Wolf Minerals Limited Interim Financial Report -5-

NOTE 6: KEY MANAGEMENT PERSONNEL

Remuneration arrangements of key management personnel are disclosed in the annual financial report.

NOTE 7: EQUITY COMPENSATION BENEFITS

At total expense of $36,302 has been recognised in the statement of profit or loss and other comprehensive income at 31 December 2014. This amount relates entirely to equity compensation benefits awarded to employees of the Company. During the year the Company issued two tranches of performance rights and once tranche of options. Further details are provided below.

   a)         Performance rights issues 

During the period ending 31 December 2014, the Company issued 2,953,418 performance rights to employees in accordance with the Wolf Minerals Limited Performance Rights Plan as readopted by shareholders at the Annual General Meeting held on 21 November 2014.

The vesting of the performance rights is subject to the following conditions:

a) 50% of performance rights will vest based on the Company's relative share price performance versus the AIM Basic Resources Index in accordance with a defined scale; and

b) 50% of performance rights will vest based upon the Company's Total Shareholder Return ("TSR") performance as measured over the vesting period.

The performance rights were valued by an independent third party using industry standard valuation techniques. The key inputs and valuations are summarised in the table below.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2014

NOTE 7: EQUITY COMPENSATION BENEFITS (CONTINUED)

 
   Item                              Tranche 1      Tranche 1      Tranche 2      Tranche 2 
 
   Vesting conditions                    a)             b)             a)             b) 
   Underlying security spot 
    price                              $0.26          $0.26          $0.26          $0.26 
   Exercise price                       Nil            Nil            Nil            Nil 
   Valuation date                    21/11/2014     21/11/2014     21/11/2014     21/11/2014 
   Expiration date                   30/06/2016     30/06/2016     30/06/2017     30/06/2017 
   Performance period (years)           2.00           2.00           3.00           3.00 
   Volatility                           60%            60%            60%            60% 
   Risk free rate                      2.53%          2.53%          2.56%          2.56% 
   Dividend Yield                       Nil            Nil            Nil            Nil 
   Number of performance rights       730,715        730,714        745,995        745,994 
   Valuation per performance 
    right                              $0.185         $0.128         $0.193         $0.136 
   Valuation per tranche              $135,182       $93,531        $143,977       $101,455 
 

At 31 December 2014 all of the performance rights remained unvested and a total expense of $26,507 has been recognised in the statement of profit or loss and other comprehensive income as part of equity compensation benefits. The total value of the performance rights will be recognised in the statement of profit or loss and other comprehensive income on a pro-rata basis over the life of the respective performance rights.

   b)         Option issues 

During the period ending 31 December 2014 the Company issued 850,000 options to an employee.

The options were valued using the Black Scholes valuation model with the key inputs and valuations summarised in the table below.

 
   Item 
   Underlying price             $0.25 
   Exercise price               $0.34 
   Valuation date             18/12/2014 
   Expiry date                30/11/2015 
   Historical volatility        38.80% 
   Risk free rate               2.96% 
   Number of options           850,000 
   Value per option            $0.0144 
   Probability                   80% 
   Value of issue               $9,795 
 

The options vested upon issue and a total expense of $9,795 has been recognised in the statement of profit or loss and other comprehensive income as part of equity compensation benefits.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2014

 
                                  31 December      30 June 
                                      2014           2014 
                                       $              $ 
   NOTE 8: OTHER RECEIVABLES 
   Current 
   Accrued interest                       812              - 
   GST refundable                      53,152        132,868 
   Other assets1                       40,650         58,812 
   Prepayments                         84,176     13,403,253 
   VAT refundable                   8,008,219      5,970,654 
                                    8,187,009     19,565,587 
                               --------------  ------------- 
 
   Non-Current 
   Other assets1                   20,178,100      6,444,561 
                               --------------  ------------- 
                                   20,178,100      6,444,561 
                               --------------  ------------- 
 

1 Other assets comprise a bond agreement and cash collateral deposits the Group has provided as security to various parties in connection with environmental restoration obligations. The bond and collateral deposits are not released until the underlying obligations have been fulfilled by the Group to the satisfaction of the UK authorities. The two major non-current collateral deposits are a GBP9.05M ($17.2M) financial provision for the restoration bond and a GBP0.8M ($1.52M) environmental waste permit.

 
 
   NOTE 9: MINE DEVELOPMENT ASSET 
 
   Mine development expenditure 
   Brought forward                                      119,669,556      31,895,741 
   Effect of foreign currency exchange differences        6,196,183       3,562,239 
   Expenditure capitalised during the period             93,930,154      84,211,576 
   At reporting date                                    219,795,893     119,669,556 
                                                     ==============  ============== 
 

The ultimate recoupment of mine development expenditure is dependent on the successful commercial development of the Project, including positive cash flows from production.

 
 
   NOTE 10: PROPERTY, PLANT & EQUIPMENT 
   Plant and equipment: 
   At cost                                       530,830      450,517 
   Accumulated depreciation                    (177,054)     (96,645) 
   Total plant and equipment                     353,776      353,872 
                                            ------------  ----------- 
 
   Total property, plant and equipment           353,776      353,872 
                                            ============  =========== 
 
 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2014

 
                                             Motor Vehicles     Plant and equipment      Total 
                                                   $                     $                 $ 
   NOTE 10: PROPERTY, PLANT & EQUIPMENT 
    (CONTINUED) 
 
   Balance at 30 June 2013                                -                  58,929       58,929 
   Additions                                        235,478                 107,330      342,808 
   Depreciation expense                            (15,866)                (35,133)     (50,999) 
   Effect of foreign currency exchange 
    differences                                           -                   3,134        3,134 
                                          -----------------  ----------------------  ----------- 
   Balance at 30 June 2014                          219,612                 134,260      353,872 
                                          -----------------  ----------------------  ----------- 
 
   Additions                                              -                  55,431       55,431 
   Depreciation expense                            (44,360)                (25,733)     (70,093) 
   Effect of foreign currency exchange 
    differences                                       9,534                   5,032       14,566 
                                          -----------------  ----------------------  ----------- 
   Balance at 31 December 2014                      184,786                 168,990      353,776 
                                          =================  ======================  =========== 
 
 
                                          31 December      30 June 
                                              2014           2014 
                                               $              $ 
   NOTE 11: TRADE AND OTHER PAYABLES 
   Current 
   Trade payables                          16,699,348      2,466,599 
   Accrued borrowing costs                          -        306,075 
   Accrued expenses                         2,842,889     22,828,093 
                                       --------------  ------------- 
                                           19,542,237     25,600,767 
                                       --------------  ------------- 
 
 
                                            Mine Rehabilitation     Employee Benefits       Total 
   NOTE 12: PROVISIONS                                                      $                 $ 
 
   Opening balance at 1 July 2014                     2,058,561               126,789     2,185,350 
   Additional provisions                                887,672                60,191       947,863 
   Effect of foreign currency exchange 
    differences                                         106,587                     -       106,587 
                                         ---------------------- 
   Balance at 31 December 2014                        3,052,820               186,980     3,239,800 
                                         ----------------------  --------------------  ------------ 
 
 
                                    31 December      30 June 
                                        2014           2014