CRUSADER RESOURCES LIMITED

A B N: 94 106 641 963

Annual Financial Report Year ended 31 December 2015

Contents to Financial Report

Contents Page

Corporate Information 2

Chairman's letter 3

Directors' Report 4

Consolidated Statement of Profit or Loss and Other Comprehensive Income 24

Consolidated Statement of Financial Position 25

Consolidated Statement of Changes in Equity 26

Consolidated Statement of Cash Flows 28

Notes to the Financial Statements 29

Directors' Declaration 69

Independent Audit Report 70

Auditor's Independence Declaration 72

Additional ASX Information 73

Corporate Information

This annual report covers both Crusader Resources Limited and its subsidiaries. The Group's functional and presentation currency is Australian dollars ($).

A description of the Group's operations and of its principal activities is included in the Review of Operations and Activities in the Directors' Report on pages 4 to 23. The Directors' Report is not part of the financial report.

Directors

Stephen Copulos (Chairman)

Robert Smakman (Managing Director) Paul Stephen (Executive Director) John Evans

Mauricio Ferreira

Jim Rogers - appointed 2 March 2016 David Netherway - resigned 14 May 2015

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

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 Bank of Western Australia Limited

Level 14, Woodside Plaza Perth Business Banking Centre

240 St Georges Terrace Level 30, Bank West Tower

Perth WA 6000 108 St Georges Terrace

Telephone: +61 8 9365 7000 Perth WA 6000

Facsimile: +61 8 9365 7001

Share Register Solicitors

Security Transfers Registrars Pty Ltd GTP Legal

770 Canning Highway Level 1, 28 Ord Street

Applecross WA 6959 West Perth WA 6005

Telephone: +61 8 9315 0933 Telephone: +61 8 6555 1867

Facsimile: +61 8 9315 2233

ASX Code:

Ordinary shares - CAS

Chairman's Letter to Shareholders

Dear Shareholder,

2015 has been a very eventful year for Crusader Resources Ltd, amongst a backdrop of a difficult period for the mining and exploration sector we have continued to further develop our diversified suite of Brazilian assets.

Making progress in the gold division we have made major advances on the high-grade Juruena Gold Project during 2015. We completed a 10,000m Diamond and RC drilling campaign.

A maiden JORC compliant resource estimate of 1.3Mt @ 5.6 g/t gold for 233,900 ounces was calculated over three prospects: Querosene, Dona Maria and Crentes.

In addition, Denver-based international engineering firm Global Resource Engineering (GRE) commenced work on the Juruena scoping study which will consider an underground development at the Querosene and Dona Maria prospects with processing to take place through a central facility.

The weak Brazilian currency and firmer overall gold price continues to assist with the economic evaluation of the Borborema Gold Project located in the northeast of Brazil. During 2015, work continued on evaluating development options for Borborema, targeting the shallower deposit, reducing the size of the plant required and significantly lowering capital costs.

Despite an environment of reduced global and domestic demand and weaker iron ore prices throughout 2015, the Posse iron ore mine continues to maintain profitability.

We were very pleased to announce the signing of a key access agreement with the neighbouring tenement holder to Posse in the first half of 2015. This agreement allowed us to extend mining into the neighbouring area where we know high- quality ore is located. We expect the Posse mine to continue to operate profitably during 2016 and continue to deliver shareholder value.

During the period, Crusader underwent a substantial reorganisation program focused on reducing production, administration and management costs across the company. In addition, the Company signed service agreements with four other ASX-listed companies to co-share office and administration costs, significantly reducing Crusader's Perth office costs going forward.

Following this program, we are now very well placed to deliver significant value to our shareholders on the back of our high-grade gold projects and profitable iron ore project.

Juruena, in particular, is entering a very exciting phase and I look forward to providing shareholders with an update on the highly anticipated scoping study which is expected to be available in the first half of 2016.

The board is very encouraged by the demand of the recent capital raise of $6.25m in March 2016 which will see the company funded throughout the year and the new and exciting developments in the Lithium space.

I would like to thank our Managing Director, Rob Smakman, Executive Director, Paul Stephen and all the Crusader team for working diligently, putting the blocks in place that will ultimately flow through to shareholders as the Group continues to grow. There remains a very strong focus on cost-effective exploration and project development, designed to provide Crusader with a suite of projects that will deliver growth options well into the future. I am very confident we have the team and the skills to deliver on Crusader's potential.

I would also like to thank all our shareholders for their continued support. Looking ahead, we remain extremely optimistic for 2016 and beyond with both our iron ore and gold divisions expected to deliver significant growth. I hope that you will continue with us on what has been an exciting journey to date.

Yours faithfully

Stephen Copulos Chairman