AUSGOLD LIMITED - Annual Report 2011

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(ACN 140 164 496)

ANNUAL REPORT FOR THE FULL-YEAR ENDED 30 JUNE 2011

Content

	Page
Corporate Directory	1
Letter to Shareholders	2
Operations Report	4
Directors’ Report	15
Auditors Independence Declaration	22
Remuneration Report	23
Corporate Governance Statement	29
Consolidated Statement of Comprehensive Income	34
Consolidated Statement of Financial Position	35
Consolidated Statement of Changes in Equity	36
Consolidated Statement of Cash Flows	37
Notes to the Consolidated Financial Statements	38
Directors’ Declaration	74
Independent Audit Report	75
Shareholder Information	77
Schedule of Mineral Licence Interest	80

Ausgold Limited – 2011 Annual Report

CORPORATE DIRECTORY

Directors

Robert James Pett (Non-Executive Chairman)

Benjamin John Bell (Chief Executive Officer)

Simon Trevisan (Executive Director)

Richard Lockwood (Non-Executive Director)

Christopher David Kelsall (Non-Executive Director)

Ian MacKenzie Murchison (Alternate Director to Mr Trevisan from 31 August 2010)

Company Secretary

Ian MacKenzie Murchison resigned 31 August 2010

Fleur Louise Hudson appointed from 31 August 2010

Auditors

BDO Audit (WA) Pty Ltd 38 Station Street SUBIACO WA 6008

Telephone: (08) 6382 4600 Facsimile: (08) 6382 4601

Home Exchange

Australian Securities Exchange Ltd Exchange Plaza 2 The Esplanade PERTH WA 6000

ASX Code: AUC

Share Registry

Security Transfer Registrars Pty Ltd 770 Canning Highway APPLECROSS WA 6153

Telephone: (08) 9315 2333 Facsimile: (08) 9315 2233

Registered Office

14[th] Floor Parmelia House 191 St Georges Terrace PERTH WA 6000

Telephone: (08) 9424 9300 Facsimile: (08) 9321 5932

Web: www.ausgoldlimited.com Email: [email protected]

Solicitors

Minter Ellison Level 49, Central Park 152-158 St Georges Terrace Perth WA 6000

Banker

St George Bank Limited Level 1, Westralia Plaza 167 St Georges Tce, Perth WA 6000

Ausgold Limited – 2011 Annual Report

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Letter to Shareholders

Dear Shareholder,

With the gold price reaching record levels, there is no better time to be discovering gold.

Our exploration efforts over the last year have not only identified gold mineralisation at Katanning in South Western Australia similar to the 26 million ounce Boddington deposit with potential for a big gold system but have also identified a potentially new gold province just South West of Perth where your company holds over 6,000 square kilometres of exploration and mining tenure.

A major exploration programme is currently underway to discover more gold at Katanning and at the same time unlock the full potential of our regional tenure.

Two corridors of gold mineralisation have been identified at Katanning with an impressive strike length of 18 kilometres. The drilling is now focused on a section of the eastern corridor three kilometres long from our Fraser prospect in the south to the Jinkas deposit and north to the Neighbours prospect (see figure below) . There are currently six rigs operating with most of this drilling planned to be completed by early next year.

A well planned but intensive exploration programme is also underway to test the Boddington South regional potential. Priority gold targets have been identified for early reverse circulation drilling, at the same time air core drilling, geochemistry and geophysics are being applied to prove up further prospects for drilling and increase our understanding of the geological and structural controls on mineralisation in the region.

A reverse circulation drilling programme is also underway at Yamarna to follow up on the highly significant hits of copper and nickel from previous drilling. Albeit at a slower pace exploration will continue during the course of the coming year on our prospects at Doolgunna and Cracow.

The staffing of our exploration team has increased at both senior and junior levels and responsibilities have been carefully defined to ensure that our exploration remains efficient and focused.

The exploration budget to June next year is $15 million with most of this being allocated to drilling at Katanning and Boddington South. I believe that this investment will go a long way towards unlocking the enormous potential of our projects.

I would like to thank our exploration team for their committed efforts and splendid success during the year and to you, our shareholders for your encouragement and on-going support.

Yours faithfully

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Robert Pett Chairman

Ausgold Limited – 2011 Annual Report

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Letter to Shareholders

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Ausgold Limited – 2011 Annual Report

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Operations Report

Ausgold Limited was formed to utilise some of the latest innovations in geosciences to target areas in Australia prospective for the discovery of gold and copper-gold ore bodies.

Throughout the past 12 months, Ausgold has continued to make a number of impressive inroads, particularly in the Southwest Yilgarn region of Western Australia, unearthing the exciting Katanning Gold Discovery, located within close proximity to Newmont’s 26 million ounce Boddington Gold Mine.

Katanning Gold Discovery, Western Australia (AUC 100%)

The Katanning Gold Discovery is located within Ausgold’s Boddington South Exploration Project, approximately 275km southeast of Perth (Figure 1). Katanning demonstrates very similar geological make-up to the nearby 26 million-ounce Boddington Gold Mine. Recognising the potential to mirror such a discovery, Ausgold commenced drill testing of the primary gold mineralisation at Katanning in September 2010.

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Figure 1: Map of Ausgold Katanning Gold Discovery

This drill program has identified two key mineralised corridors at Katanning, the Eastern and Western, which cover a strike length of over 18 kilometres, which to date contain 10 pockets of identified mineralisation:

The Eastern Corridor hosts the Jinkas ore body as well as a number of highly prospective gold targets including Olympia, Neighbours, and Fraser prospects.

The Western Corridor is host to the Dingo ore body and the recently discovered gold mineralisation at Jackson. This Corridor also hosts the Datatine, Lone Tree, White Dam and Shoestring prospects (Figure 2).

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Operations Report continued

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Figure 2: Map of Ausgold Katanning Gold Discovery demonstrating the Eastern and Western mineralised corridors

Over the past 12 months, Ausgold commenced and completed a first pass Reverse Circulation (RC) drilling program across the Dingo, Jackson and Olympia prospects. In addition, the Company also completed an air core drilling program over the Fraser prospect, which has interpreted this prospect to potentially be the southern extension of the Jinkas ore body.

Ausgold commenced a geophysics survey on both corridors, comprising of ground electromagnetic, induced polarisation and ground magnetic surveys at the north and south of Jinkas and Dingo ore bodies respectively. Results from this survey have assisted the Company to target further mineralisation along strike of its known ore bodies, in addition to identifying priority targets across the Company’s entire regional exploration program.

A key event for Ausgold in furthering its exciting exploration program at Katanning was the successful placement of $25 million of new shares at $1.35 per share to major offshore institutions. The funds will be used primarily for the Company’s drilling program at Katanning, as well as further regional exploration at the greater Boddington South Project.

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Operations Report continued

Katanning Gold Discovery

Jinkas

In September 2010, Ausgold commenced an RC drilling program designed to test the primary gold mineralisation hosted within the fresh bedrock with the initial focus of the campaign being the northern strike extension of the Jinkas ore body.

Some of the significant intercepts received from the first 38 holes of this program included:

20m @ 15.64 g/t Au from 97m
28m @ 4.08 g/t Au from 97m
o 23m @ 4.29 g/t Au from 81m o 15m @ 4.53 g/t Au from 98m

Assay results from the program continued to reveal significant intersections, with around 7,000m of drilling having been completed at the Jinkas deposit by early 2011 to test and drill out the primary mineralisation which lies beneath the existing pit and extends to the north.

By mid-year, Ausgold had completed a 68-hole RC drilling program along strike of the Jinkas oxide pit and had delineated primary gold mineralisation along a strike length of more than 900m and to a depth of 100m.

The ore body remains open in all directions and the Company had commenced a resource delineation drill program of the Jinkas ore body to test continuation of Jinkas to depths of 500m below surface.

Ausgold is currently drilling to test the strike extension of up to 1.5km.

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Figure 3: Image of mineralisation at Jinkas

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Operations Report continued

Dingo

The Dingo deposit is located less than 4km south of the Jinkas ore body. Work during the course of the year by Ausgold included the completion of a 150 hole-drilling program. This initial drilling program focused on delineating a gold resource down to 100m below the surface.

By mid-2011, Ausgold had identified that the primary mineralisation at Dingo appeared continuous over a strike length of 1km and remains open in all directions and at depth.

The Company also announced some positive assay results from Dingo, which confirmed the continuation of mineralisation with highlights including:

11m @ 4.15 g/t Au from 107m
o 20m @ 2.69 g/t Au from 79m o 20m @ 2.42 g/t Au from 86m

The initial interpretation of these results indicated that gold grades increased as drilling progressed south along this ore body.

The Company currently has four RC rigs on site to further test the strike depth and continuation.

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Figure 4: Image of mineralisation at Dingo

Jackson

Drilling commenced at the Jackson Prospect, which is located 2km north of the Jinkas ore body early in 2011.

By mid-year first pass drilling was completed and results from the initial drilling confirmed gold mineralisation was present and suggested the potential for Jackson to be a third gold deposit at Katanning, with mineralisation appearing consistent in style to that already discovered at Jinkas and Dingo.

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Operations Report continued

The results received also paved the way for Ausgold to gain a better understanding of the mineralisation at Jackson, which appeared to be more complex than that of Jinkas and Dingo.

Highlights of the initial assays received included:

10m @ 11.28 g/t Au from 17m
4m @ 7.05 g/t Au from 10m
11m @ 1.27 g/t Au from 9m
7m @ 3.34 g/t Au from 15m

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Figure 5: Image of mineralisation at Jackson

Fraser

During the course of the year, Ausgold undertook an air core drilling program across the Fraser Prospect located along strike and 500m south of the Jinkas ore body and 1.6 km north of Dingo. The program was completed on a 100m x 100m grid.

Significantly, post year-end, Ausgold announced assay results from its ongoing drilling program and confirmed that two corridors of gold mineralisation are present within the Fraser Prospect.

The results indicate that the gold mineralisation at Jinkas may extend a further 1km south of the known mineralisation, with the program designed to test a historic gold-in-soil anomaly located south and along strike of the Jinkas ore body.

The results defined at least two coherent zones over 800m in strike, open to north and at depth, believed to be surface projections of the Eastern (Jinkas line) and Western Corridor (Dingo line), along with other associated lenses of mineralisation.

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Operations Report continued

Ausgold is planning an RC drilling program and submission of a program of works to follow up these important results, with the RC program scheduled for commencement in September 2011.

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Figure 6: Image of mineralisation at Fraser

Olympia

During the course of the year, first pass reconnaissance drilling was completed at the Olympia Prospect, which is located 2km north along strike of Jinkas comprising 10 holes. This drill program was designed to test a conceptual target at Olympia, with all holes intersecting shallow gold mineralisation, including the impressive intercept of 4m @ 9.39 g/t from 6m.

An RC drilling program of the primary mineralisation is underway to further test the strike extent of mineralisation at Olympia.

Katanning Infrastructure

Located 277 kilometres southeast of Perth, Katanning is a major service centre of Western Australia’s Wheatbelt Region and plays host to a number of agricultural businesses.

The town itself is located within close proximity to key infrastructure including a major railway line and the vibrant city hubs of Perth, Bunbury and Albany. Together with the throng of farming activity in the surrounding region, Katanning is a township on the rise.

Although the region has a heavy agricultural focus, it is also a regional centre with easy access to a range of recreation and leisure facilities, government, health and education services and a solid retail and business district.

Whilst Katanning does have a distinct agricultural flavour, mining is not completely foreign to the area with Newmont’s well-known 26 million ounce Boddington Gold Mine situated to the north west.

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Operations Report continued

In July 2011 it was announced that under the Royalties for Regions Regional Centres Development Plan (Supertowns) initiative, which aims to enhance and stimulate growth in key regional towns in WA’s southwest, that Katanning has been included in a select group of townships which will receive a share of $85.5 million.

“Katanning is an ideal candidate with strong population growth related to livestock industries such as the saleyards development, meatworks and abattoir and the development of resources projects in the region.

“Supertowns will empower regional communities to start planning to attract and sustain larger populations. In Western Australia, regional areas produce 85 per cent of exports, which accounts for $94 billion in our economy,” said Mia Davies, Nationals Member for the Agricultural Region.

The selection process for the Supertowns program was based on local and regional economic drivers, as well as each community’s readiness to attract and sustain growth.

Located only 40km north-east of Katanning, it is becoming more and more evident that Ausgold’s Katanning Gold Discovery, could form an integral part of the economic growth within the region. Having already yielded a number of eye-catching results this year, and with strong indications that the discovery may be similar to that of the nearby Boddington yellow-metal stalwart, we could see Katanning emerge as a major new mineral province.

Boddington South Exploration Project

The Boddington South Exploration Project covers in excess of 6,000 km² and is home to Ausgold’s Katanning Gold Discovery. The Company believes that the potential exists for Boddington South to host repetitions of similar ore bodies to that already discovered at Katanning.

In total, 100km of previously unmapped Archaen greenstones have been identified including a number of gold and copper anomalies. It is Ausgold’s belief that from historic workings and the Company’s exploration program to date, that multiple anomalies warrant further follow-up exploration.

In January 2011, Ausgold entered into an agreement with Dominion Mining Limited to earn a 60% interest in the Bullock Pool and Nanicup Bridge prospects by spending $600,000 in exploration expenditure across two years.

This agreement allowed Ausgold to secure a controlling interest in two highly-prospective gold systems located adjacent to the Company’s existing Boddington South tenement package.

The Bullock Pool Prospect is characterised by a 33km long gold anomaly centred on a similar Archaean greenstone unit that is known to host gold mineralisation within the nearby Katanning Gold Deposit.

An initial RC drill program that was undertaken by Dominion targeting gold within the fresh bedrock confirmed the presence of primary mineralisation within Bullock Pool with intersections including:

9m @ 2.0 g/t Au from 30m
4m @ 2.4 g/t Au from 36m

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Operations Report continued

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Figure 7: Schematic image of selected regional gold targets within the Ausgold’s greater Boddington South Exploration Project derived from open-file databases, which suggests possible repetitions of Katanning-style gold mineralisation across the Company’s greater tenement holding.

The Company reported at mid-2011 that through the analysis of historic data, over 20 target areas had been identified. The Bullock Pool and Nanicup Bridge prospects along with four target areas had been assessed as high priority with another seven areas warranting further exploration.

Hudson – Historic gold workings have been reported at Hudson and Ausgold believes this prospect demonstrates the potential to host mineralisation in line with the greenstone found at the Katanning Gold Discovery.

Bailey – Surface geochemical sampling carried out during the last decade indicated a 900m north-south trending gold anomaly including high-grade gold-in-soil values with a nearby laterite sample recording the highest arsenic assay for the whole historic dataset covering the Boddington South area.

Mathilde – Historic workings have demonstrated a discrete, very strong, gold-arsenic anomaly in calcrete and laterite up to 91 ppb Au (laterite), 60 ppb Au (calcrete) and 120 ppm As (laterite) – demonstrating some of the peak arsenic and gold assays received in all of the historic dataset, making this area a robust drill target.

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Operations Report continued

Dumbleyung – Gold was first reported at the Dumbleyung Prospect in 1906 and a sampling program completed in 1990 by a previous explorer recovered rock chip samples up to 10.86 g/t Au. An auger sampling program completed around the same time indicated a coherent gold anomaly over 500m long (peak assay 215 ppb Au) trending slightly west of north and open to the northwest.

Yamarna, Western Australia

Situated approximately 125km northeast of Laverton in Western Australia, Ausgold’s Yamarna project covers over 550 km² of prospective ground over the eastern-most Archaean greenstone belt of the Yilgarn Craton.

Exploration conducted during 2010, including a surface geochemical sampling program that identified a coherent copper-in-soil anomaly, confirmed the project’s potential to host a significant copper deposit. A detailed airborne electromagnetic survey subsequently completed over the project area identified 18 discrete bedrock conductors.

Encouraged by the positive results from the Company’s surface geochemical and geophysical surveys, and the favourable geological setting for base metal mineralisation, Ausgold undertook an initial 1,500m RC drill program within the Yamarna Project in late 2010.

The program consisted of a single, angled RC hole and drilled into six separate geophysical targets across the project area. The objective was to determine the source of the bedrock conductor and provide Ausgold with information on the area’s stratigraphy as the majority of the project’s prospective geology is concealed beneath a thick cover of windblown sand.

One of these drill holes (YMRC003) intersected significant copper and nickel mineralisation at the Company’s Winchester Prospect returning 31m @ 0.58% Cu and 0.35% Ni from 29m. This intersection included 1m @ 1.32% Cu and 1.05% Ni from 39m, and 1m @ 2.46% Cu and 0.70% Ni from 57m.

In addition, downhole electromagnetic surveys completed in conjunction with the Yamarna Project’s RC drill program subsequently identified off-hole conductors within fresh bedrock below most of the drill holes surveyed.

In mid-2011, Ausgold reported that it would commence a 4,500m drill program to target its copper targets at the Yamarna Project including follow-up drilling at the Winchester Prospect where the Company previously intersected 31m @ 0.58% Cu and 0.35% Ni (including 2.46% Cu and 1% Ni).

The drill program had been scheduled for completion in September 2011 .

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Operations Report continued

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Figure 8: Image of mineralisation at Yamarna

Doolgunna Station

Ausgold’s Doolgunna Station project is located adjacent to Sandfire Resources’ DeGrussa copper-gold ore bodies and only 35km from the 7 million ounce Plutonic Gold Mine. The deposit is considered prospective for similar volcanogenic massive sulphide (VMS) copper-gold mineralisation to that at DeGrussa and covers over 5km strike length of prospective Jenkins Fault and Narracoota Volcanics.

The Company completed an airborne electromagnetic survey during 2010, targeting DeGrussa-style copper-gold mineralisation and mapped the location of the Jenkins Fault with Ausgold’s project area.

A detailed ground gravity survey over the Jenkins Fault during the September 2010 quarter was also undertaken.

Ausgold believes that the apparent presence of a strongly-conductive pyrrhottic (iron sulphide) sedimentary unit coincident with this regional fault may be masking the more subtle electromagnetic response often associated with copper-gold mineralisation.

As a result, the Company completed a detailed gravity survey over the prospective Narracoota Volcanics and Jenkins Fault. This survey, undertaken on a 100m x 50m grid, had been designed to highlight any bedrock response potentially attributable to a buried copper ore body.

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Operations Report continued

During the March 2011 quarter the Company commenced reconciliation of the results of the gravity data against the other datasets (including the high-resolution aeromagnetic and airborne electromagnetic data) in order to prioritise before drill testing.

The detailed gravity survey at the Doolgunna Station Project also delineated a number of anomalies within the Peak Hill Schist that may represent gold targets. These are in addition to the potential Plutonic-style gold targets within the Archaean greenstone units in northeast of the tenement that remained untested by drilling.

Paterson

The Paterson Project is an exploration licence application covering an area of 296 km². Ausgold has a conditional agreement to acquire the non-uranium rights. The project is located in a highly prospective area between the Nifty copper mine and Encounter Resources’ recent BM1 copper discovery.

The Australian Government recognised the potential for this province to host additional ore bodies and acquired electromagnetic data over this region in 2010. The objective of the Government’s survey included mapping new zones of copper mineralisation within the area.

Coverage of this airborne survey included Ausgold’s Paterson Project and this geophysical data was obtained by the Company during the December 2010 quarter.

Cracow

The Cracow project is located 375km northwest of Brisbane, and covers an area of 1,200 km² and is located only 16 km north of Newcrest’s one million ounce Cracow Gold Mine.

A surface geochemical sampling program was undertaken by Ausgold and identified eight separate goldin-soil anomalies within the Company’s project area that warranted further investigation. It was Ausgold’s belief that these areas demonstrated potential for repetitions of the nearby Cracow ore body.

A follow-up exploration program, plus a reconnaissance survey of tenement EPM17054 was undertaken in late 2010. This survey, however, concluded prematurely due to the heavy rainfall experienced across Queensland.

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Benjamin Bell Chief Executive Officer

The information in this annual report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Benjamin Bell, who is a Member of the Australian Institute of Geoscientists. Mr Bell is the Chief Executive Officer and a full-time employee of Ausgold Limited, and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking 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”. Mr Bell consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

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Directors Report

The Directors present their report together with the financial report of the consolidated entity consisting of Ausgold Limited (the “Group”) and the entity it controlled at the end of, or during the year ended 30 June 2011 and the auditor’s report thereon.

DIRECTORS

The Directors of the Group during or since the end of the financial year are:

Name	Period of Directorship
Mr Robert James Pett Non-Executive Chairman	Director since 23 October 2009
Mr Benjamin John Bell Chief Executive Officer	Director since 2 November 2009
Mr Simon Trevisan Executive Director	Director since 23 October 2009
Mr Richard Lockwood Non-Executive Director	Director since 12 November 2010
Mr Christopher David Kelsall Non-Executive Director	Director since 5 November 2009
Mr Ian Murchison Alternate Director	Director 23 October 2009 to 2 November 2009 Alternate director to Mr Trevisan since 31 August 2010

The qualification, experience and special responsibilities of the Directors of the Group during or since the end of the financial year are:

Non - Executive Chairman

Robert James Pett BA(Hons), MA(Econ), FAICD, Minerals Economist

Mr Robert Pett is a minerals economist with over 27 years experience in exploration and mining of gold and other metals. During that period he has overseen the successful exploration, development, operation and financing of more than ten mining projects worldwide. This includes gold and nickel mines in Australia and gold mines in East and West Africa, a number evolving from grass roots discovery, as well as numerous exploration projects. He holds a Masters Degree from Queens University Canada. Mr Pett is a member of the Board's Audit Committee and chairman of the Remuneration Committee.

During the last 3 years Mr Pett has served on the boards of the following public companies: A-Cap Resources Ltd, Regalpoint Resources Ltd, Brazilian Metals Group Ltd, Senex Energy Ltd and Indochina Minerals Ltd.

Chief Executive Officer

Benjamin John Bell BSc, MMET, MBA

Mr Bell is a geologist and geophysicist with 15 years in the mineral industry, including 10 years in gold exploration. Previously Mr Bell has consulted to a number of ASX listed gold explorers and has held senior exploration geologist roles with companies including Regis Resource Ltd. He has also managed the operations of UTS Geophysics and the airborne geophysical arm of the Australian Government Agency, Geoscience Australia. Mr Bell is currently a director of unlisted Australian Explorer Mikada Resources Pty Ltd and holds a Bachelor of Science, a Masters of Mineral Exploration Technologies and a Master of Business Administration.

Executive Director

Simon Trevisan B Econ , LLB (Hons)m MBT

Mr Trevisan is the managing director of the Transcontinental Group of Companies and for the past 15 years has been responsible for managing the Group's mining, oil and gas and property development projects.

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Directors’ Report continued

Mr Trevisan has been involved in the promotion and management of a number of public companies, including the establishment and listing of Mediterranean Oil & Gas plc, an AIM listed oil and gas company with production and a substantial oil discovery in Italy. He was Executive Chairman of ASX-listed gold explorer Aurex Consolidated Ltd. In that role Mr Trevisan oversaw the recapitalisation of the company, the acquisition of gold tenements at Yamarna, and a farm-out to AngloGold to fund a drilling campaign which ultimately led to a merger with TerraGold Mining Ltd. He has a Bachelor of Economics and a Bachelor of Law (UWA) and a Masters Degree in Business and Technology from the University of New South Wales. Mr Trevisan initially practiced as a solicitor with Allens Arthur Robinson Legal Group firm, Parker and Parker, in the corporate and natural resources divisions and later acted as General Counsel to a group of public companies involved in the mining and exploration sectors. Mr Trevisan is currently an executive director of uranium explorer Regalpoint Resources Ltd and was a founding director of Ausgold Exploration Pty Ltd. Mr Trevisan is a member of the Board's Remuneration Committee.

Non-Executive Director

Richard Lockwood

Mr Lockwood has 35 years experience in mining, mining investment and stockbroking. Formerly a mining investment partner for Hoare Govett and McIntosh Securities he was involved in the development and financing of several gold and base metals projects in Europe, Australia and Africa. Mr Lockwood is currently a Senior Fund Manager for City Natural Resources High Yield Trust, New City High Yield Trust, Geiger Counter Limited and Golden Prospect Precious Metals. He is also currently a non-executive director of Regalpoint Resources Ltd, Kalahari Minerals Ltd and Indochina Minerals Ltd.

Non-Executive Director

Christopher David Kelsall B Econ, LLB

Mr Kelsall is currently Finance Director of Mediterranean Oil & Gas plc, an AIM listed oil and gas production and exploration company, based in London. He has spent most of his career in investment banking, advising clients in relation to capital markets, privatisation and corporate advisory projects in a wide range of developed and emerging markets. In his most recent role as a Director, Equity Capital Markets, at Deutsche Bank AG, Hong Kong, Mr Kelsall advised Chinese and other Asian issuers within the industrial and natural resources sectors. Mr Kelsall holds a Bachelor of Economics and a Bachelor of Law from the University of Western Australia, in addition to a Graduate Diploma in Applied Finance and Investment from the Securities Institute of Australia. Mr Kelsall is chairman of the Board's Audit Committee and a member of the Remuneration Committee.

Alternate Director to Mr Trevisan

Ian Murchison B.Comm., FCA, Dipl Naut Sc.

Mr Murchison is an Investment Director and a founding shareholder of Perth-based private equity fund manager Foundation Capital. Foundation Capital was established in 1994 and has invested institutional funds of over $125 million, primarily in Western Australia. Mr Murchison is a Fellow of the Institute of Chartered Accountants and was a founding partner of Sothertons Chartered Accountants. Mr Murchison is director of TFS Corporation Ltd, Ausgold Limited (alternate to Mr Simon Trevisan), Austwide Distributors Pty Ltd and Skill Hire Pty Ltd.

Mr Murchison is the Chairman of the Audit and Risk Committee and a member of the Share Trading Committee and Nomination and Remuneration Committee.

Company Secretary

Ian Murchison B.Comm., FCA, Dipl Naut Sc. - Resigned on 31 August 2010 Fleur Hudson BA, LLB, LLM (Disp. Res.) – Appointed on 31 August 2010

Fleur Hudson has a Bachelor of Arts, a Bachelor of Laws and Master of Laws degrees. Fleur has been a director of Transcontinental Group since 2009 and was appointed as company secretary of Ausgold Limited in 2010. Prior to that, Fleur has practiced as a solicitor with international law firms in Perth and in London since 1998. As a solicitor, Fleur has advised large national and international companies with respect to a variety of civil construction, infrastructure and commercial issues.

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Directors’ Report continued

DIRECTORS’ MEETINGS

The number of directors’ meetings attended by each of the directors of the Company who hold or held office during the financial year was:

	Board	Meetings	Nomination and Remuneration Committee Meetings	Nomination and Remuneration Committee Meetings	Audit and Risk Committee Meetings	Audit and Risk Committee Meetings
Director	Held	Attended	Held	Attended	Held	Attended
R J Pett	6	6	1	1	2	2
B J Bell	6	6	-	-	-	-
S Trevisan	6	6	1	1	-	-
R Lockwood	3	3	-	-	-	-
C D Kelsall	6	6	1	1	2	2
I Murchison	-	-	-	-	2	2

PRINCIPAL ACTIVITY

The principal activity of the consolidated entity during the year was the development of its interests in exploration projects.

OPERATING AND FINANCIAL REVIEW

(a) Operating Review

Ausgold Limited farmed into an initial 80% interest in the Katanning Gold Project and post year end completed the remaining 20% acquisition. It also entered into a farm-in agreement to earn a 60% interest in the Bullock Pool Joint Venture. The Company placed $25 million as new shares at $1.35 per share primarily to major offshore institutions. The proceeds of the raising are be used primarily in funding the Company’s drilling program at its Katanning Gold Discovery and for regional exploration at the greater Boddington South Project.

(b) Financial Review

The consolidated entity incurred a loss of $1,024,406 (2010: $747,888) for the financial year. This loss included the write-off of $367,034 in exploration expenditure under impairment and research and development in accordance with the consolidated entity’s accounting policies, share-based payments of $71,839 and corporate and administrative costs of $309,132.

(c) Significant Changes in the State of Affairs

The Company was successful in completing a capital raising via a placement in two tranches. In the first tranche 12,000,000 ordinary shares raised $16.2 million before costs at $1.35 per share and was completed before the financial year end.

The consolidated entity’s net assets increased from $9,777,749 to $30,163,761 during the financial year. The increase in net assets principally comprised:

a) an increase in exploration and evaluation expenditure of $16,067,579 as a result of the acquisition of a portfolio of mineral exploration tenements located in Australia; and
b) an increase in cash and investments comprising held to maturity assets of $5,034,806 principally from capital raisings completed during the year.

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Directors’ Report continued

Fully paid ordinary shares issued during the year were as follows:

The issue of 4,611,686 fully paid ordinary shares at $0.20 each on exercise of options;
The issue of 12,000,000 fully paid ordinary shares at $1.35 each to raise $16,200,000;
The issue of 250,000 fully paid ordinary shares at $0.30 each on exercise of options.

Total shares issued during the year to 30 June 2011 were 16,861,686.

RESULTS

The net amount of the consolidated loss of the consolidated entity for the year ended 30 June 2011 after providing for income tax was $1,024,406 (30 June 2010: $747,888). At 30 June 2011, the Group had $12,831,971 comprising cash and cash equivalents, and a held to maturity financial asset in the form of a $12 million dollar, 3 month term deposit with Westpac-St George Bank, a AA rated Australian trading bank.

DIVIDENDS

No dividend has been declared or paid by the company to the date of this report.

REVIEW OF OPERATIONS

Ausgold’s principal activity during the year ended 30 June 2011 was exploration for gold and copper deposits in Australia.

In June 2011 Ausgold successfully completed a capital raising of $16,200,000 on the issue of 12,000,000 fully paid ordinary shares at $1.35 each, with a second tranche of a further 6,518,519 shares raising $8,800,000, subject to shareholder approval.

A summary of the Company’s activities during the year is set out in the Operations Report.

ENVIRONMENTAL REGULATION

The consolidated entity’s exploration and mining activities are governed by a range of environmental legislation. As the group is still in the development phase of its exploration projects, Ausgold is not yet subject to the public reporting requirements of environmental legislation. To the best of the directors’ knowledge, the group has adequate systems in place to ensure compliance with the requirements of the applicable environmental legislation and is not aware of any material breach of those requirements during the financial year and up to the date of the Directors’ Report.

EVENTS SUBSEQUENT TO REPORTING DATE

On 22 July 2011, the company issued the balance of 6,518,519 ordinary shares at $1.35 per share approved by shareholders on 18 July 2011, to fund the Company’s drilling program at the Katanning Gold Discovery and for regional exploration at the greater Boddington South Exploration Project and the Company’s other exploration projects and for working capital.

On 27 July 2011 Ausgold completed the acquisition of the remaining 20% interest in the Katanning Gold Project from Great Southern Resources Pty Ltd (“GSR”). Ausgold paid GSR a final instalment of A$1,000,000 in cash and 1,379,311 ordinary shares as the second tranche of the consideration in the “Boddington South” Joint Venture pursuant to the Purchase Agreement dated April 2011.

LIKELY DEVELOPMENTS

The Consolidated entity will continue to pursue its main objective of developing interests in exploration projects.

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Directors’ Report continued

OPTIONS

At the end of the year, the balance of options over unissued ordinary shares was:

Class Expiry Date Exercise Price Date Granted Number of Options Bonus Options 31 March 2013 $0.20 27 January 2010 85,438,314

During the year the Chief Executive Officer became entitled under the terms of his employment agreement to the issue of 300,000 options as approved by board at the board meeting held on 14 September 2010. The options will be exercisable at 30 cents per share. Entitlement is subject to shareholder approval.

Unissued shares under option

At the date of this report, the balances of unissued ordinary shares of the Group under option are:

Class	Expiry Date	Exercise Price	Date Granted	Number of
				Options
Mr Christopher	31 December 2014	$0.20	16 December 2009	200,000
David Kelsall
Mr Christopher	31 December 2014	$0.25	16 December 2009	250,000
David Kelsall
Mr Benjamin Bell	31 December 2014	$0.20	16 December 2009	700,000
as trustee for	31 December 2014	$0.25	16 December 2009	500,000
Kestrel Investment	31 December 2014	$0.25	16 December 2009	500,000
Fund

Shares issued on the exercise of options granted to Shareholders

4,611,686 bonus options with an exercise price of $0.20 per share were exercised by the shareholders during the financial year.

Class	Number of	Exercise Price	Date Granted	Number of
	Options exercised			shares issued
Ordinary shares	4,611,686	$0.20	16 December 2009	4,611,686

DIRECTORS’ INTERESTS

The relevant interest of each director in the shares issued by the Company at the date of this report is as follows:

Director	Ordinary Shares	Options
Robert James Pett1	5,800,000	5,800,000
Benjamin Bell2	85,000	1,750,000
Simon Trevisan3	16,600,000	15,600,000
Richard Lockwood	-	-
Christopher David Kelsall4	385,000	835,000
Ian MacKenzie Murchison5	7,281,888	7,581,888

Note 1: Relevant interest as director and controlling shareholder of Batterbury Holdings Pty Ltd.

Note 2: Relevant interest as the trustee for Kestrel Investment Fund. Mr Bell also has an interest as a beneficiary of Kestrel Investment Fund.
Note 3: Relevant interest as director and controlling shareholder of Transcontinental Investments Pty Ltd. Note 4: Refer note to the financial statements Note 23

Note 5: Relevant interest as director of Tenalga Pty Ltd the trustee of Murchison Superannuation Fund.

Mr Murchison also has an interest as a beneficiary of the Murchison Superannuation Fund.

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Directors’ Report continued

INDEMNIFICATION OF OFFICERS AND AUDITORS

(a) Indemnification

The Company has agreed to indemnify the current directors and company secretary of the Company against all liabilities to another person (other than the Company or a related body corporate) that may arise from their position as directors and company secretary of the Company, except where the liability arises out of conduct involving a lack of good faith.

The agreement stipulates that the Company will meet to the maximum extent permitted by law, the full amount of any such liabilities, including costs and expenses.

(b) Insurance premiums

The Company paid a premium during the year in respect of a director and officer liability insurance policy, insuring the directors of the Company, the company secretary, and all executive officers of the Company against a liability incurred as such a director, secretary or executive officer to the extent permitted by the Corporations Act 2001 .

NON-AUDIT SERVICES

During the financial year, BDO Corporate Finance (WA) Pty Ltd (“BDO Corporate Finance”), a related entity of BDO Audit (WA) Pty Ltd (“BDO Audit”), the Company’s auditor, BDO Tax (WA) Pty Ltd (“BDO Tax”), the Company’s tax adviser, performed certain other services in addition to their statutory duties.

The Board and the Audit and Risk Committee have considered the non-audit services provided during the financial year by the auditor and are satisfied that the provision of those non-audit services during the financial year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the followings reasons:

all non-audit services were subject to the corporate governance procedures adopted by the Company; and
the non-audit services provided do not undermine the general principals relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decisionmaking capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.

Details of the amount paid to the auditor of the Company, BDO Audit (WA) Pty Ltd and its related practices for audit and non-audit services provided during the financial year are set out below. In addition, amounts paid to other auditors for the statutory audit have been disclosed:

	Consolidated	Consolidated
	2011	2010
	$	$
Services other than statutory audit:
Other Services	-	-
- Independent accountant’s report for inclusion in a
prospectus	-	11,312
(BDO Corporate Finance (WA) Pty Ltd)
- Tax compliance services (BDO Tax (WA) Pty Ltd)	15,665	21,560

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Directors’ Report continued

REMUNERATION REPORT

The Remuneration Report is set out on pages 23 to 28 and forms part of the Directors’ Report.

AUDITORS INDEPENDENCE DECLARATION

The auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is included on page 22 of the financial report.

AUDITORS

BDO Audit continues to act as the auditor in the office in accordance with section 327 of the Corporations Act 2001 .

This report is made in accordance with a resolution of the Board of Directors

For and on behalf of the Board.

==> picture [139 x 66] intentionally omitted <==

Simon Trevisan Executive Director Signed this 28[th] day of September 2011

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38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +8 6382 4600 Fax: +8 6382 4601 www.bdo.com.au

==> picture [77 x 30] intentionally omitted <==

28 September 2011

Ausgold Limited The Board of Directors Level 14, 191 St Georges Terrace PERTH WA 6000

Dear Sirs,

DECLARATION OF INDEPENDENCE BY CHRIS BURTON TO THE DIRECTORS OF AUSGOLD LIMITED

As lead auditor of Ausgold Limited for the year ended 30 June 2011, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

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

This declaration is in respect of Ausgold Limited and the entity it controlled during the period.

==> picture [85 x 31] intentionally omitted <==

Chris Burton Director

==> picture [30 x 19] intentionally omitted <==

BDO Audit (WA) Pty Ltd Perth, Western Australia

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

22 | Page

Remuneration Report

REMUNERATION REPORT

This Remuneration Report outlines the director and executive remuneration arrangements of the Company and the consolidated entity and has been audited in accordance with the requirements by section 308(3C) of the Corporations Act 2001 and the Corporations Regulations 2001 .

For the purposes of this report, key management personnel of the consolidated entity are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the consolidated entity, directly or indirectly, including any director (whether executive or otherwise) of the Company. The consolidated entity does presently employ three non-executive directors.

KEY MANAGEMENT PERSONNEL

The following were key management personnel of the consolidated entity at a time during the financial year and unless otherwise indicated were key management personnel for the entire financial year:

Name	Position Held
Mr Robert James Pett	Non-Executive Chairman
Mr Benjamin John Bell	Chief Executive Officer
Mr Simon Trevisan	Executive Director
Mr Richard Lockwood	Non-Executive Director
Mr Christopher David Kelsall	Non-Executive Director
Mr Ian Murchison	Alternate Director of Mr Trevisan

REMUNERATION COMMITTEE

The Remuneration Committee of the Board of Directors of the Company is responsible for determining and reviewing remuneration policies for the directors and executives. If necessary the Remuneration Committee obtains independent advice on the appropriateness of remuneration packages given trends in comparable companies and in accordance with the objectives of the consolidated entity.

PRINCIPLES OF REMUNERATION

The remuneration structures explained below are competitively set to attract and retain suitably qualified and experienced candidates, reward the achievements of strategic objectives and achieve the broader outcome of creation of value for shareholders. The remuneration structures take into account:

The capability and experience of the key management personnel;
The key management personnel’s ability to control the achievement of strategic objectives;
• The consolidated entity’s performance including:
The growth in share price; and
The amount of incentives within each key management person’s compensation.

Given the evaluation and developmental nature of the consolidated entity’s principal activity, the overall level of compensation does not have regard to the earnings of the consolidated entity.

REMUNERATION STRUCTURE

In accordance with best practice corporate governance, the structure of non-executive directors’ remuneration is clearly distinguished from that of executives.

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Remuneration Report continued

Non-Executive Director Remuneration

The Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. Directors’ fees cover all main board activities and membership of committees and during the year was set at $2,500 per month as approved by the board.

Non-executive directors generally do not receive performance related compensation. However, shareholders approved the grant of options to a non-executive director of 500,000 options prior to the company being listed.

The Board considers that the issue of options as remuneration to the non-executive directors was appropriate at the date of grant. The Board believes it ensured that remuneration was competitive with market standards and provided an incentive to pursue longer term success for the Company. Furthermore, the Board considers the grant of options as remuneration reduced demand on the critical cash resources of the Company at that time and assisted in ensuring the continuity of service of directors who have extensive knowledge of the Company, its business activities and assets and the industry in which it operates.

Non-executive directors do not receive any retirement benefits, other than statutory superannuation.

Executive Remuneration

Remuneration for executives is set out in employment agreements. Details of these employment agreements are provided below.

Executive directors may receive performance related compensation but do not receive any retirement benefits, other than statutory superannuation.

Fixed remuneration

Fixed remuneration consists of base compensation (which is calculated on a total cost basis and includes any FBT charges related to employee benefits including motor vehicles) as well as employer contributions to superannuation funds.

Fixed remuneration is reviewed annually by the Remuneration Committee through a process that considers individual and overall performance of the consolidated entity. As noted above, the Remuneration Committee has access to external advice independent of management.

Indemnifying Directors and Officers

The Company has made an agreement to indemnify all the Directors and Officers of the Company against all losses or liabilities incurred by each Director and Officer in their capacities as Directors and Officers of the Company. During the period ended 30 June 2011, the Company paid insurance premiums in respect of Directors’ and Officers’ Liability Insurance for Directors and Officers of the Company. The liabilities insured are damages and legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the Directors and Officers in their capacity as Directors and Officers of the entity and related joint venture companies. On 11 November 2010, the Company paid an insurance premium of $14,148 covering the period from 11 November 2010 to 11 November 2011 (2010: $8,370).

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Remuneration Report continued

Consequences of Performance on Shareholder Wealth

In considering the consolidated entity’s performance and benefits for shareholder wealth, the directors have regard to the following indices in respect of the current financial year and the previous financial periods since incorporation:

	2011	2010
Net loss for the year	$1,024,406	$747,888
Dividends Paid	Nil	Nil
Change in share price	$1.43	8 cents
Share Price at beginning of year	$0.12	20 cents
Share Price at end of the period	$1.55	12 cents
Loss Per share	1.11 cents	1.39 cents

These figures cover the financial period from 01 July 2010 to 30 June 2011.

Due to the consolidated entity currently being in an evaluation and developmental phase, the consolidated entity’s earnings are not considered to be a principal performance indicator. However, the overall level of key management personnel remuneration takes into account the achievement of strategic objectives, service criteria and growth in share price.

The level of remuneration has remained unchanged. Furthermore, total remuneration for all nonexecutive directors has remained unchanged since last voted upon by shareholders.

SERVICE AGREEMENTS

The Company has entered into an employment agreement with its Chief Executive Officer. The employment agreement outlines the components of remuneration paid to the executive and is reviewed on an annual basis.

Mr Benjamin Bell, Chief Executive Officer has an employment agreement effective from 1 November 2009.

The appointment was on the following terms:

salary of $175,000 per annum to be reviewed each year by the Company's remuneration committee;
superannuation contribution calculated at 9% of current and future ongoing salary to a super fund of choice;
appointment to the board of the Company and its subsidiary; and issue of 1,700,000 options with the terms set out in the Remuneration Report.

In addition, subject to shareholder approval, Mr Bell is to be issued a further 300,000 options, upon the Company establishing a JORC-compliant resource on any of its tenements within two years from the date of his appointment. This requirement was achieved in late 2010 and the 300,000 options will be put to shareholders at the AGM.

The company has entered into a service agreement with Mr Chris Kelsall, Non Executive director. The agreement outlines the components of remuneration paid to the non-executive director.

Mr Chris Kelsall, Non-Executive Director has an employment agreement effective from 3 November 2009.

The appointment is on the following terms:

Director's fee of $2,500 per calendar month based on a commitment of eight hours per month;
• Director's fee of $2,500 per day at a pro-rata rate for time commitments longer than eight hours per month; and
issue of 500,000 options with the terms set out in prospectus.

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Remuneration Report continued

REMUNERATION OF KEY MANAGEMENT PERSONNEL

Details of the nature and amount of each major element of the remuneration of each key management person of the consolidated entity are:

2011 Key Management Person	Short-term Benefits	Short-term Benefits	Post-employment Benefits	Share-based payment	Share-based payment
Directors	Salary $	Other Fees $	Superannuation $	Equity $	Options (a) $	Total $
Robert Pett(1)	47,667	-	4,290	-	-	51,957
Benjamin Bell(2)	195,948	-	17,635	-	60,411	273,994
Simon Trevisan(3)	-	152,000	-	-	-	152,000
Richard Lockwood(4)	19,417	-	-	-	-	19,417
Christopher Kelsall(5)	30,000	-	-	-	11,428	41,428
	293,032	152,000	21,925	-	71,839	538,796

(a) The fair value of the options is calculated at the date of grant using a Black-Scholes valuation model and allocated to each reporting period evenly over the period from grant date to vesting date. Market conditions were not taken into account within the valuation model as the Company was not listed on the ASX at the date of grant.

(1) Mr Pett received $47,667 in salary for Non-Executive Chairman duties as approved by the board on 15 September 2010

(2) Mr Bell has got the annual salary review during the year and the salary package was increase to $225,000 per annum including superannuation for the period from 01 November 2010.

(3) Mr Trevisan has not received remuneration from the company for the year ended 30 June 2011. Ausgold Ltd has an agreement with Transcontinental Investments Pty Ltd as disclosed in Note 17 under Management Commitment. Transcontinental Investments Pty Ltd charged a management and administrative fee to Ausgold Ltd for office space and services and accounting, company secretarial and administration services totalling $152,000 during the financial year. Mr Trevisan is a director and controlling shareholder of Transcontinental Investments Pty Ltd.

(4) Mr Lockwood has joined the Group on 08 November 2010 appointed as Non-Executive Director and received $19,417 in salary for Non-Executive duties based on $2,500 per month as approved by the board.

(5) Mr Kelsall received $30,000 in salary for Non-Executive duties based on $2,500 per month as approved by the board.

2010 Key Management Person	Short-term Benefits	Short-term Benefits	Post-employment Benefits	Share-based payment	Share-based payment
Directors	Salary $	Other Fees $	Superannuation $	Equity $	Options (a) $	Total $
Robert Pett	-	-	-	-	-	-
Benjamin Bell	116,667	-	10,500	-	172,770	299,937
Simon Trevisan (1)	-	98,710	-	-	-	98,710
Richard Lockwood	-	-	-	-	-	-
Christopher Kelsall (2)	20,000	-	-	-	57,471	77,471
	136,667	98,710	10,500	-	230,241	476,118

(1) Mr Trevisan has not received remuneration from the company for the year ended 30 June 2010. Ausgold Ltd has an agreement with Transcontinental Investments Pty Ltd as disclosed in Note 17 under Management Commitment which is a director related entity (Simon Trevisan) which charged a management and administrative fee for office space and services, accounting and administration services totalling $98,710 for the year ended 30 June 2010, were paid to Transcontinental Investments Pty Ltd, of which Mr Trevisan is a director and shareholder.

(2) Mr Kelsall received $20,000 in directors fees for Non-Executive duties based on $2,500 per month as approved by the board.

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Remuneration Report continued

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

ate:
Grant date	Expiry Date	Fair	Exercise	Price of	Estimated	Risk-free	Dividend
		value	price	shares on	volatility	interest	yield
		per		grant date		rate
		option
16 Dec 2009	02 Nov 2014	0.20	0.20	0.20	86%	5.34%	0.00%
16 Dec 2009	02 Nov 2014	0.20	0.25	0.20	86%	5.34%	0.00%

SHARE-BASED PAYMENTS

Options and rights over equity instruments granted as compensation

Details on options that were granted as compensation to each key management personnel during the previous financial year that have not been exercised are as follows:

Issued to	Number of Options	Exercise Price	Expiry Date	Vesting Date	Value of Options Granted*	Value of Options Expensed	Value to Vest
Mr Christopher David Kelsall	200,000 250,000	0.20 0.25	31/12/2014 31/12/2014	16/12/2009 03/11/2010	35,350 33,550	35,350 33,550	35,350 33,550
Mr Benjamin Bell as trustee for Kestrel Investment Fund	700,000 500,000 500,000	0.20 0.25 0.25	31/12/2014 31/12/2014 31/12/2014	16/12/2009 01/11/2010 01/05/2011	98,980 67,100 67,100	98,980 67,100 67,100	98,980 67,100 67,100

The value at grant date calculated in accordance with AASB 2 Share-based Payment of options granted during the year as part of remuneration on 16 December 2009.

The assessed fair value at grant date of options granted to the individuals is allocated equally over the period from grant date to vesting date, and the amount is included in the remuneration tables above. Fair values at grant date are independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

Detail on options that vested during the financial year

Issued to	Number of Options	Expiry Date	Year granted	Vest %	Forfeited %	Financial years in which options may vest	Maximum total value of grant yet to vest $
Mr Christopher David Kelsall	200,000 250,000	31/12/2014 31/12/2014	2010 2011	- -	- -	30/06/2012 30/06/2013	35,350 33,550
Mr Benjamin Bell as trustee for Kestrel Investment Fund	700,000 500,000 500,000	31/12/2014 31/12/2014 31/12/2014	2010 2010 2011	- - -	- - -	30/06/2012 30/06/2013 30/06/2014	98,980 67,100 67,100

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Remuneration Report continued

Options issued as part of remuneration for the year ended 30 June 2011

Options are issued to directors and executives as part of their remuneration. The options are issued based on performance criteria, and to increase goal congruence between executives, directors and shareholders.

Modification of terms of equity-settled share-based payment transactions

No terms of equity-settled share-based payment transactions (including options and rights granted as compensation to a key management person) have been altered or modified by the issuing entity during the reporting period or the prior period.

There were no options exercised by directors or key management personnel during the year ended 30 June 2011.

This is the end of the audited Remuneration Report.

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Corporate Governance Statement

The Board of Directors (‘Board’) of Ausgold Limited is responsible for the corporate governance of the Company. The Board guides and monitors the business activities and affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are accountable. The Company has adopted systems of control and accountability as the basis for the administration of corporate governance. The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company’s needs.

The Corporate Governance Statement has been structured with reference to the ASX Corporate Governance Council’s “Principles of Good Corporate Governance and Best Practice Recommendations” to the extent that they apply to the Company.

The Company’s corporate governance policies are available on the Company’s website: - http://www.ausgoldlimited.com/company/corporate governance

This statement reflects Ausgold’s corporate governance system in place during the 2011 financial year and as at the date of this report. The following is a summary of the Company’s adherence to those principles and recommendations:

1. Lay Solid Foundations for Management and Oversight

Board Charter

The Company complies with this recommendation.

In carrying out its responsibilities referred to below, the Board:

recognises its overriding responsibilities to act honestly, fairly and diligently and in accordance with the law in serving its shareholders; and
recognises its duties and responsibilities to its employees and the community.

To ensure that the Board is able to discharge its duties properly, it has established a nomination committee (referred to as the Remuneration and Nomination Committee) to select those best suited to act as directors.

The Board recognises that it acts for and on behalf of the shareholders, and is accountable to them. The Board seeks to identify and meet all regulatory and ethical responsibilities, as well as the expectations of the shareholders. Further, the Board has established an Audit and Risk Committee which is responsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately and properly manage those risks.

The operation and administration of the Company is the responsibility of the Chief Executive Officer and the Executive Director. The Board is responsible for ensuring that they have the proper and appropriate qualifications and experience to execute their duties effectively.

The Board is responsible for ensuring that the operation of the Company takes into account all risks identified by the Board and is aligned with the expectations of the shareholders.

Evaluation of the Performance of Senior Executives

The performance of senior executives is evaluated in accordance with the Performance Evaluation Process. A performance evaluation for senior executives has taken place in the reporting period and was carried out in accordance with the process disclosed.

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Corporate Governance Statement continued

2. Structure the Board to Add Value

Composition of the Board

The Company complies with this recommendation.

The Board is comprised of a Non-Executive Chairman, Chief Executive Officer, an Executive Director and Non-Executive Director, with the appropriate qualifications and experience.

At the date of this document, the Board is comprised as follows:

At the date of this document,	the Board is comprised as follows:
Name	Position Held
Robert Pett	Non-Executive Chairman
Benjamin Bell	Chief Executive Officer
Simon Trevisan	Executive Director
Richard Lockwood	Non-Executive Director
Chris Kelsall	Non-Executive Director
Ian Murchison	Company Secretary until 31 August 2010 Alternate Director to Simon Trevisan as of 31 August 2010
Fleur Hudson	Company Secretary as of 31 August 2010

The membership of the Board, its activities and composition is subject to periodic review.

In accordance with the Company’s Constitution, the tenure of a director (other than managing director) is subject to reappointment by shareholders not later than the third anniversary following his or her last appointment. Subject to the requirements of the Corporations Act 2001 , and the ASX Listing Rules, the Board does not prescribe to the principle of a set retirement age, and there is no maximum period of service as a director.

It is the opinion of the Company that an independent director is a non-executive director who is not a member of management and who is free of any business or other relationship which could either be perceived to, or actually would, materially affect or interfere with the independent exercise of their judgment.

The Directors are required to take into consideration any potential conflicts of interest when accepting appointments to other boards.

The Board has determined that the individual directors have the right in connection with their duties and responsibilities as directors, to seek independent professional advice at the Company’s expense. With the exception of expenses for legal advice in relation to director’s rights and duties, the engagement of an outside adviser is subject to prior approval by the Chairman. Such approval will not be unreasonably withheld.

The Board has established a nomination committee (referred to as the Remuneration and Nomination Committee) who are responsible for, amongst other things, identifying individuals with the requisite skill set, experience and professional expertise from which the Company could benefit. At the date of this document, the members of the Remuneration and Nomination Committee are Mr Pett (chairman), Mr Trevisan and Mr Kelsall. For further information regarding the Remuneration and Nomination Committee please refer to the Remuneration and Nomination Committee Charter.

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Corporate Governance Statement continued

3. Promote ethical and responsible decision making

The Company complies with this recommendation.

Due to the size and nature of the operations of the Company, it does not have a formally documented code of conduct for its directors and executives. Despite this, the Board maintains high standards of ethical and responsible decision making, recognizing the legitimate interests of the shareholders and the responsibilities it has to regulatory authorities.

With respect to share dealings and disclosures, the Company’s Share Trading Policy regarding “Restricted Persons” (including the directors, executives and employees) dealing in its securities states the following:

Consistent with the legal prohibitions on insider trading contained in the Corporations Act 2001 , all Restricted Persons are prohibited from trading in the Company’s securities (and any financial products issued or created over or in respect of the Company’s securities) while in possession of unpublished price sensitive information.
Restricted Persons are required to receive clearance from the Chairman or Executive Director prior to undertaking any transaction in Company securities. If a Restricted Person is considered to possess unpublished price sensitive information, they will be precluded from making a security transaction until 1 trading day after the time of public release of that information.
As required by the ASX Listing Rules, the Company will notify the ASX of all transactions of securities in the Company conducted by a director of the Company.

The Company has a formally appointed Share Trading Committee to ensure that the Share Trading Policy is properly followed. At the date of this document, the members of the Share Trading Committee are Mr Pett, Mr Trevisan and Mr Murchison.

For further information regarding the Share Trading Committee please refer to the Share Trading Committee Charter and the Share Trading Policy.

4. Safeguard Integrity in Financial Reporting

Audit and Risk Committee

The Company does not comply with the recommendation of having at least 3 Non-Executive Directors on the audit committee. The Company is small with limited resources and has not had an operating business. The Company’s audit committee is comprised of the Chairman, non-executive director and alternate director to an executive director.

The Company has a formally appointed audit committee (referred to as the Audit and Risk Committee) to effectively and properly deal with the efficiency of significant business processes, while safeguarding assets and ensuring that proper accounting records are kept and exposure to financial risk is minimised. At the date of this document, the members of the Audit and Risk Committee are Mr Pett, Mr Kelsall and Mr Murchison.

The appointment of the audit committee ensures the existence of an effective internal framework within the Company. For further information regarding the Audit and Risk Committee please refer to the Audit and Risk Committee Charter.

5. Make Timely and Balanced Disclosure

The Company complies with this recommendation.

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Corporate Governance Statement continued

The Board has dedicated its Company Secretary to be the person responsible for:

ensuring that the Company is in compliance with the ASX Listing Rules; and
for overseeing and coordinating disclosure of information to the ASX, as well as communicating with the ASX.

In accordance with the ASX Listing Rules, the Company Secretary will ensure that the Company notifies the ASX immediately with regards to:

all information concerning the Company that could reasonably be expected to have a material effect on the price or value of the Company’s securities; and
all information that would, or would be likely to, influence people who commonly invest in securities in deciding whether to acquire or dispose of the Company’s securities.

6. Respect the Rights of Shareholders

The Company complies with this recommendation.

The Board recognises its duty to ensure that all shareholders are kept well informed of all major developments affecting the Company and its development. Information is communicated to shareholders as follows:

the Annual Report which is distributed either in electronic or hard copy form depending on what each shareholder has elected;
the Annual General Meeting and any other general meeting called as may be required to obtain shareholder’s approval when appropriate;
the Quarterly and Half Yearly Reports which can be found on the Company’s website;
all announcements made to the ASX as required under the continuous disclosure requirements of the ASX Listing Rules can be found on the Company’s website;
the Company’s promotion of communication with the shareholders via the Company website and email.

7. Recognise and Manage Risk

The Company complies with this recommendation.

The Company has a formally appointed risk committee (referred to as the Audit and Risk Committee – see point 4 above) to effectively and properly ensure, amongst other things, that there are adequate policies in relation to risk management, compliance and internal control. 6

It is the Audit and Risk Committee’s role to ensure that strategic, operational, legal and financial risks are identified, properly and effectively assessed, managed and monitored to enable the Company’s objectives to be achieved.

8. Remuneration Fairly and Responsibly

The Company complies with this recommendation.

The Company has a formally appointed Remuneration and Nomination Committee (as referred to point 2 above). This committee was set up to determine proper levels of remuneration for executive and non-executive Board members, to review the various skills and experience on the Board and identify specific individuals for nomination as directors and overseeing Board and executive succession planning.

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Corporate Governance Statement continued

Non-Executive Directors’ Remuneration Policy

The structure of non-executive directors’ remuneration is clearly distinguished from that of executives. Remuneration for non-executive directors is fixed.

The non-executive directors receive $2,500 per calendar month based on commitment of eight hours per month for performance related compensation. The shareholders approved the grant of 500,000 options to Christopher Kelsall on 3 November 2009.

The Board considers that the issue of 500,000 options as remuneration to the non-executive director was appropriate at the date of grant. The Board believes it ensured that remuneration was competitive with market standards and provided an incentive to pursue longer term success for the Company. Furthermore, the Board considers the grant of options as remuneration reduced demand on the critical cash resources of the Company at that time and assisted in ensuring the continuity of service of directors who have extensive knowledge of the Company, its business activities and assets and the industry in which it operates.

Executive Officer’s Remuneration Policy

As noted previously, executive directors are employed pursuant to employment or service agreements. Summaries of these agreements are set out in the Remuneration Report.

Neither the non-executive directors nor the executives of the Company receive any retirement benefits, other than superannuation.

Further details regarding the remuneration arrangements of the Company are set out in the Remuneration Report.

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Consolidated Statement of Comprehensive Income

FOR THE YEAR ENDED 30 JUNE 2011

Note Revenue from continuing operations Other income Employee option expenses Directors’ fee Corporate and administrative expenses Legal Fee Depreciation and amortisation expenses Accounting expenses Management fee Impairment Exploration expenses Consulting fee Occupancy expenses Research and Development (CET) Other expenses Loss before income tax Income tax benefit 4 Loss for the year Other comprehensive income Total comprehensive loss for the year Total comprehensive loss for the year is attributable to ordinary equity holders of the entity Owner of Ausgold Limited Basic and diluted loss per share attributable to ordinary equity holders of the Company (cents) 18	2011 2010
	$ $
	301,700 241,056 - - (71,839) (230,241) (101,373) (20,000) (309,132) (115,925) (50,039) (8,835) (49,802) (5,220) (76,225) (51,291) (152,000) (98,710) (297,836) (435,866) (5,215) (11,829) (8,605) (14,070) (69,198) - (134,842) (62,549)
	(1,024,406) (813,480) - 65,592
	(1,024,406) (747,888) - -
	(1,024,406) (747,888)
	(1,024,406) (747,888)
	(1.11) (1.39)

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

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Consolidated Statement of Financial Position

FOR THE YEAR ENDED 30 JUNE 2011

Note CURRENT ASSETS Cash and cash equivalents 5 Trade and other receivables 6 Held to maturity financial asset 6 Total Current Assets NON CURRENT ASSETS Security deposit 7 Property, plant and equipment 8 Exploration and evaluation expenditure 9 Prepayment of exploration expenditure 9 Total Non Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 10 Provisions 10 Total Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed Equity 11 Reserves 12 Accumulated Losses 13 TOTAL EQUITY	2011 2010
	$ $
	831,971 2,797,165 461,530 226,862 12,000,000 5,000,000
	13,293,501 8,024,027
	395,000 140,000 374,672 40,511 17,739,048 1,686,144 197,499 182,824
	18,706,219 2,049,479

	31,999,720 10,073,506
	1,806,123 292,389 29,836 3,368
	1,835,959 295,757

	1,835,959 295,757
	30,163,761 9,777,749
	26,809,422 10,392,085 5,223,322 230,241 (1,868,983) (844,577)
	30,163,761 9,777,749

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

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Consolidated Statement of Changes in Equity

FOR THE YEAR ENDED 30 JUNE 2011

Balance as at 1 July 2009 Total comprehensive loss for the year Transactions with equity holders in their capacity as equity holders: Shares issued during the year 50 million shares at 20 cents issued Share issue costs Employee share options Balance as at 30 June 2010 Balance as at 1 July 2010 Total comprehensive loss for the year Transactions with equity holders in their capacity as equity holders: Shares issued during the year 12 million shares at 135 cents issued Share issue costs Shares to be issued Options to be issued Employee share options Balance as at 30 June 2011	Contributed Equity Accumulated Losses Option Reserves Total Equity
	$ $ $ $
	200,000 (96,689) - 103,311 - (747,888) - (747,888) 925,358 - - 925,358 10,000,000 - - 10,000,000 (733,273) - - (733,273) - - 230,241 230,241
	10,192,085 (747,888) 230,241 9,674,438
	10,392,085 (844,577) 230,241 9,777,749
	10,392,085 (844,577) 230,241 9,777,749 - (1,024,406) - (1,024,406) 1,027,337 - - 1,027,337 16,200,000 - - 16,200,000 (810,000) - - (810,000) - - 4,413,796 4,413,796 - - 507,446 507,446 - - 71,839 71,839
	16,417,337 (1,024,406) 4,993,081 20,386,012
	26,809,422 (1,868,983) 5,223,322 30,163,761

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

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Consolidated Statement of Cash Flows

FOR THE YEAR ENDED 30 JUNE 2011

Note Cash Flows from Operating Activities Payments to suppliers and employees (inclusive of goods and services tax) Interest received Net Cash Used in Operating Activities 15 Cash Flows from Investing Activities Payments for property, plant & equipment Payments for exploration expenditure Prepayment for exploration expenditure Security Deposit Held to maturity investment Net Cash Used in Investing Activities Cash Flows from Financing Activities Proceeds from the issue of share capital (net) Net Cash Provided by Financing Activities Net Increase/(Decrease) in Cash Held Cash and Cash Equivalents at the Beginning of the Year CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2011 2010
	$ $
	(601,096) (309,256) 301,700 241,056
	(299,396) (68,200)
	(383,963) (45,731) (10,429,497) (1,540,726) (14,675) (182,824) (255,000) - (7,000,000) (5,000,000)
	(18,083,135) (6,769,281)
	16,417,337 9,624,270
	16,417,337 9,624,270
	(1,965,194) 2,786,789 2,797,165 10,376
	831,971 2,797,165

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

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Notes to the Consolidated Financial Statements continued

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The primary accounting policies adopted in the preparation of the financial statements are set out below and should be read in conjunction with the prospectus. These policies will consistently apply to all years presented, unless otherwise stated.

(a) Reporting Company

Ausgold Limited (the “Group”) is a company domiciled in Australia. Ausgold Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. The consolidated financial report of the Company as at and for the year ended 30 June 2011 comprises the Company and its subsidiary (together referred to as the “consolidated entity”).

The nature of the operations and principal activities of the consolidated entity are described in the Directors’ Report.

(b) Basis of Preparation

i) Statement of Compliance

The consolidated financial statements are general purpose financial statements for the reporting year ended 30 June 2011 and have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, the Australian Accounting Interpretations and the Corporations Act 2001 . The consolidated financial statements of Ausgold Limited have been prepared using policies based on International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board (IASB).

The financial statements were approved by the Board of Directors on 19 September 2011.

ii) Historical cost convention

The financial statements have been prepared on a historical cost basis.

The financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes the commercial realisation of the future potential of the Group the discharge of liabilities in the normal course of business.

The Board considers that the Group is a going concern as additional funding is not required. The Group can continue to fund its operations and further develop their mineral exploration and evaluation assets during the twelve month period from the date of this financial report.

iii) Change in accounting policy

In the financial year ended 30 June 2011, all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2010 have been reviewed. It has been determined that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on the operations of the Group and consolidated entity and, therefore, no change is necessary to the accounting policies.

(c) Significant Accounting Judgements, Estimates and Assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

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Notes to the Consolidated Financial Statements continued

Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are outlined below:

i) Significant Accounting Judgements

Exploration Expenditure

The write-off and carrying forward of exploration acquisition costs is based on an assessment of an area of interest’s viability and/or the existence of economically recoverable reserves. Information may come to light in a later period which results in the asset being written off as it is not considered viable.

ii) Significant Accounting Estimates and Assumptions

Estimation of Useful Lives of Assets

The estimation of the useful lives of assets has been based on historical experience. The condition of the assets is assessed at least once per year and considered against the remaining useful life. Depreciation charges are included in Note 8.

iii) Critical Accounting Estimate

Judgments, estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes assumptions concerning the future. All judgments, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances available to management. The resulting accounting estimates will, by definition, seldom equal the related actual results. The judgments, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts and assets and liabilities within the next financial year are discussed below.

Impairment of Assets

At each reporting date the Group assesses whether there is any indication that individual assets are impaired. Where impairment indicators exist, recoverable amount is determined and impairment losses are recognised in the statement of comprehensive income where the asset's carrying value exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purpose of assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where it is not possible to estimate recoverable amount for an individual asset, recoverable amount is determined for the cash-generating unit to which the asset belongs.

Share based payments

The Group measures the cost of equity settled transactions with employees by reference to the fair value of equity instruments at the date at which they are granted. The fair value is determined by an external valuer using a Black-Scholes option pricing model, using the assumptions detailed in Note 14.

Going Concern

The financial statements have been prepared on the going concern basis. As at 30 June 2011 the Group had incurred a net loss of $1,024,406 and incurred cash outflows from operating activities for the year ended 30 June 2011 of $299,396. The Group had net assets of $30,163,761 and continues to incur expenditure on its exploration tenements drawing on its cash balances. At 30 June 2011, the Group has approximately $831,971 in cash and cash equivalents and $12,000,000 held to maturity financial asset.

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Notes to the Consolidated Financial Statements continued

(d) Summary of Significant Accounting Policies

i) Principles of Consolidation

The consolidated financial statements incorporate the assets and liabilities of all the subsidiaries that Ausgold Limited (“The parent entity”) has the power to control the financial and operating policies as at 30 June 2011 and the results of all subsidiaries for the year ended. All inter-company balances and transactions between the Group in the consolidated entity, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the consolidated entity.

Subsidiaries

Subsidiaries are entities controlled by the consolidated entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the consolidated entity.

In the consolidated entity’s financial statements, investments in subsidiaries are carried at cost. The financial statements of the subsidiary are prepared for the same reporting period as the Company, using consistent accounting policies.

In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from inter-entity transactions have been eliminated in full.

The investment in subsidiary held by Ausgold Limited is accounted for at cost in the separate financial statements of the Company less any impairment charges. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition method of accounting involves allocating the cost of the business combination to the fair value of the assets acquired and the liabilities and contingent liabilities assumed at the date of acquisition.

Business Combinations

All business combinations occurring on or after 1 July 2010 are accounted for by applying the acquisition method. The change in accounting policy is applied prospectively and had no material impact on earnings per share. The consolidated entity has applied the acquisition method for the business combination.

For every business combination, the Group identifies the acquirer, which is the combining entity that obtains control of the other combining entities or businesses. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable. The acquisition date is the date on which control is transferred to the acquirer. Judgment is applied in determining the acquisition date and determining whether control is transferred from one party to another.

The acquisition method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at date of exchange. Acquisition related expenses are expensed as incurred.

Except for non-current assets or disposal groups classified as held for sale (which are measured at fair value less costs to sell), all identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the cost of the business combination over the net fair value of the consolidated entity’s share of the identifiable net assets acquired is recognised as goodwill.

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Notes to the Consolidated Financial Statements continued

If the cost of acquisition is less than the consolidated entity’s share of the identifiable net assets acquired, the difference is recognised as goodwill. If the cost of acquisition is less than the consolidated entity’s share of the net fair value of the identifiable net assets of the subsidiary, the difference is recognised as a gain in the statement of comprehensive income, but only after a reassessment of the identification and measurement of the net assets acquired.

Measuring goodwill

The Group measures goodwill as the fair value of the consideration transferred including the recognised amount of any non-controlling interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date.

Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Group to the previous owners of the acquiree, and equity interests issued by the Group. Consideration transferred also includes the fair value of any contingent consideration and sharebased payment awards of the acquiree that are replaced mandatorily in the business combination. If a business combination results in the termination of pre-existing relationships between the Group and the acquiree, then the lower of the termination amount, as contained in the agreement, and the value of the off-market element is deducted from the consideration transferred and recognised in other expenses.

Transaction costs

Transaction costs that the Group incurs in connection with a business combination, such as finder’s fees, legal fees, due diligence fees, and other professional and consulting fees, are expensed as incurred.

ii) Foreign Currency

Functional and presentation currency

Both the functional and presentation currency of Ausgold Limited is Australian dollars (A$).

Foreign currency transactions and balances

Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the statement of financial position date.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Translation of foreign operations

The statement of comprehensive income is translated at the average exchange rates for the period.

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

iii) Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the strategic steering committee.

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Notes to the Consolidated Financial Statements continued

iv) Cash and Cash Equivalents

“Cash and cash equivalents” includes cash at bank and in hand, deposits held at call with financial institutions, other short-term highly liquid deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.

For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above.

v) Trade and Other Receivables

Trade debtors are recognised at the amount receivable and are due for settlement within 30 days from the end of the month in which services were provided. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off against the receivable directly unless a provision for impairment has previously been recognised.

A provision for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. Loans granted are recognised at the amount of consideration given or the cost of services provided to be reimbursed.

vi) Revenue Recognition

Interest

Revenue is recognised as interest accrues using the effective interest method. The effective interest method uses the effective interest rate which is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial asset.

vii) Fair value estimation for financial instruments

Fair values may be used for financial asset and liability measurement as well as for sundry disclosures. Fair values for financial instruments traded in active markets are based on quoted market prices at statement of financial position date. The quoted market price for financial assets is the current bid price and the quoted market price for financial liabilities is the current ask price.

The fair values of financial instruments that are not traded in an active market are determined using valuation techniques. Assumptions used are based on observable market prices and rates at statement of financial position date. The fair value of long-term debt instruments is determined using quoted market prices for similar instruments. Estimated discounted cash flows are used to determine fair value of the remaining financial instruments. The fair value of forward exchange contracts is determined using forward exchange market rates at the statement of financial position date. The fair value of interest rate swaps is calculated as the present value of estimated future cash flows.

The fair value of trade receivables and payables is their nominal value less estimated credit adjustments. A financial instrument is recognised if the consolidated entity becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the consolidated entity’s contractual rights to the cash flows from the financial assets expire or if the consolidated entity transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular purchases and sales of financial assets are accounted for at trade date, ie, the date that the consolidated entity commits itself to purchase or sell the asset. Financial liabilities are derecognised if the consolidated entity’s obligations specified in the contract expire or are discharged or cancelled.

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Notes to the Consolidated Financial Statements continued

Cash and cash equivalents comprise cash balances and call deposits greater than 3 months are classified as held to maturity investments and valued at amortised costs.

viii) Investments and Other Financial Assets

All investments and other financial assets are initially stated at cost, being the fair value of consideration given plus acquisition costs. Purchases and sales of investments are recognised on trade date which is the date on which the Group commits to purchase or sell the asset. Accounting policies for each category of investments and other financial assets subsequent to initial recognition are set out below.

Held-to-maturity Investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant amount of held-tomaturity financial assets, the whole category would be tainted and reclassified as available-forsale. Held-to-maturity financial assets are included in non-current assets, except for those with maturities less than 12 months from the reporting date, which are classified as current assets.

Available-for-sale financial assets

Available-for-sale financial assets comprise investments in listed and unlisted entities and any nonderivatives that are not classified as any other category, and are classified as non-current assets. After initial recognition, these investments are measured at fair value with gains or losses recognised as a separate component of equity (available-for-sale investments revaluation reserve).

Where losses have been recognised in equity and there is objective evidence that the asset is impaired, the cumulative loss, being the difference between the acquisition cost and current fair value less any impairment loss previously recognised in the statement of comprehensive income, is removed from equity and recognised in the statement of comprehensive income.

Reversals of impairment losses on equity instruments classified as available-for-sale cannot be reversed through the statement of comprehensive income. Reversals of impairment losses on debt instruments classified as available-for-sale can be reversed through the statement of comprehensive income where the reversal relates to an increase in the fair value of the debt instrument occurring after the impairment loss was recognised in the statement of comprehensive income.

ix) Exploration and Evaluation Expenditure

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against profit or loss in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. 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.

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Notes to the Consolidated Financial Statements continued

Exploration and evaluation expenditure encompasses expenditures incurred by the Group in connection with the exploration for and evaluation of mineral resources before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable.

Exploration and evaluation expenditure incurred by the Group is accumulated for each area of interest and recorded as an asset if:

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

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

the exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; and
exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the areas of interest are continuing.

For each area of interest, expenditure incurred on the Exploration of Tenements throughout Australia and New Zealand is capitalised, classified as tangible or intangible, and recognised as an exploration and evaluation asset. Exploration and evaluation assets are measured at cost at recognition. A provision for unsuccessful exploration and evaluation is created against each area of interest by means of a charge to the statement of comprehensive income. The recoverable amount of each area of interest is determined on a bi-annual basis and the provision recorded in respect of that area adjusted so that the net carrying amount does not exceed the recoverable amount. For areas of interest that are not considered to have any commercial value, or where exploration rights are no longer current, the capitalised amounts are written off against the provision and any remaining amounts are charged against profit. Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.

(e) Property, Plant and Equipment

Items of property, plant and equipment are initially recorded at cost, being the fair value of the consideration provided plus incidental costs directly attributable to the acquisition, and depreciated. Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation.

Plant & Equipment

Plant and equipment are measured on the cost basis.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employment and subsequent disposal. The expected net cash flows have not been discounted to their present values in determining recoverable amounts.

Depreciation

The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful lives to the economic entity commencing from the time the asset is held ready for use.

The depreciation rates used for each class of depreciable assets are:

Class of Fixed Asset Depreciation Rate Plant and equipment 11 - 33% Motor vehicles 20%

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Notes to the Consolidated Financial Statements continued

(f) Impairment

Financial Assets

A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

Non-Financial Assets

The carrying amounts of the non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, recoverable amount is estimated at each reporting date.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in the statement of comprehensive income. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(g) Income Tax Expenses or Benefit

The income tax expense or benefit (revenue) for the period is the tax payable on the current period's taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax base of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for all temporary differences, between carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases, at the tax rates expected to apply when the assets are recovered or liabilities settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. Exceptions are made for certain temporary differences arising on initial recognition of an asset or a liability if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit. Deferred tax assets are only recognised for deductible temporary differences and unused tax losses if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities, associates and interests in joint ventures where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Current and deferred tax balances relating to amounts recognised directly in equity are also recognised directly in equity.

Ausgold Limited and its subsidiary have unused tax losses. However, no deferred tax balances have been recognised, as it is considered that asset recognition criteria have not been met at this time.

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Notes to the Consolidated Financial Statements continued

(h) Goods and Services Tax

Revenues, expenses and assets are recognised net of GST except where GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

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

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

(i) Comparatives

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

(j) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

(k) Trade and Other Payables

Liabilities are recognised for amounts to be paid in the future for goods or services received, whether or not billed to the consolidated entity. Trade accounts payable are normally settled within 60 days.

(l) Employee Benefits

Wages and Salaries, Annual Leave and Sick Leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the statement of financial position date are recognised in respect of employees' services rendered up to statement of financial position date and measured at amounts expected to be paid when the liabilities are settled. Liabilities for nonaccumulating sick leave are recognised when leave is taken and measured at the actual rates paid or payable. Liabilities for wages and salaries are included as part of Other Payables and liabilities for annual and sick leave are included as part of Employee Benefit Provisions.

Long Service Leave

Liabilities for long service leave are recognised as part of the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees to the statement of financial position date using the projected unit credit method. Consideration is given to expect future salaries and wages levels, experience of employee departures and periods of service. Expected future payments are discounted using national government bond rates at the statement of financial position date with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

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Notes to the Consolidated Financial Statements continued

Share-based payments

Share-based compensation benefits are provided to employees via Ausgold Limited.

The fair value of options granted under Ausgold Limited is recognised as an employee benefit expense with a corresponding increase in equity (share-based payments reserve). The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options. The fair value at grant date is determined using a BlackScholes option pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

The fair value of the options granted excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each statement of financial position date, the entity revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate.

The market value of shares issued to employees for no cash consideration under the employee share scheme is recognised as an employee benefits expense with a corresponding increase in equity when the employees become entitled to the shares.

(m) Share-based Payment Transactions

The grant date fair value of options granted to employees (including key management personnel) is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options. The amount recognised as an expense is adjusted to reflect the actual number of share options for which the related service and non-market vesting conditions are met.

Share-based payment arrangements in which the consolidated entity receives goods or services as consideration for its own equity instruments are accounted for as equity-settled share-based payment transactions, regardless of how the equity instruments are obtained by the consolidated entity.

(n) Contributed Equity

Ordinary shares are classified as equity.

Costs directly attributable to the issue of new shares or options are shown as a deduction from the equity proceeds, net of any income tax benefit. Costs directly attributable to the issue of new shares or options associated with the acquisition of a business are included as part of the purchase consideration.

(o) Earnings or Loss per share

Basic earnings or loss per share are calculated by dividing the net profit or loss attributable to members of the parent entity for the reporting period by the weighted average number of ordinary shares of the Company.

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Notes to the Consolidated Financial Statements continued

(p) Determination of Fair Values

A number of the consolidated entity’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Trade and Other Receivables

The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date.

Depreciation

Items of property, plant and equipment are depreciated using the diminishing value method over their estimated useful lives to the consolidated entity. The depreciation rates used for each class of asset for the current period are as follows:

• Plant and Equipment 33% • Motor Vehicles 20%

Assets are depreciated from the date the asset is ready for use. The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at each of the statement of financial position date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. The recoverable amount is assessed on the basis of expected net cash flows that will be received from the assets continual use or subsequent disposal. The expected cash flows have been discounted to their present value in determining the recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of comprehensive income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

(q) Rounding of amounts

The company is of a kind referred to in Class Order 98/100, issued by ASIC, relating to the ‘rounding off’ of amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance with that Class Order to the nearest dollar.

(r) New accounting standards and interpretations

Australian Accounting Standards and Interpretations that have recently issued or amended but are not yet effective have not been adopted by the consolidated entity for the year ended 30 June 2011. These are outlined in the table below.

AASB reference	Title	Summary	Application date of standard	Impact on consolidated financial report	Application date for Group
AASB 9 (issued December 2009)	Financial Instruments (AASB 2009-11)	Amendments to the requirements for classification and measurement and derecognition of financial assets and financial liabilities	Periods beginning on or after 01 January 2013	Due to the recent release of these amendments and that adoption is only mandatory for the 30 June 2014 year end, the entity has not yet made an assessment of the impact of these amendments.	01 January 2013

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Notes to the Consolidated Financial Statements continued

AASB reference	Title	Summary	Application date of standard	Impact on consolidated financial report	Application date for Group
AASB 2010-3 Interpretation 19 (issued December 2009)	Extinguishing Financial Liabilities with Equity Instruments	Equity instruments issued to a creditor to extinguish all or part of a financial liability are ‘consideration paid’ to be recognised at the fair value of the equity instruments issued, unless their fair value cannot be measured reliably, in which case they are measured at the fair value of the debt extinguished. Any difference between the carrying amount of the financial liability extinguished and the ‘consideration paid’ is recognised in profit or loss.	Periods beginning on or after 1 July 2011	These amendments are unlikely to have any impact on the consolidated entity as the entity has not undertaken any debt for equity swaps.	01 July 2011
AASB 2010-4	Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1, AASB 7, AASB 101, AASB 134 and Interpretation 13]	Emphasises the interaction between quantitative and qualitative AASB 7 disclosures and the nature and extent of risks associated with financial instruments. Clarifies that an entity will present an analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the notes to the financial statements.	Periods beginning on or after 01 January 2011	These amendments are unlikely to have any impact on the consolidated entity	01 July 2011
AASB 2010-5	Amendments to Australian Accounting Standards [AASB 1, 3, 4, 5, 101, 107, 112, 118, 119, 121, 132, 133, 134, 137, 139, 140, 1023 & 1038 and Interpretations 112, 115, 127, 132 & 1042]	This Standard makes numerous editorial amendments to a range of Australian Accounting Standards and Interpretations, including amendments to reflect changes made to the text of IFRS by the IASB.	Periods beginning on or after 01 January 2011	These amendments have no major impact on the requirements of the amended pronouncementson the consolidated entity	01 July 2011
AASB 2010-6 [AASB 1 & AASB 7]	Amendments to Australian Accounting Standards Disclosures on Transfers of Financial Assets	Amendments made to AASB 7 Financial Instruments: will affect particularly entities that sell, factor, securities, lend or otherwise transfer financial assets to other parties	Periods beginning on or after 1 July 2011	The amendment is not expected to have any significant impact on the group’s disclosure therefore not expected to have any impact on the group's financial statements	01 July 2011
AASB 2010-8	Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets	Amendments made to AASB 112 requires the measurement of deferred tax assets or liabilities to reflect the tax consequences that would follow from the way management expects to recover or settle the carrying amount of the relevant assets or liabilities that is through use or through sale.	periods beginning on or after 1 January 2012	These amendments are unlikely to have any impact on the consolidated entity	01 July 2012

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Notes to the Consolidated Financial Statements continued

AASB reference	Title	Summary	Application date of standard	Impact on consolidated financial report	Application date for Group
AASB 1053	Application of Tiers of Australian Accounting Standards	Amendment to Australian Accounting Standards arising from Reduce Disclosure Requirement (AASB 2010-2)	Periods beginning on or after 01 July 2013	Ausgold Limited is listed on the ASX and is not eligible to adopt the new Accounting Standards – Reduced Disclosure Requirement, therefore amendments are unlikely to have any impact on the consolidated entity	01 July 2013
AASB 124 (Revised)	Related Party Disclosures (December 2009)	The revised AASB 124 simplifies the definition of a related party, clarifying its intended meaning and eliminating inconsistencies from the definition, including: (a) a subsidiary and an associate with the same investor as related parties of each other (b) Entities significantly influenced by one person and entities significantly influenced by a close member of the family of that person are no longer related parties of each other (c) The definition now identifies that, whenever a person or entity has both joint control over a second entity and joint control or significant influence over a third party, the second and third entities are related to each other A partial exemption is also provided from the disclosure requirements for government-related entities. Entities that are related by virtue of being controlled by the same government can provide reduced related party disclosures.	Periods beginning on or after 01 January 2011	These amendments are unlikely to have any impact on the consolidated entity during the financial year	01 July 2011
IFRS 10	Consolidated Financial Statements	IFRS 10 establishes a new control model that applies to all entities. It replaces parts of IAS 27_Consolidated_ and Separate Financial Statements dealing with the accounting for consolidated financial statements and SIC-12_Consolidation – Special Purpose_ Entities. The new control model broadens the situations when an entity is considered to be controlled by another entity and includes new guidance for applying the model to specific situations, including when acting as a manager may give control, the impact of potential voting rights and when holding less than a majority voting rights may give control. This is likely to lead to more entities being consolidated into the group.	Periods beginning on or after 01 July 2013	These amendments are unlikely to have any impact on the consolidated entity	01 July 2013

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Notes to the Consolidated Financial Statements continued

AASB reference	Title	Summary	Application date of standard	Impact on consolidated financial report	Application date for Group
IFRS 11	Joint Arrangements	IFRS 11 replaces IAS 31_Interests in_ Joint Ventures_and SIC-13_Jointly- controlled Entities – Non-monetary _Contributions by Ventures._IFRS 11 uses the principle of control in IFRS 10 to define joint control, and therefore the determination of whether joint control exists may change. In addition IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, accounting for a joint arrangement is dependent on the nature of the rights and obligations arising from the arrangement. Joint operations that give the venturers a right to the underlying assets and obligations themselves is accounted for by recognising the share of those assets and obligations. Joint ventures that give the venturers a right to the net assets is accounted for using the equity method. This may result in a change in the accounting for the joint arrangements held by the group.	Periods beginning on or after 01 July 2013	These amendments are unlikely to have any impact on the consolidated entity	01 July 2013
IFRS 12	Disclosure of Interests in Other Entities	IFRS 12 includes all disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates and structures entities. New disclosures have been introduced about the judgments made by management to determine whether control exists, and to require summarised information about joint arrangements, associates and structured entities and Subsidiaries with non-controlling interests.	Periods beginning on or after 01 July 2013	These amendments are unlikely to have any impact on the consolidated entity	01 July 2013
IFRS 13	Fair Value Measurement	IFRS 13 establishes a single source of guidance under IFRS for determining the fair value of assets and liabilities. IFRS 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value under IFRS when fair value is required or permitted by IFRS. Application of this definition may result in different fair values being determined for the relevant assets. IFRS 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes information about the assumptions made and the qualitative impact of those assumptions on the fair value determined.	Periods beginning on or after 01 July 2013	These amendments are unlikely to have any impact on the consolidated entity during the financial year	01 July 2013

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Notes to the Consolidated Financial Statements continued

2. FINANCIAL RISK MANAGEMENT

(a) Overview

The Company and the consolidated entity have exposure to the following risks from their use of financial instruments:

Credit risk
Liquidity risk
Market risk

This note presents information about the consolidated entity’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk and the management of capital.

Ausgold’s risk management framework is supported by the Board, management and the Audit and Risk Committee. The Board is responsible for approving and reviewing consolidated entity risk management strategy and policy. Management is responsible for monitoring that appropriate processes and controls are in place to effectively and efficiently manage risk. The Audit and Risk Committee is responsible for identifying, monitoring and managing significant business risks faced by consolidated entity and considering the effectiveness of its internal control system. Management and the Audit and Risk Committee report to the Board.

The consolidated entity’s hold the following financial instruments:

Financial assets Cash and cash equivalents Trade and other receivables Held to maturity investments Security Deposit Financial liabilities Trade and other payables	Consolidated 2011 2010 $ $ 831,971 2,797,165 461,530 226,862 12,000,000 5,000,000 395,000 140,000
	13,688,501 8,164,027
	1,835,959 295,757
	1,835,959 295,757

(b) Financial Risk Management Objectives

The overall financial risk management strategy focuses on the unpredictability of the finance markets and seeks to minimise the potential adverse effects on financial performance and protect future financial security.

(c) Credit Risk

Credit risk is the risk of financial loss to the consolidated entity if counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s cash and cash equivalents, deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with a minimum rating of 'A' are accepted.

The consolidated entity does not hold any credit derivatives to offset its credit exposure.

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to historical information about counterparty default rates

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Notes to the Consolidated Financial Statements continued

Trade receivables _Counterparties without external credit rating _ Group 1 Group 2 Cash at bank and short-term bank Deposits AA AA Held to maturity investments* AA	Consolidated 2011 2010 $ $ 461,530 183,117 - 43,745
	461,530 226,862
	783,314 2,701,636 48,657 95,529
	831,971 2,797,165
	12,000,000 5,000,000
	12,000,000 5,000,000

Group 1 – new customers (less than 6 months).

Group 2 – existing customers (more than 6 months) with no defaults in the past.

Exposure to credit risk

The carrying amount of the consolidated entity’s financial assets represents the maximum credit exposure. The consolidated entity’s maximum exposure to credit risk at the reporting date was:

Cash and cash equivalents Trade and other receivables Held to maturity investments	2011 2010 $ $ 831,971 2,797,165 461,530 226,862 12,000,000 5,000,000
	13,293,501 8,024,027

(d) Liquidity Risk

Liquidity risk arises from the financial liabilities of the consolidated entity and the consolidated entity’s subsequent ability to meet their obligations to repay their financial liabilities as and when they fall due.

The following are the contractual maturities of financial liabilities on an undiscounted basis, including estimated interest payments. Cash flows for liabilities without fixed amount or timing are based on conditions existing at year end.

Trade and other payables	2011 2010 $ $ 1,835,959 295,757
	1,835,959 295,757

Ultimate responsibility for liquidity risk management rests with the Board of Directors. The Board has determined 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 and regularly monitoring budgeted and actual cash flows and matching the maturity profiles of financial assets, expenditure commitments and liabilities.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying amounts as the impact of discounting is not significant.

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Notes to the Consolidated Financial Statements continued

Contractual maturities of financial liabilities Group - at 30 June 2011 Trade payables Total Group - at 30 June 2010 Trade payables Total	Less than 6 months 6 - 12 months Total Carrying Amount $ $ $ $ 1,835,959 - 1,835,959 1,835,959
	1,835,959 - 1,835,959 1,835,959
	$ $ $ $ 292,389 3,368 295,757 295,757
	292,389 3,368 295,757 295,757

(e) Market Risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and commodity prices will affect the consolidated entity’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 return.

Foreign Currency Risk

The consolidated entity is exposed to currency risk on transactions that are denominated in a currency other than the respective functional currencies or the consolidated entities, primarily the Australian dollar (AUD).

The Board does not consider the consolidated entity is materially exposed to changes in foreign exchange rates. As a result, the consolidated entity does not currently seek to mitigate its foreign currency exposures.

The Board believes the Reporting risk exposures are representative of the risk exposure inherent in financial instruments.

The Group has surrendered New Zealand tenements at the end of financial year ended 30 June 2011 as a result there is no foreign currency risk for Ausgold Limited in future reporting.

Interest Rate Risk

The consolidated entity’s exposure to interest rates primarily relates to the consolidated entity’s cash and cash equivalents and held to maturity investments. The consolidated entity manages market risk by monitoring levels of exposure to interest rate risk and assessing market forecasts for interest rates.

Profile

At the reporting date the interest rate profile of the Company’s and the consolidated entity’s interest bearing financial instruments was:

Variable Rate Instruments

Variable Rate Instruments
Financial Assets Financial Liabilities	Consolidated 2011 2010 $ $ 12,831,971 7,797,165 - -
	12,831,971 7,797,165

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Notes to the Consolidated Financial Statements continued

The Group manages its interest rate risk by monitoring available interest rates while maintaining an overriding position of security whereby the majority of cash and cash equivalents are held in AA- rated bank accounts. The Group’s exposure to interest rate risk and effective weight average interest rate by maturing periods is set out in tables below:

	Weighted Average Effective Interest Rate	Floating

		Interest Rate	Maturing	*Non- Interest*	*Total*
			within 1 Year	*Bearing*

	2011	2011	2011	2011	2011
Financial Assets	%	$	$	$	$
Cash and cash equivalents Trade and other receivables Held to maturity investments	4.75 - 6.22	783,314 - 12,000,000	48,657 - -	- 461,530 -	831,971 461,530 12,000,000
Total Financial Assets	-	12,783,314	48,657	461,530	13,293,501
Financial Liabilities					1,835,959 1,835,959
Trade and other payables	-	-	-	1,835,959
Total Financial Liabilities	-	-	-	1,835,959

	Weighted Average Effective Interest Rate	Floating

		Interest Rate	Maturing within 1 Year	*Non- Interest* *Bearing*	*Total*


	2010	2010	2010	2010	2010
Financial Assets	%	$	$	$	$
Cash and cash equivalents Trade and other receivables Held to maturity investments	4.50 - 5.83	2,701,636 - 5,000,000	95,529 - -	- 226,863 -	2,797,165 226,862 5,000,000
Total Financial Assets	-	7,701,636	95,529	226,863	8,024,027
Financial Liabilities
Trade and other payables	-	-	-	295,757	295,757
Total Financial Liabilities	-	-	-	295,757	295,757

Other Market Price Risk

The Company and consolidated entity are involved in the exploration and development of mining tenements for minerals. Should the Company successfully progress to a producer, revenues associated with mineral sales and the ability to raise funds through equity and debt will have some dependence upon commodity prices.

Cash Flow Sensitivity Analysis for Variable Rate Instruments

A change of 100 basis points in interest rates at reporting date would have increased/ (decreased) equity and profit or loss by the amounts shown below. The Board assessed a 100 basis point movement as being reasonably possible based on forward treasury rate projections. This analysis assumes that all other variables remain constant.

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Notes to the Consolidated Financial Statements continued

A change of 100 basis points in interest rates would have increased or decreased the consolidated entity’s profit or loss by $128,320.

Consolidated

	Consolidated
Cash and cash equivalents Held to maturity investments	+1% (100 basis points) -1% (100 basis points) 2011 2010 $ $ 8,320 (8,320) 120,000 (120,000)
	128,320 (128,320)

(f) Capital Management

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

The Board is constantly adjusting the capital structure to take advantage of favourable costs of capital or high return on assets. As the market is constantly changing management may issue new shares, sell assets to reduce debt or consider payment of dividends to shareholders.

The Board has no current plans to issue further shares on the market. The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position although there is no formal policy regarding gearing levels.

The consolidated entity has no formal financing and gearing policy or criteria during the year having regard to the early status of its development and low level of activity. This position has not changed from the previous year.

There were no changes in the consolidated entity’s approach to capital management during the year. The consolidated entity is not subject to any externally imposed capital requirements.

(g) Fair value measurements

The fair values of financial assets and liabilities are determined in accordance with generally accepted pricing models based on estimated future cash flow. There are currently no assets and liabilities which require fair valuing under the measurement hierarchy.

3. SEGMENT INFORMATION

Operating segments are reported in a manner that is consistent with the internal reporting to the chief operating decision maker (“CODM”), which has been identified by the company as the Chief Executive Officer and other members of the Board of Directors.

Management has determined that the group has two reportable segments, being mineral exploration in Australia and New Zealand. As the group is focused on mineral exploration, the Board monitors the group based on actual versus budgeted exploration expenditure incurred by area of interest. This internal reporting framework is the most relevant to assist the Board with making decisions regarding the group and its ongoing exploration activities, while also taking into consideration the results of exploration work that has been performed to date.

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Notes to the Consolidated Financial Statements continued

Segment information provided to the executive management committee for the year ended 30 June 2011 is as follows (the Group surrendered its NZ tenements at the end of June 2010):

June 2011 is as follows (the Group surrendered its NZ tenements at the end of June 2010):	June 2011 is as follows (the Group surrendered its NZ tenements at the end of June 2010):	June 2011 is as follows (the Group surrendered its NZ tenements at the end of June 2010):
Segments Total 30 June 2011 Australia New Zealand Revenue from external sources - - - Reportable segment profit / (loss) (367,034) - (367,034) Reportable segment assets 12,015,305 - 12,015,305 Segments Total 30 June 2010 Australia New Zealand Revenue from external sources - - - Reportable segment profit / (loss) (293,145) (84,407) (377,552) Reportable segment assets 1,868,968 - 1,868,968
	30 June 2011	30 June 2010
Reconciliation of reportable segment loss to the statement of comprehensive income Reportable segment profit / (loss) Other profit / (loss) • Interest revenue • Depreciation and amortisation • Corporate and administration • Other expenses • Share-based payments	(367,034) 301,700 (49,802) (541,984) (295,447) (71,839)	(377,552) 241,056 (5,220) (281,089) (160,434) (230,241)
Profit / (Loss) before income tax	(1,024,406)	(813,480)

There is no reportable segments’ liabilities to be allocated based on the operations of the segment. The reconciliation of segments’ assets to total assets and segments’ liabilities to total liabilities are referred to Statement of Financial Position as at 30 June 2011.

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Notes to the Consolidated Financial Statements continued

	Consolidated
	2011	2010
4. TAXATION	$	$
Income tax benefit (R & D Tax Offset)	-	65,592

Tax Rates

The potential tax benefit in respect of tax losses not brought into account has been calculated at 30%.

Numerical reconciliation between tax expenses and pre-tax net loss

Income tax benefit at the beginning of the year

ncome ax ene a e egnnng o e year Loss before income tax expense Income tax benefit calculated at rates noted above Tax effect on amounts which are not tax deductible R & D expenditure offset received Deferred tax asset not bought to account Income tax benefit Deferred tax assets not brought to account Unused tax losses Timing differences Capital raising cost in equity Tax at 30%	- - (1,024,406) (813,480)
	(307,321) (244,044) 23,856 77,174 - 65,592 283,465 166,870
	- 65,592
	13,095,903 2,394,019 (12,196,593) (1,836,112) 648,000 586,618
	464,193 343,358

The benefit for tax losses will only be obtained if:

a) the Company derives future assessable income of a nature and an amount sufficient to enable the benefit from the deductions for the losses to be realized;
b) the Company continues to comply with the conditions for deductibility imposed by Law; and
c) no changes in tax legislation adversely affect the ability of the Company to realise these benefits.

5. CASH AND CASH EQUIVALENTS

5. CASH AND CASH EQUIVALENTS
Cash at bank and on hand	48,657	797,165
Short term deposit	783,314	2,000,000
	831,971	2,797,165
(a) Reconciliation to cash at the end of the year
The above figures are reconciled to cash at the end of the financial year as shown in the
statement of cash flows as follows:
Balances as above	831,971	2,797,165
Balances per statement of cash flows	831,971	2,797,165

(b) Risk exposure

The group’s exposure to interest rate risk is discussed in Note 2. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of cash and cash equivalents mentioned above. The consolidated entity’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are discussed in Note 2.

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Notes to the Consolidated Financial Statements continued

6. TRADE AND OTHER RECEIVABLES CURRENT Trade debtors Other debtors Taxation receivables Held to maturity financial asset	Consolidated 2011 2010 $ $ - 43,745 5,661 4,807 455,869 178,310 12,000,000 5,000,000
	12,461,530 5,226,862

(a) Impaired trade receivables

There were no impaired trade receivables for the group in 2011 or 2010.

The ageing of these receivables is as follows: 1 to 3 months 3 to 6 months Over 6 months	455,869 188,037 5,661 38,825 - -
	461,530 226,862

(b) Past due but not impaired

As at 30 June 2011, trade receivables of $5,661 (2010 - $26,017) were past due	but not
impaired. The ageing analysis of these trade receivables is as follows:
3 to 6 months 5,661	16,486
Over 6 months -	9,531
5,661	26,017

(c) Held to maturity financial asset

The group has a financial asset in the form of a $12 million dollar 3 month term deposit with Westpac–St George a AA rated Australian trading bank.

(d) Foreign exchange and interest rate risk

Information about the group's exposure to foreign currency risk and interest rate risk in relation to trade and other receivables is provided in Note 2.

(e) Fair value and credit risk

Due to the short-term nature of the trade receivables the carrying amount is assumed to approximate their fair value. The exposure to credit risk at the end of the reporting period is the carrying amount of each class of receivables mentioned above. Refer to Note 2 for more information on the risk management policy of the group and the credit quality of the entity’s trade receivables.

7. SECURITY NON-CURRENT At 1 July 2010, Security deposit Additions At 30 June 2011, Security deposit	140,000 140,000 255,000 -
	395,000 140,000

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Notes to the Consolidated Financial Statements continued

8. PROPERTY, PLANT AND EQUIPMENT Consolidated and Company Year Ended 30 June 2011 At 1 July 2010, net of accumulated depreciation Additions Disposals Depreciation Charge for the year At 30 June 2011, net of accumulated depreciation At 30 June 2011 Cost Accumulated Depreciation Net carrying amount 9. EXPLORATION AND EVALUATION EXPENDITURE Exploration, evaluation and development costs carried forward in respect of areas of interest (net of amounts written off) Reconciliation Carrying amount at the beginning of the year Expenditure during the year – exploration Prepayment Expenditure during the year – exploration Expenditure written off Carrying amount at the end of the year	Consolidated 2011 2010 $ $ 40,511 - 383,963 45,731 - - (49,802) (5,220)
	374,672 40,511
	429,694 45,731 (55,022) (5,220)
	374,672 40,511
	17,936,547 1,868,968 1,868,968 522,970 16,237,114 1,540,726 197,499 182,824 (367,034) (377,552)
	17,936,547 1,868,968

The ultimate recoupment of exploration and evaluation expenditure is dependent upon successful development and commercial exploitation, or alternatively, sale of the respective areas. During the year the Group wrote off expenditure totaling $367,034 (2010:$377,152) and the prepayment of exploration and evaluation expenditure totaling $209,477 (2010:$182,824).

10. TRADE AND OTHER PAYABLES CURRENT LIABILITIES Trade creditors and accruals Provisions 11. CONTRIBUTED EQUITY Contributed equity as at 01 July 2010 Share issued during the year Capital raising of 12,000,000 Ordinary shares issued at $1.35 per share on 8 June 2011 Less: Share issued cost Share issued during the year on exercise of options Balance at end of the year	1,806,123 292,389 29,836 3,368
	1,835,959 295,757
	10,392,085 200,000 - 915,358 16,200,000 10,000,000 (810,000) (733,273) 1,027,337 10,000
	26,809,422 10,392,085

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Notes to the Consolidated Financial Statements continued

(a) Movements of share capital during the year

Date Details 23.10.2009 Share issued upon incorporation 02.11.2009 Capitalisation of Shareholder loan of subsidiary 02.11.2009 Shares issued on acquisition of subsidiary Shares issued on listing Less: Transaction costs arising on share issue Less: Investment in Subsidiary 20.01.2010 Shares issued on exercise of options 30.06.2010 Balance Share issued on exercise of options during the financial year 08.06.2011 Share issued on capital raising on 8 June 2011 Less: Transaction costs arising on share issue 28.06.2011 Share issued on exercise of options Fund received on exercise of 150,000 options but not yet issued share	No of shares Issue price$ $ 1,000 0.20 200 1,000 1,115,158 39,998,000 0.20 7,999,600 50,000,000 0.20 10,000,000 (733,273) (7,999,600) 50,000 0.20 10,000
	90,050,000 10,392,085 4,611,686 0.20 922,337 12,000,000 1.35 16,200,000 (810,000) 250,000 0.30 75,000 0.20 30,000
	106,911,686 26,809,422

Date
Details
23.10.2009
Share issued upon incorporation
02.11.2009
Capitalisation of Shareholder loan of
subsidiary
02.11.2009
Shares issued on acquisition of
subsidiary
Shares issued on listing
Less: Transaction costs arising on
share issue
Less: Investment in Subsidiary
20.01.2010
Shares issued on exercise of options
30.06.2010
Balance
Share issued on exercise of options
during the financial year
08.06.2011
Share issued on capital raising on 8
June 2011
Less: Transaction costs
arising on share issue
28.06.2011
Share issued on exercise of options
Fund received on exercise of
150,000 options but not yet issued
share

No of shares
Issue price$
$
1,000
0.20
200
1,000
1,115,158
39,998,000
0.20
7,999,600
50,000,000
0.20
10,000,000
(733,273)
(7,999,600)
50,000
0.20
10,000

90,050,000
10,392,085
4,611,686
0.20
922,337
12,000,000
1.35
16,200,000
(810,000)
250,000
0.30
75,000
0.20
30,000

106,911,686
26,809,422

(b) Ordinary shares

The holder of ordinary shares is entitled to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

Ordinary shares have no par value and the company does not have a limited amount of authorised capital.

(c) Options

During or since the end of the year, the balance of options over unissued ordinary shares are:

Class	Expiry Date	Exercise Price	Date Granted	Number of Options
Options	31 March 2013	$0.20	27 January 2010	85,438,314

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Notes to the Consolidated Financial Statements continued

Unissued shares under option

At the date of this report, the balances of unissued ordinary shares of the Group under option are:

Class	Expiry Date	Exercise Price	Date Granted	Number
				of
				Options
Mr Christopher David	31 December 2014	$0.20	16 December 2009	200,000
Kelsall
Mr Christopher David	31 December 2014	$0.25	16 December 2009	250,000
Kelsall
Mr Benjamin Bell as	31 December 2014	$0.20	16 December 2009	700,000
trustee for Kestrel	31 December 2014	$0.25	16 December 2009	500,000
Investment Fund	31 December 2014	$0.25	16 December 2009	500,000
			Consolidated
			2011	2010
12. RESERVES			$	$
Share Option Reserve
Balance at beginning of the	year		230,241	-
Share based payments			71,839	230,241
Shares to be issued as per agreement			4,413,796	-
Options to be issued as per	agreement		507,446	-
Balance at end of the year			5,223,322	230,241

Share-based payments reserve

This reserve is used to record the value of equity-settled share-based payments provided to employees and directors as part of their remuneration including shares and options to be issued to Great Southern Resources Pty Ltd as per “Boddington South” Joint Venture Agreement. For detail of the valuation of the share and options, refer Note 14.

13. ACCUMULATED LOSSES

Accumulated loss at the beginning of the year Net profit /(loss) attributable to shareholders Accumulated loss at end of the year	(844,577) (96,689) (1,024,406) (747,888)
	(1,868,983) (844,577)

14. SHARE BASED PAYMENT RESERVES

The fair value of option at grant date is independently determined using a Black and Scholes option valuation methodology that takes into account the exercise price.

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Notes to the Consolidated Financial Statements continued

The following share based payments were made through the issue of equity during the prior year.

ear.
	Number of Options	Value of options issued	Options expensed during year 2011**
Issue of Tranche A management options exercisable at $0.20, vesting immediately and expiring five years from issue Issue of Tranche B management options exercisable at $0.25, vesting one year from issue and expiring five years from issue Issue of Tranche C management options exercisable at $0.25, vesting 18 months from issue and expiring five years from issue	950,000 750,000 500,000	134,330 100,650 67,100	- 4,739 67,100
Total	2,200,000	302,080	71,839

** - Options calculated on a per day ratio

The following inputs were used:

The following inputs were used:
	2011
Input	Tranche A	Tranche B	Tranche C
Underlyingshareprice	$0.20	$0.20	$0.20
Exerciseprice	$0.20	$0.25	$0.25
Expected volatility	86%	86%	86%
Expiry date	31 December 2014	31 December 2014	31 December 2014
Expected dividends	-	-	-
Risk-free interest rate	5.34%	5.34%	5.34%

The options will be expensed over their vesting period in accordance with AASB 2. In the Statement of financial position all of the Tranche A and proportional amounts from Tranche B options and Tranche C have been expensed.

2,200,000 options were issued to the directors and employees/consultants.

The below are summaries of options granted to the directors

Issued to	Number of Options	Exercise Price	Expiry Date	Vesting Date
Mr Christopher David Kelsall	250,000 250,000	0.20 0.25	31/12/2014 31/12/2014	16/12/2009 03/11/2010
Mr Benjamin Bell as trustee for Kestrel Investment Fund	700,000 500,000 500,000	0.20 0.25 0.25	31/12/2014 31/12/2014 31/12/2014	16/12/2009 01/11/2010 01/05/2011

Options Expensed

Options expense relates to options issued to Directors in prior periods, with the expense being recognised over the vesting period.

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Notes to the Consolidated Financial Statements continued

Options Granted

There were also shares and options granted during the year to Great Southern Resources Pty Ltd (“GSR”) as per Boddington South Joint Venture Acquisition Agreement dated 20 April 2011 (“BSJVA”). The payments pursuant to the BSJVA were in two installments. The fair value of shares and options at grant date is independently determined and has been taken this into account during this reporting period.

First Installment as per BSJVA:

$1,000,000 cash has been paid to GSR during the financial year.
1,379,311 shares valued at $1.60 per share accrued on 20 April 2011 to total $2,206,899

First Installment of the payments under the BSJVA included options issued as follows: 500,000 options valued at $1.01 per option on 20 April 2011 by using the following inputs:

Input	First Instalment
Underlyingshareprice	$1.01
Exerciseprice	$1.45
Expected volatility	80%
Expirydate	01 July2015
Expected dividends	-
Risk-free interest rate	5.34%

Second Installment of the payments under the BSJVA included:

$1,000,000 cash liable to be paid on or before 1 August 2011.
1,379,310 shares at valued at$1.60 per share on 20 April 2011 was to total $2,206,897

	Consolidated
	2011	2010
15. CASH FLOW INFORMATION	$	$
Reconciliation of cash flow from operating activities with the loss from continuing
operations after income tax:
Non-cash flows in profit from ordinary activities
Net (Loss) after Income Tax	(1,024,406)	(747,888)
Depreciation & Amortisation	49,802	5,220
Employee option expense	71,839	230,241
Impairment	367,034	377,552
Changes in assets & liabilities net of purchase &
disposal of Subsidiaries.
(Increase) / Decrease in receivables	(234,668)	(224,160)
Increase / (Decrease) in creditor & accruals	471,003	290,835
Cash flow from Operating Activities	(299,396)	(68,200)

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Notes to the Consolidated Financial Statements continued

16. REMUNERATION OF AUDITOR

During the year the following fees were paid or payable for services provided by the auditor of the entity and its related parties:

Audit and other assurance services BDO Audit (WA) Pty Ltd Audit and review of financial report Total remuneration for audit and other assurance services Corporate finance BDO Corporate Finance (WA) Pty Ltd Independent accountant’s report for inclusion in a prospectus Total remuneration for corporate finance Taxation services BDO Tax (WA) Pty Ltd Tax compliance services Total remuneration for taxation services	34,175 30,262
	34,175 30,262
	- 11,312
	- 11,312
	15,665 21,560
	15,665 21,560

17. COMMITMENTS

The commitment expenditure at reporting date is as follows:

Remuneration Commitments

Names and positions held of key management personnel remuneration has been included in the Remuneration Report section of the Directors’ Report during the financial year.

Exploration Project Commitment

The Company has entered into an agreement dated 4 November 2009, between Ausgold Exploration and Regalpoint Resources Limited (Regalpoint), under which Ausgold Exploration, at its own cost, has agreed to pursue the grant of an exploration tenement in Western Australia, E45/3037, (Regalpoint Tenement) in the name of Regalpoint. Regalpoint is the current applicant for the Regalpoint Tenement. Regalpoint has agreed to assign rights to explore for and mine minerals on the Regalpoint Tenement, other than uranium, to Ausgold Exploration. Regalpoint will remain the titleholder of the Regalpoint Tenement once it is granted and retain the right to explore for and develop uranium deposits provided prior notice is first given to Ausgold Exploration.

This assignment is subject to completion under the agreement, which is conditional on the grant of the Regalpoint Tenement, consent or waiver under any law or Native Title Agreement, Regalpoint providing all relevant information and all documents that relate to the Regalpoint Tenement or Regalpoint’s interest in the Regalpoint Tenement, the Regalpoint Tenement being in good standing and free of encumbrances, Regalpoint providing Ausgold Exploration with satisfactory evidence that it is the sole beneficial owner and the registered legal owner of the Regalpoint Tenement, the consent of the Minister for Mines and Petroleum being obtained and Ausgold Exploration not giving notice of a material adverse change event prior to completion.

Subject to completion, Ausgold Exploration will be liable to expend $184,000 on the Regalpoint Tenement during the first two years following the grant of the Regalpoint Tenement, keep the Regalpoint Tenement in good standing and will also be required to meet all fees, rates, place bonds and other costs associated with the maintenance of the Regalpoint Tenement. These obligations will continue beyond this initial two year period unless Ausgold Exploration decides to relinquish its rights to part or the whole of the Regalpoint Tenement by giving three months’ notice to Regalpoint.

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Notes to the Consolidated Financial Statements continued

The agreement continues until terminated:

by mutual agreement of the parties;
by either party if the conditions precedent are not satisfied;
by Regalpoint if Ausgold Exploration defaults prior to completion;
in the event of complete relinquishment by Ausgold Exploration of its rights after the initial two year period of the grant; or
in the event the Regalpoint Tenement ceases to exist.

Transcontinental Investments, of which Mr Trevisan is a director and the largest shareholder, is a shareholder in Regalpoint. Mr Trevisan is also a director of Regalpoint. Batterbury Holdings Pty Ltd, of which Mr Pett is a director and the controlling shareholder, has a shareholding in Regalpoint. Mr Pett is also a director of Regalpoint. Tenalga Pty Ltd, of which Mr Murchison is a director and the controlling shareholder, has a shareholding in Regalpoint. Mr Murchison is also a director of Regalpoint. Mr Lockwood has a shareholding in Regalpoint. Mr Lockwood is a director of Regalpoint.

Management Fees Commitment

Ausgold Limited has entered into an agreement with Transcontinental Investments, under which the Company agreed to retain Transcontinental Investments to provide corporate administration services to the Company. The agreement states that the Company must pay a monthly fee of $20,000 (plus GST) to Transcontinental Investments plus reimbursement each month for certain costs, expenses and liabilities incurred and/or paid by Transcontinental Investments on behalf of the Company during the month. The initial term of the agreement is two years from the date of Official Quotation and thereafter the agreement continues on the same terms until it is terminated.

Not later than one year Later than one year but not Later than five years Later than five years TOTAL	30 June 2011 30 June 2010 240,000 180,000 240,000 105,000 - -
	480,000 285,000

Tenements Commitments

The expenditure required to maintain exploration tenements in which the group has an interest in:

Not later than one year Later than one year but not later than five years Later than five years TOTAL	30 June 2011 30 June 2010 3,424,100 2,469,705 3,546,600 4,789,130 3,789,000 487,199
	10,759,700 7,746,034

18. LOSS PER SHARE

Basic loss per share (1.11) (1.39)

The calculation of basic loss per share at 30 June 2011 was based on the loss attributable to ordinary shareholders of $1,024,406 (2010: $747,888) and a weighted average number of ordinary shares outstanding during the year of 92,550,355 (2010: 53,617,994).

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Notes to the Consolidated Financial Statements continued

Loss attributable to ordinary shareholders Net loss for the year Weighted average number of ordinary shares (WANOS) Balance at beginning of year WANOS used in calculating basic earning per shares Weighted average number of options exercise during the year Weighted average number of shares on capital raising	Consolidated 2011 2010 $ $ 1,024,406 747,888
	1,024,406 747,888
	Number Number 2011 2010 90,050,000 200,000 - 53,395,939 1,744,190 22,055 756,165 -
	92,550,355 53,617,994

Diluted earnings per share must be calculated where potential ordinary shares on issue are dilutive. As the potential ordinary shares on issue would decrease the loss per share in the current period, they are not considered dilutive and not shown.

19. EVENTS OCCURING AFTER THE REPORTING DATE

Ausgold Limited has entered into a Boddington South Joint Venture Acquisition Agreement (“BSJVA”) with Great Southern Resources Pty Ltd (“GSR”), dated 20 April 2011. The Company paid GSR $900,000 of the cash amount payable under the BSJVA during the financial year ended 30 June 2011. On 1 July 2011 the company issued to GSR 1,379,311 ordinary shares and 500,000 unlisted options with an exercise price of $1.45, expiring on 1 July 2015, as part consideration (first instalment) for the acquisition of a 20% interest in the “Boddington South” Joint Venture pursuant to the BSJVA.

On 22 July 2011, the company issued 6,518,519 ordinary shares at $1.35 per share pursuant to a shareholder approval on 18 July 2011, to fund the company’s drilling program at the Katanning Gold Discovery and for regional exploration at the greater Boddington South Exploration Project and the company’s other exploration projects and for working capital.

On 27 July 2011 Ausgold settled the acquisition of the remaining 20% interest in the Katanning Gold Project from GSR. Ausgold paid GSR a final instalment of A$1,000,000 in cash and issued 1,379,311 ordinary shares as the second tranche of the consideration pursuant to the BSJVA.

20. CONTINGENT LIABILITIES

There are no contingent items at reporting date.

21. RELATED PARTY INFORMATION

Parent entities

The legal parent entity within the group is Ausgold Limited. Ausgold Limited owns 100% of the issued ordinary shares of Ausgold Exploration Pty Ltd.

- Wholly owned group transactions

Loans made by Ausgold Limited to wholly-owned subsidiary Ausgold Exploration Pty Ltd are contributed to meet required expenditure payable on demand and are not interest bearing.

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Notes to the Consolidated Financial Statements continued

Key management personnel

Disclosures relating to key management personnel are set out in Note 23.

Transactions with related parties

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

The following transaction occurred with related parties for the year ended 30 June 2011:

	2011	2010
Tax consolidation legislation	$	$
Income tax benefit from tax consolidated entities	-	65,592
Share-based payments	-	-
Employees share option	71,839	230,241
Other transactions
Remuneration paid to directors	101,373	20,000
Management Fee to Transcontinental Investments	152,000	98,710

There is Commodity Rights Purchase Agreement between Ausgold Exploration and Regalpoint Resources Limited (a Director related entity). The details of the agreement under Note 17 exploration project commitment.

The aggregate amount recognised during the year relating to key management personnel and their related parties were as follows:

Director	Transaction	Transactions Value for the Year Ended 30 June	Balance Outstanding as at 30 June
		2011 2010	2011 2010
Simon Trevisan (Director and controlling shareholder of Transcontinental Investments Pty Ltd)	Office space and equipment rent, company secretarial and accounting fees1	152,000 98,710	- -

Notes in relation to the table of related party transactions:

A company associated with Mr Trevisan provides office space, office equipment and supplies and corporate management and administration services in connection with the operations of the Company and amounts are payable on a monthly basis.

Corporate administration services include those services necessary for the proper administration of a small public company, including:

1) company secretarial and accounting, corporate governance and reporting and administration support, management of the Company’s website, management of third party professional and expert service providers including legal, accounting, tax, audit and investment banking, independent technical expert and other services associated with proper administration of a listed public company;
2) operating, marketing, strategic and financial activities required in relation to the Company's Australian mining and exploration projects; and
3) provision of A grade office space in a central business district office for the Company’s main corporate office including use of IT, photocopying and other office equipment and supplies.

The Company must pay a monthly fee of $20,000 (plus GST) to Transcontinental Investments plus reimbursement each month for certain costs, expenses and liabilities incurred and/or paid by Transcontinental Investments on behalf of the Company during the month.

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Notes to the Consolidated Financial Statements continued

22. PARENT ENTITY INFORMATION

The following details information related to the parent entity, Ausgold Limited, as at 30 June 2011. The information presented here has been prepared using consistent accounting policies as presented in Note 1.

Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total Liabilities Contributed equity Retained earnings / (accumulated losses) Option reserve Other reserve Total equity Profit / (loss) for the year Other comprehensive (loss) for the year Total comprehensive (loss) for the year	2011 2010 $ $ 12,827,425 7,814,935 12,585,350 1,479,927
	25,412,775 9,294,862
	52,594 42,911 21,355 -
	73,949 42,911
	25,694,265 9,276,927 (657,519) (255,218) 302,080 230,241 - -
	25,338,826 9,251,950
	(657,519) (255,218) - -
	(657,519) (255,218)

The parent company has guaranteed the loan of Ausgold Exploration Pty Ltd.

23. KEY MANAGEMENT PERSONNEL DISCLOSURES

Directors

Names and positions held of parent entity directors and key management personnel in office at any time during the financial year are:

Robert James Pett (Non-Executive Chairman)

Benjamin John Bell (Chief Executive Officer) Simon Trevisan (Executive Director) Richard Lockwood (Non-Executive Director) Christopher David Kelsall (Non-Executive Director)

Ian MacKenzie Murchison (Alternate Director to Mr Trevisan)

Other key management personnel

Fleur Louise Hudson (Company Secretary)

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Notes to the Consolidated Financial Statements continued

Key Management Personnel Compensation

The key management personnel compensation disclosed below represents an allocation of the key personnel’s estimated compensation from the Group in relation to their services rendered to the Company. The Individual directors & executive compensation comprised as at 30 June 2011. The details are contained in the Remuneration Report in the Directors’ Report set out on pages 23 to 28.

Short-term employee benefits Robert Pett Benjamin John Bell Christopher Kelsall Richard Lockwood Share-based payments Benjamin John Bell Christopher Kelsall	Consolidated 2011 2010 $ $ 51,957 - 213,583 127,167 30,000 20,000 19,417 -
	314,957 147,167
	60,411 172,770 11,428 57,471
	71,839 230,241

Equity instruments disclosure relating to Key Management Personnel

Shareholdings:

Number of shares held by Parent Entity Directors and other key management personnel of the Group, including their personally related parties, are set out below.

2011 Name	Balance at the start of the year	Allotment during the year	Received during the year on the exercise of options	Other changes during the year	Balance at the end of the year
*Directors of Ausgold Limited* *Ordinary Shares*
Robert James Pett~~1~~	5,800,000	-	-	-	5,800,000
Benjamin Bell~~2~~	85,000	-	-	-	85,000
Simon Trevisan~~3~~	16,600,000	-	-	-	16,600,000
Richard Lockwood	-	-	-	-	-
Christopher David Kelsall	385,000	-	-	-	385,000
*Other key management personnel of the group* *Ordinary Shares*
Ian MacKenzie Murchison4	7,800,000	-	-	(518,112)	7,281,888
Fleur Hudson	265,000	-	-	(100,000)	165,000

Note 1: Relevant interest as director and controlling shareholder of Batterbury Holdings Pty.
Note 2: Relevant interest as the trustee for Kestrel Investment Fund. Mr Bell also has an interest as a beneficiary of Kestrel Investment Fund.
Note 3: Relevant interest as director and controlling shareholder of Transcontinental Investments Pty Ltd.
Note 4: Relevant interest as director of Tenalga Pty Ltd the trustee of Murchison Superannuation Fund.

Mr Murchison also has an interest as a beneficiary of the Murchison Superannuation Fund.

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Notes to the Consolidated Financial Statements continued

2010 Name	Balance at the start of the year	Allotment during the year	Received during the year on the exercise of options	Other changes during the year	Balance at the end of the year
*Directors of Ausgold Limited* *Ordinary Shares*
Robert James Pett1	5,800,000	-	-	-	5,800,000
Benjamin Bell2	50,000	-	-	35,000	85,000
Simon Trevisan3	16,600,000	-	-	-	16,600,000
Christopher David Kelsall	335,000	50,000	-	-	385,000
*Other key management personnel of the group* *Ordinary Shares*
Ian MacKenzie Murchison4	7,800,000	-	-	-	7,800,000

Note 1: Relevant interest as director and controlling shareholder of Batterbury Holdings Pty.
Note 2: Relevant interest as the trustee for Kestrel Investment Fund. Mr Bell also has an interest as a beneficiary of Kestrel Investment Fund.
Note 3: Relevant interest as director and controlling shareholder of Transcontinental Investments Pty Ltd.
Note 4: Relevant interest as director of Tenalga Pty Ltd the trustee of Murchison Superannuation Fund. Mr Murchison also has an interest as a beneficiary of the Murchison Superannuation Fund.

Options provided as remuneration and shares issued on exercise of such options:

Details of options provided as remuneration and shares issued on the exercise of such options, together with term and conditions of the options, can be found in the remuneration report on pages 23 to 28.

Option Holdings:

The numbers of options over ordinary shares in the company held during the financial year by each director of Ausgold Limited and other key management personnel of the Group, including their personally related parties, are set out below.

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Notes to the Consolidated Financial Statements continued

				Other changes during the year
	Balance at the start of the year	Granted as compen- sation	Exercised		Balance at the end of the year	Vested and exercisable	Unvested


*Directors of Ausgold Limited* *Option Holdings*
Robert James Pett1	5,800,000	-	-	-	5,800,000	-	-
Benjamin Bell2	1,750,000	-	-	-	1,750,000	1,750,000	-
Simon Trevisan3	16,600,000	-	-	(1,000,000)	15,600,000	-	-
Richard Lockwood	-	-	-	-	-	-	-
Christopher David Kelsall	835,000	-	-	-	835,000	835,000	-
*Other key management personnel of the group* *Ordinary Shares*
Ian MacKenzie Murchison4	7,800,000	-	(218,112)	-	7,581,888	-	-
Fleur Hudson	265,000	-	-	-	265,000	-	-

				Other changes during the year
	Balance at the start of the year	Granted as compen- sation	Exercised		Balance at the end of the year	Vested and exercisable	Unvested


*Directors of Ausgold Limited* *Option Holdings*
Robert James Pett1	-	-	-	5,800,000	5,800,000	-	-
Benjamin Bell2	-	1,700,000	-	50,000	1,750,000	750,000	1,000,000
Simon Trevisan3	-	-	-	16,600,000	16,600,000	-	-
Christopher David Kelsall	-	500,000	(50,000)	385,000	835,000	585,000	250,000
*Other key management personnel of the group* *Ordinary Shares*
Ian MacKenzie Murchison4	-	-	-	7,800,000	7,800,000	-	-

Note 1: Relevant interest as director and controlling shareholder of Batterbury Holdings Pty Ltd.

Note 2: Relevant interest as the trustee for Kestrel Investment Fund. Mr Bell also has an interest as a beneficiary of Kestrel Investment Fund.

Note 3: Relevant interest as director and controlling shareholder of Transcontinental Investments Pty Ltd.

Note 4: Relevant interest as director of Tenalga Pty Ltd the trustee of Murchison Superannuation Fund.

Mr Murchison also has an interest as a beneficiary of the Murchison Superannuation Fund.

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Notes to the Consolidated Financial Statements continued

Individual Key Management Personnel Compensation Disclosures

Information regarding individual key management personnel compensation and some equity instruments disclosures as permitted by Corporations Regulations 2M.3.03 are provided in the Remuneration Report section of the Directors’ Report on pages 23 to 28.

Other Key Management Personnel Transactions with the Company

A number of key management personnel or their related parties hold positions in other entities that result in them having control or significant influence over the financial or operating policies of those entities.

A number of those entities transacted with the Company during the year. The terms and conditions of those transactions were no more favorable than those available or, which might reasonably be expected to be available, on similar transactions to unrelated entities on an arm’s length basis.

For details, refer to Note 21.

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Directors’ Declaration

DIRECTORS’ DECLARATION

In the opinion of the directors of Ausgold Limited:

a) the financial statements and notes set out on pages 38 to 73 are in accordance with the Corporations Act 2001 , including:
i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of its performance for the financial year ended on that date; and
ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
b) there are reasonable grounds to believe that Ausgold Limited will be able to pay its debts as and when they become due and payable;
c) the directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the managing director and executive director for the year ended 30 June 2011.
d) the consolidated entity has included in the notes to the financial statements, our explicit and unreserved statement of compliance with International Financial Reporting Statements

This declaration is made in accordance with a resolution of the directors and signed for on behalf of the board by:

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Simon Trevisan Executive Director

Dated at Perth, Western Australia this 28[th] day of September 2011

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38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +8 6382 4600 Fax: +8 6382 4601 www.bdo.com.au

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AUSGOLD LIMITED

Report on the Financial Report

We have audited the accompanying financial report of Ausgold Limited, which comprises the consolidated statement of financial position as at 30 June 2011, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated 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 of the consolidated entity comprising the company and the entity it controlled at the year’s end or from time to time during the financial year.

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 is free from material misstatement, whether due to fraud or error. In Note 1(b), the directors also state, that the financials comply with International Financial Reporting Financial 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 about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

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 . We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of Ausgold Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

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Opinion

In our opinion:

(a) the financial report of Ausgold Limited is in accordance with the Corporations Act 2001 , including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 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 also complies with International Financial Reporting Standards as disclosed in Note1(b).

Report on the Remuneration Report

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

Opinion

In our opinion, the Remuneration Report of Ausgold Limited for the year ended 30 June 2011 complies with section 300A of the Corporations Act 2001 .

BDO Audit (WA) Pty Ltd

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Chris Burton Director

Perth, Western Australia Dated this 28[th] day of September 2011

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Shareholder Information

The shareholder information set out below was applicable as at 31 August 2011.

1. Distribution of Shareholders

Analysis of number of shareholders by size of holding.

Category of holding 1 - 1,000 1001 – 5000 5001 – 10,000 10,001 – 100,000 100,001 - shares and over TOTAL	Number Number of Shares 82 47,336 186 559,136 125 1,042,442 292 9,703,102 68 106,138,810
	753 117,490,826

2. Twenty Largest Shareholders

The names of the twenty largest holders of quoted shares are:

HSBC CUSTODY NOMINEES AUSTRALIA LTD
TRANSCONTINENTAL INVESTMENTS PTY LTD
J P MORGAN NOMINEES AUSTRALIA LTD
NEFCO NOMINEES PTY LTD
MR DENIS IVAN RAKICH
TENALGA PTY LTD
BATTERBURY HOLDINGS PTY LTD
NATIONAL NOMINEES LTD
RBC DEXIA INVESTOR SERVICES
FGL ASSET MANAGEMENT LTD
SHERTIM INVESTMENTS PTY LTD
AUSTOCK NOMINEES PTY LTD
BERENES NOMINEES PTY LTD
MEDICAL CORPORATION AUSTRALASIA
BRAHMA FINANCE BVI LTD
COLBERN FIDUCIARY NOMINEES PTY LTD
COSA PARO PTY LTD
LOPEZ ENTERPRISES PTY LTD
FITEL NOMINEES LTD
T T NICHOLLS PTY LTD
TOTAL

Number of
Shares
Percentage of
total shares
26,085,980
22.20%
16,600,000
14.13%
8,815,117
7.50%
8,199,278
6.98%
8,000,000
6.81%
7,163,776
6.10%
5,800,000
4.94%
5,435,851
4.63%
2,021,500
1.72%
1,655,000
1.41%
1,575,098
1.34%
1,000,000
0.85%
975,000
0.83%
900,000
0.77%
800,000
0.68%
651,000
0.55%
650,000
0.55%
617,200
0.53%
610,000
0.52%
400,000
0.34%

97,514,800
83.38%

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Shareholder Information continued

3. Twenty Largest Option Holders

The names of the twenty largest holders of quoted options are:

HSBC CUSTODY NOMINEES
TRANSCONTINENTAL INVESTMENTS
MR DENIS IVAN RAKICH
TENALGA PTY LTD
BATTERBURY HOLDINGS PTY LTD
TALEX INVESTMENTS PTY LTD
NEFCO NOMINEES PTY LTD
SHERTIM INVESTMENTS PTY LTD
ARREDO PTY LTD
AUSTOCK NOMINEES PTY LTD
FGL ASSET MANAGEMENT LIMITED
BERENES NOMINEES PTY LTD
FARR ANDREW AND CAROLINE
NATIONAL NOMINEES LIMITED
VETTER ANTHONY JOHN + J
MR DAVID BOVELL
OWEN PETER MURRAY
TRIGLOBAL MANAGEMENT LTD
MOORWELL HOLDINGS PTY LTD
MR CHRISTOPHER DAVID KELSALL
TOTAL

Number of
Options
Percentage of
total options
16,280,250
19.35%
15,600,000
18.54%
8,435,000
10.03%
7,581,888
9.01%
5,800,000
6.89%
3,884,000
4.62%
2,708,000
3.22%
1,575,098
1.87%
1,450,000
1.72%
1,000,000
1.19%
1,000,000
1.19%
700,000
0.83%
700,000
0.83%
540,056
0.64%
490,000
0.58%
440,000
0.52%
397,167
0.47%
363,000
0.43%
356,500
0.42%
335,000
0.40%

69,635,959
82.75%

4. Substantial shareholders

The names of the substantial shareholders who have notified the Company in accordance with section 671B of the Corporation Act 2001 are:

	Number of Shares	Percentage of Ordinary Shares
Transcontinental Investments Pty Ltd	16,600,000	14.26%
CQS Asset Management Limited	13,212,703	11.49%
J P Morgan Chase & Co.	9,000,000	7.83%
Rakich Denis Ivan	8,000,000	6.87%
Tenalga Pty Ltd	7,163,776	6.72%

5. Voting Rights

All ordinary shares (whether fully paid or not) carry one vote per share without restriction.

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Shareholder Information continued

6. Unlisted Options

There are 900,000 unlisted options over unissued shares on issue, in the class exercisable at 20 cents per share on or before 31 December 2014. There are 2 holders of this class of option.

There are 1,250,000 unlisted options over unissued shares on issue, in the class exercisable at 25 cents per share on or before 31 December 2014. There are 2 holders of this class of option.

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Schedule of Mineral Licence Interest

The list of tenements is situated and the percentage interest held by the Company in accordance with ASX Ruling 4.10.15 are:

					Current Percentage Interest
		Lease Status
State	Lease		Grant Date	Project


WA tenements
WA	E38/2128	Granted	29/10/2009	Yamarna	100%
WA	E38/2129	Granted	13/10/2008	Yamarna	100%
WA	E52/2162	Granted	7/01/2009	Doolgunna Station	100%
WA	E70/2590	Granted	3/07/2008	Boddington South	100%
WA	E70/2928	Granted	26/11/2008	Boddington South	100%
WA	E70/3342	Granted	6/12/2010	Boddington South	100%
WA	E70/3343	Granted	6/12/2010	Boddington South	100%
WA	E70/3344	Granted	4/06/2010	Boddington South	100%
WA	E70/3345	Granted	16/06/2010	Boddington South	100%
WA	E70/3721	Granted	22/11/2010	Boddington South	100%
WA	E70/3722	Granted	22/11/2010	Boddington South	100%
WA	E70/3723	Granted	29/08/2011	Boddington South	100%
WA	E70/3724	Granted	14/12/2010	Boddington South	100%
WA	E70/3725	Granted	22/11/2010	Boddington South	100%
WA	E70/3735	Granted	22/11/2010	Boddington South	100%
WA	E70/3736	Granted	22/11/2010	Boddington South	100%
WA	E70/3737	Granted	30/08/2011	Boddington South	100%
WA	E70/3738	Granted	22/11/2010	Boddington South	100%
WA	E70/3952	Granted	18/01/2011	Boddington South	100%
WA	E70/3957	Granted	16/08/2011	Boddington South	100%
WA	E70/3961	Granted	19/01/2011	Boddington South	100%
WA	E70/4061	Granted	1/06/2011	Boddington South	100%
WA	E77/1516	Granted	21/04/2011	Mount Manning	100%
WA	E69/2463	Application		Marymia	0%

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Schedule of Mineral Licence Interest continued

					Current Percentage Interest
		Lease Status
State	Lease		Grant Date	Project


WA	E70/3953	Application		Boddington South	0%
WA	E70/3954	Application		Boddington South	0%
WA	E70/3955	Application		Boddington South	0%
WA	E70/3958	Application		Boddington South	0%
WA	E70/3959	Application		Boddington South	0%
WA	E70/3960	Application		Boddington South	0%
WA	E70/3962	Application		Boddington South	0%
WA	E70/4045	Application		Boddington South	0%
WA	E70/4046	Application		Boddington South	0%
WA	E70/4047	Application		Boddington South	0%
WA	E70/4048	Application		Boddington South	0%
WA	E70/4049	Application		Boddington South	0%
WA	E70/4050	Application		Boddington South	0%
WA	E70/4051	Application		Boddington South	0%
WA	E70/4052	Application		Boddington South	0%
NSW tenements
NSW	EL7102	Granted	10/03/2010	Koonenberry	100%
NSW	EL7103	Granted	11/03/2008	Koonenberry	100%
NSW	EL7104	Granted	11/03/2008	Koonenberry	100%
NSW	EL7498	Granted	7/04/2010	Koonenberry	100%
NSW	EL7500	Granted	7/04/2010	Koonenberry	100%
NSW	EL7501	Granted	7/04/2010	Koonenberry	100%
QLD tenements
QLD	EPM16025	Granted	29/10/2008		100%
QLD	EPM17054	Granted	26/11/2010	Cracow	100%
QLD	EPM17055	Granted	27/03/2008	Cracow	100%
QLD	EPM17057	Granted	28/03/2008	Cracow	100%
QLD	EPM17059	Granted	28/03/2008	Cracow	100%
QLD	EPM17066	Granted	16/03/2009	Croydon	100%

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Schedule of Mineral Licence Interest continued

					Current Percentage Interest
		Lease Status
State	Lease		Grant Date	Project


QLD	EPM17069	Granted	16/03/2009	Croydon	100%
QLD	EPM17083	Application			0%
WA	M70/210	Granted	28/03/1985	Boddington South	100%
WA	M70/211	Granted	28/03/1985	Boddington South	100%
WA	M70/488	Granted	19/04/1994	Boddington South	100%
WA	G70/84	Granted	13/06/1989		100%
WA	G70/85	Granted	13/06/1989		100%
WA	L70/13	Granted	24/05/1989		100%
WA	L70/32	Granted	11/12/1995		100%
WA	L70/33	Granted	11/12/1995		100%
Quadrio JV (Ausgold Earning 60%)
WA	E70/3201	Application		Quadrio JV	0%
WA	E70/2970	Granted	25/03/2008	Quadrio JV	0%
WA	E70/3012	Granted	23/06/2009	Quadrio JV	0%
WA	E70/3754	Granted	17/09/2010	Quadrio JV	0%
WA	E70/2908	Granted	31/05/2007	Quadrio JV	0%
WA	E70/2910	Granted	31/05/2007	Quadrio JV	0%

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AI assistant

AUSGOLD LIMITED — Annual Report 2011

64457_rns_2011-09-28_2b9addca-5fe8-469b-a172-7ee7e11b4520.pdf

Content

CORPORATE DIRECTORY

Directors

Company Secretary

Auditors

Home Exchange

Share Registry

Registered Office

Solicitors

Banker

Letter to Shareholders

Letter to Shareholders

Operations Report

Katanning Gold Discovery, Western Australia (AUC 100%)

Operations Report continued

Operations Report continued

Katanning Gold Discovery

Jinkas

Operations Report continued

Dingo

Jackson

Operations Report continued

Fraser

Operations Report continued

Olympia

Katanning Infrastructure

Operations Report continued

Boddington South Exploration Project

Operations Report continued

Operations Report continued

Yamarna, Western Australia

Operations Report continued

Doolgunna Station

Operations Report continued

Paterson

Cracow

Directors Report

DIRECTORS

Non - Executive Chairman

Chief Executive Officer

Benjamin John Bell BSc, MMET, MBA

Executive Director

Simon Trevisan B Econ , LLB (Hons)m MBT

Non-Executive Director

Richard Lockwood

Non-Executive Director

Christopher David Kelsall B Econ, LLB

Alternate Director to Mr Trevisan

Company Secretary

DIRECTORS’ MEETINGS

PRINCIPAL ACTIVITY

OPERATING AND FINANCIAL REVIEW

(a) Operating Review

(b) Financial Review

(c) Significant Changes in the State of Affairs

RESULTS

DIVIDENDS

REVIEW OF OPERATIONS

ENVIRONMENTAL REGULATION

EVENTS SUBSEQUENT TO REPORTING DATE

LIKELY DEVELOPMENTS

OPTIONS

Unissued shares under option

Shares issued on the exercise of options granted to Shareholders

DIRECTORS’ INTERESTS

INDEMNIFICATION OF OFFICERS AND AUDITORS

(a) Indemnification

(b) Insurance premiums

NON-AUDIT SERVICES

Directors’ Report continued

REMUNERATION REPORT

AUDITORS INDEPENDENCE DECLARATION

AUDITORS

DECLARATION OF INDEPENDENCE BY CHRIS BURTON TO THE DIRECTORS OF AUSGOLD LIMITED

REMUNERATION REPORT

KEY MANAGEMENT PERSONNEL

REMUNERATION COMMITTEE

AUSGOLD LIMITED Annual Report 2011