Fifield NSW

RIMFIRE PACIFIC MINING NL ANNUAL REPORT 2016

Contents

PAGE

CHAIRMAN'S REPORT 2

REVIEW OF EXPLORATION ACTIVITIES 3

DIRECTORS' REPORT 11

REMUNERATION REPORT 16

AUDITOR'S INDEPENDENCE DECLARATION 21

CORPORATE GOVERNANCE STATEMENT 22

SCHEDULE OF MINING TENEMENTS 29

STATEMENT OF COMPREHENSIVE INCOME 30

STATEMENT OF FINANCIAL POSITION 31

STATEMENT OF CHANGES IN EQUITY 32

STATEMENT OF CASH FLOWS 33

NOTES TO THE FINANCIAL STATEMENTS 34

Note 1 - Statement of Accounting Policies 34

1. - Revenue 40

2. - Results for the Financial Year 41

3. - Income Tax Expense 41

4. - Auditor's Remuneration 42

5. - Earnings Per Share 42

6. - Cash and Cash Equivalents 42

7. - Receivables 43

8. - Controlled Entity 43

9. - Property, Plant & Equipment 43

10. - Other Assets 44

11. - Exploration & Evaluation Costs 44

12. - Payables 45

13. - Provisions 45

14. - Contributed Equity 45

15. - Parent Entity Information 46

16. - Capital and Leasing Commitments 47

17. - Contingent Liabilities and Contingent Assets 47

18. - Segment Reporting 47

19. - Key Management Personnel Disclosures 47

20. - Related Party Details 48

21. - Cash Flow Information 48

22. - Financial Risk Management 49

23. - Events Occurring after the Reporting Period 51

24. - Company Details 51

DIRECTORS' DECLARATION 52

INDEPENDENT AUDITOR'S REPORT 53

ADDITIONAL INFORMATION FOR PUBLICLY LISTED COMPANIES 55

CORPORATE DIRECTORY 58

Rimfire Pacific Mining NL - 2016 Annual Report to Shareholders | i

Chairman's Report

Dear Fellow Shareholders,

Rimfire has continued to develop and progress on three key fronts during the 2016 Financial Year. This progress has been driven by a focused, cost conscious management team under the leadership of our Managing Director, John Kaminsky, with technical insights and expertise from our Principal Geologist, Colin Plumridge.

Our areas of key focus have been:

1. SORPRESA GOLD AND SILVER RESOURCE

   The Company performed further examination within the Sorpresa gold and silver mineralisation area with additional drilling at the Roadside and Trench 31 areas and more metallurgical testing. During the year we achieved some excellent results with Trench 31 producing 9 metres at 18.1 g/t Au from 18 metres, and Roadside providing results such as 9m @ 16.1g/t Au & 297 g/t Ag from 43m and 7 metres at 13.4 g/t Au and 751g/t Ag from 19m. There were also many bonanza grade silver results in excess of 1000 g/t achieved at Roadside.

   Data derived from these programs has increased our understanding of the Sorpresa resource, and we look forward to providing shareholders with an updated assessment of this resource during 2017.

2. REGIONAL EXPLORATION

   Throughout the year we have undertaken geological mapping, creek and augur geochemical sampling, a ground gravity survey and drilling across our leases. This work has increased our knowledge of the gold and copper prospects east of Sorpresa. Importantly the 7km x 2km gold prospective "Sorpresa Corridor" has been identified which includes the Fortuna Prospect area to the north where management is looking forward to further work being undertaken during 2017.

3. PARTNERSHIP OPPORTUNITIES

As foreshadowed during the year Rimfire has been having discussions with potential partners who will bring technical and financial resources to assist in accelerating discovery growth within the Company's prospect portfolio. The Board is confident that we will establish a partnership arrangement before the end of 2016.

CORPORATE ACTIVITIES

Over the last 15 months more than $3.5 million was raised from existing and new shareholders through a rights issue, a share placement and share purchase plan. The board and management are grateful for this support from shareholders. In addition, R&D funding was secured providing substantial funds in excess of those raised from shareholders.

During the coming year we will continue to maintain tight cost controls with emphasis of maximising dollars spent in the ground and increasing our total exploration dollar spend.

Finally, I acknowledge and thank management, our staff, contractors, stakeholders and my fellow directors for their contributions and work during the year. In particular, I would like to acknowledge and thank Tom Burrowes for his guidance and wise counsel over more than 5 years he served as a director and John Gillett for his work during his time as Chairman.

Ian McCubbing Chairman of the Board Dated 12th October 2016

Rimfire Pacific Mining NL - 2016 Annual Report to Shareholders | 2

Review of Exploration Activities

FIFIELD PROJECT AREA EXPLORATION

Rimfire Pacific Mining NL ('Rimfire or the Company') is currently focussed on exploration for gold (Au), silver (Ag) and base metals (Cu) on its Fifield Project Area located at Fifield, in Central Western NSW and its goal is to continue discovery growth and establish a potential minable resource(s) within the currently identified Cu, Au, Ag and Pt mineralisation located within the greater Sorpresa (35km2) project areas.

The Company is still uncovering new opportunities at Fifield, typically with subtle surface expressions for the mineralisation. The surface prospecting, mapping and sampling conducted in 2016 has successfully extended the discovery knowledge, assisting the integrated understanding of the

district around Sorpresa and has led to better interpretation of the geology and mineralisation thereby creating additional discovery opportunities. The area around Sorpresa remains highly prospective.

The regional prospects have continued to advance, including the recent establishment of the 7km x 2km North-South "Sorpresa Corridor", which is prospective for gold. The Sorpresa discovery provides proof of concept for additional discoveries in the district surrounds. The discovery of copper bearing mineralisation to the east of Sorpresa, including Eclipse South, (best intersection of 4m @ 6.5% Cu & 2.3g/t Au from 119m in Fi588, in July 2015), provides additional encouragement to the regional potential.

During the previous period the Company reached a major milestone with the announcement of its maiden JORC compliant Indicated and Inferred mineral resource for the Sorpresa Gold and Silver Project being 6.4Mt for 7.9 million ounces of silver and 125,000 ounces of gold (at a 0.5g/t Au & 25g/t Ag cut-off).

The Company also owns 223 hectares of freehold land at Fifield, which covers much of the historic alluvial platinum/gold workings in the district. The registered tenements and licences covered an area of approximately 566km2 and were nearly doubled in the period and were as follows:

Exploration Summary and Highlights

The Company conducted ongoing drill delineation of gold and silver mineralisation along strike and at depth at the Sorpresa gold and silver mineralised zone within the high grade lenses at Trench 31 and Roadside areas, focused on the oxide material at shallow depth.

The Company's third best drill hole (Fi 0689) at Fifield, was drilled, with 9m @ 18.15g/t Au & 100g/t Ag from 18m

showing Sorpresa continues to have upside along its current 1.5km strike length.

3 | Rimfire Pacific Mining NL - 2016 Annual Report to Shareholders