Strategic Energy Resources : Half-Year Financial Report - 31 December 2021

onlyStrategic Energy Resources Limited

ABN 14 051 212 429

useHalf-year Financial Report - 31 December 2021 personalFor

Strategic Energy Resources Limited

Contents

31 December 2021

Corporate directory Directors' report

Auditor's independence declaration

Statement of profit or loss and other comprehensive income onlyStatement of financial position

Statement of changes in equity

Statement of cash flows

Notes to the financial statements Directors' declaration

I dependent auditor's review report to the members of Strategic Energy Resources Limited

For usepersonal

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Strategic Energy Resources Limited Corporate directory

31 December 2021

Directors

onlyCompany secretary Registered office and principal place of business

Share register

useAuditor

Stock exchange listing

Mr Stuart Rechner - Executive Chairman

Dr David DeTata - Managing Director

Mr Anthony McIntosh - Non-Executive Director

Mr Mathew Watkins

Level 4, 100 Albert Road

South Melbourne VIC 3205

Ph: 03 9692 7222

Fax: [phone]

Link Market Services Limited

Tower 4, 727 Collins Street

Melbourne, VIC 3008

Ph: 1300 554 474

Grant Thornton Audit Pty Ltd

Tower 5, Collins Square

727 Collins Street

Melbourne VIC 3008

Strategic Energy Resources Limited shares are listed on the Australian Securities Exchange (ASX code: SER)

personalWebsite For

www.strategicenergy.com.au

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Strategic Energy Resources Limited Directors' report

31 December 2021

The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Consolidated Entity') consisting of Strategic Energy Resources Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the period ended 31 December 2021.

onlyDirectors

The following persons were Directors of Strategic Energy Resources Limited during the whole of the financial period and up to the date of this report, unless otherwise stated:

Mr Stuart Rechner - Executive Chairman

Dr David DeTata - Managing Director (appointed as Managing Director on 1 July 2021, previously a Non-Executive Director)

Mr Anthony McIntosh - Non-Executive Director

Principal activities

useStrategic Energy Resources Ltd is a specialised undercover mineral explorer and project generator focused on discovery in gr nfield frontiers of Australia. During the period principal continuing activities of the Consolidated Entity consisted of exploration for minerals in Australia.

Dividends

There were no dividends paid, recommended or declared during the current or previous financial period.

Review of operations

The loss for the Consolidated Entity after providing for income tax amounted to $135,288 (31 December 2020: $1,708,702).

personalThe net assets of the Consolidated Entity increased by $1,280,679 to $6,077,083 as at 31 December 2021 (30 June 2021: SER will return to East Tennant to undertake a follow-up geophysics program set to include ground based Induced

$4,796,404). The Consolidated Entity had net cash outflows from operating activities for the period of $287,022 (31 December 2020: $412,817). Working capital, being current assets less current liabilities, decreased by $710,633 to $1,296,676 (30 June 2021: $2,007,309).

The review of operations preceding this report outlines the exploration activities and corporate matters for the year.

SER's goal is the discovery of major copper-gold deposits which we pursue as a specialised undercover mineral explorer and project generator. During the July-December 2021 reporting period, we have continued to execute our strategy of "Di covery via Drilling" and "Discovery via Partnership" while also generating valuable new exploration projects across Au tralia.

During the period, SER was the first explorer to conduct a diamond drill campaign in the emerging, highly prospective East

T nnant Iron Oxide Copper-Gold (IOCG) province with the financial assistance of a Northern Territory Government G ophysics and Drilling Collaborations (GDC) grant. While the results of the drill program at the 'Cottage' prospect were

disappointing, we remain convinced of the potential of the region given the positive results from the MinEx CRC National Drilling Initiative campaign and the significant uptake of new mineral exploration tenements in the region. In the coming year

Polarisation (IP) over our identified gravity and/or magnetic targets to distinguish prospects more likely to host metal sulphides.

ForAt the completion of the East Tennant program, the drill rig was mobilised to our Canobie project to test a newly identified discrete combined magnetic, gravity and electromagnetic target, 'Kalarka' with the financial assistance of a Queensland G vernment Collaboration Exploration Initiative (CEI) grant. The two-hole diamond drill program intersected thick intervals of nickel-elevated ultramafic rock with semi massive sulphide zones in both drill holes. Drill holes were collared 535m apart; with best intersections included:

• CND001A:

• 1. 132m of disseminated Ni-Cu sulphides within ultramafic @ 0.1% Ni from 507m; including 2m @ 0.68% Ni, 0.17% Cu (from 635m)
• CNDD002:
• 1. 43m of disseminated Ni-Cu sulphides within ultramafic @ 0.1% Ni from 615m; and 0.6m @ 0.96% Ni, 0.11% Cu (from 661.6m)

Refer ASX Announcement of 19 December 2021 for full details.

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Strategic Energy Resources Limited Directors' report

31 December 2021

These results, when viewed alongside historical nickel intercepts recorded at the Tea Tree Prospect, 2.75km southeast of Kalarka are a significant advancement of the Canobie Project and increases the potential of the region to host significant Ni + Cu sulphide mineralisation, which can be associated with more massive accumulations, as demonstrated between Western and Eastern Deeps systems at Voisey's Bay (Labrador, Canada) and within the Nebo-Babel deposit (West Musgraves

onlyRanges, W.A.). An independent expert review was competed by Dr Steve Beresford along with follow-up work to assist in vectoring towards areas of potentially higher tenor within the project. In the coming year a follow up geophysical survey will be conducted ahead of a Ni + Cu sulphide focused drill campaign.

A second CEI grant was also awarded to SER in collaboration with machine learning pioneers Caldera Analytics to develop a deep learning-based model to interpret basement geology from geophysical data across our northwest Queensland exploration licences. The project commenced during the period and will be completed during the second quarter of 2022. Preliminary results have shown that the machine learning program will significantly assist in our ability to generate new drill targets across our northwest Queensland portfolio.

useTowards the end of the period the transfer of the Isa North Copper-Gold Project from Newcrest Mining Ltd (ASX:NCM) was completed. The project covers an underexplored 976km2 belt located along the projected northern extension of the mineralised Mt Isa - Gunpowder Fault Zone, a region that hosts several large deposits which lie on or adjacent to this fault y tem, including the Mt Isa, Mt Oxide and Gunpowder copper deposits and the Mt Isa, Hilton and George Fisher lead-zinc- ilver deposits. SER is well advanced in negotiating land access agreements and drill targeting, with preparations being

made for drill testing Isa North targets this year.

In NSW, SER continued to undertake drill targeting work at our South Cobar project with the completion of an airborne magnetic and radiometric survey followed by a geochemical survey that has since been completed. The project area is

personalocated along strike and surrounding the undeveloped Browns Reef Zn-Pb-Cu volcanic massive sulphide deposit. Preparations are now underway for a drilling campaign mid-year with financial assistance from a NSW New Frontiers

Cooperative Drilling Grant.

SER intends to undertake exciting drill programs at Isa North and South Cobar this year. Simultaneously, we will advance our East Tennant and Canobie projects with follow-up geophysical surveys and drill targeting.

Significant changes in the state of affairs

On 30 November 2021, the Company issued 6,333,333 Unlisted Options to current directors, Nil exercise price, expiring on 30 November 2024, subject to vesting conditions.

On 25 November 2021, the Company issued 2,375,000 fully paid ordinary shares to Directors of the Company at an issue p ice of $0.044 (4.4 cents) per Share, raising $104,500 before costs following the receipt of shareholder approval granted on 17 November 2021.

On 11 November 2021, the Company announced the completion of the divestment of the Benmara Project to Resolution Minerals Ltd (RML). The consideration for the final stage of the agreement of outright purchase of the Tenement (EL32228) comprised a payment of $250,000 in RML shares or cash, at RML's election. RML has elected to make payment via the issue of 13,773,778 shares as approved by shareholders at Annual General Meeting held on 11 November 2021.The consideration shares were issued on 12 November 2021 and this results in the Company holding 16,273,778 shares in RML.

ForOn 14 September 2021, the Company issued 27,625,000 fully paid ordinary shares to professional, sophisticated and other exempt investors at an issue price of $0.044 (4.4 cents) per Share, raising $1,215,500 before costs.

There were no other significant changes in the state of affairs of the Consolidated Entity during the financial period.

Matters subsequent to the end of the financial period

On 17 January 2022, the Company was awarded $120,000 co-funding grant from New South Wales Government to support diamond drilling activities at the Achilles 1 Prospect within our South Cobar project (EL9012). The drill program will follow a soil geochemistry survey over the target area using CSIRO's Ultrafine+™ next gen analytics scheduled for later this month.

No other matter or circumstance has arisen since 31 December 2021 that has significantly affected, or may significantly affect the Consolidated Entity's operations, the results of those operations, or the Consolidated Entity's state of affairs in future financial years.

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