Perth 20 April 2016

Chairman’s Report

I am pleased to present to shareholders the Company’s Annual Report for the year ended 31 December 2015, particularly as we have been able to report a second successive year of profitable results since the new Board and management team took office on 7 February 2014.  The Company also recorded a positive cash balance of $13.9m at year end.

The year end profit of $2.6m and positive cash balance was achieved notwithstanding a depressed gold price throughout the year, the exhaustion of the Svartliden ore stockpiles, and the acquisition of the Fäboliden Gold Project (“Fäboliden”) in Sweden for approximately $6.0m cash.

The depressed gold price and exhaustion of Svartliden ore created difficult trading conditions for the Company but close attention to cost reductions and operational efficiencies enabled the Company to maintain profit.

A major achievement during the year was the acquisition of Fäboliden, including the mining tenements and surrounding land and timber resource.  The exploration of the high grade zone selected for drilling has been very encouraging to date and planning is proceeding for commencement of mining as soon as practicable.  Details of the results have been announced.  The securing of environmental permits, including stakeholder consultation, is in progress as well as detailed mine planning.  The Board hopes that Fäboliden will enable the continuation of the Svartliden operation for a number of years.

A number of other operational improvements were achieved during the year.  These included several significant improvements to the processing plant at Vammala.  Details of these are set out in this Annual Report and have resulted in both improved recoveries and operational efficiencies.

The Board has previously indicated that it believes that there is a disconnect between a listing on the ASX and the Company’s operations being all in the Nordic area.  Accordingly, consideration has been given to listing in a jurisdiction where Nordic operations may generate more interest.  The Board considers that Hong Kong may be an appropriate jurisdiction and it will continue to explore the prospects of listing in Hong Kong, the Board will keep the market informed as further progress is made.

We expect 2016 to be similar to 2015 for the Company as we will not have ore to process at Svartliden until Fäboliden can be brought on stream.  The Orivesi Gold Mine will have reduced output and costs are increasing because of the depth of the mine.  However we expect increased production at the Jokisivu Gold Mine and the Kaapelinkulma Gold Project can be brought on stream at short notice.

We will continue to develop our strategy and are hopeful of maintaining our improved operational position.

I wish to express my sincere thanks to our Directors and loyal staff for their support and efforts during this difficult period.  I also thank our shareholders for their support.

In view of our Fäboliden acquisition we believe Dragon has significant opportunity for improvement in the future.

Arthur G. Dew

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