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TAWANA RESOURCES NL - Annual Report for the Year ended 31 December 2013

Release Date: 28/03/2014 14:18:00      Code(s): TAW       PDF(s):  
Annual Report for the Year ended 31 December 2013

                Tawana Resources NL
             (Incorporated in Australia)
       (Registration number ACN 085 166 721)
        Share code on the JSE Limited: TAW
                ISIN: AU000000TAW7
Share code on the Australian Stock Exchange Limited:
                        TAW
                ISIN: AU000000TAW7
           (“Tawana” or “the Company”)




           TAWANA RESOURCES NL

                ABN 69 085 166 721




                ANNUAL REPORT

    FOR THE YEAR ENDED 31 DECEMBER 2013
CONTENTS



Corporate Directory                            3

Chairman’s Statement                           4

Directors’ Report                              6

Corporate Governance Statement                28

Auditor’s Independence Declaration            33

Statement of Comprehensive Income             34

Statement of Financial Position               35

Statement of Changes in Equity                36

Statement of Cash Flows                       37

Notes to the Financial Statements             38

Directors’ Declaration                        60

Independent Auditor’s Report to the Members   61

Schedule of Mining Tenements                  64

ASX Additional Information                    65




TAWANA RESOURCES NL ABN 69 085 166 721        2
CORPORATE DIRECTORY


Directors                                       Solicitors to the Company

Mr Wayne Richards      Executive Chairman       Steinepreis Paganin
Mr Lennard Kolff       Managing Director        Level 4, The Read Buildings
Mr Matthew Bowles      Non-Executive Director   16 Milligan Street
                                                Perth WA 6000
Joint Company Secretaries
                                                Price Sierakowski
Mr Winton Willesee                              Level 224, St Martin’s Tower
Mr Aaron Finlay                                 44 St George’s Terrace
                                                Perth WA 6000
Principal Place of Business
and Registered Office
                                                Share Registry
Suite 25
145 Stirling Highway                            Computershare Investor Services Pty Ltd
Nedlands WA 6009                                GPO Box 2975
                                                Melbourne VIC 3001
Contact Details
                                                Tel:      +61 3 9415 5000
                                                Fax:      +61 3 9473 2500
Website: www.tawana.com.au
Tel:     +61 8 9389 3140
                                                Auditor
Fax:     +61 8 9389 3199

                                                William Buck Audit (Vic) Pty Ltd
                                                Level 20
                                                181 William Street
                                                Melbourne VIC 3000

                                                Stock Exchange

                                                Australian Securities Exchange
                                                ASX Code: TAW

                                                JSE Limited
                                                JSE Code: TAW




TAWANA RESOURCES NL ABN 69 085 166 721                                                    3
CHAIRMAN’S STATEMENT



Dear Shareholders

It is with great pleasure that I write to you as the Executive Chairman of Tawana Resources NL.

The Company had a very successful and dynamic year in 2013, with exploration and development
success at its 100%-owned Mofe Creek Project, and the structuring of the Company to transition it
from an explorer into a future iron ore producer.

With continued strong global interest in iron ore projects within Africa, and sustained iron ore pricing
over the past years, the iron ore market remains one of the most preferred commodities for Business
development, investment and financing.

The Company made a strategic decision in 2013 to focus all its efforts on the development of its Mofe
Creek Project, in the Sinje District of Liberia. All non-core business assets associated with gold or
diamonds have, or will be, sold or relinquished from the Company. This will allow the Company to
structure, recruit and execute its key deliverables and milestones without disruption or distraction from
other tasks required to maintain such legacy assets.

With strong financial support and investment interest, a successful raising of A$2.9m in September
2013 resulted in a positive re-rating of the Company, along with the presence of sufficient funds to
undertake the Company’s Maiden Resource Drilling Program (September 2013- January 2014) and
the commencement of a Scoping Study on the Mofe Creek Project. The Company has appreciated in
market value from approximately A$8m in August 2013, to a peak value of A$49m in October of that
year, thereby offering strong financial return to Shareholders.

With all principal consultants and staff now in place for the completion of the Scoping Study, the
Project remains on-track to complete this study in July 2014, and embark on relevant Feasibility
Studies thereafter, with a strong focus on the development of an initial early start-up, low capital
intensity Project of 1-2 Million Tonnes Per Annum (Mtpa). The Business model is to complete the
required studies, design, and procurement activites, including logistics, to build potentially two
processing facilities over a definitive period, to produce up to 10Mtpa of high-grade hematitic iron ore.

The ongoing success of the Company has been due to the commitment and dedication of Tawana’s
Managing Director, Len Kolff and Exploration Manager Rockson Coffie. With a small but dedicated
team located in Liberia, the Project has advanced significantly in a very short time. The Board and our
key stakeholders acknowledge this in-country expertise combined with the great rapport the
Management Team has with our local communities.

Liberia is developing into a strategic iron-ore exporting country with ArcelorMittal now exporting 4
Mtpa and China Union recently shipping its first maiden ore shipment in February 2014. Vedanta
(Sesa Goa) is likewise advancing their iron ore projects in the immediate geographical vicinity of the
Mofe Creek Project. With new infrastructure and port developments progressing, along with several
major mining companies operating within the country, Tawana Resources is well placed to develop its
Mofe Creek Project – both from a technical and commercial perspective.

This year, 2014 will be one of the most strategic and fulfilling years in the Company’s history, as we
strive to complete a Scoping Study, undertake a Feasibility Study, finance ongoing development
activities and commence our Mofe Creek - Mineral Development Agreement (“MDA”) Application – for
our future mining licences and entitlement to operate within Liberia. This work coupled with our high-
level environmental, social and community involvement will ensure our Company is aligned with the
principles of operating a safe, efficient and sustainable business within Liberia.

The Company will continue to refine its corporate governance processes, policies and procedures as
the Company migrates from an explorer to a developer. Accordingly, in the ensuing year, I will
augment the existing board and management teams to ensure the Company has the correct skills and
resources to complete our future tasks in the safest, most timely and cost effective method.




TAWANA RESOURCES NL ABN 69 085 166 721                                                                 4
CHAIRMAN’S STATEMENT


I look forward to working with the Board and Management over the forthcoming year, to deliver our
strategic milestones in accordance with our strategic plans and objectives.

As shareholders of our Company, your ongoing support and commitment is both essential and very
much appreciated, as I believe 2014 will be a very important year for the growth and development of
our Company - Tawana Resources.




Wayne Richards
Executive Chairman
Tawana Resources NL




TAWANA RESOURCES NL ABN 69 085 166 721                                                           5
DIRECTORS’ REPORT


Your directors submit their report for the year ended 31 December 2013 for Tawana Resources NL
(“the “Company”) and its controlled entities (the “Consolidated Entity”).

Directors

The names and details of the Company’s directors in office during the financial year and until the date
of this report are as follows. Directors were in office for the entire period unless otherwise stated.

Mr Wayne Richards – Executive Chairman
Appointed 15 August 2013

Mr Richards has greater than 27 years of mining, mineral processing and corporate financing
experience within the Resources sector, with much of his career spent in senior executive roles.
Wayne was formerly the Managing Director of Brockman Resources where he built the Executive and
Management Team and transitioned the Company from an $18M explorer to a $960M Project
Developer. The company was the target of a successful takeover in 2011. Prior to that, he held
senior executive positions with BHP Billiton’s Iron Ore Division, with responsibility for integrating
projects across BHP’s three iron ore business sectors – mine, port and rail. Mr Richards was the
former Project commissioning and operations manager for the Anaconda Nickel Project (Minara
Resources) and has extensive early-stage Project development, construction and financing expertise.

Over the past 3 years, Mr Richards has held directorships with the following ASX-listed companies:

Company                                     Commenced              Ceased
Brockman Resources Limited                  2 July 2007            16 Sept 2011
NSL Consolidated Limited                    15 Mar 2013            23 Sept 2013
Ironclad Mining Limited                     1 Mar 2012             30 July 2012


Mr David Frances – Executive Chairman
Appointed 28 January 2013
Resigned 6 May 2013

Mr Frances has been involved in the international mining industry for over 20 years. He was, most
recently, President and CEO of Mawson West Ltd (TSX:MWE), a position he held for seven years
during which he led Mawson through the transition from a Western Australian gold explorer to an
international copper explorer, developer, and producer in the Democratic Republic of Congo.

Over the past 3 years, Mr Frances has held directorships with the following ASX-listed companies:

Company                                     Commenced              Ceased
Orrex Resources Limited                     30 Nov 2010            -


Mr Warwick Grigor – Non-Executive Chairman
Appointed 20 April 2010
Resigned 28 January 2013

Mr Grigor is a veteran of 30 years in Australian stockbroking, analysis and corporate advisory
functions, having first commenced employment with Hamersley Iron Pty Ltd after completing degrees
in law and economics. His most recent venture is Canaccord BGF, a stockbroking business
established in 2008, where Mr Grigor is Executive Chairman and Head of Research.

Over the past 3 years, Mr Grigor has held directorships with the following ASX-listed companies:

Company                                     Commenced              Ceased
Peninsula Energy Limited                    11 Apr 2005            -




TAWANA RESOURCES NL ABN 69 085 166 721                                                               6
DIRECTORS’ REPORT


Mr Len Kolff – Managing Director
Appointed 27 October 2011

Mr Kolff joined Tawana initially as Chief Executive Officer in July 2010, having worked at Rio Tinto
over the past decade, where he was involved in a range of high profile projects including the
Simandou iron ore project and the Northparkes Cu-Au mine. His responsibilities have encompassed
a broad range of disciplines, including the design, implementation and supervision of multi-commodity
exploration and pre-feasibility study resource drilling programs, management of geological teams and
collaboration with the mine planning and development functions of major project teams.

Over the past 3 years, Mr Kolff has held no other directorships with ASX-listed companies.

Mr Julian Babarczy – Non-Executive Director
Appointed 9 December 2009
Resigned 15 August 2013

Mr Babarczy is currently a Portfolio Manager at Regal Funds Management, where he has primary
responsibility for investments within the mining and oil and gas sectors. Prior to this role, Mr Babarczy
worked in investment banking for Lazard, where he provided advice to both listed and unlisted
companies on capital raising and merger and acquisition transactions. Before joining Lazard, Mr
Babarczy held several roles in corporate finance, where he was instrumental in a range of successful
transactions including IPOs, secondary market capital raisings, listed company advisory mandates
and equities research across a broad range of industry sectors. Mr Babarczy holds a Bachelor of
Business from Monash University in Melbourne, is a Chartered Financial Analyst charterholder, and
has a graduate diploma in Applied Finance and Investment from the Securities Institute of Australia.

Over the past 3 years, Mr Babarczy has held no other directorships with ASX-listed companies.

Mr Matthew Bowles – Non-Executive Director
Appointed 30 May 2011

Mr Bowles has extensive commercial and corporate finance experience within the resources sector,
formerly being an Executive Director, Mergers and Acquisitions with global advisory firm Ernst &
Young. Prior to joining Ernst & Young in 2004, Mr Bowles spent 8 years with Rio Tinto Limited in a
number of senior financial roles and 4 years in London in corporate finance and investment banking.

Mr Bowles is currently the Chief Development Officer for Gryphon Minerals Limited. He is a member
of the Australian Society of Certified Practising Accountants and the Financial Services Industry of
Australasia.

Over the past 3 years, Mr Bowles has held directorships with the following ASX-listed companies:

Company                                               Commenced           Ceased
Alicanto Minerals Limited                             19 Sept 2012        -

Interests in the shares and options of the Company

As at the date of this report, the interests of the directors in the shares and options of Tawana
Resources NL were:

Name                                    Number of ordinary     Number of options over
                                                   shares            ordinary shares
Mr W Richards (2)                                    5,000,000               55,000,000
Mr D Frances (2)                                       250,000                        -
Mr W Grigor                                         27,850,000                5,000,000
Mr L Kolff                                                   -               25,000,000
Mr J Babarczy (2)                                   26,173,288                5,000,000
Mr M Bowles                                          5,250,000                8,500,000
(1)   Opening balance as at the date of appointment
(2)   Closing balance as at the date of resignation




TAWANA RESOURCES NL ABN 69 085 166 721                                                                 7
DIRECTORS’ REPORT


Joint Company Secretaries

Mr Winton Willesee

Mr Willesee is an experienced Company Director and Company Secretary. Mr Willesee brings a broad
range of skills and experience in strategy, company administration, corporate governance, company
public listings, merger and acquisition transactions, reconstructions and corporate finance.

Mr Willesee holds a Master of Commerce, Post-Graduate Diploma in Business (Economics and
Finance), a Graduate Diploma in Applied Corporate Governance, a Graduate Diploma in Applied
Finance and Investment, a Graduate Diploma in Education and a Bachelor of Business. He is a
Fellow of the Financial Services Institute of Australasia, a Member of CPA Australia and a Chartered
Secretary.

Mr Willesee is currently a director and/or chairman of a number of small and mid-cap listed
companies.

Mr Aaron Finlay

Mr Finlay is a Chartered Accountant and Chartered Company Secretary with over 20 years’
experience in the accounting and finance profession.

Mr Finlay is Finance Director and Company Secretary for BWX Limited. Prior to this he was Finance
Director and Company Secretary for ASX-listed Cleveland Mining Company Limited, Chief Financial
Officer and Company Secretary for ASX listed Mayne Pharma Group Limited and previously
INVESCO Australia’s Chief Financial Officer where he had responsibility for the operations of finance,
as well as the compliance, legal, and human resources functions. Prior to that position, Mr Finlay was
head of group tax and treasury for INVESCO’s global operations in London. Prior to joining
INVESCO, Mr Finlay worked for PricewaterhouseCoopers (then Price Waterhouse) in London and
Perth for 7 years.

Operating results

The loss of the Consolidated Entity for the year ended 31 December 2013 after providing for income
tax amounted to $3,315,988 (2012: $6,473,524).

Financial position

The net assets of the Consolidated Entity are $5,188,394 as at 31 December 2013 (2012:
$3,097,190).

Principal activities and significant changes in affairs

Tawana Resources NL’s principal activities consisted of mineral exploration, in particular iron ore
exploration and development. There were no significant changes in the nature of the activities of the
consolidated entity during the year that have not been covered in this Annual Report.

REVIEW OF OPERATIONS

Tawana Resources NL is an iron ore focused ASX and JSE-listed Company with its principal project
in Liberia, West Africa. Tawana’s 100% owned Mofe Creek Project (“the Project”) is a new discovery
in the heart of Liberia’s historic iron ore district, located 20km from the coast and 80km from the
country’s capital city and major port, Monrovia.

Tawana is committed to becoming a mid-tier iron ore producer through the development of the Mofe
                                     
Creek Project, which covers 285km2 of highly prospective tenements in Grand Cape Mount County.
The Project hosts high-grade friable itabirite mineralisation which can be easily upgraded to a superior
quality iron ore product of +65% Fe, for which there is consistent global demand.




TAWANA RESOURCES NL ABN 69 085 166 721                                                                8
DIRECTORS’ REPORT


Mofe Creek Iron Ore Project

    -   Extensive high-grade (+50% Fe up to 60% Fe) “DSO – potential” zone defined at Gofolo
        Main: over 1km strike including 12-26m @ 57.5% Fe
    -   Follow-up metallurgical testwork on RC samples have achieved a 63% to 68% Fe ‘premium’
        quality product at 58% to 68% mass recovery with exceptionally low SiO2 and Al2O3 levels
        (3.0% combined)
    -   Exceptional final product grades achieved at 1.0mm crush; significant resource expansion
        opportunity
    -   Preliminary Ore processing flow sheet highlights the potential for a low capital cost
        beneficiation plant, with simple crushing and gravity separation circuits
    -
                                                                                                          1
        Friable itabirite exploration target of up to 95Mt within a global exploration target of 500Mt
    -   Only 8km of a potential 65km of interpreted prospective strike drilled to date
    -   A total of 113 (97 reverse circulation “RC” and 16 diamond core “DD”) resource drill holes for
        8,938m and 9 exploration RC drill holes for 492m of drilling completed to date at the Mofe
        Creek deposits
    -   Maiden resource drilling program completed in January 2014. All results released and
        maiden resource statement pending

Scoping Study

    -   Tenova Australia awarded principal role of managing and co-ordinating the plant design and
        logistics components of the scoping study (Study). Coffey International (“Coffey”) of Perth to
        lead the development of the maiden resource program, mine planning and mining
        methodologies studies as part of deliverables for the Study
    -   Earth Systems of Perth and Africa in conjunction with EarthCons of Liberia to lead the
        environmental, social and community studies
    -   PRDW was appointed to undertake the barging and transhipment studies for the Project
    -   Scoping study scheduled for release in July 2014

Corporate

    -   The appointment of Mr Wayne Richards as Executive Chairman in August 2013
    -   Key appointments of in-Country Manager, Study Manager and part-time Chief Financial
        Officer
    -   Successful capital raise in October for A$2.92m for resource drilling and the development of
        the Mofe Creek scoping study
    -   Divestment of non-core diamond assets in South Africa and South Australia being concluded

Mofe Creek Iron Ore Project, LIBERIA
Tawana Resources NL is an iron ore focused ASX and JSE-listed Company with its principal project
in Liberia, West Africa. Tawana’s 100% owned Mofe Creek Project (“the Project”) is a new discovery
in the heart of Liberia’s historic iron ore district, located 20km from the coast and 80km from the
country’s capital city and major port, Monrovia.

Tawana is committed to becoming a mid-tier iron ore producer through the development of the Mofe
                                     
Creek Project, which covers 285km2 of highly prospective tenements in Grand Cape Mount County.
The Project hosts high-grade friable itabirite mineralisation which can be easily upgraded to a superior
quality iron ore product of +65% Fe, for which there is consistent global demand.




TAWANA RESOURCES NL ABN 69 085 166 721                                                                        9
DIRECTORS’ REPORT


The Company has completed its maiden resource drilling program and has significantly advanced its
scoping study on the Mofe Creek Project. The scoping study will consider both an early start-up, low
capital cost project with a production rate of 1-2 million tonnes per annum (Mtpa), as well as a longer-
term project capable of producing 5-10 Mtpa of premium (+65%Fe) product.








TAWANA RESOURCES NL ABN 69 085 166 721                                                                      10
DIRECTORS’ REPORT


Corporate

The Company announced the appointment of Mr Wayne Richards on 15 August 2013 as its Executive
Chairman. Mr Richards has a career spanning almost 30 years in the design, development and
commissioning/expansion of several major iron ore and nickel projects (greenfield and brownfield). Mr
Richards was recently Managing Director of Brockman Resources Ltd and previously worked with
BHP Billiton Iron Ore, Anaconda Nickel and QNI-Billiton.

The Company completed a strategic review of potential funding proposals and Joint Venture partners,
coordinated by Euroz Securities Limited in the first half of the year.

A number of significant and highly regarded global resource, mining and investment companies
confirmed their interest in the potential development and funding of the Project Studies which led to
several earn-in agreements and/or potential JV structures, both at a Corporate and Project (asset)
level, being assessed.

However, whilst the Board of Tawana deemed the process a business success, the Company
decided to retain a 100% interest in the Mofe Creek Project, and raise sufficient capital to execute the
Project’s maiden resource drilling program and scoping study.

The Company executed an Underwriting Agreement with Canaccord Genuity (Australia) Limited
(Canaccord) for 50 million options in July 2013 with a strike price of $0.01 and an expiry date of 30
July 2013, generating approximately $500,000 in funds for the Company.
The Company successfully completed a capital raising for A$2.92m in October 2013. Funds raised
are currently being used for the maiden resource drilling program at the Company’s Mofe Creek Iron
Ore project in Liberia, ongoing metallurgical test work programs, working capital and the completion of
a scoping study for the Project. The Placement was strongly supported by both existing and new
investors and Institutions, which reflected the quality of the Company’s Mofe Creek Iron Ore Project.

The Company terminated the Option Agreement to acquire the Sinoe gold license outright in July
2013.

Mofe Creek Iron Ore Project -Operations

A 2,418m Reverse Circulation (“RC”) exploration drill programme was completed at the Mofe Creek
                                                                                          1
Iron Project during the first quarter and a global exploration target size potential range of 360Mt to
670Mt of friable iron formation was announced, of which 90-270Mt was friable itabirite and 230-440Mt
was friable intermixed itabirite/amphiboliteThis represented a significant milestone for the company
and a new iron ore discovery in Liberia very close to the coast. A total of 834m for 7 holes was drilled
at the Gofolo Main target and 1,584m for 15 holes at the Koehnko target during this initial exploration
programme between January and February 2013)

Additional high-grade outcropping itabirite and magnetite float was discovered at the Zaway and
Gofolo North-East (“NE”) targets within the project area. Positive results from the exploration drilling
phase and discovery of additional mineralisation at Zaway lead to mobilisation of the drill rig to site in
October 2013. The same multi-purpose drill rig previously utilised earlier that year completed
exploration,infill and extensional RC resource drilling at the Gofolo Main, Zaway and Gofolo NE
prospects in support of a maiden JORC compliant resource in the Inferred and Indicated category,
scheduled for release in March/April 2014.



1 This information was prepared and first disclosed under JORC Code 2004. It has not been updated since to
comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last
reported. The potential quantity and grade of the Exploration Target is conceptual in nature. There has been
insufficient exploration to estimate a Mineral Resource and it is uncertain if further exploration will results in the
estimate of a Mineral Resource. Refer ASX announcement of 18 March 2013 for further details Refer to ASX
announcement of 18 March 2013.




TAWANA RESOURCES NL ABN 69 085 166 721                                                                            11
DIRECTORS’ REPORT


A total of 4,829m for 65 RC resource drill holes were completed during this phase of drilling at Gofolo
Main and Zaway, completing the RC component of the resource evaluation programme on those
prospects. An additional 492m in 9 exploration RC holes was consequently completed at the Gofolo
NE prospect.

Subsequent to the reporting period, metallurgical and quality control HQ diamond core drilling was
completed at Gofolo Main for a total of 781m in 11 holes and at Zaway for a total of 376.5m in 5
holes. The multi-purpose rig was then converted back to RC to complete 10 resource holes for 536m
at the Koehnko prospect to finalise the planned resource programme during end-January 2014.




Initial review of the Gofolo Main results show a ‘DSO – potential’ high-grade zone developing over a
1km strike along the southern flank of the Gofolo Main hill. Surface to near-surface friable iron
formation intersections vary from 49.5% Fe to 57.5% Fe over 8m to 20m drill depth intersections.
Good continuity over current 200m line spacing, high Fe% grade, coarse grained mineralisation and
potential low-stripping ratios suggest this could be the potential start-up mine for the Mofe Creek
Project.




TAWANA RESOURCES NL ABN 69 085 166 721                                                             12
DIRECTORS’ REPORT








TAWANA RESOURCES NL ABN 69 085 166 721                                                                            13
DIRECTORS’ REPORT





Drilling results have defined a 2km strike length high-grade, coarse grained itabirite deposit along the
northern and southern flank of the Zaway Hill. Mineralisation is open to the east along the northern
flank and has been observed in road cuttings.

Drilling results have defined a 1.2km strike length, low contaminant level itabirite deposit along the
Koehnko hill. Mineralisation is open to the west and east along the main Koehnko hill, with additional
target footprints yet untested by drilling to the north, east and south.




TAWANA RESOURCES NL ABN 69 085 166 721                                                                            14
DIRECTORS’ REPORT






Metallurgical Test-Work

A reconnaissance metallurgical test work program on soft, friable weathered surface mineralisation
and hard, fresh below base of weathering mineralisation at the Gofolo and Koehnko prospects was
completed during the year. Initial results demonstrated that a +60% Fe product with low contaminant
levels (i.e. silica, alumina phosphorous and sulphur) and a (de-slimed) mass recovery between 40%
to 57% could be achieved with minimal crushing (3.35mm), screening and simple gravity separation
beneficiation.

A total of 9 composites of mineralised RC drill chips were shipped to ALS Iron Ore Technical Centre,
Perth, Western Australia early last year (2013) for comprehensive test-work of both magnetic and
non-magnetic material including sizing, Heavy Liquid Separation (HLS), Davis Tube Recovery (DTR),
optical mineralogy and XRD analysis.

In addition to the HLS test-work completed on friable ‘weathered’ mineralisation, DTR test-work was
also completed on ‘fresh’ below base of weathering ‘magnetite’ mineralisation. Results demonstrate
that a high-grade +70% Fe magnetite concentrate at 38% weight recovery was achievable.

Subsequent to the reporting period, follow-up metallurgical test work confirmed that a high-grade
+62% Fe up to 68% Fe ‘premium’ product with low impurities could be produced at a +58% to 68%
(de-slimed) mass recovery rate, from 1.0mm crushed material. The feed material for this testwork was
derived from +37% Fe to 50% Fe head grade, friable itabirite from the Gofolo Main and Koehnko
deposits.

The first phase metallurgical testwork was completed at a 3.35mm crush to define the ‘minimum’
amount of work required to generate a +60% Fe product. Follow-up testwork was designed to assess
what potential product grades could be achieved at a 1mm crush (i.e. no particulate grinding).




TAWANA RESOURCES NL ABN 69 085 166 721                                                                       15
DIRECTORS’ REPORT


Testwork results indicated excellent upgradability for both composites with Fe grades ranging
between 63.2% to 67.7% Fe at a 3.6 SG, whilst the levels of contaminants decreased to
approximately 3.0% combined SiO2 and Al2O3.

Composite         SG (µm)        Mass              Feed Mass Fe %                SiO2 %       Al2O3 %
                                 Recovery          Recovery
                                 %                 %
Comp 2            +3.6           67.6              50.3             63.2         1.9          0.92
Comp 5            +3.6           57.5              40.7             67.7         2.0          0.64

Table 1| Mass recovery and product grade of the -1.0+0.045mm using heavy liquid separation.

Results also demonstrate that an exceptional final product grade can be achieved from low-grade
feed (36% Fe) at a 1.0mm crush confirming the potential for the design and development of a low
capital intensity process plant with simple gravity beneficiation equipment. This was a significant
outcome and milestone as it confirmed the favourable physical characteristics of the mineralisation;
i.e. coarse grained and friable, and could be simply upgraded to a premium product. The coarseness
of the mineralisation could potentially lead to the development of a simple beneficiation process for
the ‘hard’ below base of oxidation ‘fresh’ material - which to date has not been included in any
studies or exploration targets.

A comprehensive diamond drill core metallurgical test-work program with ALS – Iron Ore Technical
Centre was developed and is currently being executed. The test work program was designed to
optimise the processing parameters required to beneficiate the medium and high-grade friable itabirite
mineralisation present at the Mofe Creek prospects to produce the optimal quality iron ore product at
the most viable particle sizing and Fe grade, with the minimal amount of plant and equipment. The
programme is structured to confirm the design criteria necessary for the Mofe Creek scoping study,
including a preliminary plant design for the early start-up options being scoped, and the longer-term,
larger-scale processing facility.

Infrastructure and Logistics
Detailed proposals and development scenarios were presented to relevant Ministries and Authorities
within Liberia, confirming Tawana’s business development and execution plans for both an early start-
up scenario (1-2 Mtpa) and the Company’s longer-term 5-10 Mtpa production plan. Discussions and
proposals were also presented to the existing third-party owner/operators of the Monrovia deep-water
port facilities to seek port access and/or port gate/rail siding sales agreements in support of the early
production start-up scenario.

Meetings were held with the Ministry of Lands, Mines and Energy, the Ministry of Transport and the
National Port Authority by the Executive Chairman and Managing Director late in the year. Proposals
for road, rail and port access/developments were initiated. An extensive inspection of the Freeport of
Monrovia was conducted and a fly-over of the entire Project site including potential mine(s) and
transport corridors to the coast and/or the Port of Monrovia were conducted.

The construction of China Union’s Bong mine iron ore handling facilities at the Freeport of Monrovia
was completed with a maiden iron ore shipment dispatched during February 2014. The Freeport of
Monrovia is located within 80km of the Mofe Creek project along a sealed bitumen road.




TAWANA RESOURCES NL ABN 69 085 166 721                                                               16
DIRECTORS’ REPORT





Scoping Study

The scoping study will be structured to consider both an early start-up, low capital cost project with a
production rate of 1-2 million tonnes per annum (Mtpa), as well as a longer-term project capable of
producing 5-10 Mtpa of iron ore product.

The Company awarded the principal role of managing and coordinating the major design and logistics
components of the scoping study to globally recognised mining and minerals design and development
group, Tenova Australia.

Tenova Mining and Minerals (“Tenova”) is part of the global Tenova Group, which has offices in
Australia and Africa. Tenova is a worldwide supplier of advanced technologies, products and
engineering service, with relevant experience in iron ore and the steel mining industry. Tenova has
recently completed study and detailed design and engineering work on Vedanta’s Bomi Hills Project,
located near-by to Tawana’s, Mofe Creek Project.

The Company awarded Coffey International Limited (Perth office) the tasks of completing the maiden
resource and mine planning studies in support of the scoping study.

Coffey International Limited is a specialist professional services consultancy with expertise in
geosciences, international development, and project management. With more than 50 years of
experience, Coffey is well known in their markets for deep technical skills and market-leading
solutions to complex tasks.




TAWANA RESOURCES NL ABN 69 085 166 721                                                              17
DIRECTORS’ REPORT


Resource modelling for the Mofe Creek maiden resource statement is well underway with all results
now incorporated into a database and QA/QC’ed, whilst wire framing is currently well advanced.

The Company awarded Earth Systems (Perth and Africa offices) in conjunction with EarthCons of
Liberia the scope of work for the completion of environmental, community and social studies in
support of the scoping study.

Earth Systems, an Australian company established in 1993 has global operations including an
established ESIA accredited office in Dakar, Senegal. The consultancy has extensive experience in
the mining and resource development sector working with major players in the mining industry in West
Africa, Australia and globally. Earth Systems will partner with a local multidisciplinary consultancy
group - EarthCons, based in Monrovia. EarthCons has provided environmental and social inputs to a
number of projects throughout Liberia including those regionally relevant to the Mofe Creek.

An environmental, social and community baseline site review and mapping in support of the scoping
study was recently completed on site. A preliminary report is being prepared at the time of preparing
this report. A scope of works in support of baseline data requirements for the Pre-Feasibility Study will
be subsequently developed.

An in-country Manager was appointed to spearhead commercial negotiations on the Mineral
Development Agreement (“MDA”) and commenced employment at the Project within Liberia in
February 2014.

A part-time Study Manager was appointed to Tawana, to champion the co-ordination and timely
completion of the Mofe Creek Project scoping study. The study remains on-track for completion in
early July 2014. Additionally, a part-time Chief Financial Officer has been employed to structure the
Company’s corporate financial systems to effect the timely and accurate migration of the Company
financial systems from an explorer to a future developer. The appointee will also be accountable for
managing the financial model for the scoping study and assist with future financial analyses of various
operating scenarios and varying ownership and development scenarios.

About the Mofe Creek Iron Ore Project

The Mofe Creek Project is located within one of Liberia’s historic premier iron ore mining districts. The
project is 10km along strike from the abandoned Bomi Hills mine (50Mt DSO @ 65% Fe), 80km
along strike from the historic Bong Mine (275Mt @ 38% Fe), 45km from the Mano River mine (100Mt
@ 52% Fe) and 20km from the Bea Mountain resource (100Mt @ 45% Fe).

The Project is characterised by exceptionally coarse grained, high-grade itabirite that has the potential
to deliver a high-grade product (63%Fe – 68%Fe) at a coarse crush sizing, with high mass recoveries,
and potentially low mine stripping ratios and free-dig material.

The Project is exceptionally well located being approximately 20km from the coast for potential haul-
road trucking or conveyor of product to the coast and transhipment via barge to deeper water for on-
shipment or barging to the port of Monrovia. Other possible infrastructure solutions exist; road or rail
to the deep water port of Monrovia via a 80km sealed road from the central licence area or a 65km
                                                            
decommissioned standard-gauge iron ore railway alignment2 from the Bomi Hills mine to the port of
Monrovia; 17km east from the easternmost magnetic anomaly.

The Project hosts a 95Mt high-grade +45% Fe friable itabirite exploration target within a global
exploration target of 500Mt of friable itabirite and intermixed itabirite/amphibolite. Initial metallurgical
test-work completed in mid 2013 on representative samples from the maiden 2,500m reverse
circulation drill programme confirmed the potential to beneficiate through crushing to only 3.35mm, a
+60% Fe product with low contaminants and 44-57% mass recovery within the itabirite. Subsequent


 The railway alignment falls under the Western Cluster project currently joint ventured with Sesa Goa; India’s largest producer
and exporter of iron ore in the private sector.



TAWANA RESOURCES NL ABN 69 085 166 721                                                                                      18
DIRECTORS’ REPORT


metallurgical testing has confirmed that crushing the same material to a 1.0mm size fraction
generates a 63% Fe to 68% Fe ‘Premium’ product with a 58-68% mass recovery, at a 3.6 SG.

Proximity to the coast and positive initial metallurgical test-work results suggests the potential for an
early start-up, low capital intensity project, with low operating costs.

About Liberia

Liberia is a democratic country run by Her Excellency President Ellen Johnson Sirleaf; Africa’s first
elected female head of state in 2005 and recently re-elected in November 2011 for her second term.
The country is hugely prospective and hosts several world class iron ore deposits but yet is
completely underexplored for gold and non-ferrous metals. Liberia has a modern and transparent
mining code and the government is supportive of foreign investment especially in the exploration and
mining industry to help unlock the value of its potential mineral wealth.

Liberia is located in West Africa dominantly within the Archean aged Kenema Man Domain and lesser
Birimian sediments to the east. There are a large number of world class iron ore deposits located in
Liberia and historically it was the 5th largest iron ore producer in the world for a number of years
during the 1960’s to 1980’s. West Africa is one of the fastest growing mineral provinces in the world
and Liberia currently hosts several world class iron ore deposits.

Other Assets - South Africa

The Company continues to divest its legacy diamond portfolio and announced the sale of Kareevlei
Diamond Project to BlueRock Diamonds PLC (AIM: BRD) for R4 million in two tranches on 26 August
2013.

Diamond Resources Pty Ltd, the 100% owned South African subsidiary of Tawana Resources NL
entered into an Option Agreement with BlueRock Diamonds on 23 April 2013 and a Supplementary
Agreement on 3 August 2013. Under the terms of the agreement, BlueRock Diamonds has the option
to purchase outright the Kareevlei Diamond Project Mining Right and associated equipment for a total
of R4 million (approximately AU$430,000).

The Company received the first tranche payment of R3 million (approximately AU$320,000) during
September 2013 and the second tranche payment of R1 million (approximately AU$108,000) was
placed into escrow pending successful transfer of the Mining Right, expected during 2014.

Australia

Subsequent to the announcement of the termination of the Flinders Island Agreement between
Flinders Mines (ASX: FMS) and Tawana Resources (ASX: TAW) and Orogenic Exploration Pty Ltd on
29 July 2013, the Company announced that it entered into an Asset Sale Agreement with Kalyan
Resources Pty Ltd and terminated the Flinders Island Agreement with Orogenic Exploration Pty Ltd
during the quarter on 26 August 2013.

Concurrent with the termination of the Flinders Island Agreement, the Company announced the sale
of its 80% holding in the Flinders Island Diamond Project to Kalyan Resources Pty Ltd for A$1 (one
dollar) plus a 2.5% Gross Revenue Royalty on Kalyan’s 80% holding in the event of discovery and
commercial production.

Len Kolff
Managing Director
Tawana Resources NL

Detailed information on all aspects of Tawana’s projects can be found on the Company’s website
www.tawana.com.au.




TAWANA RESOURCES NL ABN 69 085 166 721                                                               19
DIRECTORS’ REPORT


Competent Persons Statement
The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves
is based on information compiled by Len Kolff , who is a Member of the Australian Institute of
Geoscientists included in a list promulgated by the ASX from time to time. Len Kolff is a full-time
employee of the company and has sufficient experience which is relevant to the style of mineralisation
and type of deposit under consideration and to the activity which he is undertaking to qualify as a
Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves’. Len Kolff consents to the inclusion in the
report of the matters based on his information in the form and context in which it appears. This
information was prepared and first disclosed under JORC Code 2004. It has not been updated since
to comply with the JORC Code 2012 on the basis that the information has not materially changed
since it was last reported.

Forward Looking Statement

This report may contain certain forward looking statements and projections regarding estimated,
resources and reserves; planned production and operating costs profiles; planned capital
requirements; and planned strategies and corporate objectives. Such forward looking
statements/projections are estimates for discussion purposes only and should not be relied upon.
They are not guarantees of future performance and involve known and unknown risks, uncertainties
and other factors many of which are beyond the control of Tawana Resources NL. The forward
looking statements/projections are inherently uncertain and may therefore differ materially from results
ultimately achieved.

Tawana Resources NL does not make any representations and provides no warranties concerning
the accuracy of the projections, and disclaims any obligation to update or revise any forward looking
statements/projects based on new information, future events or otherwise except to the extent
required by applicable laws. While the information contained in this report has been prepared in good
faith, neither TAW or any of its directors, officers, agents, employees or advisors give any
representation or warranty, express or implied, as to the fairness, accuracy, completeness or
correctness of the information, opinions and conclusions contained in this presentation. Accordingly,
to the maximum extent permitted by law, none of TAW, its directors, employees or agents, advisers,
nor any other person accepts any liability whether direct or indirect, express or limited, contractual,
tortuous, statutory or otherwise, in respect of, the accuracy or completeness of the information or for
any of the opinions contained in this presentation or for any errors, omissions or misstatements or for
any loss, howsoever arising, from the use of this presentation.




TAWANA RESOURCES NL ABN 69 085 166 721                                                              20
DIRECTORS’ REPORT


Corporate Social Responsibility

The Company strives to be a partner of choice within the communities, stakeholders and government
authorities it engages with in Liberia and on the project sites. Maintaining an open, honest, equitable
and transparent dialogue with all stakeholders and in particular the local communities within which the
Company operates is part of doing business in Liberia and maintaining a ‘social licence to operate’.

The Company has completed extensive road upgrades totalling 28km, and refurbished six bridges
during the year, facilitating improved access for communities to markets, neighbouring towns and
health services; otherwise previously difficult to reach.

Additionally the Company was very proud to provide home and away strips, soccer boots, balls and
provisions for the Grand Cape Mount soccer team during the year who were crowned National
Champions for 2013.

The Company will continue to pursue social projects within its licence area which have a positive and
lasting effect for the communities and as part of its social licence to operate within Liberia.


Subsequent Events

On 15 January 2014, the Company announced that it had received very encouraging results from the
ongoing resource evaluation drill programme currently underway at its flagship Mofe Creek Iron Ore
Project in Liberia.

On 21 January 2014, the Company announced the results of follow-up metallurgical test work on
previous RC samples, achieving a 63% to 68% Fe – premium quality product at 58% to 68% mass
recovery, from its flagship Mofe Creek Iron Ore Project in Liberia.

On 3 February 2014, the Company announced that it had a new, multiple high grade, course itabirite
intersection over the Zaway project at its Mofe Creek Iron Ore Project.




TAWANA RESOURCES NL ABN 69 085 166 721                                                              21
DIRECTORS’ REPORT


On 11 February 2014, the Company announced that it had appointed Mr Peter Connery to the
position of Liberian in-Country manager for the development of the Company’s Mofe Creek Iron Ore
Project.

On 12 February 2014, the Company issued 6,000,000 employee share options over fully paid
ordinary shares, comprising 1,000,000 options exercisable at $0.039, expiring on 20 January 2017
and 5,000,000 options exercisable at $0.042 and expiring on 7 February 2017, the second tranche of
which have since been forfeited.

On 5 March 2014, the Company announced the discovery of additional broad mineralised
intersections of friable itabirite iron formations at the Koehnko prospect at its Mofe Creek Iron Ore
Project.

On 6 March 2014, the Company issued 25,750,000 fully paid ordinary shares on the exercise of
options previously issued by the Company, comprising 25,000,000 options exercisable at $0.01
expiring 8 March 2014 and 750,000 exercisable at $0.015 and expiring 12 December 2016.

Dividends paid or recommended

The Directors do not recommend the payment of a dividend and no amount has been paid or
declared by way of a dividend to the date of this report.

Future developments, prospects and business strategies

The consolidated entity will continue to concentrate on mineral exploration, particularly iron ore
exploration, with emphasis on the development of its existing projects.

Environmental issues

The Company is aware of its environmental obligations with regards to its exploration activities and
ensures that it complies with all regulations at all times.




TAWANA RESOURCES NL ABN 69 085 166 721                                                           22
DIRECTORS’ REPORT


REMUNERATION REPORT (audited)

This report details the nature and amount of remuneration for each Director of Tawana Resources NL,
and for key management personnel. For the year ended 31 December 2013, there are considered to
be no key management personnel who are not Directors of the Company.

Remuneration policy

The Board policy for determining the nature and amount of remuneration of Directors and Executives
is agreed by the Board of Directors as a whole. The Board obtains professional advice where
necessary to ensure that the Company attracts and retains talented and motivated Directors and
employees who can enhance Company performance through their contributions and leadership.

Remuneration policy takes into account the risks and liabilities assumed by the directors and
executives as a result of their involvement in the activities undertaken by the Company.

Executive Director Remuneration

In determining the level and make-up of executive remuneration, the Board negotiates remuneration
to reflect the market salary for a position and individual of comparable responsibility and experience.
Remuneration is compared with the external market by reference to industry salary surveys. If
required, the Board may engage an external consultant to provide independent advice in the form of a
written report detailing market levels of remuneration for comparable executive roles. Such a process
did not occur during the year.

Remuneration consists of both fixed and variable remuneration components as considered
appropriate.

Non-Executive Director Remuneration

Non-Executive Directors’ fees are paid within an aggregate limit which is approved by the
shareholders from time to time. Retirement payments, if any, are determined in accordance with the
rules set out in the Company’s Constitution and the Corporations Act at the time of the Director’s
retirement or termination. Non-Executive Directors remuneration may include an incentive portion
consisting of bonuses and/or options, as considered appropriate by the Board, which is subject to
shareholder approval in accordance with the ASX Listing Rules.

The aggregate remuneration, and the manner in which it is apportioned amongst Non-Executive
Directors, is reviewed annually. The Board considers the amount of director fees being paid by
comparable companies with similar responsibilities and levels of experience of the Non-Executive
Directors when undertaking the annual review process.

The current maximum amount of Non-Executive Directors fees payable is fixed at $300,000 in total,
for each 12 month period commencing 1 January each year, until varied by ordinary resolution of
shareholders.


TAWANA RESOURCES NL ABN 69 085 166 721                                                             23
DIRECTORS’ REPORT


Details of remuneration for year ended 31 December 2013

Details of the remuneration of the Directors of Tawana Resources NL and its controlled entities, are
set out in the following tables.


                                       Short-term benefits              Post         Share-         Total      Perform-
                                                                     employment      based                      ance
                                                                                          (6)                      (5)
                                 Salary and Cash bonus  Non-cash         Super-       payments                    Related
                                   fees                 benefits       annuation
2013                                  $           $             $           $              $             $             %
Directors
Mr W Richards(1)                107,551             -            -       9,948       754,020       871,519        86.5
Mr D Frances(3)                  78,979             -            -       6,664             -        85,643           -
Mr W Grigor(2)                    6,667             -            -         600             -         7,267           -
Mr L Kolff                      235,874        25,000            -      23,839       291,050       575,763        54.9
Mr J Babarczy(4)                 25,041             -            -           -             -        25,041           -
Mr M Bowles                      40,000             -            -       3,650       103,040       146,690        70.2
                                494,112        25,000            -      44,701     1,148,110     1,711,923


(1)    Appointed 15 August 2013
(2)    Resigned 28 January 2013
(3)    Appointed 28 January 2013, Resigned 6 May 2013
(4)    Resigned 15 August 2013
(5)    Share based payments form all of performance-related remuneration with the exception of the single contractual bonus
       payment based on a successful capital raising.
(6)    Incentive options issued in accordance with the Company’s Notice of General Meeting and Explanatory Memorandum
       dated 4 November 2013 as approved by shareholders at the General Meeting of shareholders held on 12 December
       2013 and issued on 18 December 2013 with an expiry date of 12 December 2016 and vesting immediately.



                                       Short-term benefits              Post         Share-         Total      Perform-
                                                                     employment      based                      ance
                               Salary and Cash bonus Non-cash         Super-        payments                     related
                                  fees                benefits       annuation
2012                               $           $             $           $              $             $             %
Directors
Mr W Grigor                      40,000             -            -       3,600        84,500       128,100        66.0
Mr L Kolff                      231,711             -            -      20,854       169,000       421,565        53.9
Mr E Luff(1)                     16,667             -            -           -             -        40,000           -
Mr J Babarczy                    40,000             -            -           -        84,500       124,500        66.0
Mr M Bowles                      40,000             -            -       3,600        84,500       128,100        66.0
                                368,378             -            -      28,054       422,500       818,932

(1)    Resigned 15 June 2012




TAWANA RESOURCES NL ABN 69 085 166 721                                                                                  24
DIRECTORS’ REPORT


Options granted as remuneration

All options issued to Directors and Key Management Personnel are issued for nil consideration.

All options issued have been granted for up to a five year period, with incentive options vesting
immediately on issue and performance options vesting within 12 and 36 months from contract or issue
date.

All options issued carry no dividend or voting rights. When exercised, each option is converted into
one ordinary share pari passu with existing ordinary shares.

During the year ended 31 December 2013, 68,500,000 options were issued to Directors or Key
Management Personnel as remuneration.

Shares issued on exercise of compensation options

During the year ended 31 December 2013, Mr Bowles disposed of 9,000,000 and exercised
6,000,000 options over fully paid ordinary shares at an exercise price of $0.01 and expiring on 23
February 2013.

During the year ended 31 December 2012, no share options were exercised by Directors or Key
Management Personnel.

Employment contracts of directors and senior executives

There are no contracts between the Company and the Directors other than Messrs Richards and
Kolff. The Company has entered into a standard appointment agreement with Mr Len Kolff which
provides for a continuous appointment term from 1 September 2013 and a notice period of six
months, $270,000 annual salary (inclusive of superannuation) and performance bonuses together
with an issue of options over fully paid ordinary shares in the Company as noted above.

The Company has entered into a standard appointment agreement with Mr Wayne Richards which
provides for an initial appointment term of three years from 15 August 2013 with an option to extend
for a further two years, $310,000 annual salary and an issue of incentive and performance options in
accordance with the Company’s Notice of General Meeting and Explanatory Memorandum dated 4
November 2013 and are subject to performance milestones as approved by shareholders at the
General Meeting of shareholders held on 12 December 2013.

This ends the audited remuneration report.

Meetings of directors

During the financial year, 12 meetings of Directors were held. Attendances by each Director during
the year were as follows:

                               Board meetings
                          Number              Number
                          attended           eligible to
                                               attend

Mr W Richards                 6                   6
Mr D Frances                  2                   2
Mr W Grigor                   -                   -
Mr L Kolff                   12                  12
Mr J Babarczy                 6                   6
Mr M Bowles                  12                  12




TAWANA RESOURCES NL ABN 69 085 166 721                                                           25
DIRECTORS’ REPORT




Options

At the date of this report, the unissued ordinary shares of Tawana Resources NL under option are as
follows:

Grant date            Date of expiry       Exercise price    Number under
                                                                option
9 Sep 2010              9 Sep 2014             $0.05              5,000,000
10 Nov 2011            10 Nov 2015             $0.05              1,250,000
28 May 2012            30 April 2015           $0.036            27,000,000
27 June 2012           30 April 2015           $0.036             1,500,000

18 Dec 2013            12 Dec 2016            $0.0001            10,000,000

18 Dec 2013            12 Dec 2016            $0.0001            10,000,000

18 Dec 2013            12 Dec 2016            $0.0001            10,000,000

18 Dec 2013            12 Dec 2016             $0.015            31,500,000

18 Dec 2013            12 Dec 2016             $0.046            10,000,000

18 Dec 2013            12 Dec 2016             $0.018            10,000,000

12 Feb 2014             20 Jan 2017            $0.039             1,000,000
                                                                117,250,000


During the year ended 31 December 2013, a total of 100,000,000 options were exercised at a price of
$0.01 per option. Subsequent to 31 December 2013, a further 25,000,000 options expiring 8 March
2014 were exercised at a price of $0.01 per option and 750,000 options expiring 12 December 2016
were exercised at a price of $0.015 per option.

No person entitled to exercise an option had or has any right by virtue of the option to participate in
any share issue of any other body corporate.

Indemnifying officers or auditor

In accordance with the constitution, except as may be prohibited by the Corporations Act 2001, every
officer of the Company shall be indemnified out of the property of the Company against any liability
incurred by him in his capacity as officer or agent of the Company or any related corporation in
respect of any act or omission whatsoever and howsoever occurring or in defending any proceedings,
whether civil or criminal. The terms of the policy prevent disclosure of the amount of the premium
payable and the level of indemnification under the insurance contract.

Proceedings on behalf of the Company

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene
in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf
of the Company for all or any part of these proceedings.

The Company was not a party to any such proceedings during the year.

Non-audit services

The Company did not engage its external auditor to provide any non-audit services during or since the
end of the financial year.




TAWANA RESOURCES NL ABN 69 085 166 721                                                             26
DIRECTORS’ REPORT


Auditor’s independence declaration

The lead auditor’s independence declaration for the year ended 31 December 2013 has been
received and is attached to this Directors’ Report.

Signed in accordance with a resolution of the Board of Directors.




Mr Len Kolff
Managing Director
Tawana Resources NL
                      
Dated at Perth this 28th day of March 2014




TAWANA RESOURCES NL ABN 69 085 166 721                                               27
CORPORATE GOVERNANCE STATEMENT


The Board members of Tawana Resources NL are committed to achieving and demonstrating the
highest standards of corporate governance. An extensive review of the Company’s corporate
governance framework was completed in light of the best practice recommendations released by the
Australian Securities Exchange (ASX) Corporate Governance Council in March 2003. In August
2007, the ASX Corporate Governance Council released a second edition of the principles, which was
subject to further amendments in 2010. The Board continues to review the framework and practices
to ensure they meet the interests of shareholders. The Company and its controlled entities together
are referred to as the consolidated entity in this statement.

The relationship between the Board and Senior Management is critical to the consolidated entity’s
long-term success. The Directors are responsible to the shareholders for the performance of the
Company in both the short and the longer term and seek to balance sometimes competing objectives
in the best interests of the consolidated entity as a whole. Their focus is to enhance the interests of
shareholders and other key stakeholders and to ensure the consolidated entity is properly managed.

Day to day management of the consolidated entity’s affairs and the implementation of the corporate
strategy and policy initiatives are formally delegated by the Board to the Managing Director as set out
in the consolidated entity’s Delegated Authority Policy.

A description of the Company’s main corporate governance practices is set out below. All of these
practices, unless otherwise stated, were in place for the entire year.

Foundations for management and oversight

The Board has the overall responsibility to shareholders for all governance matters of the
consolidated entity. The Board remains primarily responsible for the strategic direction and financial
aspirations of the consolidated entity, whilst delegating the responsibility of management to the
Managing Director and/or the senior management team.

The Board aims to fulfil its responsibilities by creating value for all stakeholders that is sustainable and
beneficial. Stakeholders include shareholders, employees, customers, the community and the
environment. The Board has adopted a Charter that includes amongst other items, the specific roles
and responsibilities of the Board. Without limiting the Board’s function, their specific responsibilities
include:

-    Approving objectives, strategies and financial plans and monitoring the Company’s performance
     against these plans;
-    Appointment of the Managing Director and reviewing his performance and remuneration;
-    Monitoring compliance with the regulatory requirements, ensuring all consolidated entity
     employees act with integrity and due diligence in the interests of the Company and
     stakeholders; and
-    Review and approval of all significant policies and procedures across the consolidated entity.

Board composition

The Board reviews from time to time the size, structure and composition of the Board, taking into
consideration the balance of skills, experience and knowledge of Board members.

The Company has adopted a definition of independence consistent with the guidance provided by the
ASX Corporate Governance Council. Such a definition provides that an Independent Director is a
Non-Executive Director and is not a member of management and:

-     is not a substantial shareholder of the Company or an officer of, or otherwise associated directly
      with, a substantial shareholder of the Company;
-     within the last three years has not been employed in an executive capacity by the Company or
      another member of the consolidated entity, or been a Director after ceasing to hold such
      employment;




TAWANA RESOURCES NL ABN 69 085 166 721                                                                  28
CORPORATE GOVERNANCE STATEMENT


-     within the last three years has not been a principal or a material adviser or a material consultant
      to the Company or member of the consolidated entity, or an employee materially associated
      with the service provided;
-     is not a material supplier or customer of the Company or other member of the consolidated
      entity, or an officer of or otherwise associated directly with a material supplier or customer;
-     has no material contractual relationship with the Company or another member of the
      consolidated entity other than as a Director of the Company;
-     has not served on the Board for a period which could, or could reasonably be perceived to,
      materially interfere with the Director’s ability to act in the best interests of the Company; and
-     is free from any interest and any business or other relationship which could, or could reasonably
      be perceived to, materially interfere with the Director’s ability to act in the best interests of the
      Company.

A substantial shareholder is defined to be a person or Company that has an interest of 5% or more of
the voting rights of the Company.

The Board has reviewed the position of all current directors in light of the Company’s adopted
definition of independence.

During the financial year the Board was chaired by both Executive (Non-Independent) and Non-
executive (Independent) Chairman. As a result, the Board was not comprised of a majority of
independent non-executive Directors for the whole of the financial year.

The Board considers that Mr Bowles meets the criteria in Principle 2. He has no material business or
contractual relationship with the Company, other than as a director and no conflicts of interest which
could interfere with the exercise of independent judgment, notwithstanding he is a nominee of
Gryphon Minerals Limited (as at the date of this report Gryphon Minerals Limited holds approximately
12.8% of the Company's issued share capital). The Board considers Mr Bowles to be independent on
the basis Gryphon Minerals Limited is not in a position to exercise control over the Company.

The following were Directors during the 2013 year:

Director        Capacity                   Position             Held office from    Held office to

W Richards      Executive Chairman         Non-Independent        15 August 2013      Current
D Frances       Executive Chairman         Non-Independent       28 January 2013        6 May 2013
W Grigor        Non-Executive Chairman     Independent               20 Apr 2010   28 January 2013
L Kolff         Managing Director          Non-Independent           27 Oct 2011           Current
J Babarczy      Non-Executive Director     Independent                9 Dec 2009    15 August 2013
M Bowles        Non-Executive Director     Independent               30 May 2011           Current


At each annual general meeting one-third of the Directors or, if their number is a multiple of three,
then the number nearest to but not more than one-third of the Directors (excluding the Managing
Director) must retire from office as follows:

(a)   The directors to retire by rotation at an annual general meeting are those directors who have
      been longest in office since their last election or appointment.
(b)   Directors elected or appointed on the same day may agree among themselves which of them
      must retire.

A director must retire from office at the conclusion of the third annual general meeting after which the
director was elected, even if his or her retirement results in more than one-third of all directors retiring
from office. A retiring director will be eligible for re-election.




TAWANA RESOURCES NL ABN 69 085 166 721                                                                  29
CORPORATE GOVERNANCE STATEMENT


Responsibilities

The responsibilities of the board include:

-     providing strategic guidance to the Company;
-     reviewing and approving business and financial plans;
-     monitoring strategy implementation and financial performance;
-     liaising with the Company’s auditors;
-     appointing the Managing Director and reviewing his performance;
-     enhancing and protecting the reputation of the organisation, and
-     overseeing the operation of the systems and processes for compliance and risk management
      reporting to shareholders.

Independent professional advice

Directors and Board committees have the right, in connection with their duties and responsibilities, to
seek independent advice at the Company’s expense. Prior written approval of the Chairman is
required, but this will not be unreasonably withheld.

Performance assessment

The full Board is responsible for reviewing the performance of the Chairman. It is the responsibility of
the Chairman, to assess the performance of each of the Directors. Due to the changes to the Board,
the Board did not conduct performance reviews during the 2013 year.

Corporate reporting

The Chairman and Company Secretary have made attestations recommended by the ASX Corporate
Governance Council as to the Company’s financial condition prior to the Board signing this report.

Board committees

In view of the Company’s current stage and the small size of the Board, the roles that would otherwise
be performed by an audit committee, remuneration committee and nomination committee are
performed by the full Board.

External auditors

Company policy is to appoint external auditors who clearly demonstrate quality and independence.
The performance of the external auditor is reviewed annually and applications for tender of external
audit services are requested as deemed appropriate, taking into consideration assessment of
performance, existing value and tender costs. William Buck Audit (Vic) Pty Ltd was appointed as the
external auditor in 2009. The Corporations Act requires William Buck Audit (Vic) Pty Ltd to rotate
audit engagement partners on listed companies at least every five years.

An analysis of fees paid to the external auditors, including a breakdown of fees for non-audit services,
is provided in the Directors’ Report and in the notes to the financial statements. It is the policy of the
external auditor to provide an annual declaration of their independence to the Board.

The external auditor is requested to attend the annual general meeting and be available to answer
shareholder questions about the conduct of the audit and the preparation and content of the audit
report.




TAWANA RESOURCES NL ABN 69 085 166 721                                                                30
CORPORATE GOVERNANCE STATEMENT


Risk assessment and management

The Board is responsible for ensuring there are adequate policies in relation to risk management,
compliance and internal control systems. In summary, the Company policies are designed to ensure
strategic, operational, legal, reputation and financial risks are identified, assessed, effectively and
efficiently managed and monitored to enable achievement of the Company’s business objectives.

Considerable importance is placed on maintaining a strong control environment. There is an
organisational structure with clearly drawn lines of accountability and delegation of authority.
Adherence to the Code of Conduct is required at all times and the Board actively promotes a culture
of quality and integrity.

The Company’s risk management policy and the operation of the risk management and compliance
system is managed by the Board.

Detailed control procedures cover management accounting, financial reporting, project appraisal,
environment, health and safety, IT security, compliance and other risk management issues.

In addition, the Board requires that each major proposal submitted to the Board for decision is
accompanied by a comprehensive risk assessment and, where required, management’s proposed
mitigation strategies.

Safety, Health and Environment Management System (SHEMS)

The Company recognises the importance of environmental and occupational health and safety
(OH&S) issues and is committed to the highest levels of performance. To help meet this objective the
SHEMS was established to facilitate the systematic identification of environmental and OH&S issues
and to ensure they are managed in a structured manner. This system has been operating for a
number of years and allows the Company to:

-     monitor its compliance with all relevant legislation;
-     continually assess and improve the impact of its operations on the environment;
-     encourage employees to actively participate in the management of environmental and OH&S
      issues; and
-     use energy and other resources efficiently.

Information on compliance with significant environmental regulations is set out in the Directors’
Report.

Code of conduct

These policies set out the ethical standards that govern the conduct of all Directors and employees.
The Company recognises the interests of all stakeholders in the community and their role in creating
shareholder value. Every Director and employee is required at all times, to conduct themselves in a
manner consistent with the principles of honesty and integrity.

The Code requires Directors and employees, amongst other things, to comply with the law, to disclose
relevant interests that they may have and to act in the best interests of the Company. The Code also
covers confidentiality of information and respect of privacy.

Diversity policy

The Company has established a Workplace Diversity Policy which outlines the Board’s commitment to
promoting a corporate culture that is supportive of diversity. This policy outlines the Company’s
strategies for achieving diversity within the Company.

Given the Company’s size and stage of development, the Company has not adopted targets for the
proportion of female employees within the organisation as proportional targets are difficult to achieve
with such low employee numbers. However Company policy for vacancies at the Board and Senior
Management level is to ensure that a diverse candidate pool is sought.


TAWANA RESOURCES NL ABN 69 085 166 721                                                             31
CORPORATE GOVERNANCE STATEMENT


As at 31 December 2013 there were not any female Directors or employees within the Company.

Continuous disclosure and shareholder communication

The Company has policies and procedures on information disclosure that focus on continuous
disclosure of any information concerning the consolidated entity that a reasonable person would
expect to have a material effect on the price of the Company’s securities. These policies and
procedures also include the arrangements the Company has in place to promote communication with
shareholders and encourage effective participation at general meetings.

When analysts are briefed on aspects of the Company’s operations, the material used in the
presentation is released to the ASX. Procedures have also been established for reviewing whether
any price sensitive information has been inadvertently disclosed and, if so, this information is also
immediately released to the market.

Securities policy

This policy provides guidance to all Directors’, officers and staff dealing in Tawana’s securities. The
Securities Policy prohibits trading for all persons aware of unpublished price sensitive information
about the Company. In addition, it specifically limits the trade of Tawana’s securities by the
Company’s officers during certain periods of time prior to the release of both the half-year and full
year results.

Significant accounting policies

Details of significant accounting policies are set out in Note 1 of the notes forming part of the financial
statements.

Directors’ and executives’ remuneration

The performance of the Company depends upon the quality of its Directors and executives. To
prosper, the Company must attract, motivate and retain highly skilled Directors and executives.

The Board undertakes a review of the remuneration packages of all Directors and executive officers
on an annual basis. Remuneration packages are reviewed with due regard to performance and other
relevant factors.

In order to retain and attract executives of sufficient experience to facilitate the efficient and effective
management of the Company’s operations, the Board may seek the advice of external advisors in
connection with the structure of remuneration packages.

Remuneration packages contain the following key elements:
-     Primary benefits, including salary/fees;
-     Post employments benefits, including superannuation and prescribed retirement benefits, and
-     Other benefits

Details of Directors and Key Management Personnel are contained within the Directors’ Report.

Non-Executive Directors’ fees are determined by the Board based on external advice that is received
from time to time and with reference to fees paid to other Non-Executive Directors of comparable
companies, taking account of the specific duties in relation to the Company. Non-Executive Director’s
fees are within the limit agreed to by shareholders and represent the responsibilities of the time spent
by the Non-Executive Directors’ in fulfilling their duties to the Board.

Publicly available information

In accordance with the ASX Corporate Governance Council, the best practice recommendations
provide that specific documents should be publicly available.
All policies referred to in this section are available by contacting the Company.


TAWANA RESOURCES NL ABN 69 085 166 721                                                                  32
AUDITOR’S INDEPENDENCE DECLARATION




AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS
ACT 2001 TO THE DIRECTORS OF TAWANA RESOURCES NL

I declare that, to the best of my knowledge and belief, during the year ended 31 December 2013 there
have been:
no contraventions of the auditor independence requirements as set out in the Corporations Act 2001
in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.




William Buck Audit (Vic) Pty Ltd
ABN 59 116 151 136




J.C. Luckins
Director

Dated this      day of March 2014




TAWANA RESOURCES NL ABN 69 085 166 721                                                           33
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2013




                                                     Note                  Consolidated
                                                                      2013                    2012
                                                                         $                       $

Continuing operations
Revenue                                               4            22,377               98,526

Corporate costs                                                  (960,312)            (887,063)
Depreciation                                                       (4,356)              (4,683)
Employee benefits expense                             5          (586,206)            (394,929)
Share-based payments                                  5        (1,241,115)            (496,660)
Exploration expenses written off                                 (295,981)          (4,701,592)
Other expenses                                                   (140,093)             (74,324)
Loss before income tax expense                                 (3,205,686)          (6,460,725)
Income tax expense                                    6                 -                    -
Net loss for the year after tax from
continuing operations                                          (3,205,686)          (6,460,725)
Loss from discontinued operations after tax          12          (110,302)             (12,799)
Net loss for the year attributable to members
of Tawana Resources NL                                         (3,315,988)          (6,473,524)

Other comprehensive income / (loss) that
may be subsequently reclassified to profit or
loss
Gain / (loss) on translation of foreign operations                389,075              (44,751)
Other comprehensive income / (loss) for the
period, net of tax                                                389,075              (44,751)
Total comprehensive loss for the period
attributable to members of Tawana
Resources NL                                                   (2,926,913)          (6,518,275)

Loss per share from continuing and
discontinuing operations
Basic and diluted loss (cents)                      18             (0.33)               (0.75)

Loss per share from continuing operations
Basic and diluted loss (cents)                      18             (0.32)               (0.74)

Loss per share from discontinued operations
 Basic and diluted loss (cents)                     18             (0.01)               (0.01)



       The above Statement of Comprehensive Income should be read in conjunction with the
                                    accompanying notes.




TAWANA RESOURCES NL ABN 69 085 166 721                                                          34
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2013




                                                  Note                       Consolidated
                                                                        2013                  2012
                                                                           $                     $

Current assets
Cash and cash equivalents                         16(a)           2,045,163            1,678,614
Trade receivables and other assets                  7               203,141               85,513
Total current assets                                              2,248,304            1,764,127

Non-current assets
Trade receivables and other assets                  7                47,821               51,047
Plant and equipment                                                 119,918               52,024
Exploration expenditure                             8             3,105,123            1,413,186
Total non-current assets                                          3,272,862            1,516,257

Total assets                                                      5,521,166            3,280,384

Current liabilities
Trade and other payables                            9               251,751              121,374
Provisions                                                           43,946               22,556
Total current liabilities                                           295,697              143,930

Non-current liabilities
Provisions                                                           37,075               39,264
Total non-current liabilities                                        37,075               39,264

Total liabilities                                                   332,772              183,194

Net assets                                                        5,188,394            3,097,190

Equity
Contributed equity                                 10            49,107,032           45,631,150
Reserves                                           11             3,049,143            2,369,859
Accumulated losses                                              (46,967,781)         (44,903,819)
Total equity                                                      5,188,394            3,097,190



   The above Statement of Financial Position should be read in conjunction with the accompanying
                                               notes.




TAWANA RESOURCES NL ABN 69 085 166 721                                                         35
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2013




                                                            Consolidated
                                             Issued      Reserves Accumulated              Total
                                             capital                     losses
                                                   $            $            $                   $


Balance at 1 January 2012               45,431,150      2,884,143    (39,396,488)     8,918,805

Loss for the year                                 -             -     (6,473,524)    (6,473,524)
Other comprehensive loss for the year             -       (44,751)             -        (44,751)
Total comprehensive loss for the year             -       (44,751)    (6,473,524)    (6,518,275)
Transactions with owners in their
capacity as owners
Shares issued, net of costs                200,000              -             -         200,000
Share options exercised or expired               -       (966,193)       966,193              -
Share options issued and vested                  -        496,660              -        496,660
Balance at 31 December 2012             45,631,150      2,369,859     44,903,819      3,097,190

Balance at 1 January 2013               45,631,150      2,369,859    (44,903,819)     3,097,190

Loss for the period                               -              -    (3,315,988)    (3,315,988)
Other comprehensive income for the
year                                              -       389,075               -       389,075
Total comprehensive loss for the year             -       389,075     (3,315,988)    (2,926,913)
Transactions with owners in their
capacity as owners
Shares issued, net of costs              3,475,882               -              -     3,475,882
Share options exercised or expired               -     (1,252,026)     1,252,026              -
Share options issued and vested                  -      1,542,235               -     1,542,235
Balance at 31 December 2013             49,107,032      3,049,143    (46,967,781)     5,188,394




  The above Statement of Changes in Equity should be read in conjunction with the accompanying
                                            notes.




TAWANA RESOURCES NL ABN 69 085 166 721                                                       36
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2013




                                                Note                       Consolidated
                                                                      2013                 2012
                                                                         $                    $

Cash flows from operating activities
Receipts from customers                                                 -               13,746
Payments to suppliers and employees                            (1,691,737)          (1,478,832)
Interest received                                                  22,377               98,537
Net cash flows used in operating activities     16(b)          (1,669,360)          (1,366,549)

Cash flows from investing activities
Proceeds from sale of plant and equipment                                                    -
Purchase of plant and equipment                                   (72,250)             (49,173)
Proceeds from sale of discontinued operation      12                    -              248,947
Payments for exploration                                       (1,688,342)          (1,064,853)
Net cash flows used in investing activities                    (1,760,592)            (865,079)

Cash flows from financing activities
Proceeds from issue of shares                                   3,988,000              200,000
Capital raising costs                                            (210,998)                   -
Net cash from financing activities                              3,777,002              200,000

Net increase in cash and cash equivalents                         347,050           (2,031,628)
Cash and cash equivalents at beginning of the
year                                                            1,678,614            3,722,991
Effects of exchange rates on cash holdings in
foreign currencies                                                 19,499              (12,749)
Cash and cash equivalents at end of the year    16(a)           2,045,163            1,678,614



  The above Statement of Cash Flows should be read in conjunction with the accompanying notes.




TAWANA RESOURCES NL ABN 69 085 166 721                                                       37
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



1.    Summary of significant accounting policies

      The principal accounting policies adopted in the preparation of these financial statements are
      set out below. These policies have been consistently applied to all the years presented, unless
      otherwise stated. The financial statements include the consolidated entity consisting of Tawana
      Resources NL and its subsidiaries. For the purpose of preparing the consolidated financial
      statements, the Company is a for-profit entity.

(a)   Basis of preparation

      This general purpose financial report has been prepared in accordance with Australian
      Accounting Standards, other authoritative pronouncements and the Australian Accounting
      Interpretations and the Corporations Act 2001.

      The financial report is presented in Australian dollars and rounded to the nearest dollar.

      The financial report is prepared on a going concern basis.

      These financial statements have been prepared under the historical cost convention.

      Compliance with International Financial Reporting Standards

      These financial statements comply with Australian Accounting Standards (“AASBs”).
      Compliance with AASBs ensures that these financial statements, comprising the financial
      statements and notes thereto, comply with International Financial Reporting Standards (“IFRS”).

      Critical accounting estimates

      The preparation of financial statements in conformity with AASBs requires the use of certain
      critical accounting estimates. It also requires management to exercise its judgement in the
      process of applying the consolidated entity’s accounting policies. The areas involving a higher
      degree of judgement or complexity, or areas where assumptions and estimates are significant
      to the financial statements, are disclosed in Note 3.

(b)   Going Concern

      During the year the Consolidated entity recognised a loss after tax of $3,315,988 (31 December
      2012: $6,473,524) and incurred net cash outflows from operations of $1,669,360 (31 December
      2012: $1,366,549). As at 31 December 2013 the Consolidated entity had $2,045,163 of cash
      (31 December 2012: $1,678,614).

      The Group anticipates future expenditure on its 100% owned Mofe Creek Project with a view to
      completing a Scoping Study, undertaking a Pre-Feasibility Study, finance ongoing development
      activities and commence the Mofe Creek - Mineral Development Agreement (“MDA”)
      Application – for the Group’s future mining licences and entitlement to operate within Liberia.

      The Group plans to continue to progress the development of the Mofe Creek Project. In order
      to achieve these objectives, the Group’s continuing viability, its ability to continue as a going
      concern and to meet its debts and commitments and as they fall due, the Board of Directors of
      the Group:

          -   Has a strong record of raising capital from existing and prospective investors and is
              contemplating further initiatives to raise further capital in order to continue the
              successful exploration and development in the near future;
          -   Have the ability to implement cost reductions and effectively contain costs where
              appropriate and will continue to monitor any cost reductions already implemented; and
          -   Continue to investigate commercial options with regards to the Group’s assets.




TAWANA RESOURCES NL ABN 69 085 166 721                                                             38
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



1.    Summary of significant accounting policies (continued)

(b)   Going Concern (continued)

      Should the Group not successfully achieve these assumptions as described above, it may be
      unable to realize its assets, nor acquit its liabilities, in accordance with its basis of preparation of
      these financial statements. In the event the Group does not meet the minimum exploration
      expenditure, its mining exploration licences may be cancelled or not renewed.

(c)   Principles of consolidation

      Controlled entities

      The consolidated financial statements incorporate the assets and liabilities of all controlled
      entities of Tawana Resources NL as at 31 December 2013 and the results of all subsidiaries for
      the year then ended. Tawana Resources NL and its controlled entities together are referred to
      in these financial statements as the Group or the consolidated entity.

      A controlled entity is any entity controlled by the Company. Control exists when the Company
      has an exposure to and an ability to affect the quantum of variable returns in an investee and
      power over that investee. Power in this instance means an ability to direct relevant activities that
      influence the investee’s returns, power connected with its voting, distribution and wind-up
      entitlement rights in the investee and power from the ability to influence contractual
      arrangements held in the investee.

      Controlled entities are fully consolidated from the date on which control is transferred to the
      consolidated entity. They are de-consolidated from the date that control ceases.

      Intercompany transactions, balances and unrealised gains on transactions between
      consolidated entity companies are eliminated. Unrealised losses are also eliminated unless the
      transaction provides evidence of the impairment of the asset transferred. Accounting policies of
      subsidiaries have been changed where necessary to ensure consistency with the policies
      adopted by the consolidated entity.

(d)   Foreign currency translation

      The presentation currency of Tawana Resources NL and its controlled entities is Australian
      Dollars (A$). The functional currency of Tawana Resources NL is Australian Dollars and the
      functional currency of the overseas subsidiaries is South African Rand (Tawana Resources SA
      (Pty) Ltd and Diamond Resources (Pty) Ltd), Botswana Pula (Seolo Botswana Pty Ltd) and US
      Dollars (Kenema-Ma Holdings Liberia Pty Ltd).

      Transactions in foreign currencies are initially recorded in the functional currency at the
      exchange rates prevailing at the date of the transaction. Monetary assets and liabilities
      denominated in foreign currencies are revalued at the rate of exchange prevailing at the end of
      the reporting period. Foreign exchange gains and losses resulting from the settlement of such
      transactions and from translation at financial year end exchange rates are recognised in the
      profit and loss.

      As at the end of the reporting period the assets and liabilities of foreign operations are
      translated into the presentation currency of Tawana Resources NL at the rate of exchange
      prevailing at the end of the reporting period and the Statement of Comprehensive Income is
      translated at the weighted average exchange rates for the period. All translation differences are
      recognised in the foreign currency translation reserve.

      On disposal of a foreign entity, the deferred cumulative amount recognised in other
      comprehensive income relating to that particular foreign entity is recognised in the Statement of
      Comprehensive Income.




TAWANA RESOURCES NL ABN 69 085 166 721                                                                    39
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



1.    Summary of significant accounting policies (continued)

(e)   Revenue recognition

      Revenue is measured at the fair value of consideration received or receivable. Revenue is
      recognised to the extent that it is probable that the economic benefits will flow to the
      consolidated entity and the revenue can be reliably measured. The following specific
      recognition criteria must also be met before revenue is recognised.

      Interest
      Interest is recognised as it accrues using the effective interest method.

(f)   Income tax

      The income tax expense or revenue for the period is the tax payable on the current period’s
      taxable income based on the applicable income tax rate for each jurisdiction adjusted by
      changes in deferred tax assets and liabilities attributable to temporary differences and to
      unused tax losses.

      Deferred income tax is provided in full using the liability method on temporary differences
      arising between the tax bases of assets and liabilities with the carrying amounts in the
      consolidated financial statements. However, the deferred income tax is not accounted for if it
      arises from initial recognition of an asset or liability in a transaction other than a business
      combination, that at the time of the transaction, affects neither accounting nor taxable profit or
      loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or
      substantially enacted at the reporting date and are expected to apply when the related deferred
      income tax asset is realised or the deferred income tax liability is settled.

      Deferred tax assets are recognised for deductible temporary differences and unused tax losses
      only if it is probable that future taxable amounts will be available to realise those temporary
      differences and losses.

      Deferred tax liabilities and assets are not recognised for temporary differences between the
      carrying amount and the tax base of investments in controlled entities where the parent entity is
      able to control the timing of the reversal of temporary differences and it is probable that the
      differences will not be reversed in the foreseeable future.

      Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset
      current tax assets and liabilities, and when the deferred tax balances relate to the same taxation
      authority. Current tax assets and tax liabilities are offset where the entity has a legally
      enforceable right to offset and intends either to settle on a net basis, or to realise the asset and
      settle the liability simultaneously.




TAWANA RESOURCES NL ABN 69 085 166 721                                                                40
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



1.    Summary of significant accounting policies (continued)

(g)   Impairment of assets

      Assets, except for exploration and evaluation (refer to Note 1(g)) are reviewed for impairment
      on an annual basis and tested for impairment whenever events or changes in circumstances
      indicate that the carrying amount may not be recoverable. An impairment loss is recognised for
      the amount by which the asset’s carrying amount exceeds its recoverable amount. The
      recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For
      the purposes of assessing impairment, assets are grouped at the lowest levels for which there
      are separately identifiable cash inflows which are largely independent of the cash inflows from
      other assets or groups of assets (cash-generating units). Non-financial assets, other than
      goodwill that suffered an impairment, are reviewed for possible reversal of the impairment at
      each subsequent reporting date.

(h)   Exploration and evaluation expenditure

      Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable
      area of interest. The costs are only carried forward to the extent that they are expected to be
      recouped through the successful development of the area or where activities in the area have
      not yet reached a stage that permits reasonable assessment of the existence of economically
      recoverable resources and further work is intended to be performed.

      Accumulated costs in relation to an abandoned area will be written off in full against the profit
      and loss in the year in which the decision to abandon the area is made.

      When production commences, the accumulated costs for the relevant area of interest will be
      amortised over the life of the area according to the rate of depletion of the economically
      recoverable resources.

      A regular review is undertaken of each area of interest to determine the appropriateness of
      continuing to carry forward costs in relation to that area of interest.

(i)   Property, plant and equipment

      Plant and equipment and buildings are stated at cost less accumulated depreciation and any
      impairment losses. Land is stated at cost less any impairment losses. Depreciation is
      calculated on a straight line basis over the estimated useful life of the asset except for motor
      vehicles which is on a diminishing value as follows:

      Freehold buildings               over 10 years
      Plant and equipment              over 7 years
      Motor vehicle (Australia)        22.5%
      Motor vehicle (overseas)         over 4 years

      The carrying values of all assets are reviewed for impairment when events or changes in
      circumstances indicate the carrying value may not be recoverable in accordance with Note 1(f).

      The residual value, useful lives and depreciation methods are reviewed and adjusted if
      appropriate, at the end of each reporting period.

      Gains and losses on disposals are determined by comparing proceeds with the carrying
      amount. These are included in the Statement of Comprehensive Income.




TAWANA RESOURCES NL ABN 69 085 166 721                                                              41
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



1.    Summary of significant accounting policies (continued)

(j)   Inventories

      Inventories consisting of rough diamonds are stated at lower of cost or estimated net realisable
      value. Cost comprises direct materials, direct labour, and an appropriate proportion of variable
      and fixed overhead expenditure.

(k)   Trade and other receivables

      Trade receivables are recognised initially at fair value and subsequently measured at amortised
      cost using the effective interest method, less provision for impairment. Trade receivables are
      generally due for settlement within 30 days.

      Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to
      be uncollectible are written off by reducing the carrying amount directly. An allowance account
      is used when there is objective evidence that the consolidated entity will not be able to collect
      all amounts due according to the original terms of the receivables. Significant financial
      difficulties of the debtor, probability that the debtor will enter bankruptcy or financial realisation,
      and default or delinquency in payments, are considered indicators that the trade receivable is
      impaired. The amount of the impairment allowance is the difference between the asset’s
      carrying amount and the present value of estimated future cash flows, discounted at the original
      effective interest rate. Cash flows relating to short-term receivables are not discounted if the
      effect of discounting is immaterial.

      The amount of the impairment loss is recognised in the Statement of Comprehensive Income
      within other expenses.

      When a trade receivable, for which an impairment allowance had been recognised, becomes
      uncollectible in a subsequent period, it is written off against the allowance account. Subsequent
      recoveries of amounts previously written off are credited against other expenses in the
      Statement of Comprehensive Income.

(l)   Cash and cash equivalents

      Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and
      in hand and short-term deposits with an original maturity of three months or less that are readily
      converted into known amounts of cash. For the purposes of the statement of cash flows, cash
      and cash equivalents consist of cash and cash equivalents as defined above.

(m)   Employee entitlements

      Wages and Salaries and Annual Leave
      Liabilities for wages and salaries, including non-monetary benefits and annual leave expected
      to be wholly settled within 12 months of the reporting date are recognised in other payables in
      respect of employees’ services up to the reporting date and are measured at the amounts
      expected to be paid when the liabilities are settled. All other amounts are considered other long
      term benefits for measurement purposes and are measured at the present value of expected
      future payments to be made in respect of services provided by employees.

      Share-based payments
      Share-based compensation benefits are provided to employees in accordance with the Tawana
      Resources Employee Option Plan, an employee share scheme.

      The fair value of options granted under the Tawana Resources Employee Option Plan is
      recognised as an employee benefit expense with a corresponding increase in equity. The fair
      value is measured at grant date and recognised over the period during which the employees
      become unconditionally entitled to the options.




TAWANA RESOURCES NL ABN 69 085 166 721                                                                   42
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



1.    Summary of significant accounting policies (continued)

(m)   Employee entitlements (continued)

      Long Service Leave
      Liabilities for long service leave are recognised, and are measured as the present value of
      expected future payments to be made in respect of services provided by employees.

(n)   Provisions

      Provisions are recognised when the consolidated entity has a present obligation, legal or
      constructive, as a result of a past event and it is probable that an outflow of resources
      embodying economic benefits will be required to settle the obligation and a reliable estimate
      can be made of the amount of the obligation.

(o)   Leases

      Leases in which a significant portion of the risks and rewards of ownership are retained by the
      lessor are classified as operating leases. Payments made under operating leases, net of any
      incentives received from the lessor, are charged to the Statement of Comprehensive Income on
      a straight-line basis over the period of the lease.

(p)   Provision for rehabilitation

      Environmental obligations associated with the retirement or disposal of long lived assets will be
      recognised when the disturbance occurs and is based on the extent of damage incurred. The
      provision is measured at the present value of the future expenditure, and a corresponding
      rehabilitation asset is also recognised. On an ongoing basis, the rehabilitation liability will be re-
      measured in line with the changes in the time value of money (recognised as an expense in the
      Statement of Comprehensive Income and an increase in the provision), and additional
      disturbances will be recognised as additions to a corresponding asset and rehabilitation liability.
      The rehabilitation asset will be accounted for in accordance with the accounting policy
      applicable to the asset to which it relates (i.e. exploration expenditure).

(q)   Trade and other payables

      These amounts represent liabilities for goods and services provided to the consolidated entity
      prior to the end of financial year which are unpaid. The amounts are unsecured and are usually
      paid within 30 days of recognition.

(r)   Other taxes

      Revenues, expenses and assets are recognised net of the amount of GST or VAT except:

      -     where the GST / VAT incurred on a purchase of goods and services is not recoverable
            from the taxation authority, in which case the GST / VAT is recognised as part of the cost
            of acquisition of the asset or as part of the expense item as applicable; and
      -     receivables and payables are stated with the amount of GST / VAT included.

      The net amount of GST recoverable from, or payable to, the taxation authority is included as
      part of receivables or payables in the Statement of Financial Position.

      Cash flows are included in the Statement of Cash Flows on a gross basis and the GST / VAT
      component of cash flows arising from investing and financing activities, which is recoverable
      from, or payable to, the taxation authority, are classified as operating cash flows.

      Commitments and contingencies are disclosed net of the amount of GST / VAT recoverable
      from, or payable to, the taxation authority.




TAWANA RESOURCES NL ABN 69 085 166 721                                                                  43
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



1.    Summary of significant accounting policies (continued)

(s)   Contributed equity

      Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of
      new shares are shown in equity as a deduction, net of tax, from the proceeds.

(t)   Earnings per share

      Basic earnings per share
      Basic earnings per share is calculated by dividing the profit/(loss) attributable to equity holders
      of the Company, excluding any costs of servicing equity other than ordinary shares, by the
      weighted average number of ordinary shares outstanding during the financial year, adjusted for
      bonus elements in ordinary shares issued during the year.

      Diluted earnings per share
      Diluted earnings per share adjusts the figures used in the determination of basic earnings per
      share to take into account the after income tax effect of interest and other financing costs
      associated with dilutive potential ordinary shares and the weighted average number of shares
      assumed to have been issued for no consideration in relation to dilutive potential ordinary
      shares.

(u)   Preparation of financial statements in relation to the consolidated entity

      From 28 June 2010, the Corporations Act 2001 no longer requires the preparation of parent
      entity accounts, for the purpose of streamlining parent entity reporting. Where the entity is
      required to prepare financial statements in relation to the consolidated entity, the Corporations
      Regulations 2001 (the Principal Regulations) specify supplementary information about the
      parent entity that is to be included in a note to the consolidated financial statements. This
      information is disclosed in Note 22.

(v)   Discontinued operations

      Discontinued operations are those operations from a major line of the business or a
      geographical segment which have been earmarked by the Consolidated Entity for sale, as part
      of a single co-ordinated plan.

(w)   New accounting standards adopted for these financial statements

      The Consolidated Entity has changed some of its accounting policies as a result of new or
      revised accounting standards which became effective for annual reporting periods commencing
      on 1 January 2013.

      Accounting for consolidations

      The new standard AASB 110 has redefined definitions of control, as applied for entities
      preparing consolidated financial statements. The Consolidated Entity consequently has altered
      its principles of consolidation accounting policy, principally in defining control of a controlled
      entity, in order to meet the requirements under AASB 110. There was no impact on the
      financial statements or notes in these financial statements as a result of the alteration to this
      policy.

      Accounting for employee leave provisions

      The revised standard AASB 119 has changed the methodology that the Consolidated Entity
      uses to account for annual leave. Any annual leave expected to be taken in-excess of 12
      months as at reporting date is now discounted to present values. As the Consolidated Entity
      expects all of its employees to take all of their outstanding annual leave balances within 12
      months, this policy change did not affect these financial statements.



TAWANA RESOURCES NL ABN 69 085 166 721                                                               44
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



1.    Summary of significant accounting policies (continued)

(w)   New accounting standards adopted for these financial statements (continued)

      Application of fair value measurement principles

      The other new standard applicable for the first is AASB 13 Fair Value Measurement. The
      adoption of this standard has not affected accounting policies or amounts recognised or
      disclosed in these half year financial statements due to the nature of the Consolidated Entity’s
      financial instruments and re-valued Plant and Equipment.

2.    Financial risk management

      The consolidated entity’s exploration activities are being funded by equity and do not expose
      the consolidated entity to significant financial risks. There are no speculative or derivative
      financial instruments. Funds are invested for various short term periods to match forecast cash
      flow requirements.

(a)   Market risk

      Foreign currency risk
      The consolidated entity has foreign operations with functional currencies in the South African
      Rand, the Botswana Pula and the United States Dollar. Both the parent company and each
      subsidiary transacts predominantly in its own functional currency with little or no foreign
      currency risk. Cash invested into each foreign operation through intercompany loan accounts,
      with no fixed date of maturity on those loans, from the parent to its foreign operations is
      considered to form part of the parent company’s net investment in its foreign operations and
      therefore is considered by the parent company to not represent a foreign currency risk.

      Cash flow and fair value interest rate risk
      As the consolidated entity has no significant interest-bearing assets or liabilities, the
      consolidated entity’s income and operating cash flows are not materially exposed to changes in
      market interest rates.

(b)   Credit risk

      Management manage credit risk by assessing creditor worthiness at the time of transaction.

      The consolidated entity has no significant exposure to credit risk from external parties at period
      end given all the counterparties to its credit exposures are related entities of the consolidated
      entity. The maximum exposure to credit risk from related entities of the consolidated entity at
      the reporting date is equal to the carrying value of financial assets at 31 December 2013.

      Other receivables are of a low value. Activity with trade debtors is limited and the recoverability
      has not been brought into question. There is no history of bad trade debts.

(c)   Liquidity and capital risk management

      The consolidated entity’s objectives when managing capital are to safeguard their ability to
      continue as a going concern, so that they can continue to provide returns for shareholders and
      benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of
      capital. In order to maintain or adjust the capital structure, the consolidated entity may adjust
      the amount of dividends paid to shareholders, return capital to shareholders, issue new shares
      or sell assets to reduce debt.

      During 2013, the consolidated entity’s strategy, which was unchanged from 2012, was to keep
      borrowings to a minimum. The Company’s equity management is determined by funds required
      to undertake exploration activities and meet its corporate and other costs.




TAWANA RESOURCES NL ABN 69 085 166 721                                                               45
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



2.     Financial risk management (continued)

(c)    Liquidity and capital risk management (continued)

       Liquidity risk arises from the financial liabilities of the Group and the Group’s subsequent ability
       to meet their obligations to repay their financial liabilities as and when they fall due.

       The Group’s objective is to maintain a balance between continuity of funding and flexibility
       through the use of equity funding and cash and short-term deposits sufficient to meet the
       Group’s current cash requirements.

(d)    Fair value estimation

       The carrying amount of financial assets and financial liabilities recorded in the financial
       statements approximate their respective fair values determined in accordance with the
       accounting policies disclosed in Note 1.

3.     Critical accounting estimates and judgements

       Estimates and judgements are continually evaluated and are based on historical experience
       and other factors, including expectation of future events that may have a financial impact on the
       entity and that are believed to be reasonable under the circumstances.

       Critical accounting estimates and assumptions

       The consolidated entity makes estimates and assumptions concerning the future. The resulting
       accounting estimates, will by definition, seldom equal the related actual results. The estimates
       that have a significant risk of causing a material adjustment to the carrying amounts of assets
       and liabilities within the next financial year are discussed below.

(i)    Recoverability of exploration expenditure

       The consolidated entity tests annually whether the exploration and evaluation expenditure
       incurred in identifiable areas of interest is expected to be recouped through the successful
       development of the area or where activities in the area have not yet reached a stage that
       permits reasonable assessment of the existence of reserves and further work is expected to be
       performed. All expenditure that does not meet these criteria is expensed in accordance with
       Note 1(g).

(ii)   Share based payment valuations

       Details relating to the shares based payment valuations are detailed in Note 19.

4.     Revenue and other income

                                                                                  Consolidated
                                                                             2013                   2012
                                                                                $                      $
       Revenue from continuing operations
       Interest received                                                   22,377                 98,526
                                                                           22,377                 98,526




TAWANA RESOURCES NL ABN 69 085 166 721                                                                 46
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



5.   Expenses

     Expenses from continuing operations
     includes:
     Auditors’ remuneration                                          49,000                45,000
     Compliance and regulatory fees                                 239,206               174,795
     Consultancy and legal fees                                     147,083               199,537
     Travel expenses                                                261,549               135,532
                                                                    696,838               554,864

     Employee benefits expense includes:
     Salaries and wages                                             416,916               228,253
     Superannuation                                                  44,701                28,054
     Directors’ fees                                                102,396               136,667
     Share-based payments                                         1,124,115               496,660
     Other employee expenses                                         22,392                 1,955
                                                                  1,710,520               891,589

6.   Income tax

     Tax losses

     The Group has unused tax losses for which no benefit has been recognised, however the
     Directors are of the opinion that, given uncertainty around the amount of such losses, it would
     be misleading to quantify these losses. Unused tax losses carried forwarded in the parent
     entity as at 31 December 2012, in accordance with the Company’s filed income tax return,
     amounted to $26,240,596.




TAWANA RESOURCES NL ABN 69 085 166 721                                                          47
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



6.   Income tax (continued)

     The future income tax benefit attributable to these losses has not been brought to account
     because the benefit is not probable of realisation. The potential future income tax benefits
     which may arise from these losses will only be realised if:

        ?    the consolidated entity derives future assessable income of a nature and sufficient
             amount to enable the benefit of losses to be realised;
        ?    the consolidated entity continues to comply with the conditions of deductibility imposed
             in each legislative environment, and
        ?    no changes in tax legislation adversely affect the consolidated entity in realising the
             benefit from the deduction for the losses.


     Income tax recognised in profit or loss

                                                                         2013                     2012
                                                                            $                        $
     Current tax
     Current tax expense in respect of the current
     year                                                                   -                       -
     Adjustments recognised in the current year in
     relation to the current tax of prior years                             -                       -
                                                                            -                       -
     Deferred tax
     Deferred tax expense recognised in the current
     year                                                                   -                       -
                                                                            -                       -
     Total income tax expense recognised in the
     current year relating to continuing operations                         -                       -

     The income tax expense for the year can be reconciled to the accounting profit as follows:

     Loss before tax from continuing operations                    (3,899,951)             (6,460,725)

     Income tax benefit calculated at 30% (2012:
     30%)                                                          (1,169,985)             (1,938,217)
     Foreign taxes paid                                                                             -
     Effect of unused tax losses and tax offsets not 
     recognised as deferred tax assets                              1,169,985               1,938,217
                                                                            -                       -
     Adjustments recognised in the current year in
     relation to the current tax of prior years                             -                       -
     Total income tax expense recognised in the
     current year relating to continuing operations                         -                       -

     The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by
     Australian corporate entities on taxable profits under Australian tax law. There has been no
     change in the corporate tax rate when compared with the previous reporting period




TAWANA RESOURCES NL ABN 69 085 166 721                                                              48
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



7.    Trade receivables and other assets

                                                                                 Consolidated
                                                                            2013                 2012
                                                                               $                    $
      Current
      Trade debtors                                                      64,104               29,065
      GST and VAT receivable                                             77,339                6,867
      Prepayments                                                        61,698               49,581
                                                                        203,141               85,513

      Non-current
      Other deposits                                                     47,821               51,047



8.    Exploration expenditure

      The exploration and evaluation expenditure relates to the consolidated entity’s projects in South
      Africa and Botswana.

      Movement in carrying values

                                                                  Consolidated           Consolidated
                                                                          2013                   2012
                                                                              $                      $
      Balance at beginning of year                                  1,413,186              5,081,927
      Expenditure during the year                                   1,688,342              1,064,853
      Expenditure written off during the year                        (295,981)            (4,701,592)
      Foreign currency translation                                    299,576                (32,002)
      Balance at end of year                                        3,105,123              1,413,186

9.    Trade and other payables

      Current
      Trade creditors                                                    40,955               45,186
      Other creditors and accruals                                      210,796               76,188
                                                                        251,751              121,374

10.   Contributed equity

(a)   Issued capital

      Ordinary shares, fully paid                                  49,107,032             45,631,150

(b)   Movements in share capital

                                                  2013          2012              2013           2012
                                                Number        Number                 $              $

      Balance at beginning of year        876,629,043     856,629,043      45,631,150      45,431,150
      Shares issued during year           349,000,000      20,000,000       3,988,000         200,000
      Transaction costs relating to
      share issues                                  -               -        (512,118)              -
      Balance at end of year            1,225,629,043     876,629,043      49,107,032      45,631,150




TAWANA RESOURCES NL ABN 69 085 166 721                                                             49
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



10.   Contributed equity (continued)

(c)   Terms and conditions of contributed equity

      Holders of ordinary shares are entitled to receive dividends as declared from time to time and
      are entitled to one vote per share at shareholders’ meetings in a poll or one vote per
      shareholder on a show of hands.

      In the event of winding up of the Company, ordinary shareholders rank after all other
      shareholders and creditors and are fully entitled to any proceeds of liquidation. Shares do not
      have a par value.

11.   Reserves

                                                    Note                           Consolidated
                                                                          2013                  2012
                                                                             $                     $
      Foreign currency translation                   (a)               343,769               (45,306)
      Options                                        (b)             2,682,490             2,392,281
      Asset revaluation                              (c)                22,884                22,884
                                                                     3,049,143             2,369,859

(a)   Foreign currency translation reserve

      Exchange differences arising from the translation of foreign controlled entities are taken to the
      foreign currency translation reserve, as described in Note 1(c).

(b)   Options reserve

      The options reserve records the fair value of options issued but not exercised.

      Balance at beginning of year                                   2,392,281             2,861,814
      Options expense for year charged to
      profit or loss                                 19              1,241,115               496,660
      Options expense charged to the cost of
      equity                                         19                301,120                     -
      Options exercised and expired during
      year                                                          (1,252,026)             (966,193)
      Balance at end of year                                         2,682,490             2,392,281

(c)   Asset revaluation reserve

      The asset revaluation reserve records revaluations of non-current assets. This is a historical
      reserve and there have been no movements in the years ended 31 December 2013 and 2012.

      Balance at end of year                                            22,884               22,884

12.   Discontinued operations

      On 9 March 2011 the Group announced that it had commenced an ongoing rationalisation
      program in respect of its existing interests in South Africa and Botswana. The Group had
      originally announced a decision to sell its interest in the Kareevlei project on 18 August 2010,
      which had been classified as a discontinued operation in the prior financial year. As at
      December 2011 the Group commenced a program to market and sell its remaining interests in
      South Africa and Botswana. As such, the assets that formed part of the disposal group were
      reclassified as Assets Held for Sale in the statement of financial position and all revenues and
      expenditures relating to the disposal group were reclassified as a discontinued operation in the
      statement of comprehensive income for the year ended 31 December 2011. The assets held



TAWANA RESOURCES NL ABN 69 085 166 721                                                             50
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



12.   Discontinued operations (continued)

      for sale have been valued by the directors at cost, which in their estimation, is below their net
      fair value less distribution costs. In the process of reviewing those recoverable values, amounts
      previously capitalised as exploration expenditure under tenements, which the Group still holds
      title to, have been written down by $2,923,147 to $nil.

      The financial performance of the discontinued operations, which is included in the Statement of
      Comprehensive Income as loss from discontinued operations, and adjusted to the previous
      year’s comparatives, is as follows:

                                                                                Consolidated
                                                                          2013                2012
                                                                             $                   $
      Other revenues                                                         -             141,965
      Corporate costs                                                 (110,302)           (154,764)
                                                                      (110,302)            (12,799)

13.   Key management personnel disclosures

(a)   Directors and other key management personnel

      The following persons were directors of Tawana Resources NL during the financial year:

      Wayne Richards (appointed 15 August 2013)
      David Frances (appointed 28 January 2013, resigned 6 May 2013)
      Warwick Grigor (resigned 28 January 2013)
      Lennard Kolff
      Julian Babarczy (resigned 15 August 2013)
      Matthew Bowles

      There were no key management personnel of the group for the year outside the Directors

(b)   Compensation of key management personnel

      Short-term employee benefits                                     519,112               351,711
      Post-employment benefits                                          44,701                28,054
      Share-based payments                                           1,148,110               422,500
                                                                     1,711,923               802,265

(c)   Equity instrument disclosures relating to key management personnel

(i)   Option holdings

      The number of options over ordinary shares in the Company held during the financial year by
      each director of Tawana Resources NL and other key management personnel of the Company,
      including their personally related parties, are set out below.




TAWANA RESOURCES NL ABN 69 085 166 721                                                             51
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



13.    Key management personnel disclosures (continued)

(c)    Equity instrument disclosures relating to key management personnel (continued)

(i)    Option holdings (continued)


       2013


       Name                       Balance at         Granted       Exercised      Options     Balance at       Options
                                   start of         during year   during year    disposed     end of year    vested and
                                     year           as remun-                   during year                 exercisable at
                                                      eration                                                end of year

                                   Number            Number        Number        Number        Number          Number
       Directors
       Mr W Richards                       -        55,000,000            -             -   55,000,000     25,000,000
       Mr D Frances *                      -                 -            -             -            -              -
       Mr W Grigor *               5,000,000                 -            -             -    5,000,000      5,000,000
       Mr L Kolff                 15,000,000        10,000,000            -             -   25,000,000     25,000,000
       Mr J Babarczy *             5,000,000                 -            -             -    5,000,000      5,000,000
       Mr M Bowles                20,000,000         3,500,000   (6,000,000)   (9,000,000)   8,500,000      8,500,000


                                  45,000,000        68,500,000    (6,000,000)- (9,000,000)    98,500,000   68,500,000
         * Closing Balance at date of resignation

       2012


       Name                       Balance at         Granted       Exercised      Lapsed      Balance at       Options
                                   start of         during year   during year   during year   end of year    vested and
                                     year           as remun-                                               exercisable at
                                                      eration                                                end of year

                                   Number            Number        Number        Number        Number          Number
       Directors
       Mr W Grigor                         -         5,000,000          -             -     5,000,000       5,000,000
       Mr L Kolff                 10,000,000        10,000,000          -    (5,000,000)   15,000,000      15,000,000
       Mr E Luff *                 6,104,150                 -          -             -            -                -
       Mr J Babarczy                       -         5,000,000          -             -     5,000,000       5,000,000
       Mr M Bowles                15,000,000         5,000,000          -             -    20,000,000      20,000,000
                                  31,104,150        25,000,000          -    (5,000,000)   45,000,000      45,000,000
         * Closing Balance at date of resignation



(ii)   Shareholdings

       The number of shares in the Company held during the financial year by each director of
       Tawana Resources NL and other key management personnel, including their personally related
       parties, is set out below. There were no shares granted during the reporting year as
       remuneration (2012: Nil).




TAWANA RESOURCES NL ABN 69 085 166 721                                                                               52
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



13.    Key management personnel disclosures (continued)

(c)    Equity instrument disclosures relating to key management personnel (continued)

(ii)   Shareholdings (continued)

       2013


       Name                       Balance at      Balance at     Received        Other      Balance at    Balance at
                                  start of the     date of      during the    acquisition     date of     end of the
                                     year          appoint-       year on      of shares    resignation      year
                                                    ment        exercise of   during the
                                                                  options         year

                                    Number         Number        Number        Number        Number        Number
       Directors
       Mr W Richards                      -             -             -    5,000,000             -     5,000,000
       Mr D Frances                       -       250,000             -            -       250,000
       Mr W Grigor               27,850,000             -             -            -    27,850,000             -
       Mr L Kolff                         -             -             -            -             -             -
       Mr J Babarczy             25,173,288             -             -    1,000,000    26,173,288             -
       Mr M Bowles                        -             -     6,000,000            -             -     6,000,000


                                 53,023,288       250,000     6,000,000    6,000,000    54,273,288    11,000,000
       * Closing balance at date of resignation

       2012


       Name                       Balance at      Balance at     Received        Other      Balance at    Balance at
                                  start of the     date of      during the    acquisition     date of     end of the
                                     year          appoint-       year on      of shares    resignation      year
                                                    ment        exercise of   during the
                                                                  options         year
                                    Number         Number        Number        Number        Number        Number

       Directors
       Mr W Grigor                27,850,000             -             -             -             -    27,850,000
       Mr L Kolff                          -             -             -             -             -             -
       Mr E Luff *                21,589,740             -             -             -    21,589,740             -
       Mr J Babarczy              25,173,288             -             -             -             -    25,173,288
       Mr M Bowles                         -             -             -             -             -             -
                                  74,613,028             -             -             -    21,589,740    53,023,288
       * Closing balance at date of resignation

(d)    Loans to key management personnel

       There were no loans to key management personnel of the consolidated entity, including their
       personally related parties, as at 31 December 2013 or 31 December 2012.

(e)    Other transactions with key management personnel

       Mr M Bowles, a Non-Executive director of the Company, has a senior position with Gryphon
       Minerals Limited, which received $29,391 in fees for the provision of administration services.
       Payments were based on commercial terms and conditions.



TAWANA RESOURCES NL ABN 69 085 166 721                                                                          53
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



14.   Details of controlled entities

      Name                                       Country of         Interest held by the
                                               incorporation        consolidated entity
                                                                    2013           2012
                                                                      %              %
      Parent
      Tawana Resources NL                         Australia

      Controlled entities
      Seolo Botswana (Pty) Ltd                   Botswana            100             100
      Tawana Resources (Pty) Ltd                South Africa         100             100
      Diamond Resources (Pty) Ltd               South Africa         100             100
      Kenema-Man Holdings Liberia Pty Ltd        Australia           100             100
      Waba Holdings Pty Ltd                      Australia           100             100
      Tawana Liberia Inc                          Liberia            100             100
      Archean Liberia Inc                         Liberia            100             100

15.   Segment information

      The consolidated entity operates wholly in one business segment, being the exploration,
      evaluation and development of mineral resources. AASB 8 requires operating segments to be
      identified on the basis of internal reports about components of the Group that are regularly
      reviewed by the chief operating decision maker in order to allocate resources to the segments
      and to assess their performance.

      Information reported to the Group’s chief operating decision maker for the purposes of resource
      allocation and assessment of segment performance is focused on the geographical region of
      operations. The Group’s reportable segments under AASB 8 are therefore within one
      geographical segment, being Africa.

16.   Notes to the Statement of Cash Flows

(a)   Reconciliation of cash and cash equivalents

      For the purposes of the Statement of Cash Flows, cash includes cash on hand and at call in
      deposits with banks. Cash at the end of the year is shown in the Statement of Financial
      Position as:

                                                                                 Consolidated
                                                                         2013                    2012
                                                                             $                       $
      Cash on hand and at bank                                     2,025,163               1,658,614
      Cash on deposit                                                 20,000                  20,000
                                                                   2,045,163               1,678,614




TAWANA RESOURCES NL ABN 69 085 166 721                                                             54
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



16.   Notes to the Statement of Cash Flows (continued)

(b)   Reconciliation of net loss after tax to net cash flows from operations

                                                                           Consolidated
                                                                      2013                2012
                                                                         $                   $
      Net loss                                                  (3,315,988)         (6,473,524)

      Adjustments for:
      Depreciation                                                   4,356              4,683
      Impairment and write off of non-current
      assets                                                       295,981          4,701,592
      Profit on sale of property, plant and
      equipment                                                          -           (115,469)
      Share-based payments                                       1,241,115            496,660

      Changes in assets and liabilities
      (Increase) / decrease in:
         Trade and other receivables                              (114,402)           (54,447)

      Increase / (decrease) in:
        Trade and other payables                                   200,377             38,157
        Provisions                                                  19,201             35,805
      Net cash from operating expenses                          (1,669,360)        (1,366,549)

17.   Auditors’ remuneration

      William Buck
      Audit services                                                49,000             45,000
      Non-audit services                                            10,500                  -
                                                                    59,500             45,000

      Auditor of subsidiaries
      Pricewaterhouse Coopers
      Audit services                                                      -             4,478
                                                                          -             4,478




TAWANA RESOURCES NL ABN 69 085 166 721                                                      55
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



18.   Loss per share

                                                                          2013            2012
                                                                         Number          Number

      Weighted average number of ordinary shares used in the
      calculation of basic and diluted loss per share                   988,087,834     865,231,783


      The loss per share calculation as disclosed on the Statement of Comprehensive Income does
      not include instruments that could potentially dilute basic earnings per share in the future as
      these instruments were anti-dilutive in the periods presented. A summary of such instruments
      is as follows:

      Equity securities                                                 Number of      Number of
                                                                        securities      potential
                                                                                        ordinary
                                                                                         shares

      Options over ordinary shares                                      148,000,000     148,000,000


19.   Share-based payments

      Summary of options on issue

      Issue date                     Quantity       Grant date          Expiry date   Exercise price

      17 Jan 2009                  6,750,000       18 Dec 2008       17 Jan 2014              $0.10
      9 Sep 2010                   5,000,000        9 Sep 2010        9 Sep 2014              $0.05
      8 Mar 2011                  25,000,000        8 Mar 2011        8 Mar 2014              $0.01
      10 Nov 2011                  1,250,000       10 Nov 2011       10 Nov 2015              $0.05
      28 May 2012                 27,000,000       28 May 2012     30 April 2015             $0.036
      27 June 2012                 1,500,000      27 June 2012     30 April 2015             $0.036
      18 Dec 2013 *               10,000,000       18 Dec 2013       12 Dec 2016            $0.0001
      18 Dec 2013 *               10,000,000       18 Dec 2013       12 Dec 2016            $0.0001
      18 Dec 2013 *               10,000,000       18 Dec 2013       12 Dec 2016            $0.0001
      18 Dec 2013                 31,500,000       18 Dec 2013       12 Dec 2016             $0.015
      18 Dec 2013                 10,000,000       18 Dec 2013       12 Dec 2016             $0.046
      18 Dec 2013                 10,000,000       18 Dec 2013       12 Dec 2016             $0.018
                                 148,000,000

        * Performance options were issued to Mr Wayne Richards in accordance with the Company’s
        Notice of General Meeting and Explanatory Memorandum dated 4 November 2013 and are
        subject to performance milestones as approved by shareholders at the General Meeting of
        shareholders held on 12 December 2013. These performance milestones are graded targets
        relating to the development of the 100%-owned Mofe Creek Project assessed during
        September of 2014, 2015 and 2016.

      All other share options are exercisable at year end.

      During the year ended 31 December 2013, the following options were exercised:

      23 Feb 2013         50,000,000    23 Feb 2013      23 Feb 2013          $0.01
      9 Sep 2010          50,000,000    9 Sep 2010       30 July 2013         $0.01




TAWANA RESOURCES NL ABN 69 085 166 721                                                            56
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



19.   Share-based payments (continued)

      During the year ended 31 December 2013, the following options expired:

      17 Jan 2009          6,000,000    18 Dec 2008      17 Jan 2013             $0.10
      17 Jan 2009          6,750,000    18 Dec 2008      17 Jan 2013             $0.07
      10 Nov 2011          1,250,000    10 Nov 2011      10 Nov 2013             $0.03

      Fair value of options granted during the year

      The assessed fair value at grant date of options granted to individuals is allocated equally over
      the period from grant date to vesting date. Fair values at grant date are independently
      determined using a Black Scholes option pricing model that takes into account the exercise
      price, term of the option, the share price at grant date and expected price volatility of the
      underlying share, the expected dividend yield and the risk free interest rate for the term of the
      option.

      The following options were issued during the year ended 31 December 2013:

          Issue           Quantity     Grant date    Expiry date      Exercise         Fair     Total fair
           date                                                          price        value        value
                                                                                       per
                                                                                     option
      A 18 Dec 2013     10,000,000      18 Dec 2013     12 Dec 2016       $0.0001      $0.0339     $339,130
      B 18 Dec 2013     10,000,000      18 Dec 2013     12 Dec 2016       $0.0001      $0.0339     $339,210
      C 18 Dec 2013     10,000,000      18 Dec 2013     12 Dec 2016       $0.0001      $0.0339     $339,300
      D 18 Dec 2013     31,500,000      18 Dec 2013     12 Dec 2016        $0.015      $0.0302     $950,065
      E 18 Dec 2013     10,000,000      18 Dec 2013     12 Dec 2016        $0.046      $0.0291     $291,050
      F 18 Dec 2013     10,000,000      18 Dec 2013     12 Dec 2016        $0.018      $0.0301     $301,120

                        81,500,000                                                               $2,559,875

      The model inputs for the options granted during the year were as follows:

                                          (A)             (B)             (C)
      Quantity                        10,000,000      10,000,000      10,000,000
      Grant date                      18 Dec 13       18 Dec 13       18 Dec 13
      Expiry date                     12 Dec 16       12 Dec 16       12 Dec 16
      Grant date share price            $0.034          $0.034          $0.034
      Exercise price                   $0.0001         $0.0001         $0.0001
      Expected volatility               175%            175%            175%
      Option life (years)                 2.0             2.5             3.0
      Expected dividend yield             0%              0%              0%
      Risk free rate at grant date      3.26%           3.26%           3.26%

      Series A, B and C options have been issued to Mr Wayne Richards in accordance with the
      Company’s Notice of General Meeting and Explanatory Memorandum dated 4 November 2013
      and are subject to performance milestones as approved by shareholders at the General
      Meeting of shareholders held on 12 December 2013. These performance conditions are yet to
      be satisfied and as at 31 December 2013 all of these options are yet to vest.


                                         (D)            (E)            (F)
      Quantity                       31,500,000     10,000,000     10,000,000
      Grant date                     18 Dec 13      18 Dec 13      18 Dec 13
      Expiry date                    12 Dec 16      12 Dec 16      12 Dec 16
      Grant date share price           $0.034         $0.034         $0.034
      Exercise price                   $0.015         $0.046         $0.018
      Expected volatility              175%           175%           175%


TAWANA RESOURCES NL ABN 69 085 166 721                                                               57
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



      Option life (years)               2.5           3.0           2.5
      Expected dividend yield            0%            0%            0%
      Risk free rate at grant date    3.26%         3.26%         3.26%


      The cost of the issue of options was recorded in the financial statements as follows:

      -     options issued during the financial year for consulting work, employee benefits and
            directors’ fees with a cost of $1,241,115 (2012: $25,755) were charged to the profit or
            loss;
      -     options issued during 2013, and not yet vested at the end of the financial year for
            employee remuneration, with a current estimate of $1,017,640 (2012: $ Nil) will be
            charged to the profit or loss in future years on the satisfaction of exploration and
            development related performance milestones; and
      -     options issued in satisfaction of capital raising costs, with a value of $301,120 (2012: $
            Nil) were charged directly to equity.

20.   Commitments and contingent assets and liabilities

      Leasing commitments

      The Group has entered into operating leases on office space for terms of up to 5 years. Future
      minimum rentals payable under this operating lease are as follows:

                                                                          2013                   2012
                                                                            $                      $
      Within one year                                                   33,810                 56,002
      After one but not more than five years                           241,449                224,008
                                                                       275,259                280,010

      Annual license fees on exploration licenses held by the Company are $33,810 (31 December
      2012: $43,394) with a minimum exploration commitment of $241,449 (31 December 2012:
      $96,424) per annum.

      The Group does not have any material contingent assets or liabilities other than as disclosed in
      this report.

21.   Subsequent events

      On 15 January 2014, the Company announced that it had received very encouraging results
      from the ongoing resource evaluation drill programme currently underway at its flagship Mofe
      Creek Iron Ore Project in Liberia.

      On 21 January 2014, the Company announced the results of follow-up metallurgical test work
      on previous RC samples, achieving a 63% to 68% Fe – premium quality product at 58% to 68%
      mass recovery, from its flagship Mofe Creek Iron Ore Project in Liberia.

      On 3 February 2014, the Company announced that it had a new, multiple high grade, course
      itabirite intersection over the Zaway project at its flagship Mofe Creek Iron Ore Project in
      Liberia.

      On 11 February 2014, the Company announced that it had appointed Mr Peter Connery to the
      position of Liberian in-Country manager for the development of the Company’s Mofe Creek Iron
      Ore Project.




TAWANA RESOURCES NL ABN 69 085 166 721                                                             58
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013



21.   Subsequent events (continued)

      On 12 February 2014, the Company issued 6,000,000 employee share options over fully paid
      ordinary shares, comprising 1,000,000 options exercisable at $0.039, expiring on 20 January
      2017 and 5,000,000 options exercisable at $0.042 and expiring on 7 February 2017, the second
      tranche of which have since been forfeited.

      On 5 March 2014, the Company announced the discovery of additional broad mineralised
      intersections of friable itabirite iron formations at the Koehnko prospect at its flagship Mofe
      Creek Iron Ore Project in Liberia.

      On 6 March 2014, the Company issued 25,750,000 fully paid ordinary shares on the exercise of
      options previously issued by the Company, comprising 25,000,000 options exercisable at $0.01
      expiring 8 March 2014 and 750,000 exercisable at $0.015 and expiring 12 December 2016.

22.   Supplementary information about the parent entity

                                                                                  Parent
                                                                          2013                   2012
                                                                             $                      $
      Assets
      Current assets                                                1,620,710              1,569,956
      Total assets                                                  4,975,707              3,280,384

      Liabilities
      Current liabilities                                             212,687                 55,760
      Total liabilities                                               212,687                 55,760

      Net assets                                                    5,188,394              3,097,190

      Equity
      Issued capital                                               49,107,032             45,631,150
      Reserves                                                      3,049,143              2,369,859
      Total equity                                                  5,188,394              3,097,190

      Profit and loss
      Profit / (loss)                                              (2,063,982)            (6,090,764)

      Comprehensive income
      Total comprehensive income                                   (2,063,982)            (6,090,764)

      There were no contingent liabilities, guarantees or capital commitments of the parent entity not
      otherwise disclosed in these financial statements.




TAWANA RESOURCES NL ABN 69 085 166 721                                                             59
DIRECTORS’ DECLARATION


In accordance with a resolution of the directors of Tawana Resources NL, I state that:

1.    In the opinion of the directors:

      (a)   the financial statements and notes as set out on pages 34 to 59 of the Company and of
            the consolidated entity are in accordance with the Corporations Act 2001, including:

            (i)    giving a true and fair view of the Company’s and the consolidated entity’s financial
                   position as at 31 December 2013 and of their performance for the year ended on
                   that date; and

            (ii)   complying with Accounting Standards and Corporations Regulations 2001; and

      (b)   there are reasonable grounds to believe that the Company will be able to pay its debts as
            and when they become due and payable.

2.    The attached financial statements and notes thereto comply with International Financial
      Reporting Standards as issued by the International Accounting Standards Board as described
      in Note 1 to the financial statements.

3.    This declaration has been made after receiving the declarations required to be made to the
      directors in accordance with section 295A of the Corporations Act 2001 for the financial year
      ended 31 December 2013.

On behalf of the Board




Mr Len Kolff
Managing Director
Tawana Resources NL

Perth, 28 March 2014




TAWANA RESOURCES NL ABN 69 085 166 721                                                             60
INDEPENDENT AUDITOR’S REPORT


INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TAWANA RESOURCES NL AND
CONTROLLED ENTITIES

Report on the Financial Report
We have audited the accompanying financial report of Tawana Resources NL (the company) and its
controlled entities (the consolidated entity), which comprises the statement of financial position as at
31 December 2013, the statement of comprehensive income, the statement of changes in equity and
the statement of cash flows for the year then ended, notes comprising a summary of significant
accounting policies and other explanatory information, and the directors’ declaration of the
consolidated entity comprising the company and the entities it controlled at the year’s end or from time
to time during the financial year.

Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International Financial
Reporting Standards (IFRS).

Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used at the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.




TAWANA RESOURCES NL ABN 69 085 166 721                                                              61
INDEPENDENT AUDITOR’S REPORT



INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TAWANA RESOURCES NL AND
CONTROLLED ENTITIES (CONT)

Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.

Auditor’s Opinion
In our opinion:
a) the financial report of Tawana Resources NL is in accordance with the Corporations Act 2001,
       including:
    i.      giving a true and fair view of the consolidated entity’s financial position as at 31 December
            2013 and of its performance for the year ended on that date; and
   ii.      complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b) the financial report also complies with International Financial Reporting Standards as disclosed in
       Note 1.

Emphasis of Matter
Without qualification to the opinion expressed above, attention is drawn to the following matter. As a
result of the matters described in the going concern paragraph in Note 1 to the financial statements,
there is inherent uncertainty whether the consolidated entity will be able to continue as a going
concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course
of business and at the amounts stated in the financial report.

Report on the Remuneration Report
We have audited the remuneration report included in the directors’ report for the year ended 31
December 2013. The directors of the company are responsible for the preparation and presentation
of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the remuneration report, based on our audit conducted in
accordance with Australian Auditing Standards.

Auditor’s Opinion
In our opinion, the remuneration report of Tawana Resources NL for the year ended 31 December
2013, complies with section 300A of the Corporations Act 2001.




TAWANA RESOURCES NL ABN 69 085 166 721                                                                  62
INDEPENDENT AUDITOR’S REPORT


INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TAWANA RESOURCES NL AND
CONTROLLED ENTITIES (CONT)

Matters Relating to the Electronic Presentation of the Audited Financial Report
This auditor’s report relates to the financial report of Tawana Resources NL for the year ended 31
December 2013 included on Tawana Resources NL’s web site. The company’s directors are
responsible for the integrity of the Tawana Resources NL web site. We have not been engaged to
report on the integrity of the Tawana Resources NL web site. The auditor’s report refers only to the
financial report. It does not provide an opinion on any other information which may have been
hyperlinked to/from these statements. If users of this report are concerned with the inherent risks
arising from electronic data communications they are advised to refer to the hard copy of the audited
financial report to confirm the information included in the audited financial report presented on this
web site.




William Buck Audit (Vic) Pty Ltd
ABN 59 116 151 136




J.C. Luckins
Director

Dated this     day of March 2014




TAWANA RESOURCES NL ABN 69 085 166 721                                                            63
SCHEDULE OF MINING TENEMENTS


Mining & Exploration tenements currently held by the consolidated entity are as follows:


 Location            Title held by                           % held by        Title
                                                          Tawana group

 Kareevlei Wes       Diamond Resources Pty Ltd                     100%       NC 30/5/1/2/2/081 MR
 South Africa

 Orapa               Seolo Botswana (Pty) Ltd                      100%       PL 61/2007
 Botswana

 Mofe Creek          Tawana Liberia Inc                            100%       MEL 12029




TAWANA RESOURCES NL ABN 69 085 166 721                                                               64
ASX ADDITIONAL INFORMATION
AS AT 25 MARCH 2014



Additional information included in accordance with the Listing Rules of the Australian Securities
Exchange Limited. The information is current as at 25 March 2014.

1.    Substantial shareholders

      On 11 October 2013 the Company received a substantial shareholder form from Gryphon
      Minerals Limited stating that Gryphon Minerals Limited had a relevant interest in 114,250,000
      ordinary shares representing 11.70% of the voting shareholding of the Company.

2.    Statement of issued capital

(a)   Distribution of fully paid ordinary shareholders

      Size of holding                         Number of              Shares held
                                                holders
      1 – 1,000                                     183                108,757
      1,001 – 5,000                                 364              1,116,944
      5,001 – 10,000                                263              2,100,385
      10,001 – 100,000                              777             33,529,671
      100,001 and over                              751          1,176,611,148
                                                  2,338          1,213,466,905

(b)   All ordinary shares (whether fully paid or not) carry one vote per share without restriction.

(c)   At the date of this report there were 989 shareholders who held less than a marketable parcel of
      shares.

3.    Options

                                         Exercise          Expiry date       Number of    Number of
                                            price                               options     holders
      Unlisted options                      $0.05           9 Sep 2014         5,000,000           1
      Unlisted options                      $0.05          10 Nov 2015         1,250,000           1
      Unlisted options                     $0.036        30 April 2015        27,000,000           6
      Unlisted options                     $0.036        30 April 2015         1,500,000           1
      Unlisted options                    $0.0001          12 Dec 2016        10,000,000           1
      Unlisted options                    $0.0001          12 Dec 2016        10,000,000           1
      Unlisted options                    $0.0001          12 Dec 2016        10,000,000           1
      Unlisted options                     $0.015          12 Dec 2016        31,500,000           5
      Unlisted options                     $0.046          12 Dec 2016        10,000,000           1
      Unlisted options                     $0.018          12 Dec 2016        10,000,000           1
      Unlisted options                     $0.039          20 Jan 2017         1,000,000           1




TAWANA RESOURCES NL ABN 69 085 166 721                                                                65
ASX ADDITIONAL INFORMATION
AS AT 25 MARCH 2014



4.   Quotation

     Listed securities in Tawana Resources NL are quoted on the Australian Securities Exchange
     and the Johannesburg Stock Exchange.

5.   Twenty largest shareholders

     The twenty largest shareholders hold 47.40% of the issued capital of the Company as at 25
     March 2014.

     No.   Shareholder                                             Number of            % of
                                                                     shares           issued
                                                                                      capital

     1     Gryphon Minerals Limited                              120,800,000          9.65%
     2     Spring Plains Past Co (Vic) PL                         57,554,909          4.60%
     3     Merriwee Pty Ltd (Merriwee Super Fund A/C)             53,350,000          4.26%
     4     Sisu International Pty Ltd                             45,447,000          3.63%
     5     Citicorp Nominees Pty Limited                          37,982,710          3.04%
     6     Computershare Company Nominees Limited                 37,912,138          3.03%
     7     Black Peak Holdings Pty Ltd                            30,000,000          2.40%
     8     BT Portfolio Services Limited                          25,500,000          2.04%
     9     Mr Julian Babarczy                                     25,173,288          2.82%
     10    Symorgh Investments Pty Ltd                            25,000,000          1.99%
     11    Basapa Pty Ltd                                         20,753,849          1.66%
     12    Bainpro Nominees Pty Limited                           18,734,575          1.50%
     13    HSBC Custody Nominees (Australia) Limited              18,105,387          1.45%
     14    Gryphon Minerals Limited                               14,250,000          1.14%
     15    Trayburn Pty Ltd                                       11,912,926          0.95%
     16    Quality Life Pty Ltd (The Viking Fund A/c)             11,500,000          0.92%
     17    Capital Accretion Pty Ltd                              11,493,029          0.92%
     18    Mrs Sarah Freeman                                      10,000,000          0.80%
     19    143 Pty Ltd                                             9,076,667          0.73%
     20    Neville James Miles                                     8,501,101          0.68%


                                                                 593,047,579         47.40%




TAWANA RESOURCES NL ABN 69 085 166 721                                                     66
ASX ADDITIONAL INFORMATION
AS AT 25 MARCH 2014




Loss per share and headline earnings per share

Classification of securities as ordinary shares

The Company has only one category of ordinary shares included in basic loss per share.

Classification of securities as potential ordinary shares

There are currently no securities to be classified as dilutive potential ordinary shares on issue.

                                                                       2013               2012
                                                                       Number             Number

 Weighted average number of ordinary shares used in the
 calculation of basic loss per share                                   988,087,834        865,231,783

                                                                           $                  $
 
 Net loss from continuing and discontinuing operations                 (3,315,988)        (6,473,524)

 Net loss from continuing operations                                   (3,205,686)        (6,460,725)

The loss per share calculation as disclosed on the Statement of Comprehensive Income does not
include instruments that could potentially dilute basic earnings per share in the future as these
instruments were anti-dilutive in the periods presented. A summary of such instruments is as follows:

 Equity securities                                                     Number of          Number of
                                                                       securities         potential
                                                                                          ordinary
                                                                                          shares

 Options over ordinary shares                                          148,000,000        148,000,000

No options have been issued subsequent to year end but prior to the date of issue of these financial
statements.

Headline earnings per share (unaudited)

Reconciliation of net loss to headline earnings

                                                                       Consolidated
                                                                          2013               2012
                                                                            $                  $
 Net loss                                                              (3,205,686)        (6,460,725)
 Add:
  Loss from discontinued operations after tax                            (110,302)          (12,799)
 Headline earnings from continuing and discontinuing operations
 used in the calculation of headline earnings per share                (3,315,988)        (6,473,524)

 Headline earnings per share (cents)                                        (0.33)             (0.75)

28 March 2014

Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Ltd




                                                                 
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