African Energy Resources Limited

ARBN 123 316 781

Financial Report 30 June 2015

1. Reporting entity 21

2. Basis of preparation 21

3. Significant accounting policies 21

4. Financial risk management 26

5. Determination of fair values 28

6. Segment information 28

7. Revenue from continuing operations 29

8. Personnel expenses 29

9. Professional & Corporate Expenses 29

10. Income Taxes 30

11. Earnings per share 30

12. Trade and other receivables 31

13. Property, plant and equipment 31

14. Exploration and evaluation expenditure 31

15. Recognised fair value measurements 32

16. Investments in associates 33

17. Deconsolidation of subsidiaries 34

18. Trade and other payables 34

19. Contributed equity 34

20. Reconciliation of loss after income tax to net cash inflow from operating activities 35

21. Parent Entity 35

22. Related parties 35

23. Share‐based payments 37

24. Events occurring after the reporting period 38

25. Contingencies and Commitments 38

African Energy Resources Limited Financial Report 30 June 2015 Corporate Directory

Directors Mr Alasdair Cooke

Executive Chairman

Dr Charles (Frazer) Tabeart Managing Director

Mr Gregory (Bill) Fry Executive Director

Mr Valentine Chitalu Non‐Executive Director

Mr Philip Clark Non‐Executive Director

Mr Vincent (Ian) Masterton‐Hume Non‐Executive Director

Mr Yan Zhao Alternate Director to Mr Hume

Mr Wayne Richard Trumble Non‐Executive Director

Mr John Dean (appointed 22 December 2014) Non‐Executive Director

Company Secretary Mr Daniel Davis

Registered Office Granite House, La Grande Rue St Martin, Guernsey GY1 3RS

Representative Office in Australia Suite 1, 245 Churchill Avenue Subiaco, Western Australia, 6008

Share Register Link Market Services Limited

Level 4 Central Park 152 St Georges Terrace Perth, Western Australia, 6000

Stock Exchange Listings Australian Securities Exchange (ASX: AFR) Botswana Stock Exchange (BSE: AFR)

Auditor BDO Audit (WA) Pty Limited

38 Station Street Subiaco, Western Australia, 6008

Solicitors Fairweather Corporate Lawyers

595 Stirling Highway

Cottesloe, Western Australia, 6011

Bankers HSBC Bank Australia Limited

190 St Georges Terrace

Perth, Western Australia, 6000

Website www.africanenergyresources.com

African Energy Resources Limited Financial Report 30 June 2015 Directors' Report

Your Directors present their report on the Consolidated Entity consisting of African Energy Resources Limited (Company) and its controlled entities for the financial year ended 30 June 2015.

1. Directors and Company Secretary

   
   

   The Directors and the Company Secretary of the Company at any time during or since the end of the financial year are as follows.

   
   

   Mr Alasdair Cooke BSc (Hons), MAIG - Executive Chairman

   Mr Cooke has served as Chairman of the Board of the Company since its incorporation. Mr Cooke is a geologist with over 25 years' experience in the resource exploration industry throughout Australia and internationally. For the past 15 years Mr Cooke has been involved in mine development through various private and public resource companies, prior to which he held senior positions in BHP Billiton plc's international new business and reconnaissance group.

   
   

   Mr Cooke is a founding director of Mitchell River Group, which over the past ten years has established a number of successful ASX listed resources companies, including Panoramic Resources Limited, operating the Savannah and Lanfranchi nickel projects in Australia; Albidon Limited, operating the Munali Nickel Mine in Zambia, Mirabela Nickel Limited, operating the Santa Rita nickel project in Brazil; Exco Resources Limited, developing copper and gold resources in Australia; and Energy Ventures Limited.

   
   

   Other current directorships Special responsibilities

   Energy Ventures Limited Anova Metals Limited

   Executive Chairman Member of the remuneration committee

   
   

   Former directorships in the last three years Interests in shares and options

   Exco Resources Limited 50,003,683 shares 933,333 performance rights

   Dr Charles (Frazer) Tabeart PhD, BSc (Hons) ARSM, MAIG - Managing Director

   Dr Tabeart is a graduate of the Royal School of Mines with a PhD and Honours in Mining Geology. He has over 25 years' experience in international exploration and mining projects, including 16 years with WMC Resources. Whilst at WMC, Dr Tabeart managed exploration portfolios in the Philippines, Mongolia and Africa, gaining considerable experience in a wide variety of commodities and operating with staff from diverse cultural backgrounds.

   
   

   Dr Tabeart was appointed Managing Director of the Company in November 2007 after serving two years as General Manager. Under his stewardship the Company discovered and delineated the coal resource at the Sese Coal & Power Project and has since managed the strategic direction of company to focus upon the delivery of multiple coal‐fired power stations, captive coal‐mines and an export coal mine. He has overseen the acquisition of Mmamantswe and Mmamabula West Coal Projects that has grown the resource inventory of the Company to 8.7Bt of thermal coal.

   
   

   Other current directorships Special responsibilities

   Segue Resources Limited (appointed 1 September 2014) Managing Director

   
   

   Former directorships in the last three years Interests in shares and options

   none 4,774,100 shares

   1,933,333 performance rights

   
   

   Mr Gregory (Bill) Fry - Executive Director Mr Fry has more than 20 years corporate experience in the mining and resources industry, specialising in accounting, management, business development and general corporate activities. He has vast experience in project evaluation and development, project funding, management, finance and operations.

   
   

   Over the past 15 years, Mr Fry has been a Director of several private and public companies with activities ranging from funds management, minerals exploration, mining and quarrying. He has been an Executive Director of African Energy Resources since listing and is responsible for the Company's commercial and financial business programs.

   
   

   Other current directorships Special responsibilities

   Energy Ventures Limited Anova Metals Limited

   Member of the Audit committee

   
   

   Former directorships in the last three years Interests in shares and options

   Norrland Resources Limited 5,869,610 shares 1,266,667 performance rights

   Directors Report (continued)

   
   

   Mr Valentine Chitalu MPhil, BAcc, FCCA - Non‐Executive Director

   Mr Chitalu, a Zambian national and resident, is a Chartered Certified Accountant, Fellow of the Association of Chartered Certified Accountants (UK) and holds a practicing certificate from the Zambia Institute of Certified Accountants. He also holds a Masters Degree in Economics, Finance and Politics of Development and a Bachelor's Degree in Accounting and Finance.

   
   

   Mr Chitalu has been a Non‐Executive Director of African Energy Resources since listing and has assisted African Energy through his extensive business and Government contacts in the region.

   
   

   Other current directorships Special responsibilities

   CDC Group nil

   
   

   Former directorships in the last three years Interests in shares and options

   nil 2,251,425 shares

   400,000 performance rights

   
   

   Mr Philip Clark - Non‐Executive Director BE (Mining), MBA, MAUSIMM, GAICD Mr Clark brings a broad range of business skills to African Energy, with a particular focus on developing coal resources. He previously spent over 30 years working for BHP Billiton, culminating in five years as Vice President of Resource Development for BHP Billiton Energy Coal globally. He also held previous roles in coal mine management. Mr Clark is also the Chairman of Engineers Without Borders Australia Limited, a not‐for‐profit organisation which partners with developing communities, assisting them to gain access to the knowledge, resources and appropriate technologies to improve their livelihoods. During the past three years he has held no other public Directorships. Mr Clark is Chairman of the Company's Audit and Remuneration Committees.

   
   

   Other current directorships Special responsibilities

   Engineers Without Borders Australia Engineers Without Borders International City West Water

   Chairman of Audit & Risk Committee Chairman of Remuneration Committee

   
   

   Former directorships in the last three years Interests in shares and options

   nil 2,485,352 shares

   200,000 performance rights

   
   

   Mr Vincent Ian Masterton‐Hume ‐ Non‐Executive Director Mr Hume's career in the resources industry stretches back several decades, primarily in the fields of managed fund investments, capital raising and project development. He currently sits on the boards of Silver City Mines; TSX‐listed Golden Minerals; and ASX‐listed Iron Road. He is a former Director of ASX and TSX‐listed Marengo Mining.

   
   

   Mr Hume was a Founding Partner of The Sentient Group ('Sentient'), an independent private equity investment firm that specialises in the global resource industry. He remains an independent advisor to Sentient, following his retirement from the fund in 2008. Sentient manages in excess of US $2.3 billion in the development of metal, mineral and energy assets across the globe. Sentient's current investment portfolio includes projects in power generation, energy storage, potash, and base, precious and ferrous metals mining, covering countries as diverse as China, Brazil, Canada, Papua New Guinea, Finland, Australia, Kenya and Botswana.

   
   

   Prior to the founding of Sentient, Mr Hume was a consultant to AMP's Private Capital Division, working on the development of a number of Chilean mining investment joint ventures, as well as advising on a number of specific investments across a range of commodities and locations.

   
   

   Other current directorships Special responsibilities

   Silver City Mines Limited Golden Minerals Limited Iron Road Limited

   Member of Remuneration Committee

   
   

   Former directorships in the last three years Interests in shares and options

   Antofagasto Australia Limited Marengo Mining Limited

   4,157,606 shares 100,000 performance rights

   
   

   Mr Wayne Trumble ‐ Non‐Executive Director Mr Trumble is a senior executive with 35 years of specific industry expertise in electricity, investment and construction. For the twelve years to 2014, Mr Trumble was the Executive General Manager of Griffin Power Pty Ltd, reporting to the Board of the Griffin Group, where he led Griffin's move from fuel supplier to electricity generator. He was responsible for preparation of strategy and the development, execution and operation of Griffin's $1.2 billion Bluewaters coal fired project, providing 436 MW of base load power in Western Australia. Mr Trumble led the team

   Directors Report (continued)

   
   

   responsible for all aspects of the project development and construction including all required environmental approvals, negotiations of turn‐key EPC contract, off take contracts, grid interconnection and approval of project financing to a level of $1.0 billion.

   
   

   Prior to working at Griffin, Mr Trumble was the Managing Director of TransAlta Energy where he was responsible for the commissioning and operation of the 105MW Parkeston Power Station at Kalgoorlie.

   
   

   Other current directorships Special responsibilities

   Energy Made Clean Member of Audit & Risk Committee

   
   

   Former directorships in the last three years Interests in shares and options

   nil 327,273 shares

   1,000,000 performance rights

   
   

   Mr Yan Zhao ‐ Alternate Director Mr Zhao is an employee of Sentient Group where he has worked as part of the investment team since 2008. Prior to joining Sentient, Mr Zhao worked at Actis Capital in London, where he supported and worked on a wide range of investments with a special focus on natural resources. Prior to this, Yan was an Auditor in KPMG, involved in due diligence work on several Chinese companies listed in Hong Kong.

   
   

   Yan holds a Master in Finance from London Business School and a BSc in Economics from University of International Business and Economics in China. Yan has the certificate of CGA‐Canada, ACCA and CFA level III candidate.

   
   

   Current directorships Special responsibilities

   nil nil

   Former directorships in the last three years Interests in shares and options

   nil nil

   
   

   Mr John Dean ‐ Non‐Executive Director (appointed 22 December 2014) Mr Dean is an employee of First Quantum Minerals (FQM). Since joining FQM in 2011 he has fulfilled various roles within their mining operations including at FQM's Sentinel Copper Mine, its new flagship mine in Zambia. Prior to joining FQM, Mr Dean worked as an analyst in the energy and natural resource industries, possessing expertise in the valuation and commercial analysis of upstream oil and gas projects, as well as experience in electricity, natural gas, and crude oil markets.

   
   

   Mr Dean graduated with honours from the University of Louisville in the United States with a Bachelor of Science in Business Administration, and was later awarded a Masters of Business Administration with distinction from the University of Oxford.

   
   

   In addition to the Directorship, Mr Dean leads the team responsible for the development of power generation projects at the Sese Coal & Power Project under the recently signed joint venture with FQM.

   
   

   Current directorships Special responsibilities

   nil nil

   Former directorships in the last three years Interests in shares and options

   nil nil

   
   

   Mr Daniel Davis - Company Secretary

   Mr Davis is a member of CPA Australia who graduated from the University of Western Australia in 2001 with a Bachelor of Commerce majoring in Accounting and Finance. Mr Davis has worked in the resources sector for the past ten years specialising in African based explorers and producers. Mr Davis was appointed to the role of Company Secretary in 2009.

   
   

2. Directors' Meetings

   The number of Directors' meetings and number of meetings attended by each of the Directors of the Company during the financial year were:

   
   

   Director	Board of Directors		Remuneration Committee		Audit & Risk Committee
   	Present	Held	Present	Held	Present	Held
   Alasdair Cooke	6	6	2	2	‐	‐
   Charles Tabeart	6	6	‐	‐	‐	‐
   Gregory Fry	6	6	‐	‐	5	5
   Valentine Chitalu	5	6	‐	‐	‐	‐
   Philip Clark	6	6	2	2	5	5
   Vincent Masterton‐Hume	6	6	2	2	‐	‐
   Wayne Trumble	6	6	‐	‐	5	5
   John Dean (appointed 22 December 2014)	3	3	‐	‐	‐	‐

   Directors Report (continued)

   
   

3. Review of Operations

   
   

   In October 2014, the Company completed a placement of 69,000,000 shares to First Quantum Minerals at AU$0.055 per share to raise approximately AU$3,800,000, with attaching options on a 1 for 5 basis exercisable at AU$0.10 within three years.

   
   

   In October 2014, African Energy entered a joint venture agreement with First Quantum Minerals (FQM) whereby FQM acquired a majority interest in Sese Coal & Power Project (Sese JV Agreement). An initial AU$8,000,000 invested by FQM to acquire 51% of Sese JV, was paid to African Energy as repayment of parent company loans. FQM will invest a further AU$12,000,000 by July 2016 to earn an additional 24% stake in the Sese JV, taking their interest to 75%. On earning 75% interest in the Sese JV, FQM will loan carry African Energy's 25% share of all development funding at Sese, with this loan to be repaid from AFR's share of future project cashflow. All Conditions Precedent to conclude the Sese JV Agreement were met in early January.

   
   

   In November 2014, the Company raised AU$3,757,870 by the issue of 68,324,910 shares at AU$0.055 per share in a 1 for 8 non‐renounceable rights issue. The Company repaid a loan facility to Macquarie Bank Limited of US$5,000,000 in December 2014.

   In February, Mmamabula West (PL56/2005) was granted a two‐year extension to 31st March 2017, triggering a final payment of US$1,500,000 to Asenjo.

   
   

   In June 2015, African Energy executed a binding term sheet with experienced South African project developer, TM Consulting, for the conditional sale of the Mmamantswe coal and power project. The Developer will form a bid consortium which will sole fund the preparation and submission of a bid into South Africa's coal‐fired base load IPP procurement programme using the Mmamantswe project. If the Mmamantswe bid is shortlisted, African Energy will transfer its interest in the Mmamantswe prospecting licence (PL069/2007) to the Developer for US$10,000,000. AFR will receive an additional US$10,000,000 should the shortlisted project reach financial close.

   
   

4. Remuneration Report ‐ Audited This Remuneration Report outlines the remuneration arrangements which were in place during the year, and remain in place as at the date of this report, for the Directors and key management personnel of African Energy Resources Limited.

   
   

   The functional currency of the Company and each of the operating subsidiaries is US dollars which represents the currency of the primary economic environment in which the Consolidated Entity operates.

   
   

   The information provided in this remuneration report has been Audited as required by section 308(3c) of the Corporations Act 2001.

   
   

5. Principles of Compensation

   The objective of the Group's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders, and conforms with market practice for delivery of reward. The Board ensures that executive reward satisfies the following key criteria for good reward governance practices:

   • competitiveness and reasonableness;

   • acceptability to shareholders;

   • performance linkage / alignment of executive compensation;

   • transparency; and

   • capital management.

     
     

     Alignment to shareholders' interests:

   • has economic profit as a core component of plan design;

   • focuses on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering constant return on assets as well as focusing the executive on key non‐financial drivers of value; and

   • attracts and retains high calibre executives.

     
     

     Alignment to program participants' interests:

   • rewards capability and experience;

   • reflects competitive reward for contribution to growth in shareholder wealth;

   • provides a clear structure for earning rewards; and

   • provides recognition for contribution.

     
     

     The framework provides a mix of fixed and variable pay, and a blend of short and long‐term incentives. As executives gain seniority with the Group, the balance of this mix shifts to a higher proportion of ''at risk'' rewards.

     
     

     The following table shows key performance indicators for the group over the last five years:

     
     

     2015	2014	2013	2012	2011
     Profit / (loss) for the year attributable to owners	(5,105,959)	(6,779,734)	(12,547,719)	(9,576,739)	(4,927,071)
     Basic earnings / (loss) per share (cents)	(0.90)	(1.55)	(3.58)	(2.95)	(1.70)
     Dividend payments	‐	‐	‐	‐	‐
     Dividend payment ratio (%)	‐	‐	‐	‐	‐
     Increase / (decrease) in share price (%)	(4%)	3%	(61%)	(71%)	713%
     Total KMP incentives as percentage of profit / (loss) for the year (%)	‐	‐	‐	‐	‐

     Directors Report (continued)

     
     

6. Remuneration governance The Remuneration Committee provides advice on remuneration and incentive policies and practices and specific recommendations on remuneration packages and other terms of employment for Executive Directors, other senior executives and Non‐Executive Directors. The Corporate Governance Statement provides further information on the role of the Board.

   
   

   Mr Clark is the chairman of the remuneration committee.

   
   

7. Non‐Executive Directors Fees and payments to Non‐Executive Directors reflect the demands which are made on, and the responsibilities of, the Directors. Non‐Executive Directors' fees and payments are reviewed annually by the Board.

   
   

   The current base remuneration was last reviewed with effect from 1 April 2015 and was set at AU$45,000 per annum.

   
   

8. Executive Directors

   The executive pay and reward framework has two components:

   • base pay; and

   • long‐term incentive through participation in the African Energy Resources Performance Rights Plan.

     
     

     Base Pay

     Base pay is structured as a total employment cost package which may be delivered as a combination of cash and prescribed non‐financial benefits at the Remuneration Committee's discretion.

     
     

     Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. Base pay for executives is reviewed annually to ensure the executive's pay is competitive with the market. There is no guaranteed base pay increases included in any executives' contract.

     
     

     Employee Performance Rights Plan

     In August 2012 the Board adopted an employee performance right share plan ('Plan') to enable the Company to issue Performance Rights to employees and Directors. The Plan was developed by the Board to provide an opportunity to employees to participate in the Company's future growth and provide an incentive to contribute to that growth. The Plan is further designed to assist in retaining employees. Performance Rights were chosen as they allow the Company to incentivise employees and Directors. The Remuneration Committee has determined performance hurdles that will apply to each Performance Right issued.

     
     

     Performance conditions are detailed in note 23.

     
     

     Service Contracts

     On appointment to the Board, Executive Directors enter into an executive service agreement with the Company. The agreement details the Board policies and terms, including compensation, relevant to the office of Director.

     
     

     The Company currently has service contracts in place with the following three Board members. All contracts with Executive Directors are for a two year term but can be terminated by either party with three months' notice. Details of the service agreements are listed below.

     
     

     Mr Alasdair Campbell Cooke ‐ Executive Chairman, the Company

   • Commencement date: 1 April 2015

   • Base salary is AU$$85,000

   • Termination payment is the equivalent of three months consulting fees

   • Mr Cooke's contract and remuneration is reviewed annually

     
     

     Dr Charles Frazer Tabeart ‐ Managing Director, the Company

   • Commencement date: 1 April 2015

   • Base salary is AU$$320,000

   • Termination payment is the equivalent of three months consulting fees

   • Dr Tabeart's contract and remuneration is reviewed annually

     
     

     Mr Gregory William Fry ‐ Executive Director, the Company

   • Commencement date: 1 April 2015

   • Base salary is AU$$160,000 Termination payment is the equivalent of three months consulting fees

   • Mr Fry's contract and remuneration is reviewed annually No other key management personnel have service contracts in place with the Consolidated Entity.

9. Voting and comments made at the Company's 2014 Annual General Meeting

   The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices.

   
   

10. Directors and Executive Officers' Remuneration (Consolidated Entity) Details of the remuneration of the Directors of the Consolidated Entity (as defined in AASB 124 Related Party Disclosures) of the Consolidated Entity are set out in the following tables.

    
    

    The key management personnel of the Consolidated Entity are the Directors of African Energy Resources Limited.

    Directors Report (continued)

    
    

    Details of remuneration

    The following tables set out remuneration paid to key management personnel of the Consolidated Entity during the year.

    
    

    Key Management Personnel remuneration ‐ 2015	Short term employee benefits	Post‐ employment benefits		Share based payments		Total	performance related
    	Cash salary & fees	Superannuation		Shares	Performance Rights
    	US$	US$		US$	US$
    Non‐Executive Directors	9,290	‐	25,012	2,218	36,520	‐
    Valentine Chitalu
    Philip Clark	9,290	‐	25,012	4,654	38,956	11%
    Vincent Masterton‐Hume	9,290	‐	25,012	‐	34,302	‐
    Wayne Trumble	29,934	‐	10,620	‐	40,553	‐
    John Dean	20,928		‐	‐	20,928	‐
    Total Non‐Executive Directors	78,730	‐	85,656	6,872	171,258	3%
    Key Management Personnel	125,927	‐	44,063	22,183	169,990	‐
    Executive Directors
    Gregory Fry
    Charles Tabeart	258,047	‐	45,021	22,183	303,069	‐
    Alasdair Cooke	80,098	‐	59,549	‐	139,647	‐
    Total Key Management Personnel	464,073	‐	148,632	44,366	612,705	‐
    Total	542,803	‐	234,288	51,239	783,963	1%

    
    

    Key Management Personnel

    remuneration ‐ 2014

    Non‐Executive Directors

    
    

    Valentine Chitalu	‐	‐	29,905	2,088	31,993	‐
    Philip Clark	13,800	‐	29,905	‐	43,705	‐
    Michael Curnow	‐	‐	29,905	4,544	34,448	‐
    Vincent Masterton‐Hume	‐	‐	18,797	‐	18,797	‐
    Wayne Trumble	6,951	‐	‐	‐	6,951	‐
    Total Non‐Executive Directors	20,751	‐	108,510	6,632	135,893	‐
    Key Management Personnel
    Executive Directors Gregory Fry	138,000	‐	29,905	52,826	220,731	15%
    Charles Tabeart	285,200	‐	53,828	84,750	423,779	15%
    Alasdair Cooke	‐	‐	70,259	15,962	86,221	19%
    Total Key Management Personnel	423,200	‐	153,992	153,539	730,731	15%
    Total	443,951	‐	262,503	160,171	866,624	13%

    
    

    The Company and the Group currently have no performance based cash remuneration built into Director or executive packages. The total remuneration shown in the table above is fixed.

    
    

    The Group did not engage a remuneration consultant during the year.

    
    

11. Share‐based compensation The establishment of the AFR Employee Performance Rights Plan was approved by shareholders at the 2012 Annual General Meeting. The Employee Performance Rights Plan is designed to provide long‐term incentives for key staff and consultants to deliver long‐term shareholder returns. Participation in the plan is at the Board's discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits.

    
    

    Rights are granted under the plan for no consideration. Rights granted under the plan carry no dividend or voting rights. When exercisable, each right is convertible into one ordinary share.

    
    

    shares issued	shares issued
    Gregory Fry	1/07/14	333,334	23,667
    Charles Tabeart	1/07/14	333,334	23,667
    Philip Clark	1/10/14	100,000	4,654
    Valentine Chitalu	1/07/14	33,333	2,367

    KMP Date Vested Numberof

    Value of

    Directors Report (continued)

    
    

    
    

    On 28 November 2014, The Company issued 3,766,667 new performance rights to Directors following approval by shareholders at the 2014 annual general meeting. During the year 800,002 shares were issued to Directors upon vesting of performance rights. The balance of 6,899,999 remained unvested at 30 June 2015.

    
    

    Issue Date Expiry Date Vesting hurdle Issued in Year Unvested at 30 June 2015

    
    

    28‐Nov‐14	27‐Nov‐19	Formal execution of a 300MW Sese PPA or when FQM have made a formal financial commitment to a 300MW power station at Sese	500,000	500,000
    28‐Nov‐14	27‐Nov‐19	Financial close of a 300MW power station whereby all conditions are	2,600,000	2,600,000
    satisfied by all parties and all agreements are executed, or when FQM have
    made a formal financial commitment to a 300MW power station at Sese
    28‐Nov‐14	27‐Nov‐19	Formal execution of a PPA between the Sese JV company and ZESCO for the full output of a 300MW IPP at Sese	300,000	300,000
    28‐Nov‐14	27‐Nov‐19	continued service until 1 July 2015	366,667	366,667
    3,766,667	3,766,667

    
    

12. Additional Information

    Details of vesting profile of the rights granted as remuneration to each Key Management Personnel is detailed below.

    
    

    
    

    Type Year Granted

    
    

    Granted

    Value at Grant Date

    
    

    Expiry Date

    
    

    Vested in year

    
    

    Forfeited in year

    
    

    Max Value Yet to Vest

    
    

    Alasdair Cooke	Rights	2013	500,000	87,500	30‐Sep‐17	‐	‐	58,333
    Charles Tabeart	Rights	2013	3,000,000	525,000	30‐Sep‐17	333,334	‐	291,667
    Gregory Fry	Rights	2013	2,000,000	350,000	30‐Sep‐17	333,334	‐	175,000
    Valentine Chitalu	Rights	2013	100,000	17,500	30‐Sep‐17	33,333	‐	5,833
    Philip Clark	Rights	2013	200,000	35,000	30‐Sep‐17	100,000	‐	17,500
    Valentine Chitalu	Rights	2014	466,667	25,667	27‐Nov‐19	‐	‐	25,667
    Philip Clark	Rights	2014	200,000	11,000	27‐Nov‐19	‐	‐	11,000
    Vincent Masterton‐Hume	Rights	2014	200,000	11,000	27‐Nov‐19	‐	‐	11,000
    Wayne Trumble	Rights	2014	1,100,000	60,500	27‐Nov‐19	‐	‐	60,500
    Gregory Fry	Rights	2014	600,000	33,000	27‐Nov‐19	‐	‐	33,000
    Charles Tabeart	Rights	2014	600,000	33,000	27‐Nov‐19	‐	‐	33,000
    Alasdair Cooke	Rights	2014	600,000	33,000	27‐Nov‐19	‐	‐	33,000

13. Directors' and Executives Interests

    
    

14. Shares

    Balance at 30/06/2013		Balance at 30/06/2014	Purchases (Sales)	Issued upon vesting of rights	Issued in lieu of cash fee	Balance at 30/06/2015	Balance at Reporting Date
    Non‐executive Directors	767,277	1,205,969	‐	‐	‐	‐	‐
    Michael Curnow
    Valentine Chitalu	618,792	1,024,150	554,166	33,334	539,775	2,151,425	2,251,425
    Philip Clark	374,286	793,851	951,767	100,000	539,774	2,385,392	2,485,392
    Vincent Masterton‐Hume	1,330,001	1,660,400	1,857,432	‐	539,774	4,057,606	4,157,606
    Wayne Trumble	‐	‐	‐	‐	227,273	227,273	327,273
    John Dean	‐	‐	‐	‐	‐	‐	‐
    Executive Directors
    Alasdair Cooke	34,002,925	37,433,245	11,157,560	‐	1,246,211	49,837,016	50,003,682
    Charles Tabeart	2,011,689	3,844,335	(708,492)	333,334	971,590	4,440,767	4,774,100
    Gregory Fry	4,389,478	5,338,168	(675,000)	333,334	539,774	5,536,277	5,869,610
    	43,494,448	51,309,985	13,127,566	800,002	4,604,171	68,635,756	69,869,088

    Directors Report (continued)

    
    

15. Performance Rights

    
    

    Balance at 30/06/2013	Balance at 30/06/2014	Issued on 28 Nov 2014	Vested and converted to shares in 2015	Balance at 30/06/2015	Vested and exercisable	Unvested
    Non‐executive Directors	100,000	‐	‐	‐	‐	‐	‐
    Michael Curnow
    Valentine Chitalu	100,000	66,667	466,667	(33,334)	500,000	‐	500,000
    Philip Clark	200,000	200,000	200,000	(100,000)	300,000	‐	300,000
    Vincent Masterton‐Hume	‐	‐	200,000	‐	200,000	‐	200,000
    Wayne Trumble	‐	‐	1,100,000	‐	1,100,000	‐	1,100,000
    John Dean	‐	‐	‐	‐	‐	‐	‐
    Executive Directors
    Alasdair Cooke	500,000	333,333	600,000	‐	933,333	‐	933,333
    Charles Tabeart	3,000,000	2,000,000	600,000	(333,334)	2,266,666	‐	2,266,666
    Gregory Fry	2,000,000	1,333,334	600,000	(333,334)	1,600,000	‐	1,600,000
    	5,900,000	3,933,334	3,766,667	(800,002)	6,899,999	‐	6,899,999

    
    

16. Other related party transactions The terms and conditions of the transactions with Directors, key executives and associates and their related entities were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non‐Director related entities on an arm's length basis.




Charges from Charges to




2015 US$	2014 US$	2015 US$	2014 US$
319,370	578,417	‐	‐

Mitchell River Group Pty Ltd Provision of a fully serviced office and admin staff Alasdair Cooke, Frazer Tabeart, Gregory Fry




At 30 June 2015 the company had a payable outstanding to Mitchell River Group of US$7,863 (30 June 2014: US$46,834).




This is the end of the Audited remuneration report.




17. Principal Activities The principal activity of the Consolidated Entity during the course of the financial year consisted of evaluation and exploration of coal and energy projects in southern Africa.

    
    

18. Results and Dividends

    The Consolidated Entity's loss after tax attributable to members of the Consolidated Entity for the financial year ended 30 June 2015 was US$5,105,959 (loss in 2014: US$ 6,779,734).

    
    

    No dividends have been paid or declared by the Company during the year ended 30 June 2015.

    
    

19. Loss Per Share

    The basic loss per share for the Consolidated Entity for the year was 0.90 cents per share (2014: 1.55 cents).

    
    

20. Events Subsequent to Reporting Date

    On 2 September 2015 the Company announced an extension to 30 September 2015 of the time period to complete certain conditions precedent for the sale of Mmamantswe coal and power project.

    
    

    Other than the aforementioned events, no matters or circumstances have arisen since the end of the financial year which have significantly affected or may significantly affect the operations, results or state of affairs of the Group in future financial years which have not been disclosed publicly at the date of this report.

    
    

21. Likely Developments and Expected Results

    The Group will continue to pursue activities within its corporate objectives. Further information about likely developments in the operations of the Group and the expected results of those operations in the future financial years has not been included in this report because disclosure would likely result in unreasonable prejudice to the Group.

    
    

22. Significant Changes in the State of Affairs In the opinion of the Directors, other than stated under Review of Operations, and Events Subsequent to Reporting Date, there were no significant changes in the state of affairs of the Group that occurred during the financial year under review and subsequent to the financial year end.

    Directors Report (continued)

    
    

23. Environmental Regulations

    The Consolidated Entity's operations are not subject to any significant environmental regulations under either Commonwealth or State legislation or under the legislation of African countries in which it operates. However, the Board believes there are adequate systems in place for the management of its environmental requirements and is not aware of any breach of those environmental requirements as they apply.

    
    

    The Group recognises its responsibility to rehabilitate areas affected by its exploration activities and made provision for rehabilitation in the Statement of Financial Position.

    
    

    The Company is not subject to the reporting requirements of both the Energy Efficiency Opportunities Act 2006 and the National Greenhouse and Energy Reporting Act 2007.

    
    

24. Indemnification and Insurance of Officers and Auditors

    
    

25. Indemnification

    An indemnity agreement has been entered into with each of the Directors and Company Secretary of the Company named earlier in this report. Under the agreement, the Company has agreed to indemnify those officers against any claim or for any expenses or costs which may arise as a result of work performed in their respective capacities to the extent permitted by law. There is no monetary limit to the extent of this indemnity.

    
    

26. Insurance

    During the financial year, the Company has taken out an insurance policy in respect of Directors' and officers' liability and legal expenses' for Directors and officers.

    
    

27. Corporate Structure African Energy Resources Limited is a Company limited by shares that is incorporated and domiciled in Guernsey. The Company is listed on the Australian Securities Exchange and Botswana Stock Exchange under code AFR.

    
    

28. Non‐Audit Services

    
    

    
    

    2015 US$	2014 US$
    ‐	5,114
    ‐	5,114

    BDO Audit (WA) Pty Ltd: Other assurance services

    
    

    
    

    The company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor's expertise and experience with the company and/or the group are important.

    
    

    During the year, there were no non‐Audit services provided by BDO Audit (WA) Pty Limited (2014: US$5,114).

    
    

29. Lead Auditor's Independence Declaration

The lead Auditor's Independence Declaration is set out on page 16 and forms part of the Directors' report for the financial year ended 30 June 2015.







Charles Frazer Tabeart Managing Director

Perth, 30 September 2015