ABN 80 110 385 709

Annual Financial Report

For the year ended 30 June 2016

Contents

Chairman's Letter 3

Operations Review 4

Directors' Report 10

Remuneration Report (Audited) 14

Auditor's Independence Declaration 18

Financial Report 19

Consolidated Statement of Profit or Loss and Other Comprehensive Income 19

Consolidated Statement of Financial Position 20

Consolidated Statement of Cash Flows 21

Consolidated Statement of Changes in Equity 22

Notes to the Consolidated Financial Statements 23

Directors' Declaration 49

Independent Auditor's Report 50

Tenement Schedule 52

Additional Securities Exchange Information 53

Corporate Directory 54

The Company's Corporate Governance Statement is available online at www.dynastyresources.com.au in the Corporate › Corporate Governance section.

Chairman's Letter

For year ended 30 June 2016

Dear Shareholder,

Your Company, Dynasty Resources, has regained momentum during the year ended 30 June 2016. In July 2015, the Board successfully completed a fully underwritten rights issue, raising more than $2 million. This was a turning point for the Company given that cash reserves had dwindled to under $300,000 in the previous quarter.

In September 2015, the Board entered an agreement to acquire 100% of the shares in a Hong Kong company (USA Nongbiao Purina Group Agricultural Holding Ltd, 'Nong Biao'), which owned 75% of a Shanghai based financial leasing company (Shanghai Chen Mao Financial Lease Co Ltd, 'Chen Mao'). The Board believes the transaction allowed Dynasty a low price entry to the Chinese financial leasing market as the purchase consideration was only A$10,000. According to the China Daily (21 July 2015), China's financial leasing market was expected to hit 5 trillion yuan (~A$1.1 trillion) during the first half of the 2016 calendar year to become the world's largest, surpassing that of the United States, with the sector expected to maintain an annual growth rate of 30% over the next five years.

The Board believes this transaction will provide short term cash flow, with the aim to generate positive income for the Company for the first time. This would then enable Dynasty to reposition itself in the business of mineral exploration.

The Board completed the acquisition of Nong Biao in December 2015, and then raised a further $1.225m via two tranches in January and February of 2016 through placements to sophisticated investors.

This improved cash position was reflected in the Company's strengthening share price, which appreciated from around 1 cent to more than 5 cents in March 2016. The Board then secured a further $1.2m via a share placement at this improved share price in June 2016.

After an extensive review program, the Company announced in June 2016 an intention to explore for lithium in the East Pilbara, Western Australia. With the growth of the renewable energy industry, particularly in China, lithium has been one of the hottest commodities in recent years with demand expected to remain as more and more electronic devices and electric cars rely on the power storage of batteries. Your Company's lithium project is well located in one of the most active exploration regions in Western Australia, only 3 kilometres along strike from the Pilgangoora resource and 20 kilometres east of the Wodgina resource. Other companies, including Altura Mining Ltd (ASX:AJM) and Pilbara Minerals Ltd (ASX:PLS), have made major lithium discoveries in the region which supports the Board's confidence in this strategy to achieve exploration success for shareholders.

Post year end the Company completed a partially underwritten 1-for-10 rights issue, combined with a placement to sophisticated investors, raising $2.3 million. Cash held is intended to be used to fund the lithium exploration program, provide capital support to expand Chen Mao's financial leasing business in Shanghai, and the evaluation of other business opportunities the Board is considering.

Over the year, the Company has successfully raised nearly $6.8 million, with no brokerage or commissions to third parties. This has been achieved during what has been a difficult period for most junior exploration companies.

The focus for the Board over coming months is to test the potential of the identified prospective lithium exploration target and undertake the planned drilling program. Also, the financial leasing business in Shanghai has been expanding with the establishment of the local management team.

We look forward to these initiatives achieving strong results in the 2016/2017 year. The Board would like to thank all shareholders for their support of the last year.

Yours faithfully,

Lewis Tay Executive Chairman

13 October 2016

Operations Review

For year ended 30 June 2016

Dynasty Resources Limited (Dynasty or Company) is focused on developing successful resource projects within Australia. The Company has undergone significant portfolio changes during the financial year to reflect the changing markets and to take advantage of opportunities within the exploration and financial sectors.

Our Strategy

Due to ongoing difficult market conditions throughout the period, the Company continued the review of its tenement holdings and exploration activities and has preserved funds by consolidating the tenement holdings to two key tenements. Dynasty is presently advancing the lithium potential at the North Shaw project where there already exist iron ore resources with a free carried royalty held by Dynasty. In addition, Dynasty holds a tenement in the highly prospective Tropicana Belt.

North Shaw Project

Dynasty owns tenement E 45/2728-I that sits adjacent to significant lithium resources in the Pilgangoora Area of the East Pilbara region in Western Australia. During the year Dynasty has completed an initial evaluation of the lithium potential of the tenement and considers the ground highly prospective with known pegmatites in the area, a continuation of the Pilgangoora mineralised corridor through the tenement and large areas of lithologies conducive to the intrusion of lithium pegmatites.

Ground work was commenced in June 2016 with reconnaissance mapping and sampling searching for outcropping pegmatites within the tenements. This work has identified two large pegmatite bodies, one in the southern part of the tenement and one in the northern section. Numerous other pegmatites were located throughout the tenement and 146 rock chip samples were collected for analysis. While no lithium minerals were observed, the emplacement of these large pegmatites indicates the potential of the area to host a lithium bearing pegmatite body. Preliminary work suggests the contact zone between the granite batholith and metamorphic units has been the focal point of pegmatite intrusion, with pegmatites intruding the metamorphic zone preferentially. The identification of pegmatites along the contact with the Pilgangoora greenstone belt and mafic enclaves within the batholith is highly encouraging. Reconnaissance mapping indicates that this contact zone continues under cover in the north of the tenement. This zone is within the Pilgangoora Lithium corridor and is considered the most prospective zone for a lithium resource.

Dynasty is planning to test for extensions to the Pilgangoora mineralisation within the northern portion of the tenement using bedrock drilling and geochemistry.