have been handed over to NST which will sole fund all JV expenditure including all CTP exploration and evaluation costs, assessment and development costs, mining of the JV tenements and refurbishing the CTP process plant and associated infrastructure, during the Sole Funding Period.

The Sole Funding Period will expire on the date on which the process plant at the CTP has been refurbished to operating condition and has operated for a continuous 30 day period or has produced 5,000 ounces of gold ore (whichever occurs first). On the expiry of the Sole Funding Period, NST will have earned a further 35% undivided interest in the CTP (taking NST's total JV Interest to 60%).

On 23 September 2016, the Company announced that it had reached agreement with Metals X Limited ("MLX") which ended the legal proceedings (the "Proceedings") between the parties. The terms of the settlement were:

1. each party provided and received a full discharge and release from any and all claims in respect of, or arising out of or in connection with the subject matter of the Proceedings;

2. each party will no longer pursue its claims against the other;

3. the Proceedings were dismissed on a no admission of liability basis; each party will bear its own legal costs; and

4. the Company (jointly and severally with Tanami (NT) Pty Ltd) made payment to MLX of $3,000,000.

In reaching this settlement with MLX, the Company took into account its legal advice together with the significant costs and inherent uncertainty of litigation, and the substantial time commitments and distraction that the litigation presents for the board and management.

On 14 July 2016, the Coyote Plant Agreement with ABM Resources NL Initial Lease Term expired and on that date, the management and maintenance of Coyote was handed back to the Company.

During the year, the Company sold 250,000 shares at a weighted average price of $5.53 per share to receive approximately $1.37 million net of transaction costs.

At 30 June 2017, the Company had 750,000 shares in NST remaining.