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Mantle Mining Corporation Limited

ABN 70 107 180 441

Annual Report 2015

Corporate Directory 3

Directors' Report 4

Corporate Governance Statement 43

Consolidated Statement of Comprehensive Income 55

Consolidated Statement of Financial Position 56

Consolidated Statement of Cash Flows 57

Consolidated Statement of Changes in Equity 58

Notes to the Financial Statements 59

Directors' Declaration 82

Independent Auditor's Report 83

Auditor's Independence Declaration 85

Shareholder Information 86

Directors

Mr Martin Blakeman Non-Executive Chairman Mr Ian Kraemer Managing Director

Mr Stephen de Belle Non-Executive Director

Company Secretaries

Mr Winton Willesee Miss Erlyn Dale

Principal Place of Business and Registered Office

Suite 25

145 Stirling Highway

Nedlands WA 6009

Contact Details

Mail: PO Box 3144 Nedlands WA 6009

Website: www.mantlemining.com Email: [email protected] Tel: +61 8 9389 3130

Fax: +61 8 9389 3199

Solicitors to the Company

Fairweather Corporate Lawyers 595 Stirling Highway

Cottesloe WA 6011

Share Registry

Security Transfer Registrars Alexandria House

Suite 1

770 Canning Highway

Applecross WA 6153

Tel: +61 8 9315 2333

Fax: +61 8 9315 2233

Auditors

RSM Bird Cameron Partners

8 St George's Terrace

Perth WA 6000

Stock Exchange

Australian Securities Exchange 2 The Esplanade

Perth WA 6000

ASX Code: MNM

MNMOB

Your Directors present their report for the year ended 30 June 2015.

DIRECTORS

The names and details of the Directors in office at any time during or since the end of the year are as follows:

Mr Martin Blakeman - Non-Executive Chairman Mr Ian Kraemer - Managing Director

Mr Stephen de Belle - Non-Executive Director

Mr Peter Anderton - Non-Executive Director (Resigned 29 January 2015)

All Directors have been in office since the start of the financial period to the date of this report unless otherwise stated.

Mr Martin Blakeman - Non-Executive Chairman

Qualifications: BEc

Appointed 26 Nov 2003

Martin completed his tertiary studies at the University of WA graduating with a Bachelor of Economics in 1976. Since graduation, Martin has applied his skills in management and economics to the rural and mining industries. Martin's professional career in the mining industry has included over 30 years' experience at board level in Australian Stock Exchange listed resource companies, commencing with his appointment in 1983 as a founding Director of Harmark Pty Ltd (the founder and former controlling shareholder of Forrestania Gold NL, one of Australia's more successful resource investment companies of the time), retiring from Harmark in 1999 after 16 years of continuous service.

Martin promoted and was appointed to the Board as a founding Director of Metex Resources NL (now Carbon Energy Limited) in September 1992. Over a 4 year period to June 1996, he held the position as Manager Corporate at Metex, forming an integral part of that company's executive management team.

In 2003, Martin incorporated and became a founding Director of Mantle Mining Corporation Ltd. He has overseen the strategic decisions of the Company including mine and tenement acquisitions in QLD and VIC, and its successful 2006 listing on ASX. He remains Chairman of the Company.

Over the past three years Martin has held directorships with the following ASX-listed companies:

Company	Commenced	Ceased
Newera Resources Limited	1 Mar 2006	5 June 2015

Mr Ian Kraemer - Managing Director Qualifications: BSc MSc FAusIMM Appointed 4 Feb 2008

Ian has an extensive background in the resources sector with 30 years' professional experience in the exploration, acquisition, construction and operation of diverse mining projects in the coal, gold and nickel sectors.

Prior to involvement in Mantle Mining, Ian worked for 8 years as Business Development Manager with Thiess. In that capacity he was responsible for acquisitions and for underground mining project design, development and operational takeover. Most recently he held the position of Project Director responsible for the development and commercialisation of clean coal technology company, Exergen Pty Ltd, reporting directly to the Chairman of Thiess.

Ian first commenced his mining career in 1980 as a cadet Coal Mine Manager in Queensland. During the following 8 years he held various line management positions culminating in the appointment of Relieving Underground Coal Mine Manager at Moura. In 1987, Ian left Moura and relocated to the

USA where he completed Bachelor's and Master's Degrees in Mining Engineering at Columbia University in NYC. He then accepted the position of Director Operational & Strategic Planning for Pittston Coal & Minerals (15 coal mines in USA and 2 metal mines in Australia) followed by a transfer back to Australia as Director Australasian Business Development.

Ian holds First and Second Class Coal Mine Manager's Certificates in QLD and in NSW.

Over the past three years Ian has not held directorships with any ASX-listed companies other than Mantle Mining Corporation Ltd.

Mr Stephen de Belle - Non-Executive Director

Qualifications: MSc MTCP BA

Appointed 3 Jul 2006

Stephen has an extensive background in resources development, including the start-up of new companies and projects. In 2005-06 he assisted with the preparation for and listing on the London Alternative Investment Market of Finders Resources (gold-silver and copper projects currently being developed) and prior to that he was founding Managing Director of Midwest Corporation Ltd (ASX listed iron ore producer and project developer).

Prior to his work with Midwest, Stephen was a Principal of Kyle Associates (consulting firm), Chairman of Australian Superannuation Nominees Ltd (a specialist DIY super trustee company), Director of Xylogy Pty Ltd (software for project management and governance), Head of Resources Finance, ABN AMRO Australia, Director of Structured Finance, Barclays Bank and had positions with BZW Australia, ANZ Capital Markets, ANZ McCaughan, Capel Court and CSR Minerals.

Stephen has been closely involved with the start-up and operation of iron ore, coal, base metals, gold and petroleum projects and companies, and has particular expertise in the development and financing of projects in the resources and infrastructure sectors both in Australia and overseas. Mr de Belle is currently the Managing Director Granite Power Limited.

Over the past three years Stephen has held directorships with the following ASX-listed companies:

Company	Commenced	Ceased
Finders Resources Limited	27 Nov 2004	20 August 2013

Mr Peter R Anderton - Non-Executive Director

Qualifications: BSc MAusIMM

Appointed 26 Nov 2003 (Resigned 29 January 2015)

Peter has over 30 years' professional geological experience including 12 years with major mining companies. He is a founding Director of Mantle Mining Corporation Ltd.

Peter has specialised in gold and base metals mining and exploration, but also has significant experience in tin and nickel. He has held Senior Geologist positions at a number of mines as well as the Chief Geologist position at Tindals Gold Mine. Since 1988, he has been contracting and consulting to the mining and exploration industry in a senior capacity. Companies with which he has had extensive involvement include WMC, MPI, Normandy and KCGM.

Over the past three years Peter has not held directorships with any ASX-listed companies other than Mantle Mining Corporation Ltd.

Interests in the shares and options of the consolidated entity

As at the date of this report, the interests of the directors in the shares and options of Mantle Mining Corporation Ltd were:

Ordinary Shares		Options
Direct	Indirect	Direct	Indirect
Martin Blakeman1	-	45,530,649	-	1,818,182
Stephen de Belle2	-	17,507,251	-	1,981,237
Ian Kraemer3	2,775,703	3,747,627	165,598	468,454
Peter Anderton4	6,129,255	162,500

1 41,272,789 shares and 1,818,182 MNMOB options exercisable at $0.018 on or before 30 June 2016, are held by Tonka Trading Pty Ltd as trustee for the Jakessi Superannuation Fund and 4,257,860 shares are held by Martin Alexander Blakeman as trustee for the Blackwood Trust, both of which are entities related to Mr Blakeman.

2 69,223 shares and 8,653 MNMOB options exercisable at $0.018 on or before 30 June 2016, are held by Mr Stephen De Belle , 10,694,749 shares and 1,169,678 MNMOB options exercisable at $0.018 on or before 30 June 2016 are held by Mr Stephen De Belle & Ms Jennifer Sheehan , 6,423,247 shares and 802,906 MNMOB options exercisable at $0.018 on or before 30 June 2016 are held by S De Belle & J Sheehan and 320,032 shares are held by Exflex Holdings Pty Ltd, all of which are entities related to Mr de Belle.

3 3,747,627 shares and 468,454 MNMOB options exercisable at $0.018 on or before 30 June 2016 are held by IR Kraemer Pty Ltd as trustee for the Kraemer Super Fund, an entity related Mr Kraemer.

4 Securities held as at the date of resignation on 29 January 2015.

COMPANY SECRETARIES

Mr Winton Willesee

Qualifications: BBus, DipEd, PGDipBus, MCom, FFin, CPA, MAICD, ACIS

Mr Willesee is an experienced company director and company Secretary. Mr Willesee brings a broad range of skills and experience in strategy, company development, corporate governance, company public listings, merger and acquisition transactions and corporate finance.

Mr Willesee holds a Master of Commerce, Post-Graduate Diploma in Business (Economics and Finance), a Graduate Diploma in Applied Corporate Governance, a Graduate Diploma in Applied Finance and Investment, a Graduate Diploma in Education and a Bachelor of Business. He is a Fellow of the Financial Services Institute of Australasia, a Member of the Australian Institute of Company Directors, a Member of CPA Australia and a Chartered Secretary.

Miss Erlyn Dale

Qualifications: BCom, GradDipACG, ACIS

Miss Dale has a broad range of experience in company administration and corporate governance having held the position of Company Secretary with several ASX-listed and unlisted companies.

Miss Dale holds a Bachelor of Commerce (Accounting and Finance) and a Graduate Diploma in Applied Corporate Governance with the Governance Institute of Australia and is a chartered secretary.

OPERATING RESULTS

The loss of the consolidated entity for the year ended 30 June 2015 after providing for income tax amounted to $3,272,778 (2014: $2,481,579).

FINANCIAL POSITION

The net assets of the consolidated entity are $6,393,236 as at 30 June 2015 (2014: $7,689,020).

PRINCIPAL ACTIVITIES AND SIGNIFICANT CHANGES IN AFFAIRS

Mantle Mining Corporation Ltd (ASX:MNM) (the 'Company') is an Australian based minerals exploration and mine development company. The Company's principal activities are to acquire mineral tenements and to locate economically developable deposits of gold and coal. It is the Company's intention to progress mineral deposits through feasibility and into mining operations. The Company is in the process of reopening the Norton goldmine and has agreed to acquire Morningstar Gold NL. The Company ensures its activities are carried out in an environmentally, socially and financially responsible manner to the ultimate benefit of its shareholders. During the period there have been no significant changes in the affairs of the Company.

PROJECT OVERVIEW

As at the date of this report, the Company held interests in the following projects:

Gold Projects

• Norton Gold Project - the Company holds a 90% interest in Norton Gold Project which comprises one mining licence (ML 80035) located within the historic Norton gold field less than 100 km south of the port city of Gladstone, Queensland.

  
  

• Granite Castle Project - The Company holds a 100% interest in the Granite Castle Gold Project which comprises two exploration licences (EPM 14179 & 15527) and an application for a mineral development licence (MDL 493), located approximately 260km west of Townsville and 120km north of Hughenden in Queensland.

  
  

• Charters Towers Project - The Company holds a 100% interest in one exploration licence (EPM 14388) located around the township of Charters Towers in north Queensland.

  
  

  Coal Projects

  
  

• Bacchus Marsh Project - the Company holds a 50% interest in two exploration licences (EL 5294

  & 5323) located within the Parwan coal basin, approximately 60km west of Melbourne.

  
  

• Latrobe Valley Project - The Company holds a 100% interest in the Latrobe Valley Project which comprises six exploration licences (EL 5210, 5336, 5337, 5338, 5428 and 5429) located 150km east of Melbourne and immediately adjacent to the main Latrobe Valley coal basin.

Table 1: Mantle's Tenement Schedule.

Tenement	Project	Name	Grant Date	Expiry Date	Area	O'ship (%)
ML 80035 1	Norton	Norton	04/04/1996	30/04/2017	22 Ha	90
MDL 493	Granite Castle	Range Creek	application	1168 Ha	100
EPM 14179	Granite Castle	Range Creek	25/11/2004	24/11/2017	6 sb	100
EPM 15527	Granite Castle	Oaky Creek	30/11/2007	29/11/2015	27 sb	100
EPM 14388	Charters Towers	Charters Towers	24/02/2005	23/02/2020	7 sb	100
EL 5294 2	Bacchus Marsh	Bacchus Marsh	23/03/2011	22/03/2016	154 grat	50
EL 5323 2	Bacchus Marsh	Bacchus Marsh	10/08/2011	09/08/2015	1 grat	50
EL 5210	Latrobe Valley	Yalungah	03/06/2009	02/06/2019	25 grat	100
EL 5336	Latrobe Valley	Jeeralang	30/04/2015	29/04/2020	368 grat	100
EL 5337	Latrobe Valley	Thorpdale	20/04/2011	19/04/2016	148 grat	100
EL 5338	Latrobe Valley	Baromi	30/04/2015	29/04/2018	3 grat	100
EL 5428	Latrobe Valley	Mirboo	01/06/2015	31/05/2020	21 grat	100
EL 5429	Latrobe Valley	Callignee	01/06/2015	31/05/2020	29 grat	100

1. 10% interest held by Joint Venture partner Avanti Mining and Contracting Pty Ltd.

2. 50% interest held by Joint Venture partner Exergen Pty Ltd.

JORC DISCLOSURES

Figure 1: Mantle's Project Locations.

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves has been reported in accordance with the requirements of 2012 Edition of the 'Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves' (the '2012 JORC Code'). Such information has been compiled by Competent Persons as defined in the 2012 JORC Code and is supported by the various Competent Persons Statements set out below.

The Company undertakes its annual review of Exploration Results, Mineral Resources and Ore Reserves as of 30 June every year.

The Company confirms that it is not aware of any new information or data that materially affects the information included in the market announcements as noted for each Mineral Resource, a) thru e) below, and in the case of estimates of Mineral Resources or Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcements continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcements.

The Norton Mineral Resource was added to The Company's Mineral Resources during the year.

A portion of the Latrobe Valley Mineral Resource was relinquished during the year and the Company is working with the original consultant to have the remaining Mineral Resource estimated.

Follow-up drill programs have been designed for most projects aimed at re-estimating Company Mineral Resources and underscoring production studies as and when appropriate.

The Company relies on arms length professional consultants for the estimation of all Mineral Resources and Ore Reserves and maintains two levels of internal review; Exploration Managers and the Managing Director.

1. Competent Persons Statement: Norton Gold Project

   
   

   Table 2: Norton Mineral Resource, above 2 g/t Au cut-off.

   Class	Tonnes	Gold (g/t)	Gold (oz)	Silver (g/t)	Silver (oz)
   Indicated	107,000	6.2	21,100	15	50,300
   Inferred	141,000	3.9	17,700	12	52,600
   Total	248,000	4.9	38,800	13	103,000

   
   

   Table 3: Norton near surface Mineral Resource subset, above 2 g/t Au cut-off*.

   Class	Tonnes	Gold (g/t)	Gold (oz)	Silver (g/t)	Silver (oz)
   Indicated	70,000	6.8	15,200	16	36,000
   Inferred	58,000	3.9	7,400	10	18,600
   Total	128,000	5.5	22,600	13	54,600

   
   

   The information in Table 2 is extracted from the report entitled 'Norton Gold Mine Resource Estimate' created on 15 May 2015 and the information in Table 3 is extracted from the report entitled 'Positive Norton Gold Mine Scoping Study' created on 8 July 2015, both of which are available to view on www.mantlemining.com.

   
   

   Both of the above reports contained the following Competent Person's statement: 'The information in this report that relates to Mineral Resources is based on information compiled by John Horton, Principal Geologist of ResEval Pty Ltd, who is a Fellow of the Australasian Institute of Mining and Metallurgy, a Member of the Australian Institute of Geoscientists. Mr Horton has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Horton consents to the inclusion in the report of matters based on his information in the form and context in which it appears.'

   
   

2. Competent Persons Statement: Granite Castle Project

   
   

   Table 4: Granite Castle Mineral Resource, above 1 g/t Au cut-off.

   Class	Tonnes	Gold (g/t)	Gold (oz)	Silver (g/t)	Silver (oz)
   Measured	111,000	4.3	15,500	58	205,800
   Indicated	250,000	3.6	28,800	71	567,900
   Inferred	403,000	2.5	32,900	56	727,200
   Total	765,000	3.1	77,200	61	1,500,900

   
   

   The information in Table 4 is extracted from the report entitled 'Improved Confidence Levels for Granite Castle Resource' created on 28 May 2008 and available to view on www.mantlemining.com. The report contained the following Competent Person's statement: 'The information in this report that relates to Mineral Resources is based on information compiled by Dr William Yeo, a full time employee of Hellman and Schofield Pty Ltd. Dr Yeo is a Member of the Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is undertaking, to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Dr Yeo consents to the inclusion of the matters based on his information in the form and context in which it appears in this report.'

3. Competent Persons Statement: Charters Towers Project

   
   

   Table 5: Charters Towers (Great Britain) Mineral Resource, above 1 g/t Au cut-off.

   Class	Tonnes	Gold (g/t)	Gold (oz)
   Inferred	1,535,000	2.2	109,000
   Total	1,535,000	2.2	109,000

   
   

   The information in Table 5 is extracted from the report entitled 'Disclosure Document' created on 2 October 2006 and available to view on www.mantlemining.com. Information in this report is based on information from a report provided by Resource Evaluations Pty Ltd that contained the following Competent Persons statement: 'This report was completed under the overall supervision and direction of Gerry Fahey and the 3-D modeling and Mineral Resource estimation was carried out by Mark Drabble both of whom are Competent Persons as defined in the Australasian Code for the Reporting of Mineral Resources and Ore Reserves (JORC Code) 1999 Edition and who consent to the inclusion in this report of the matters based on his information in the form and context in which it appears.'

   
   

4. Competent Person Statement: Bacchus Marsh Coal Project

   
   

   Table 6: Bacchus Marsh Mineral Resource, below 30% Ash cut-off.

   Class	Tonnes (Bt)	TM (%)	Ash (% db)	VM (% db)	FC (% db)	TS (% db)	GDSE (MJ/kg)
   Inferred	1.6	52.9	10.4	47.2	42.4	3.4	24.5
   Total	1.6	52.9	10.4	47.2	42.4	3.4	24.5

   
   

   The information in Table 6 is extracted from the report entitled 'Mantle Reports Maiden JORC Resource' created on 15 August 2012 and available to view on www.mantlemining.com The report contained the following Competent Person's statement: 'Information in this report that relates to Coal Resource estimates prepared by AMC Consultants Pty Ltd is based on information compiled by Ms K Zunica, who is a Member of the Australasian Institute of Mining and Metallurgy and is a full time employee of AMC Consultants Pty Ltd. The estimates are based on exploration data provided by Mantle Mining Corporation Ltd. Ms Zunica has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which she is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Ms Zunica has provided written consent to the inclusion in the report of the matters based on her information in the form and context in which it appears.'

   
   

5. Competent Person Statement: Latrobe Valley Coal Project

   
   

   Table 7: Latrobe Valley (Yarragon) Inferred Mineral Resource.

   Region	Grid Mean Thickness (m)	Area (km2)	Density (g/cc)	Tonnage (Mt)
   Yarragon A seam	7.73	5.51	1.25	53
   Yarragon B seam north	11.33	3.39	1.25	48
   Yarragon B seam south	17.06	8.84	1.25	188
   Total	289

   
   

   The information in Table 7 is extracted from the report entitled 'Mantle Acquires 289M Tonne JORC Inferred Coal Resource' created on 23 August 2013 and available to view on www.mantlemining.com. The report contained the following Competent Person's statement: 'The information compiled in this report relating to resources is based on information compiled by Gordon Saul, who is a member of the Australian Institute of Geoscientists and who is employed by Resolve Geo Pty Ltd. Gordon has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Gordon Saul consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.'

6. Competent Person's Statement: Other

   
   

   The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Mark Maxwell and Mr Stuart Moore, both employees of Mantle Mining Corporation Ltd. Mr Maxwell and Mr Moore are both Members of the Australasian Institute of Mining and Metallurgy and both have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Maxwell (for Coal) and Mr Moore (for Minerals) consent to the inclusion in the report of the matters based on their information in the form and context in which it appears.

   
   

   REVIEW OF OPERATIONS

   
   

   The Norton Gold Mine

   
   

   The Norton Gold Mine is located within the historic Norton gold field less than 100 km south of the port city of Gladstone, Queensland (Figure 2).

   
   

   Figure 2: Norton Gold Mine project location.

   
   

   The project is located within an outcropping area central to a major Intrusion Related Gold System (IRGS) within the New England Orogen of Eastern Australia. The region hosts several major gold mines and historic deposits including Cracow (3 Moz gold), Mt Rawdon (2 Moz gold) and Mt Morgan (8 Moz gold).

   
   

   The property was previously mined in three phases:

   • Historic 1878 to 1906 then variously to 1930 9,200 t @ 41 g/t Au;

   • Pacific Goldmines NL in 1997 from Never Never 4,713 t @ 9.5 g/t Au;

   • Norton Gold Fields in 2004/5 from Never Never and Frampton 14,500 t @ 8.1 g/t Au.

Mining Licence ML80035 covers the majority of the historically known gold lodes within the Norton gold field. Joint Venture partner, Avanti Mining & Contracting Pty Ltd, holds a 10% interest in the project and provides management services to the joint venture.

The licence area contains eight significant shear systems, four of which have been previously mined and are the focus of previous drilling, the current resource estimate, and current redevelopment studies (Figure 3).

Figure 3: Norton ML 80035 with geology, shears, drill holes and existing mine layout.