Annual Report to shareholders

ABN 50 009 188 694

Ian Middlemas - Chairman Robert Behets - Director Mark Pearce - Director John Welborn - Director

Mr Greg Swan

Level 9, BGC Centre 28 The Esplanade

Perth WA 6000

Tel: +61 8 9466 5030

Fax: +61 8 9466 5029

Australian Securities Exchange

Home Branch - Perth

Level 40, 152-158 St Georges Terrace

Perth WA 6000

EQX - Fully paid Ordinary Shares

Computershare Investor Services Pty Ltd

Level 11, 172 St Georges Terrace

Perth WA 6000

Tel: 1300 557 010

Int: +61 8 9323 2000

Fax: +61 8 9323 2033

Australia and New Zealand Banking Group Limited

DLA Piper

Ernst & Young

www.equatorialresources.com.au

Directors' Report 1

Auditor's Independence Declaration 11

Consolidated Statement of Profit or Loss and Other Comprehensive Income 12

Consolidated Statement of Financial Position 13

Consolidated Statement of Changes in Equity 14

Consolidated Statement of Cash Flows 15

Notes to the Financial Statements 16

Directors' Declaration 37

Independent Auditor's Report 38

Corporate Governance 42

ASX Additional Information 43

The Directors of Equatorial Resources Limited present their report on the Consolidated Entity consisting of Equatorial Resources Limited ("Company" or "Equatorial") and the entities it controlled at the end of, or during, the year ended 30 June 2017 ("Consolidated Entity" or "Group").

DIRECTORS

The names and details of the Company's Directors in office at any time during the financial year or since the end of the financial year are:

Mr Ian Middlemas - Chairman

Mr Robert Behets - Non-Executive Director Mr Mark Pearce - Non-Executive Director Mr John Welborn - Non-Executive Director

Unless otherwise stated, all Directors held their office from 1 July 2016 until the date of this report.

CURRENT DIRECTORS AND OFFICERS

Mr Ian Middlemas B.Com, CA Chairman (Non-Executive)

Mr Middlemas is a Chartered Accountant, a member of the Financial Services Institute of Australasia and holds a Bachelor of Commerce degree. He worked for a large international Chartered Accounting firm before joining the Normandy Mining Group where he was a senior group executive for approximately 10 years. He has had extensive corporate and management experience, and is currently a director with a number of publicly listed companies in the resources sector.

Mr Middlemas was appointed a Director of the Company on 5 November 2009. During the three year period to the end of the financial year, Mr Middlemas has held directorships in Apollo Minerals Limited (July 2016 - present), Cradle Resources Limited (May 2016 - present), Paringa Resources Limited (October 2013 - present), Berkeley Energia Limited (April 2012 - present), Prairie Mining Limited (August 2011 - present), Salt Lake Potash Limited (January 2010 - present), Piedmont Lithium Limited (September 2009 - present), Sovereign Metals Limited (July 2006 - present), Odyssey Energy Limited (September 2005 - present), Syntonic Limited (April 2010 - June 2017) and Papillon Resources Limited (May 2011 - October 2014).

Mr Robert Behets B.Sc.(Hons), FAusIMM, MAIG Director (Non-Executive)

Mr Behets is a geologist with over 25 years' experience in the mineral exploration and mining industry in Australia and internationally. He was instrumental in the founding, growth and development of Mantra Resources Limited, an African focused uranium company, through to its acquisition by ARMZ for approximately A$1 billion in 2011. Prior to Mantra, Mr Behets held various senior management positions during a long career with WMC Resources Limited.

Mr Behets has a strong combination of technical, commercial and managerial skills and extensive experience in exploration, mineral resource and ore reserve estimation, feasibility studies and operations across a range of commodities, including uranium, gold and base metals. He is a Fellow of The Australasian Institute of Mining and Metallurgy, a Member of the Australian Institute of Geoscientists and was also previously a member of the Australasian Joint Ore Reserve Committee ('JORC').

Mr Behets was appointed a Director of the Company on 25 February 2016. During the three-year period to the end of the financial year, Mr Behets has held directorships in Berkeley Energia Limited (April 2012 - present), Piedmont Lithium Limited (February 2016 - present), Apollo Minerals Limited (October 2016 - present), Cradle Resources Limited (May 2016 - July 2017) and Papillon Resources Limited (May 2012 - October 2014).

Mr Mark Pearce B.Bus, CA, FCIS, FFin Director (Non-Executive)

Mr Pearce is a Chartered Accountant and is currently a director of several listed companies that operate in the resources sector. He has considerable experience in the formation and development of listed resource companies and has worked for several large intern ational Chartered Accounting firms. Mr Pearce is also a Fellow of the Institute of Chartered Secretaries and a Fellow of the Financial Services Institute of Australasia.

Mr Pearce was appointed a Director of the Company on 5 November 2009. During the three-year period to the end of the financial year, Mr Pearce has held directorships in Apollo Minerals Limited (July 2016 - present), Prairie Mining Limited (August 2011 - present), Piedmont Lithium Limited (September 2009 - present), Sovereign Metals Limited (July 2006 - present), Odyssey Energy Limited (September 2005 - present), Salt Lake Potash Limited (August 2014 - present) and Syntonic Limited (April 2010 - October 2016).

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(Continued)

CURRENT DIRECTORS AND OFFICERS (Continued)

Mr John Welborn B.Com, FCA, FAIM, SA Fin, MAICD, MAusIMM, JP Director (Non-Executive)

Mr Welborn is a Chartered Accountant with a Bachelor of Commerce degree from the University of Western Australia and is a Fellow of the Institute of Chartered Accountants in Australia, a Fellow of the Australian Institute of Management and is a member of the Australian Institute of Mining and Metallurgy, the Financial Services Institute of Australasia, and the Australian Institute of Company Directors.

Mr Welborn has extensive experience in the resources sector as a senior executive and in corporate management, finance and investment banking. Mr Welborn is currently the Managing Director of Resolute Mining Limited and was previously the Head of Specialised Lending in Western Australia for Investec Bank (Australia) Ltd.

Mr Welborn was appointed a Director of the Company on 6 August 2010. During the three-year period to the end of the financial year, Mr Welborn has held directorships in Resolute Mining Limited (February 2015 - present), Orbital Corporation Limited (June 2014 - present) and Prairie Mining Limited (February 2009 - September 2015).

Mr Greg Swan B.Com, CA, ACIS, AFin Company Secretary

Mr Swan is a Chartered Accountant and Chartered Secretary and is currently Company Secretary and Chief Financial Officer for several listed companies that operate in the resources sector. He commenced his career at a large international Chartered Accounting firm and has since been involved with a number of exploration and development companies, including Mantra Resources Limited, Papillon Resources Limited, and Paringa Resources Limited.

Mr Swan was appointed Company Secretary of the Company on 26 May 2010.

PRINCIPAL ACTIVITIES

The principal activities of Equatorial during the financial year consisted of mineral exploration. No significant change in the nature of Equatorial's activities occurred during the year.

OPERATING AND FINANCIAL REVIEW

During the year, Equatorial continued to advance its existing mineral resource assets in Africa as well as searching for new opportunities in the resources sector which have the potential to build shareholder wealth.

Badondo Iron Project

Equatorial is the 100% owner of the Badondo Iron Project ("Badondo"), which is held by Equatorial's 100% owned subsidiary Congo Mining Exploration Ltd SARL. Badondo is a potentially large-scale iron project in the northwest region of the Republic of Congo, within a regional cluster of world-class iron ore exploration projects including Sundance Resources Limited's Mbalam-Nabeba project.

Badondo has a large direct shipping ore hematite exploration target and assay results received to-date have confirmed the presence of thick high-grade iron mineralisation at, and close to, surface.

During the year, the Company lodged a Mining Licence Application ("MLA") for Badondo. Under the terms of the Republic of Congo Mining Code, exploration licences are granted for an initial 3-year period and are then capable of being renewed, upon application, for two further periods of two years. The Badondo Exploration Licence was renewed for the second time by Government Decree dated 7 December 2015. Equatorial is now undertaking the process to upgrade the Company's tenure to a 25-year Mining Licence. According to the Republic of Congo Mining Code, an MLA requires the submission of a feasibility study, an environmental and social impact assessment, community development plans, and the completion of technical reviews by relevant government agencies. On 22 November 2016, Equatorial lodged the MLA for Badondo based on completed exploration work in order to position the Company with a 25 year right to mine at the project. Equatorial will continue to work with the Government with the aim of securing the Badondo Mining Licence during the 2017 calendar year.

Equatorial has plans for further exploration work at Badondo, which may include a follow-up drilling program. Further exploration and development programs at Badondo will be considered by the Company in the context of the current iron ore price and the progre ss of regional infrastructure developments.

In addition, Equatorial is continuing to investigate regional opportunities for partnership and cooperation with strategic investors at a project level, in order to maximise the value of Badondo for shareholders.

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