ADAVALE RESOURCES LIMITED — Annual Report 2011

Aug 30, 2011

APPENDIX 4E

PRELIMINARY FINAL REPORT TO THE AUSTRALIAN STOCK EXCHANGE

Name of Entity Adavale Resources Limited ABN 96 008 719 015 Year ended 30 June 2011 Previous corresponding period 30 June 2010

RESULTS FOR ANNOUNCEMENT TO THE MARKET

		$		$
Revenue from ordinary activities (continuing)	Down 21.8% from	161,533	To	126,286
(Loss) from ordinary activities after tax attributable to members	Down 40.4% from	(2,069,737)	To	(1,232,659)
Net (Loss) for the period attributable to members.	Down 40.4% from	(2,069,737)	To	(1,232,659)

No interim dividend was paid and it is not proposed to pay any dividends.

Explanation of Revenue

The Profit from ordinary activities before income tax expense includes the following revenues whose disclosure is relevant in explaining the financial performance of the entity:

Revenues from continuing operations Interest from third parties Other	Year Year Ended Ended 30 June 30 June 2011 2010 $ $ 115,059 146,991 15,207 14,542
	130,266 161,533

Explanation of results

During the year, there was a loss of $1,232,659 (2010: $2,069,737). This has resulted from the

following:

• Consulting fees of $240,000 relating to work in Indonesia.

• ASX and Share register costs totaling $134,339, relating to annual listing fees,

• placement fees and the sale of unmarketable parcel of shares.

• Exchange rate differences of $71,403 from converting USD expenses to AUD in

• the 2011 year.

The result for the year is in line with management and Board expectations.

	Current Period	Previous Corresponding Period
Net tangible assets per ordinary security (basic)	1.08 cents	2.03 cents
Net tangible assets per ordinary security (diluted)	1.08 cents	2.03 cents

2

Other matters

There have been no entities over which control has been gained or lost during the period.

There are no associates or joint ventures included within the accounts of Adavale Resources Limited

Audit of financial report

The report is based on accounts which are in the process of being audited.

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ADAVALE RESOURCES LIMITED

ACN 008 719 015

PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 June 2011

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ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

CONTENTS FOR THE YEAR ENDED 30 JUNE 2011

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2011	6
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011	7
CASH FLOW STATEMENTAS AT 30 JUNE 2011	8
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2011	9
NOTES TO THE FINANCIAL STATEMENTS	10

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ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2011

Notes 4 Audit Fee Exchange rate difference Share based expenses 25(d) 7 7 7 7 Other expenses from ordinary activities Profit / (Loss) from ordinary activities before income tax expense Income tax expense relating to ordinary activities Profit / (Net Loss) from ordinary activities after income tax expense Insurance Revenue from ordinary activities Other Revenue Total revenue shareholder of the company Basic (loss)/earnings per share – cents Share registry fees Management and administration Directors fees Write-off of exploration expenditure Impairment of exploration licence Employee expenses Premises expenses Contractor and consultants expenses Legal expenses Earnings per Share from continuing operations: Basic (loss)/earnings per share – cents Diluted (loss)/earnings per share – cents Diluted (loss)/earnings per share – cents Profit/(loss) on sale of subsidiary Income tax (expense)/benefit relating to ordinary activities Total comprehensive income/(loss) Earnings per Share attributable to the ordinary

2011 2010 $ $ 126,266 161,533 126,266 161,533 (313,970) (126,193) (23,000) (18,200) (32,559) (12,000) (353,959) (527,689) (90,770) (51,443) (21,886) - (134,339) (68,627) (15,000) (15,000) (120,125) (144,000) - (739,574) - (449,940) (71,403) - (52,000) - (129,914) (78,604) (1,358,925) (2,231,270) - - (1,232,659) (2,069,737) - - - - (1,232,659) (2,069,737) (0.47) (1.13) (0.47) (1.13) (0.47) (1.13) (0.47) (1.13) Consolidated

The accompanying notes form part of these financial statements

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ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 JUNE 2011

Notes CURRENT ASSETS Cash assets 8 Receivables 9 Other TOTAL CURRENT ASSETS NON-CURRENT ASSETS Receivables 9 Property, plant and equipment 10 Financial Assets 11 Other 12 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Payables 13 Provisions 14 TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 15 Reserves Accumulated losses TOTAL EQUITY	2011 2010 $ $ 2,908,011 2,556,280 105,136 29,894 3,731 8,832 Consolidated
	3,016,878 2,595,006
	16,360 15,000 7,259 4,486 - - 4,400,456 3,576,108
	4,424,075 3,595,594
	7,440,953 6,190,600
	174,151 266,978 15,754 6,193
	189,905 273,171
	189,905 273,171
	7,251,048 5,917,429
	37,326,273 34,771,995 43,433 31,433 (30,118,658) (28,885,999)
	7,251,048 5,917,429

The accompanying notes form part of these financial statements.

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ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2011

Notes Cash flows from operating activities Cash receipts in the course of operations Cash payments in the course of operations Interest received Net cash provided by/(used in) operating activities 22(b) Cash flows from investing activities Payment for acquisition of subsidiary Purchase of property, plant and equipment Net cash (used in) investing activities Cash flows from financing activities Equity in Subsidiary Issue of shares Costs of issue shares Net cash provided by (used in) financing activities Net increase/(decrease) in cash held Cash at beginning of financial year Cash at end of financial year 22(a) Development,exploration & evaluation expenses capitalised

2011 2010 $ $ 15,207 14,542 (1,464,720) (903,860) 115,596 157,451 (1,333,917) (731,867) (530,752) - (4,282) - (824,348) (1,532,994) (828,630) (1,532,994) 530,752 - 2,627,921 - (113,643) - 3,045,030 - 882,483 (2,264,861) 2,556,280 4,821,141 3,438,763 2,556,280 Consolidated

The accompanying notes form part of these financial statements.

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ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2011

Note ECONOMIC ENTITY Balance at 1 July 2009 Total comprehensive loss for the year Profit (Loss) on disposal of subsidiary Balance at 30 June 2010 Balance at 1 July 2010 Total comprehensive loss for the year Issue of shares Costs of shares Share based Balance at 30 June 2011	Share Accumulated Option Capital Losses Revaluation Total Reserves $ $ $ $ 34,771,995 (26,816,262) 31,433 7,987,166 (2,069,737) (2,069,737)
	34,771,995 (28,885,999) 31,433 5,917,429
	34,771,995 (28,885,999) 31,433 5,917,429 (1,232,659) (1,232,659) 2,627,921 2,627,921 (113,643) (113,643) 40,000 12,000 52,000
	37,326,273 (30,118,658) 43,433 7,251,048

The accompanying notes form part of these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

1. REPORTING ENTITY

Adavale Resources Limited (the “Company”) is a company domiciled in Australia. The consolidated financial statements of the Company as at and for the year ended 30 June 2011 comprise the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interest in associates and jointly controlled entities. The Group is primarily involved in mining exploration.

The registered office of the Company is: Adavale Resources Limited Level 33 Colonial Centre 52 Martin Place SYDNEY NSW 2000

The principal place of business is: Unit 8 & 9 88 Forrest Street COTTESLOE WA 6011

2. BASIS OF PREPARATION

(a) Statement of Compliance

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards including Accounting Standards interpretations, adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial report of the Group and the financial report of the Company comply with all Australian equivalents to International Financial Reporting Standards (IFRSs) and interpretations adopted by the International Accounting Standards Board (IASB).

(b) Use of estimates and Judgements

The preparation of the financial statements requires management to make judgements, estimates and assumptions that effect the application of accounting polices and the reported amounts of assets, liabilities, income and expenses.

The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group.

Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. All significant areas of estimation uncertainty and critical judgements in applying accounting policies have been disclosed in the following notes to the financial statements.

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ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

3. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

Material accounting policies adopted in the preparation of this financial report are presented below. The financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by all entities in the Group unless otherwise stated.

(a) Principles of Consolidation

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by Adavale Resources Limited (the parent entity) as at 30 June 2010 and the results of all controlled entities for the year then ended. Adavale Resources Limited and its controlled entities together are referred to in this financial report as the consolidated entity.

Controlled Entities

A controlled entity is any entity controlled by Adavale Resources Limited. Control exists where Adavale Resources Limited has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable are taken into account.

In the Company’s financial statements, investments in controlled entities are carried at cost. A list of controlled entities is contained in Note 21 of the accounts.

Where controlled entities have entered or left the economic entity during the year, their financial statements have been included from the date control was obtained or until the date control ceased.

Minority equity interests in the equity and results of the entities that are controlled are shown as a separate item in the Economic Entity financial report.

Transactions Eliminated on Consolidation

Unrealised gains and losses and inter-entity balances resulting from transactions with or between controlled entities are eliminated on consolidation.

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ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

3. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT).

(b) Revenue Recognition

Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST). Exchanges of goods or services of the same nature and value without any cash consideration are not recognised as revenues.

Interest Revenue

Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset.

Sale of Non-Current Assets

The gross proceeds of non-current asset sales are included as revenue at the date control of the asset passes to the buyer, usually when an unconditional contract of sale is signed.

The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal.

(c) Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities, which are recoverable from, or payable to, the ATO are classified as operating cash flows.

(d) Foreign Currency Transactions and Balances

Functional and Presentation Currency

The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

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ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

3. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT).

(d) Foreign Currency Transactions and Balances (cont)

Transaction and Balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction Foreign currency monetary items are translated at the year end exchange rate. Non-monetary items measured at historical cost continued to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at their fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the income statement, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement.

Group Companies

The financial results and position of foreign operations whose functional currency is different from the Group’s presentational currency are translated as follows:

• Assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;

• Income and expenses are translated at average exchange rates for the period; and

• Retained earnings are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the group’s foreign currency translation reserve in the balance sheet. These differences are recognized in the income statement in the period in which the operation is disposed.

(e) Taxation

Current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

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ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

3. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT).

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income tax legislation and the anticipation that the company will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

Adavale Resources Limited and its wholly-owned Australian controlled entities have formed an income tax consolidated group under the Tax Consolidation Regime from 1 July 2002. The Company, as the head entity in the tax consolidated group, is responsible for recognising current and deferred tax amounts relating to transactions, events and balances of the wholly-owned Australian controlled entities in this group as if those transactions, events and balances were its own, in addition to the current and deferred tax amounts arising in relation to its own transactions, events and balances.

(f) Financial Instruments

Recognition

Financial instruments are initially measured at cost on trade date basis, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.

Financial Assets at Fair Value Through Profit and Loss

A financial instrument is classified in this category if acquired principally for the purpose of selling in the short term, or if so designated by management and within the requirements of AASB 139: Recognition and Measurement of Financial Instruments. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the income statement in the period in which they arise.

Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at cost using the effective interest rate method.

Held-to-Maturity Investments

These investments have fixed maturities and it is the company’s intention to hold these investments to maturity. Any held-to-maturity investments held by the company are stated at amortised cost using the effective interest rate method.

Available-for-Sale Financial Instruments

Available-for-sale financial instruments include any financial assets not included in the above categories. Available-for-sale financial instruments are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity.

Financial Liabilities

Non-derivative financial instruments are recognised at amortised cost, comprising original debt less principal payments and amortisation.

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ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

3. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT).

Fair Value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the value of all unlisted securities, including recent arms length transactions, reference to similar instruments and option pricing models.

Impairment

At each reporting date, the company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement.

(g) Impairment of Assets

At each reporting date the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the income statement.

(h) Receivables

The collectibility of debts is assessed at balance date and specific provision is made for any doubtful accounts.

(i) Investments

Controlled Entities

Investments in controlled entities are carried in the Company’s financial statements at the lower of cost and recoverable amount.

(j) Depreciation and amortisation

Useful Lives

All assets, including intangibles, have limited useful lives and are depreciated/amortised using the diminishing value method, with the exception of finance lease assets which are amortised over the term of the relevant lease, or where it is likely the consolidated entity will obtain ownership of the asset, the life of the asset.

Assets are depreciated or amortised from the date of acquisition or, in respect of internally constructed assets, from the time an asset is completed and held ready for use. Goodwill balances are reviewed annually and any balance representing future benefits for which the realization is considered to be no longer probable are written off.

Depreciation and amortisation rates and methods are reviewed annually for appropriateness. When changes are made, adjustments are reflected prospectively in current and future periods only. Depreciation and amortisation are expensed.

The depreciation/amortisation rates used for each class of asset during the current and prior year are as follows:

	2011	2010
Plant and Equipment	3-5 years	3-5 years
Field Equipment	3-5 years	3-5 years

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ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

3. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT).

(k) Payables

Liabilities are recognised for amounts to be paid in the future for goods or services received.

(l) Employee Benefits

Provision is made for the Company’s liability for employee benefits arising from services rendered by employees to balance date.

(m) Provisions

A provision is recognised when a legal or constructive obligation exists as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation.

(n) Cash

For the purposes of the statement of cash flows, cash includes deposits at call with financial institutions and other highly liquid investments with short periods to maturity which are readily convertible to cash on hand and are subject to an insignificant risk of changes in value, net of outstanding bank overdrafts.

(o) Earnings per Share

• (i) Basic earnings per share:

  • Basic earnings per share is determined by dividing net profit after income tax attributable to members of the

  • Company by the weighted average number of ordinary shares outstanding during the financial year.

• (ii) Diluted earnings per share:

  • Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(p) Exploration Expenses Capitalised

Exploration and evaluation expenditure

Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied:

• (i) the rights to tenure of the area of interest are current; and

• (ii) at least one of the following conditions is also met:

• (a) the exploration and evaluation expenditures are expected to be recouped through successful

development and exploitation of the area of interest, or alternatively, by its sale; or

(b) exploration and evaluation activities in the area have not, at the reporting date, reached a stage which permits a reasonable assessment of the existence, or otherwise, of economically recoverable reserves and active and significant operations in, or relating to, the area of interest are continuing.

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ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

3. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT).

(p) Exploration Expenses Capitalised (cont)

Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortisation of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest.

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years.

Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to development.

(q) Intangible assets

The intangible assets of the Company are exploration licenses acquired during the year ended 30 June 2007. The licenses are measured at cost less accumulated impairment losses. A review of the exploration licences occur each year

(r) Segment Reporting

As of 1 July 2009 the company presents operating segments based on information reported internally. Due to the adoption of IFRS 8 Operating segments, the accounting policy was changed in respect of segment operating disclosures.

Comparative segment information has been re-presented in conformity with the transitional requirements of the standard. Since the change in accounting policy only impacts presentation and disclosure aspects there is no impact on earnings per share.

An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses, including revenues and expenses that relate to transaction with any of the Company’s other components.

Unallocated items comprising mainly of head office assets, expenses and liabilities.

(s) New Accounting Standards and Australian Accounting Interpretations

The AASB has issued new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods and which the Group has decided not to early adopt. A discussion of those future requirements and their impact on the Group is as follows:

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

3. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT).

AASB 9: Financial Instruments (December 2010) (applicable for annual reporting periods commencing on or after 1 January 2013).

This Standard is applicable retrospectively and includes revised requirements for the classification and measurement of financial instruments, as well as recognition and derecognition requirements for financial instruments. The Group has not yet determined any potential impact on the financial statements.

AASB 124: Related Party Disclosures (applicable for annual reporting periods commencing on or after 1 January 2011).

This Standard removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities and clarifies the definition of a “related party” to remove inconsistencies and simplify the structure of the Standard. No changes are expected to materially affect the Group.

AASB 1053: Application of Tiers of Australian Accounting Standards and AASB 2010–2: Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements [AASB 1, 2, 3, 5, 7, 8, 101, 102, 107, 108, 110, 111, 112, 116, 117, 119, 121, 123, 124, 127, 128, 131, 133, 134, 136, 137, 138, 140, 141, 1050 & 1052 and Interpretations 2, 4, 5, 15, 17, 127, 129 & 1052] (applicable for annual reporting periods commencing on or after 1 July 2013).

AASB 1053 establishes a revised differential financial reporting framework consisting of two tiers of financial reporting requirements for those entities preparing general purpose financial statements:

• Tier 1: Australian Accounting Standards; and

• Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements.

Tier 2 of the framework comprises the recognition, measurement and presentation requirements of Tier 1, but contains significantly fewer disclosure requirements.

The following entities are required to apply Tier 1 reporting requirements (ie full IFRS):

• for-profit private sector entities that have public accountability; and

• the Australian Government and state, territory and local governments.

Since the Group is a for-profit private sector entity that has public accountability, it does not qualify for the reduced disclosure requirements for Tier 2 entities.

AASB 2010–2 makes amendments to Australian Accounting Standards and Interpretations to give effect to the reduced disclosure requirements for Tier 2 entities. It achieves this by specifying the disclosure paragraphs that a Tier 2 entity need not comply with as well as adding specific “RDR” disclosures.

AASB 2010–2 makes amendments to Australian Accounting Standards and Interpretations to give effect to the reduced disclosure requirements for Tier 2 entities. It achieves this by specifying the disclosure paragraphs that a Tier 2 entity need not comply with as well as adding specific “RDR” disclosures.

AASB 2009–12: Amendments to Australian Accounting Standards [AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031 and Interpretations 2, 4, 16, 1039 & 1052] (applicable for annual reporting periods commencing on or after 1 January 2011).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

3. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT).

AASB 2009–14: Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement [AASB Interpretation 14] (applicable for annual reporting periods commencing on or after 1 January 2011).

This Standard amends Interpretation 14 to address unintended consequences that can arise from the previous accounting requirements when an entity prepays future contributions into a defined benefit pension plan.

This Standard is not expected to impact the Group.

AASB 2010–4: Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1, AASB 7, AASB 101 & AASB 134 and Interpretation 13] (applicable for annual reporting periods commencing on or after 1 January 2011).

This Standard details numerous non-urgent but necessary changes to Accounting Standards arising from the IASB’s annual improvements project. Key changes include:

clarifying the application of AASB 108 prior to an entity’s first Australian-Accounting-Standards financial statements;

adding an explicit statement to AASB 7 that qualitative disclosures should be made in the context of the quantitative disclosures to better enable users to evaluate an entity’s exposure to risks arising from financial instruments;

amending AASB 101 to the effect that disaggregation of changes in each component of equity arising from transactions recognised in other comprehensive income is required to be presented, but is permitted to be presented in the statement of changes in equity or in the notes;

adding a number of examples to the list of events or transactions that require disclosure under AASB 134; and

making sundry editorial amendments to various Standards and Interpretations.

This Standard is not expected to impact the Group.

AASB 2010–5: Amendments to Australian Accounting Standards [AASB 1, 3, 4, 5, 101, 107, 112, 118, 119, 121, 132, 133, 134, 137, 139, 140, 1023 & 1038 and Interpretations 112, 115, 127, 132 & 1042] (applicable for annual reporting periods beginning on or after 1 January 2011).

This Standard makes numerous editorial amendments to a range of Australian Accounting Standards and Interpretations, including amendments to reflect changes made to the text of IFRSs by the IASB. However, these editorial amendments have no major impact on the requirements of the respective amended pronouncements.

AASB 2010–6: Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets [AASB 1 & AASB 7] (applicable for annual reporting periods beginning on or after 1 July 2011).

This Standard adds and amends disclosure requirements about transfers of financial assets, especially those in respect of the nature of the financial assets involved and the risks associated with them. Accordingly, this Standard makes amendments to AASB 1: First-time Adoption of Australian Accounting Standards, and AASB 7: Financial Instruments: Disclosures, establishing additional disclosure requirements in relation to transfers of financial assets.

This Standard is not expected to impact the Group.

AASB 2010–7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127] (applies to periods beginning on or after 1 January 2013).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

3. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT).

This Standard makes amendments to a range of Australian Accounting Standards and Interpretations as a consequence of the issuance of AASB 9: Financial Instruments in December 2010. Accordingly, these amendments will only apply when the entity adopts AASB 9.

As noted above, the Group has not yet determined any potential impact on the financial statements from adopting AASB 9.

AASB 2010–8: Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets [AASB 112] (applies to periods beginning on or after 1 January 2012).

This Standard makes amendments to AASB 112: Income Taxes.

The amendments brought in by this Standard introduce a more practical approach for measuring deferred tax liabilities and deferred tax assets when investment property is measured using the fair value model under AASB 140: Investment Property.

Under the current AASB 112, the measurement of deferred tax liabilities and deferred tax assets depends on whether an entity expects to recover an asset by using it or by selling it. The amendments introduce a presumption that an investment property is recovered entirely through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale.

The amendments brought in by this Standard also incorporate Interpretation 121 into AASB 112.

The amendments are not expected to impact the Group.

AASB 2010–9: Amendments to Australian Accounting Standards – Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters [AASB 1] (applies to periods beginning on or after 1 July 2011).

This Standard makes amendments to AASB 1: First-time Adoption of Australian Accounting Standards.

The amendments brought in by this Standard provide relief for first-time adopters of Australian Accounting Standards from having to reconstruct transactions that occurred before their date of transition to Australian Accounting Standards.

Furthermore, the amendments brought in by this Standard also provide guidance for entities emerging from severe hyperinflation either to resume presenting Australian-Accounting-Standards financial statements or to present Australian-Accounting-Standards financial statements for the first time.

This Standard is not expected to impact the Group.

AASB 2010–10: Further Amendments to Australian Accounting Standards – Removal of Fixed Dates for First-time Adopters [AASB 2009–11 & AASB 2010–7] (applies to periods beginning on or after 1 January 2013).

This Standard makes amendments to AASB 2009–11: Amendments to Australian Accounting Standards arising from AASB 9, and AASB 2010–7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2010).

The amendments brought in by this Standard ultimately affect AASB 1: First-time Adoption of Australian Accounting Standards and provide relief for first-time adopters from having to reconstruct transactions that occurred before their transition date.

[The amendments to AASB 2009–11 will only affect early adopters of AASB 2009–11 (and AASB 9: Financial Instruments that was issued in December 2009) as it has been superseded by AASB 2010–7.]

This Standard is not expected to impact the Group.

20

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

4. REVENUE FROM ORDINARY ACTIVITIES

Revenue from outside the operating activities Interest Other Revenue	2011 2010 $ $ 111,059 146,991 15,207 14,542 Consolidated
	126,266 161,533

5. AUDITORS’ REMUNERATION

5. AUDITORS’ REMUNERATION
Audit services: Auditor of the Company	2011 2010 $ $ 23,000 18,200 Consolidated
	23,000 18,200

21

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

6. TAXATION

The prima facie tax on loss from ordinary activities before income tax is reconciled to income tax as follows: a. Prima facie tax receivable on loss from ordinary activities at 30% (2010: 30%) Tax effect of deferred tax assets not brought to account Income tax expense attributable to entity	2011 2010 $ $ (369,798) (620,922) 369,798 620,922 - - Consolidated

The directors have not recognised any tax assets in respect of losses, as they do not believe that the conditions for recognition set out in Note 1(f) have been met.

7. ASSET BACKING AND EARNINGS PER SHARE

Continuing Operations Net tangible asset backing – cents per share Earnings per share - Basic – cents - Diluted – cents Earnings/(loss) used in the calculation of basic and diluted EPS Weighted average number of ordinary shares used in the calculation of basic and diluted EPS - in the calculation of basic EPS - in the calculation of diluted EPS Number of options not considered dilutive	2011 2010 $ $ 1.08 2.03 (0.47) (1.13) (0.47) (1.13) (1,232,659) (2,069,739) Consolidated
	263,615,155 183,593,979 263,615,155 183,593,979 118,674,069 2,976,190

As the company reported a loss for the year ended 30 June 2011, options on issue were not included in the calculation of diluted earnings per share.

22

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

8. CASH ASSETS

Cash at bank 9. RECEIVABLES Current Other receivables Non-current Receivable from other entities Receivable from wholly owned subsidiary 10. PROPERTY, PLANT AND EQUIPMENT Field equipment At cost Accumulated depreciation Office equipment At cost Accumulated depreciation Total property, plant and equipment – Net book value Movement in Carrying Values Carrying value as at 1 July 2010 Additions Disposals Depreciation Carrying value as at 30 June 2011

2011 2010 $ $ 2,908,011 2,556,280 2011 2010 $ $ 105,136 29,894 105,136 29,894 16,360 15,000 - - 16,360 15,000 2011 2010 $ $ 8,322 8,322 (5,949) (5,194) 2,373 3,128 10,165 5,887 (5,279) (4,529) 4,886 1,358 7,259 4,486 Field Office Total Equipment Equipment $ $ $ 3,128 1,358 4,486 - 4,278 4,278 - - - (755) (750) (1,505) Consolidated Consolidated Consolidated

2,373 4,886 7,259

23

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

11. FINANCIAL ASSETS

Available-for-sale Shares in controlled entities Less Impairment Shares in other entities	2011 2010 $ $ - - - - - - - - - - Consolidated

Available-for-sale financial assets comprise investments in ordinary issued shares of controlled entities. There are no fixed returns or fixed maturity dates attached to these investments.

12. OTHER NON-CURRENT ASSETS

12. OTHER NON-CURRENT ASSETS
Exploration Licences Exploration expenditure capitalised - Development phase - Exploration and evaluation phase	2011 2010 $ $ 1,050,160 1,049,960 2,046,056 1,391,531 1,304,240 1,134,617 Consolidated
	4,400,456 3,576,108

Exploration Licences are carried at cost of acquisition less impairment losses. A review of the exploration licences had occurred in in the 2011 year and no impairment charge was expensed to the Comprehensive Income Statement.

Recoverability of the carrying amount of exploration assets is dependent on the successful exploration and sale of uranium ore.

Capitalised costs amounting to $824,348 (2010:$1,532,944) have been included in cash flows from investing activities in the cash flow statement. Adavale Resources Limited relinquished all its holdings in Springvale, Queensland and had written off $622,125 exploration costs in the 2010 year. Mt Flint in South Australia had also been relinquished and $117,449 of costs has been written off in the 2010 year.

13. PAYABLES

Trade creditors Trade creditors to related parties Other creditors and accruals	2011 2010 $ $ 36,894 89,656 26,694 142,924 110,563 34,398 Consolidated
	174,151 266,978

Further information relating to trade creditors to related parties is set out in note 24.

24

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

14. PROVISIONS Current Employee benefits (a) Movement in provisions Consolidated Opening balance as at 1 July 2010 Provision expense Balance as at 30 June 2011	2011 2010 $ $ 15,754 6,193 Consolidated
	15,754 6,193
	Employee benefits $ 6,193 9,561 15,754

15. CONTRIBUTED EQUITY

Issued and Paid-up Share Capital (a) Ordinary shares, fully paid Number Ordinary Shares Balance as at 1 July Non-recounceable Entitlement issue as at 22 Nov 2010 Performance shares issued on 26 Nov 2010 Shortfall placement on 3 Dec 2010 Additional shares issued on 3 Dec 2010 Options exercised in 2010 Less: transactions costs of issue Closing balance at 30 June	2011 2010 2010 2010 No $ No $ 316,990,019 34,771,995 183,593,979 34,771,995 Consolidated Consolidated
	316,990,019 34,771,995 183,593,979 34,771,995
	No $ No $ 183,593,979 34,771,995 183,593,979 34,771,995 18,337,116 366,742 - - 2,000,000 40,000 - - 104,058,870 2,081,176 - - 9,000,000 180,000 - - 54 2 - - - (113,643) - -
	316,990,019 37,326,273 183,593,979 34,771,995

Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders’ meetings.

In the event of a winding up of the Company, ordinary shareholders rank after all creditors and are fully entitled to any proceeds of liquidation.

25

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

15. CONTRIBUTED EQUITY (continued)

• (i) On 19 October 2010, the company announced a pro-rata non-renounceable entitlement issue offer of 2 cents per share. A total of 18,337,116 new ordinary shares were applied from a total offer of 122,395,986 shares on 22 Nov 2010. A shortfall

• of 104,058,870 ordinary shares resulted and the shortfall shares were allocated pursuant to the underwriting agreement. On 3 Dec 2010 it was announced the shortfall were placed.

• (ii) An additional 9,000,000 shares were placed to raise a further $180,000, on the same terms as the entitlement issue. The additional placements were made to sophiscated investors pursuant to ASX Listing rule 7.1.

• (iii) On 26 October 2010, 2,000,000 performance shares were approved at the AGM for 2 director of Adavale Resources Ltd.

• These being 1,000,000 ordinary shares to John Risinger and 1,000,000 ordinary shares to Philip Suriano.

• (iv) 54 options were exercised from shareholders during 2011, resulting in 54 ordinary shares issued at 4 cents.

• (b) Options

Options - exercisable at 0.21, expiring date 30 Nov 2011 Opening balance Issued Closing balance Options - exercisable at 0.21, expiring date 01 Dec 2011 Opening balance Issued Closing balance Options - exercisable at 0.04, expiring date 31 Jul 2014 Opening balance Issued Closing balance Class A Options - exercisable at 0.04, expiring date 31 Jul 2014 Opening balance Issued Closing balance	2011 2010 No No 1,428,571 1,428,571 - - 1,428,571 1,428,571 1,547,619 1,547,619 - - 1,547,619 1,547,619 - - 65,697,879 - 65,697,879 - - - 10,000,000 - 10,000,000 - Consolidated

26

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

15. CONTRIBUTED EQUITY (continued)

Class B Options - exercisable at 0.04, expiring date 31 Jul 2014 Opening balance Issued Closing balance Class C Options - exercisable at 0.045, expiring date 31 Jul 2015 Opening balance Issued Closing balance Class D Options - exercisable at 0.05, expiring date 31 Jul 2016 Opening balance Issued Closing balance Options - exercisable at 0.04, expiring date 31 Jul 2014 Opening balance Issued Closing balance

2011 2010 No No - - 10,000,000 - 10,000,000 - - - 10,000,000 - 10,000,000 - - - 10,000,000 - 10,000,000 - - - 10,000,000 - 10,000,000 - Consolidated

27

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

(c ) Converting Performance Shares Number Balance at the beginning of the year Granted Issued	2011 2010 No No - - 2,000,000 - (2,000,000) - Consolidated
	- -

For details of performance shares - see note 15.

Capital Risk Management

The company’s objective when managing capital is to safeguard its ability to continue as a going concern. In order to maintain or adjust the capital structure, the company may issue new shares or return capital to shareholders.

The company’s strategy, which is unchanged from 2011, was to maintain a sufficient level of cash to meet its obligation, when the debt is due and its investment commitment.

16. RESERVES

The option reserve records items recognised as expenses on valuation of Directors share options

17. DIVIDENDS

The Directors do not recommend a dividend for the year ended 30 June 2011. No dividend was paid for the year ended 30 June 2011

18. FINANCIAL INSTRUMENTS

Financial Risk Management

The Company's activities expose it to a variety of financial risks; market risk (including fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company.

Risk management is carried out by the board of directors under policies approved by the Board. The board identifies and evaluates financial risks and provides principles for overall risk management.

28

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

(a) Interest Rate Risk

The consolidated entity is exposed to interest rate fluctuations.

Interest Rate Risk Exposures

The consolidated entity’s exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities is set out below:

Weighted Average Note Interest rate 2011 Financial assets Cash assets 8 4.66% Receivables 9 Other current assets Financial liabilities Payables 13 2010 Financial assets Cash assets 8 2.55% Receivables 9 Other current assets Financial liabilities Payables 13	Floating Non- Interest 1 year or 1 to 5 years more than 5 Interest Total rate less years Bearing $ $ $ $ $ $ 1,872,774 1,035,238 - - - 2,908,012 - - - - - - - - - - - - Fixed interest maturing in:
	1,872,774 1,035,238 - - - 2,908,012
	- - - - - -
	- - - - - -
	563,719 1,992,561 - - - 2,556,280 - - - - 29,894 29,894 - - - - 8,832 8,832
	563,719 1,992,561 - - 38,726 2,595,006
	- - - - 266,977 266,977
	- - - - 266,977 266,977

29

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

18. FINANCIAL INSTRUMENTS DISCLOSURE (CONTINUED)

Financial Risk Management (continued)

Interest Rate Sensitivity Analysis

A sensitivity analysis was performed relating to the exposure to interest rate risk at balance date. This sensitivity analysis demonstrates the effect on the current year results and equity which should result from a change in these risks.

At 30 June 2011, the effect on profit and equity as a result of changes in the interest rate, with all other variables remaining constant would be as follows:

		Economic	Economic	Economic	Economic
		Entity		Entity
		30 June	**2011 **	30 June	2010
		$		$
	Change in profit
	- Increase in interest rate by 5%		6,479		3,279
	- Decrease in interest rate by 5%	(6,479)		(3,279)
	Change in equity
	- Increase in interest rate by 5%		6,479		3,279
	- Decrease in interest rate by 5%	(6,479)		(3,279)
(b)	Net Fair Values of Financial Assets and Liabilities

Valuation Approach

Net fair values of financial assets and liabilities are determined by the consolidated entity on the following basis:

Monetary financial assets and financial liabilities not readily traded in an organised financial market are determined by valuing them at the present value of contractual future cash flows on amounts due from customers (reduced for expected credit losses) or due to suppliers. Cash flows are discounted using standard valuation techniques at the applicable market yield having regard to the timing of the cash flows. The carrying amounts of bank term deposits, trade debtors, other debtors, accounts payable, bank loans and lease liabilities approximate net fair value.

The net fair value of investments in unlisted shares in other corporations is determined by reference to the underlying net assets and an assessment of future maintainable earnings and cash flows of the respective corporations.

The balances of financial assets and liabilities approximate their net fair value.

30

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

18. FINANCIAL INSTRUMENTS DISCLOSURE (CONTINUED)

(c) Unrecognised Financial Instruments

The Company and controlled entities do not have any unrecognised financial instruments.

(d) Market Risk

Price Risk

The Company is not exposed to equity securities price risk as it holds no investments in listed securities classified on the balance sheet either as available for sale or at fair value through profit or loss. The Company is not exposed to commodity price risk.

(e) Credit Risk Exposures

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted. The Company measures credit risk on a fair value basis. The credit risk on financial assets, excluding investments, of the consolidated entity, which have been recognised on the statement of financial position, is the carrying amount, net of any provision for doubtful debts.

The Company has no significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics.

(f) Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through credit facilities or other fund raising initiatives, to meet commitments as and when they fall due

Management monitors rolling forecasts of the Group’s liquidity on the basis of expected cash flow. Consolidated Economic Entity cash reserves of $2,908,011 (2010: $2,556,280) as at 30 June 2011 will ensure liquidity risk is minimised for future financial periods.

(g) Capital Management Risk

The Company’s objective when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits to other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets.

The Company monitors capital on the basis of the gearing ratio. The ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowing less cash and cash equivalents. Total capital is calculated as equity shown in the balance sheet plus net debt. As the company is in a transitionary stage the gearing ratio has been maintained throughout the year at 0%.

31

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

19. COMMITMENTS

Minimum expenditure commitments on exploration licences Committed but not provided for and payable: Within one year One year or later and no later than for five years	2011 2010 $ $ 235,000 245,269 - - 235,000 245,269 Consolidated

20. SEGMENT INFORMATION

The Company has identified its operating segments based on internal reports that are reviewed by the Board and management. The Company operated in one business segment during the year, being mining and in two geographical areas, being Australia and Indonesia.

The segment reporting is detailed below:

(a) Primary Reporting – Business Segments Year ended 30 June 2011 Revenue Sales Interest Other Total Segment Revenue Segment Result - Others - Loans - Others Total segment assets - Exploration expenditure - Receivables Total segment liabilities Profit/(loss) from ordinary activities before income tax Income tax expense Net Profit/(loss)	Mining and Mining and Other Total exploration exploration $ $ $ $ Australia Indonesia - - - - 572 - 110,487 111,059 - - 15,207 15,207
	572 - 125,694 126,266
	(127,695) (301,195) (803,769) (1,232,659) - - - -
	(127,695) (301,195) (803,769) (1,232,659)
	2,354,400 2,046,056 - 4,400,456 4,075 66,859 3,328,671 3,399,605 39,264 134,687 2,757,680 2,931,631
	2,397,739 2,247,602 6,086,351 10,731,692
	2,759,986 530,752 - 3,290,738 21,345 1,800 166,762 189,907
	2,781,331 532,552 166,762 3,480,645

32

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

20. SEGMENT INFORMATION (CONT)

(b) Primary Reporting – Business Segments Year ended 30 June 2010 Revenue Sales Interest Other Total Segment Revenue Segment Result - Others - Loans - Others Net Profit/(loss) Total segment assets - Exploration expenditure - Receivables Total segment liabilities Profit/(loss) from ordinary activities before income tax Income tax expense	Mining and Mining and Other Total exploration exploration $ $ $ $ Australia Indonesia - - - - 145 - 146,846 146,991 - - 14,542 14,542
	145 - 161,388 161,533
	(938,374) - (1,131,363) (2,069,737) - - - -
	(938,374) - (1,131,363) (2,069,737)
	2,202,098 1,391,631 - 3,593,729 33,665 - 2,423,769 2,457,434 4,486 - 2,543,620 2,548,106
	2,240,249 1,391,631 4,967,389 8,599,269
	2,408,669 - - 2,408,669 98,288 - 174,882 273,170
	2,506,957 - 174,882 2,681,839

All segment assets are located in Australia and Indonesia.

c) Segment assets:

Reportable segments’ assets reconciled to total assets as follow:

Segment Assets Intersegment Eliminations Total assets as per balance sheet	Consolidated 30 June 2011 10,731,692 (3,290,738) 7,440,954	Consolidated 30 June 2010 8,599,269 (2,408,669)
		6,190,600

33

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

20. SEGMENT INFORMATION (CONT)

d) Segment liabilities:

Reportable segments’ liabilities reconciled to total liabilities as follow:

gments’ liabilities reconciled to total liabilities as follow:
Segment Liabilities Intersegment Eliminations Total liabilities as per balance sheet	Consolidated 30 June 2011 3,480,644 (3,290,738) 189,906	Consolidated 30 June 2010 2,681,839 (2,408,669)
		273,170

21. CONTROLLED ENTITIES

Particulars in relation to controlled entities

Particulars in relation to controlled entities
		Ordinary Shares
		Consolidated Entity Interest
	2011		2010
	%		%
Company:
Adavale Resources Limited
Controlled entities:
Adavale Minerals Pty Ltd	100		100
Adavale Queensland Pty Ltd	100		100
Adavale Indonesia Pty Ltd	100		100
The above entities were incorporated in Australia.
PT Adavale Nusantara	100		-
Incorporated in Indonesia

34

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

22. NOTES TO THE STATEMENTS OF CASH FLOWS

		Consolidated	Consolidated
		2011	2010
	Notes	$	$
(a) Reconciliation of Cash
For the purposes of the statements of cash flows,
cash includes cash on hand and at bank and short
term deposits at call, net of outstanding bank
overdrafts. Cash as at the end of the financial year
as shown in the statements of cash flows is
reconciled to the related items in the statements of
financial position as follows:
Cash at bank	8	2,908,011	2,556,280
(b) Reconciliation of the operating loss after
tax to the net cash flow from operations
Profit/(loss) from ordinary activities after
income tax		(1,232,659)	(2,069,737)
Add/(less) non cash items:
- Depreciation of non-current assets		1,509	1,855
- Accrued interest		4,537	10,460
- Impairment losses			1,189,514
- Loss/(Gain) on disposal of subsidiary			-
- Other		12,000	(100)
		(1,214,613)	(868,008)
Changes in assets and liabilities:
- (Increase)/decrease in receivables		(76,038)	(11,017)
- Increase/(decrease) in trade creditors and accruals		(92,827)	140,965
- Increase/(decrease) in provisions		9,561	6,193
Net cash provided by/(used in) operating activities		(1,373,917)	(731,867)
23. SHARE BASED PAYMENTS
Shares granted to key management personnel as share-based	payments are as follows:
	Grant Date		No.
	26-Nov-10		1,000,000
	26-Nov-10		1,000,000

On 26 November 2010, 2,000,000 performance shares were approved at the AGM for 2 director of Adavale Resources Ltd. These being 1,000,000 ordinary shares to John Risinger and 1,000,000 ordinary shares to Philip Suriano.

35

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

24. RELATED PARTIES

Directors’ and Key Management Personnel

The directors of Adavale Resources Limited are considered the key management personnel of the consolidated economic entity. The directors’ remuneration and equity holdings have been disclosed in the directors report attached to the financial statements.

(a) The key management personnel compensation comprised:

Short-term employee benefits Directors fees Share based payments Total	2011 2010 $ $ 240,000 120,000 120,125 144,000 52,000 - 412,125 264,000 Consolidated

Apart from the details disclosed in this note and elsewhere in the financial report, no director or other related party has entered into a material contract with the Company or the consolidated entity since the end of the previous financial year and there were no material contracts involving directors’ interests existing at year-end.

Directors’ transactions with the Company or its controlled entities

	Consolidated	Consolidated
	2011	2010
	$	$
Fees paid to Arthur Phillip Pty Limited, a company
controlled by Mr Richard Poole for provision of
company secretarial, administration, management and
advisory services during the year	137,266	252,000
Fees paid to Steinepreis Paganin, a firm of which Mr
Roger Steinepreis is a partner, for the provision of legal
services during the year	65,956	14,888
Fees paid to Entertainment Marketing Enterprise Pty
Ltd, a company controlled by Mr Philip Suriano for
the provision of management and advisory services
during the year	146,982	120,000
Fees paid to Larca Pty Ltd, a company controlled
by Mr John Risinger for provision of management
and advisory services during the year	91,196	40,000
Fees paid to Drill Logic Pty Limited, a company controlled
by Mr Mark Stevenson and Mr John Risinger for the
provision of exploration services during the year	-	17,380

36

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

24. RELATED PARTIES (CONTINUED)

The terms and conditions of the transactions with directors and their director-related entities were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-Director-related entities on an arm’s length basis.

Directors’ balances with the Company or its controlled entities

Steinepreis Paganin Larca Consulting Pty Limited Entertainment Marketing Enterprise Pty Ltd Seiki Takahashi Payables (see note 13) Arthur Phillip Pty Limited	2011 2010 $ $ 15,950 2,000 6,695 4,000 4,049 2,049 - 55,000 - 79,875 Consolidated
	26,694 142,924

Transactions with associated company

For the purpose of administering a number of associated companies, an administration company Norfolk Management Pty Ltd was formed, with Adavale Resources Limited holding one share being 50% of the issued capital. The company operates solely as an administrative function and recharges as an administrative fee for the share of administrative expenses incurred on behalf of Adavale Resources Limited. During the year $144,960 (2010 - $99,468) was paid to Norfolk Management Pty Ltd as administrative fees. The company made neither profits nor losses for the year ended 30 June 2011, hence there is no proportional share of results bought to account to the company or Group financial statements.

25. EVENTS SUBSEQUENT TO REPORTING DATE

No matters or circumstances have arisen since the end of the year which significantly affect or may significantly significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.

37