Predictive Discovery : 22nd September 2016 - Annual Financial Report

ABN 11 127 171 877‌‌‌

ANNUAL FINANCIAL REPORT 30 JUNE 2016 CORPORATE DIRECTORY DIRECTORS AUDITOR

Mr Phillip Jackson Non-executive Chairman Moore Stephens

Mr Paul Roberts Managing Director Level 18, 530 Collins Street Mr David Kelly Non-executive Director MELBOURNE VIC 3000

Company Secretary

Mr Eric Moore

REGISTERED OFFICE Suite 2, Level 2 20 Kings Park Road WEST PERTH WA 6005 Telephone: [phone] Fax: [phone] Email: [e-mail] Site: www.predictivediscovery.com	SHARE REGISTRY Link Market Services Limited Level 4, 152 St Georges Terrace PERTH WA 6000 Telephone: [phone] Email: [e-mail]
POSTAL ADDRESS PO Box 1710 WEST PERTH WA 6872	ASX CODE PDI
CONTENTS
DIRECTORS' REPORT	3
STATEMENT OF COMPREHENSIVE INCOME	12
STATEMENT OF FINANCIAL POSITION	13
STATEMENT OF CHANGES IN EQUITY	14
STATEMENT OF CASH FLOWS	15
NOTES TO THE FINANCIAL STATEMENTS	16
DIRECTORS' DECLARATION	40
INDEPENDENT AUDITOR'S REPORT	41
AUDITOR'S INDEPENDENCE DECLARATION	43

DIRECTORS' REPORT

Predictive Discovery Limited ("the Company" or "Predictive") is a public company incorporated and domiciled in Australia and listed on the Australian Securities Exchange.

The directors of the Company present their report on the group, which comprises Predictive Discovery Limited and its controlled entities, for the year ended 30 June 2016.

The names of the directors in office at any time during, or since the end of the year are:

NAMES POSITION

Mr Phillip Jackson Non-Executive Chairman

Mr Paul Roberts Managing Director

Mr Philip Henty Non-Executive Director (resigned 30 November 2015) Mr Timothy Markwell Non-Executive Director (resigned 17 December 2015) Mr David Kelly Non-Executive Director (appointed 22 January 2016)

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

COMPANY SECRETARY

Eric Moore

Eric (Ric) Moore was appointed as Company Secretary on 7 April 2015. He has held senior managerial positions in a number of resource companies during the past 20 years and was Company Secretary of a publicly listed company between 1996 and 2005. Ric is also Company Secretary of Aurora Minerals Limited and Peninsula Mines Limited.

PRINCIPAL ACTIVITIES

During the financial year, the principal activity of the group was mineral exploration with the objective of identifying and developing economic reserves in West Africa and Australia.

OPERATING RESULTS FOR THE PERIOD

The consolidated loss of the group for the financial year after providing for income tax amounted to $7,864,047 (2015:

$7,060,889). This was largely from the costs of administering the group to 30 June 2016, impairment of exploration and exploration costs.

REVIEW OF OPERATIONS

In the year to June 2016, substantial exploration operations including three drilling programs were undertaken by joint venture partners in Cote D'Ivoire and Victoria. In addition, the Company farmed in on the Bobosso Project in NE Cote D'Ivoire and was engaged in discussions with possible joint venture partners in Burkina Faso. $1.3 million was raised in a fully subscribed Rights issue in November-December 2015.

Predictive's joint venture with Toro Gold Limited (Toro JV) in Cote D'Ivoire carried out a large exploration program involving diamond and RC drilling, extensive geochemical sampling programs and geological mapping. This work obtained highly encouraging results on the Boundiali, Kokoumbo and Ferkessedougou exploration permits including:

1. Boundiali - a 6km long gold geochemical anomaly under which first pass RC drilling has obtained excellent drill intersections including 20m at 10.5g/t Au and 28m at 4.0g/t Au with abundant visible gold panned from drill chips, (2) Kokoumbo - two large gold-in-soil anomalies beneath one of which diamond drilling intersected a new style of quartz diorite-hosted gold mineralisation with a best intercept of 7.5m at 16g/t Au, and (3) Ferkessedougou (South) - a 4km long gold-in-soil geochemical anomaly which requires follow-up drilling. The Toro JV also farmed into a ground package held by GIV Minerals SARL, an Ivoirian company, and thereby approximately doubled the area covered by the JV to 3,133km2. Toro earned a 51% interest in Predictive's Cote D'Ivoire subsidiary, Predictive Discovery Cote D'Ivoire SARL, during the financial year by exploration expenditure of US$1 million and is in the process of earning 14% more equity by spending an additional US$2.5 million.

   PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 2016 3 DIRECTORS' REPORT

   Also in Cote D'Ivoire, the Company entered into a JV with XMI SARL, an Ivoirian company, over two permits and one permit application in NE Cote D'Ivoire, covering 1,200km2. This project covers a large known gold mineralised system drilled previously by Equigold and Lihir Gold. An initial program of data assessment, historic drill core and RC chip re- logging, regional target generation and collection of near-surface metallurgical samples was carried out in the first six months to June 2016.

   In Burkina Faso, Predictive published an Exploration Target estimate covering drilled prospects within a 10km radius of the Company's Bongou gold discovery. In addition, the Company undertook field visits and discussions with possible joint venture partners, in accordance with the Company's announced joint venture strategy.

   In Victoria, the Company's joint venture partner, Cape Clear Minerals Pty Ltd (CCM), undertook a diamond drilling program which encountered narrow high grade gold mineralisation including 1.3m at 17.5g/t Au.

   As in previous years, administration costs were reduced in Burkina Faso and Australia, reflecting the ongoing difficult capital raising environment during the year.

   DIVIDENDS PAID OR RECOMMENDED

   No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made.

   FINANCIAL POSITION

   The net assets of the group have decreased by $6,581,400 from 30 June 2015 to 30 June 2016. This net movement is largely due to the following factors:

   • $1.2m net capital raising;

   • Expenditure on exploring and evaluating the assets in Burkina Faso and Cote D'Ivoire; and

   • Impairment of exploration costs carried forward.

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

No significant changes in the group's state of affairs occurred during the financial year.

EVENTS SUBSEQUENT TO BALANCE DATE

On 22 August 2016 Predictive Discovery Limited announced plans to raise up to $4million in three components, being:

1. A minimum of $1m and up to $2m being raised from clients and affiliates of the Sprott Group;

2. A placement of $1.2m to large shareholders and several other sophisticated investors; and

3. A Share Purchase Plan to raise up to $0.8m.

Portions of the first two components are subject to shareholder approval at a meeting to be held on 5 October 2016, while the Share Purchase Plan is expected to close on 27 September 2016. Subsequent to balance date, 45,000,000 shares were issued prior to the date of this report for consideration of $450,000 before costs as part of this capital raising.

Other than the above, no matters or circumstances have arisen for the year which significantly affected or could significantly affect the operations of the group, the results of those operations, or the state of affairs of the group in future financial years.

FUTURE DEVELOPMENTS

Likely developments in the operations of the group and the expected results of those operations in future financial years have not been included in this report, as the inclusion of such information is likely to result in unreasonable prejudice to the group.