Adelaide Resources Limited: 2016 Annual Report to Shareholders

Adelaide - Adelaide Resources Ltd. (ASX:ADN) is pleased to provide its Annual Report 2016 to shareholders.

Managing Director's review

In January 2016 we witnessed a welcome reversal to the negative market sentiment that has dogged the minerals exploration sector for five years. The turnaround is evidenced by a 61% increase in the S&P Small Resources Index from a low of 1,203 on January 14, to 1,937 on June 30. The recovery since January is better described as slow and steady rather than dramatic, however it nonetheless appears solid.

During the financial year, the Company spent $1.186 million on exploration activities, while joint venturer expenditure contributed a further $0.198 million. Expenditures were directed towards a range of exploratory activities with the bulk of funds utilised to conduct drilling programmes.

The price of gold appreciated by over 16% from A$1,525 at the start of the financial year to A$1,775 on June 30, 2016, validating the Company's decision to direct the majority of its 2015-16 exploration efforts to the search for gold deposits.

Principal to this focus has been the Eyre Peninsula gold project where the Company holds 100% equity in a cluster of gold targets located north of the township of Wudinna. The release in July 2016 of a maiden 107,000 ounce Mineral Resource for the Barns gold deposit represents a significant milestone along the path from discovery to development for the project.

The maiden Mineral Resource at Barns is comparable in contained ounces to deposits either in production or planned for development elsewhere in South Australia. These other deposits are owned by companies with market capitalisations that are multiples of Adelaide Resources, indicating the upside that continued success on the Eyre Peninsula can deliver.

The chances of further increasing the resource base in the Barns camp are considered excellent, with historical drillholes at prospects like Baggy Green recording intersections of similar grade and width to those that define the Barns deposit.

A number of the Company's shareholders, together with resources sector stock brokers and analysts, have expressed their view that a significant gold discovery in the pedigreed Drummond Basin in Queensland would catalyse a material re-rating of the Company's valuation. The Board shares this view and remains strongly committed to advancing the Company's efforts in the region.

Gold systems of epithermal style are present on the Company's Drummond Basin tenements, with most targets either yet to be drilled or subject to only limited historical drill tests. By their nature epithermal gold deposits are elusive and their exploration carries higher risks than other styles of deposit, but the quality of the prize can be transformative for those lucky enough to discover them.

Lithium is a commodity enjoying recent dramatically increased demand for application in the high tech electric vehicle and home energy storage sectors. The Company has applied for tenements that may have potential for both hardrock lithium and salt lake lithium brine deposits. None of the areas pegged have previously been evaluated for lithium and confirmation of its presence is uncertain, however the cost of the preliminary work required to confirm if lithium is present is modest and considered worthwhile.

Copper is a metal that is critical to building modern economies, a role unlikely to be challenged in the coming decades. However, its performance over the financial year has seen a price decline of 13% to around A$6,480 at June 30, and a concomitant lack of market interest. The Company's copper dominant Moonta and Rover projects remain highly prospective, however the Company seeks to advance both through the engagement of third parties.

STRATEGY

To achieve the goal of growing shareholder wealth, Adelaide Resources' directors have formulated a company strategy comprising the following key principles:

- The Company will maintain a strong focus on gold exploration, with copper and lithium complementary target commodities. Directors believe the outlook for these metals remains positive, and believe these are commodities well suited to Adelaide Resources. The principal focus for the 2016/17 financial year will be to advance the Eyre Peninsula gold project towards mine development.

- The Company's Board believes it is in shareholders' best interests to retain maximum equity in its tier one projects and consequently seeks to self-fund exploration programs on these projects when equity markets allow. The Board will contemplate third party investment in a tier one project if it believes the consequent loss of shareholder equity is more than compensated by increased financial certainty and the project de-risking that may accrue.

- The Company will pursue opportunities which have potential to unlock value in its other mineral assets, and will maintain an active lookout for quality new projects in Australia and overseas.

- The Company will build shareholder wealth while adhering to principles of good corporate governance, caring for its employees, conducting its operations in an environmentally sensitive manner, and maintaining respect for other stakeholders and for the communities in which it operates.

To view the annual report, please visit:
http://abnnewswire.net/lnk/JRJF5J4Y


About Adelaide Resources Limited:

Adelaide Resources Ltd. (ASX:ADN) is an Australian Securities Exchange listed company focusing on mineral exploration for gold, copper and lithium deposits. The company has built a highly prospective exploration portfolio of projects covering 7,969 sq kms within 21 exploration licences located in South Australia, Queensland, Western Australia and the Northern Territory. Adelaide Resources was incorporated on 23 December 1993 and subsequently listed on the ASX on 11 September 1996. The company's head office is in Adelaide, South Australia.

Adelaide Resources' vision is to be a sustainable minerals exploration company providing shareholders with risk managed discovery, development and mining opportunities.



Contact:

Adelaide Resources Ltd.
Chris Drown Managing Director
Nick Harding Executive Director, Company Secretary Tel: +61-8-8271-0600
Email: admin@adelaideresources.com.au
www.adelaideresources.com.au