ADX ENERGY LTD

2011 ANNUAL REPORT

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01 Profile and vision

ABN 50 009 058 646

02 Key forecast activities in 2011 - 2012 Highlights in 2010 - 2011

Registered and Principal Office

Suite 6, 2nd Floor, 11 Ventnor Avenue West Perth, Western Australia 6005 Telephone +61 89226 2822 Facsimile +61 89226 5333 Email [email protected] Web www.adxenergy.com.au

03 Global operations

04 Chairman’s review

06 Managing Director’s report

Technical Office

Kundrastrasse 6/2/1, a 1100 Vienna, Austria Telephone +43 (0)16410189 Facsimile +43 (0)1641018920

08 Operations report

12 Director information

Operations Office

13 Company secretary

Tunisia Office Alpine Oil & Gas Pty Ltd (A wholly owned subsidiary of ADX) Residence Dar Maghrebia, B-1-1 Rue du Lac Windermere Les Berges du Lac 1053 Tunis, Tunisia

14 Financial statements

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Directors

Ian Tchacos (Non-Executive Chairman)

Wolfgang Zimmer (Managing Director)

Paul Fink (Technical Director)

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Andrew Childs (No-Executive Director)

Company Secretary

Peter Ironside

Share Registry

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Computershare Investor Services Pty Ltd 45 St George’s Terrace Perth Western Australia 6000 Telephone +61 89323 2001 Facsimile +61 89323 2033

Solicitors

Freehills 250 St George’s Terrace Perth Western Australia 6000

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Bankers

National Australia Bank 100 St George’s Terrace Perth Western Australia 6000

Stock Exchange Listing

Australian Stock Exchange 2 The Esplanade Perth Western Australia 6000 ASX Code: ADX

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Auditors

Rothsay Chartered Accountants Central Park Building 152-158 St Georges Terrace Perth Western Australia 6000

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inspired by opportunity guided by experience

ADX Energy Ltd (ADX) is an Australian Stock Exchange (ASX) listed oil and gas exploration and appraisal company. ADX operates five oil and gas permits in North Africa and Europe, together with gold and base metal interests in Australia held via its stake in ASX listed Riedel Resources (RIE).

ADX strives to achieve exponential growth based on early entry to high impact exploration opportunities in proven oil and gas basins where there is good access to infrastructure, strong demand for energy, stable governments, attractive fiscal terms and above all, where management has had past experience and established firm relationships.

The company is headquartered in Perth, Western Australia with additional offices operating out of Vienna, Austria and Tunis in Tunisia.

VISION Striving for superior shareholder returns through better investment choices, by applying state of the art technology and high quality management.

ADX ENERGY LTD 2011 ANNUAL REPORT

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key forecast activities in 2011-2012

	1 2	Dougga pre-feasibility studies Dougga and exploration well farmout
	3	Drill Dougga gas field appraisal well
	4	Test Lambouka well and or near field exploration
	5	Follow up exploration well (Dougga West)
	6	Acquire seismic onshore Romania

highlights in 2010-2011

Spudded the Sidi Dhaher well, onshore Tunisia on 26 August 2011. First well to be drilled following the revolution.

Dougga Resource Upgrade – A competent persons report based on 3D seismic mapping resulted in an increase in mean contingent resource estimates to 79 mmboe (239 bcf sales gas and 41 mmbbls liquids).

Sicily Channel Exploration Mapping - based on 3D seismic, 3 material prospects with a most likely prospective resource potential totalling over 400 mmboe. Additional most likely prospective potential of 570 mmboe based on 2D seismic provides further opportunities.

New Sicily Channel Acreage Awarded at 100% equity interest - offshore exploration permit d 364 C.R-.AX adjacent to ADX operated’s Kerkouane permit.

Demerger of gold and base metal interests to Riedel Resources (RIE). ADX Energy now a fully focussed oil and gas company with 42.94% interest in Riedel.

Drilled Lambouka-1 well discovering two gas bearing zones. Significantly the first deep water well offshore Tunisia in the Kerkouane permit.

ADX ENERGY LTD 2011 ANNUAL REPORT

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global
operations
VIENNA Onshore Romania
PANONNIAN EXPLORATION PERMIT
Offshore Tunisia
SICILY CHANNEL PERMITS
– DOUGGA DISCOVERY
TUNIS
Onshore Tunisa
CHORBANE EXPLORATION PERMIT
Mineral Assets
GOLD AND BASE METAL PORTFOLIO
PERTH
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C h a i r m a n ’ s review

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ADX Energy Limited (ADX) has faced a challenging year due to the political situation in Tunisia and turbulence in capital markets worldwide. Shareholder’s perception of the Company’s situation and the market volatility which has affected investor sentiment is reflected in the Company’s share price performance. While it is difficult to predict capital markets in the medium term we remain positive about Tunisia as an investment destination, the country’s political transformation and in particular our ability to engage with the relevant authorities to progress our asset base and overcome operational challenges.

Although external factors have resulted in operational delays in Tunisia your management team has continued to add value to its asset base and position the Company for further growth by building its acreage portfolio, enhancing appraisal opportunities like the Dougga gas discovery, maturing exploration prospects for drilling and attracting the necessary capital via industry farmouts and equity markets.

In my first address as Chairman last year I stated our intention of transforming ADX into a focussed energy company. The transition of business activities from gold and minerals exploration to energy was completed with the successful Initial Public Offering of Riedel Resources Limited (ASX:RIE) during December 2010, resulting in ADX retaining a 42.9% interest in that company. Riedel is now well placed with a talented management team and the capital required to create value from its existing asset base and access new opportunities.

During the last year your Company has made some excellent progress across our energy portpolio.

With the benefit of revised mapping using the new 3D data set acquired in our Kerkouane permit, ADX commissioned a competent persons report on Dougga that resulted in an increase in mean contingent resource estimates to 79 mmboe (239 bcf sales gas and 41 mmbbls of liquids) for the liquids rich gas discovery. ADX’s most likely estimate based on our view of most likely field mapping and pressure data is approximately 110 mmboe.

ADX ENERGY LTD 2011 ANNUAL REPORT

Corporate Governance Statement

The Lambouka gas discovery well intersected a gas column of approximately 25 m based on logs and shows. Unfortunately due to instability of the borehole while drilling and evaluating Lambouka, it was not possible to test the well. A potentially substantial resource containing 309 bcf mean recoverable gas resources may exist in tertiary age rocks.
In addition to Dougga and Lambouka, mapping based on the recently acquired 3D seismic has generated three material prospects with a most likely prospective resource potential of over 400 mmboe. Additional most likely prospective resource potential of 570 mmboe based on 2D seismic provides further opportunities. This includes the Kerkouane gas discovery over which new 2D seismic has recently been acquired.
Following a six month interruption due to the Tunisian revolution, ADX was able to spud its onshore Sidi Dhaher well. Persistence on ADX’s side and support from the highest levels of the Tunisian authorities enabled drilling preparations to go ahead.
ADX successfully bid for the Parta block in South West Romania and signed the fiscally attractive concession agreement with the government in late January 2011.

In addition to the above asset achievements the Company has been able to secure the necessary funding for its activities via farmouts (A$ 3.5 million) and placements ($ 4.8 million).

Looking forward, the results of the Sidi Dhaher well will be an important milestone for the Company given the potential of this exciting onshore well.

Of high strategic importance and longer term potential is the Company’s Sicily Channel appraisal potential including the Dougga-1, Lambouka-1 and Kerkouane-1 discoveries coupled with substantial exploration opportunities defined on 3D seismic and 2D seismic. This extraordinary acreage position provides the opportunity for the creation of a valuable production hub which is positioned to access domestic and export infrastructure, is in good proximity to landfall for onshore gas processing and benefit from strong demand for gas at internationally attractive pricing. The liquid-rich nature of gas in the area enhances the commercial potential of any gas development.

The Dougga development concept study and economic analysis undertaken by Tracs-AGR has provided attractive project economics for the discovery based on an offshore floating production system for condensate removal and dehydration supplying an onshore gas plant. Studies by ADX indicate the potential for significant development capital cost reductions utilising a subsea development tied back to an onshore gas plant. Dougga together with Lambouka (15 km from Dougga) and the nearby Dougga West prospect or the Kerkouane-1 discovery, represent the potential for a large and strategic resource development.

ADX intends to undertake further Dougga concept development studies during the second half of 2011 with a view to substantially enhancing project economics and asset materiality ahead of seeking a farminee to assist in the funding of a Dougga appraisal well and the drilling of at least one near field exploration prospect.

In addition to its Tunisian activities, ADX has undertaken scouting work for 2D and 3D seismic where it plans to commence seismic operations in its Parta block in South West Romania. ADX has continued to review opportunities in Romania and Hungary which are prospective, proven hydrocarbon provinces that are underexplored based on seismically identified potential, have favourable fiscal terms and good access to local infrastructure and European Energy markets.

ADX has positioned itself to capitalise on its Tunisian asset position which is expected to benefit from a more stable political outlook. Beyond Tunisia the Company continues to seek new opportunities for portfolio growth as well as synergistic corporate opportunities that may provide cash flow and increased materiality.

On behalf of the Board of ADX I would like to thank our management team for its excellent work and persistence under difficult conditions. I look forward to an exciting year ahead and believe the patience of our shareholders will be rewarded given the exceptional potential and materiality of the Company’s asset base in comparison to the Company’s current capitalisation.

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IAN TCHACOS

ADX ENERGY LTD 2011 ANNUAL REPORT

Managing Director’s Report

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Dear Shareholders

In the challenging environment of 2010 we were able to focus our attention on more operational tasks. Following a very efficient and quick 3D seismic acquisition ADX drilled the first deep water well in Tunisia under a Zero Discharge Regime without any incidents. The world wide economic climate was characterised by a mild recovery after the global financial crisis, though the effects were still being felt worldwide. We are continuing our strategy of maintaining operatorship in all assets as well as conservative handling of our financial resources. Our farmout efforts were successful as in previous years and we prepared for additional drilling activities onshore Tunisia.

REVIEW OF ACTIVITIES

Operational

Early in the year our withdrawal from the Cooper Basin in Australia was completed with the sale of the non-core exploration permit PEL 182. Farmouts were completed for the Tunisian offshore and onshore permits.

Sicily Channel

The exploration well Lambouka-1 was drilled to a depth of 2786 metres and plugged and suspended on 8 September 2010. The suspension of the well for future re-entry will provide the best opportunity to minimise rig time and maximise reservoir information to be acquired from a possible future drill stem test of the gas bearing formation encountered in the well.

Further work has also commenced to identify the total resource potential of this gas discovery.

Post year end, ADX concluded two transactions which will enable the Company to increase its interest in the Lambouka area on favourable terms. In combination with Dougga, Lambouka provides a material appraisal and development opportunity for ADX. Regaining these interests which were previously farmed out to drill the Lambouka-1 well provides ADX with a consistent interest in Kerkouane.

A Dougga resource update was undertaken by ADX on 4th November 2010 followed by a competent person’s report (CPR)

06 ADX ENERGY LTD 2011 ANNUAL REPORT

Corporate Governance Statement

which was completed by Tracs-AGR (“Tracs”) in March 2011. This independent review by a highly reputable resource certification company has resulted in a number of encouraging findings which indicate that the Dougga gas field is a potentially viable resource. The planned Dougga appraisal well is an important next step to confirm its commercial potential.

The offshore exploration permit d 364 C.R-.AX in Italian waters has been awarded to ADX in January 2011. The adjacent permit d 363 C.R-.AX is also under application by ADX. The awarded permit is contiguous to ADX’s offshore Tunisian Kerkouane permit which contains the Dougga gas condensate discovery and the Lambouka gas discovery. ADX is the operator of this new permit and holds a 100% interest. The acreage acquisition is in line with ADX’s ongoing strategy of focusing its resources on core areas which offer proven prospectivity, materiality, access to developed markets and the ability to leverage from early entry.

ORGANISATIONAL STRUCTURE

ADX continued to maintain small offices in Vienna, Tunis and Bucharest in addition to its headquarters in Perth mainly for reasons of operational efficiency and to take advantage of the opportunities available in the Mediterranean areas.

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WOLFGANG ZIMMER

Onshore Tunisia

The camp and rig equipment for the exploration well Sidi Dhaher-1 was mobilised on June 20th and after considerable delays caused by supply issues during the revolution in Libya, the well finally spudded post year end on the 26th of August. The Tunisian Authorities supported our efforts and approved an extension of the current exploration period for the Chorbane permit by one year to the 12th of July 2012.

Romania

ADX signed the concession agreement for the exploration permit EX-10 Parta with NAMR in January 2011. The presidential approval has not been received at year end but is expected within the next months. Interpretation of already available 2D seismic data indicates that the Parta permit is a low risk area where modern exploration and production technology has not yet been applied and where discoveries can be easily and quickly brought on stream and monetised.

ADX continues to evaluate potential farmin and acquisitions opportunities as part of our strategy to acquire prospective exploration and development acreage within Romania and other Eastern European countries.

ADX ENERGY LTD 2011 ANNUAL REPORT

OPERATIONS REPORT

TUNISIA AND ITALY

APPRAISAL ASSETS

Dougga Gas Condensate Discovery

Operator: ADX Energy Ltd

Interest: 60% interest in the Kerkouane license which contains Dougga

In the 2009 annual report the Dougga gas condensate field resource review and a pre-feasibility study were highlighted as a key activity for the period 2010 to 2011. Based on the new 3D seismic and reservoir engineering work this resulted in a significant increase in contingent resources for both the most likely case and also for the low estimate case. Contingent resources have increased and resource uncertainty has decreased.

The independent third party review was undertaken by AGR-Tracs (Tracs) who in their competent persons report tabled the following recoverable contingent resources for the Upper Cretaceous reservoir:

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Table 1: TRACS Competent Persons Report

A successful appraisal well will convert this large resource into reserves. Based on reservoir data from the structurally down dip Dougga-1 well (drilled by Shell in 1981 on old 2D seismic data) and the reservoir engineering work undertaken by Tracs, it is expected that Dougga could produce in the most likely case approximately 50 mmscf/day sales gas and 12,600 barrels of liquids per day (condensate and LPG). Since the 3D seismic covered Dougga structure is very large, and no gas water contact has been found by the Dougga-1 well, the large resource upside potential of 133 mmboe with a corresponding hydrocarbon column in excess of 500 metres is technically well supported (Figure 2).

Dougga (see Figure 1 for location) is located in 328 metres water depth approximately 45kms east of the Cap Bon peninsular in the Sicily channel. The discovery is well positioned in terms of access to domestic and export infrastructure, proximal to landfall for onshore gas processing and demand for gas at internationally attractive pricing. The liquids-rich nature of Dougga gas enhances the commercial potential of any gas development.

The development concept study and economic analysis with Tracs have further revealed that the project economics for Dougga are compelling based on an offshore floating production system for condensate removal and dehydration together with an onshore gas plant (in the order of a billion USD NPV10). Recent studies by ADX indicate the potential for significant CAPEX reductions utilising a subsea development connected to an onshore gas plant. Together with Lambouka (15 km from Dougga) and the even closer Dougga West prospect, a large and strategic resource could be developed in the near future.

A key activity for 2011 and 2012 will therefore be to further improve the project economics by enhancing the resource potential and cost reduction as well as seeking appropriate support from Tunisian authorities for this strategic infrastructure project.

3D seismic and new engineering work have further enhanced the commercial potential of the Dougga gas condensate asset and reduced technical risk.

Kerkouane Gas Discovery Evaluation

2D seismic acquisition over the Kerkouane-1 discovery and surrounding prospective areas in the ADX operated Kerkouane license offshore Tunisia has successfully been completed by Shell Tunisia Offshore GmbH. The survey was acquired under a data exchange and acquisition agreement and as part of a larger program undertaken by Shell. The data is currently being processed by Shell. The data was acquired as part of a long offset survey operated by Shell in their neighbouring Azmour and Raf Raf blocks, offshore Tunisia. Under the agreement ADX and its partners will obtain a total of 104 km of 2D seismic in the area around the Kerkouane-1 gas discovery well. Whilst the old seismic data clearly shows the presence of very large world class structures in the area, new technology is required to unravel the tectonic complexity and locate new exploration wells with sufficiently high confidence. Therefore, the objective of this seismic data acquisition is to transform the Kerkouane-1 discovery and adjacent leads such as a large Pliocene lead into drillable appraisal and exploration projects.

The Kerkouane-1 well and its sidetrack drilled by Shell in 1981, had well control issues such as massive gas kicks and gas influx at relatively shallow reservoir levels. Solvent cut oil shows in side wall cores suggest the possibility of an oil rim potential. The well never reached the main target, i.e. the Cretaceous reservoir which is also the main gas condensate bearing reservoir in the Dougga appraisal project. Due to the large size of the Kerkouane-1 structure the resource potential can be expected to be in the order of the Dougga and Lambouka discoveries.

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Figure 2: 3D seismic through the Dougga gas condensate discovery
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Figure 1: Sicily Channel appraisal and exploration assets location map
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ADX ENERGY LTD 2011 ANNUAL REPORT

Kerkouane & Pantelleria

EXPLORATION ASSETS

Kerkouane Licence Pantelleria Licence Operator: ADX Energy Ltd Interest: 60% Interest: 100%

Operator: ADX Energy Ltd

The Kerkouane and Pantelleria permits are contiguous across the Tunisian - Italian border with a total area of 4,504 km[2] (Kerkouane – 3080 km[2] ; G.R15.PU (Pantelleria) 657 km[2] )

As in the previous financial year, the Kerkouane-Pantelleria permits were the main focus of ADX’s technical and operational efforts. After funding was secured through a number of farmouts the preparation for and drilling of the Lambouka prospect was the most significant activity in 2010 until the well was plugged and suspended in mid September 2010.

Whilst it was disappointing that the well could not be flow tested and no reservoir fluid samples could be retrieved due to significant drilling fluid losses and wellbore instability, there were several significantly positive outcomes.

It is significant that ADX has successfully drilled the first deep water well in Tunisia without any safety incidence at a time when the general public and media showed strong interest in every offshore deep water drilling, alerted by the BP Macondo oil spill incidence in the Gulf of Mexico. (At the time of Lambouka spud the Macondo oil spill subsequent to a deadly blow out had not yet been bought under control by a relief well).

During the well planning phase, ADX chose a very conservative well design which helped to continue the drilling operations during this difficult phase without interruption. The incident-free operations, under a Zero Discharge Regime, have certainly further added to ADX’s reputation as a well regarded and competent operator in Tunisia and Italy.

Whilst the Miocene age sandstone reservoir did not contain any hydrocarbons, the discovery of a thick high quality reservoir section in the western part of the Tunisian Sicily Channel upgrades a number of exploration prospects which previously had only deeper reservoir sections such as the Cretaceous formation as their main target. Unlike the nearby Dougga field which contains CO2 (i.e. 30%) it is assumed that no CO2 is present at Lambouka given that none was detected during the drilling of the well. At the same time hydrocarbon shows in the form of elevated gas chromatography readings, including heavy components and fluorescence point towards the presence of an active hydrocarbon system in the area.

Finally, the increase in hydrocarbon shows occurred at approximately the same time and depth as the massive drilling fluid losses occurred. Therefore, it was concluded at the time that the well had reached and intersected the main target, i.e. the Upper Cretaceous hydrocarbon bearing and heavily fractured. Subsequent detailed and comprehensive analysis of the data has revealed that the well did not reach the main Cretaceous target. The hydrocarbon bearing intervals in Lambouka are within a geologically younger formation which consists of Tertiary age carbonates with intercalations of extrusive volcanic rocks of subaqueous origin. This rapid change of mechanical properties within relatively short distances in conjunction with continued tectonic movement throughout geological times had created a highly fractured formation. The largest hydrocarbon shows are also correlated with the largest fractures, as clearly seen on FMI logs (formation micro scanner).

The extensive fracturing in conjunction with the good indications of a petroleum system have made the deeper Cretaceous target in Lambouka a relatively low risk prospect. The resource potential (most likely recoverable prospective resource) based on the 3D seismic and Lambouka well data are 126 mmboe (gas condensate case).

As with Lambouka and Dougga, ADX has utilised recently acquired 3D seismic to assess a number of substantial near field exploration opportunities. These new prospects have the potential to contain in excess of 400 mmboe of prospective resources based on ADX studies. The prospects are summarised in the table 2 below.

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Resource
Prospect
Status Estimate Likely Fluid
Name
(mmboe)
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Prospect Name	Status	Resource Estimate (mmboe)	Likely Fluid
Lambouka- Deep	Drill Deeper- Exploration	126	gas condensate
Dougga West	Near Field Exploration	226	oil or gas condensate (resource base on Birsa oil case)
Elissa	Exploration	57	gas condensate
Total Covered by 3D Seismic		409 mmboe

Table 2: Near field appraisal and exploration, covered by dual sensor 3D seismic, most likely (ML) prospective resources estimate

Figure 3 shows a seismic cross section through the Dougga gas condensate field and the large anticline now named as Dougga-West prospect. This prospect is on the same structural trend and regional fault system as the Nilde oil field in offshore Italy (see Figure 1 for location) and therefore a proven play type and relatively low risk.

Of immediate interest outside the 3D area is the Kerkouane-1 well in the north western part of the Kerkouane license which had significant gas shows during exploration drilling and will be covered by three new seismic lines acquired by Shell as part of a 2D survey in their neighbouring licenses. ADX has given approval to Shell to shoot seismic into its Kerkouane block in order to tie with the Kerkouane-1 gas discovery.

The resource potential (ADX in-house, most likely) of appraisal and exploration opportunities which are outside the 3D seismic area is summarised in the table below:

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ML
Prospect/Lead Predicted
Status Resource
Name Fluid Type
(mmboe)
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Prospect/Lead Name	Status	ML Resource (mmboe)	Predicted Fluid Type

Kerkouane	Appraisal	87	gas condensate
Lambouka Overthrust	Exploration	17	gas condensate
Tazerka - North	Exploration	24	oil
Galliano	Exploration	122	gas condensate
East Galliano	Exploration	146	gas condensate
North Zibbibo	Exploration	20	oil
Cap Bon Mare	Exploration	77	gas condensate
Carthage	Exploration	79	gas condensate
Total Covered by 2D Seismic		572 mmboe

Table 3: Near field appraisal and exploration, covered by 2D seismic, most likely (ML) prospective resources

The combined contingent and prospective most likely resource potential currently identified on both 2D and 3D seismic data is 1.15 billion barrels of oil equivalent. The period 2011 to 2012 and beyond will therefore have the objective to move these significant contingent resources into reserves category through the appraisal of Dougga and the drilling of material and prospective near field targets in the 3D covered area.

The achievements and results detailed above have enabled a three year renewal of the Kerkouane license from the Tunisian government, i.e. until 22 February 2014 for a fair commitment (1 well to 2500 meters and well test Lambouka) and a relinquishment of 772 km[2] of license area. The new acreage position is therefore 3080km[2] in Tunisia and the original 657km[2] in Italy. This is a very positive outcome given large adjacent exploration areas in both Italy and Tunisia have now been taken up by Repsol and Shell.

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Dougga - West Dougga Gas
Prospect Condensate Field
Messinian
Top Birsa
Ain Grab
BouDabbous
Abiod
Sidi Kralif
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Figure 3: 3D Seismic X section through the Dougga gas condensate field and large Dougga West anticline prospect

A highly attractive appraisal and exploration prospect portfolio supported by encouraging well data and 3D seismic, in an area which has recently attracted the majors and supermajors (Repsol, Shell) into the area.

ADX ENERGY LTD 2011 ANNUAL REPORT

Chorbane Licence

Operator: ADX Energy

Interest: 40%

ADX is the operator of the 2,438km[2] Chorbane permit which is located in central Tunisia. The area has excellent infrastructure that may allow any discovery to be tied into existing facilities with minimal effort, time and expense.

The block has a number of large oil and gas prospects, both in the eastern part adjacent to several producing oil and gas fields and also in the western part of the license (Figure 4). The prospects in the eastern part of the license are close to producing oil and gas fields and several wells had good shows and has a proven hydrocarbon system. This area can be regarded as relatively low risk and is partly covered with good quality 2D seismic data. This prospective trend also continues into the south eastern part of Chorbane which is partly offshore. The area is in principle particularly prospective because any structure or trap would be directly charged from a large oil and gas producing kitchen area to the east. Figure 5 shows such a structure. Whilst this area is therefore in principle relatively low risk with excellent potential for large sized discoveries, more modern high quality seismic data would be required to move the leads identified on older seismic data into ready to drill projects.

Therefore, because of its size, excellent high quality seismic definition, several oil and gas targets and a seismic direct hydrocarbon indicator (DHI) at one target level, the Sidi Dhaher prospect was selected as the first prospect to be drilled. The DHI together with the fact that Sidi Dhaher is on a structural trend with the large gas charged Chaal field further to the south have mitigated the somewhat higher hydrocarbon charge risk of the prospects in the western part of Chorbane. (The Chaal gas field is located partly in the ADX Chorbane block and estimated to contain 850 bcf contingent resources according to a Ryder Scott Competent Person’s Report (source: Candax Nov. 2009 investor presentation). All the above factors contributed to a successful farmout of the Sidi Dhaher well. The first two incoming parties, Gulfsands Petroleum Plc and Xstate Resources Ltd, already provided funding of ADX’s expected share of the drilling cost, whereas the proceeds for the third incoming party, Verus Investments Limited, can be utilised for other operations.

Due to the Tunisian “Jasmine” revolution in early 2011 and the subsequent lack of safety and security measures provided by authorities, the spud of Sidi Dhaher-1 well was delayed. Another factor contributing to the delay was that the rig operator for the Sidi Dhaher well had its base and main operations in neighbouring Libya, which resulted in a much slower than usual rig up time due to a more complex logistical situation caused by the Civil War in Libya.

Despite all these adversities ADX managed to secure the full support of the Tunisian authorities at the highest level and eventually ensure a safe operating environment. The well was spudded on the 26 August 2011. At the time of writing this annual report the results of wireline logging, reservoir pressure measurement and formatiion sampling were being evaluated and as a result are not able to be discussed.

The main focus of activities for 2011 and 2012 will be to acquire additional seismic data and mature several of the identified leads and prospects into drill ready status.

The area has excellent infrastructure that may allow any oil or gas discovery to be rapidly commercialised via tie-in to existing facilities.

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CHS Prospect
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Figure 5: 2D seismic section through large tilted horst block in Chorbane block, adjacent to oil and gas fields

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Palermo
SICILY
SIDI DHAHER
SIDI BEHARA SIDI EL ITAYEM
Tunis
Chorbane
MAHARES
PERMIT
CHS PROSPECT
PROSPECTS
LEADS
GAS
OIL
TUNISIA
GAS PIPELINE
OIL PIPELINE
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Figure 4: Chorbane location map and prospects

ADX ENERGY LTD 2011 ANNUAL REPORT

Romania AMI & Parta Licence

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Figure 6: Infrastructure and prospects map

Operator: ADX Energy

Interest: 60%

ADX has delivered on its promises made in last year’s annual report in relation to acquiring assets in Romania. ADX, who was certified by the Romanian authorities as a qualified operator in 2010, successfully bid for the Parta block (Figure 6) in a large exploration area licensing round and signed the concession agreement with the government in late January 2011. Whilst ADX was waiting for ratification by the president of Romania, scouting work for 2D and 3D seismic in the Parta block has been completed. It can be expected with reasonable confidence that high quality seismic data can be acquired in a cost efficient manner. In order to secure the licence, ADX and its partners have bid two exploration wells in addition to 2D and 3D seismic data acquisition.

Interpretation of already available 2D seismic data and well data has further enhanced the resource portfolio in this low risk area where modern exploration and production technology has not yet been applied and where small discoveries can be easily and quickly brought on stream and monetised. Several oil and gas fields in the licence at different stratigraphic levels prove the presence of a highly prolific petroleum system.

Of particular interest in terms of large resource upside potential are stratigraphic traps which are well proven to work in the area, but have not been explored deliberately because of a lack of high quality 2D and 3D seismic data. Some of the prospects identified show already seismic amplitude anomalies on the old seismic data probably associated with gas bearing formations (Figure 7). With new modern high resolution seismic a large amount of these low risk shallow gas targets can be expected to be discovered. Several operators active in the Pannonian basin have also announced that large potential for unconventional gas exists in the area.

New oil and gas with technology in the world’s oldest petroleum province.

The activity for 2011 and 2012 will focus on acquiring 2D and 3D seismic data and prepare for drilling the first well. ADX and its partners also continue to evaluate further opportunities in Romania through a study group. The activity currently focuses on areas where ADX has successfully applied for prospecting licenses, see Figure 8.

New Ventures

ADX Energy pursues new venture opportunities in the Pannonian Basin of Hungary and Romania, in the Caspian and the Mediterranean region.

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Figure 7: 2D seismic section through Parta licence showing an undrilled closure as well as stratigraphic prospects with dip reversal and a structural component

Figure 8: Prospecting licences

ADX ENERGY LTD 2011 ANNUAL REPORT

Director information

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Ian Tchacos BEng, Grad Dip Chemical Eng. Non Executive Chairman

Mr Tchacos is a Petroleum Engineer with over 25 years international experience in corporate development and strategy, mergers and acquisitions, petroleum exploration, development and production operations, commercial negotiation, oil and gas marketing and energy finance. He has a proven management track record in a range of international oil company environments.

In his last appointment as Managing Director of Nexus Energy, he was responsible for this Company’s development from an onshore micro cap explorer to an ASX top 200 offshore producer and operator.

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Wolfgang Zimmer PhD - Geology and Petrology Executive Managing Director

Dr Wolfgang Zimmer has over 30 years experience in the oil and gas industry. He received a PhD from the University of Vienna in Geology and Petrology. His career began with Mobil Oil in Austria where he worked in Europe and the USA in the oil and gas exploration and production industry. In 1991 he joined OMV, the Austrian oil company and fulfilled a variety of senior management roles for the next 15 years. He established OMV’s Australian and New Zealand operations for five years. Dr Zimmer has significant experience in North Africa having been the Director of OMV’s onshore and offshore production operations in Tunisia. In 2006 he joined Grove Energy, a Canadian and UK listed oil and gas explorer. As CEO he successfully merged Grove with another exploration company in 2007.

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Paul Fink MSc (Geophysics) Executive Technical Director

Mr Paul Fink is based in Vienna and has over 20 years of petroleum exploration and production industry experience in technical and management positions. Mr Fink is a graduate from the Mining University of Leoben, Austria. He started his career as a processing geophysicist and then worked predominantly on international exploration and development projects and assignments in Austria, Libya, Bulgaria, United Kingdom, Australia and finally in Pakistan as Exploration and Reservoir Manager for OMV. In 2005 he started his own petroleum consultancy business, which also allowed him to work on projects in Romania.

Most recently he was working as the acting Vice President (exploration) for Focus Energy, leading their highly successful exploration campaign in India, which included two discoveries, reserves certification, field development planning and successful petroleum licence bidding.

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Andrew Childs BSc - Geology and Zoology Non Executive Director

Mr Childs is Non Executive Director of Riedel Resources Limited, Managing Director of Petroleum Ventures Pty Ltd, Chairman of Australian Oil Company Ltd and Non Executive Director of Timor Oil Ltd, Orion Energy Pty Ltd and Bombora Energy Pty Ltd. Mr Childs is also Principal of Resource Recruitment and Managing Director of International Recruitment Services Pty Ltd.

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ADX ENERGY LTD 2011 ANNUAL REPORT

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Company Secretary

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Peter Ironside

B. Com, CA

Mr Ironside is a Chartered Accountant and business consultant with over 25 years experience in the exploration and mining industry. He has been a Director and/or Company Secretary of several ASX listed companies. Mr Ironside brings a significant level of accounting, compliance and corporate governance experience to the Board, together with support in the areas of corporate initiatives and capital raisings. Mr Ironside has been a Director of listed companies, Integra Mining Limited since 21 December 2000, and Atticus Resources Limited since 5 April 2007.

financial statements

14 Corporate Governance Statement 18 Directors’ Report 28 Directors’ Declaration 29 Statement of Comprehensive Income 30 Balance Sheet
31 Statement of Changes in Equity 32 Statement of Cash Flows
33 Notes to the Financial Statements
62 Auditors’ Report
63 Additional Shareholder Information
64 Tenement Schedule

ADX ENERGY LTD 2011 ANNUAL REPORT

Corporate Governance Statement

This statement outlines the main corporate governance practices that were in place for the financial year. These corporate governance practices comply with the ASX Corporate Governance Council recommendations unless otherwise stated.

Board of Directors

The Board operates in accordance with the broad principles set out in its charter, which is available from the corporate governance information section of the Company website at www.adxenergy.com.au.

Role and Responsibilities of the Board

The Board is responsible for ensuring that the Company is managed in a manner which protects and enhances the interests of its shareholders and takes into account the interests of all stakeholders. This includes setting the strategic directions for the company, establishing goals for management and monitoring the achievement of these goals. A summary of the key responsibilities of the Board include:

Strategy - Providing strategic guidance to the Group, including contributing to the development of and approving the corporate strategy;
Financial performance - Approving budgets, monitoring management and financial performance;
Financial reporting and audits - Monitoring financial performance including approval of the annual and half-year financial reports and liaison with the external auditors;
Leadership selection and performance - Appointment, performance assessment and removal of the Managing Director. Ratifying the appointment and/or removal of other senior management, including the Company Secretary and other Board members;
Remuneration - Management of the remuneration and reward systems and structures for executive management and staff;
Risk management - Ensuring that appropriate risk management systems and internal controls are in place; and
Relationships with the exchanges, regulators and continuous disclosure - Ensuring that the capital markets are kept informed of all relevant and material matters and ensuring effective communications with shareholders.

The Board has delegated to management responsibility for:

Strategies. Assisting in developing and implementing corporate strategies and making recommendations where necessary;
Leadership selection and performance. Appointing management where applicable and setting terms of appointment and evaluating performance;
Budgets. Developing budgets and managing day-to-day operations within budget;
Risk Management. Maintaining risk management frameworks; and
Communication. Keeping the Board and market informed of material events.

Composition of the Board

The names, skills, experiences and period of office of the Directors of the Company in office at the date of this Statement are set out in the Director’s Report.

The composition of the Board is determined using the following principles:

Persons nominated as Non-Executive Directors shall be expected to have qualifications, experience and expertise of benefit to the Company and to bring an independent view to the Board’s deliberations. Persons nominated as Executive Directors must be of sufficient stature and security of employment to express independent views on any matter.
The Chairperson should ideally be independent, but in any case be Non-Executive and be elected by the Board based on his/her suitability for the position.
The roles of Chairperson and Managing Director should not be held by the same individual.
All Non-Executive Directors are expected voluntarily to review their membership of the Board from time-to-time taking into account length of service, age, qualifications and expertise relevant to the Company’s then current policy and programme, together with the other criteria considered desirable for composition of a balanced board and the overall interests of the company.
The Company considers that the Board should have at least three Directors (minimum required under the Company’s Constitution) and to have a majority of independent Directors but acknowledge that this may not be possible at all times due to the size of the Company. Currently the Board has four Directors, with only Mr Ian Tchacos and Mr Andrew Childs as independent. The number of Directors is maintained at a level which will enable effective spreading of workload and efficient decision making.
The Board has accepted the following definition of an independent Director:

“An independent Director is a Director who is not a member of management (a Non-Executive Director) and who:

is not a substantial shareholder of the Company or an officer of, or otherwise associated, directly or indirectly, with a substantial shareholder of the Company;
has not within the last three years been employed in an Executive capacity by the Company or another group member, or been a Director after ceasing to hold any such employment;
is not a principal of a professional adviser to the Company or another group member;
is not a significant consultant, supplier or customer of the Company or another group member, or an officer of or otherwise associated, directly or indirectly, with a significant consultant, supplier or customer;
has no significant contractual relationship with the Company or another group member other than as a Director of the Company;

ADX ENERGY LTD 2011 ANNUAL REPORT

Corporate Governance Statement

has not served on the Board for a period which could, or could reasonably be perceived to, materially interfere with the Director’s ability to act in the best interests of the Company; and
is free from any interest an any business or other relationship which could, or could reasonable be perceived to, materially interfere with the Director’s ability to act in the best interests of the Company”.

ADX considers a significant consultant, supplier or customer to be material if the total of their annual invoices amounts to more than 5% of the Company’s total expenditure in that category.

Independent Professional Advice and Access to Company Information

Each Director has the right of access to all relevant Company information and to the Company’s Executives and, subject to prior consultation with the Chairperson, may seek independent professional advice at the Company’s expense. A copy of advice received by the Director is made available to all other members of the Board.

Nomination Committee / Appointment of New Directors

Because the size of the Company and the size of the Board, the Directors do not believe it is appropriate to establish a separate Nomination Committee. The Board has taken a view that the full Board will hold special meetings or sessions as required. The Board are confident that this process for selection and review is stringent and full details of all Directors are provided to shareholders in the annual report and on the web.

The composition of the Board is reviewed on an annual basis to ensure the Board has the appropriate mix of expertise and experience. Where a vacancy exists, through whatever cause, or where it is considered that the Board would benefit from the services of a new director with particular skills, the Board determines the selection criteria for the position based on the skills deemed necessary for the Board to best carry out its responsibilities and then appoints the most suitable candidate who must stand for election at the next general meeting of shareholders.

Term of Office

Under the Company’s Constitution, the minimum number of Directors is three. At each Annual General Meeting, one third of the Directors (excluding the Managing Director) must resign, with Directors resigning by rotation based on the date of their appointment. Directors resigning by rotation may offer themselves for re-election.

Performance of Directors and Managing Director

The performance of all Directors, the Board as a whole and the Managing Director is reviewed annually. The Board meets once a year with the specific purpose of conducting a review of its composition and performance. This review includes:

Determining the appropriate balance of skills and experience required to suit the Company’s current and future strategies;
Comparing the requirements above against the skills and experience of current Directors and Executives;
Assessing the independence of each Director;
Measuring the contribution and performance of each Director;
Assessing any education requirements or opportunities; and
Recommending any changes to Board procedures, Committees or the Board composition.

A review was undertaken during the year ended 30 June 2011.

Performance of Senior Executives

The Board meets at least annual to review the performance of senior Executives, considerations include the following:

The performance of the senior Executive in supplying the Board with information in a form, time frame and quality that enables the Board to effectively discharge its duties;
Feedback from other senior Executives; and
Any particular concerns regarding the senior Executives.

There were no senior executives (other than Executive Directors) during the year until the appointment of Mr Paul Ford in February 2011, so no review was held.

Conflict of Interest

In accordance with the Corporations Act 2001 and the Company’s constitution, Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the Board believes a significant conflict exists, the Director concerned does not receive the relevant Board papers and is not present at the Board meeting whilst the item is considered. Details of Directors related entity transactions with the Company and Group are set out in the related parties note in the financial statements.

ADX ENERGY LTD 2011 ANNUAL REPORT

Corporate Governance Statement

Diversity

Effective from 1 July 2011, ADX has established a Diversity Policy in accordance with the updated recommendations of the ASX Corporate Governance Principles and Recommendations.

ADX recognises its talented and diverse workforce as a key competitive advantage, and is committed to workplace diversity. Diversity includes, but is not limited to gender, age, ethnicity and cultural background.

The Diversity Policy defines the initiatives which assist ADX with maintaining and improve the diversity of its workforce.

Remuneration

The performance of the Company depends upon the quality of its Directors and Executives. To prosper, the Company must attract, motivate and retain highly skilled Directors and Executives.

To this end, the Company embodies the following principles in its remuneration framework:

Provide competitive rewards to attract high calibre executives;
Link Executive rewards to shareholder value; and
Establish appropriate performance hurdles in relation to variable Executive remuneration.

A full discussion of the Company’s remuneration philosophy and framework and the remuneration received by Directors and Executives in the current period is included in the remuneration report, which is contained within the Report of the Directors.

There are no schemes for retirement benefits for Non-Executive Directors, other than superannuation.

Board Remuneration Committee

Due to the limited size of the Company and of its operations and financial affairs, the use of a separate remuneration committee is not considered efficient for ADX. The Board has taken a view that the full Board will hold special meetings or sessions as required. The Board are confident that this process for determining remuneration is stringent and full details of remuneration policies and payments are provided to shareholders in the remuneration report in the Directors Report and on the web.

Risk Oversight and Management

The Board is responsible for ensuring there are adequate policies in relation to risk management, compliance and internal control systems. In summary, the Company policies are designed to ensure strategic, operational, legal, reputation and financial risks are identified, assessed, effectively and efficiently managed and monitored to enable achievement of the Company’s business objectives.

A summary of the risks recognised by the Board can be found in the corporate governance information section of the Company website at www.adxenergy.com.au.

Considerable importance is placed on maintaining a strong control environment. The Board actively promotes a culture of quality and integrity.

Control procedures cover management accounting, financial reporting, compliance and other risk management issues.

The Board encourages management accountability for the Company’s financial reports by ensuring ongoing financial reporting during the year to the Board. Annually, the Company Secretary (who is responsible for preparing the financial reports) and the Managing Director are required to state in writing to the Board that in all material respects: Declaration required under s295A of the Corporations Act 2001 -

the financial records of the Group for the financial year have been properly maintained; the financial statements and notes comply with the accounting standards;
the financial statements and notes for the financial year give a true and fair view; and
any other matters that are prescribed by the Corporations Act regulations as they relate to the financial statements and notes for the financial year are satisfied.
Additional declaration required as part of corporate governance -

• the risk management and internal compliance and control systems in relation to financial risks are sound, appropriate and operating efficiently and effectively. These declarations were received for the June 2011 financial year.

Audit Committee

Due to the limited size of the Company and of its operations and financial affairs, the use of a separate audit committee is not considered appropriate for ADX. In addition to managements accountability referred to above, the Board assures integrity of the financial statements by:

(a) reviewing the Company’s statutory financial statements to ensure the reliability of the financial information presented and compliance with current laws, relevant regulations and accounting standards;
(b) monitoring compliance of the accounting records and procedures, in conjunction with the Company’s auditor, on matters overseen by the Australian Securities and Investments Commission, Australian Stock Exchange Limited (“ASX”) and Australian Taxation Office;
(c) ensuring that management reporting procedures, and the system of internal control, are of a sufficient standard to provide timely, accurate and relevant information as a sound basis for management of the Group’s business;
(d) reviewing audit reports and management letters to ensure prompt action is taken by the Company’s management; and

ADX ENERGY LTD

2011 ANNUAL REPORT

Corporate Governance Statement

(e) When required, nominating the external auditor and at least annually reviewing the external auditor in terms of their independence and performance in relation to the adequacy of the scope and quality of the annual statutory audit and half-year review and the fees charged.

Code of Conduct

The Company has developed a Code of Conduct (the Code) which has been fully endorsed by the Board and applies to all Directors and employees. The Code is regularly reviewed and updated as necessary to ensure it reflects the highest standards of behaviour and professionalism and the practices necessary to maintain confidence in the Company’s integrity.

The Code of Conduct embraces the values of:

Integrity
Excellence
Commercial Discipline

The Board encourages all stakeholders to report unlawful/unethical behaviour and actively promotes ethical behaviour and protection for those who report potential violations in good faith.

Trading in ADX Securities by Directors, Officers and Employees

The Board has adopted a specific policy in relation to Directors and officers, employees and other potential insiders buying and selling shares.

Directors, officers, consultants, management and other employees are prohibited from trading in the Company’s shares, options and other securities if they are in possession of price-sensitive information.

The Company’s Security Trading Policy is provided to each new employee as part of their induction training. ADX personnel must receive written approval prior to any dealing in ADX securities.

The Directors are satisfied that the Company has complied with its policies on ethical standards, including trading in securities.

Market Disclosure Policies

The Board has a Market Disclosure Policy to ensure the compliance of the Company with the various laws and ASX Listing Rule obligations in relation to disclosure of information to the market. The Managing Director is responsible for ensuring that all employees are familiar with and comply with the policy.

ADX is committed to:

(a) ensuring that shareholders and the market are provided with timely and balanced information about its activities;
(b) complying with the general and continuous disclosure principles contained in the Australian Stock Exchange Limited (“ASX”) Listing Rules and the Corporations Act 2001; and
(c) ensuring that all market participants have equal opportunities to receive externally available information issued by ADX.

Communication with Shareholders

The Company places significant importance on effective communication with shareholders.

Information is communicated to shareholders through the distribution of the annual and half yearly financial reports, quarterly reports on activities, announcements through the Australian Stock Exchange and the media, on the Company’s website and through the Chairman’s address at the annual general meeting.

In addition, news announcements and other information are sent by email to all persons who have requested their name to be added to the email list. If requested, the Company will provide general information by email, facsimile or post.

The Company will, wherever practicable, take advantage of new technologies that provide greater opportunities for more effective communications with shareholders.

Company Website

ADX has made available details of all its corporate governance principles, which can be found in the investor relations section of the Company website at www.adxenergy.com.au.

ADX ENERGY LTD 2011 ANNUAL REPORT

Directors’ Report

Your Directors present their report for the year ended 30 June 2011.

Directors

The names and particulars of the Directors of the Company in office during the financial year and up to the date of this report were as follows. Directors were in office for the entire year unless otherwise stated.

Ian Tchacos BEng, Grad Dip Chemical Engineering

Non Executive Chairman (Appointed 2 March 2011)

In his last appointment as Managing Director of Nexus Energy he was responsible for the company’s development from an onshore micro cap explorer to an ASX top 200 offshore producer and operator.

Other directorships of listed companies in the last three years: Nexus Energy Limited (until 21/12/2009) and Australian Oil Company Limited and Riedel Resources Limited (current).

Wolfgang Zimmer PhD - Geology and Petrology

Executive Managing Director (Appointed 10 December 2007)

Dr Wolfgang Zimmer has over 30 years experience in the oil and gas industry. He received a PhD from the University of Vienna in Geology and Petrology. His career began with Mobil Oil in Austria where he worked in Europe and the USA in the oil and gas E&P industry. In 1991 he joined OMV, the Austrian oil company and fulfilled a variety of senior management roles for the next 15 years. He established OMV’s Exploration and Production business in Australia and New Zealand and was its Managing Director for five years. Dr Zimmer has significant experience in North Africa having been the director of OMV’s onshore and offshore production operations in Tunisia. In 2006 he joined Grove Energy, a Canadian and UK listed oil and gas explorer. As CEO he successfully merged Grove with another exploration company in 2007.

Other directorships of listed companies in the last three years: Riedel Resources Limited (current).

Paul Fink MSc (Geophysics)

Executive Technical Director (Appointed 25 February 2008)

Other directorships of listed companies in the last three years: Nil

Andrew Childs BSc - Geology and Zoology

Non Executive Director (Appointed 11 November 2009)

Mr Childs is Non Executive Director of Riedel Resources Limited, Managing Director of Petroleum Ventures Pty Ltd, Chairman of Australian Oil Company Ltd and Non Executive Director of Timor Oil Ltd, Orion Energy Pty Ltd and Bombora Energy Pty Ltd. Andrew is also Principal of Resource Recruitment and Managing Director of International Recruitment Services Pty Ltd.

Company Secretary

Peter Ironside B. Com, CA

Mr Ironside is a chartered accountant and business consultant with over 25 years experience in the exploration and mining industry. He has been a director and/or company secretary of several ASX listed companies. Mr Ironside is a director of Ironside Pty Ltd, a corporate services company. Mr Ironside brings a significant level of accounting, compliance and corporate governance experience to the Board, together with support in the areas of corporate initiatives and capital raisings. Mr Ironside has been a director of listed companies, Integra Mining Limited, since 21 December 2000 and Atticus Resources Limited since 5 April 2007.

ADX ENERGY LTD 2011 ANNUAL REPORT

Directors’ Report

Directors continued

Meetings of Directors

During the financial year, 3 meetings of Directors were held. The number of meetings attended by each Director during the year is as follows:

	Meetings Held	Meetings Attended
I Tchacos	3	3
W Zimmer	3	3
P Fink	3	3
A Childs	3	3

Directors’ Interests in Shares and Options

The following tables sets out each Director’s relevant interest in shares and options in shares of the Company as at the date of this report.

Name of Director	Number of Shares	Number of Options
I Tchacos	3,609,429	6,000,000
W Zimmer	8,154,321	7,500,000
P Fink	1,600,000	4,650,000
A Childs	11,259,869	4,650,000

ADX ENERGY LTD 2011 ANNUAL REPORT

Directors’ Report

Corporate Information

Corporate Structure

ADX Energy Ltd is a limited company that is incorporated and domiciled in Australia. ADX Energy Ltd has prepared a consolidated financial report incorporating the entities that it controlled during the financial year as follows: ADX Energy Ltd - parent entity Alpine Oil & Gas Pty Ltd - 100% owned Australian controlled entity AuDAX Energy GmbH - 100% owned Austrian controlled entity AuDAX Energy Srl - 100% owned Italian controlled entity Bull Petroleum Pty Ltd - 100% owned Australian controlled entity

Principal Activity

The principal activities of the Group during the year were oil and gas exploration. There were no significant changes in the nature of the principal activities during the year.

Financial summary

The net loss of the Group for the year, after provision for income tax, amounted to $5,837,000 (2010: loss of $2,141,000).

Summary of financial position

ADX’s cash reserves at 30 June 2011 were $783,000 (2010: $2,271,000). During the year, the major source of funding was via a successful placing in December 2010 of 60,267,182 shares to institutions and sophisticated investors at an issue price of 8.3 cents per share raising gross proceeds of $5,002,000.

The Group continued to invest significantly in oil and gas exploration with $6,706,000 costs being incurred and capitalised during the year.

Summary of other significant transactions

During the year, Riedel Resources Limited (“Riedel”) lodged with ASIC an Initial Public Offering incorporating ADX’s gold and base metal assets. In January 2011, subsequent to various conditions precedent being met, ADX was issued 25,000,000 shares in Riedel ($5 million), representing 42.94% of Riedel. As a result, ADX holds an investment in Riedel at book value of $4,743,000 after taking into account $257,000 as ADX’s share of the Riedel group losses;
In November 2010, Verus Investments Limited (“Verus”) signed a farmin agreement to earn a 10% interest in the Tunisian Chorbane permit. To meet the agreement conditions, Verus has paid ADX US$1.35 million initial payments, will further contribute towards the drilling cost of the Sidi Dhaher well and will also meet its share of other Chorbane expenditures. Combined with other Chorbane farmouts secured in the previous financial year, ADX is carried through the expected cost of the Sidi Dhaher well;
In June 2010, ADX entered into an agreement to sell its 49.9% interest in Cooper Basin PEL-182 to Victoria Petroleum NL. The total consideration comprised of $1.1 million in cash plus the ADX share of the future plugging liability for previous wells estimated at $200,000. In July 2010 the sale was completed and the cash consideration was received following satisfaction of the conditions precedent to the sale;
During the year, the US$1,500,000 bond for the Kerkouane permit was released when the drilling of Lambouka-1 well commenced;
In September 2010 drilling of the Lambouka-1 discovery was completed and the well was suspended to allow for future re-entry. ADX at year end held a 30% interest in the Lambouka area (refer Note 25 to the financial statements). Ongoing studies continued through the financial year to enhance definition of the Lambouka resource.
In January 2011 a concession agreement for the Romania block EX-10 PARTA was signed with NAMR (Agentia Nationala Pentru Resurse Minerale). ADX is awaiting ratification by the Romanian government.

Operations report

Refer to the Operations report preceding this Director’s report.

Dividends

No dividends were paid or declared during the year. The Directors do not recommend payment of a dividend.

Significant Changes in the State of Affairs

Significant changes in the state of affairs of the Company during the financial year are detailed in the Operations report and Financial summary in this report.

Future Developments

The Company intends to continue its exploration programme on its existing permits, and to acquire further suitable permits for exploration and development. Additional comments on likely developments are included in the Operations report.

ADX ENERGY LTD 2011 ANNUAL REPORT

Directors’ Report

Environmental Issues

The Company’s environmental obligations are regulated by the laws of the countries in which ADX has operations. The Company has a policy to either meet or where possible, exceed its environmental obligations. No environmental breaches have been notified by any governmental agency as at the date of this report.

Remuneration Report (Audited)

This report details the nature and amount of remuneration for each Director and Executive of ADX Energy Ltd. The information provided in the remuneration report includes remuneration disclosures that are audited as required by section 308(3C) of the Corporations Act 2001.

For the purposes of this report key management personnel of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including a Director (whether Executive or otherwise) of the parent company and includes the Executives in the parent group receiving the highest remuneration.

For the purposes of this report the term “Executive” includes those key management personnel who are not Directors.

Remuneration Committee

Due to the limited size of the Company and of its operations and financial affairs, the use of a separate remuneration committee is not considered efficient for ADX. The Board has taken a view that the full Board will hold special meetings or sessions as required. The Board are confident that this process for determining remuneration is stringent and full details of remuneration policies and payments are provided to shareholders in the annual report and on the web. The Board has adopted the following policies for Directors’ and Executives’ remuneration.

A. Principles Used to Determine the Nature and Amount of Remuneration

Remuneration Philosophy

The performance of the Company depends upon the quality of its Directors and Executives. To prosper, the Company must attract, motivate and retain highly skilled Directors and Executives.

To this end, the Company embodies the following principles in its remuneration framework:

provide competitive rewards to attract high calibre Executives;
link Executive rewards to shareholder value; and
establish appropriate, demanding performance hurdles in relation to variable Executive remuneration.

Remuneration structure

In accordance with best practice corporate governance, the structure of Non-executive Director and Executive compensation is separate and distinct.

Non-executive Directors’ remuneration

Objective

The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.

Structure

Non-executive Directors’ fees are paid within an aggregate limit which is approved by the shareholders from time to time. Retirement payments, if any, are agreed to be determined in accordance with the rules set out in the Corporations Act at the time of the Director’s retirement or termination. Non-executive Directors’ remuneration may include an incentive portion consisting of bonuses and/or options, as considered appropriate by the Board, which may be subject to shareholder approval in accordance with ASX listing rules. The option incentive portion is targeted to add to shareholder value by having a strike price considerably greater than the market price at the time of granting.

The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst Directors is reviewed annually. The Board considers the amount of Director fees being paid by comparable companies with similar responsibilities and the experience of the Non-executive Directors when undertaking the annual review process.

ADX ENERGY LTD 2011 ANNUAL REPORT

Directors’ Report

A Principles to Determine the Nature and Amount of Remuneration continued

Executive Director Remuneration

Objective

The Company aims to reward Executives with a level and mix of remuneration commensurate with their position and responsibilities within the Company and so as to:

reward Executives for Company, and individual performance;
ensure continued availability of experienced and effective management; and
ensure total remuneration is competitive by market standards.

Structure

In determining the level and make-up of Executive remuneration, the Board negotiates a remuneration to reflect the market salary for a position and individual of comparable responsibility and experience. Due to the limited size of the Company and of its operations and financial affairs, the use of a separate remuneration committee is not considered appropriate. Remuneration is regularly compared with the external market by participation in industry salary surveys and during recruitment activities generally. If required, the Board may engage an external consultant to provide independent advice in the form of a written report detailing market levels of remuneration for comparable Executive roles.

Remuneration consists of a fixed remuneration and a long term incentive portion as considered appropriate.

Fixed Remuneration - Objective

The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position and is competitive in the market. Fixed remuneration is reviewed annually by the Board and the process consists of a review of Company and individual performance, and relevant comparative remuneration in the market. As noted above, the Board may engage an external consultant to provide independent advice.

Fixed Remuneration - Structure

The fixed remuneration is a base salary or monthly consulting fee.

Variable Pay - Long Term Incentives - Objective

The objective of long term incentives is to reward Executives in a manner which aligns this element of remuneration with the creation of shareholder wealth. The incentive portion is payable based upon attainment of objectives related to the Executive’s job responsibilities. The objectives vary, but all are targeted to relate directly to the Company’s business and financial performance and thus to shareholder value.

Variable Pay - Long Term Incentives - Structure

Long term incentives granted to Executives are delivered in the form of options. The option incentives granted are aimed to motivate Executives to pursue the long term growth and success of the Company within an appropriate control framework and demonstrate a clear relationship between key Executive performance and remuneration. Director options are granted at the discretion of the Board and approved by shareholders. Other key management employees may be granted options under ADX’s employee incentive scheme. Performance hurdles are not attached to vesting periods, however the Board determines appropriate vesting periods to provide rewards over a period of time to key management personnel.

During 2011 there were no performance related payments made.

ADX ENERGY LTD 2011 ANNUAL REPORT

Directors’ Report

B Service Agreements

On appointment to the Board, all Non-executive Directors enter into a service agreement with the company in the form of a letter of appointment. The letter summarises the Board policies and terms, including compensation, relevant to the office of Director.

Remuneration and other terms of employment for the Executive Directors and the other key management personnel are also formalised in service agreements. The major provisions of the agreements relating to remuneration are set out below.

Name	Term of agreement	Term of agreement	Base salary excluding superannuation	Base salary excluding superannuation	Termination beneft
I Tchacos - Chairman - Directors Fee	Commencing 2 March 2010 and continues whilst a Director		$50,000		None
I Tchacos - Chairman - Consultancy	Term of 1 year commencing 2 May 2010		$1,500 per day		*
W Zimmer - Managing Director - Directors Fee	Commencing 23 August 2010 and continues whilst a Director		$44,000		None
W Zimmer - Managing Director - Consultancy	Term of 3 years commencing 1 February 2010		$295,000		*
P Fink - Technical Director - Consultancy	Contract renewed for 3 year extension from 1 January 2011		$250,000		*
P Fink - Technical Director - Directors Fee	Commencing 9 September 2010 and continues whilst a Director		$30,000		None
A Childs - Non-executive Director	Commencing 1 May 2010 and continues whilst a Director		$40,000		None
P Ironside - Company Secretary	Ongoing		$36,000		None
P Ford - Finance Manager	Term of 3 years commencing 17 February 2011		$220,000		*
* Termination benefts are payable on early termination as follows:
Event		Noticeperiod		Payment in lieu of notice
Termination for serious misconduct		None		None
Employee initiated termination		3 months		3 months
Termination due to specifed events		1 month		1 month
ADX initiated termination - I Tchacos		3 months plus 3 months payable		6 months
ADX initiated termination - W Zimmer		3 months plus 9 months payable		12 months
ADX initiated termination - P Fink / P Ford		3 months		3 months

C Details of Remuneration

Directors

The following persons were Directors of ADX Energy Ltd during the financial year:

Ian Tchacos	-	Chairman
Wolfgang Zimmer	-	Managing Director
Paul Fink	-	Technical Director
Andrew Childs	-	Non-Executive Director

Other Key Management Personnel (employees and consultants)

Peter Ironside	-	Company Secretary
Paul Ford	-	Finance Manager (appointed February 2011)

There were no other persons that fulfilled the role of a key management person, other than those disclosed as Directors.

ADX ENERGY LTD 2011 ANNUAL REPORT

Director’s Report

C Details of Remuneration continued

Remuneration of Key Management Personnel

Details of the remuneration of each Director and named executive officer of the Company, including their personally-related entities, during the year was as follows:

		Primary Benefts	Primary Benefts	Post Employment	Post Employment	Share Based	Share Based
	Year	Cash salary directors fees and consulting fees $	Motor vehicle $	Superan- nuation $	Other $	Shares $	Options(1) $	Total $	Remuneration consisting of options during the year %
Directors
Ian Tchacos	2011 2010	174,808 29,916	- -	5,505 1,376	- -	- -	330,240 13,760	510,553 45,052	64.7% 30.5%
W Zimmer	2011 2010	346,155 302,344	- -	- -	- -	- -	354,990 78,260	701,145 380,604	50.6% 20.6%
Paul Fink	2011 2010	275,000 250,000	- -	- -	- -	- -	215,469 53,406	490,469 303,406	43.9% 17.6%
A Childs	2011 2010	94,400 24,587	- -	3,276 2,213	- -	- -	215,469 53,406	313,145 80,206	68.8% 66.6%
G Roper(2)	2011 2010	- 40,000	- 4,087	- -	- 3,336	- -	- -	- 47,423	- -
Other Key Management Personnel
P Ironside	2011 2010	36,000 9,600	- -	- -	- -	- 51,218	86,665 78,797	122,665 139,615	70.7% 56.4%
P Ford(3)	2011 2010	77,564 -	- -	5,445 -	- -	- -	10,971 -	93,980 -	11.7% -

(1) Share based payments - options represents the amount expensed in the period for options granted in the current year and/or in prior years.

(2) Resigned March 2010.

(3) Appointed February 2011.

There were no performance related payments made during the year. Performance hurdles are not attached to remuneration options, however the Board determines appropriate vesting periods to provide rewards over a period of time to key management personnel.

ADX ENERGY LTD 2011 ANNUAL REPORT

Directors’ Report

D Share-based Compensation

The following options were granted as equity compensation benefits to Directors and other Key Management Personnel during the year. The options were issued free of charge. Each option entitles the holder to subscribe for one fully paid ordinary share in the Company at various exercise prices with various expiry dates.

	Terms and Conditions of Each Grant	Terms and Conditions of Each Grant	Terms and Conditions of Each Grant	Terms and Conditions of Each Grant	Terms and Conditions of Each Grant	Terms and Conditions of Each Grant	Terms and Conditions of Each Grant
2011	Number of Granted Options for Year that Vested During Year	Granted Number	Grant Date	Value per Option at Grant Date $	Exercise Price $	First Exercise Date	Last Exercise Date
Directors
None
Other Key Management Personnel
P Ironside	-	625,000	5/07/2010	0.1612	0.25	01/05/2012	31/12/2012
P Ford	-	2,000,000	25/02/2011	0.0288	0.25	01/12/2012	31/07/2013
TOTAL	-	2,625,000

	Terms and Conditions of Each Grant	Terms and Conditions of Each Grant	Terms and Conditions of Each Grant	Terms and Conditions of Each Grant	Terms and Conditions of Each Grant	Terms and Conditions of Each Grant	Terms and Conditions of Each Grant
2010	Number of Granted Options for Year that Vested During Year	Granted Number	Grant Date	Value per Option at Grant Date $	Exercise Price $	First Exercise Date	Last Exercise Date
Directors
I Tchacos	-	6,000,000	10/06/2010	0.1032	0.25	01/05/2012	31/12/2012
W Zimmer	-	6,000,000	10/06/2010	0.1032	0.25	01/05/2012	31/12/2012
P Fink	-	3,600,000	10/06/2010	0.1032	0.25	01/05/2012	31/12/2012
A Childs	-	3,600,000	10/06/2010	0.1032	0.25	01/05/2012	31/12/2012
Other Key Management Personnel
P Ironside	-	-
TOTAL	-	19,200,000

The Black-Scholes Option Pricing Model was used to value the options issued as share-based payments. Refer to note 23 ‘Share based payments’ in the notes to the financial statements for variables used in the models.

During the year 4,550,000 key management personnel options lapsed (2010: nil)

Shares issued to Key Management Personnel on exercise of compensation options

During 2011, there were no compensation options exercised by Directors or other Key Management Personnel (2010: nil).

End of Remuneration Report.

ADX ENERGY LTD 2011 ANNUAL REPORT

Directors’ Report

Indemnification and Insurance of Officers

The Company has paid a premium to insure the Directors and Officers of the Company and its controlled entities. Details of the premium are subject to a confidentiality clause under the contract of insurance.

The liabilities insured are costs and expenses that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the group.

Shares Under Option

Unissued ordinary shares of the Company under option at the date of this report are as follows:

Unlisted Options Unlisted Options Unlisted Options Unlisted Options Unlisted Options Unlisted Options	Number Issue Price of Shares Exercise Date 525,000 40 cents Between 13/05/2011 and 13/05/2012 3,600,000 40 cents Between 22/04/2011 and 31/04/2013 1,500,000 25 cents Between 30/06/2011 and 01/07/2012 1,500,000 30 cents Between 30/06/2012 and 01/07/2013 21,700,000 25 cents Between 01/05/2012 and 31/12/2012 2,000,000 25 cents Between 01/12/2012 and 31/07/2013 30,825,000

No option holder has any right under the options to participate in any other share issue of the Company or any other related entity.

No share options were exercised by employees or Key Management Personnel during the year.

Subsequent Events

The following events occurred after 30 June 2011:

A Sale and Purchase Agreement was signed with Carnavale Resources Limited (“CAV”) on 12 August 2011 to buy back a 20% interest in the Lambouka Prospect Area in the Kerkouane Permit. An option to purchase an interest in the extension of the Lambouka Prospect into Italian waters (Pantelleria Permit) was also cancelled as part of the agreement. CAV are required to pay US$765,000 to ADX as a condition of the deal as reimbursement for past joint venture costs. As consideration for the interest, ADX will issue 11,172,535 ordinary shares, approximately 70% of which will be subject to phased escrow provisions. In the event that production is derived from a development of the Lambouka-1 well discovery, ADX will additionally pay two production payments of US$1 million each, after 6 and 12 months continuous production respectively.
ADX entered into a Sale and Purchase Agreement with PharmAust Limited (“PAA”) on 9 September 2011 to buy back a 10% interest in the Lambouka Prospect area. ADX will issue 1,000,000 ordinary shares as consideration for the interest and also forgave PAA for outstanding past joint venture costs totalling US$400,473. PAA paid ADX US$50,000 in cash as a condition of the agreement.
On Friday 26 August 2011, drilling commenced on the Sidi Dhaher-1 well in the Chorbane permit. Drilling is ongoing at the date of this report and updates are provided via ASX announcements on a regular basis. Through agreements with other parties to farmin to the Chorbane permit, ADX is carried through the expected cost of the well..
US$1 million in cash provided as security for a performance bond with the Tunisian authorities was released on 23 September 2011. The bond was conditional upon ADX commencing drilling of the Sidi Dhaher well.
In July 2011, ADX was awarded the exploration block d 364 C.R-.AX in Italian waters. The permit is contiguous to the Tunisian Kerkouane permit containing the Dougga gas condensate discovery and the Lambouka gas discovery.

ADX ENERGY LTD 2011 ANNUAL REPORT

Directors’ Report

Audited Independence and Non-Audit Services

Auditors’ independence - section 307C

The following is a copy of a letter received from the Company’s auditors:

“Dear Sirs,

In accordance with Section 307C of the Corporations Act 2001 (the “Act”) I hereby declare that to the best of my knowledge and belief there have been:

i) no contraventions of the auditor independence requirements of the Act in relation to the audit of the 30 June 2011 annual financial statements; and
ii) no contraventions of any applicable code of professional conduct in relation to the audit.

Graham Swan (Lead auditor)

Rothsay Chartered Accountants”

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----- Start of picture text -----

The Company’s auditors received, or are due to receive, the following amounts for the provision of audit and non - audit services.
2011
$
Auditors’ remuneration
- auditing the accounts 46,500
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The Board is satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

Rounding

The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the Company under ASIC Class Order 98/0100. The Company is an entity to which the Class Order applies.

Corporate Governance

In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of ADX Energy Ltd support and adhere to the principles of corporate governance. The Company’s Corporate Governance Statement is contained in this annual report.

Signed in accordance with a resolution of Directors.

Wolfgang Zimmer

Managing Director

Dated this 30th day of September 2011

ADX ENERGY LTD 2011 ANNUAL REPORT

Directors’ Declaration

1 In the opinion of the Directors:
a The financial statements and notes are in accordance with the Corporations Act 2001, including:
- i giving a true and fair view of the Company’s and Group’s financial position as at 30 June 2011 and of their performance for the year then ended; and ii complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and iii complying with International Financial Reporting Standards (IFRS) as stated in note 1 of the financial statements; and
b there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
2 This declaration has been made after receiving the declarations required to be made to the Directors in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2011.

This declaration is signed in accordance with a resolution of the Board of Directors.

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Wolfgang Zimmer

Managing Director Dated this 30th day of September 2011

ADX ENERGY LTD 2011 ANNUAL REPORT

Consolidated Statement of Comprehensive Income FOR THE YEAR ENDED 30 JUNE 2011

Note	CONSOLIDATED 2011 $’000 2010 $’000
Revenue and Income Interest revenue 2(a) Gain on sale of subsidiary 2(a) Other income 2(a) Expenses Administration and corporate expenses, 2(b) net of recoveries from exploration projects Exploration expensed 2(b) Share of loss from associate 12 Other 2(b) Total expenses Loss before income tax Income tax expense 3 Loss after income tax attributable to members of ADX Energy Ltd Other comprehensive income/(loss) Exchange differences on translation of foreign operations Income tax relating to items of other comprehensive income/(loss) Other comprehensive income/(loss) for the period, net of tax Total comprehensive income/(loss) for the period	53 51 3,941 - 36 11
	4,030 62
	2,468 1,254 7,141 944 257 - 1 5
	9,867 2,203
	(5,837) (2,141) - -
	(5,837) (2,141)
	(2,612) (62) - -
	(2,612) (62)
	(8,449) (2,203)
	Cents Per Share Cents Per Share

Basic earnings/(loss) per share 4 (1.57) (0.77)

ADX ENERGY LTD 2011 ANNUAL REPORT

Consolidated Balance Sheet AS AT 30 JUNE 2011

	Note
	ASSETS Current Assets Cash and cash equivalents 5 Trade and other receivables 6 Other fnancial assets at fair value 7 Non-current assets classifed as held for sale 8 Total Current Assets Non-Current Assets Receivables 6 Other fnancial assets 9 Property, plant and equipment 10 Deferred exploration expenditure 11 Investment in associate 12 Total Non-current Assets Total Assets LIABILITIES Current Liabilities Trade and other payables 13 Provisions 14 Total Current Liabilities Total Liabilities Net Assets Equity Issued capital 15 Reserves 16 Accumulated losses Total Equity

Note

ASSETS
Current Assets
Cash and cash equivalents
5
Trade and other receivables
6
Other fnancial assets at fair value
7
Non-current assets classifed as held for sale
8
Total Current Assets
Non-Current Assets
Receivables
6
Other fnancial assets
9
Property, plant and equipment
10
Deferred exploration expenditure
11
Investment in associate
12
Total Non-current Assets
Total Assets
LIABILITIES
Current Liabilities
Trade and other payables
13
Provisions
14
Total Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
15
Reserves
16
Accumulated losses
Total Equity

ADX ENERGY LTD 2011 ANNUAL REPORT

Consolidated Statement of Changes In Equity FOR THE YEAR ENDED 30 JUNE 2011

			Accumulated
	Issued Capital	Reserves	Losses	Total Equity
	$’000	$’000	$’000	$’000
At 1 July 2009	41,494	3,776	(36,903)	8,367
Proft/(loss) for the year	-	-	(2,141)	(2,141)
Other comprehensive income/(loss)	-	(62)	-	(62)
Total comprehensive loss for the period, net of tax	-	(62)	(2,141)	(2,203)
Transactions with owners in their capacity as owners:
Issue of share capital	13,592	-	-	13,592
Cost of issue of share capital	(1,434)	-	-	(1,434)
Share based payments	-	466	-	466
	12,158	466	-	12,624
As at 30 June 2010	53,652	4,180	(39,044)	18,788
At 1 July 2010	53,652	4,180	(39,044)	18,788
Proft/(loss) for the year	-	-	(5,837)	(5,837)
Other comprehensive income/(loss)	-	(2,612)	-	(2,612)
Total comprehensive loss for the period, net of tax	-	(2,612)	(5,837)	(8,449)
Transactions with owners in their capacity as owners:
Issue of share capital	5,134	-	-	5,134
Cost of issue of share capital	(282)	-	-	(282)
Share based payments	-	1,367	-	1,367
	4,852	1,367	-	6,219
As at 30 June 2011	58,504	2,935	(44,881)	16,558

ADX ENERGY LTD 2011 ANNUAL REPORT

Consolidated Statement of Cash Flows FOR THE YEAR ENDED 30 JUNE 2011

	Note
	Cash fows from operating activities Receipts in the ordinary course of activities Payments to suppliers and employees, including for exploration expensed Interest received Net cash fows used in operating activities 5(i) Cash fows from investing activities Proceeds from sale of property, plant and equipment Payments for plant and equipment Proceeds from sale of exploration interest Proceeds from farmout prepayment Payments for exploration expenditure capitalised Payments for bonds Receipts from bonds Receipts from exploration refunds Payments made on behalf of joint venture partners and ventures Receipts from exploration partners and ventures Payments of partners cash calls to JV bank accounts Payments for rental bond Other Net cash fows used in investing activities Cash fows from fnancing activities Proceeds from issue of shares and options Payments of share issue costs Net cash fows from fnancing activities Net increase/(decrease) in cash and cash equivalents held Net foreign exchange differences Add opening cash and cash equivalents brought forward Closing cash and cash equivalents carried forward 5

Note

Cash fows from operating activities
Receipts in the ordinary course of activities
Payments to suppliers and employees, including for exploration expensed
Interest received
Net cash fows used in operating activities
5(i)
Cash fows from investing activities
Proceeds from sale of property, plant and equipment
Payments for plant and equipment
Proceeds from sale of exploration interest
Proceeds from farmout prepayment
Payments for exploration expenditure capitalised
Payments for bonds
Receipts from bonds
Receipts from exploration refunds
Payments made on behalf of joint venture partners and ventures
Receipts from exploration partners and ventures
Payments of partners cash calls to JV bank accounts
Payments for rental bond
Other
Net cash fows used in investing activities
Cash fows from fnancing activities
Proceeds from issue of shares and options
Payments of share issue costs
Net cash fows from fnancing activities
Net increase/(decrease) in cash and cash equivalents held
Net foreign exchange differences
Add opening cash and cash equivalents brought forward
Closing cash and cash equivalents carried forward
5

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

1 Summary of Significant Accounting Policies

a Basis of preparation

The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and authoritative pronouncements of the Australian Accounting Standards Board. The financial report has also been prepared on a historical cost basis with the exception of listed equity securities held for trading which have been measured at fair value.

The financial report is presented in Australian dollars, which is the group’s presentation currency and all values are rounded to the nearest thousand dollars ($’000) unless otherwise stated. The Group is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments Commission, relating to the “rounding off” of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that class order to the nearest thousand dollars.

b Statement of Compliance

The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS).

c Adoption of new and revised standards

Standards not yet effective

The Group has reviewed all of the Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective and have not been adopted by the Group for the annual reporting period ending 30 June 2011. These are listed below. No other standard, amendment or interpretation issues are expected to affect the recognition of amounts in the financial statements.

AASB 9 Financial Instruments (effective from 1 January 2013)

AASB 9 amends the requirements for classification and measurement of financial assets. ADX has not yet made an assessment of the impact of these amendments.

IFRS 11 Joint Arrangements (effective from 1 January 2013)

IFRS 11 clarifies the accounting treatments for joint arrangements. There is no material impact for ADX.

IFRS 12 Disclosure of Interests in Other Entities (effective from 1 January 2013)

IFRS 12 is a disclosure standard only which may require additional disclosures for interests in other entities, including joint arrangements.

IFRS 13 Fair Value Measurement (effective from 1 January 2013)

IFRS 13 establishes a single framework for measuring fair value of financial and non-financial items. ADX has not yet made an assessment of the impact of these amendments.

Amendments to IAS 1 Presentation of Items of Other Comprehensive Income (effective from 1 January 2013)

When this standard is first adopted for the year ended 30 June 2014, there will be no impact on amounts recognised for transactions and balances for 30 June 2014 (and comparatives). However, the statement of comprehensive income will include name changes and include subtotals for items. Impact is disclosure only.

IAS 19 Employee Benefits (effective from 1 January 2013)

IAS 19 includes amendments to the timing for recognition of liabilities for termination benefits. ADX currently calculates its liability for annual leave employee benefits on the basis that it is due to be settled within 12 months of the end of the reporting period because employees are entitled to use this leave at any time. The amendments to IAS 19 require that such liabilities be calculated on the basis of when the leave is expected to be taken, i.e. expected settlement. ADX has not yet made an assessment of the impact of these amendments.

d Significant accounting estimates and judgements

Significant accounting judgments

In the process of applying the Group’s accounting policies, management has made the following judgments, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements.

Exploration assets

The Group’s accounting policy for exploration expenditure is set out at Note 1(m). The application of this policy necessarily requires management to make certain estimates and assumptions as to future events and circumstances. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised expenditure under the policy, it is concluded that the expenditures are unlikely to be recovered by future exploitation or sale, then the relevant capitalised amount will be written off the income statement.

Significant accounting estimates and assumptions

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual report period are:

(i) Impairment of assets

In determining the recoverable amount of assets, in the absence of quoted market prices, estimations are made regarding the present value of future cash flows using asset specific discount rates and the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

1 Summary of Significant Accounting Policies continued

d Significant accounting estimates and judgments continued

(ii) Share-based payment transactions

The Group measures the cost of equity settled transactions by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using a Black-Scholes model.

(iii) Commitments - Exploration

The Group has certain minimum exploration commitments to maintain its right of tenure to exploration permits. These commitments require estimates for the cost to perform exploration work required under these permits.

e Basis of consolidation

The consolidated financial statements comprise the financial statements of ADX Energy Ltd (“Company” or “Parent Entity”) and its subsidiaries as at 30 June each year (the Group).

The financial statements of the subsidiaries are prepared for the same period as the parent entity, using consistent accounting policies.

In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Control exists where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The acquisition of subsidiaries has been accounted for using the purchase method of accounting. The purchase method of accounting involves allocating the cost of the business combination to the fair value of the assets acquired and the liabilities and contingent liabilities assumed at the date of acquisition. Accordingly, the consolidated financial statements include the results of subsidiaries for the period from their acquisition.

f Business combinations

The purchase method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the combination. Where equity instruments are issued in a business combination, the fair value of the instruments is their published market price as at the date of exchange, adjusted for any conditions imposed on those shares. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

All identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the cost of the business combination over the net fair value of the Group’s share of the identifiable net assets acquired is recognised as goodwill. If the cost of acquisition is less than the Group’s share of the net fair value of the identifiable net assets of the subsidiary, the difference is recognised as a gain in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.

g Foreign currency translation

Both the functional and presentation currency of ADX Energy Ltd and its Australian operating subsidiaries is Australian Dollars, while for the subsidiaries with operations overseas the functional currency is:

Alpine Oil & Gas Pty Ltd, USD
AuDAX Energy GmbH, Euro
AuDAX Energy Srl, Euro

Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are converted at the rate of exchange ruling at the balance sheet date.

As at the reporting date the assets and liabilities of the subsidiaries operating overseas are translated into the presentation currency of ADX Energy Ltd at the rate of exchange ruling at the balance sheet date and the income statements are translated at the weighted average exchange rates for the period.

The exchange differences arising on the retranslation are taken directly to a separate component of equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement.

h Interest in a jointly controlled operation

Interests in jointly controlled assets are reported in the financial statements by including the consolidated entity’s share of assets employed in the Joint Ventures, the share of liabilities incurred in relation to the Joint Ventures and the share of any expenses and revenues in relation to the Joint Ventures in their respective categories.

i Cash and cash equivalents

Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as described above, net of outstanding bank overdrafts.

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

1 Summary of Significant Accounting Policies continued

j Trade and other receivables

Receivables are initially recognised a fair value and subsequently measured at amortised cost, less provision for doubtful debts. Current receivables for GST are due for settlement within 30 days and other current receivables within 12 months. Cash on deposit is not due for settlement until rights of tenure are forfeited or performance obligations are met.

k Impairment of financial assets

The Group assesses at each balance sheet date whether a financial asset or group of financial assets is impaired. If there is objective evidence that an impairment on loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either directly or through use of an allowance account. The amount of the loss is recognised in profit or loss.

l Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows:

Plant and equipment - 2 to 5 years

The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.

Disposal

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.

m Exploration and evaluation expenditure

Costs related to the acquisition of properties that contain resources are allocated separately to specific areas of interest. These costs are capitalised until the viability of the area of interest is determined.

Exploration and evaluation expenditure is stated at cost and is accumulated in respect of each identifiable area of interest.

Such costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area of interest (or alternatively by its sale), or where activities in the area have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active operations are continuing. Accumulated costs in relation to an abandoned area are written off to the income statement in the period in which the decision to abandon the area is made.

The Directors review the carrying value of each area of interest as at the balance date and any exploration expenditures which no longer satisfies the above policy is written off.

Once an area of interest enters the development phase, all capitalised acquisition, exploration and evaluation expenditures will be transferred to mineral development or oil and gas properties, as appropriate.

n Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.

Recoverable amount is the great of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

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 prior years.

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

1 Summary of Significant Accounting Policies continued

o Investments and other financial assets

Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale investment, as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The Group determines the classification of its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial year-end.

All regular way purchases and sales of financial assets are recognised on the trade date, i.e. the date that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the marketplace.

i Financial assets at fair value through profit or loss

Financial assets classified as held for trading are included in the category ‘financial assets at fair value through profit or loss’. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Gains or losses on investments held for trading are recognised in profit or loss. The fair values of quoted investments are based on last trade prices. If the market for financial assets is not active (and for unlisted securities), the Company establishes fair value by using valuation techniques.

ii Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

p Investment in associate

The Group’s investment in its associate is accounted for under the equity method of accounting in the consolidated financial statements. This is an entity in which the Group has significant influence and which is not a subsidiary.

The financial year of the associate is the same as the Group. Both use consistent accounting policies and financial information of the same reporting date has been used by the Group in applying the equity method.

Under the equity method, the investment in the associate is carried in the consolidated balance sheet at cost plus post acquisition changes in the Group’s share of net assets of the associate, less any impairment in value. The consolidated income statement reflects the Group’s share of the results of operations of the associate.

Where there has been a change recognised directly in the associate’s equity, the Group recognises its share of any changes and discloses this, when applicable, in the consolidated statement of changes in equity.

q Intangible assets

Intangible assets acquired separately or in a business combination are initially measured at cost. The cost of an intangible asset acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is recognised in profit or loss in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful life and tested for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for prospectively by changing the amortisation period or method, as appropriate, which is a change in accounting estimate. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset.

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash generating unit level consistent with the methodology outlined for goodwill above. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed each reporting period to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for as a change in an accounting estimate and is thus accounted for on a prospective basis.

r Non-current assets held for sale

Non-current assets and disposal groups are classified as held for sale and measured at the lower of their carrying amount and fair value less costs to sell if their carrying amount will be recovered principally through a sale transaction. They are not depreciated or amortised. For an asset or disposal group to be classified as held for sale it must be available for immediate sale in its present condition and its sale must be highly probable.

s Trade and other payables

Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services.

t Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

1 Summary of Significant Accounting Policies continued

u Employee leave benefits

(i) Wages, salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefits and annual leave and expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled.

(ii) Long service leave

The liability for long service leave is recognised in the provision for employee benefits as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wages and salary levels, experience of employee departures and period of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

v Issued capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

w Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured.

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

x Share-based payment transactions

Equity settled transactions:

The Group provides benefits to executive directors, employees and consultants of the Group in the form of share-based payments, whereby those individuals render services in exchange for shares or rights over shares (equity-settled transactions).

When provided, the cost of these equity-settled transactions with these individuals is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of options is determined using a Black-Scholes model.

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of ADX Energy Ltd (market conditions) if applicable.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant individuals become fully entitled to the award (the vesting date).

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects:

(i) the grant fair value of the award;
(ii) the extent to which the vesting period has expired; and
(iii) the number of awards that, in the opinion of the Directors of the Group, will ultimately vest taking into account such factors as the likelihood of non-market performance conditions being met.

This opinion is formed based on the best available information at balance date.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition.

If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. If an equity-settled award is forfeited, any expense previously recognised for the award is reversed. However, if a new award is substituted for a cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

y Income tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except:

when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

1 Summary of Significant Accounting Policies continued

y Income tax continued

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:

when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each balance sheet date and recognised to the extent that it is has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in profit and loss.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

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 legislation and the anticipation that the Group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

z Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
receivables and payables, which are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

aa Earnings per share

Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:

costs of servicing equity (other than dividends);
the after effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

ab Segment reporting

An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. This includes start up operations which are yet to earn revenues. Management will also consider other factors in determining operating segments such as the existence of a line manager and the level of segment information presented to the board of Directors.

Operating segments have been identified based on the information provided to the chief operating decision makers - being the executive management team.

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

1 Summary of Significant Accounting Policies continued

ab Segment reporting continued

The group aggregates two or more operating segments when they have similar economic characteristics, and the segments are similar in each of the following respects:

Nature of the products and services,
Nature of the production processes,
Type or class of customer for the products and services,
Methods used to distribute the products or provide the services, and if applicable
Nature of the regulatory environment.

Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately.

However, an operating segment that does not meet the quantitative criteria is still reported separately where information about the segment would be useful to users of the Financial Statements.

CONSOLIDATED

	CONSOLIDATED
Note	2011 $’000 2010 $’000
2 Revenue and Expenses a Revenue and Income Revenue Interest revenue Income Net gain on sale of subsidiary 17 Net gain on sale of property, plant and equipment Other b Expenses Administration and corporate expenses include: Depreciation Foreign exchange losses Operating lease rental expense Share based payments - options 21 Share based payments - shares 21 Other administration and corporate expenses Exploration expenses include: Impairment of deferred exploration 11 Share based payments - shares 21 Other exploration expenses Other expenses include: Impairment of fnancial assets - shares	53 51 3,941 - - 10 36 1
	3,977 11
	4,030 62
	38 37 5 41 142 118 1,367 421 - 51 916 586
	2,468 1,254
	6,912 472 - 11 229 461
	7,141 944
	1 5

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

	CONSOLIDATED 2011 $’000 2010 $’000
3 In come Tax Expense a Income Tax Expense The reconciliation between tax expense and the product of accounting loss before income tax multiplied by the Company’s applicable income tax rate is as follows: Loss for year Prima facie income tax (beneft) @ 30% Tax effect of non-deductible items Prior year adjustments Tax losses from prior years now utilised Deferred tax assets not brought to account Income tax attributable to operating loss b Deferred tax assets not recognised relate to the following: Tax losses Other Timing Differences These deferred tax assets have not been brought to account as it is not probable that tax profts will be available against which deductible temporary differences can be utilised. c Franking Credits The franking account balance at year end was $nil (2010: $nil). d Tax Consolidation Legislation	(5,837) (2,141)
	(1,751) (642) 2,433 194 - 88 (861) - 179 360
	- -
	8,940 9,726 10 6
	8,950 9,732

ADX Energy Ltd and its 100% owned Australian subsidiaries have not formed a tax consolidate group

	CONSOLIDATED 2011 2010
4 Earnings Per Share Basic loss per share Loss attributable to ordinary equity holders of the Company used in calculating basic earnings per share Weighted average number of ordinary shares outstanding during the year used in calculation of basic EPS Diluted earnings per share is not disclosed because potential ordinary shares, being options granted, are not dilutive and their conversion to ordinary shares would not demonstrate an inferior view of the earnings performance of the Company.	Cents Cents (1.57) (0.77)
	$’000 $’000 (5,837) (2,141) Number of shares Number of shares 370,800,069 277,372,303

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

	CONSOLIDATED 2011 $’000 2010 $’000
5 Cash and Cash Equivalents Cash at bank and on hand i Reconciliation of loss for the year to net cash fows used in operating activities Proft/(loss) after income tax Non-Cash Items: Net gain on sale of subsidiary Net gain on sale of property, plant and equipment Depreciation Foreign exchange losses Share-based payments expensed - options Share-based payments expensed - shares Impairment of exploration assets Impairment of fnancial assets - shares Loss from associate Amortisation of deferred costs Change in assets and liabilities: (Increase)/decrease in receivables (Increase)/decrease in exploration Increase/(decrease) in payables Increase in provisions Net cash fows used in operating activities ii Non-Cash Financing and Investing Activities The following non-cash fnancing and investing activities were undertaken: 2011:	783 2,271
	(5,837) (2,141) (3,941) - - (10) 38 37 5 41 1,367 421 - 62 6,912 472 1 5 257 - - 71 268 525 - (197) (702) (81) 11 3
	(1,621) (792)

In January 2011, ADX was issued 25,000,000 shares ($5 million) in ASX listed Riedel Resources Limited (ASX: RIE) as final consideration for the demerger of ADX’s gold and base metal assets. Refer to note 12.
• 750,000 ADX shares ($128,000) were issued as consideration for the acquisition of an option agreement for the Millrose exploration tenement. Refer to note 11.
2010:
A capital implementation fee of 5 million ADX shares ($600,000) was paid to Trafalgar Capital to secure an equity facility ( refer note 15f)
A share placement fee of 1.1 million ADX shares ($110,000) was paid.
An underwriting fee of 482,050 ADX shares ($72,000) was paid as part consideration for the June 2010 rights issue.

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

	CONSOLIDATED 2011 $’000 2010 $’000
6 Trade and Other Receivables Current Share of cash held by joint ventures Cash on deposit - security bonds GST refundable Share of receivables held by joint ventures Other Total current receivables Non-Current Cash on deposit - security bonds Other Total non-current receivables	241 1,443 969 1,772 28 39 1,492 770 88 229
	2,818 4,253
	21 1,205 14 15
	35 1,220

Fair Value and Risk Exposures:

i.	Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair
	value.
ii.	The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security.
iii.	Details regarding interest rate risk exposure are disclosed in note 24.
iv.	Other receivables generally have repayments between 30 and 90 days.

Receivables do not contain past due or impaired assets as at 30 June 2011 (2010: none)

	CONSOLIDATED 2011 $’000 2010 $’000
7 Other Current Financial Assets at Fair Value Through Profit and Loss Current Listed equity securities held for trading The fair value of listed securities has been determined by reference to published price quotations in an active market. 8 Non-Current Assets Classified as Held for Sale Deferred exploration - Cooper Basin PEL-182	7 9
	- 1,096

In June 2010, ADX entered into an agreement to sell its 49.9% interest in Cooper Basin PEL-182 to Victoria Petroleum NL. The total consideration is a cash consideration of $1.1 million and the ADX share of the future plugging and liability for previous wells estimated at $200,000. In July 2010 the sale was completed and the cash consideration was received following satisfaction of the conditions precedent to the sale.

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011


	8 Non-Current Assets Classified as Held for Sale - continued Proceeds Deferred exploration - Cooper Basin PEL-182 Other costs Gain on sale of exploration asset 9 Other Financial Assets Non-Current Investment in other entities This represented an investment in an exploration company in Turkey. This investment was included in the assets of subsidiary, Audax Minerals Pty Ltd, which was sold during the year. Refer note 17. 10 Property, Plant and Equipment Motor vehicles - at cost Less: Accumulated depreciation Plant and equipment - at cost Less: Accumulated depreciation Total property, plant and equipment Reconciliation of property, plant and equipment: Motor Vehicle Carrying amount at beginning of year Additions Depreciation Currency translation differences Carrying amount at end of year Plant and Equipment Carrying amount at beginning of year Additions Depreciation Currency translation differences Carrying amount at end of year

8 Non-Current Assets Classified as Held for Sale - continued
Proceeds
Deferred exploration - Cooper Basin PEL-182
Other costs
Gain on sale of exploration asset
9 Other Financial Assets
Non-Current
Investment in other entities
This represented an investment in an exploration company in Turkey. This investment was included in the assets of
subsidiary, Audax Minerals Pty Ltd, which was sold during the year. Refer note 17.
10 Property, Plant and Equipment
Motor vehicles - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Total property, plant and equipment
Reconciliation of property, plant and equipment:
Motor Vehicle
Carrying amount at beginning of year
Additions
Depreciation
Currency translation differences
Carrying amount at end of year
Plant and Equipment
Carrying amount at beginning of year
Additions
Depreciation
Currency translation differences
Carrying amount at end of year

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

	CONSOLIDATED 2011 $’000 2010 $’000
11 Deferred Exploration Expenditure Deferred exploration costs brought forward Capitalised expenditure incurred during the year Shares issued - Millrose JV option agreement Expenditure written off during the year Sale of subsidiary - exploration assets (note 17) Transfer to assets held for sale (note 8) Currency translation differences Deferred exploration costs carried forward Ultimate recoupment of exploration and evaluation expenditure carried forward is dependent on successful development and commercial exploitation or, alternatively, sale of the respective areas. Impairment: Exploration and evaluation expenditure written off in the 2011 year relates to the Lambouka prospect area. The Directors consider it most likely that only a proportion of the existing Lambouka-1 well bore is able to be utilised in future operations to assess prospect reserves. The decision has therefore been made to impair the value of the Company’s Lambouka asset by $6,912,000. 12 Investment in Associate Investment in associate During the year, ADX Energy Ltd acquired a 42.9% interest (25 million shares) in Riedel Resources Limited (ASX:RIE). Riedel is a listed Australian mineral exploration company. The fair value based on the closing ASX share price for Riedel at 30 June 2011 was $2,625,000. Reconciliation of investment in associate: Carrying amount at beginning of year Acquisition of investment in associate (note 17) Share of losses in associate Net carrying value The following table illustrates summarised information of the investment in Riedel Resources Limited. Share of associate’s balance sheet as at 30 June: Current assets Non-current assets Current liabilities Non-current liabilities Net assets	12,826 6,158 6,706 8,065 128 - (6,912) (472) (1,401) - - (1,096) (1,769) 171
	9,578 12,826
	4,743 -
	- - 5,000 - (257) -
	4,743 -
	1,963 - 2,442 - (180) - - -
	4,225 -

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011


12 13 14 15	Investment in Associate continued Share of associate’s revenue and loss Revenue Loss before income tax Loss after income tax Share of associate’s commitments and contingencies Share of capital commitments and contingencies Trade and Other Payables Trade creditors and accruals Fair Value and Risk Exposures (i) Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value. (ii) Trade and other payables are unsecured and usually paid within 60 days of recognition. Provisions Current Employee entitlements Issued Capital a Issued Capital Ordinary shares fully paid b Movements in Ordinary Share Capital
	Number of Shares	Summary of Movements	Issue Price	$’000
	228,796,167	Opening balance at 1 July 2009		41,494
	512,180	Shares issued in lieu of services on 27 August 2009	10 cents	51
	25,160,000	Placement on 27 August 2009	10 cents	2,516
	1,100,000	Shares issued as costs of placement	10 cents	-
	5,000,000	Shares issued as facility fee to Trafalgar - refer note 15(f)	12 cents	-
	90,611	Shares issued in lieu of services on 12 October 2009	12.6 cents	11
	28,571,428	Placement on 23 October 2009	10.5 cents	3,000
	48,205,065	Rights issue on 8 June 2010	15 cents	7,231
	482,050	Shares issued as costs of rights issue	15 cents	-
		Costs of equity raisings during the year		(606)
		Costs of placements - non cash (prior year options granted)		(45)
	337,917,501	Closing Balance at 30 June 2010		53,652

	337,917,501	Opening balance at 1 July 2010		53,652
	750,000	Shares issued in re Millrose exploration licence (refer note 11)	17 cents	128
	60,267,182	Placement on 17 December 2010	8.3 cents	5,002
	20,775	Options exercised	25 cents	5
		Costs of share issues - cash		(283)
	398,955,458	Closing Balance at 30 June 2011		58,504

ADX ENERGY LTD

2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

15 Issued Capital continued

c Options on issue

==> picture [526 x 127] intentionally omitted <==

----- Start of picture text -----

Number Issue Price of Shares Exercise Date
Unlisted Options 525,000 40 cents Between 13/05/2011 and 13/05/2012
Unlisted Options 3,600,000 40 cents Between 22/04/2011 and 21/04/2012
Unlisted Options 2,250,000 20 cents Between 30/06/2010 and 01/07/2011
Unlisted Options 1,500,000 25 cents Between 30/06/2011 and 01/07/2012
Unlisted Options 1,500,000 30 cents Between 30/06/2012 and 01/07/2013
Unlisted Options 21,700,000 25 cents Between 01/05/2012 and 31/12/2012
Unlisted Options 2,000,000 25 cents Between 01/12/2012 and 31/07/2013
33,075,000
----- End of picture text -----

During the year:

i. 4,750,000 unlisted options were granted as share-based payments (2010: 19,200,000);
ii. 250,000 unlisted options were forfeited (2010: nil);
iii. 24,081,758 listed options expired and 20,775 listed options were exercised (2010: 24,102,665 listed options were granted under a Rights Issue);
iv. 5,375,000 unlisted options expired (2010; 6,500,000); and
v. No unlisted options were exercised (2010: Nil).

d Terms and conditions of contributed equity

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 winding up of the Company, ordinary shareholders rank after all other shareholders and creditors are fully entitled to any proceeds of liquidations.

e Capital management

When managing capital, management’s objective is to ensure the entity continues as a going concern as well as maintaining optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity.

Management may in the future adjust the capital structure to take advantage of favourable costs of capital and issue further shares in the market. Management has no current plans to adjust the capital structure. There are no plans to distribute dividends in the next year.

f Equity facility

In October 2009, ADX executed a Committed Equity Facility Agreement to secure an A$20,000,000 facility with Trafalgar Capital Specialised Investment Fund, Luxembourg (Trafalgar). Subject to terms and conditions of the facility, ADX may, at its discretion, issue shares to Trafalgar at any time over the next 30 months. Shares issued to Trafalgar will be priced at 95% of the lowest of the daily volume weighted average price (“VWAP”) of the Ordinary Shares on ASX as quoted by Bloomberg during the prior five consecutive trading day period. In 2010, ADX issued 5,000,000 shares at 12 cents each ($600,000) to Trafalgar as the facility fee.

As at 30 June 2011, this equity facility has not been utilised.

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011


	16 Reserves Share-based payments reserve Option premium reserve Asset revaluation reserve Foreign currency translation reserve Share-based payments reserve Balance at the beginning of the year Share-based payments Balance at the end of the year Nature and purpose of the reserve: The Share-based payments reserve is used to recognise the fair value of options issued but not exercised Option premium reserve Option premium reserve Nature and purpose of the reserve: The option premium reserve is used to accumulate proceeds received from the issuing of options Asset revaluation reserve Asset revaluation reserve Nature and purpose of the reserve: The asset revaluation reserve is used to record increments and decrements in the value of non-current assets. This reserve can only be used to pay dividends in limited circumstances. Foreign currency translation reserve Balance at the beginning of the year Currency translation differences Balance at the end of the year Nature and purpose of the reserve: The foreign currency translation reserve is used to record exchange differences arising from the translation of the fnancial statements of foreign subsidiaries.

16 Reserves
Share-based payments reserve
Option premium reserve
Asset revaluation reserve
Foreign currency translation reserve
Share-based payments reserve
Balance at the beginning of the year
Share-based payments
Balance at the end of the year
Nature and purpose of the reserve:
The Share-based payments reserve is used to recognise the fair value of options issued but not exercised
Option premium reserve
Option premium reserve
Nature and purpose of the reserve:
The option premium reserve is used to accumulate proceeds received from the issuing of options
Asset revaluation reserve
Asset revaluation reserve
Nature and purpose of the reserve:
The asset revaluation reserve is used to record increments and decrements in the value of non-current assets. This
reserve can only be used to pay dividends in limited circumstances.
Foreign currency translation reserve
Balance at the beginning of the year
Currency translation differences
Balance at the end of the year
Nature and purpose of the reserve:
The foreign currency translation reserve is used to record exchange differences arising from the translation of the
fnancial statements of foreign subsidiaries.

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

	COMPANY 2011 $’000 2010 $’000
17 Parent Entity Information Balance sheet information Current assets Non-current assets Current liabilities Non-current liabilities Net Assets Issued capital Reserves Accumulated losses Proft and loss information Proft/(loss) for the year Comprehensive proft/(loss) for the year	611 2,114 26,062 16,838 (453) (405) - -
	26,220 18,547
	58,504 53,652 5,751 4,383 (38,035) (39,488)
	26,220 18,547
	1,453 (2,376) 1,453 (2,376)

Commitments and contingencies

There are no commitments or contingencies, including any guarantees entered into by ADX Energy on behalf of its subsidiaries

Subsidiaries

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% Held by Parent Entity
Place of
Name of Controlled Entity Class of Share Incorporation 2011 2010
Alpine Oil & Gas Pty Ltd Ordinary Australia 100% 100%
AuDAX Minerals Pty Ltd Ordinary Australia - 100%
AuDAX Energy GmbH Ordinary Austria 100% 100%
AuDAX Energy Srl Ordinary Italy 100% 100%
Bull Petroleum Pty Ltd Ordinary Australia 100% 100%
----- End of picture text -----

During the year, ADX Energy Ltd sold 100% of its subsidiary, AuDAX Minerals Pty Ltd to Riedel Resources Limited (Riedel). ADX was issued 25,000,000 shares ($5 million) in Riedel (ASX: RIE) as final consideration for this demerger of ADX’s gold and base metal assets.

	CONSOLIDATED 2011 $’000 2010 $’000
Note Proceeds - 25,000,000 shares in Riedel at 25c each 12 Net assets of subsidiary Gain on sale of subsidiary 2(a)	5,000 - 1,059 -
	3,941 -

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011


	18 Commitments and Contingencies a Operating leases (non-cancellable) Within one year More than one year but not later than fve years These non-cancellable operating leases are primarily for offce premises b Exploration commitments - Australia During the 2011 fnancial year ADX divested all Australian exploration assets (see notes 8 and 12) Within one year More than one year but not later than fve years c Exploration Commitments and Contingencies for Tunisia, Italy and Romania In order to maintain current rights of tenure to exploration licences the Company may be compelled to perform minimum exploration activities to meet requirements specifed by the relevant governments. These expenditure commitments may be varied as a result of renegotiations, relinquishments, farm-out or sales. Tunisia - Chorbane Permit The current exploration period for the Chorbane permit was extended during the year through to 12 July 2012. There is an outstanding commitment on this permit to drill an exploration well, which will be extinguished by the Sidi Dhaher well. Through agreements with other parties to farmin to the Chorbane permit, ADX expects to be carried through the projected cost of this well. A US$ 1 million letter of credit was provided to the Tunisian Ministry for the Chorbane permit in June 2009, to secure fulflment of permit commitments. ADX will complete its commitment obligations on commencement of the Sidi Dhaher well, allowing the security to be released. Funds deposited to support the security are disclosed as a current receivable in this fnancial report, pending release. Refer note 25. Tunisia - Kerkouane Permit In January 2011 ADX was granted by the Government of Tunisia a further three year exploration license over the Kerkouane permit (through to 22 February 2014). Exploration commitments for the period include the drilling of one well in addition to a well test on the Lambouka discovery. In September 2009, a letter of credit was provided to the Tunisian Ministry in the amount of US$ 1.5 million. This bond was released on drilling of the Lambouka-1 well and the security refunded during the fnancial year. Romania - Parta In January 2011 a concession agreement for the Romania block EX-10 PARTA was signed with NAMR (Agentia Nationala Pentru Resurse Minerale). ADX is awaiting ratifcation by the Romanian government at which point commitments for the frst exploration period will crystallise, being acquisition of 100km of 2D, 100km of 3D seismic and drilling of two wells. These commitments are to be shared by ADX and joint venture partners in the Parta block. Summary of commitments at year end for Tunisia, Italy and Romania: Within one year More than one year but not later than fve years

18 Commitments and Contingencies
a
Operating leases (non-cancellable)
Within one year
More than one year but not later than fve years
These non-cancellable operating leases are primarily for offce premises
b
Exploration commitments - Australia
During the 2011 fnancial year ADX divested all Australian exploration assets (see notes 8 and 12)
Within one year
More than one year but not later than fve years
c
Exploration Commitments and Contingencies for Tunisia, Italy and Romania
In order to maintain current rights of tenure to exploration licences the Company may be compelled to perform
minimum exploration activities to meet requirements specifed by the relevant governments. These expenditure
commitments may be varied as a result of renegotiations, relinquishments, farm-out or sales.
Tunisia - Chorbane Permit
The current exploration period for the Chorbane permit was extended during the year through to 12 July 2012.
There is an outstanding commitment on this permit to drill an exploration well, which will be extinguished by the
Sidi Dhaher well. Through agreements with other parties to farmin to the Chorbane permit, ADX expects to be
carried through the projected cost of this well.
A US$ 1 million letter of credit was provided to the Tunisian Ministry for the Chorbane permit in June 2009, to
secure fulflment of permit commitments. ADX will complete its commitment obligations on commencement of
the Sidi Dhaher well, allowing the security to be released. Funds deposited to support the security are disclosed
as a current receivable in this fnancial report, pending release. Refer note 25.
Tunisia - Kerkouane Permit
In January 2011 ADX was granted by the Government of Tunisia a further three year exploration license over the
Kerkouane permit (through to 22 February 2014). Exploration commitments for the period include the drilling of
one well in addition to a well test on the Lambouka discovery.
In September 2009, a letter of credit was provided to the Tunisian Ministry in the amount of US$ 1.5 million.
This bond was released on drilling of the Lambouka-1 well and the security refunded during the fnancial year.
Romania - Parta
In January 2011 a concession agreement for the Romania block EX-10 PARTA was signed with NAMR (Agentia
Nationala Pentru Resurse Minerale). ADX is awaiting ratifcation by the Romanian government at which point
commitments for the frst exploration period will crystallise, being acquisition of 100km of 2D, 100km of 3D
seismic and drilling of two wells. These commitments are to be shared by ADX and joint venture partners in
the Parta block.
Summary of commitments at year end for Tunisia, Italy and Romania:
Within one year
More than one year but not later than fve years

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

18 Commitments and Contingencies continued

d Conditional commitments to previous partner

In March 2009, ADX entered an agreement with a previous partner to acquire that partners’ 30% interest in the Sicily Channel exploration permit, Pantelleria. As consideration, ADX will pay US$ 280,000 cash if and when ADX disposes of an interest in that permit.

19 Interest in Joint Ventures

a Joint Venture Details

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ADX Group % Interest
Joint Venture Note Principal Activities 2011 2010
Kerkouane, Lambouka - Tunisia a Exploration 30% 100%
Kerkouane, Remainder - Tunisia Exploration 60% 100%
Chorbane, Tunisia b Exploration 100% 100%
Pantelleria - Italy c Exploration 100% 100%
Romania - AMI and Parta Block d Exploration 60% 60%
Dulcie Joint Venture e Exploration - 20%
Cheritons Find JV - Free Carried Interest e Exploration - 10%
Navigator Bronzewing JV e Exploration - 80%
Cooper Basin PEL 182 Joint Venture f Exploration - 49.9%
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Notes:

a Agreements have been entered into subsequent to year end that impact interests in this area. Refer note 25.

b ADX retains 100% until farmin obligations are met by other parties and then the interest falls to 40%.

c Two parties have the option to acquire an interest in this permit. As at 30 June this option has not been elected.

d A concession was signed for the Parta block in January 2011 and is awaiting final governmental approvals.

e Tenements were included in the sale of subsidiary. Refer note 12.

f Sold during the financial year. Refer to note 8.

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

	CONSOLIDATED 2011 $’000 2010 $’000
19 Interests in Joint Ventures continued b Assets utilised in Joint Ventures The following amounts represent the consolidated entity’s interests in the assets employed in Joint Ventures. These amounts are included in the consolidated Financial Statements under their respective categories as follows: Current assets Trade and other receivables - Share of cash held by joint ventures Total current assets Non -current assets Exploration and evaulation not yet cash called Total non-current assets Total assets Current liabilities Trade and other payables Total current liabilities Total liabilities Net assets c Share of Joint Ventures proft or loss Exploration expensed	241 2,073
	241 2,073
	549 -
	549 -
	790 -
	56 1,000
	56 1,000
	56 1,000
	734 1,073
	(11) -

d Commitments relating to Joint Venture

Capital expenditure commitments and contingent liabilities in respect of the Joint Ventures are disclosed in note 18.

20 Key Management Personnel Disclosures

	CONSOLIDATED 2011 $ 2010 $
a Compensation of Key Management Personnel Short term employment benefts Post-employment benefts Share-based payment	1,003,927 660,534 14,226 6,925 1,213,804 328,847
	2,231,957 996,306

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

20 Key Management Personnel Disclosures continued

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b Option holdings of Key Management Personnel
Change
Balance at Options Options due to Balance at
beginning of the Granted as acquired under Options expired or appointment/ end of the Not
2011 year remuneration Rights Issue exercised forfeited (resignation) year exercisable Exercisable
Directors
I Tchacos 6,395,834 - - - (395,834) - 6,000,000 6,000,000 -
W Zimmer 9,400,000 - - - (1,900,000) - 7,500,000 6,000,000 1,500,000
P Fink 5,800,000 - - - (1,150,000) - 4,650,000 3,600,000 1,050,000
A Childs 6,568,194 - - - (1,918,194) - 4,650,000 3,600,000 1,050,000
Other Key Management Personnel
P Ironside 3,284,177 625,000 - - (1,534,177) - 2,375,000 1,125,000 1,250,000
P Ford - 2,000,000 - - - - 2,000,000 2,000,000 -
TOTAL 31,448,205 2,625,000 - - (6,898,205) - 27,175,000 22,325,000 4,850,000
Change
Balance at Options Options due to Balance at
beginning of the Granted as acquired under Options expired or appointment/ end of the Not
2010 year remuneration Rights Issue exercised forfeited (resignation) year exercisable Exercisable
Directors
I Tchacos - 6,000,000 395,834 - - - 6,395,834 6,000,000 395,834
W Zimmer 5,000,000 6,000,000 400,000 - (2,000,000) - 9,400,000 1,500,000 7,900,000
P Fink 3,500,000 3,600,000 100,000 - (1,400,000) - 5,800,000 4,650,000 1,150,000
A Childs - 3,600,000 868,194 - (1,400,000) 3,500,000 6,568,194 4,650,000 1,918,194
G Roper 1,000,000 - - - - (1,000,000) - - -
Other Key Management Personnel
P Ironside 2,500,000 - 784,177 - - 3,284,177 1,000,000 2,284,177
TOTAL 12,000,000 19,200,000 2,548,205 - (4,800,000) 2,500,000 31,448,205 17,800,000 13,648,205
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ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

20 Key Management Personnel Disclosures continued

c Shareholdings of Key Management Personnel

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2011 Balance at Options exercised Granted as Net change other Change due to Balance at end
beginning of the remuneration appointment/ of the year
year (resignation)
Directors
I Tchacos 3,141,667 - - 467,762 - 3,609,429
W Zimmer 8,154,321 - - - - 8,154,321
P Fink 2,100,000 - - (500,000) - 1,600,000
A Childs 10,386,714 - - 323,155 - 10,709,869
Other Key Management Personnel
P Ironside 5,683,475 - - 301,205 - 5,984,680
P Ford - - - - - -
TOTAL 29,466,177 - - 592,122 - 30,058,299
2010 Balance at Options exercised Granted as Net change other Change due to Balance at end
beginning of the remuneration appointment/ of the year
year (resignation)
Directors
I Tchacos - - - 1,391,667 1,750,000 3,141,667
W Zimmer 7,942,655 - - 211,666 - 8,154,321
P Fink 1,900,000 - - 200,000 - 2,100,000
A Childs - - - 2,134,388 8,252,326 10,386,714
G Roper 8,692,232 - - (88,500) (8,603,732) -
Other Key Management Personnel
P Ironside 3,955,126 - 512,180 1,216,169 - 5,683,475
TOTAL 22,490,013 - 512,180 5,065,390 1,398,594 29,466,177
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All equity transactions with Key Management Personnel other than those arising from the exercise of remuneration options have been entered into under terms and conditions no more favourable than those the entity would have adopted if dealing at arms-length.

d Other transactions and balances with Key Management Personnel

2011

Dr Wolfgang Zimmer, Mr Ian Tchacos and Mr Andrew Childs are Director’s of ADX’s associate, Riedel Resources Limited (Riedel). During the year, ADX entered in an agreement to sell ADX’s wholly owned subsidiary, Audax Minerals Pty Ltd, to Riedel for consideration of 25 million shares in Riedel ($5,000,000). This consideration was determined based on independent valuations of Audax Minerals mining tenements and the transaction was undertaken on arms-length terms and conditions. Refer note 17.

2010

Mr Andrew Childs was a director of Bombora Energy Limited until 8 July 2010. During the 2010 year, ADX entered into agreements with Bombora as follows:

Bombora to earn 10% interest in the Lambouka project, Kerkouane, by paying 10% of well and other costs;
Bombora to earn 10% interest in the remainder of Kerkouane by paying 15% of seismic costs (capped at US$780,000 for Bombora share);
Bombora has an option to increase its interest by another 10% in Kerkouane after drilling a well in the Kerkouane remainder area;
Bombora to have an option to acquire 10% of Pantelleria permit prior to 30/6/2011; and
Bombora to earn 10% interest in the Chorbane project by paying 10% of costs.

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

20 Key Management Personnel Disclosures continued

To 30 June 2010, Bombora has paid A$3.1 million as joint venture contributions for the above projects and is still contributing to earn its interests in the projects.

The Directors consider these transactions to be based on arms length pricing.

Mr Ian Tchacos and Mr Andrew Childs are both directors of Australian Oil Company Limited (AOC). AOC is a joint venture participant in the Cooper Basin PEL-182 JV of which ADX is operator and holds 49.9%. There have been no transactions other than normal cash calls made by ADX as operator. ADX sold its interest in this joint venture to another party in June 2010 (refer note 8).

	CONSOLIDATED 2011 $’000 2010 $’000
21 Share-based Payments a Value of share based payments in the fnancial statements Expensed in the proft and loss: Share-based payments - options Share-based payments - shares Included in equity: Share-based payments - options Included in deferred exploration: Share-based payments - shares	1,367 421 - 62
	1,367 483
	- 45
	128 45

21 Share-based Payments

b Summary of share-based payments granted during the year:

2011

Granted to employees and consultants:

2,750,000 options expiring 31 December 2012, exercisable at 25 cents each, vesting 1 May 2012; and
2,000,000 options expiring 31 July 2013, exercisable at 25 cents each, vesting 1 December 2012.

The assessed fair values of the options were determined using a Black-Scholes option pricing model, taking into account the exercise price, term of option, the share price at grant date and expected price volatility of the underlying share, expected dividend yield and the risk-free interest rate for the term of the option. The inputs to the model used were:

Grant Date Option exercise price ($) Expected life of options (years) Dividend yield (%) Expected volatility (%) Risk-free interest rate (%) Underlying share price ($) Value of Option ($)	05/07/2010 25/02/2011
	0.25 0.25 2.49 2.43 - - 121 72 5.15 5.59 0.24 0.115 0.1612 0.0288

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of options granted were incorporated into the measurement of fair value..

During the year 750,000 shares ($128,000) were issued to acquire an option interest in the Millrose JV. The fair value was based on the market value for that interest.

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

21 Share-based Payments

2010

Granted to Directors on 10 June 2010 (approved by shareholders on 3 June 2010);

19.200,000 options expiring 31 December 2012, exercisable at 25 cents each, vesting 1 May 2012.

Grant date Option exercise price ($) Expected life of options (years) Dividend yield (%) Expected volatility (%) Risk-free interest rate (%) Underlying share price ($) Value of Option ($)	10/06/2010
	0.25 2.56 - 125.0 5.28 0.17 0.1032

During the 2010 year, 602,791 shares ($62,635) were issued in lieu of payments for consulting fees. The fair value was based on the market value for those services.

c Weighted average fair value

The weighted average fair value of share based payment options granted during the year was $0.1055 (2010: $0.1032).

d Weighted average exercise price

The following table shows the number and weighted average exercise price (“WAEP”) of share options granted as share based payments.

	2011 Number 2011 WAEP 2010 Number 2010 WAEP
Outstanding at the beginning of year Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at the end of the year Exercisable at year end	33,950,000 0.276 21,250,000 0.306 4,750,000 0.250 19,200,000 0.250 (250,000) 0.250 - - - - - - (5,375,000) 0.303 (6,500,000) 0.300
	33,075,000 0.268 33,950,000 0.276
	7,875,000 0.314 7,750,000 0.276

The weighted average share price for options exercised during the year was nil (2010: nil).

e Range of exercise price

The range of exercise price for options granted as share based payments outstanding at the end of the year was $0.20 to $0.40 (2010: $0.15 to $0.40).

f Weighted average remaining contractual life

The weighted average remaining contractual life of share based payment options that were outstanding as at 30 June 2011 was 1.35 years (2010: 2.03 years).

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

	CONSOLIDATED 2011 $ 2010 $
22 Auditor’s Remuneration Amount received or due and receivable by the auditor for: Auditing the fnancial statements, including audit review - current year audits Other services - taxation services Total remuneration of auditors	46,500 34,500 - -
	46,500 34,500

23 Segment Information

Identification of reportable segments

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Directors (the chief operating decision makers) in assessing performance and in determining the allocation of resources.

The operating segments are identified by management based on the exploration type. Discrete financial information about each of these operating businesses is reported to the Board on at least a quarterly basis.

The reportable segments are based on aggregated operating segments determined by the similarity of activity type and phase of operations, as these are the sources of the Group’s major risks and have the most effect on the rates of return.

Reportable Operating Segments Identified

For management purposes, the Group has organised its operating segments into two reportable segments as follows:

Minerals Exploration and Evaluation Segment: This segment includes assets and activities that are associated with mineral exploration. During the year, the Group divested of its interest in minerals and this segment will no longer be reported against for 2012 onwards.
Oil and Gas Exploration Evaluation Segment: This segment includes assets and activities that are associated with oil and gas exploration.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements. However, the Group’s financing (including finance income) is managed on a group basis and are not allocated to operating segments.

Accounting Policies

The accounting policies used by the Group in reporting segments internally are the same as those contained in note 1 to the accounts.

There have been no inter-segment transactions.

It is the Group’s policy that if items of revenue and expense are not allocated to operating segments then any associated assets and liabilities are also not allocated to segments. This is to avoid asymmetrical allocations within segments which management believe would be inconsistent.

The following items are not allocated to segments as they are not considered part of core operations of any segment and are managed on a Group basis.

Interest revenue
Foreign currency gains/(losses)
Corporate costs

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

23 Segment Information continued

Operating Segments	Minerals $’000 Oil and Gas $’000	Total Operations $’000
2011 Revenue and income Total segment revenue Result Segment result Depreciation Impairment of deferred exploration Total Segment result Reconciliation of segment loss after tax to net loss after tax: Unallocated revenue and income Foreign currency losses Unallocated depreciation Unallocated expenditure Net loss after tax Assets Segment assets Reconciliation of segment assets: Cash held by parent Other Total assets Liabilities Segment liabilities Reconciliation of segment liabilities: Unallocated liabilities Total liabilities Capital expenditure Segment capital expenditure - deferred exploration Segment capital expenditure - plant and equipment Total Segment capital expenditure Reconciliation of capital expenditure: Unallocated additions Total capital expenditure	3,941 -	3,941
	3,720 (7,181) - (35) - -	3,941
		(3,461) (35) -
	3,720 (7,216)	(3,496) 53 (5) (3) (2,386)
	4,743 12,696
		(5,837)
		17,439 555 89
	- 1,263
		18,083
		1,263 262 1,525
	241 6,592 - -
		6,833 -
	241 6,592	6,833 53 6,886

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

23 Segment Information continued

Operating Segments	Minerals $’000 Oil and Gas $’000	Total Operations $’000
2010 Revenue Total segment revenue Result Segment result Amortisation and depreciation Impairment of deferred exploration Total Segment result Reconciliation of segment loss after tax to net loss after tax Unallocated revenue and income Foreign currency losses Unallocated depreciation Unallocated expenditure Net loss after tax Assets Segment assets Reconciliation of segment assets: Cash held by parent Other Total assets Liabilities Segment liabilities Reconciliation of segment liabilities: Unallocated liabilities Total liabilities Capital expenditure Segment capital expenditure - deferred exploration Segment capital expenditure - plant and equipment Total Segment capital expenditure Reconciliation of capital expenditure: Unallocated additions Total capital expenditure	- -	-
	(12) (489) - (105) (86) (386)	-
		(501) (105) (472)
	(98) (980)	(1,078) 62 (41) (3) (1,081)
	1,213 18,708
		(2,141)
		19,921 1,802 94
	97 2,666
		21,817
		2,763 266
	55 8,010 - 44
		3,029
		8,065 44
	55 8,054	8,109 3

		8,112

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

24 Financial Risk Management Objectives and Policies

The Group’s principal financial instruments comprise cash. The main purpose of these financial instruments is to provide working capital for the Group’s operations.

The Group has various other financial instruments such as trade debtors, security bonds and trade creditors, which arise directly from its operations.

It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be undertaken, except for share investments which are considered immaterial.

The main risks arising from the Group’s financial instruments are interest rate risk, credit risk and foreign currency risk. The Board reviews and agrees on policies for managing each of these risks and they are summarised below.

Interest rate risk

At balance date the Group’s exposure to market risk for changes in interest rates relates primarily to the Company’s cash and bonds. The Group constantly analyses its exposure to interest rates, with consideration given to potential renewal of existing positions, the mix of fixed and variable interest rates and the period to which deposits may be fixed.

At balance date, the Group had the following financial assets exposed to variable interest rates that are not designated in cash flow hedges:

	CONSOLIDATED 2011 $’000 2010 $’000
Financial Assets: Cash and cash equivalents Trade and other receivables Receivables - non current Net exposure	781 1,980 1,245 1,483 - 1,168
	2,026 4,631

Sensitivity

At 30 June 2011, if interest rates had increased by 0.75% from the year end variable rates with all other variables held constant, post tax profit and equity for the Group would have been $41,000 higher (2010: changes of 1.5% $69,000 higher/$69,000 lower).

The 1.5% (2009: 0.5%) sensitivity is based on reasonably possible changes, over a financial year, using an observed range of historical RBA movements over the last year.

Liquidity Risk

The Group has no significant exposure to liquidity risk as there is effectively no debt. The Group manages liquidity risk by monitoring immediate and forecast cash requirements and ensuring adequate cash reserves are maintained.

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted the policy of dealing with creditworthy counter parties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company measures credit risk on a fair value basis.

Significant cash deposits are with institutions with a minimum credit rating of AA (or equivalent) as determined by a reputable credit rating agency eg Standard & Poor. The US$1 million deposited as security for a letter of credit is with Societe Tunisienne de Banque, which has a credit rating of BB (Long-term).

The Company does not have any other significant credit risk exposure to a single counterparty or any group of counterparties having similar characteristics.

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

24 Financial Risk Management Objectives and Policies continued

Foreign currency risk

As a result of oil and gas exploration operations in Europe being denominated in USD and Euro, the Group’s balance sheet can be affected by movements in the USD/A$ and Euro/A$ exchange rates. The Company does not hedge this exposure.

The Group manages its foreign exchange risk by constantly reviewing its exposure to commitments payable in foreign currency and ensuring appropriate cash balances are maintained in Euros and USD, to meet current operational commitments.

As 30 June 2011, the Group had the following exposures to foreign currencies that are not designated in cash flow hedges:

	CONSOLIDATED 2011 $’000 2010 $’000
Financial Assets: Cash and cash equivalents Trade and other receivables - current Receivables - non-current Financial Liabilities: Trade and other payables Net exposure	341 470 1,292 1,975 - 1,183 1,507 1,637
	126 1,991

Sensitivity

At 30 June 2011, if exchange rates increased by 12% or decreased by 12% from the year end rates with all other variables held constant, post tax profit and equity for the Group would have been $13,000 lower / $17,000 higher (2010: changes of 10% $181,000 lower / $221,000 higher).

The 12% (2010: 10%) sensitivity is based on reasonably possible changes, over a financial year, using an observed range of actual historical rates, for the Australian dollar to the US dollar and Euro, for the preceding year.

Management believes the balance date risk exposures are representative of the risk exposure inherent in financial instruments.

Commodity price risk

The Group’s exposure to price risk is minimal given the Group is still in an exploration phase.

Fair value

Disclosure of fair value measurements by level are as follows:

Level 1 - the fair value is calculated using quoted prices in active markets
Level 2 - the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices)
Level 3 - the fair value is estimated using inputs for the asset or liability that are not based on observable market data

ADX ENERGY LTD 2011 ANNUAL REPORT

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

24 Financial Risk Management Objectives and Policies continued

Fair value - continued

The following table presents the Group’s assets and liabilities measured at fair value as well as the methods used to estimate the fair value.

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Year ended 30 June 2011 Year ended 30 June 2010
Valuation Valuation Valuation Valuation
with with no with with no
Quoted Observable Observable Quoted observable Observable
Market Price Market Data Market Data Market Price Market Data Market Data
(Level 1) (Level 2) (Level 3) Total (Level 1) (Level 2) (Level 3) Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Consolidated
Other current financial 7 - - 7 9 - - 9
assets at fair value
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Transfer Between Categories

There were no transfers between level 1 and Level 2 during the year.

25 Subsequent Events

The following events occurred after the balance sheet date.

A Sale and Purchase Agreement was signed with Carnavale Resources Limited (“CAV”) on 12 August 2011 to buy back a 20% interest in the Lambouka Prospect Area in the Kerkouane Permit and cancel an option to purchase an interest in the extension of the Lambouka Prospect into Italian waters (Pantelleria Permit). The agreement completed on 26 September 2011. As a condition of the deal, US$ 765,000 was received from CAV as reimbursement for past joint venture costs. As consideration for the interest, ADX issued 11,172,535 ordinary shares, approximately 70% of which will be subject to phased escrow provisions. In the event that production is derived from a development of the Lambouka-1 well discovery, ADX will additionally pay two production payments of US$1 million each, after 6 and 12 months continuous production respectively.
ADX entered into a Sale and Purchase Agreement with PharmAust Limited (“PAA”) on 9 September 2011 to buy back a 10% interest in the Lambouka Prospect Area. The agreement completed on 27 September 2011. ADX issued 1,000,000 ordinary shares as consideration for the interest and also forgive PAA for outstanding past joint venture costs totaling $400,473. PAA paid ADX US$ 50,000 in cash as a condition of the agreement.
On Friday 26 August 2011, drilling commenced on the Sidi Dhaher well in the Chorbane permit. Drilling is ongoing at the date of this report and updates are provided via ASX announcements on a regular basis. Through agreements with other parties to farmin to the Chorbane permit, ADX is carried through the expected cost of the well.
$1 million in cash provided as security for a performance bond with the Tunisian authorities was released on 23 September 2011. The bond was conditional upon ADX commencing drilling of the Sidi Dhaher well.
In July 2011, ADX was awarded exploration block d 364 C.R-.AX in Italian waters. The permit is contiguous to the Tunisian Kerkouane permit containing the Dougga gas condensate discovery and the Lambouka gas discovery.

ADX ENERGY LTD 2011 ANNUAL REPORT

Level 18, Central Park Building, 152-158 St Georges Terrace, Perth WA 6000 PO Box 8716, Perth Business Centre, WA 6849 Phone (08) 6364 5076 www.rothsay.com.au

Independent Audit Report

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OTHSAY

Independent Audit Report to the Members of ADX Energy Ltd

Report on the Financial Report

We have audited the accompanying financial report of ADX Energy Ltd (the “Company”) which comprises the balance sheet as at 30 June 2011 and the statement of comprehensive income, statement of changes in equity and statement of cash flow state for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the Director’s Declaration of the consolidated entity comprising the Company and the entities it controlled at the year’s end or from time to time during the year.

Directors Responsibility for the Financial Report

The Directors of the Company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report. The Directors are also responsible for the remuneration disclosures contained in the Directors’ Report.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance as to whether the financial report is free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate to the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used in and the reasonableness of accounting estimates made by the Directors as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

We are independent of the Company and have met the independence requirements of Australian professional ethical requirements and the Corporations Act 2001.

Audit opinion

In our opinion, the financial report of ADX Energy Ltd is in accordance with the Corporations Act 2001, including:
a (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of their performance for the year ended on that date; and
- (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001;
b the consoidated financial report also complies with International Financial Reporting Standards as issued by the Interanational Accounting Standards Board.

Report on the Remuneration Report

We have audited the Remuneration Report included in the Directors’ Report for the year ended 30 June 2011. The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Audit Opinion

In our opinion the Remuneration Report of ADX Energy Ltd for the year ended 30 June 2011 complies with section 300A of the Corporatations Act 2001.

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Rothsay

Graham Swan

Partner

Dated 30 September 2011

The liability of Rothsay Chartered Accountants is limited by the Accountants Scheme, approved under the Professional Standards Act 1994 (NSW).

ADX ENERGY LTD 2011 ANNUAL REPORT

Additional Shareholder Information

Information as at 9 September 2011

a Substantial Shareholders (who have lodged notices with ADX Energy Ltd)

None

b Shareholder Distribution Schedule as at 9 September 2011

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Size of Holding Number of Shareholders Number of Ordinary Shares Percentage of Issued Capital
1 - 1,000 162 91,724 0.02
1,001 - 5,000 562 1,836,297 0.46
5,001 - 10,000 490 4,037,745 1.01
10,001 - 100,000 1,293 52,574,218 13.18
100,001 and over 478 340,415,474 85.33
Total Shareholders 2,985 398,955,458 100
Number of shareholders holding less than a marketable parcel 733 1,974,074 0.5
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c Voting Rights

i. at meetings of members entitled to vote each member may vote in person or by proxy or attorney, or in the case of a member which is a body corporate, by representative duly appointed under section 250D;

ii. on a show of hands every member entitled to vote and present in person or by proxy or attorney or representative duly authorised shall have one (1) vote;

iii. on a poll every member entitled to vote and present in person or by proxy or attorney or representative duly authorised shall have one (1) vote for each fully paid share of which he is the holder and in the case of contribution shares until fully paid shall have voting rights pro rata to the amount paid up or credited as paid up on each such share; and

iv. a member shall not be entitled to vote at general meetings or be reckoned in a quorum in respect of any shares upon which any call or other sum presently payable by him is unpaid.

d Twenty largest shareholders

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Name Number of Ordinary Shares % of Issued Capital
1 JP Morgan Nominees Australia Limited 105,481,064 26.44
2 Mr Andrew Childs 11,140,381 2.79
3 HSBC Custody Nominees (Australia) Limited 10,254,465 2.57
4 Runyon Pty Ltd 8,763,679 2.20
5 Vasse Group Limited 8,154,321 2.04
6 Kenlow (1982) Pty Ltd 4,666,667 1.17
7 Mr Gary James Roper 4,141,012 1.04
8 Mr Ian Tchacos 3,476,096 0.87
9 Mr Victor Miasi + Mr Joseph Miasi 3,000,000 0.75
10 Nefco Nominees Pty Ltd 3,000,000 0.75
11 Ironside Pty Ltd 2,711,112 0.68
12 Banksia Investments Pty Ltd 2,257,700 0.57
13 National Nominees Limited 2,255,734 0.57
14 Mr Bryce Coleman Martin + Mrs Helen Grant McFarlane Martin 2,083,334 0.52
15 Mr Stanley John Fields 2,000,000 0.50
16 Nutsville Pty Ltd 1,800,000 0.45
17 Citicorp Nominees Pty Limited 1,786,158 0.45
18 Humbolt Capital Corporation 1,750,000 0.44
19 Mr Lachlan Cox 1,700,000 0.43
20 Mr Edward John Valle 1,646,000 0.41
182,067,720 45.64
Shares on issue at 9 September 2011 398,955,458
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ADX ENERGY LTD

2011 ANNUAL REPORT

Tenement Schedule

Oil and Gas Assets

Europe and North Africa

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Project Permit ADX Group Interest (%) Operator
Kerkouane - Tunisia [(1)] Kerkouane 100% (1) ADX
Pantelleria - Italy [(1)] G.R15.PU 100% ADX
Chorbane - Tunisia [(1)] Chorbane 100% ADX
Romania [(2)] EX-10 PARTA 60% ADX
Italy D 364 C.R.-.AX 100% ADX
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(1) After various farmin obligations are completed, ADX Group will hold:

60% of the Kerkouane permit;
100% in the Pantelleria permit; and
40% in the Chorbane permit.

(2 ) In January 2011 a concession agreement for the Romania block EX-10 PARTA was signed with NAMR (Agentia Nationala Pentru Resurse Minerale). ADX is awaiting ratification by the Romanian government.

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ADX ENERGY LTD 2011 ANNUAL REPORT

www.adxenergy.com.au

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AI assistant

ADX ENERGY LTD — Annual Report 2011

64308_rns_2011-10-09_a9382cec-5734-44fc-94e4-8ac45ac09253.pdf

2011 ANNUAL REPORT

ADX Energy Ltd

01 Profile and vision

Registered and Principal Office

Technical Office

Operations Office

Directors

Company Secretary

Share Registry

Solicitors

Bankers

Stock Exchange Listing

Auditors

inspired by opportunity guided by experience

highlights in 2010-2011

C h a i r m a n ’ s review

Managing Director’s Report

Dear Shareholders

REVIEW OF ACTIVITIES

Operational

Sicily Channel

ORGANISATIONAL STRUCTURE

WOLFGANG ZIMMER

Onshore Tunisia

Romania

OPERATIONS REPORT

TUNISIA AND ITALY

APPRAISAL ASSETS

Dougga Gas Condensate Discovery

Interest: 60% interest in the Kerkouane license which contains Dougga

Kerkouane Gas Discovery Evaluation

Kerkouane & Pantelleria

EXPLORATION ASSETS

Chorbane Licence

Operator: ADX Energy

Interest: 40%

Operator: ADX Energy

Interest: 60%

New oil and gas with technology in the world’s oldest petroleum province.

New Ventures

Director information

Company Secretary

Peter Ironside

financial statements

Corporate Governance Statement

Board of Directors

Role and Responsibilities of the Board

Composition of the Board

Corporate Governance Statement

Independent Professional Advice and Access to Company Information

Nomination Committee / Appointment of New Directors

Term of Office

Performance of Directors and Managing Director

Performance of Senior Executives

Conflict of Interest

Corporate Governance Statement

Diversity

Remuneration

Board Remuneration Committee

Risk Oversight and Management

Audit Committee

Corporate Governance Statement

Code of Conduct

Trading in ADX Securities by Directors, Officers and Employees

Market Disclosure Policies

ADX is committed to:

Communication with Shareholders

Company Website

Directors’ Report

Directors

Ian Tchacos BEng, Grad Dip Chemical Engineering

Non Executive Chairman (Appointed 2 March 2011)

Wolfgang Zimmer PhD - Geology and Petrology

Executive Managing Director (Appointed 10 December 2007)

Paul Fink MSc (Geophysics)

Executive Technical Director (Appointed 25 February 2008)

Andrew Childs BSc - Geology and Zoology

ADX ENERGY LTD Annual Report 2011