Tanami Gold NL : Half Year Financial Statements

TANAMI GOLD NL

ABN 51 000 617 176

CONSOLIDATED INTERIM FINANCIAL REPORT

FOR THE HALF-YEAR ENDED

31 DECEMBER 2018

CONTENTS

DIRECTORS' REPORT

Page

3

LEAD AUDITOR'S INDEPENDENCE DECLARATION

6

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

7

DIRECTORS' DECLARATION

15

INDEPENDENT AUDITOR'S REPORT

16

2

For the half-year ended 31 December 2018

The Directors' present their report together with the consolidated interim financial report of the consolidated entity, being the Company and its controlled entities, for the half-year ended 31 December 2018 ("half-year") and the auditor's independent review report thereon.

1. Directors

The Directors of the Company at any time during or since the end of the half-year are:

Name	Period of Directorship
Mr A.G. Dew 1	Non-Executive Chairman	Appointed 2 December 2011
Mr G.J. McMahon 1	Independent Non-Executive Director	Appointed 23 April 2013
Mr C.C. Procter	Independent Non-Executive Director	Appointed 9 December 2011
Mr B. Montgomery	Independent Non-Executive Director	Appointed 6 February 2013
Mr B.R Smith	Non-Executive Director	Appointed 27 November 2018

1 On 27 November 2018, Mr A.G. Dew replaced Mr G.J. McMahon as Non-Executive Chairman. Mr G.J. McMahon remains as a Non-Executive Director.

2. Results

The consolidated entity had a profit after tax for the half-year from continuing operations of $17.060 million (HY 2017: loss $0.494 million) and a total net profit after tax for the half year of $17.060 million (HY 2017 profit: $11.807 million).

As at 31 December 2018, the Company held cash and cash equivalents of $28.254 million (FY 2018: $8.543 million) and in addition held 500,000 Northern Star Resources Limited ("NST") shares at $9.24 per share (equating to $4.620 million at 31 December 2018).

3. Nature of Operations and Principal Activities

The Company is a no liability company and is domiciled and incorporated in Australia. The principal activity of the Consolidated Entity for the half year period was gold exploration. The Company's exploration centre is situated in the Tanami Desert in the Northern Territory.

4. Corporate and Financial Overview

Joint Venture with Northern Star Resources Limited

As previously announced, the Company and NST have formed an unincorporated joint venture ("JV") to advance the Company's Central Tanami Project ("CTP").

In accordance with the JV, management of the exploration activities at the CTP have been handed over to NST which will sole fund all JV expenditure including all CTP exploration and evaluation costs, assessment and development costs, mining of the JV tenements and refurbishing the CTP process plant and associated infrastructure, during the Sole Funding Period

The Sole Funding Period will expire on the date on which the process plant at the CTP has been refurbished to operating condition and has operated for a continuous 30 day period or has produced 5,000 ounces of gold ore (whichever occurs first). On the expiry of the Sole Funding Period, NST will have earned a further 35% undivided interest in the CTP.

The Heads of Agreement ("HOA") included two put options. The first put option allowed the Company to sell a further 15% of the CTP to NST for $20 million in cash or NST shares, at the Company's election, at any time up to the earlier of three years after acquisition completion (31 July 2018) or commercial production being achieved. NST advised that commercial production would not be achieved by 31 July 2018, and it was not clear if or when commercial production would be achieved. Subsequently, on 31 July 2018, the Company completed the exercise of the first put option and elected to have the consideration payable in cash. Settlement date for this transaction was 15 September 2018. NST now hold 40% and the Company holds 60% of the CTP.

For the half-year ended 31 December 2018

The Company has a second put option which grants it the right but not the obligation to sell a further 25% of the CTP for $32 million in cash or NST shares (at the Company's election) up to six months after commercial production is achieved.

As announced on the ASX on 28 February 2019, the Company is currently in discussion with NST regarding the achievement of the objectives of the HOA.

NST Shares

At 31 December 2018, the Company had 500,000 shares in NST remaining.

5. Exploration Activities Overview

Central Tanami Project (60% Tanami)

In accordance with the JV which commenced on 3 August 2015, management of the exploration activities at the Company's CTP was assumed by NST who will sole fund all JV expenditure including CTP exploration and evaluation costs. The Company has continued to provide input into exploration targeting although NST, as Manager of JV activities, has responsibility to plan and implement ongoing exploration activities and ensure annual exploration commitments are met.

During the period, a program of RC and diamond drilling was completed beneath the existing treatment plant infrastructure testing for potential shallow extensions to the main Hurricane-Repulse mineralisation. RC drilling intersected significant gold mineralisation at varying depths in all 23 drill holes completed beneath all major infrastructure at the CTP Plant. Significant intersections from the RC drilling program included:

•  NHRC00003 - 3m (dth) at 20.5g/t Au from 140m and 12m at 4.6g/t Au from 147m;

•  NHRC00007 - 19m (dth) at 4.6g/t Au from 136m;

•  NHRC00009 - 14m (dth) at 3.2g/t Au from 150m, and

•  NHRC00015 - 15m (dth) at 2.9g/t Au from 92m.

Diamond drilling down plunge of the new mineralised zones, intersected a wide zone of significant gold mineralisation:

•  NHDD001 - 8.5m (dth) at 6.6 g/t gold from 177.86m depth located approximately 130 metres below the base of the existing Hurricane pit to the north.

Further south at Jim's, diamond drilling beneath the existing open pit also returned significant gold intersections up to 170 metres beneath the base of the open pit. Significant results included:

•  JDD001 - 7.2m (dth) at 2.3g/t Au from 184.5m and 26m at 3.9g/t Au from 224m;

•  JDD002 - 10.0m (dth) at 5.7g/t gold from 401.0m;

•  JDD003 - 8.0m (dth) at 3.9g/t gold from 219.1m; and

•  JDD004 - 20.5m (dth) at 2.2g/t gold from 253.5m and 10.3m at 1.1g/t gold from 258.56m.

Further extensional RC and diamond drilling is planned at both locations commencing late in the March 2019 quarter following cessation of the wet season.

6. Business Strategies and Prospects

As the Company holds a 60% interest in the CTP JV, the Board monitors and provides assistance to the JV Manager NST whilst it is earning its further interest (refer to CTP Exploration above).

7. Subsequent Events

There are no significant events after the balance date that require disclosure in this financial report.

For the half-year ended 31 December 2018

8. Lead Auditor's Independence Declaration under Section 307C of the Corporations Act 2001

The Directors have received confirmation from the auditor of Tanami Gold NL that they are independent of the Company.

A copy of the auditor's independence declaration as required under Section 307C of the Corporations Act 2001 is included on the following page and forms part of the Directors' report for the half-year ended 31 December 2018.

9. Rounding

The amounts contained in this report and in the financial report have been rounded to the nearest $1000 (unless otherwise stated) under the option available to the Company under ASIC Instrument 2016/191. The Company is an entity to which the Class Order applies.

Signed in accordance with a resolution of the Directors:

Arthur G Dew

Non-Executive Chairman Perth, Western Australia 14 March 2019