First Graphite : 11-03-2016: Half Year Accounts

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(Formerly MRL Corporation Limited)

ACN 007 870 760

INTERIM FINANCIAL REPORT

For the Half Year Ended 31 December 2015

Directors Corporate Directory Share Registry

Warwick Grigor (Chairman)

Craig McGuckin (Managing Director)

Peter R. Youd (Executive Director)

Denis Geldard (Non-Executive Director)

Chris Banasik (Non-Executive Director)

Company Secretary

Peter R. Youd

Principal Registered Office in Australia

Suite 3

9 Hampden Road

Nedlands WA 6009

Telephone: [phone]

Facsimile: [phone]

Email: [e-mail] Website: www.firstgraphite.com.au

Stock Exchange Listing

The Company is listed on the Australian Securities Exchange Limited under the trading codes FGR, FGROA and FGROB

Automic Registry Services Level 1, 7 Ventnor Avenue West Perth W.A. 6005

Telephone: [phone]

Facsimile: [phone]

Auditor

BDO Audit (WA) Pty Ltd 38 Station Street

Subiaco WA 6008

Solicitors - Australia Steinepreis Paganin Lawyers and Consultants Level 4,

The Read Buildings 16 Milligan Street

Perth WA 6000

Solicitors - Sri Lanka

Varners

Level 14, West Tower World Trade Centre Echelon Square Colombo 01

Sri Lanka

Bankers

Westpac Banking Corporation Level 6

109 St Georges Terrace Perth WA 6000

Contents

Corporate Directory 2

Directors' Report 4

Auditors Independence Declaration 5

Consolidated Statement of Profit or Loss and Other Comprehensive Income 6

Consolidated Statement of Financial Position 7

Consolidated Statement of Changes in Equity 8

Consolidated Statement of Cash Flows 9

Notes to the Consolidated Financial Statements 10

1. Basis of Preparation of half-year financial statements 10

   Accounting policies 10

2. Segment information. 11

3. Revenue and other income 12

4. Other Current Assets 12

5. Exploration and evaluation expenditure. 12

6. Issued Capital 13

7. Dividends 14

8. Subsequent events after Reporting Date 14

9. Capital Commitments 14

10. Contingent Liabilities and Contingent Assets 14

11. Fair Value measurement of financial instruments 14

12. Share based payments 15

Directors Declaration 16

Independent Auditors Report 17

Additional Securities Information 19

Additional Securities Information 20

Directors' Report

Your Directors present their report on the consolidated entity (referred to hereafter as the "Group") consisting of First Graphite Limited and the entities it controlled at the end of, or during, the half-year ended 31 December 2015.

DIRECTORS

The following persons were Directors of First Graphite Limited during the half-year and up to the date of this report:

• Warwick Grigor (appointed 4 December 2015)

  
  

• Craig Robert McGuckin

  
  

• Peter Richard Youd

  
  

• Denis Geldard

  
  

• Chris Banasik

  
  

• Peter Hepburn-Brown (resigned 20 November 2015)

REVIEW AND RESULTS OF OPERATIONS Operating Results

Net operating loss after tax for the half-year ended 31 December 2015 was $2,520,265 (2014: $2,065,621), of which $443,109 (2014: 769,991) were non-cash expenses.

Review of Operations and Changes in State of Affairs

The key areas of activity during the half were:

• Commencement of an extensive research and development program at the University of Adelaide on commercial graphene production.

• Continued development of mine projects at Pandeniya and Aluketiya

• Further exploration drilling at the Company's projects

AUDITORS INDEPENDENCE DECLARATION

A copy of the auditor's independence declaration as required under Section 307C of the Corporations Act 2001 is set out on page 5.

Signed in accordance with a resolution of Directors and on behalf of the Directors by:

Craig McGuckin Managing Director Nedlands, 14 March 2016