AMERICAN URANIUM LTD - Annual Report 2007

GTI RESOURCES LTD

ABN 33 124 792 132

Annual Report for the period ended 31 December 2007

GTI Resources Ltd

Annual Report for the period ended 31 December 2007

	Page
Chairman’s report	3
Operations report	4 – 10
Corporate governance	11 – 13
Directors’ report	14 – 19
Auditor’s independence declaration	20
Independent audit report	21 – 22
Directors’ declaration	23
Income statement	24
Balance sheet	25
Statement of changes in equity	26
Cash flow statement	27
Notes to the financial statements	28 – 48

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Chairman’s Report

12 March 2008

Dear Shareholder

GTI Resources Ltd (GTI) was admitted as a new member of the Australian Securities Exchange on the 10[th] August 2007 following the fully underwritten public raising of $4 million dollars, by the issue of 20m shares at 20 cents each.

The board welcomes all new shareholders and thanks them for their support in achieving the public listing of GTI.

We have now commenced our planned exploration programmes and since listing have acquired additional project areas which target uraninum, gold, silver, and base metals.

Drilling of our high grade target at our Yangibana project area is now planned following area evaluation and interpretation.

Recently two further exploration licences have been granted at Cambridge Creek and Conical Hill and three new project areas at Yelbeni, Bonnie Rock and Silver King covering more than 900 square kilometers have now been applied for. Please refer to the detailed Operations Report for further details.

On behalf of the board I thank all shareholders for their continued support for GTI. Exciting times lie ahead for us and I look forward to sharing the ongoing journey with all shareholders.

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Murray McDonald Executive Chairman GTI Resources Ltd

GTI Resources Ltd 13 Colin Street West Perth WA 6005 Phone: +61 8 9215 0400

ABN 33 124 792 132 PO Box 287 West Perth WA 6872 Facsimile: +61 8 9321 3628

www.gtiresources.com.au

GTI Resources Ltd Operations Report

GTI Resources Ltd – Annual Report 2007 – Operations

Highlights

$4 million raised in fully underwritten IPO, heavily oversubscribed
Exploration of Western Australian uranium, gold projects underway
High grade uranium to 1.67% U3O8 in gossan samples at Yangibana
Drilling of high grade targets at Yangibana planned for Q1 2008
New uranium exploration projects at Yelbeni and Bonnie Rock
Silver King precious & base metal project identified and pegged
Cambridge Creek tenement granted, exploration to commence Q1 2008
New project generation and acquisition program implemented
$3.4 million cash at year end

GTI Resources Ltd, a newly formed exploration company with a strong focus on the discovery and mining of uranium and gold, was incorporated on 5[th] April, 2007. Over the following months, the Company assembled a portfolio of projects in Western Australia and issued a Prospectus for its initial public offering.

The IPO was fully underwritten by KTM Capital Pty Ltd, and closed heavily oversubscribed with $4 million raised. GTI Resources made its stockmarket debut on 10[th] August 2007, just four months after being formed.

Since listing on ASX, GTI has commenced its planned exploration programmes, and acquired new project areas in Western Australia which target uranium, gold, silver and base metals.

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Bali
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Panorama and GTI Project Locations

Figure 1

Project Operations, 2007

GTI Resources Ltd Operations Report

Prior to listing in August 2007, much of the Company’s activities were focussed on building the project portfolio. Once that had been successfully achieved, GTI accelerated its exploration programmes at the initial five Western Australian uranium and gold projects at Yangibana, Bali Hi-Pinnacles, Conical Hill, Cambridge Creek and Tambourah, as set out in the IPO prospectus.

GTI’s uranium projects lie within the Capricorn Orogen, a 600 kilometre-long tectonic belt characterized by regional metamorphism and abundant plutonic intrusions. These intrusions include “hot” granitoids that have higher than average background uranium levels, and are potential source rocks for remobilised and secondary uranium deposits. From an exploration point of view, the presence of “hot” granites is a very important factor in determining the prospectivity of a region.

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Capricorn Orogen Projects and Uranium Deposits

Figure 2

Since listing, two further exploration licences have been granted, at Cambridge Creek and Conical Hill, and an additional licence has been applied for at Cambridge Creek. More recently, GTI has applied in the last month for three new project areas at Yelbeni, Bonnie Rock and Silver King covering more than 900 square kilometres (Figure 1).

The first two are prospective for uranium within palaeodrainage channels, which form part of the extensive salt lake system developed throughout the Yilgarn. Reconnaissance surface sampling by previous explorers has shown anomalous uranium values to 43ppm U3O8.

The Silver King project includes the historic high grade mines of Silver King/Silver Star/Rainbow at Uaroo, about 30 kilometres northwest from GTI’s Cambridge Creek property. Recorded production from the project area between 1901 – 1953 was 38,927oz silver and 3,440t of lead concentrate averaging 61.1% Pb. In addition, significant gold and copper values have been reported from previous exploration within this project area.

GTI Resources Ltd Operations Report

Drilling of high grade uranium targets at Yangibana is planned for Q1 2008, to test surface uranium sampling results of up to 1.67% U3O8 in gossanous ironstone and 1,895ppm U3O8 (0.19%) in surrounding granitic basement rocks (Figures 2, 3).

Yangibana (Uranium-Rare Earths–Base Metals, GTI 100%)

Yangibana lies 260km northeast of Carnarvon and is dominated by granitic intrusives flanking a metasedimentary horizon, with high grade uranium and Rare Earth Element (REE) mineralisation exposed in gossanous outcrop. These ironstones are reported to be weathered carbonatite dykes, potentially related to a larger intrusive system at depth.

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Yangibana Project, showing Rockchip Sample Location and U3O8 Results

Figure 3

A total of 33 rock samples collected from Yangibana North, Yangibana and South Yangibana prospects by a previous explorer were analysed for a range of 38 major, minor and trace elements. Of these, 19 samples were of iron-rich gossan samples and 14 were of adjacent granitic and associated basement host rock.

At the main Yangibana prospect, eight ironstone samples averaged 3,251ppm U3O8 with a range of 107ppm – 16,679ppm U3O8, and one granitic sample returned 482ppm U3O8.

GTI Resources Ltd Operations Report

Nine gossanous ironstone samples at Yangibana North ranged from 61ppm to 1,880ppm U3O8 and averaged 725ppm U3O8. A further 9 granitic rock samples ranged from 48ppm to 1,895ppm U3O8 and averaged 847ppm U3O8.

Two ironstone samples at South Yangibana returned 68ppm and 718ppm U3O8, while four granitic samples ranged from 213ppm-835ppm and averaged 504ppm U3O8.

GTI is extremely encouraged by these sample results, which greatly enhance the Yangibana project’s potential as a uranium target, as previous exploration has been largely focussed on rare earth and base metal mineralisation.

The data was located during detailed research of Geological Survey files and database compilation by the Company’s consulting geologist. As precise details of sampling method, sample location and analytical methods are not known, GTI plans to confirm these historical results during the current Quarter prior to finalising drill sites.

The extent of these high grade uranium results has yet to be tested, even though the gossanous mineralised horizon has been demonstrated to continue at depth by drilling, as only the surface samples were analysed for uranium.

Drilling of the Yangibana and Yangibana North prospects is planned during the first half of 2008, following fieldwork to confirm drillhole locations and receipt of the necessary heritage and State government approvals.

Conical Hill (Uranium, GTI 100%)

Calcrete-hosted uranium mineralisation in palaeochannels, similar to that discovered adjacent to E69/2119 in 1972 by Esso Australia Limited, is the main target at the Conical Hill project which is located 150 kilometres northeast from Wiluna (Figures 1, 2).

Additional targets include gold and base metals, which are considered as prospective by Geological Survey WA in the broader project area although little previous exploration has been reported.

During the year, fieldwork including reconnaissance radiometric traversing was carried out along established tracks on Granite Peaks Station. A standard heritage agreement received from the Native Title Representative Body in relation to E69/2400 was signed, and GTI anticipates granting of the exploration licence in due course.

Review of airborne radiometric and magnetic surveys and remote sensing data has better defined anomalous target areas and zones of potential calcrete development.

Zones of anomalous radioactivity, up to 5 times background, were noted during the ground scintillometer survey. The best defined anomaly lies just north of Snowy Well, over ferruginous laterite, and coincides with a marked uranium-channel peak on regional airborne radiometrics. Further follow-up will be conducted as soon as E69/2400 has been granted.

The elevated radiometric responses detected in the basement shales of the Chiall Formation indicate that these may be the source of the palaeochannel uranium mineralisation previously discovered in the area. Further exploration of the bedrock anomalism will also be carried out.

GTI Resources Ltd Operations Report

Cambridge Creek (Uranium, GTI 100%)

Exploration Licence E08/1561 was granted early in October 2007, after an additional licence just to the north was applied for during September. The project now comprises three contiguous tenements.

Cambridge Creek lies about 180 kilometres southeast from Exmouth, within the Gascoyne Complex of high grade metasedimentary rocks, orthogneiss and granitoids near the western margin of the Capricorn Orogen.

Uranium mineralisation in intrusive pegmatite deposits and shear hosted hydrothermal and unconformitystyle deposits are being targeted within the project area.

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Cambridge Creek Geology

Figure 4

Database compilation and GIS capture of previous exploration results, remote sensing and geophysical data have been carried out. Fieldwork in early 2008 will entail validation and ground truthing of the digital information, mapping and sampling, exploration planning and drill target generation.

Bali Hi – Pinnacles (Uranium–Copper-Gold, GTI 90-100%)

GTI’s Bali Hi-Pinnacles project is located in the central Capricorn Orogen, 950km north of Perth and 80km southwest of Paraburdoo. GTI has a 90% interest in the Bali Hi granted exploration licence, and a 100% interest the Pinnacles licence application.

GTI has continued evaluation of the uranium-high grade base metal mineralisation on the Bali shear within E098/1372, including target generation for additional zones on adjacent structures. Previous

GTI Resources Ltd Operations Report

significant results recorded at Bali Lo were 4,273ppm U3O8 (0.43%) and 2,906ppm U3O8 (0.29%) with 4.2% Cu and 20.1% Cu respectively.

The programme presented in the prospectus has been commenced, initially comprising database establishment and compilation of previous exploration data. Fieldwork to follow up on these programmes will recommence early in 2008.

Review of detailed airborne radiometric and magnetic surveys, flown on behalf the Geological Survey of Western Australia and recently released, is providing additional targeting. Interpretation of this data, together with the completed digital database, will allow better definition of drill targets for testing planned for early 2008.

Department of Industry and Resources has advised that a small part of E08/1372, formerly Wanna pastoral lease, is to be included within a new conservation park. The Stockyard Creek prospect will be affected by this proposal.

Tambourah (Gold-Base Metals, GTI 90%)

Historical high grade gold production from the local Tambourah mining centre in the Eastern Pilbara of 5,247 ounces at an average grade of 30g/t Au demonstrates the mineralisation potential of the area.

GTI believes that the geological and structural setting is favourable for large gold deposits, and is untested for base metal deposits which are known to occur elsewhere in the region.

Fieldwork commenced at the Tambourah project, 160 kilometres southeast of Port Hedland, and 100 kilometres from Marble Bar, soon after listing. The high grade gold systems were visited and location of previous mainly shallow drilling was evaluated.

A rockchip sample previously returned 2.95g/t Au, 0.75% Cu, 0.63% Pb and 38g/t Ag from a shallow pit north of the main mining area. This sample location was geologically reviewed, and is interpreted as being adjacent to a broad area of alteration at outcrop. Further detailed sampling and mapping of this and similar alteration zones has been planned for 2008.

Exploration targeting both base metal and high grade gold systems in the project area, 160 kilometres southeast of Port Hedland and 100 kilometres from Marble Bar, will recommence in the 2008 field season. The objective is to advance the definition of geochemical anomalism and structural interpretations, leading to drill target selection.

Yelbeni and Bonnie Rock (Uranium, GTI 100%)

These recently acquired exploration licences are located near Bencubbin, 230 kilometres northeast of Perth.

Only limited uranium exploration has previously been carried out over both Yelbeni E70/3367 and Bonnie Rock E70/3368, with sparse existing airborne radiometric coverage. GTI will conduct reconnaissance scintillometer surveys along the existing extensive road network, to assist in designing future detailed airborne surveys and drill target definition.

GTI Resources Ltd Operations Report

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Yelbeni Uranium Project, E70/3367

Figure 5

E70/3367 covers 587 square kilometres of mainly sandplain and colluvium shallowly overlying drainages which lead into extensive salt lake systems. Despite the transported nature of much of the surface material, elevated uranium values up to 43ppm U3O8 have been recorded over a length of 55 kilometres (Figure 5).

Similar uranium anomalism has been shown on the Bonnie Rock E70/3368, despite wide-spaced sampling.

Competent Person: The contents of this report that relate to geology and exploration results are based on information compiled by consulting geologist Ian Cowden of Iana Pty Ltd, who is a Fellow of the Australasian Institute of Mining and Metallurgy, a Chartered Professional Geologist and a Member of the Australian Institute of Geoscientists. He has sufficient experience relevant to the styles of mineralisation and types of deposit under consideration and to the activity being undertaken to qualify as a “Competent Person”, as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Ian Cowden consents to the inclusion in this report of the matters compiled by him in the form and context in which they appear.

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GTI Resources Ltd Corporate governance

Corporate governance

STATEMENT

In accordance with the ASX Corporate Governance Council's Principles of Good Corporate Governance and Best Practice Recommendations (" ASX Principles and Recommendations "), GTI Resources Ltd (" Company ") has made it a priority to adopt systems of control and accountability as the basis for the administration of corporate governance. Some of these policies and procedures are summarised in this statement. Commensurate with the spirit of the ASX Principles and Recommendations, the Company has followed each recommendation where the Board has considered the recommendation to be an appropriate benchmark for corporate governance practices, taking into account factors such as the size of the Company and the Board, resources available and activities of the Company. Where, after due consideration, the Company's corporate governance practices depart from the ASX Principles and Recommendations, the Board has offered full disclosure of the nature of, and reason for, the adoption of its own practice.

Further information about the Company's corporate governance practices is set out on the Company's website at www.gtiresources.com.au. In accordance with the ASX Principles and Recommendations, information published on the Company's website includes charters (for the Board and its committees), the Company's code of conduct and other policies and procedures relating to the Board and its responsibilities.

EXPLANATIONS FOR DEPARTURES FROM BEST PRACTICE RECOMMENDATIONS

During the Company's 2007/2008 financial year (" Reporting Period ") the Company has complied with each of the ASX Principles and Recommendations[1] , other than in relation to the matters specified below.

Principle 2

Recommendation 2.1 : A majority of the Board should be independent

Notification of Departure : The Board does not have a majority of independent directors. None of the directors are independent.

Explanation for Departure : The Board considers that its present composition is adequate for the Company's current size and operations and includes an appropriate mix of skills and expertise, relevant to the Company's business. During the Reporting Period Mr Greg Down resigned from the Board and Mr Darren Crawte was appointed. Notwithstanding Mr Crawte's lack of independence, the Board believes he is suitably qualified for the position and has an intimate knowledge of the Company's operations. Further, the Board has adopted a Policy on Independent Professional Advice to assist Directors with independent judgement.

Principle 2

Recommendation 2.2 : The chairperson should be an independent director

Notification of Departure : The chair does not satisfy the test of independence as set out in Box 2.1 of the ASX Principles and Recommendations (" Independence Criteria ").

Explanation for Departure : Mr Murray McDonald, the current chair, does not satisfy all of the Independence Criteria. The Board believes that Mr Murray McDonald is the most appropriate person for the position as chair because of his extensive industry experience.

Principle 2

Recommendation 2.3 : The roles of the chair and managing director should not be exercised by the same individual.

1 A copy of the ASX Principles and Recommendations is set out on the Company’s website under the Section entitled "Corporate Governance".

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GTI Resources Ltd Corporate governance

Notification of Departure : The roles of chair and managing director are exercised by Mr Murray McDonald.

Explanation for Departure : While the Board recognises the importance of the need for the division of responsibilities between the chair and the managing director, the existing structure is considered appropriate to the Company's present circumstances. It provides a unified leadership structure which the Board believes is important given the Company's early stage of exploration. Mr Murray McDonald has been a major force in the current direction of the Company and has provided strong and effective leadership to the Board.

Principle 2

Recommendation 2.4 : The Board should establish a nomination committee.

Notification of Departure : A separate nomination committee has not been formed.

Explanation of Departure : The role of the nomination committee is carried out by the full Board. Given its size, the Board considers that at this stage no efficiencies or other benefits would be gained by establishing a separate nomination committee. The Board has adopted and applies a Nomination Committee Charter.

Principle 4

Recommendation 4.2, 4.3 : The Board should establish an audit committee which should be structured in accordance with Recommendation 4.3.

Notification of Departure : A separate audit committee has not been formed and therefore is not structured in accordance with the compositional recommendation.

Explanation for Departure : The full Board carries out the duties of the audit committee. Given its size and composition, the Board does not consider that the Company will gain any benefit from the formation of a separate audit committee. The Board has adopted an Audit Committee Charter which provides that the Board may meet with the external auditor, without management present.

Principle 9

Recommendation 9.2: The Board should establish a remuneration committee.

Notification of Departure : No separate remuneration committee has been formed.

Explanation for Departure : Due to the small size and structure of the Board, a separate remuneration committee was not considered to add any efficiency to the process of determining the levels of remuneration for the directors and key executives. The Board considers that it is more appropriate to set aside time at Board meetings each year to specifically address matters that would ordinarily fall to a remuneration committee. When considering matters of remuneration, the Board functions in accordance with its Remuneration Committee Charter.

In addition, all matters of remuneration will continue to be determined in accordance with Corporations Act requirements, especially in respect of related party transactions. That is, no directors participate in any deliberations regarding their own remuneration or related issues.

NOMINATION COMMITTEE

The full Board, in its capacity as the nomination committee, held one meeting during the Reporting Period. All Board members appointment at the time attended the meeting.

AUDIT COMMITTEE

The full Board, in its capacity as the audit committee, held one meeting during the Reporting Period. All Board members appointment at the time attended the meeting.

Details of each of the director's qualifications are set out in the Director's Report.

All of the directors consider themselves to be financially literate and have industry knowledge. Darren Crawte is a qualified Chartered Accountant with 10 years experience working within public practice and therefore meets the tests of financial expertise.

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GTI Resources Ltd Corporate governance

REMUNERATION COMMITTEE

Details of remuneration, including the Company’s policy on remuneration, are contained in the “Remuneration Report” which forms of part of the Directors’ Report.

The full Board, in its capacity as the remuneration committee, held one meeting during the Reporting Period. All Board members appointment at the time attended the meeting.

OTHER

Skills, Experience, Expertise and term of office of each Director

A profile of each director containing the applicable information is set out in the Directors' Report.

Identification of Independent Directors

In considering the independence of directors, the Board refers to the Independence Criteria. To the extent that it is necessary for the Board to consider issues of materiality, the Board refers to the thresholds for qualitative and quantitative materiality as adopted by the Board and contained in the Board Charter, which is disclosed in full on the Company’s website.

Applying the Independence Criteria, none of the directors of the Company are considered to be independent.

Statement concerning availability of Independent Professional Advice

If a director considers it necessary to obtain independent professional advice to properly discharge the responsibility of his/her office as a director, then, provided the director first obtains approval for incurring such expense from the chairperson, the Company will pay the reasonable expenses associated with obtaining such advice.

Confirmation whether performance Evaluation of the Board and its members have taken place and how conducted

Given the short period of time between listing and the Company's end of financial year, the Board did not consider an evaluation of the Board and its members to be a beneficial exercise.

Existence and Terms of any Schemes for Retirement Benefits for Non-Executive Directors

There are no termination or retirement benefits for non-executive directors.

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GTI Resources Ltd Directors’ report

Directors’ report

The Directors of GTI Resources Ltd submit herewith the annual financial report of the Company for the financial period ended 31 December 2007. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows:

The names and particulars of the Directors of the Company during or since the end of the financial period are:

Murray McDonald
Greg Down
Ian Cowden
Darren Crawte

Directors have been in office since the start of the financial period and up to the date of this report except for:

Greg Down – resigned 4 October 2007
Darren Crawte – appointed 4 October 2007

Information on Directors

Murray McDonald Executive Chairman

In 1995 Mr McDonald floated Legend Mining Limited and after 10 years as the managing director of that company, resigned to pursue other interests.

Mr McDonald has a broad management and operating expertise ranging from the acquisition of large mining operations, joint venture negotiations, tenement acquisition, regulatory approvals to resource funding and implementation.

Mr McDonald is a Member of the Australasian Institute of Mining & Metallurgy, the Financial Services Institute of Australasia and is a Certified Practising Accountant.

During the past three (3) years Mr McDonald has not held directorships in any other listed company.

Ian Cowden Non-Executive Director

Mr Cowden is a professional geologist and has been involved in the exploration and mining sectors world wide for over 30 years. His experience ranges from project generation and management of exploration programmes through to discovery of ore bodies, with emphasis on feasibility studies and development to mining.

He has worked for major international mining companies and junior explorers including BP Minerals International Limited, Utah Development Company and Delta Gold NL. His specific operational experience has included gold, base metals, uranium and industrial minerals. Mr Cowden has served on the boards of a number of public listed companies, recently Liberty Gold NL, Legend Mining Limited and Truscott Mining Corporation Limited.

Mr Cowden is a Fellow of the Australasian Institute of Mining & Metallurgy, a Certified Practising Geologist and a Member of the Australian Institute of Geoscientists.

During the past three (3) years Mr Cowden has held directorships in the following other listed companies:

Company	Appointed	Resigned
Truscott MiningCorporation Limited	October 2005	30 November 2007

Mr Cowden is a director and shareholder in Iana Pty Ltd which has a contract to supply the services of Mr Cowden as a consultant geologist/geophysicist.

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GTI Resources Ltd Directors’ report

Company Secretary

Darren Crawte LL.B (Hons), ACA

Company Secretary (appointed 13 June 2007) & Non-Executive Director (appointed 4 October 2007)

Mr Crawte has significant experience providing corporate advice and support to listed companies in the exploration and biotech sector.

He is an associate director of Ord Nexia, a Perth based accountancy firm and has 9 years experience of working in public practice in both the UK and Australia with particular experience in the fields of financial reporting, audit and managing ASX compliance. Mr Crawte holds positions as Company Secretary with a number of other listed entities.

Principal activities

The principal activity of GTI Resources Ltd is exploration and evaluation of mineral resources.

Changes in state of affairs

The company was incorporated on 5 April 2007 and listed on the Australian Securities Exchange on 10 August 2007. Capital of $4,900,903 was raised during the financial period (including $600,000 of Vendor consideration).

There were no other significant changes in the state of affairs of the Company during the financial period.

Subsequent events

There has not been any matter or circumstance that has arisen since the end of the financial period, that has significantly affected, or may significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.

Future developments

Disclosure of information regarding likely developments in the operations of the Company in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the Company. Accordingly, this information has not been disclosed in this report.

Environmental regulations

The Company’s operations are subject to significant environmental regulations under both Commonwealth and State legislation. The Board believes that the Company has adequate systems in place for the management of its environmental regulations and is not aware of any breach of those environmental requirements as they apply to the Company.

Dividends

No amounts were paid or declared by way of dividend by the Company. The Directors do not recommend payment of a dividend in respect of the financial period ended 31 December 2007.

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GTI Resources Ltd Directors’ report

Share options

Share options granted to Directors

During and since the end of the financial period an aggregate of share options were granted to the following Directors of the Company:

Directors and executives			Number of ordinary shares under option
	Number of options granted	Issuing entity
Murray McDonald 3,000,000 GTI Resources Ltd 3,000,000 Ian Cowden 3,000,000 GTI Resources Ltd 3,000,000 Greg Down 3,000,000 GTI Resources Ltd 3,000,000

Share options that expired/lapsed

No options expired or lapsed during or since the end of the financial period.

Share options granted to employees

No share options were granted to employees of the Company during and since the end of the financial period.

Share options on issue or exercised

Details of unissued shares or interests under option at the date of this report are:

Issuing entity	Number of shares under option	Class of shares	Exercise price of option	Expiry date of options
GTI Resources Ltd 5,500,000 Ordinary 30 cents 19 December 2009 GTI Resources Ltd 4,500,000 Ordinary 40 cents 19 December 2011

The holders of such options do not have the right, by virtue of the option, to participate in any share issue or interest issue of any other body corporate or registered scheme.

No shares or interests were issued during the financial period or up to the date of this report as a result of exercise of any options.

Indemnification of officers and auditors

The Company has entered into Deeds of Insurance, Indemnity and Access with each of the Directors under which the Company agrees to indemnify the Directors against certain liabilities incurred by the Directors while acting as Director of the Company, to insure the Directors against certain risks to which the Directors are exposed to as a Director of the Company.

The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

Directors’ meetings

The following table sets out the number of Directors’ meetings (including meetings of committees of Directors) held during the financial period and the number of meetings attended by each Director (while they were a Director or committee member). During the financial period, four board meetings were held. No remuneration committee meetings and no audit committee meetings were held during the period.

	Board of Directors	Board of Directors	Remuneration committee	Remuneration committee	Audit committee	Audit committee
Directors	Entitled to attend	Attended	Entitled to attend	Attended	Entitled to attend	Attended
Murray McDonald 4 4 Nil N/A Nil N/A Ian Cowden 4 4 Nil N/A Nil N/A Darren Crawte 2 2 Nil N/A Nil N/A Greg Down 2 2 Nil N/A Nil N/A

The Directors also passed 2 circular resolutions during the period.

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GTI Resources Ltd Directors’ report

Directors’ shareholdings

The following table sets out each Director’s relevant interest in shares, debentures, and rights or options in shares or debentures of the Company or a related body corporate as at the date of this report.

Directors	Shares	Options
Murray McDonald 3,193,033 3,000,000 Ian Cowden 3,000,001 3,000,000 Darren Crawte - -

Remuneration report

Remuneration policy for Directors and executives

The Board is responsible for establishing remuneration packages applicable to the Board members of the Company. The policy adopted by the Board is to ensure that remuneration properly reflects an individual's duties and responsibilities and that remuneration is competitive in attracting, retaining and motivating people of the highest calibre.

Directors' remuneration packages are also assessed in the light of the condition of markets within which the Company operates, the Company’s financial condition and the individual's contribution to the achievement of corporate objectives.

The Executive Chairman, Mr Murray McDonald, is employed for a period of three years from 1[st] June 2007. Mr McDonald shall have an option to extend the initial term for a further three year period on the same terms and conditions of the original contract. In the event Mr McDonald does not extend the agreement the agreement shall continue until it is determined by either party giving the other party 6 months notice or such intended determination.

The Company’s Constitution (Constitution) provides that the remuneration of non-executive Directors will be not more than the aggregate fixed sum determined by a general meeting. The Constitution provides $500,000 per annum for this purpose however the Directors have resolved not to exceed $200,000 per annum.

Director and executive details

The Directors of GTI Resources Ltd during the period were:

Murray McDonald
Ian Cowden
Greg Down – resigned 4 October 2007
Darren Crawte – appointed 4 October 2007

There were no specified executives of the Company during the period.

Elements of Director and executive remuneration

Remuneration packages contain the following key elements:

a) Primary benefits (being salary, fees, bonus and non monetary benefits)
b) Post-employment benefits (being superannuation)
c) Equity (being share options granted)
d) Other benefits

No remuneration has been provided that is performance related.

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GTI Resources Ltd Directors’ report

The following table discloses the remuneration of the Directors of the Company:

2007	Short Term	Short Term	Short Term	Short Term	Post-employment	Post-employment	Post-employment	Post-employment	Equity	Equity	Total
	Salary & fees	Bonus	Non-		Super-		Prescribed	Other	Options
			monetary		annuation		benefits

	$	$	$		$		$	$	$		$
Murray McDonald 101,567 - - 9,917 - 3,200 113,152 227,836 Ian Cowden (i) 61,802 - - - - - 113,152 174,954 Greg Down 50,000 - - 4,500 - - 113,152 167,652 Darren Crawte (ii) 4,500 - - - - - - 4,500 Total 217,869 - - 14,417 - 3,200 339,456 574,942 i) The services of Ian Cowden as a non-executive director and consultant to the company are provided by IANA Pty Ltd, a company of which Mr Cowden is a director and shareholder. ii) The services of Darren Crawte are provided by Ord Nexia Pty Ltd. Value of options issued to Directors and Executives The following table discloses the value of options granted, exercised or lapsed during the period:	101,567 - - 9,917 - 3,200 113,152 227,836 61,802 - - - - - 113,152 174,954 50,000 - - 4,500 - - 113,152 167,652 4,500 - - - - - - 4,500
	217,869 - - 14,417 - 3,200 339,456 574,942
	Options	Options		Options		Total value of Value of options				Percentage of total remuneration for the period that consists of options
	Granted	Exercised		Lapsed		options granted, included in
	Value at grant date	Value at		Value at		exercised and remuneration for
		exercise date		time of		lapsed the period
				lapse

	$	$		$						%
Murray McDonald Ian Cowden Greg Down Darren Crawte

Value of options - basis of calculation

The following factors and assumptions were used in determining the fair value of options at grant date:

Grant Date				Share Price		Risk Free
	Expiry	Fair Value	Exercise	on Grant	Estimated	Interest
	Date	per Option (cents)	Price (cents)	Date (cents)	Volatility %	Rate %
20 April 2007 19 December 2009 3.178 30 10 110 6.25 30 20 April 2007 19 December 2011 4.365 40 10 110 6.25 30

Each option issued under the arrangement converts into one ordinary share of GTI Resources Limited on exercise. No amounts are paid or payable by the recipient on receipt of the option. Options neither carry rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.

The number of options granted is at the sole discretion of the Directors.

18 -

GTI Resources Ltd Directors’ report

Proceedings on behalf of the Company

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party. The Company was not party to any proceedings during the period.

Non-audit services

There were no non-audit services performed during the period by the auditors (or by another person or firm on the auditors’ behalf) other than for an amount of $4,525 paid to an associated company of the auditors for preparation of the independent accountants report. The directors consider this service did not impair the independence of the auditors.

Auditor’s independence declaration

The auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is set out on page 20 of the financial report.

Signed in accordance with a resolution of the Directors made pursuant to s.298(2) of the Corporations Act 2001.

On behalf of the Directors

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Murray McDonald Executive Director & Chairman

Perth, 12 March 2008

19 -

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12 March 2008

Board of Directors GTI Resources Limited 13 Colin Street WEST PERTH WA 6005

Dear Directors

RE: GTI RESOURCES LIMITED

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of GTI Resources Limited.

As Audit Director for the audit of the financial statements of GTI Resources Limited for the period ended 31 December 2007, I declare that to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely STANTONS INTERNATIONAL (Authorised Audit Company)

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John Van Dieren Director

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Au:GTI3738A/ Decl letter 31 December 2007

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF GTI RESOURCES LIMITED

Report on the Financial Report

We have audited the accompanying financial report of GTI Resources Limited, which comprises the balance sheet as at 31 December 2007, and the income statement, statement of changes in equity and cash flow statement for the period ended on that date, a summary of significant accounting policies and other explanatory notes and the directors’ declaration of the company.

Directors’ Responsibility for the Financial Report

The directors of the GTI Resources Limited are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

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 whether the financial report is free from 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 the auditor’s 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, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

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

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 .

Auditor’s Opinion

In our opinion:
(a) the financial report of GTI Resources Limited is in accordance with the Corporations Act 2001 , including:
(i) giving a true and fair view of the company’s financial position as at 31 December 2007 and of its performance for the period ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.
(b) the financial report of the company also complies with International Financial Reporting Standards as disclosed in note 1.

STANTONS INTERNATIONAL

(An Authorised Audit Company)

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J P Van Dieren

Director

West Perth, Western Australia 12 March 2008

GTI3738A/ Year Ended 31 December 2007 Audit Report

GTI Resources Ltd Directors’ declaration

Directors’ declaration

The Directors declare that:

(a) in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable;
(b) in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position as at 31 December 2007 and performance of the Company for the financial period ended on that date; and
(c) the Directors have been given the declarations required by s.295A of the Corporations Act 2001.

Signed in accordance with a resolution of the Directors made pursuant to s.295(5) of the Corporations Act 2001.

On behalf of the Directors

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Murray McDonald Executive Director & Chairman

Perth, 12 March 2008

23 -

GTI Resources Ltd Income statement

Income statement for the financial period ended 31 December 2007

Revenue Employee benefits expense Share based payments expense Finance costs Depreciation & amortisation Exploration expenditure expensed as incurred Administration expenses Loss from continuing operations before income tax expense/benefit Income tax expense/benefit Loss from continuing operations attributable to members Loss per share: Basic and diluted (cents per share)	Note 5 5 6 19	5 April – 31 Dec 2007 $
		138,687 (232,685) (339,456) (458) (12,451) (118,437) (151,098)
		(715,898) -
		(715,898)
		(3.11)

The above Income Statement is to be read in conjunction with the notes to the financial statements which are included on pages 28 – 48.

24 -

GTI Resources Ltd Balance sheet

Balance sheet as at 31 December 2007

Current assets Cash and cash equivalents Trade and other receivables Other financial assets Total current assets Non-current assets Property, plant and equipment Exploration, evaluation and development Total non-current assets Total assets Current liabilities Trade and other payables Provisions Total current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity	Note 25 10 13 11 12 14 15 16 17 18	2007 $
		3,403,609 61,063 70,000
		3,534,672
		35,933 703,800
		739,733
		4,274,405
		64,849 12,842
		77,691
		77,691
		4,196,714
		4,519,556 393,056 (715,898)
		4,196,714

The above Balance Sheet is to be read in conjunction with the notes to the financial statements which are included on pages 28 – 48.

25 -

GTI Resources Ltd Statement of changes in equity

Statement of changes in equity for the financial period ended 31 December 2007

For the period ended 31 December 2007 At beginning of period Loss for the period Issue of shares Issue of options Share issue expenses At end of period	Attributable to equity holders Ordinary Shares $ Reserves $ Accumulated Losses $ Total Equity $ - - - - - - (715,898) (715,898) 4,900,903 - - 4,900,903 - 393,056 - 393,056 (381,347) - - (381,347)
	4,519,556 393,056 (715,898) 4,196,714

The above Statement of changes in equity is to be read in conjunction with the notes to the financial statements which are included on pages 28 – 48.

26 -

GTI Resources Ltd Cash flow statement

Cash flow statement for the financial period ended 31 December 2007

Cash flows from operating activities Interest received Payments to suppliers and employees Interest and other costs of finance paid Other income receipts Net cash used in operating activities Cash flows from investing activities Payment for property, plant and equipment Payment for exploration and evaluation Payment for investments Net cash used in investing activities Cash flows from financing activities Proceeds from issues of equity securities Payment for share issue costs Net cash provided by financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial period Cash and cash equivalents at the end of the financial period	Note 25(b) 25(a)	5 April – 31 Dec 2007 $
		109,883 (490,351) (458) 28,804
		(352,122)
		(43,625) (103,800) (70,000)
		(217,425)
		4,300,903 (327,747)
		3,973,156
		3,403,609 -
		3,403,609

The above Cash flow statement is to be read in conjunction with the notes to the financial statements which are included on pages 28 – 48.

27 -

GTI Resources Ltd Notes to the financial statements

Notes to the Financial Statements

1. General information

GTI Resources Limited (the Company) is a listed public Company, incorporated in Australia and operating in Australia.

The Company’s registered office and its principal place of business are as follows:

Registered office Principal place of business c/o Ord Group Pty Ltd 13 Colin Street Level 2, 47 Colin Street West Perth WA 6005 West Perth WA 6005

2. Adoption of new and revised accounting standards

As at 5[th] April 2007, on incorporation, the Company has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current reporting period.

28 -

GTI Resources Ltd Notes to the financial statements

3. Summary of accounting policies

Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and complies with other requirements of the law. Accounting Standards include Australian equivalents to International Financial Reporting Standards (‘A-IFRS’). Compliance with the A-IFRS ensures that the financial statements and notes of the entity comply with International Financial Reporting Standards (‘IFRS’).

The financial statements were authorised for issue by the Directors on 12 March 2008.

Basis of preparation

The financial report has been prepared on the basis of historical cost. Cost is based on the fair values of the consideration given in exchange for assets.

The following significant accounting policies have been adopted in the preparation and presentation of the financial report:

(a) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, cash in banks and investments in money market instruments, net of outstanding bank overdrafts.

(b) Employee benefits

Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave when it is probable that settlement will be required and they are capable of being measured reliably.

Provisions made in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Provisions made in respect of employee benefits which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the entity in respect of services provided by employees up to reporting date.

(c) Financial assets

Investments are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs.

Other financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’, ‘held-to-maturity’ investments, ‘available-for-sale’ financial assets, and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Loans and receivables

Trade receivables, loans, and other receivables are recorded at amortised cost less impairment.

29 -

GTI Resources Ltd Notes to the financial statements

3. Summary of accounting policies (cont’d)

(d) Financial instruments issued by the Company

Debt and equity instruments

Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual arrangement.

Transaction costs on the issue of equity instruments

Transaction costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the proceeds of the equity instruments to which the costs relate. Transaction costs are the costs that are incurred directly in connection with the issue of those equity instruments and which would not have been incurred had those instruments not been issued.

(e) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:

i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or
ii. for receivables and payables which are recognised inclusive of GST.

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

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

(f) Impairment of assets

At each reporting date, the entity reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the entity estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. 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 for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) 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 (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase.

30 -

GTI Resources Ltd Notes to the financial statements

3. Summary of accounting policies (cont’d)

(g) Income tax

Current tax

Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).

Deferred tax

Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, branches, associates and joint ventures except where the entity is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with these investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the entity expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the entity intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax for the period

Current and deferred tax is recognised as an expense or income in the income statement, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess.

Tax consolidation

The Company is an Australian resident for Australian taxation law purposes and has no subsidiaries.

31 -

GTI Resources Ltd Notes to the financial statements

3. Summary of accounting policies (cont’d)

(h) Intangible assets

Exploration and Evaluation Expenditure

Exploration, evaluation and development expenditure incurred may be accumulated in respect of each identifiable area of interest. These costs are carried forward only if they relate to an area of interest for which rights of tenure are current and in respect of which:

(i) such costs are expected to be recouped through successful development and exploitation or from sale of the area; or
(ii) exploration and evaluation activities in the area have not, at balance date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active operations in, or relating to, the area are continuing.

Accumulated costs in respect of areas of interest which are abandoned are written off in full against profit in the period in which the decision to abandon the area is made. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

Notwithstanding the fact that a decision not to abandon an area of interest has been made, based on the above, the exploration and evaluation expenditure in relation to an area may still be written off if considered appropriate to do so.

(i) Operating cycle

The operating cycle of the entity coincides with the annual reporting cycle.

(j)

Payables

Trade payables and other accounts payable are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services.

(k)

Presentation currency

The entity operates entirely within Australia and the presentation currency is Australian dollars.

(l) Plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item.

Depreciation is provided on plant and equipment. Depreciation is calculated on a diminishing value basis so as to write off the net cost or other revalued amount of each asset over its expected useful life to its estimated residual value. The estimated useful lives, residual values and depreciation method is reviewed at the end of each annual reporting period.

The following estimated useful lives are used in the calculation of depreciation:

Class	of fixed asset	Depreciation rate (%)
•	Office furniture & equipment	10 – 20
•	Computer equipment	50 – 100
•	Fixtures & fittings	10 – 20

32 -

GTI Resources Ltd Notes to the financial statements

3. Summary of accounting policies (cont’d)

(m) Provisions

Provisions are recognised when the entity has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cashflows estimated to settle the present obligation, its carrying amount is the present value of those cashflows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that recovery will be received and the amount of the receivable can be measured reliably.

(n) Share-based payments

The fair value of options are measured by use of the Black and Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of nontransferability, exercise restrictions, and behavioural considerations.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the entity’s estimate of shares that will eventually vest.

For cash-settled share-based payments, a liability equal to the portion of the goods or services received is recognised at the current fair value determined at each reporting date.

(o) Revenue recognition

Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.

33 -

GTI Resources Ltd Notes to the financial statements

4. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Company’s accounting policies, which are described in note 3, management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

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 reporting period are:

Key estimates — impairment

The Company assesses impairment at each reporting date by evaluating conditions specific to the Company that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. No impairment loss was recorded in the current financial period.

Key estimates — share based payments

The Company measures the cost of equity settled transactions with employees 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, using the assumptions detailed in Note 8.

5. Loss from operations (a) Revenue Interest revenue Other income (b) Loss before income tax Loss before income tax has been arrived at after charging the following expenses: Depreciation of non-current assets	2007 $
	109,883 28,804
	138,687
	7,692

34 -

GTI Resources Ltd Notes to the financial statements

Income taxes Income tax recognised in profit or loss The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense in the financial statements as follows: Loss from operations Income tax expense calculated at 30% Effect of expenses that are not deductible in determining taxable profit Unused tax losses and temporary differences not recognised as deferred tax assets Income tax attributable to operating loss	2007 $
	715,898
	214,769 116,480 (331,249)
	-

6. Income taxes

The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under Australian tax law.

Tax consolidation

Relevance of tax consolidation to the Company

The Company is an Australian resident entity for tax purposes and has no subsidiaries.

(b) Deferred tax balances The following deferred tax assets and (liabilities) have not been brought to account: Temporary differences Temporary differences arising from exploration activities Tax losses - revenue	8,653 (211,140) 331,249
	128,762

The Company has estimated unrecouped income tax losses of $1,104,162 available to be offset against future taxable income. A deferred tax asset in relation to the losses has not been recognised by the company on the basis that it is not probable that there will be future taxable income available against which the losses can be utilised.

35 -

GTI Resources Ltd Notes to the financial statements

7. Key management personnel remuneration

The Directors of GTI Resources Ltd during the period were:

Murray McDonald
Ian Cowden
Greg Down (resigned 4 October 2007)
Darren Crawte (appointed 4 October 2007)

There were no other key management personnel of the Company during the period.

Key management personnel remuneration

The Board policy for determining emoluments is based on the principle of remunerating Directors and senior executives on their ability to add value to the Company (taking into account the Company’s strategic plan and operations) whilst also considering market emolument packages for similar positions within the industry and in consultation with external consultants. The Board appreciates the interrelationship between this policy and Company performance. It acknowledges that it is in the best interests of shareholders to provide challenging but achievable incentives to reward senior executives for reaching the Company’s stated goals. The Board will discuss these issues internally and with candidates prior to engaging additional Directors or senior executives in the future.

Directors’ remuneration

Directors’	Short term	Short term	Short term	Post-employment	Post-employment	Post-employment	Equity	Other	Total	Remuner- ation by equity options
	Salary & fees	Bonus	Non-	Super-	Pre-	Other	Options	benefits
			monetary	annua-	scribed			(Insurance)
				tion	benefits
	$	$	$	$	$	$	$	$	$	%
2007 Murray McDonald Ian Cowden Greg Down Darren Crawte Total	101,567 - - 9,917 - 3,200 113,152 - 227,836 50% 61,802 - - - - - 113,152 - 174,954 65% 50,000 4,500 113,152 - 167,652 67% 4,500 - - - - - - - 4,500 -
	217,869 - - 14,417 - 3,200 339,456 - 574,942 -

There were no other key management personnel during the period.

Further information on options issued and transactions with related parties are described in notes 8 and 23 being share-based payments and related party disclosures respectively.

8. Share-based payments

(a) Directors and Employees

The Company has an ownership-based compensation arrangement for employees of the Company.

The number of options granted is at the sole discretion of the Directors.

36 -

GTI Resources Ltd Notes to the financial statements

8. Share-based payments (cont’d)

The following director share-based payment arrangements were in existence during the current reporting period:

Options series	Number	Grant date	Expiry date	Exercise price $	Fair value at grant date $
(1) Directors options 4,500,000 20 April 2007 19 December 2009 0.30 143,018 (2) Directors options 4,500,000 20 April 2007 19 December 2011 0.40 196,438

The fair value of the share options granted during the financial period is $339,456. Options were priced using a Black and Scholes model. The expected life used in the model has not been adjusted. Expected volatility is based on levels of similar listed companies with uranium assets in Western Australia. No allowance has been made for the effects of early exercise.


Option series (1) Option series (2) Inputs into the model 19 December 2009 19 December 2011 Grant date share price 10 cents 10 cents Exercise price 30 cents 40 cents Expected volatility 110% 110% Option life 2.7 years 4.7 years Dividend yield Nil Nil Risk-free interest rate 6.25% 6.25% Discount for unlisted status 30% 30%

(b) Contractors/Advisors

The following underwriters share-based payment arrangements were in existence during the current reporting period:

The company issued 1,000,000 share options to the underwriter of the initial public offering of the company, exercisable at 30 cents on or before 19 December 2009.

Options series	Number	Grant date	Expiry date	Exercise price $	Fair value at grant date $
(1) 1,000,000 31 July 2007 19 December 2009 0.30 0.0536

The following factors and assumptions were used in determining the fair value of options at grant date:


Option series (1) Inputs into the model 19 December 2009 Grant date share price 20 cents Exercise price 30 cents Expected volatility 70% Option life 2.7 years Dividend yield Nil Risk-free interest rate 6% Discount for unlisted status 20%

37 -

GTI Resources Ltd Notes to the financial statements

8. Share-based payments (cont’d)

The following reconciles the outstanding share options granted under all share based payment arrangements at the beginning and end of the financial period:

Balance at beginning of the financial period Granted during the financial period - director Granted during the financial period - director Granted during the financial period – contractors/ advisors Balance at end of the financial period (i) Exercisable at end of the financial period	2007 Number of options Exercise price $ - - 4,500,000 0.30 4,500,000 0.40 1,000,000 0.30
	10,000,000
	10,000,000 -

(i) Balance at end of the financial period

The share options outstanding at the end of the financial period had a weighted average exercise price of 34.5 cents and a weighted average remaining contractual life of 3.6 years.

9. Remuneration of auditors Audit or review of the financial report Other services (investigating accountants report) The auditor of GTI Resources Ltd is Stantons International Pty Ltd. 10. Current trade and other receivables Other debtors Goods and services tax (GST) recoverable Prepayments	2007 $
	16,000 4,525
	20,525
	3,155 37,735 20,173
	61,063

38 -

GTI Resources Ltd Notes to the financial statements

11. Property, plant and equipment

Property, plant and equipment
Gross carrying amount Balance at 5 April 2007 Additions Balance at 31 December 2007 Accumulated depreciation/amortisation and impairment Balance at 5 April 2007 Depreciation expense Balance at 31 December 2007 Net book value As at 31 December 2007	Office furniture and equipment at cost Computer equipment	Fixtures & fittings	Total
	$ $	$	$
	- - - - 25,268 16,020 2,337 43,625
	25,268 16,020 2,337 43,625
	- - - - 3,743 3,875 74 7,692
	3,743 3,875 74 7,692

	21,525 12,145 2,263 35,933

39 -

GTI Resources Ltd Notes to the financial statements

12. Exploration, evaluation & development Carry forward expenditure Capitalised during the period Balance at end of period	2007 $
	- 703,800
	703,800

The ultimate recoupment of costs carried forward for exploration and evaluation phase is dependant on the successful development and commercial exploitation or sales of the respective areas

13. Other financial assets

Available for sale financial assets - unlisted investments at fair value 14. Current trade and other payables Trade payables (i) Other payables Accruals	70,000
	70,000
	16,847 20,382 27,620
	64,849

(i) The average credit period on purchases of goods is 30 days. No interest is charged on the trade payables for at least the first 30 days from the date of the invoice. Thereafter, interest may be charged on the outstanding balance. The Company has financial risk management policies in place to ensure that all payables are paid within the credit timeframe (refer note 26).

15. Current provisions

Current provisions
Employee benefits	12,842
	12,842

40 -

GTI Resources Ltd Notes to the financial statements

2007 $ Issued capital 35,000,003 fully paid ordinary shares 4,519,556 4,519,556

16. Issued capital

Changes to the then Corporations Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998. Therefore, the Company does not have a limited amount of authorised capital and issued shares do not have a par value.

Fully paid ordinary shares Balance on incorporation Seed capital raising Initial public offering Directors shares Vendor shares Share issue costs Balance at end of financial period	2007
	No. $
	3 3 3,000,000 300,000 20,000,000 4,000,000 9,000,000 900 3,000,000 600,000 - (381,347)
	35,000,003 4,519,556

Fully paid ordinary shares carry one vote per share and carry the right to dividends.

(i) The fair value was determined by reference to the trading price of the shares at the time of acquisition.

Share options

As at 31 December 2007, options over ordinary shares in aggregate are as follows:

Share options on issue at period end

Details of unissued shares or interests under option are:

Issuing entity	Number of shares under option	Class of shares	Exercise price of option	Expiry date of options
GTI Resources Ltd 5,500,000 Ordinary 30 cents each 19 December 2009 GTI Resources Ltd 4,500,000 Ordinary 40 cents each 19 December 2011

All share options are unlisted options and carry no rights to dividends and no voting rights.

No options were exercised, lapsed or expired during the period.

41 -

GTI Resources Ltd Notes to the financial statements

17. Reserves Equity-settled employee benefits reserve Equity-settled share based payments reserve Equity-settled employee benefits reserve Balance at beginning of financial period Share based payments Balance at end of financial period Equity-settled share based payments reserve Balance at beginning of financial period Share based payments Balance at end of financial period	2007 $
	339,456 53,600
	393,056
	- 339,456
	339,456
	- 53,600
	53,600

The equity-settled employee benefits reserve arises on the grant of share options to Directors and employees under the share option arrangement. Amounts are transferred out of this reserve and into issued capital when the options are exercised. Further information about share-based payments is made in note 8 to the financial statements.

18. Accumulated losses Balance at beginning of financial period Net loss attributable to members of the Company Balance at end of financial period	- (715,898)
	(715,898)

42 -

GTI Resources Ltd Notes to the financial statements

		2007
		Cents per
		share
19.	Loss per share
	Basic loss per share	(3.11)

The Company incurred a loss for the period and the diluted earnings per share is the same as the basic earnings per share.

Basic earnings per share

The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

share are as follows:
	2007
	$
Loss attributable to members	(715,898)
	2007
	No.
Weighted average number of ordinary shares for
the purposes of basic earnings per share	23,029,523

43 -

GTI Resources Ltd Notes to the financial statements

20. Commitments for expenditure

2007 $

(a) Capital expenditure commitments

There are no capital expenditure commitments.

(b) Lease commitments Non-cancellable operating lease payments Not longer than 1 year Longer than 1 year and not longer than 5 years	46,475 63,537
	110,012

(c) Other expenditure commitments

Within one year 149,880

In order to maintain current rights of tenure to exploration tenements, the Company is required to perform minimum exploration work to meet the minimum expenditure requirements specified by the Western Australian state government. These obligations are not provided for in the financial report and are payable.

If the Company decides to relinquish certain leases and/or does not meet these obligations, assets recognised in the balance sheet may require review to determine the appropriateness of carrying values. The sale, transfer or farm-out of exploration rights to third parties may reduce or extinguish these obligations.

44 -

GTI Resources Ltd Notes to the financial statements

21. Contingent liabilities and contingent assets

In the opinion of the Directors, there are no contingent liabilities as at 31 December 2007 and none were incurred in the interval between the period end and the date of this financial report.

22. Segment information

The Company operates predominantly in one geographical segment, being Western Australia, and in one industry, mineral exploration.

23. Related party disclosures

(a) Equity interests in related parties

Equity interests in subsidiaries

GTI Resources Ltd has no subsidiary companies.

Equity interests in associates and joint ventures

GTI Resources Ltd has no equity interests in associates or joint ventures.

(b) Key management personnel remuneration

Details of key management personnel remuneration are disclosed in note 7 to the financial statements.

(c) Key management personnel equity holdings

(c) Key management personnel equity holdings	(c) Key management personnel equity holdings	(c) Key management personnel equity holdings	(c) Key management personnel equity holdings	(c) Key management personnel equity holdings	(c) Key management personnel equity holdings
Fully paid ordinary shares of GTI Resources Ltd
Directors	Balance on incorporation	Granted as remuneration	Received on exercise of options	Net other change	Balance at 31 December 2007
	No.	No.	No.	No.	No.
2007 Murray McDonald Ian Cowden Greg Down Darren Crawte	3,000,001 - - - 3,000,001 3,000,001 - - - 3,000,001 3,000,001 - - 397,667 3,397,668 - - - - -
	9,000,003 - - 397,667 9,397,670

45 -

GTI Resources Ltd Notes to the financial statements

23. Related party disclosures (cont’d)

Executive share options of GTI Resources Ltd

	Bal at 5 April 2007	Granted as remu- neration	Exer- cised	Net other change	Bal at 31 December 2007	Bal vested at 31 December 2007	Vested but not exerci- sable	Vested and exerci- sable	Options vested during period
Directors	No.	No.	No.	No.	No.	No.	No.	No.	No.
2007 Murray McDonald Ian Cowden Greg Down Darren Crawte	- 3,000,000 - - 3,000,000 3,000,000 - 3,000,000 3,000,000 - 3,000,000 - - 3,000,000 3,000,000 - 3,000,000 3,000,000 - 3,000,000 - - 3,000,000 3,000,000 - 3,000,000 3,000,000 - - - - - - - - -
	- 9,000,000 - - 9,000,000 9,000,000 - 9,000,000 9,000,000

2007 $

(e) Other transactions with specified Directors

The loss from operations includes the following items of revenue and expense that resulted from transactions other than remuneration, loans or equity holdings, with specified Directors or their personally-related entities:

Rental and office expenses payable to entities associated with Ian Cowden 47,950

Total liabilities arising from transactions other than remuneration with specified Directors or their personally-related entities as at reporting date: -

46 -

GTI Resources Ltd Notes to the financial statements

24. Subsequent events

There has not been any matter or circumstances that has arisen since the end of the financial period, that has significantly affected, or may significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.

25. Notes to the cash flow statement


Notes to the cash flow statement (a) Reconciliation of cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial period as shown in the cash flow statement is reconciled to the related items in the balance sheet as follows: Cash and cash equivalents (b) Reconciliation of loss for the period to net cash flows from operating activities Loss for the period Depreciation of non-current assets Equity settled share-based payment (Increase)/decrease in assets: Trade and other receivables Increase/(decrease) in liabilities: Current trade and other payables Provisions Net cash used in operating activities	2007 $
	3,403,609
	3,403,609
	(715,898) 7,692 339,456 (61,063) 64,849 12,842
	(352,122)

47 -

GTI Resources Ltd Notes to the financial statements

26. Financial instruments

(a) Financial risk management objectives

The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

The Company’s activities expose it primarily to the financial risks of changes in interest rates. The Company does not enter into derivative financial instruments to manage its exposure to interest rate risk.

(b) Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 3 to the financial statements.

(c) Foreign currency risk management

The Company has no transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations do not arise.

(d) Interest rate risk management

The Company is exposed to interest rate risk as it invests cash in both fixed and floating interest rate products. The risk is managed by maintaining an appropriate mix between fixed and floating rate products.

Maturity profile of financial instruments

The following table details the Company’s exposure to interest rate risk as at 31 December 2007:

2007	Weighted average effective interest rate	Variable interest rate	Maturity dates	Maturity dates	Maturity dates
			Less than 1 year	1-5 years	More than 5 years	Non interest bearing	Total
	%	$	$	$	$	$	$
Financial assets: Cash and cash equivalents 6.55 Other receivables Financial liabilities: Trade and other payables Lease liabilities		3,403,609 -	- - - - 3,403,609 - - - 40,890 40,890
		3,403,609	- - - 40,890 3,444,499
		- -	- - - 64,849 64,849 - - - - -
		-	- - - 64,849 64,849

(e) Credit risk management

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 a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company has no sales and trade accounts comprise only sundry debtors.

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

(f) Fair value of financial instruments

Except as detailed in the following table, the Directors consider that the carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their fair values.

Transaction costs are included in the determination of net fair value.

(g) Liquidity risk management

The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

48 -

AI assistant

AMERICAN URANIUM LTD — Annual Report 2007

64381_rns_2008-03-11_5e674b03-0fdc-4dad-8c79-a7487152baea.pdf

GTI RESOURCES LTD

Annual Report for the period ended 31 December 2007

Chairman’s Report

Highlights

Yangibana (Uranium-Rare Earths–Base Metals, GTI 100%)

Conical Hill (Uranium, GTI 100%)

Cambridge Creek (Uranium, GTI 100%)

Cambridge Creek Geology

Bali Hi – Pinnacles (Uranium–Copper-Gold, GTI 90-100%)

Tambourah (Gold-Base Metals, GTI 90%)

Yelbeni and Bonnie Rock (Uranium, GTI 100%)

Yelbeni Uranium Project, E70/3367

Corporate governance

STATEMENT

EXPLANATIONS FOR DEPARTURES FROM BEST PRACTICE RECOMMENDATIONS

Principle 2

Principle 2

Principle 2

Principle 2

Principle 4

Principle 9

NOMINATION COMMITTEE

AUDIT COMMITTEE

REMUNERATION COMMITTEE

OTHER

Skills, Experience, Expertise and term of office of each Director

Identification of Independent Directors

Statement concerning availability of Independent Professional Advice

Confirmation whether performance Evaluation of the Board and its members have taken place and how conducted

Existence and Terms of any Schemes for Retirement Benefits for Non-Executive Directors

Directors’ report

Information on Directors

Murray McDonald Executive Chairman

Ian Cowden Non-Executive Director

Company Secretary

Darren Crawte LL.B (Hons), ACA

Principal activities

Changes in state of affairs

Subsequent events

Future developments

Environmental regulations

Dividends

Share options

Share options granted to Directors

Share options that expired/lapsed

Share options granted to employees

Share options on issue or exercised

Indemnification of officers and auditors

Directors’ meetings

Directors’ shareholdings

Remuneration report

Remuneration policy for Directors and executives

Director and executive details

Elements of Director and executive remuneration

Value of options - basis of calculation

Proceedings on behalf of the Company

Non-audit services

Auditor’s independence declaration

RE: GTI RESOURCES LIMITED

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF GTI RESOURCES LIMITED

Report on the Financial Report

Directors’ Responsibility for the Financial Report

Auditor’s Responsibility

Independence

Auditor’s Opinion

STANTONS INTERNATIONAL

(An Authorised Audit Company)

J P Van Dieren

Directors’ declaration

Murray McDonald Executive Director & Chairman

Income statement for the financial period ended 31 December 2007

Balance sheet as at 31 December 2007

Statement of changes in equity for the financial period ended 31 December 2007

Cash flow statement for the financial period ended 31 December 2007

Notes to the Financial Statements

1. General information

2. Adoption of new and revised accounting standards

AMERICAN URANIUM LTD Annual Report 2007