CRUSADER RESOURCES LIMITED

A B N: 94 106 641 963

Half year Financial Report

For the half-year ended 30 June 2016

Corporate Directory

Directors

Stephen Copulos Non-Executive Chairman Robert Smakman Managing Director

Paul Stephen Executive Director

John Evans Non-Executive Director Mauricio Ferreira Non-Executive Director Jim Rogers Non-Executive Director

Company Secretary

Andrew Beigel

Registered office and principal place of business

Suite 1, Level 1

35 Havelock Street West Perth WA 6005 Australia

Telephone: +61 8 9320 7500

Facsimile: +61 8 9320 7501

Internet: www.crusaderresources.com

Brazil Office

Avenida do Contorno, 2090 Pilotis, Floresta, 30.110-012 Belo Horizonte - MG

Brazil

Telephone: +55 31 2515 0740

Auditors Bankers

Deloitte Touche Tohmatsu Macquarie Bank Limited

Level 7, Brookfield Place, Tower 2 Level4, 235 St Georges Terrace

123 St Georges Terrace Perth WA 6000 Perth WA 6000

Telephone: +61 8 9365 7000

Facsimile: +61 8 9365 7001

Share Register Solicitors

Security Transfers Registrars Pty Ltd GTP Legal

770 Canning Highway 68 Aberdeen Street

Applecross WA 6959 Northbridge WA 6003

Telephone: +61 8 9315 2333 Telephone: +61 8 6555 1866

Facsimile: +61 8 9315 2233

ASX Code:

Ordinary shares - CAS

Directors' Report

The directors present their report together with the financial report of Crusader Resources Limited ("the Company" or "Crusader") and its subsidiaries (the Group) for the half-year ended 30 June 2016, and the auditors review report thereon.

Directors

The directors of the company at any time during or since the end of the half-year are set out below. Directors were in office for the entire period unless otherwise stated.

Name

Mr. S. Copulos Chairman

Mr. R. Smakman Managing Director

Mr. P. Stephen Executive Director

Mr. J. Evans Non-executive Director

Mr. M. Ferreira Non-executive Director

Mr. J. Rogers Non-executive Director - appointed 2 March 2016

Operating Result

The Group incurred an after tax loss for the half-year ended 30 June 2016 of $4,472,981 (30 June 2015: loss of

$5,079,612).

Review of operations

Juruena Gold Project

The Juruena Project (100% Crusader owned) is located in Central Brazil on the southern fringe of the Amazon basin, situated on the western end of the prospective Juruena-Alta Floresta Gold Belt.

Following Crusader's first 10,000m exploration drilling program at Juruena and subsequent announcement of a Maiden JORC resource for the project, a second drilling program was commenced at the project in March 2016 with the aim of converting resources from the Inferred to the Indicated category as well as seeking to expand the size of the overall gold resource at Juruena. The program originally planned for 6,000m was increased to 7,700m. The Querosene and Dona Maria prospects have been the initial focus of the drilling program with initial holes also drilled for two new targets, Tomate and Mauro.

In line with the excellent results received from the first drilling program at Juruena, spectacular results have continued to be received from the current program.

Results received include 1.02m @ 7.30 g/t Au from 156.1m in hole QD027; 1.47m @ 29.42 g/t Au from 57.2m in QD028; 2.0m @ 11.09 g/t Au from 113.9m in QD030 (including 1m @ 19.56 g/t Au); 1.40m @ 48.62 g/t Au from 84.0m in QD039 (including 0.4m @ 87.96 g/t Au and 0.64m @ 47.92 g/t Au); 2.90m @ 75.02 g/t Au from 112.80m in QD043 (including 0.45m @ 335.09 g/t Au).

Work on the Scoping Study for Juruena continued during the period with progress made on updated pricing for plant and equipment. Crusader managed to secure a purchase option for an appropriately sized, turnkey crushing and milling plant. The proposed plant, which will be rebuilt in partnership with Brazilian equipment supplier and foundry - GNA, (a group that has had a long association with Crusader), will be capable of treating up to 300tpd.

The Scoping Study is now also considering an open-pit option to start the project, which if feasible, could have significant initial capital and operating cost benefits. The current drilling program will collect important data that will be used in the Scoping Study.

Discussions are ongoing with potential financial partners to provide a funding facility to develop the Juruena Gold Project. A final firm agreement is likely to be linked to the completion of the Scoping Study and a new resource statement following the completion of drilling and sampling.

Directors' Report (continued)

Review of operations (continued)

Posse Iron Project

The Posse Mine increased profitability over the half year period resulting in a Gross Loss of $28,431. Sales volume of lump products increased as average costs were reduced and margins increased. The contribution of NPO (coarse lump) to profitability continues to increase.

Crusader maintains an optimistic outlook for the second half of 2016 and anticipates the mine will operate profitably for the remainder of the year.

Operationally, the original office and laboratory locations have been moved to a location close to the mine gate, allowing access to lenses of high-grade ore as well as expanding the pit floor.

Borborema Gold Project

During the first half of the year, Crusader announced the completion of an internal optimisation review into the

development for Stage 1 of Crusader's 100% owned Borborema Gold Project, located in the northeast of Brazil.

The review showed economics for the development were positive and, as a result, further work towards a new Feasibility Study has begun (including revising the existing Ore Reserve estimate).

This review was completed using factored costs from previously unfinished feasibility work (draft BFS), updated consumable prices, a lower US$ gold price ($1,150/oz) and a higher BRL:USD exchange rate (4:1).

Borborema has a Proven and Probable Ore Reserve of 42Mt @ 1.18 g/t for 1.6Moz. (Refer to Table 1 below). This estimate was made in 2012 and includes the two main lenses of mineralisation. The optimisation of Borborema Stage 1 plans to exploit the upper lens only, which includes ore of approximately 20Mt at a strip ratio of approximately 3.5:1. This pit-size optimises the resource at current prices, minimises waste movement, reduces capital and operational costs and does not sterilise the future development of the deeper lens (Stage 2).

Table 1: Ore Reserve estimate for the Borborema Gold Project.

Reported at a 0.4 g/t cut-off for oxide and 0.5g/t cut-off for fresh material. The cut-off grades have been based on the latest throughput costs, gold price of US$1350/oz, metallurgical recovery of 95% and then rounded up. Note, appropriate rounding has been applied, subtotals may not equal total figures.

The Stage 1 project footprint has been adapted to respect the existing highway and powerlines - removing the requirement and cost to move. All direct project impacts (waste storage, pit, infrastructure etc.) have been restricted to Company owned land.

Dry stacking of tailings, following filtration, has now been proposed. This has the important additional benefits of removing the planned tailings dam, simplifying the overall operation and reducing capital costs with minimal impact on operational costs.

The updated project plan has been submitted to the relevant authorities in Brazil and the full licences are expected to be received in the 2016 calendar year. Metallurgical and comminution samples (~6 tonnes) have been shipped to an independent lab in Australia for testwork to confirm the processing flowsheet and investigate various processing cost