West African Resources Limited

(ABN 70 121 539 375)

Annual Financial Statements

for the year ended 30 June 2015

West African Resources Limited (ABN 70 121 539 375)

Directors

CORPORATE INFORMATION

Mark Connelly (Non-Executive Chairman) (Appointed 23 June 2015) Richard Hyde (Managing Director)

Simon Storm (Non-Executive Director)

Francis Harper (Non-Executive Chairman) (Resigned 23 June 2015) Jean-Marc Lulin (Non-Executive Director) (Resigned 28 August 2015) Colin Jones (Non-Executive Director) (Resigned 28 August 2015)

Company Secretary

Simon Storm

PRINCIPAL PLACE OF BUSINESS

14 Southbourne Street

Scarborough 6019 Western Australia

Ph: +61 (8) 9481 7344

Fax: +61 (8) 9481 7355

SOLICITORS

Allion Legal Level 2

50 Kings Park Road West Perth WA 6005 Ph: +61 (8) 9216 7100

REGISTERED OFFICE

14 Southbourne Street

Scarborough 6019 Western Australia

Ph: +61 (8) 9481 7344

Fax: +61 (8) 9481 7355

SECURITY EXCHANGE AUSTRALIA

Australian Securities Exchange Ltd Level 40, Central Park

152-158 St George's Terrace

Perth WA 6000

WEBSITE

www.westafricanresources.com

STOCK EXCHANGE CANADA

TSX Venture Exchange The Exchange Tower 130 King Street West Toronto, ON

M5X 1J2

LOCAL OFFICE

Secteur 27,

Quartier Ouayalghin,

Parcelles 07/08, Lot 22, Section SL, Ouagadougou

Burkina Faso

Ph: +226 50 36 73 84

SHARE REGISTRY AUSTRALIA

Computershare Investor Services Pty Ltd Level 11, 172 St George's Terrace

Perth WA 6000

Ph: 1300 787 272

AUDITORS

HLB Mann Judd

Level 4, 130 Stirling Street

Perth 6000 Western Australia

Ph: +61 (8) 9227 7500

Fax: +61 (8) 9227 7533

SHARE REGISTRY CANADA

Computershare

510 Burrard Street, 3rd Floor Vancouver, British Columbia V6C 3B9 Ph: 604 661 9436

West African Resources Limited

Highlights of the year included

Metallurgical testwork achieved recoveries of up to 90% gold -

supporting plans for heap leach starter project

Scoping Study, NI 43-101 tech report and PFS completed for Mankarga 5 New high grade zone identified at Mankarga 5

US$5 million facility from Macquarie to complete Feasibility Study

Significant progress on BFS, expected to be complete by the end of 2015

Project financing negotiations commenced Drilling completed at Mankarga 5 and Mankarga 1

Potential to add further tonnes to resource inventory

Summary

During the year ended 30 June 2015, West African Resources completed 13,445m of drilling. A summary of the drilling undertaken during the year is as follows:

Diamond: 2,909m

Reverse Circulation (RC): 165m

Auger: 4,480m

Aircore: 5,892m

The Company's focus is on developing the Mankarga 5 Gold Project as quickly as possible. A Scoping Study

was completed in July 2014 and a positive Pre-Feasibility Study followed in February 2015.

West African is now progressing a Bankable Feasibility Study for the project and undertaking infill drilling to incorporate a resource upgrade into the BFS. It has appointed consultants to undertake activities regarding project financing and permitting for the project.

The Company is continuing to explore the Mankarga 5 deposit, and has also commenced exploration at Mankarga 1, the most advanced prospect adjacent to the Mankarga 5 Mineral Resource, giving the potential for additional oxide tonnes for the proposed heap leach starter project.

West African Resources Limited

Chairman's Address

Dear Shareholder

It gives me great pleasure to welcome you to the 2015 Annual Report for West African Resources Limited. Having only just stepped into the chair at the end of the reporting period, this is my first Annual Report for the Company but it is an exciting time to be at the helm.

The company has had a very productive year and has achieved all that we set out to do as we move closer to becoming a West African gold producer. We are on track to achieve that next year with our Mankarga 5 heap leach starter project in Burkina Faso. While market conditions have been difficult, particularly for companies in the project development stage as we are, we have worked hard to keep our exploration and administration costs to a minimum. It is a testament to our Managing Director Richard Hyde and his team to have achieved all that we have over the past year.

A Scoping Study for Mankarga 5 released early in the financial year demonstrated it to be a high-margin, low-Capex project, and we followed this by completing a Pre-Feasibility Study, released in February, that improved the project outlook even further.

Highlights of the PFS included:

• Pre-production capital of US$46.6 million, including US$8.7 million working capital and contingency

• Annual gold production of 69,000 ounces for first three years, 49,000 ounces for life of mine

• Mine life of 7 years

• All-in site costs of US$538/oz for first 3 years, US$749/oz life of mine

• IRR of 63% with a 14 month payback of capital due to strong early project cash flow.

Working on these strong results, we are moving ahead with the Bankable Feasibility Study for the project, which we hope to have completed by the end of 2015. We are completing this in parallel with project financing negotiations in the hope that we can get Mankarga 5 into production as soon as possible, maximising the returns to our shareholders.

Meanwhile, we continue to undertake infill and exploration drilling at Mankarga 5 and have commenced exploration at the most advanced prospect adjacent to the deposit, Mankarga 1, in the hope that we can add further resources to our inventory.

I am excited about the year ahead and putting the experience from many years working in West Africa to use in my new role as Chairman. In the past I have worked with companies including Adamus Resources, Endeavour Mining and Papillion Resources, which merged with B2Gold Corp in a US$570 million deal, and I have experience in financing, development, construction and operation of mining projects in a variety of commodities, including gold. I am hopeful I can provide strong leadership to West African at this important time in our history.

I thank our Shareholders for your continued support, and I look forward to sharing this journey with you as we transition from

gold explorer and developer to West Africa's next gold producer.

Mark Connelly Chairman

REVIEW OF OPERATIONS

Mankarga 5 Gold Project (Tanlouka Permit), Burkina Faso

Background

West African completed the acquisition of the Mankarga 5 deposit, located on the Tanlouka Permit (Figure 1), from Channel Resources in January 2014. The Company aims to be a +50,000oz per annum gold producer in 2016 via a low- cost heap leach starter project at Mankarga 5. It has purchased a second-hand 1.6Mtpa heap leach plant and in July 2014, completed a successful scoping study for the project.

Figure 1 - Tanlouka Project Location

Scoping Study

West African released a Scoping Study for the Mankarga 5 project on 29 July 2014 which demonstrated it as a high- margin, low-Capex gold project.

Highlights of the study included:

• Pre-production capital of $35 million plus working capital and contingency of $9 million

• IRR of 57% with a 16-month payback on initial capital

• Free cash flow of $103 million after capital costs

• NPV5% of $84 million

• Estimated average annual gold production of 59,400 ounces for first three years

• Estimated average annual gold production of 44,100 ounces for life of mine

• Current study mine life of 5.4 years

• Life of mine strip ratio 1:1

• Cash costs of $614/oz

• All-in sustaining cash costs of $685/oz (including cash costs, royalties, refining and sustaining capital).

  
  

  The study demonstrated positive results for a starter project focusing on the oxide portion of the Mankarga 5 resource.

  
  

  Metallurgical Testwork

  
  

  In October, West African reported metallurgical test work results from Mankarga 5 that demonstrated outstanding gold recoveries and confirmed the heap leach suitability of oxide ore.

  
  

  Three column tests were completed on oxide ore from the Mankarga 5 deposit. Test work was completed at ALS Global in Perth on oxide composites from four metallurgical drill core holes which were sited at various locations in the Mankarga 5 deposit.

  
  

  Highlights:

  • Gold recoveries of up to 90% and averaging 86% in column test work

  • Rapid leach kinetics with strongly oxidised ore gold recoveries of 75% after 7 days.

  • Gold recoveries for all ore types more than 50% after 7 days.

  • Low to moderate cement addition of 5kg to 10kg per tonne.

  • Low cyanide consumption of 0.2 - 0.4 kg/t NaCN.

  • High percolation rates with low slumping.

  • Very low Abrasion and Ball Mill Work Indices indicate that the wear rates and power consumption will be low to very low by industry standards.

  
  

  Further metallurgical test work holes were drilled during the December quarter, with approximately 1.5 tonnes of whole drill core airfreighted to ALS Ammtec in Perth. Results from this work will be incorporated into the Bankable Feasibility Study.

  
  

  Pre-Feasibility Study

  
  

  West African Resources Limited announced results of its technical and financial assessment of an oxide heap leach starter project on its Mankarga 5 Gold Project, Burkina Faso in February 2015. This assessment constituted a Pre- Feasibility Study (PFS) incorporating updated Mineral Resource, mining schedule, column test work and cost inputs. It was prepared in accordance with the requirements of both the Australian 2012 JORC Code and Canadian NI 43-101. A summary of the base case is stated below on a pre-tax basis assuming 100% project at a gold price of $1,300/oz. All amounts are in US dollars.

• Pre-production capital of $46.6 million, including $8.7 million working capital and contingency

• Annual gold production of 69,000 ounces for first three years, 49,000 ounces for life of mine

• Mine life of 7 years

• Cash costs of $428/oz for first 3 years, $635/oz life of mine

• All-in site costs of $538/oz for first 3 years, $749/oz life of mine

• IRR of 63% with a 14 month payback of capital due to strong early project cash flow

• Pre-Tax cash flow after initial and sustaining capital costs of $146 million

• Pre-Tax NPV5% of $117 million, Post-Tax NPV5% of $86 million

• 59% increase to in-pit inventory now 440,000oz, life of mine strip ratio 2:1

  • Indicated resources increased 57% from scoping study to 8.4Mt at 1.8g/t Au (495koz), Inferred resources increased 39% to 15.2Mt at 1.6g/t Au (791koz) at a 1g/t Au cut-off

  • Potential to upgrade in-pit Inferred Resources currently treated as waste in mining schedule

  • Limited exploration conducted to date, numerous drill targets within trucking distance of the proposed plant site.

Cautionary Note:

Mineral Resources that are not mineral reserves do not have demonstrated economic viability. Mineral resource estimates do not account for mineability, selectivity, mining loss and dilution. These mineral resource estimates include inferred mineral resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is also no certainty that these inferred mineral resources will be converted to measured and indicated categories through further drilling, or into mineral reserves, once economic considerations are applied.

Production targets for the proposed heap leach starter project referred to in this announcement were first released to the ASX and TSXV on 23 February 2015. They are preliminary and there is no certainty that the production targets, or the forecast financial information derived from the production targets, will be realised. All material assumptions underpinning production targets or forecast financial information derived from production targets continue to apply and have not materially changed.

Perth-based independent engineering consultancy Mintrex Pty Ltd managed the PFS, completing it to a ± input cost estimate and assuming a throughput of 1.6Mtpa in line with the capacity of the plant purchased by West African.

The base case assumes 100% project basis and a gold price of $1300/oz, with all amounts in US dollars unless otherwise stated.

• Allows for 10% free carried Government interest

  Bankable Feasibility Study

  
  

  West African executed final documentation with the Metals and Energy Capital Division of Macquarie Bank Limited ('Macquarie') for a two-year US$5 million convertible loan facility to enable it to complete a Bankable Feasibility Study and completed drawdown of the facility on 23 December 2014.

  
  

  West African appointed Mintrex as the lead consultant and Mr Lyndon Hopkins as Study Manager.

  
  

  Project Financing

  
  

  The Company intends to finance development of Mankarga 5 predominantly with senior debt to minimise equity dilution and maximise shareholder returns. It engaged Nick Harch, Managing Director of resource investment advisory firm Orimco Pty Ltd and former Macquarie Bank Executive Director, to undertake project finance discussions with potential lenders.

  
  

  Permitting

  
  

  West African appointed Knight Piesold Pty Ltd to monitor and assess the studies required to meet environmental legislation requirements for a Mining Permit application. The proposed mine site and infrastructure was assessed as a Category A activity requiring an Etude d'Impact sur l'Environnement (Environmental and Social Impact Assessment - ESIA), while the Water Storage Facility (WSF) was assessed as a Category B activity requiring a Notice d'Impact sur l'Environnement (NIE). Field work for these separate studies is ongoing and both reports are expected to be completed by late July 2015.

  
  

  Resource Upgrade

  
  

  Resource upgrade drilling commenced in the March quarter, targeting drilling in-pit Inferred Mineral Resources. Some 0.7Mt of Inferred material grading 1.0g/t Au containing 21,000 ounces was included in the PFS pit design and is currently treated as waste. Infill drilling will upgrade this material from Inferred to Indicated category, which will make a positive impact on the project economics and reduced strip ratio.

  
  

  Exploration

  
  

  Diamond drilling results received during the December quarter confirmed potential for a Stage 2 carbon-in-leach (CIL) project at Mankarga 5, demonstrating excellent grade continuity beneath the proposed oxide starter pit that West African intends to treat by conventional heap leach processing. Results included:

  • TAN14-DD018: 2m at 6.38 g/t Au from 185m, and 26m at 2.89 g/t Au incl. 3m at 13.1 g/t Au from 190m

  • TAN14-DD020: 29m at 1.59g/t Au including 4m at 2.98g/t Au and 3m at 4.5g/t Au from 62m

  • TAN14-DD021: 2m at 28.17g/t Au from 56m

  • TAN14-DD021: 11m at 3.30g/t Au from 80m including 3m at 4.27g/t Au and 1m at 16.82g/t Au from 86m

  • TAN14-DD022: 72m at 2.15g/t Au from 231m including;

  o 7m at 7.68g/t Au from 243m o 5m at 3.58g/t Au from 263m o 1m at 17.57g/t Au from 271m o 8m at 2.69g/t Au from 278m o 3m at 2.93g/t Au from 295m.

  
  

  Late in the reporting period, West African announced results from auger drilling along strike to the northeast of the Mankarga 5 deposit which demonstrated the continuation of mineralisation. In total 245 auger holes, with an average depth of 5.3m, were drilled along strike of the M5 resource area on lines oriented northeast - southwest, on a 200m by 50m grid. Sampling returned a peak result of 635 ppb Au (0.64g/t Au) with other high tenor results of 228 ppb Au, 224 ppb Au and 218 ppb Au.

  
  

  Other Prospects

  Figure 2: Mankarga Exploration Summary Plan

  
  

  There are a number of drill-ready prospects within a short trucking distance from the Mankarga 5 starter project which have potential to add further plant feed to the project which have had little attention from the Company to date. Nearby prospects include Mankarga 1, Mankarga 2, Manesse, Tanwaka, Goudré and Moktedu (Figure 3).

  
  

  Mankarga 1 is the most advanced prospect and located approximately 500m northwest of the Mankarga 5 Mineral Resource. WAF geologists have completed detailed prospect and structural mapping of the area. Mankarga 1 comprises similar rock types and stratigraphy to Mankarga 5, however the major difference is in the orientation of mineralised trends north-northwest, in contrast to Mankarga 5 which trends northeast. Mineralisation is hosted with steeply dipping quartz veining which has been subject to significant artisanal mining activity with pits down to 30m depth.

  
  

  Channel Resources drilled approximately 23 RC holes and five Diamond holes in the area. Mineralisation is structurally complex therefore detailed auger drilling will be completed during the quarter on a 20m by 100m grid, oriented perpendicular to the main mineralised trends.

  
  

  First results from shallow reverse circulation (RC) oxide drilling at Mankarga 1 undertaken in the June quarter intercepted oxide mineralisation beneath historic artisanal workings, with two scissor holes ending in mineralisation. TAC0657 and TAC0658 both ended in quartz veining and returned 8m at 1.5g/t Au and 6m at 1.3g/t Au respectively. These results are up dip of historic RC hole TAN10-RC-23, drilled in 2010, which returned high-grade results of 2m at 25g/t Au from 58m. It is expected that oxide mineralisation from M1 will exhibit similar metallurgical characteristics to M5 oxides, therefore will be amenable to heap leach processing.

  
  

  Gold mineralisation at M1 has not been included in the project resource inventory to date, but will be added to the BFS.

  
  

  Other Permits

  Figure 3 - Project Location surrounding exploration prospects and deposits

  
  

  West African holds a number of permits surrounding the Tanlouka Permit where Mankarga 5 is located.

  
  

  However, the Company is focused on getting Mankarga 5 into production and did not complete exploration on these permits during the reporting period.

  
  

  CORPORATE

  
  

  Macquarie Bank Loan Facility

  
  

  As announced on 29 October 2014, West African signed a committed term sheet for a two-year US$5 million convertible loan facility with the Metals & Energy Capital Division of Macquarie Bank Limited. Drawdown of the facility was completed on 23 December 2014.

  
  

  The US$5 million facility will provide all necessary funding to complete the Bankable Feasibility Study (BFS) for the Company's Mankarga 5 Heap Leach Gold Project in Burkina Faso. A scoping study, released in July this year, demonstrated Mankarga 5 to be a low capital cost, high margin, heap leach starter project.

  
  

  The key terms of the Convertible Loan Agreement are as follows:

  
  

  • Committed loan facility for up to US$5 million, to be drawn down as a single loan.

  • Cash interest is payable on the facility.

  • Bullet repayment on the earlier of 30 September 2016 and the date on which WAF receives proceeds from a project financing or capital raising.

  • Drawdown of the Facility was subject to a number of conditions, including the issue of 40,545,224 unlisted options (Options), exercisable at A$0.14 on or before 30 September 2017 to Macquarie. Any funds received by

    WAF through the conversion of the Options will be applied against the outstanding Facility amount, reducing the outstanding debt owed to Macquarie.

  • The Facility is secured against all assets of WAF and its wholly-owned subsidiary, Channel Resources Limited.

  • The Convertible Loan Agreement contains other customary features, including customary representations and warranties, undertakings and events of default for facilities of this nature.

Appointment of Non-Executive Chairman

In June 2015, Mark Connelly was appointed Non-Executive Chairman of West African Resources.

Mr Connelly is the former Managing Director and Chief Executive Officer of Perth based Papillon Resources Limited, a gold developer with Malian assets, which recently merged with Vancouver-based B2Gold Corp in a US$570 million deal. Prior to this he was Chief Operating Officer of Endeavour Mining Corporation following its merger with Adamus Resources Limited where he was Managing Director and CEO.

Mr Connelly has more than 28 years of experience in the mining industry, and has held senior executive positions with Newmont Mining Corporation and Inmet Mining Corporation. He has extensive experience in financing, development, construction and operation of mining projects in a variety of commodities including gold, base metals and other resources in West Africa, Australia, North America and Europe.

Mr Connelly replaced Mr Francis Harper, who resigned from the board.

Resignation of Non-Executive Directors

In August 2015, Non-Executive Directors Jean-Marc Lulin and Colin Jones have resigned from the Board. The resignations come as West African looks to reduce its operational expenditure while continuing to develop the Tanlouka Gold Project in Burkina Faso.

Richard Hyde MANAGING DIRECTOR

Competent Pe r son's Stateme nt

Information in this announcement that relates to mineral resources is based on, and fairly represents, information and supporting documentation prepared by Mr Brian Wolfe , an independent consultant specialising in mineral resource estimation, evaluation and exploration. Mr Wolfe is a Member of the Australian Institute of Geoscientists. Mr Wolfe has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person (or 'CP') as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) and a Qualified Person under Canadian National Instrument 43-101. Mr Wolfe has reviewed the contents of this news release and consents to the inclusion in this announcement of all technical statements based on his information in the form and context in which they appear.

Information in this announcement that relates to exploration results and exploration targets is based on, and fairly represents, information and supporting documentation prepared by Mr Richard Hyde, a Director, who is a Member of The Australian Institute of Mining and Metallurgy and Australian Institute of Geoscientists. Mr Hyde has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person (or 'CP') as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) and a Qualified Person under Canadian National Instrument 43-101. Mr Hyde has reviewed the contents of this news release and consents to the inclusion in this announcement of all technical statements based on his information in the form and context in which they appear.

Information in this announcement that relates to exploration results and mineral resources is based on, and fairly represents, information and supporting documentation prepared by Mr Nigel Spicer, an independent consultant specialising in mining

engineering. Mr Spicer is a Member of the Institute of Material, Mining and Metallurgy and the Australian Institute of Mining and Metallurgy. Mr Spicer has sufficient experience which is relevant to the style of mineralisation and type of deposit under

consideration and to the activity which he is undertaking to qualify as a Competent Person (or 'CP') as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) and a Qualified Person under Canadian National Instrument 43-101. Mr Spicer has reviewed the contents of this news release and consents to the inclusion in this announcement of all technical statements based on his information in the form and context in which they appear.

Forward Looking Information

This news release contains 'forward-looking information' within the meaning of applicable Canadian and Australian securities legislation, including information relating to West African's future financial or operating performance may be deemed 'forward looking'. All statements in this news release, other than statements of historical fact, that address events or developments that West African expects to occur, are 'forward-looking statements'. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words 'expects', 'does not expect', 'plans', 'anticipates', 'does not anticipate', 'believes', 'intends', 'estimates', 'projects', 'potential', 'scheduled', 'forecast', 'budget' and similar expressions, or that events or conditions 'will', 'would', 'may', 'could', 'should' or 'might' occur. All such forward-looking statements are based on the opinions and estimates of the relevant management as of the date such statements are made and are subject to important risk factors and uncertainties, many of which are beyond West African's ability to control or predict. Forward- looking statements are necessarily based on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties and other factors that may cause actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. In the case of West African, these facts include their anticipated operations in future periods, planned exploration and development of its properties, and plans related to its business and other matters that may occur in the future. This information relates to analyses and other information that is based on expectations of future performance and planned work programs. Statements concerning mineral resource estimates may also be deemed to constitute forward-looking information to the extent that they involve estimates of the mineralization that will be encountered if a mineral property is developed.

Forward-looking information is subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking information, including, without limitation: exploration hazards and risks; risks related to exploration and development of natural resource properties; uncertainty in West African's ability to obtain funding; gold price fluctuations; recent market events and conditions; risks related to the uncertainty of mineral resource calculations and the inclusion of inferred mineral resources in economic estimation; risks related to governmental regulations; risks related to obtaining necessary licenses and permits; risks related to their business being subject to environmental laws and regulations; risks related to their mineral properties being subject to prior unregistered agreements, transfers, or claims and other defects in title; risks relating to competition from larger companies with greater financial and technical resources; risks relating to the inability to meet financial obligations under agreements to which they are a party; ability to recruit and retain qualified personnel; and risks related to their directors and officers becoming associated with other natural resource companies which may give rise to conflicts of interests. This list is not exhaustive of the factors that may affect West African's forward-looking information. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking information.

West African's forward-looking information is based on the reasonable beliefs, expectations and opinions of their respective management on the date the statements are made and West African does not assume any obligation to update forward looking information if circumstances or management's beliefs, expectations or opinions change, except as required by law. For the reasons set forth above, investors should not place undue reliance on forward-looking information. For a complete discussion with respect to West African, please refer to West African's financial statements and related MD&A, all of which are filed on SEDAR at www.sedar.com.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.