Haoma Mining NL : 2016 Full Year Statutory Accounts and Audit Report

HAOMA MINING NL FINANCIAL STATEMENTS & REPORTS FOR THE YEAR ENDED JUNE 30, 2016

The Directors of Haoma Mining NL present their report on the company and its consolidated entities (referred to hereafter as the Group, Haoma or the Economic Entity) for the financial year ended June 30, 2016.

DIRECTORS

The following persons held office as Directors from the start of the financial year to the date of this report, unless otherwise stated:

Gary Cordell Morgan (Chairman) Michele Levine

Wilton Timothy Carr Ingram (appointed November 10, 2015) John Lachlan Charles McInnes (resigned December 10, 2015)

COMPANY SECRETARY

The following person held the position of Company Secretary at the end of the financial year: James A. Wallace CA

PRINCIPAL ACTIVITIES

Haoma's continuing principal activities during the financial year were mineral exploration, the analysis of mineral deposits and the advancement of ore processing and extraction technology. There was no significant change in the nature of the principal activities during the year.

OPERATING AND FINANCIAL REVIEW

The Annual Operating and Financial Review should be read in conjunction with the financial statements for the year ended June 30, 2016. During the year, Haoma's core operations continued to be focused on mineral exploration and research and development at its primary area of interest in the Pilbara district of Western Australia with particular focus on the final stages of optimising extraction of gold and platinum group metals when processing Bamboo Creek Tailings Concentrate and Mt Webber drill core samples.

Operating Results and Financial Position

The consolidated loss of the Group for the year to June 30, 2016 was $5,659,656. This compares with the loss for the year to June 30, 2015 of $7,389,062. Other Comprehensive Income for the year included a fair value adjustment upon sale of shares held in Exterra Resources Ltd of $310,605 (2015: loss $10,000). The net comprehensive income for the period attributable to members was $5,349,051 (2015: loss $7,399,062).

The consolidated Statement of Financial Position at June 30, 2016 shows a deficiency of net assets of $65,213,463 (2015: deficiency $59,864,412). As detailed in Note 2(b) to the financial statements, almost all funding for Haoma's operations is provided by The Roy Morgan Research Centre Pty Ltd, a company owned and controlled by Haoma's Chairman, Gary Morgan. The Independent Auditor's Report for the year to June 30, 2016 includes an 'Emphasis of Matter' statement in relation to Going Concern and the reliance of Haoma on ongoing financial support provided by The Roy Morgan Research Centre Pty Ltd.

The Roy Morgan Research Centre Pty Ltd has provided an assurance to the Board that it will continue to ensure funds are available to the company to fund operations for a period of at least 12 months from the date of this report.

At June 30, 2016 the debt to The Roy Morgan Research Centre Pty Ltd was $36.817 million (2015: $33.645 million). Haoma has approved payment of interest on the debt calculated monthly at the average 30 day commercial bill rate plus a facility margin of 1%. Although interest is calculated monthly, it will accrue until Haoma has attained a financial position represented by a positive net asset ratio and the Board determines that the company is in a financial position to commence interest payments. Total interest accrued and unpaid to June 30, 2016 is $28.220 million (2015:

$26.327 million).

Future Developments, Prospects and Business Strategies

Haoma's test work program in relation to the Elazac Process and how it may be commercially exploited in relation to various Pilbara ores is ongoing. Haoma has announced that it intends to soon resume gold production at The Bamboo Creek Laboratory Pilot Plant.

Haoma is listed on the Australian Securities Exchange and is subject to the continuous disclosure requirements of the ASX Listing Rules. Haoma provides relevant information in relation to likely developments in the operations through the ASX Company Announcements Platform. Further information in relation to Haoma's operations and copies of previous information releases are available from Haoma's website at www.haoma.com.au

DIVIDENDS

No dividends have been paid or declared during or since the end of the financial year.

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SIGNIFICANT CHANGES IN STATE OF AFFAIRS

Apart from matters already described above, there were no significant changes in the state of affairs of Haoma during the year to June 30, 2016.

EVENTS SUBSEQUENT TO THE REPORTING DATE Agreement with Keras (Gold) Australia Pty Ltd

On September 13, 2016 Haoma shareholders were advised that an Agreement had been signed with Keras (Gold) Australia Pty Ltd to grant Keras an exclusive five year right to 'explore, mine and process' gold on Haoma's

Klondyke and Warrawoona Group tenements. During the 'Right to Mine' period Keras may at any time exercise a call option to purchase the tenements.

The Haoma Tenements comprise seven tenements covering an area of 650 hectares, which are centred on the Klondyke Deposit and on the historic Fieldings Gully, Coronation and Copenhagen Deposits.

The consideration to be paid by Keras is:

• $250,000 cash upon execution of the five year 'Right to Mine' Agreement which includes an the irrevocable right to purchase the tenements within the 'Right to Mine' period, and

  If Keras exercises its Option to Purchase:

• $1.25 million, comprising $500,000 in cash and a Convertible Note issued by Keras' parent entity, Keras Resources plc in the amount of $750,000 with the right to convert the Convertible Note into Keras Resources plc ordinary shares at the 30 day VWAP after announcement of the 'Right to Mine' and 'Option to Purchase' Agreement. If Haoma does not exercise the Convertible Note then Keras must pay Haoma the face value of the Convertible Note.

  In addition to the above, the Agreement grants Haoma "a full free and exclusive licence to treat any Alluvial or Scree Resources and the tailings and waste dumps arising from the Mining undertaken on the Klondyke Project Tenements". The Klondyke Project Tenements include the Tenements subject to the Agreement and all Other Tenements of which Keras is the registered holder that are located within 25 kilometres of any of the Tenements..

  Agreement with DeGrey Mining Ltd

  On October 27, 2016 Haoma shareholders were advised that an Agreement had been signed with DeGrey Mining Ltd in respect to a portion of Haoma's Exploration Lease at Cookes Hill (E45/2983) to grant DeGrey an exclusive five year right to enter the Tenement for the purposes of mineral exploration and to mine and process all Minerals with the exception of Alluvial or Scree Resources and Pegmatic Minerals on the specified area of the lease. After the first anniversary of the Agreement DeGrey may at any time and for as long as Haoma continues to hold the lease exercise an option to purchase the tenement.

  The key terms and conditions of the Agreement with DeGrey are as follows:

• Payment at Commencement of the Agreement of $290,000 to Haoma for the Right to Explore and Mine

• Issue by DeGrey of 100,000,000 share options (pre-reconstruction) to Haoma or its nominees, subject to DeGrey shareholder approval at an exercise price of $0.0029 per share with a 9 month expiry period;

• DeGrey right to acquire the defined tenement area through the payment of $10,000;

• Haoma retains all rights to pegmatite related mineralisation and alluvial sand and scree deposits on E45/2983; and obtains rights to alluvials and screes on part of adjacent DeGrey tenements.

ENVIRONMENTAL ISSUES

The gold mining, exploration and mining development activities of Haoma Mining NL are subject to significant environmental regulation. Environmental legislation under which the company conducts its activities is principally Australian State Government legislation and includes in Western Australia the Mining Act 1978 (WA), the Environmental Protection Act 1986 (WA) and the Aboriginal Heritage Act 1980 (WA); and in Queensland the Mineral Resources Act 1989 (Qld) and the Environmental Protection Act 1994 (Qld).

The company has complied with environmental protection and rehabilitation requirements and has management and reporting systems for all of the areas in which it has interests. Regular reviews are conducted with regard to environmental compliance matters. The environmental impact of the operation of the company's processing plants at Normay and at Bamboo Creek, Western Australia is subject to continuous assessment. There were no significant matters in regard to environmental control or management that arose during the year. The company will continue to monitor its performance in relation to the environment. That process will include the ongoing assessment of the environmental impact of each of the company's operations and the development of additional reporting and communications systems to ensure compliance and identify items for specific action.

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ACKNOWLEDGEMENTS

The Board wishes to acknowledge and express its appreciation to all those who during the last year have contributed to the company's activities in the Pilbara and Ravenswood districts. In particular, the Board's thanks go to Mr. Peter Cole, Prof. Peter Scales, Mr. Hugh Morgan and other consultants who have contributed to helping solve the gold assay problem with Pilbara ores; and the extraction of gold and other metals from Pilbara ores.

The Board also acknowledges the significant efforts of those personnel working at the remote Bamboo Creek and Ravenswood operations.

INFORMATION ABOUT DIRECTORS

Gary Cordell MORGAN, B.Comm Chairman

Appointment Date: May 10, 1991

Experience: Executive Chairman of Roy Morgan Research Ltd. Is a member of a number of research and marketing organisations.

Interest in Shares and Options:

Directorships held in other listed entities:

Indirect and beneficial interest in 128,182,961 Haoma Mining shares via directorships and interests in Leaveland Pty Ltd and Elazac Pty Ltd.

Holds no interest in any options to acquire shares. Nil

Special Responsibilities: Nil

Michele LEVINE, B.Sc (Hons), Env. St Non-Executive Director

Appointment Date: August 8, 1994

Experience:

Directorships held in other listed entities:

Director and CEO of Roy Morgan Research Ltd. Nil

Interest in Shares and Options: Indirect and beneficial interest in 3,150,000 Haoma Mining shares via interest in the Levine Family Trust. Direct interest in 16,194 shares.

Total interests: 3,166,194 shares

Holds no interest in any options to acquire shares.

Special Responsibilities: Nil

John Lachlan Charles McINNES, OAM, B.Comm, FCA

Non-Executive Director

Appointment Date: May 10, 1991 Resignation Date: December 10, 2015

Experience: Chartered Accountant.

Directorships held in other listed entities: Nil

Interest in Shares and Options: Indirect and beneficial interest in 1,500,000 Haoma Mining shares via Directorship and interest in Etonwood Management Pty Ltd. Direct interest in 4,500 shares.

Holds no interest in any options to acquire shares.

Special Responsibilities: Chairman of Audit Committee.

Timothy Wilton Carr INGRAM Non-Executive Director

Appointment Date: November 10, 2015

Experience: Mr Ingram has operated his own businesses in Australia and Hong Kong engaged in various fields including finance, corporate advice and marketing.

Mr Ingram has extensive skills in planning, communication and business development analysis and a depth of knowledge in the area of investment and market analysis to complement his broad base financial skills.

Directorships held in other listed entities: Nil Interest in Shares and Options:

Special Responsibilities: Nil

No Director, during or since the end of the financial year, has received or become entitled to receive a benefit by reason of a contract made by the Company or a related body corporate with the Director or with a firm of which he is a member, or with an entity in which he has a substantial financial interest other than as shown in Note 21 (Related Party Information) to the financial statements.

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