Wolf Minerals Limited Interim Financial Report -7-

                                 25,600,767                -                -          -     25,600,767     25,600,767 
                              -------------  ---------------  ---------------  ---------  -------------  ------------- 
 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2014

NOTE 16: FAIR VALUE MEASUREMENT

Fair value hierarchy

The following tables detail the Consolidated Entity's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability.

 
                                  Level 1        Level 2      Level 3       Total 
                                     $              $            $            $ 
 
   Assets 
   Option foreign exchange 
    contracts                              -        62,238           -        62,238 
   Total assets                            -        62,238           -        62,238 
 
   Liabilities 
   Amortising interest rate 
    swaps                                  -     1,079,236           -     1,079,236 
   Forward foreign exchange 
    contracts                              -       425,817           -       425,817 
   Total liabilities                       -     1,505,053           -     1,505,053 
                                ------------  ------------  ----------  ------------ 
 

At 30 June 2014, the Consolidated Entity did not have any assets or liabilities, measured or disclosed at fair value.

The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial liabilities.

Valuation techniques for fair value measurements categorised within level 2.

Level 2 hedging derivatives comprise forward foreign exchange contracts, forward foreign exchange options and interest rate swaps. These forward foreign exchange contracts have been fair valued using forward exchange rates that are quoted in an active market. Interest rate swaps are fair valued using forward interest rates extracted from observable yield curves. The effects of discounting are generally insignificant for Level 2 derivatives.

This valuation technique maximises the use of observable market data where it is available and relies as little as possible on entity specific estimates.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2014

 
                                     31 December       30 June 
                                         2014            2014 
                                          $               $ 
   NOTE 17: ISSUED CAPITAL 
   Issued and fully paid shares 
   Fully paid ordinary shares        226,270,267     226,295,680 
                                     226,270,267     226,295,680 
                                  ==============  ============== 
 
 
                                                Number of 
                                                  shares             $ 
 
   Balance at the beginning of the period      807,845,616     226,295,680 
 
   Shares issued during the period                       -               - 
   Capital raising costs                                 -        (25,413) 
                                            --------------  -------------- 
 
   Balance at the end of the period            807,845,616     226,270,267 
 

NOTE 18: COMMITMENTS

(a) Mine development asset commitments

In order to maintain current rights of tenure to mine development assets, the Consolidated Entity has the following commitments up until expiry of leases. These obligations, which are subject to renegotiation upon expiry of the leases, are not provided for in the financial report and are payable:

 
                                                       31 December     30 June 
                                                           2014          2014 
                                                            $             $ 
   Not longer than one year                                171,659     163,208 
   Longer than one year, but not longer than five 
    years                                                  773,082     735,024 
                                                    --------------  ---------- 
                                                           944,741     898,232 
                                                    ==============  ========== 
 

If the Group decides to relinquish certain leases and/or does not meet these obligations, assets recognised in the statement of financial position may require review to determine the appropriateness of carrying values. The sale, transfer or farm-out of the mine development asset to third parties will reduce or extinguish these obligations.

(b) Lease expenditure commitments

 
   Not longer than one year                            92,038     184,064 
   Longer than one year, but not longer than five 
    years                                                   -           - 
                                                    ---------  ---------- 
                                                       92,038     184,064 
                                                    =========  ========== 
 

The Group has entered into the following leases on commercial terms for office accommodation:

 
             Location                Term            Expiry 
   22 Railway Road Subiaco          4 years       19 June 2015 
   Tamar Science Park, Plymouth     Monthly     30 September 2015 
 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2014

NOTE 18: COMMITMENTS (CONTINUED)

(c) Other contractual commitments

EPC Contract

In 2013 Wolf Minerals (UK) Limited awarded a GBP75 million ($143 million) Engineer Procure Construct ("EPC") contract for the Hemerdon tungsten and tin project to GR Engineering Services Limited.

The fixed price, fixed term EPC contract is for the design, construction and commissioning of a 3Mtpa tungsten and tin mineral processing plant plus associated infrastructure, forming the key component of the Hemerdon project.

As at 31 December 2014, EPC commitments contracted for but not yet incurred amounted to $27,239,431.

Mining Services Contract

In 2013 Wolf Minerals (UK) Limited awarded a GBP85 million (A$162 million) Mining Services Contract ("MSC") for the Hemerdon tungsten and tin project to CA Blackwell (Contracts) Limited.

The MSC is rates based and made up of two parts:

   --     Phase 1, Mining pre-strip and Mine development, 
   --     Phase 2, Mine production. 

The MSC term for Phase 1 is 11 months from the commencement date, followed by Phase 2 which has a five year term from completion of Phase 1 work. The MSC is able to be terminated by Wolf at any time with 60 days' notice.

NOTE 19: DIVIDENDS

No dividends have been declared or paid during the half year ended 31 December 2014.

NOTE 20: EVENTS SUBSEQUENT TO REPORTING DATE

There were no events subsequent to the period ended 31 December 2014 that have 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.

DIRECTORS' DECLARATION

The Directors of the Company declare that:-

1. The financial statements and notes, as set out on pages 7 to 23 are in accordance with the Corporations Act 2001, and:

(a) Complying with Accounting Standard AASB 134: Interim Financial Reporting and Corporation Regulations 2001; and

(b) Giving a true and fair view of the Consolidated Entity's financial position as at 31 December 2014 and of its performance for the half year ended on that date.

2. In the Directors' opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors:

_____________________________

Russell Clark

Managing Director

   Dated:   26 February 2015 

INDEPENDENT AUDITOR'S REVIEW REPORT

TO THE MEMBERS OF

WOLF MINERALS LIMITED

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Wolf Minerals Limited (the Company) and controlled entities (Consolidated Entity) which comprises the condensed consolidated statement of financial position as at 31 December 2014, the condensed consolidated statement of profit or loss and other comprehensive income, the condensed consolidated statement of changes in equity and the condensed consolidated statement of cash flows for the half-year ended on that date, 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 31 December 2014, or during the half year.

Directors' Responsibility for the Half-Year Financial Report

The Directors of the Company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with the Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the Directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor's Responsibility