African Energy Resources Guernsey : Full Year Statutory Accounts

African Energy Resources Limited

ARBN 123 316 781

Financial Report 30 June 2017

African Energy Resources Limited Financial Report 30 June 2017 Table of Contents Corporate Directory 3 Directors' Report 4 Directors' Declaration 14 Independent Audit Report 15 Independence Declaration 19 Consolidated Statement of Profit or Loss and Other Comprehensive Income 20 Consolidated Statement of Financial Position 21 Consolidated Statement of Changes in Equity 22 Consolidated Statement of Cash Flows 23 Notes to the Consolidated Financial Statements 24

1. Basis of Preparation 24
2. Statement of Compliance 24

3. Basis of measurement 24

4. Functional and presentation currency 24

5. Going concern 24

6. Reporting entity 24

7. Use of estimates and judgments 24

8. Capital Expenditure 25

9. Exploration and evaluation expenditure 25

10. Investments in Associates 25

11. Financial Performance 26

12. Segment information 26

13. Revenue 27

14. Expenses 28

15. Income Taxes 28

16. Earnings per share 29

17. Working Capital Management 30

18. Cash and Cash Equivalents 30

19. Reconciliation of loss after income tax to net cash flows from operating activities 30

20. Trade and other receivables 30

21. Trade and other payables 30

22. Impairment 31

23. Funding and Risk Management 31

24. Contributed equity 31

25. Financial risk management 31

26. Group Structure 33

27. Basis of consolidation 33

28. Foreign currency 33

29. Parent Entity Disclosures 34

30. Subsidiaries 34

31. Related parties 34

32. Key Management Personnel 34

33. Cash Bonus 34

34. Other related party transactions 35

35. New issue of Performance Rights 35

36. New issue of Options 36

37. Assets and liabilities at 30 June arising from transactions with related parties 36

38. Share based payments 36

39. Other 38

40. Events occurring after the reporting period 38

41. Contingencies and Commitments 38

42. Remuneration of Auditors 38

43. New standards and interpretations not yet adopted 38

44. African Energy Resources Limited Financial Report 30 June 2017 Corporate Directory Directors Mr Alasdair Cooke

    Executive Chairman

    Dr Charles (Frazer) Tabeart Managing Director

    Mr Gregory (Bill) Fry Executive Director

    Mr Valentine Chitalu Non‐Executive Director

    Mr Philip Clark Non‐Executive Director

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

    Mr Yan Zhao (retired 2 December 2016) Alternate Director to Mr Hume

    Mr Wayne Richard Trumble Non‐Executive Director

    Mr John Dean Non‐Executive Director

    Company Secretary Mr Daniel Davis Registered Office Granite House, La Grande Rue St Martin, Guernsey GY1 3RS Representative Office in Australia Suite 1, 245 Churchill Avenue Subiaco, Western Australia, 6008 Share Register Link Market Services Limited

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

    Stock Exchange Listings Australian Securities Exchange (ASX: AFR) Botswana Stock Exchange (BSE: AFR) Auditor BDO Audit (WA) Pty Limited

    38 Station Street

    Subiaco, Western Australia, 6008

    Solicitors Fairweather Corporate Lawyers

    595 Stirling Highway

    Cottesloe, Western Australia, 6011

    Bankers Westpac Banking Corporation

    Level 6, 109 St Georges Terrace

    Perth WA 6000

    Website www.africanenergyresources.com

    African Energy Resources Limited Financial Report 30 June 2017 Directors' Report

    Your Directors present their report on the Consolidated Entity consisting of African Energy Resources Limited (Company) and its controlled entities for the financial year ended 30 June 2017.

    1. Directors and Company Secretary

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

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

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

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

    Other current directorships Special responsibilities

    EVE Investments Anova Metals Limited

    Executive Chairman

    Member of the remuneration committee

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

    none 50,003,682 shares

    1,100,000 performance rights 1,750,000 options

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

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

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

    Other current directorships Special responsibilities

    PolarX Limited

    Segue Resources Limited

    Managing Director

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

    none 4,774,100 shares

    2,600,000 performance rights 2,500,000 options

    Mr Gregory (Bill) Fry - Executive Director

    Mr Fry has more than 25 years corporate experience in the mining and resources industry, specialising in accounting, management, business development and general corporate activities. He has vast experience in project evaluation and development, project funding, management, finance and operations.

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