AMERICAN URANIUM LTD — Annual Report 2012

Mar 25, 2013

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ABN 33 124 792 132

ANNUAL REPORT FOR THE YEAR ENDED

31 December 2012

Corporate Directory

Board of Directors

Mr Murray McDonald Mr Ian Cowden Mr Yohanes Sucipto Ms Emma Gilbert

Executive Chairman Non‐Executive Director Non‐Executive Director Executive Director

Company Secretary

Mr Frank Campagna

Registered Office

97 Outram Street West Perth, Western Australia 6005

Principal Office

97 Outram Street West Perth, Western Australia 6005

Telephone: +61 8 9215 0400 Facsimile: +61 8 9321 3628

Auditor

Stantons International Audit & Consulting Pty Ltd Level 2, 1 Walker Avenue West Perth, Western Australia 6005

Telephone: +61 8 9481 3188 Facsimile: +61 8 9321 1204

Share Registry

Advanced Share Registry Services Pty Ltd 150 Stirling Highway Nedlands, Western Australia 6009

Telephone: +61 8 9389 8033 Facsimile: +61 8 9389 7871

Stock Exchange

Australian Securities Exchange Limited Level 8, Exchange Plaza 2 The Esplanade Perth, Western Australia 6000

ASX Code: GTR

Website

www.gtiresources.com.au

GTI Resources Ltd Contents

Contents

	Page
Chairman’s Report	1
Operations Report	2
Corporate Governance Statement	4
Directors’ Report	9
Auditor’s Independence Declaration	16
Independent Audit Report	17
Directors’ Declaration	19
Statement of Comprehensive Income	20
Statement of Financial Position	21
Statement of Changes in Equity	22
Statement of Cash Flows	23
Notes to the Financial Statements	24
Additional Securities Exchange Information	44

GTI Resources Ltd Chairman’s Report

Chairman’s Report

Dear Shareholder

The board continued during the year to access potential acquisitions World‐wide, however during the latter part of the year Asia became the focus.

In 2008 the company established a presence in Indonesia giving access to an expanded network of contacts within the mining sector and a Jakarta base from which to operate.

We now have an extensive database on Indonesia allowing a more focussed selection of potential projects. Recently site visits were undertaken to review nickel project opportunities to production.

The West Australian properties were expanded during the year with Silver King (GTI 100%) further expanded with the addition of a fourth exploration licence and another three exploration licences early in 2013. An airborne aeromagnetic survey is planned for the 2013 field season.

Further applications were submitted for additional ground at our Henry River and Yangibana projects.

The Cambridge Creek project in the Ashburton region of Western Australia is now 100% GTI.

The company announced during the year that Mr Yohanes Sucipto had accepted an invitation to join the board. Mr Sucipto has developed excellent business connections with senior business leaders and large corporations in China, Indonesia, and Hong Kong.

Shareholders will continue to be fully informed of progress on potential acquisitions, as they advance past the preliminary phase.

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Murray McDonald Executive Chairman

Perth, 07 March 2013

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GTI Resources Ltd Operations Report

Operations Report

The technical team and corporate group reviewed many international projects during the year as potential acquisition opportunities, for commodities including gold, manganese, iron ore, nickel, coal and potash.

In the latter half of the year targets in Asia were prioritised due to an expanded network of contacts and office facilities in Indonesia.

Site visits were undertaken to further review a number of projects including nickel project opportunities to production.

The company has not yet been successful in securing a suitable project however we continue a focussed approach giving the best potential to add significant value to the Company.

Mr Yohanes Sucipto accepted the board’s invitation to join GTI as a non‐executive Director. Mr Sucipto has excellent business connections with senior leaders and large corporations in China, Indonesia and Hong Kong.

WESTERN AUSTRALIAN PROJECTS:

Silver King (GTI 100%)

The project is located about 125 kilometres from the Port of Onslow and close to the North West Coastal Highway. Silver, copper and gold mineralisation occurs within the tenements.

During the year, the Department of Mines and Petroleum granted approval for iron ore exploration over the central tenement areas. Evaluation of aeromagnetic survey data has defined targets along more than 3.5 km strike length of a banded iron formation (BIF) outcrop ridge.

Located nearby, the Mt Alexander Iron Ore deposit of Zenith Minerals has a reported inferred mineral resource of 392.9 million tonnes at 29.5% Fe over some four kilometres strike length of a BIF unit mapped as a geological equivalent.

The Silver King project has now been further expanded with the addition of a fourth exploration licence in late 2012, and another three exploration licences in early January 2013.

An airborne EM survey has been planned for 2013, targeted on exploration results and historical mining areas.

Henry River (GTI 100%)

Located 20 kilometres east of Silver King, the Henry River project area covers approximately 14,376 hectares within the Ashburton Shire.

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GTI Resources Ltd Operations Report

High grade silver – lead mineralisation was previously mined at the old Thowagee workings, which comprise a series of trenches and shallow open cuts developed on two separate vein systems which are up to 370m and 260m long respectively.

GTI is targeting large deposits of syngenetic or stratiform base metal lead‐zinc‐silver mineralisation at Henry River. Rocks within the project area are considered by the Geological Survey of Western Australia to have the main potential in the Gascoyne Complex for hosting this type of deposit.

The project area was enhanced during the year and now comprises two granted exploration licences, one EL application and a prospecting licence application.

Cambridge Creek (GTI 100%)

GTI’s interest in the Cambridge Creek project area in the Ashburton region of Western Australia increased to 100% following Wombat Resources withdrawal from a joint venture.

The project is considered prospective for silver, base metals and uranium and adjoins the Company’s 100% owned Henry River project.

GTI’s expanded exploration programme at Cambridge Creek and Henry River is designed to evaluate the potential of the known lead, silver mineralisation and possible relationships to a larger syngenetic or stratiform system.

Other Projects

A new exploration licence was applied for at Yangibana, which includes REE mineralisation (Rare Earth Elements) at the Bald Hill North and Bald Hill South gossanous deposits. The new licence (GTI 100%) covers more than 15 square kilometres and is contiguous with other Yangibana prospects, over which GTI retains royalty interests and a will receive payment of $500,000 on completion of a Bankable Feasibility Study.

At Conical Hill (GTI 100%), a large exploration licence application is pending. Exploration by others on adjacent ground during the year has demonstrated that the regional geology is favourable for high grade manganese and iron mineralisation.

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

INTRODUCTION

A description of the Company’s main corporate governance practices is set out below. These practices, unless otherwise stated, were in place for the entire financial year.

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.

PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

Recommendation 1.1 – Establish and disclose the functions reserved to the Board and those delegated to senior executives.

The Board has the responsibility for protecting the rights and interests of shareholders and the enhancement of long‐term shareholder value. The Board’s primary role is to formulate the strategic direction of the Company and to oversee the Company’s business activities and management. Day to day management of the Company’s affairs and the implementation of corporate strategies are formally delegated by the Board to the Executive Chairman.

The Board has established functions that are reserved for the Board, as separate from those functions delegated to the Executive Chairman and are summarised in the Board Charter which is available on the Company’s website. The Board retains responsibility for the following:

• (a) the overall strategic direction and leadership of the Company, including its control and accountability systems;

• (b) appointing the chief executive officer, or equivalent, for a period and on terms as the directors see fit and, where appropriate, removing the chief executive officer;

• (c) ratifying the appointment and, where appropriate, the removal of senior executives including the company secretary;

• (d) approving and monitoring the corporate governance of the Company;

• (e) the establishment and maintenance of a framework of internal control and appropriate ethical standards for the management of the Company;

• (f) monitoring, reviewing and challenging senior management's performance and implementation of objectives and strategies;

• (g) approving and monitoring the progress of major capital expenditure, capital management, and acquisitions and divestitures;

• (h) monitoring the financial and non‐financial performance of the Company;

• (i) ensuring the integrity of the Company's financial and other reporting (with the assistance of the Audit Committee);

• (j) appointing the external auditor (based on recommendations of the Audit Committee) and the appointment of a new external auditor when any vacancy arises, provided that any appointment made by the Board must be ratified by shareholders at the next annual general meeting of the Company;

Recommendation 1.2 – Disclose the process for evaluating the performance of senior executives.

The Remuneration Committee is charged with periodic review of the job description and performance of the Executive Chairman according to agreed performance parameters. The Executive Chairman is the subject of an informal evaluation against both individual performance and overall business measures. These evaluations were undertaken progressively and periodically during the year.

No formal process exists for the appraisal of other senior executives, as the size and management structure of the Company permits ongoing monitoring by the Executive Chairman and the Remuneration Committee of senior executive performance. No formal evaluation of senior executive performance was therefore undertaken during the year.

The Company’s website contains a section formally setting out the Company’s Process for Performance Evaluation.

Recommendation 1.3 – Provide the information in the guide to reporting on Principle 1.

Performance evaluations for the Executive Chairman have taken place in the reporting period in accordance with the process disclosed.

The Board charter is publicly available at www.gtiresources.com.au and includes a description of what matters are reserved for the Board and management respectively.

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GTI Resources Ltd Corporate Governance

PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE

Recommendation 2.1 – A majority of the Board should be independent directors.

The Company has a four member Board comprising two executive directors, including the chairman and two non‐executive directors. Under present circumstances, there is not a majority of directors classified as independent, according to ASX guidelines. The directors are not considered to be independent by virtue of either holding in excess of 5% ownership of the Company or holding an executive position with the Company.

The current composition of the Board is considered suitable for the Company’s current size, level of operations and its strategy of minimising operating costs and includes an appropriate mix of skills, expertise and experience relevant to the Company’s business. As the Company grows and/or circumstances change, the Board will consider further appointments of independent directors if appropriate.

Recommendation 2.2 – The Chairperson should be an independent director.

Board members should possess complementary business disciplines and experience aligned with the Company’s objectives and where appropriate, significant shareholders being represented on the Board and if nominated, holding the position of Chairman. The Chairman is expected to bring independent thought and judgement to his role in all circumstances. Where matters arise in which there is a perceived conflict of interest, the Chairman must declare his interest and abstain from any consideration or voting on the relevant matter.

Recommendation 2.3 –The roles of Chairperson and Chief Executive Officer should not be exercised by the same individual.

Mr McDonald is the Executive Chairman and Chief Executive Officer of the Company and is therefore not deemed to be an independent director and as such, the Company does not comply with Recommendation 2.2 or 2.3. The Board believes that the current size of the Company and of the Board does not make a separation of the Chief Executive Officer’s and Chairman’s duties viable.

Recommendation 2.4 – The Board should establish a nomination committee.

The Company does not have a separate nomination committee. The current size of the full Board permits it to act as the nomination committee and to regularly review membership.

Recommendation 2.5 – Disclose the process for evaluating the performance of the Board, its committees and individual directors.

The Chairman is responsible for evaluation of the Board, Board committees and individual directors. The Board, acting as the Nomination Committee, in the absence of the Executive Chairman, is responsible for evaluating the performance of the Executive Chairman. Other senior executives are evaluated by the Executive Chairman.

The Company has adopted policies and procedures concerning the evaluation and development of its directors, executives and Board committee. Procedures include an internal Board performance assessment, an induction protocol and ongoing internal discussion with regard to the performance of the Board and its directors.

The Company’s process for Performance Evaluation is available on the Company’s website.

Recommendation 2.6 – Provide the information indicated in the guide to reporting on Principle 2 .

Contained in the Directors’ Report section of this Annual Report are details of the skills, experience and expertise of each Director in office at the date of this Annual Report. The terms of office, and their status as executive/non‐executive/independent, for each director for the year ended 31 December 2012 were as follows (with all directors noted as continuing in office as at 31 December 2012 and still being in office at the date of this annual report):

Murray McDonald	Executive/non‐independent (appointed 5 April 2007 continuing)
Ian Cowden	Non‐executive/non‐independent (appointed 5 April 2007 continuing)
Emma Gilbert	Executive/non‐independent(appointed 15 June 2010 continuing)
Yohanes Sucipto	Non‐executive/non‐independent (appointed 8 August 2012 continuing)

The Board has adopted ASX recommended principles in relation to the assessment of directors’ independence, which identifies shareholdings, executive roles and contractual relationships which may affect independent status. Financial materiality thresholds used in the assessment of directors’ independence are set at 10% of the annual gross expenditure of the Company and/or 25% of the annual income or business turnover of the director. The Board Charter empowers a director to seek independent professional advice, in connection with their duties and responsibilities, at the expense of the Company.

A formal evaluation of the Board of Directors did not take place during the period however, the Chairman assesses the performance of the Board, individual directors and Board committees on an ongoing basis and undertakes informal appraisals with relevant directors.

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GTI Resources Ltd Corporate Governance

The Company’s procedure for the selection and appointment of new directors is available on the Company’s website.

It is the policy of the Board that in determining candidates for Board positions, the following process is followed;

1. When a Board vacancy occurs, the Board identifies the particular skills, experience and expertise that will best complement Board effectiveness and then undertakes a selection process to identify candidates who can meet those criteria. Any appointment made by the Board is subject to ratification by shareholders at the next annual general meeting.

The Company encourages diversity in employment and in the composition of its Board, as a means of ensuring that the Company has an appropriate mix of skills and experience which are relevant to the operations of the Company.

PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING

Recommendation 3.1 ‐ Establish a code of conduct and disclose the code, or a summary as to:

• 3.1.1 the practices necessary to maintain confidence in the company’s integrity;

• 3.1.2 the practices necessary to take into account legal obligations and reasonable expectations of stakeholders;

3.1.3 the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

The Company has established a formal code of conduct to guide the Directors, senior executives and employees to guide compliance with the legitimate interests of all stakeholders. The code aims to encourage the appropriate standards of conduct and behaviour of the directors, employees and contractors of the Company. All personnel are expected to act with integrity and objectivity, striving at all times to enhance the reputation and performance of the Company. A summary of the code of conduct is disclosed on the Company’s website.

The Company’s share trading policy prohibits the purchase or disposal of securities by directors, senior executives and other designated persons in the period of two weeks immediately preceding the release of quarterly reports and the Company’s annual and half‐year financial results.

Recommendation 3.2 ‐ Establish a policy concerning diversity and disclose a summary of that policy.

The Board recognises the benefits of achieving an appropriate mix of diversity on its Board and throughout the Company as a means of enhancing the Company's performance and organisational capabilities. However, at this stage of development of the Company, the Board has elected not to establish a formal diversity policy due to limited number of personnel employed by the Company and the nature of its current activities.

Recommendation 3.3 – Disclose the measurable objectives for achieving gender diversity and the progress towards achieving those objectives.

The Company aims to achieve an appropriate mix of diversity on its Board, in senior management and throughout the organisation. The Board has determined that no specific measurable objectives will be established until the number of employees and level of activities of the Company increases to a level sufficient to enable meaningful and achievable objectives to be developed.

Recommendation 3.4 – Disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the Board.

The Board comprises four directors, three of whom are male and one is female. The Company Secretary is a male. There are no other officers or employees of the Company.

Recommendation 3.5 – Provide the information indicated in the guide to reporting on Principle 3.

A summary of the code of conduct is available on the Company’s web‐site

PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

Recommendation 4.1, 4.2 and 4.3 ‐ The Board should establish an Audit Committee, the Committee should comprise only non‐ executive directors and the committee should have a formal written charter.

The Board has established a separate Audit Committee comprising the full Board. The Audit Committee operates in accordance with a formal written charter. The Audit Committee met three times during the year and attendances by committee members are recorded in the Directors’ Report.

Mr McDonald, the Chair of the Audit Committee, is a qualified Certified Practising Accountant and has the relevant knowledge and experience to chair the Committee.

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GTI Resources Ltd Corporate Governance

Recommendation 4.4 ‐ Provide the information indicated in the guide to Reporting on Principle 4 .

A copy of the Audit Committee Charter and the process for the selection, appointment and rotation of the Company’s external auditors is available on the Company’s website.

PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE

Recommendation 5.1 ‐ Establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies.

The Company has a formal written policy for the continuous disclosure of any price sensitive information concerning the Company and to ensure accountability by senior executives.

The Chairman and Company Secretary have been nominated as the Company’s primary disclosure officers. All information released to the ASX is posted on the Company’s web‐site immediately after it is disclosed to the ASX. When analysts are briefed on aspects on the Company’s operations, the material used in the presentation is released to the ASX and posted on the Company’s web‐site.

Recommendation 5.2 ‐ Provide the information indicated in the guide to reporting on Principle 5 .

A copy of the continuous disclosure policy is available on the Company’s website.

PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS

Recommendation 6.1 ‐ Design and disclose a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose the policy.

The Board has adopted a formal written policy covering arrangements to promote communications with shareholders, including effective use of electronic communications, and to encourage effective participation at general meetings. The Board encourages the attendance of shareholders at shareholders’ meetings and sets the time and place of each meeting to allow maximum attendance by shareholders.

Recommendation 6.2 ‐ Provide the information indicated in the guide to reporting on Principle 6.

A copy of the shareholders communication policy is available on the Company’s website.

PRINCIPLE 7: RECOGNISE AND MANAGE RISK

Recommendation 7.1 ‐ Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.

The Board is responsible for the oversight of the Company’s risk management and control framework, and has adopted a formal policy on risk oversight and management. A summary of the Company’s risk management policy is available on the Company’s website.

The Company has reported on financial risks in the annual report including credit risk, liquidity risk, market risk and capital management risk.

Recommendation 7.2 ‐ The Board should require management to design and implement the risk management and internal control system to manage the Company’s material business risks, and report to it on whether those risks are being managed effectively. Board should disclose that management has reported to it as to the effectiveness of the Company’s management of its material business risks.

The Company’s risk management systems are continuing to be developed and it is recognised that the extent of the systems will evolve with the growth in the Company’s activities. Internal controls are designed to manage both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records and the reliability of financial and non‐ financial information.

The Executive Chairman reports to the Board on a regular basis on the material business risks of the Company. No formal report was provided to the Board during the year on whether those risks are being managed effectively.

Recommendation 7.3 ‐ Board should disclose whether it has received assurance from the Managing Director (or equivalent) and the CFO (or equivalent) that the declaration provided in accordance with Section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.

The Executive Chairman and the CFO provide a declaration to the Board that the Company’s external financial reports present a true and fair view of the Company’s financial condition and operational results and that the declaration in relation to the integrity of the

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GTI Resources Ltd Corporate Governance

Company’s external financial reports is founded on sound risk management and internal control systems and that those systems are operating effectively in relation to financial reporting risks

Recommendation 7.4 ‐ Provide the information indicated in the guide to reporting on Principle 7 .

A summary of the Company’s risk management policy is available on the Company’s website. It is acknowledged that a more detailed policy will be introduced once risk management systems and policies are further developed.

PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY

Recommendation 8.1 and 8.2 ‐ The Board should establish a remuneration committee and the recommended structure of the remuneration committee

The current size of the Board and the stage of development of the Company do not warrant the establishment of a separate remuneration committee. The full Board acts in the capacity of the Remuneration Committee and operates under a formal written charter. No separate meetings of the remuneration committee were held during the year, however, remuneration policies and practices are reviewed on an ongoing basis by the Board.

Recommendation 8.3 ‐ Clearly distinguish the structure of non‐executive directors’ remuneration from that of executive directors and senior executives.

The structure for the remuneration of non‐executive directors and senior executives is separate and distinct. Details of the Company’s remuneration policies are set out in the Remuneration Report section of the Directors’ Report.

Recommendation 8.4 ‐ Provide the information indicated in the guide to reporting on Principle 8.

Non Executive Director Retirement Benefits

Non‐executive directors are entitled to statutory superannuation. There are no other schemes for retirement benefits for non‐executive directors.

Limiting Risk

Where the Company grants securities under an equity based remuneration scheme, participants are prohibited from entering into arrangements for the hedging, or otherwise limiting their exposure to risk in relation to unvested shares, options or rights issued or acquired under the scheme.

Information Publicly Available

A copy of the Remuneration Committee charter is available on the Company’s website.

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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 year ended 31 December 2012. 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 year and up to the date of this report are:

Murray McDonald Executive Chairman Ian Cowden Non‐executive Director Yohanes Sucipto Non‐executive Director Emma Gilbert Executive Director

Information on Directors

Murray McDonald Executive Chairman Appointed 5 April 2007

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 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 Appointed 5 April 2007

Mr Cowden is a professional geologist and has been involved in the exploration and mining sectors worldwide 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 since 1990.

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 not held directorships in any other listed company.

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

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GTI Resources Ltd Directors’ Report

Yohanes Sucipto Non‐Executive Director Appointed 8 August 2012

Mr Sucipto has been involved in the mining industry for the last 5 years, together with experience in senior management positions including CEO for various companies for over 15 years.

Mr Sucipto has developed excellent business connections with senior business leaders and large corporations in China, Philippines, Hong Kong and Indonesia.

Emma Gilbert Executive Director Appointed 15 June 2010

For the past 12 years Ms Gilbert has been involved in the mining industry, having acquired extensive experience in accounting and management ranging from joint venture negotiations, company secretarial services and overseeing financial activities.

Ms Gilbert has served in an accounting and administration role which has included liaison with the Australian Securities Exchange (ASX), Company auditors, various financial institutions and government departments. She has extensive experience in development and management of mine accounting and financial control systems, including large overseas gold mining operations and the Gidgee Gold mine.

In 2007 Ms Gilbert rejoined Mr McDonald and Mr Cowden to list GTI Resources Ltd on the Australian Securities Exchange, a company fully underwritten on listing raising $4 million.

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

Company Secretary

Frank Campagna B.Bus (Acc), CPA Company Secretary Appointed 15 June 2010

Mr Campagna was appointed Company Secretary of GTI Resources on 15 June 2010. Mr Campagna is a Certified Practicing Accountant with over 25 years experience as Company Secretary, Chief Financial Officer and Commercial Manager for listed resources and industrial companies. He presently operates a corporate consultancy practice which provides corporate secretarial and advisory services to both listed and unlisted companies.

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 At 1 January 2012	Shares Acquired Off Market During The Year and to date of this report	Total	Options
Murray McDonald 4,500,001 ‐ 4,500,001 ‐ Ian Cowden 4,500,001 ‐ 4,500,001 ‐ Yohanes Sucipto ‐ 4,600,000 4,600,000 ‐ Emma Gilbert ‐ ‐ ‐ ‐

Remuneration of Directors and Senior Management

Information about the remuneration of Directors and senior management is set out in the remuneration report of this Directors’ Report.

Share Options Granted to Directors and Senior Management

During and since the end of the financial year no share options were granted to Directors or remunerated officers of the Company as part of their remuneration (2011: Nil).

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GTI Resources Ltd Directors’ Report

Principal Activities

The principal activity of GTI Resources Ltd is the exploration and evaluation of mineral and energy resources. There was no significant change in the nature of this activity during the year.

Review of Operations

A review of the Company’s exploration projects and activities during the year are discussed in the Operations Report included in this Annual Report.

The loss of the Company after income tax for the year was $841,780 (2011: $360,171).

Changes in State of Affairs

During the financial year there was no significant change in the state of affairs of the Company other than referred to in the financial statements or notes thereto.

Subsequent Events

There has not been any matter or circumstance that has arisen since the end of the financial year 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 year ended 31 December 2012.

Share Options

Shares under option or issued on exercise of options

At the date of this report, there were no unissued ordinary share of GTI Resources Ltd under option.

Shares issued on the exercise of options

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

Share options that expired/lapsed during the period

No options expired or lapsed since the end of the financial year or up to the date of this report.

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GTI Resources Ltd Directors’ Report

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 formal Directors’ meetings (including meetings of committees of Directors) held during the financial year and the number of meetings attended by each Director (while they were a Director or committee member). During the financial year, three Board meetings and three audit committee meetings were held.

	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 5 4 ‐ ‐ 1 1 Ian Cowden 5 5 ‐ ‐ 1 1 Emma Gilbert 5 1 ‐ ‐ 1 1 Yohanes Sucipto (appointed 8 August 2012) 2 2 ‐ ‐ ‐ ‐

The Directors also passed two circular resolutions during the year.

Proceedings on Behalf of the Company

No persons have applied for leave pursuant to s.237 of the Corporation Act 2001 to bring, or intervene in, proceedings on behalf of GTI Resources Ltd.

Non‐Audit Services

There were no non‐audit services performed during the year by the auditors (or by another person or firm on the auditor’s behalf).

Auditor’s Independence Declaration

The auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is set out on page 16 of the financial report.

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GTI Resources Ltd Directors’ Report

Remuneration Report (audited)

This remuneration report, which forms part of the Directors’ report, sets out information about the remuneration of GTI Resources Ltd’s key management personnel for the financial year ended 31 December 2012. Disclosures required under AASB 124 Related Party Disclosures have been transferred from the financial report and have been audited.

The prescribed details for each person covered by this report are detailed below under the following headings:

• key management personnel details;

• remuneration policy and relationship between the remuneration policy and Company performance;

• remuneration of key management personnel; and

• key terms of employment contracts.

Key management personnel details

The key management personnel of GTI Resources Ltd during the year or since the end of the year were:

• Murray McDonald Executive Chairman

• Ian Cowden Non‐Executive Director  Emma Gilbert Executive Director  Yohanes Sucipto Non‐Executive Director

Remuneration policy and relationship between the remuneration policy and Company performance

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.

‐ Key management personnel (excluding non executive Directors)

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 remuneration policy for executive Directors and other key management personnel has the following key elements:

• Primary benefits (being salary, fees, bonus and non monetary benefits)

• Post‐employment benefits (being superannuation)

• Equity (being share options granted)

• Other benefits

No remuneration has been provided that is performance related.

Non‐executive Directors

The fees paid to the Company’s non‐executive Directors reflect the demands on, and responsibilities of these Directors. They do not currently receive any superannuation or retirement benefits. The Board decides annually the level of fees to be paid to non‐executive Directors with reference to market standards.

‐ 13 ‐

GTI Resources Ltd Directors’ Report

Non executive Directors may also receive share options where this is considered appropriate by the Board as a whole and with regard to the stage of the Company’s development. Such options are primarily designed to provide an incentive to non‐executive Directors to remain with the Company.

A non‐executive Directors’ fee pool limit of $200,000 per annum was approved by the shareholders at the Annual General Meeting on 26 May 2008 and is currently utilised to a level of $40,000 per annum.

Remuneration of key management personnel

		Short‐term employee benefits	Short‐term employee benefits	Short‐term employee benefits	Short‐term employee benefits	Post‐ employment benefits	Other long‐ term employee benefits	Share‐ based payment	Total	% of compensation consists of options
		Salary & fees	Bonus	Non‐ monetary	Other	Super‐ annuation		Options
		$	$	$	$	$	$	$	$	%
	2012 Directors Murray McDonald (i) Ian Cowden (ii) Emma Gilbert (iii) Yohanes Sucipto (iv) Company Secretary Frank Campagna (v) 2011 Directors Murray McDonald (i) Ian Cowden (ii) Darren Crawte (iii) Emma Gilbert (iv) Company Secretary Frank Campagna (v)	199,600 ‐ ‐ 11,413 40,000 ‐ ‐ 87,975 52,900 ‐ ‐ 3,200 ‐ ‐ ‐ 2,661 ‐ ‐ ‐ 6,080				19,000 14,297 ‐ 244,310 ‐ ‐ ‐ ‐ 127,975 ‐ 4,761 6,567 ‐ 67,428 ‐ ‐ ‐ ‐ 2,661 ‐ ‐ ‐ ‐ 6,080 ‐
		292,500 ‐ ‐ 111,329				23,761 20,864 ‐ 448,454 ‐
		199,600 ‐ ‐ 36,815 40,000 ‐ ‐ 119,426 ‐ ‐ ‐ ‐ 91,693 ‐ ‐ 12,052 ‐ ‐ ‐ 8,000				23,750 ‐ ‐ 260,165 ‐ ‐ ‐ ‐ 159,426 ‐ ‐ ‐ ‐ ‐ ‐ 9,018 ‐ ‐ 112,762 ‐ ‐ ‐ ‐ 8,000 ‐
		331,293 ‐ ‐ 176,293				32,678 ‐ ‐ 540,354 ‐

• i) Other employee benefits for Mr McDonald included 2012: $7,676 (2011: $NIL) payment for annual leave. He was also entitled to annual leave not taken at 31 December 2012: $14,074 (2011: $6,397).

• ii) 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.

• iii) Other employee benefits for Ms Gilbert included an annual leave cash payment during the year of $6,179. Ms Gilbert was also entitled to annual leave not taken at 31 December 2012: $4,733 (2011: $4,261).

• iv) The services of Frank Campagna were provided by Frank Campagna and Associates a Corporate consulting firm of which Mr Campagna is a Principal.

• v) Other short term employee benefits also include directors’ and officers’ insurance.

During the year no options were issued to Directors (2011: Nil).

‐ 14 ‐

GTI Resources Ltd Directors’ Report

Key terms of employment contracts

Remuneration and other terms of employment for Directors and key management personnel

Mr Murray McDonald

The Executive Chairman, Mr Murray McDonald, was employed for an initial period of three years commencing 1[st] June 2007 with an option to extend the initial term for a further three year period on the same terms and conditions of the original contract. Mr McDonald exercised the option under his executive services agreement dated 8[th] June 2007 which shall now continue until at least 31[st] May 2013. The base fee (which did not change during the year) is currently $199,600 per annum (exclusive of superannuation entitlements).

The agreement may be terminated by the Company if Mr McDonald has an illness that prevents him from working in excess of three months in any twelve month period or in the event of serious misconduct. If the Company terminates the agreement (other than for serious misconduct) or Mr McDonald is voted off the Board (in which case the employment of Mr McDonald is deemed to be terminated), Mr McDonald is entitled to be paid his full salary and entitlements for the then unexpired period of the agreement and for any unexpired option period (but in any event limited to 1 (one) year’s salary and entitlements). The limit on termination benefits under the agreement was varied during the prior period limiting the entitlement to a maximum of one year to meet the new legislative requirements restricting termination benefits.

Ms Emma Gilbert

Ms Gilbert has been employed with the company from 1st June 2007 managing financial and administration activities. On 15th June 2010 Ms Gilbert was appointed Executive Director. Ms Gilbert is entitled to a base salary inclusive of statutory superannuation of $80,325 plus Directors fees of $18,000 per annum or pro‐rata depending on numbers of actual hours worked. There is no fixed term agreement or termination benefits payable under Ms Gilbert’s agreement.

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 Chairman

Perth, 07 March 2013

‐ 15 ‐

Stantons International Audit and Consulting Pty Ltd trading as

PO Box 1908 West Perth WA 6872 Australia

Chartered Accountants and Consultants

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Level 2, 1 Walker Avenue West Perth WA 6005 Australia

Tel: +61 8 9481 3188 Fax: +61 8 9321 1204

ABN: 84 144 581 519 www.stantons.com.au

7 March 2013

Board of Directors GTI Resources Limited 97 Outram 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 year ended 31 December 2012, 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 AUDIT AND CONSULTING PTY LTD

(Trading as Stantons International) (An Authorised Audit Company)

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John P Van Dieren - FCA Director

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16

Liability limited by a scheme approved under Professional Standards Legislation

Stantons International Audit and Consulting Pty Ltd trading as

PO Box 1908 West Perth WA 6872 Australia

Chartered Accountants and Consultants

==> picture [181 x 24] intentionally omitted <==

Level 2, 1 Walker Avenue West Perth WA 6005 Australia Tel: +61 8 9481 3188 Fax: +61 8 9321 1204

ABN: 84 144 581 519 www.stantons.com.au

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 statement of financial position as at 31 December 2012, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration.

Directors’ responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In note 2, the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.

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. Those 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 company’s preparation of the financial report that gives a true and fair view 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 company’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.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management.

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 .

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17

Liability limited by a scheme approved under Professional Standards Legislation

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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 2012 and of its performance for the year ended on that date; and

• (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and

• (b) the financial report of the Company also complies with International Financial Reporting Standards as disclosed in note 2.

Inherent Uncertainty Regarding Going Concern

Without qualification to the opinion expressed above, attention is drawn to the following matters:

As referred to in Note 2 to the financial statements, the financial statements have been prepared on the going concern basis. At 31 December 2012 the entity had net working capital of $271,632 and had incurred a loss for the year of $841,780. The ability of the entity to continue as a going concern is subject to the successful recapitalisation of the Company. In the event that the Board is not successful in recapitalising the Company and in raising further funds, the entity may not be able to continue in its present form and may not be able to meet its planned commitments.

Report on the Remuneration Report

We have audited the remuneration report included in pages 13 to 15 of the directors’ report for the year ended 31 December 2012. 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

Opinion

In our opinion the remuneration report of GTI Resources Limited for the year ended 31 December 2012 complies with section 300A of the Corporations Act 2001.

STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International) (An Authorised Audit Company)

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John P Van Dieren Director

West Perth, Western Australia 7 March 2013

18

GTI Resources Ltd Director’s 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 2012 and performance of the Company for the financial year ended on that date;

• (c) the financial statements and notes also comply with International Financial Reporting standards as disclosed in note 2; and

• (d) the Directors have been given the declarations required by s.295A of the Corporations Act 2001 for the financial year ended 31 December 2012.

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 Chairman

Perth, 07 March 2013

‐ 19 ‐

GTI Resources Ltd Statement of Comprehensive Income

Statement of Comprehensive Income for the Financial Year Ended 31 December 2012

Revenue Employee benefits expense Exploration expenditure expensed as incurred Project generation expenditure Corporate expenses Occupancy expenses Administration expenses Finance costs Diminution in value of investments Loss before income tax expense Income tax expense Loss for the year Other comprehensive income/(loss) Net change in fair value of available for sale financial assets Other comprehensive income/(loss) for the year, net of tax Total comprehensive loss for the year Loss attributable to members of GTI Resources Ltd Total comprehensive loss attributable to members of GTI Resources Ltd Loss per share: Basic and diluted (cents per share)	Note 5 11 6 7 16	2012 $ 2011 $
		193,239 500,639 (236,896) (269,776) (60,878) (66,604) (323,300) (276,215) (78,703) (82,021) (61,605) (87,073) (81,129) (78,691) (508) (430) (192,000) ‐
		(841,780) (360,171) ‐ ‐
		(841,780) (360,171)
		(56,799) 62,658
		(56,799) 62,658
		(898,579) (297,513)
		(841,780) (360,171)
		(898,579) (297,513)
		(2.19) (0.95)

Notes to the financial statements are included on pages 24 to 43

‐ 20 ‐

GTI Resources Ltd Statement of Financial Position

Statement of Financial Position as at 31 December 2012

Current assets Cash and cash equivalents Trade and other receivables Total current assets Non‐current assets Trade and other receivables Plant and equipment Exploration and evaluation expenditure Other financial assets Total non‐current assets Total assets Current liabilities Trade and other payables Provisions Total current liabilities Non‐current liabilities Provisions Total non‐current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity	Note 19(a) 8 8 9 10 11 12 13 13 14 15	2012 $ 2011 $
		320,532 659,349 11,866 21,335
		332,398 680,684
		2,998 1,998 23,471 25,459 85,900 85,900 79,166 368,651
		191,535 482,008
		523,933 1,162,692
		39,326 107,780 21,440 12,150
		60,766 119,930
		20,864 ‐
		20,864 ‐
		81,630 119,930
		442,303 1,042,762
		5,107,840 4,809,720 254,274 311,073 (4,919,811) (4,078,031)
		442,303 1,042,762

Notes to the financial statements are included on pages 24 to 43

‐ 21 ‐

GTI Resources Ltd Statement of Changes in Equity

Statement of Changes in Equity for the Financial Year Ended 31 December 2012

Attributable to equity holder

		Equity‐settled
		employee	Investment
		benefits	revaluation	Accumulated
	Ordinary shares	reserve	reserve	losses	Total equity
	$	$	$	$	$
Balance at 1 January 2011	4,809,720	210,036	38,379	(3,717,860)	1,340,275
Loss for the year	‐	‐	‐	(360,171)	(360,171)
Other comprehensive income
Net change in fair value of available
for sale financial assets	‐	‐	62,658	‐	62,658
Total	‐	‐	62,658	(360,171)	(297,513)
Balance at 31 December 2011	4,809,720	210,036	101,037	(4,078,031)	1,042,762
Balance at 1 January 2012	4,809,720	210,036	101,037	(4,078,031)	1,042,762
Loss for the year	‐	‐	‐	(841,780)	(841,780)
Transactions with owners, in their
capacity as owners and other transfers
Ordinary shares issued during the year	310,000	‐	‐	‐	310,000
Transaction costs	(11,880)	‐	‐	‐	(11,880)
Other comprehensive income
Transfer revaluation of financial assets
sold to income statement	‐	‐	(244,125)	‐	(244,125)
Diminution in value of investments to
income statement	‐	‐	192,000	‐	192,000
Net change in fair value of available
for sale financial assets	‐	‐	(4,674)	‐	(4,674)
Total	298,120	‐	(56,799)	(841,780)	(600,459)
Balance at 31 December 2012	5,107,840	210,036	44,238	(4,919,811)	442,303

Notes to the financial statements are included on pages 24 to 43

‐ 22 ‐

GTI Resources Ltd Statement of Cash Flows

Statement of Cash Flows for the Financial Year Ended 31 December 2012

Cash flows from operating activities Interest received Payments to suppliers, employees and for exploration activities Interest and other costs of finance paid Net cash used in operating activities Cash flows from investing activities Payment for plant and equipment Proceeds from sale of interests in exploration assets Proceeds from sale of financial assets Payments for financial assets Net cash provided by/ (used in) investing activities Cash flows from financing activities Proceeds from issue of shares Payment for share issue costs Loans to related parties Net cash from / (used in) financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year	Note 19(b) 19(a)	2012 $ 2011 $
		11,926 34,419 (862,462) (828,260) (508) (430)
		(851,044) (794,271)
		(6,893) (7,457) ‐ 500,000 222,000 ‐ ‐ (2,000)
		215,107 490,543
		310,000 ‐ (11,880) ‐ (1,000) (935)
		297,120 (935)
		(338,817) (304,663) 659,349 964,012
		320,532 659,349

Notes to the financial statements are included on pages 24 to 43

‐ 23 ‐

GTI Resources Ltd Notes to the Financial Statements

Notes to the Financial Statements

1. General Information

GTI Resources Ltd (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 97 Outram Street 97 Outram Street West Perth WA 6005 West Perth WA 6005

2. Significant 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 2013.

Basis of preparation

The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non‐current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets.

The directors have prepared the financial statements on the basis of going concern, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. The directors believe this to be appropriate for the following reasons:

• The Company has cash reserves of $320,532 and net working capital of $271,632, at 31 December 2012;

• The Company continues to monitor opportunities to raise further equity from interested investors;

• The Company still holds a sizeable amount of Amex Resources Ltd shares that can be readily converted into cash; and

• The Company’s Board of Directors has a long history of raising funds in the public and will do so when required.

Based on the above, the directors are confident that the Company will be able to continue operations as a going concern into the foreseeable future.

Critical accounting judgements and key sources of estimation uncertainty

In the application of the Company’s accounting policies, management is required to make judgements, 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 experiences and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to the 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 the current and future periods.

Refer to Note 3 for a discussion of critical judgements in applying the entity’s accountings policies and key sources of estimation uncertainty.

‐ 24 ‐

GTI Resources Ltd Notes to the Financial Statements

Adoption of new and revised Accounting Standards

Changes in accounting policy on initial application of Accounting Standards

The company has, where applicable, adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the year ended 31 December 2012.

The adoption of all the new and revised Standards and Interpretations has not resulted in any changes to the Group’s accounting policies and has no effect on the amounts reported for the current or prior years.

2. Significant Accounting Policies

During the current reporting period, certain accounting policies have changed as a result of new or revised accounting standards which became operative for the annual reporting period commencing on 1 January 2012.

The accounting policies and methods of computation adopted in the preparation of the 2012 annual financial report are consistent with those adopted and disclosed in the company’s 2011 annual financial report, except for the impact of the Standards and Interpretations described below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

New Accounting Policies Adopted Effective 1 January 2012

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 their operations and effective for the current reporting period.

The adoption of these amendments has not resulted in any changes to the Company's accounting policies and have no affect on the amounts reported for the current or prior periods.

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.

‐ 25 ‐

GTI Resources Ltd Notes to the Financial Statements

2. Significant Accounting Policies (cont’d)

(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.

Available‐for‐sale financial assets

Available‐for‐sale financial assets are stated at fair value. Gains and losses arising from changes in fair value are recognised in equity. Where the investment is disposed of or is determined to be impaired, the cumulate gain or loss previously recognised in the investments revaluation reserve is included in profit or loss for the period.

(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 statement of cash flows 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.

‐ 26 ‐

GTI Resources Ltd Notes to the Financial Statements

2. Significant Accounting Policies (cont’d)

• (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.

(g) 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.

‐ 27 ‐

GTI Resources Ltd Notes to the Financial Statements

2. Significant Accounting Policies (cont’d)

(h) 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 tax consolidated subsidiaries.

‐ 28 ‐

GTI Resources Ltd Notes to the Financial Statements

2. Significant Accounting Policies (cont’d)

(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 (%)
	Furniture & equipment	10 – 50
	Computer equipment	25 – 100
	Fixtures & fittings	10 – 20

(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 Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non‐ transferability, 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.

‐ 29 ‐

GTI Resources Ltd Notes to the Financial Statements

2. Significant Accounting Policies (cont’d)

• (o) Revenue recognition

Interest revenue is recognised when receivable.

• (p) Comparatives

Where necessary, comparatives have been re‐classified and re‐positioned for consistency with current year disclosures.

(q) New Accounting Standards for application in future periods

The AASB has issued a number of new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods, some of which are relevant to the company.

At the date of the authorisation of the financial statements, the standards and Interpretations listed below were in issue but not yet effective. Of all the new announcements, only the standards being relevant to the company is listed below:

• AASB 9 ‘Financial Instruments’, AASB 2009‐11 ‘Amendments to Australian Accounting Standards arising from AASB 9’, AASB 2010‐7 ‘Amendments to Australian Accounting Standards arising from AASB 9 (December 2010)’, and AASB 2012‐6 ‘Amendments to Australian Accounting Standards‐ Mandatory Effective date of AASB 9 and Transition Disclosures’AASB 2010‐6 Disclosures on Transfers of Financial Assets [AASB 1 & AASB 7]

• AASB 12 ‘Disclosure of Interests in Other Entities’

• AASB 13 ‘Fair Value Measurement’ and AASB 2011‐8 ‘Amendments to Australian Accounting Standards arising from AASB 13’

• AASB 119 ‘Employee Benefits’ (2011) and AASB 2011‐10 ‘Amendments to Australian Accounting Standards arising from AASB 19 (2011)’AASB 13 Fair Value measurement;

• AASB 2011‐4 ‘Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements

• Interpretation 20 ‘Stripping Costs in the Production Phase of a Surface Mine’ and AASB 2011‐12 ‘Amendments to Australian Accounting Standards arising from Interpretation 20’.

The company has decided not to early adopt any of the new and amended pronouncements.

3. Critical Accounting Judgements and Key Sources of Estimation Uncertainty

In the application of the Company’s accounting policies, which are described in note 2, 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:

‐ 30 ‐

GTI Resources Ltd Notes to the Financial Statements

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. During the current financial year, there was no impairment of capitalised exploration expenditure (2011: $nil).

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.

Key estimates – deferred taxation

The Company is currently in the exploration phase. As a result a deferred tax asset in relation to 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 tax losses can be utilised.

4. Segment Information

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

7. Income Taxes Income tax recognised in profit or loss Tax expense/(income) comprises: Current tax expense/(income) Deferred tax expense/(income) relating to the origination and reversal of temporary differences Total tax expense/(income) 5. Revenue Continuing operations Interest revenue Gain on disposal of exploration assets Gain on sale of financial assets (5A) 5(A) Gain on sale of financial assets Transfer from investment revaluation reserve Fair value of shares sold Share sale proceeds received 6. Loss for the Year Loss before income tax has been arrived at after charging the following expenses: Depreciation of plant and equipment (note 9) Employee benefit expense: Share‐based payments		2012 $ 2011 $
		11,927 34,419 ‐ 466,220 181,312 ‐
		193,239 500,639
		244,125 ‐ (284,813) ‐ 222,000 ‐
		181,312 ‐
		2012 $ 2011 $
		8,881 6,793
		‐ ‐
		2012 $ 2011 $
		‐ ‐ ‐ ‐
		‐ ‐

‐ 31 ‐

GTI Resources Ltd Notes to the Financial Statements

Income Taxes (Cont’d)

The prima facie income tax benefit on pre‐tax accounting loss from operations reconciles to the income tax expense in the financial statements as follows:

Loss from operations Income tax benefit calculated at 30% Tax effect of expenses that represent permanent differences Tax effect of expenses that represent temporary differences Tax effect of unused tax losses and tax offsets not recognised as deferred tax assets Income tax attributable to operating loss	(841,780) (360,171)
	(252,534) (108,051) 33,070 (25,495) (2,077) 12,014 221,541 121,532
	‐ ‐

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. There has been no change in the corporate tax rate when compared with the previous reporting period.

7. Income Taxes Unrecognised deferred tax balances The following deferred tax assets and (liabilities) have not been brought Tax effect of revenue losses ‐ revenue Temporary differences – capitalised exploration activities Temporary differences – provisions Temporary differences – investment		2012 $ 2011 $
		to account: 1,504,137 1,282,596 (25,770) (25,770) 20,641 24,050 ‐ ‐
		1,499,008 1,280,876

The Company has estimated unrecouped income tax losses of $5,013,791 (2011: $4,275,320) 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.

8.	Trade and Other Receivables Current Net amount due from ATO Prepayments Non‐current Loan to related party No receivables are past due.	2012 $ 2011 $
		3,370 7,910 8,496 13,425
		11,866 21,335
		2,998 1,998
		2,998 1,998

‐ 32 ‐

GTI Resources Ltd Notes to the Financial Statements

9. Plant and Equipment

10. 11.	Furniture and equipment at cost Computer equipment at cost Fixtures & fittings at cost Total $ $ $ $ Gross carrying amount Balance at 1 January 2011 44,677 22,539 2,800 70,016 Additions 572 6,885 ‐ 7,457 Impairment ‐ ‐ ‐ ‐ Balance at 31 December 2011 45,249 29,424 2,800 77,473 Balance at 1 January 2012 45,249 29,424 2,800 77,473 Additions 1,768 5,125 ‐ 6,893 Balance at 31 December 2012 47,017 34,549 2,800 84,366 Accumulated depreciation and impairment Balance at 1 January 2011 23,562 20,621 1,038 45,221 Depreciation expense 5,162 1,380 251 6,793 Balance at 31 December 2011 28,724 22,001 1,289 52,014 Balance at 1 January 2012 28,724 22,001 1,289 52,014 Depreciation expense 3,819 4,852 210 8,881 Balance at 31 December 2012 32,543 26,853 1,499 60,895 Net book value As at 31 December 2011 16,525 7,423 1,511 25,459 As at 31 December 2012 14,474 7,696 1,301 23,471 2012 $ 2011 $ Exploration and Evaluation Expenditure Balance at beginning of year 85,900 119,679 Capitalised during the year ‐ ‐ Disposed during the year ‐ (33,779) Impairment of exploration expenditure ‐ ‐ Balance at end of year 85,900 85,900 The ultimate recoupment of costs carried forward for exploration and evaluation phase is dependent on the successful development and commercial exploitation or sales of the respective areas. Other Financial Assets 2012 $ 2011 $ Current Available for sale financial investments carried at fair value Listed investments ‐ ‐ ‐ ‐ Non‐current Available for sale financial investments carried at fair value Listed investments 79,166 368,651 79,166 368,651	Furniture and equipment at cost Computer equipment at cost	Furniture and equipment at cost Computer equipment at cost	Fixtures & fittings at cost	Total
		$	$	$	$
		44,677 572 ‐	22,539 2,800 70,016 6,885 ‐ 7,457 ‐ ‐ ‐
		45,249	29,424 2,800 77,473
		45,249 1,768	29,424 2,800 77,473 5,125 ‐ 6,893
		47,017	34,549 2,800 84,366
		23,562 5,162	20,621 1,038 45,221 1,380 251 6,793
		28,724	22,001 1,289 52,014
		28,724 3,819	22,001 1,289 52,014 4,852 210 8,881
		32,543	26,853 1,499 60,895
		16,525	7,423 1,511 25,459
		14,474	7,696 1,301 23,471
			2012 $ 2011 $
			85,900 119,679 ‐ ‐ ‐ (33,779) ‐ ‐
			85,900 85,900
			2012 $ 2011 $
			‐ ‐
			‐ ‐
			79,166 368,651
			79,166 368,651

During the year an impairment of $192,000 was recognised in respect of a listed investment. The total of this amount was transferred from investment revaluation reserve account to income statement.

‐ 33 ‐

GTI Resources Ltd Notes to the Financial Statements

12. Trade and Other Payables Trade payables (i) Other payables and accruals	2012 $ 2011 $
	12,826 32,200 26,500 75,580
	39,326 107,780

• (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 20). No payables are past due.

13. Provisions

Provisions Current Employee benefits (i) Non‐Current Employee benefits (i)	2012 $ 2011 $
	21,440 12,150
	20,864 ‐

(i) The current and non‐current provision for employee benefits relates to annual leave and long service leave.

There are 2 employees at 31 December 2012 (2011: 2).

14. Issued Capital 43,166,669 fully paid ordinary shares (2011: 38,000,003)	2012 $ 2011 $
	5,107,840 4,809,720

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 at the beginning of the financial year Share placement Share issue costs Balance at end of financial year	2012 2011 No. $ No. $
	38,000,003 4,809,720 38,000,003 4,809,720 5,166,666 310,000 ‐ ‐ ‐ (11,880) ‐ ‐
	43,166,669 5,107,840 38,000,003 4,809,720

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

Share options on issue

As at 31 December 2012, the company has no share options on issue (2011: nil). No options were issued, exercised or lapsed during the year.

‐ 34 ‐

GTI Resources Ltd Notes to the Financial Statements

15. Reserves Equity‐settled employee benefits reserve Equity‐settled share based payments reserve Investment revaluation reserve	2012 $ 2011 $
	210,036 210,036 ‐ ‐ 44,239 101,037
	254,275 311,073

‐ Equity settled employee benefits reserve

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 21 to the financial statements.

‐ Equity settled share based payments reserve

The equity‐settled employee benefits reserve arises on the grant of share options to vendor, consultants and advisors 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 21 to the financial statements.

Investment revaluation reserve

Changes in the fair value arising on revaluation of investments classified as available‐for‐sale financial assets, are taken to the investments revaluation reserve, as described in note 2(c). Amounts are recognised in profit and loss when the associated assets are sold or impaired.

16. Loss Per Share Basic loss per share	2012 Cents per share 2011 Cents per share
	(2.19) (0.95)

The Company incurred a loss for the year and as there were no options outstanding during the year 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:

Net loss Weighted average number of ordinary shares for the purposes of basic loss per share 17. Commitments for Expenditure (a) Capital expenditure commitments There are no capital expenditure commitments.	2012 $ 2011 $
	(841,780) (360,171)
	2012 No. 2011 No.
	38,465,850 38,000,003
	2012 $ 2011 $
	‐ ‐

‐ 35 ‐

GTI Resources Ltd Notes to the Financial Statements

(b) Lease commitments (Cont’d)

ease commitments (Cont’d)
Non‐cancellable operating lease payments Not longer than 1 year Longer than 1 year and not longer than 5 years	‐ ‐ ‐ ‐
	‐ ‐

The Company was relocated to 97 Outram Street West Perth in September 2011 and subleases office space from Amex Resources Ltd. At the time of reporting, the lease was payable on a monthly basis and no formal lease agreement was entered into by the relevant parties. All dealings are on arm‐length basis.

(c) Exploration commitments (i)

Within one year 90,000 90,000

• (i) 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 statement of financial position 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.

The Company also entered into a joint venture in 2009 with partner Artemis Resources Limited. Commitments under this joint venture will be covered by the joint venture partner as the company has a free carry interest until the commencement of any bankable feasibility study, at which time the Company may elect to contribute based on the percentage interest in the joint venture held by the Company.

During the financial year, the Company had the following tenements granted; EL08/2099, E08/2225, E08/2098, E08/1846, and E08/2201, with an annual minimum exploration expenditure of $90,000 in 2012 reporting year.

18. Contingent Liabilities and Contingent Assets

In the opinion of the Directors, there are no contingent liabilities as at 31 December 2012 and none were incurred in the interval between the financial year end and the date of this financial report.

For contingent assets, please refer to note 24.

19. Notes to the Statement of Cash Flows

(a) Reconciliation of cash and cash equivalents

For the purposes of the statement of cash flows, 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 year as shown in the cash flow statement is reconciled to the related items in the statement of financial position as follows:

items in the statement of financial position as follows:
Cash and cash at bank Term deposits	2012 $ 2011 $
	320,532 659,349 ‐ ‐
	320,532 659,349

‐ 36 ‐

GTI Resources Ltd Notes to the Financial Statements

(Cont’d) (b) Reconciliation of loss for the year to net cash flows from operating activities Loss for the year Gain on disposal of exploration assets Gain on disposal of financial assets Depreciation of plant and equipment Impairment of financial assets Changes in net assets and liabilities, net of effects from acquisition and disposal of businesses (Increase)/decrease in assets: Trade and other receivables Increase/(decrease) in liabilities: Current trade and other payables Provisions Net cash used in operating activities	2012 $ 2011 $
	(841,780) (360,171)
	‐ (466,220) (181,312) ‐ 8,881 6,793 192,000 ‐ 9,469 (1,717) (68,456) 44,968 30,154 (17,924)
	(851,044) (794,271)

20. Financial Instruments

Overview

The Company has exposure to the following risks from its use of financial instruments:

• Credit risk

• Liquidity risk

• Market risk

• Capital management

This note presents information about the Company’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital. Further quantitative disclosures are included throughout this note and the financial report.

The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

20. Financial Instruments

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 at the end of the period.

The Company’s exposure and the credit ratings of its counterparties are continuously monitored. The Company does not have any significant credit risk exposure to any single counterparty or any Company of counterparties having similar characteristics. The credit risk on liquid funds is limited because the counterparties are banks with high credit‐ratings assigned by international credit‐rating agencies. The maximum exposure to credit risk is 2012: $323,530 (2011: $661,347)

‐ 37 ‐

GTI Resources Ltd Notes to the Financial Statements

Liquidity risk management

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when they fall due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

Liquidity risk management is the responsibility of the Board of Directors, who have built an appropriate liquidity risk management framework for the management of the Company’s short, medium and long‐term funding and liquidity management requirements. 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.

During the reporting period, the Company had no access to the borrowing facility as the Company maintained adequate working capital to fund its operation.

Liquidity and interest risk tables

The following tables detail the Company’s remaining contractual maturity for its financial assets and liabilities and have been prepared on the following basis:

• Financial assets ‐ based on the undiscounted contractual maturities including interest that will be earned on those assets except where the Company anticipates that the cash flow will occur in a different period; and

• Financial liabilities ‐ based on undiscounted cash flows on the earliest date on which the Company can be required to pay, including both interest and principal cash flows. Balance due within 12 months equal their carrying balances as the impact of discounting is not significant.

The Company had no derivative financial assets or liabilities during the year, or at the end of the reporting period.

20. Financial Instruments

Liquidity risk management

Contractual maturities of financial assets and liability	Less than 1 month 1‐3 months 3‐12 months 1 year to 5 years 5+ years Total
	$ $ $ $ $ $
2012 Non‐ derivative financial assets Non‐interest bearing Variable interest rate Non‐ derivative financial liabilities Non‐interest bearing 2011 Non‐ derivative financial assets Non‐interest bearing Variable interest rate Non‐ derivative financial liabilities Non‐interest bearing	3,370 ‐ ‐ 82,164 ‐ 85,534 320,532 ‐ ‐ ‐ ‐ 320,532
	323,902 ‐ ‐ 82,164 ‐ 406,066
	39,326 ‐ ‐ ‐ ‐ 39,326
	39,326 ‐ ‐ ‐ ‐ 39,326
	7,910 ‐ ‐ 370,649 ‐ 378,559 659,349 ‐ ‐ ‐ ‐ 659,349
	667,259 ‐ ‐ 370,649 ‐ 1,037,908
	107,780 ‐ ‐ ‐ ‐ 107,780
	107,780 ‐ ‐ ‐ ‐ 107,780

‐ 38 ‐

GTI Resources Ltd Notes to the Financial Statements

Market risk management

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

 Currency risk

The Company is not exposed to any currency risk. All investments and purchases are denominated in Australian dollars.

 Interest rate risk

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.

Although some of the Company’s assets are subject to interest rate risk, it is not dependent on this income. Interest income is only incidental to the Company’s operations and operating cash flows.

The Company is not exposed to interest rate risk associated with borrowed funds.

Interest rate sensitivity analysis

The sensitivity analyses of the Company’s exposure to interest rate risk at the reporting date has been determined based on the change of 50 basis points in interest rates.

At reporting date, if interest rates had been 50 basis points higher and all other variables were constant, the Company’s net loss after tax would have decreased by 2012: $1,603 (2011: $3,297) with a corresponding increase in equity. Where interest rates decreased, there would be an equal and opposite impact on the profit after tax and equity.

20. Financial Instruments

Market risk management

 Other price risk

The Company is exposed to equity securities price risk. This arises from investments held by the Company and classified on the statement of financial position as available for sale financial assets. Material investments are managed on individual basis.

Equity securities price sensitivity analysis

The sensitivity analyses of the Company’s exposure to equity securities price risk at the reporting date has been determined based on the assumption that the equity security price had increased/decreased by 5%.

At reporting date, if the equity security price had increased by 5% and all other variables were constant, the Company’s equity would have increased by 2012: $3,958 (2011: $18,433). Where the equity security price decreased, there would be an equal and opposite impact on equity.

Fair value of financial instruments

The carrying amount of financial assets and financial liabilities recorded in the financial statements represents their respective net fair values, determined in accordance with the accounting policies disclosed in note 2. The Directors consider that the carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their fair values.

As of 1 January 2010, GTI Resources Ltd has adopted the amendment to AASB 7 Financial Instruments: Disclosures which requires disclosure of fair value measurements, by level, of the following fair value measurement hierarchy:

• (a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);

• (b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2); and

‐ 39 ‐

GTI Resources Ltd Notes to the Financial Statements

• (c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).

The following table presents the Company’s assets and liabilities measured and recognised at fair value at year end.

As at 31 December 2012	Level 1 Level 2 Level 3 Total
	$ $ $ $
Financial Assets Listed investment Unlisted investment Provision for movement in fair value Financial Liabilities	79,166 ‐ ‐ 79,166 ‐ ‐ 17,000 17,000 ‐ ‐ (17,000) (17,000)
	79,166 ‐ ‐ 79,166
	‐ ‐ ‐ ‐
	‐ ‐ ‐ ‐

As at 31 December 2011	Level 1 Level 2 Level 3 Total
	$ $ $ $
Financial Assets Listed investment Unlisted investment Provision for movement in fair value Financial Liabilities	368,651 ‐ ‐ 368,651 ‐ ‐ 17,000 17,000 ‐ ‐ (17,000) (17,000)
	368,651 ‐ ‐ 368,651
	‐ ‐ ‐ ‐
	‐ ‐ ‐ ‐

The fair value of financial instruments traded in active markets (such as available for sale financial securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Company is the closing bid price on that date. These instruments are included in level 1. The fair value of these instruments at reporting day were 2012: $79,166 (2011: $368,651). The Company does not have any assets or liabilities falling within level 2 or 3 that are not fully provided for.

21. Share‐Based Payments

(a) Directors and Employees

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

Each option issued under the arrangement converts into one ordinary share of GTI Resources Ltd 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.

No share options were granted during the financial year (2011: Nil).

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

‐ 40 ‐

GTI Resources Ltd Notes to the Financial Statements

(Cont’d)

Balance at beginning of the financial year Granted during the financial year: Employees Exercised during the financial year Expired/lapsed during the financial year Balance at end of the financial year Exercisable at end of the financial year	2012 Number of options Weighted average exercise price $ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐	2011 Number of options Weighted average exercise price $
		4,750,000 0.392 ‐ ‐ ‐ ‐ 4,750,000 0.392
		‐ ‐
		‐ ‐

22. Related Party Disclosures

(a) Equity interests in related parties

Equity interests in subsidiaries

Details of interests held in subsidiaries is disclosed in note 23 to the financial statements.

Equity interests in associates and joint ventures

GTI Resources Ltd has no equity interests in associates or joint ventures, other than as disclosed in Note 24.

(b) Key management personnel remuneration

Details of key management personnel compensation are disclosed in the Remuneration Report which forms part of the Directors’ Report and has been audited. The aggregate compensation of the key management personnel is summarised below:

Short term employee benefits Post employment benefits Other long term employee benefits Share based payments	2012 $ 2011 $
	403,829 507,586 23,761 32,768 20,864 ‐ ‐ ‐
	448,454 540,354

(c) Key management personnel equity holdings

Fully paid ordinary shares of GTI Resources Ltd

	Balance at 1 January No.	Granted as remuneration No.	Received on exercise of options No.	Net other change No.	Balance at 31 December No.
2012 Murray McDonald Ian Cowden Yohanes Sucipto 2011 Murray McDonald Ian Cowden	4,500,001 ‐ ‐ ‐ 4,500,001 4,500,001 ‐ ‐ ‐ 4,500,001 ‐ ‐ ‐ 4,600,000 4,600,000
	9,000,002 ‐ ‐ 4,600,000 13,600,002
	4,500,001 ‐ ‐ ‐ 4,500,001 4,500,001 ‐ ‐ ‐ 4,500,001
	9,000,002 ‐ ‐ ‐ 9,000,002

‐ 41 ‐

GTI Resources Ltd Notes to the Financial Statements

22. Related Party Disclosures (cont’d)

(d) Share options of GTI Resources Ltd	(d) Share options of GTI Resources Ltd	(d) Share options of GTI Resources Ltd	(d) Share options of GTI Resources Ltd	(d) Share options of GTI Resources Ltd	(d) Share options of GTI Resources Ltd	(d) Share options of GTI Resources Ltd	(d) Share options of GTI Resources Ltd
	Bal at 1 January	Granted as remuneration	Lapsed	Bal at 31 December	Bal vested at 31 December	Vested but not exerci‐ sable	Vested and exercisable
	No.	No.	No.	No.	No.	No.	No.
2012 Murray McDonald Ian Cowden Emma Gilbert Yohanes Sucipto	‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
	‐ ‐ ‐ ‐ ‐ ‐ ‐
	Bal at 1 January	Granted as remuneration	Lapsed	Bal at 31 December	Bal vested at 31 December	Vested but not exerci‐ sable	Vested and exercisable
	No.	No.	No.	No.	No.	No.	No.
2011 Murray McDonald Ian Cowden Emma Gilbert	1,500,000 ‐ (1,500,000) ‐ ‐ ‐ ‐ 1,500,000 ‐ (1,500,000) ‐ ‐ ‐ ‐ 250,000 ‐ (250,000) ‐ ‐ ‐ ‐
	3,250,000 ‐ (3,250,000) ‐ ‐ ‐ ‐

2012	2011
$	$

(e) Other transactions with key management personnel of the Company

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:

Consultant fees paid or payable to entity associated with Mr Ian Cowden are on normal terms and condition at arms‐length. Total amount recognised as expenses Total current liabilities arising from transactions other than remuneration with specified Directors or their personally‐related entities as at reporting date:	87,975 115,877
	87,975 115,877
	‐ 12,742

23. Subsidiaries

The Company has a 100% interest in GTI (Australia) Pty Ltd, a company incorporated in Australia for $1.00, the Company also has a 75% interest in PT GTRI Mining, a company incorporated in Indonesia. Both have been dormant since incorporation. As the subsidiaries have no assets or liabilities, consolidated financial statements have not been prepared.

24. Disposal of Exploration Projects

The Company’s minority interest in the Yangibana project was sold to an overseas company for a cash payment of $500,000 in 2011 reporting year, with a potentially further payment of $500,000 due after completion of a bankable feasibility study. The Company also retains a royalty interest of $1/ tonne of ore mined within the project area. The potential further payment of $500,000 has not been brought to account at 31 December 2011 as it is uncertain.

‐ 42 ‐

GTI Resources Ltd Notes to the Financial Statements

25. Remuneration of Auditors Audit or review of the financial report	2012 $ 2011 $
	15,098 31,615
	15,098 31,615

The auditor of GTI Resources Ltd is Stantons International Audit and Consulting Pty Ltd.

26. Subsequent Events

There have not been any matters or circumstances that have arisen since the end of the financial year, 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.

‐ 43 ‐

GTI Resources Ltd Additional Stock Exchange Information

Additional Securities Exchange Information

As at 18 March 2013

1. Shareholdings

a. Share capital

• 43,166,669 fully paid ordinary shares held by 413 shareholders.

• b. Distribution of holders of equity securities

Distribution of holders of equity securities
Category (size of holding) 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – and over	Ordinary shares Number of holders 720 9 12,780 3 2,447,231 249 4,419,437 102 36,256,501 50
	43,166,669 413

The number of shareholdings held in less than marketable parcels is 16 given a share value of 5.0 cents per share.

c. Voting rights

The voting rights attached to each class of equity security are as follows:

Ordinary shares

Each ordinary share is entitled to one (1) vote when a poll is called, otherwise each member present at a meeting or by proxy has one (1) vote on a show of hands.

d. 20 Largest shareholders — ordinary shares

Name 1. KDDG Nominees Pty Ltd 2 Iana Pty Ltd 3. J & I Resources Pty Ltd 4. Opeka Dale Pty Ltd 5. Mrs Judith Hare 6. Globe Metals and Mining Limited 7. Mr George Lopez 8. Purnomo Oesman 9. Aquatreat Services Pty Ltd 10. Cape Birchington Pty Ltd 11. Mrs Florence Lynette Kellett 12. Mr Andrew McLean 13. Peter Richard Bolton 14. Wombola Gold Pty Ltd 15. Mr Dahong Cai 16. Jamiri Holdings Pty Ltd 17. Lush Farms Pty Ltd 18. Tromso Pty Limited 19. Mr Matthew John Collard 20. Mr Damian Delaney

Fully paid ordinary shares Number held % held 4,500,000 10.425 4,500,000 10.425 4,500,000 10.425 3,220,000 7.459 3,000,000 6.950 2,000,000 4.633 1,750,002 4.054 1,666,666 3.861 1,210,000 2.803 900,000 2.085 650,000 1.506 500,000 1.158 500,000 1.158 500,000 1.158 392,902 0.910 363,333 0.842 308,333 0.714 300,000 0.695 275,000 0.637 272,917 0.632

31,309,153 72.531

• 45 -

GTI Resources Ltd

Additional Stock Exchange Information

e. Substantial shareholders

Information based on the substantial holding notices. This does not necessarily correspond to the 20 Largest Shareholders List as it includes the substantial shareholder’s associates:

	Number of shares held
J & I Resources Pty Ltd	4,600,000
KDDG Nominees Pty Ltd	4,500,001
Iana Pty Ltd	4,500,001
Opeka Dale Pty Ltd	4,430,000
Judith Hare	3,000,000
Globe Metals and Mining Limited	2,000,000

2. Restricted securities

Class

Number

There were no restricted securities as at the 18 March 2013.

3. Unquoted equity securities

Class

Unlisted options Number Number of holders

There were no unquoted equity securities as at the 18 March 2013.

4. Company secretary

The name of the Company Secretary is Frank Campagna.

5.

Registered office

Principal place of business

97 Outram Street 97 Outram Street West Perth, Western Australia 6005 West Perth, Western Australia 6005 Telephone +618 9215 0400 Telephone +618 9215 0400

6. Registers of securities

The Company’s register of securities is maintained at:

Advanced Share Registry Services 150 Stirling Highway Nedlands, Western Australia 6009

7. Securities exchange listing

Quotation has been granted for all the ordinary shares of the company on all Member Exchanges of the Australian Securities Exchange Limited. The Company’s ASX Code is GTR.

• 46 -

GTI Resources Ltd Additional Stock Exchange Information

Tenement Schedule

As at 18 March 2013

As at 18 March 2013
	TENEMENT	HOLDER/APPLICANT	SHARES HELD
Bali Hi	E08/1372	GTI Resources Ltd Wombat Resources Limited	20% 80%
Cambridge Creek	E08/1792*	GTI Resources Ltd Wombat Resources Limited	30% 70%
Conical Hill	(E69/2957)	GTI Resources Ltd	100%
Henry River	E08/2098	GTI Resources Ltd	100%
Henry River	E08/2099	GTI Resources Ltd	100%
Henry River	(E08/2381)	GTI Resources Ltd	100%
Henry River	(P08/649)	GTI Resources Ltd	100%
Silver King	E08/1846	GTI Resources Ltd	100%
Silver King	E08/2201	GTI Resources Ltd	100%
Silver King	E08/2225	GTI Resources Ltd	100%
Silver King	(E08/2430)	GTI Resources Ltd	100%
Silver King	(E08/2445)	GTI Resources Ltd	100%
Silver King	(E08/2446)	GTI Resources Ltd	100%
Silver King	(E08/2447)	GTI Resources Ltd	100%
Yangibana	(E09/2007)	GTI Resources Ltd	100%

Key to Tenement Schedule

E ‐ Exploration Licence ( ) ‐ Application * - Transfer of Wombat 70% to GTI has been lodged

• 47 -