AVIRA RESOURCES LTD - Annual Report 2013

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2013 ANNUAL REPORT

MGT RESOURCES LIMITED ACN: 131 715 645

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CORPORATE DIRECTORY 2013

CORPORATE DIRECTORY 2013

DIRECTORS

SHARE REGISTRY

Jonathan Back Executive Chairman and Managing Director Gary Kuo Executive Director and Chief Operating Officer Robert Vagnoni Independent Non-executive Director Li Hai Jun Non-executive Director

Computershare Investor Services Pty Ltd GPO Box 52, Melbourne, Victoria 3001 Telephone: 1300 552 270 (within Australia) +61 3 9415 4000 (outside Australia)

COMPANY SECRETARY

BANKERS

Alexander Moody

Westpac Banking Corporation

NOTICE OF ANNUAL GENERAL MEETING

SOLICITORS TO THE COMPANY

The Annual General Meeting of MGT Resources Limited will be held at: MGT Resources Limited 2.05B, 68 York Street Sydney, NSW Time: 11am Date: 7 November 2013

HWL Ebsworth Lawyers Level 14, Australia Square 264-278 George Street Sydney NSW 2000

PRINCIPAL REGISTERED OFFICE

AUDITORS

MGT Resources Limited 2.05B, 68 York Street Sydney, NSW 2000 Telephone: +61 2 9262 1122 Facsimile: +61 2 9299 5175 Email: [email protected] Web: www.mgt.net.au

Duncan Dovico Chartered Accountants Level 12, 90 Arthur Street North Sydney, NSW 2060

STOCK EXCHANGE LISTING

MGT Resources Limited is listed on the Australian Securities Exchange Limited (ASX) under the code MGS

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ANNUAL REPORT 2013
CHAIRMAN’S LETTER	4
OPERATIONS REPORT	5
DIRECTOR’S REPORT	14
CORPORATE GOVERNANCE STATEMENT	19
AUDITOR’S INDEPENDENCE DECLARATION	28
CONSOLIDATED FINANCIAL STATEMENTS	29
DIRECTORS DECLARATION	69
AUDITOR’S REPORT	70
ADDITIONAL STOCK EXCHANGE INFORMATION	73

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CHAIRMAN’S LETTER

CHAIRMAN’S LETTER

Dear Shareholders,

Our corporate objective since 2009 has been to grow MGT into a fully-fledged tin mining company. Our strategy to achieve this is to develop short-term cash flow from our existing tin projects in order to help fund growth from our own balance sheet. In financial year 2013 we achieved a number of significant milestones that brought us closer to achieving this objective.

MGT’s flagship Mt Garnet Project is a valuable tin asset. It is rare to find this combination of infrastructure development, near-term production and upside exploration potential in such a strong niche commodity. This value has been recognised by Taimetco International Trade Co. Limited, who signed an off-take agreement in October 2012 for 20% of the tin production from the project.

The Company took a significant step toward commencing full-scale tin production when the Queensland Department of Natural Resources and Mines approved the principal mining lease at Mt Garnet (ML 20547) in January. ML 20547 contains a number of highly prospective tin targets in very close proximity to the Mt Veteran Mill.

In March, MGT sent its maiden shipment of tin concentrate to a smelter in Asia. The shipment demonstrated that our product can be accepted and processed by a world class LME approved smelter. Tin concentrate needs to meet stringent standards in order for a smelter to be prepared to accept it.

For MGT to execute on its strategy it must continue to expand its JORC compliant resource base. MGT geologists progressed this in March with the discovery of a rhyolite porphyry dyke at the Dalcouth prospect at the Summer Hills Mining Lease. The presence of porphyry dykes controlling or hosting mineralisation is well known at a number of productive eastern Australian tin deposits, such as Ardlethan and Baal Gammon.

The 2013 Summer Hills Drilling Program that followed this validated the decision to focus on Dalcouth as the first mining target with drilling producing some of the highest and shallowest tin grades reported in Australia for some time.

In late 2012 MGT also announced encouraging results from its Smiths Creek Tin and Pyramid Gold drilling programs, ensuring shareholders a solid pipeline of projects over the coming years.

Transferring successfully from the NSX and listing on the ASX represented a critical point in the Company’s growth. The initial softness in the company’s share price on ASX listing may be representative of the illiquid nature of our share register over the previous few years.

The directors of the company collectively hold approximately 48.5% of the outstanding shares, and as such we aim to make board and management decisions that deliver shareholder value.

What is encouraging is that the majority of long-term shareholders have remained with the company, and Board and management thank all shareholders for their ongoing support.

Now that we have the mining lease the goal is to expand the size of our JORC resource inventory, increase our processing capacity, and thereafter begin mining operations at our Mt Garnet Project subject to environmental approval.

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Jonathan Back Executive Chairman and Managing Director

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OPERATIONS REPORT

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MGT Resources Limited (“MGT”) is an Australian listed mineral exploration and development Company. MGT’s corporate objective is to become a fully-fledged tin producer with significant tin production and exploration assets

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OPERATIONS REPORT

HIGHLIGHTS

! In October 2012 MGT signed an offtake agreement with Taimetco International Trade Co., Ltd, a Taiwanese metals trader.
! In January 2013 MGT listed on ASX, with the directors maintaining 48.5% ownership of the company’s shares
! In late January 2013 MGT’s flagship mining lease, Summer Hills ML 20547, was granted for a period of 21 years.
! In March 2013 MGT sold its first shipment of tin concentrate to Taimetco. The concentrate was shipped directly to a London Metals Exchange approved smelter in Asia.
! In early 2013, MGT geologists recognized that a number of rhyolite porphyry dykes exist within the Summer Hills ML, giving MGT a model with which to interpret the mineralization and to plan the 2013 Summer Hills Drilling Program.
! Phases One and Two of the 2013 Summer Hills Drilling Program produced some of the highest grades and shallowest tin intercepts reported in Australia for some time, validating the decision to focus on Dalcouth as the first mining target.
! Results from the 2012 drilling programs at the Smiths Creek historic tin deposit and the Pyramid Gold project confirm a solid pipeline of projects, offering further potential upside for MGT shareholders.
! As at the date of this report the Company had cash reserves of over $6 million.

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OPERATIONS REPORT

OPERATIONS REPORT

1. MOUNT GARNET TIN PROJECT

86.48% owned by MGT as at 30 June 2013

89.48% owned by MGT as at 6 September 2013

The Mount Garnet Project includes the following tenements: ML 4349 “Mount Veteran” ML 20547 “Summer Hill” ML 20655 “Heads or Tails” EPM 16948 “Nymbool”

The Mount Garnet Project is the company’s flagship project. The primary focus of these tenements is tin exploration and mining.

In 2009 MGT began operations in order to upgrade the existing MT Veteran Tin Processing Plant (Plant) and to upgrade the previous historic resource into the JORC category.

After some preliminary exploration work, the Dalcouth prospect was chosen as the first potential mining target due to its shallow deposit and proximity to the Plant.

1.1 MOUNT VETERAN TIN PROCESSING PLANT (ML 4349)

First Shipment of Tin Concentrate Sold to Off-take Partner

MGT sold its first shipment of tin concentrate to its off-take partner Taimetco International Trade Co. Limited in March 2013.

Approximately 17 metric tonnes of 65% tin concentrate was shipped directly to a smelter in Asia.

Some of the tin concentrate was processed at the company’s Mt Veteran Tin Processing Plant from stockpiles at the plant left over from historical operations mined in the Mount Garnet area. The remainder was purchased from local hobby tin miners.

1.2 SUMMER HILLS (ML 20547)

Flagship Mining Lease Granted

In January 2013, Mining Lease 20547 “Summer Hills” was granted for a period of 21 years.

The Queensland Department of Natural Resources and Mines granted the lease over the whole 1,163.40 hectares applied for by the Company.

The Summer Hills ML surrounds the Mt Veteran Tin Processing Plant, which the company has recently fully refurbished in anticipation of the ML being granted.

MGT is now in the final stages of submitting a Level 1 Environmental Authority application with the Department of Environmental Heritage Protection. Following our submission, the Department will follow its usual review process including a public hearing and this is anticipated to take 3-5 months. Once Level 1 Environmental Authority is received, MGT will have all regulatory cornerstones in place to proceed to upgrade the mill to allow for 250,000 tpa production.

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OPERATIONS REPORT

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Figure 1 - Granted mining lease Summer Hills 20547 contains MGT's tin processing plant, dams, mains power, roads and nearby skilled workforce.

New Geological Model Confirmed by MGT Geologists

In early 2013, MGT geologists recognised that a number of rhyolite porphyry dykes exist within the Summer Hills ML.

This discovery presents MGT geologists with a model with which to interpret mineralisation within the Summer Hills ML.

The porphyry dykes occur at a number of locations throughout the mining lease area and are in the process of being mapped. It is of note that a number of these sites, to date, have not been tested by detailed sampling or drilling.

Of particular relevance, a dyke has been mapped along the axis of the mineralised zone at the Dalcouth prospect and is spatially related to anomalous tin values.

Higher grades tend to occur along the interpreted boundaries of the dyke, as well as in some apparent structural splays from the main body.

2013 Summer Hills Drilling Program Successful

Phases One and Two of the 2013 Summer Hills Drilling Program produced some of the highest tin grades and shallowest tin intercepts reported in Australia for some time. Significant high-grade tin mineralisation intersected was within 45 metres from surface at the Dalcouth prospect and within 55 metres of the surface at the Extended prospect on Summer Hills Mining Lease.

Not only are these high grade results but the mineralised zone remains open in three directions and at depth, validating the decision to focus on Dalcouth as the first target within the Summer Hills mining lease 17 of 23 holes at Dalcouth intersected mineralisation above the cut-off grade.

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OPERATIONS REPORT

Intervals of high-grade tin included:

4m @ 2.24% Sn from 19m, including 1m @ 5.88% (DAL99) 8m @ 1.1% Sn from 11m, including 1m @ 2.35% (DAL105) 8m @ 0.56% Sn from 38m, including 1m @ 1.09% (DAL107) 6m @ 1.2% Sn from 42m, including 1m @ 3.34% (DAL113) 3m @ 1.78% Sn from 16m, including 1m @ 5.03% (DAL114) 3m @ 1.68% Sn from 57m, including 1m @ 4.37% (X21)

The target zones are largely hosted in fractured and weathered rocks that may allow for mining without blasting in the upper part of the deposit and have favourable metallurgical characteristics.

Dalcouth remains open at depth to the southwest, along strike to the northwest and to the northeast. 30-50 metres away is an apparent second parallel zone of tin mineralisation. The mineralised zones occur at shallow depths suggesting significant savings on extraction costs. The Dalcouth Prospect is less than 500m from the Mt Veteran Tin Processing Plant.

1.3 NYMBOOL (EPM 16948)

Nymbool is located to the north east of Mount Garnet but lies within 25 road kilometers (14 kilometers direct line) of the Mount Veteran Plant. The tenement is dominated by granite of the Ootan Supersuite which has intruded the Chillagoe Formation. Portions of the tenement are shallowly covered by sand derived from the granites. There are numerous historical tin workings on the tenement including the Smiths Creek Mine.

1.3.1 SMITHS CREEK MINE PROSPECT

Drilling results confirm potential for discovery of high-grade polymetallic mineralisation at Smiths Creek Mine within Nymbool EPM16948 and identify a new high-grade tin target. Intersections include 9.8m @ 0.4% Sn, 12m @ 0.8% Sn and 0.75m @ 3.55g/t Au.

On 13 December 2012 MGT announced to the NSX the results of a diamond and percussion drilling program at the historic Smiths Creek deposit and nearby targets, located 11km northwest of the town of Mt Garnet. Drilling intersected multi-element mineralisation at Smiths Creek. Partial testing of a magnetic anomaly has discovered a new zone of tin mineralisation which will be followed up with further drilling to test its extent. There is excellent scope for the discovery of high grade mineralisation which will be followed up in the next drilling program.

1.3.2 ML 20655 – HEADS OR TAILS (ML 20655)

Heads or Tails lies within EPM16948 (Nymbool) and is a granted mining lease. The ML area holds fine tin tailings from the historical tin processing in the Smith’s Creek area. The tailings are on the surface, have an average grade of 0.44% Sn and have assayed in some areas as high as 1.35%Sn.

Mining of ML 20655 will commence once Environmental Authority Level 1 is in place.

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OPERATIONS REPORT

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Figure 2: MGT's Flagship Mt Garnet Project contains the mining leases within a 15km radius of the Company's Mt Veteran Tin Processing Plant

2. THE PYRAMID GOLD PROJECT (EPM 12887)

86.48% owned by MGT as at 30 June 2013
89.48% owned by MGT as at 6 September 2013

The Pyramid project is located within EPM 12887 in the Drummond Basin, North Queensland and is located on a major north-northeast trending belt of gold mineralisation developed over a strike length of 20 km.

On 8 January 2013, MGT announced encouraging gold results from an 11 hole reverse circulation percussion program totalling 1,265m at the Gettysberg Prospect, part of the Pyramid Gold Project, located in the northern Drummond Basin, 200km south of Townsville.

Significant gold mineralisation over sizeable downhole widths is present in holes drilled over a 350m strike length. The program was designed to target mineralisation underneath and along strike from previous drilling.

Preliminary modelling of drill sections shows that mineralisation is open at depth on some sections, and probably plunging to the northeast. Gold mineralisation appears to be associated with fine sulphide-graphite-chlorite network veining and quartz-sericite-pyrite alteration within a sandstone unit of the Devonian Ukalunda beds.

Pyramid Gold Drilling Highlights:

67m grading 0.59 g/t gold from 86m including 22m at 1.03 g/t gold from 130m
100m grading 0.47 g/t gold from 48m

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OPERATIONS REPORT

18m grading 1.73 g/t gold from surface including 2m grading 8.08 g/t gold from 16m
20m grading 1.42 g/t gold from 30m including 2m at 4.58 g/t gold from 48m

As well, encouraging higher grade gold zones are present at Gettysberg , in the order of 2m to 4m of 4g/t Au to 8 g/t Au and in the order of 20m of over 1 g/t Au.

The higher grades are contained with a broadly continuous, low grade gold envelope which is in the order of 100m of 0.5 g/t Au (all thicknesses expressed as down hole intersections).

The mineralisation envelope is open to the north and, in some sections, at depth . More drilling is required to determine its extent.

There are particular untested targets locally at the Gettysberg prospect, and also regionally. Prospects having similar geology and style of gold mineralisation occur in the same structural position as Gettysberg over a strike length of at least 5km. These prospects will now be re-valuated as they were drilled in the 1980s and 1990s by previous explorers, and have gold intercepts within them which have not been followed up.

3. THE SOUTHERN QUEENSLAND PROJECTS (EPM8402, EPM12834 and EPM15426)

86.48% owned by MGT as at 30 June 2013
89.48% owned by MGT as at 6 September 2013

MGT has three separate gold prospect areas in Southeast Queensland, Yarrol (EPM 8402), Mt Steadman (EPM12834) and Gooroolba (EPM 15426). These are non-core assets and MGT is considering divestment options.

4. CORPORATE

2013 has been an active year on the corporate front, with the Company fulfilling its objective of Listing on the ASX.

The key corporate milestone achieved in financial year 2013 included:

ASX Listing will greatly strengthen MGT’s growth prospects

On 9 January 2013 MGT was admitted to the Official List of the ASX. Transferring successfully from the NSX and listing on the ASX represented a critical point in the Company’s growth.

Off-take agreement with Taiwanese metals buyer

In October 2012 the Company signed an off-take agreement with Taimetco International Trade co., Limited, a Taiwanese metals buyer. The agreement is for 20% of MGT’s annual production of tin from its Mt Garnet projects. The agreement secured a path to market for MGT’s product, whilst keeping options open for future partners.

Further increased holding of MGT Mining Limited

Acquisition of shares in MGT Mining Limited throughout the year brought MGT’s shareholding in MGT Mining Limited from 81.33% as at 30 June 2012 to 86.48% as at 30 June 2013.

Subsequent to the end of the financial year MGT took up a further subscription in MGT Mining shares to take the shareholding to 89.48%.

5. FINANCIAL RESOURCES

During the year the Company remained well funded through a number of capital raisings and the sale of tin concentrate.

In October 2012 $2.1 million was raised in an equity placement to sophisticated investors.

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OPERATIONS REPORT

In January 2013 $1.26 million was raised as part of the ASX IPO.

In February 2013 $0.17 million was received from the sale of tin concentrate.

The cash position at 30 June 2013 was $1.1 million.

Subsequent to the end of the financial year MGT issued convertible notes to Marvel Network Limited and Cloud Adventurer Limited on 16 August 2013 with a principal sum of $3,000,000 each ($6,000,000 in total) and a term of 3 years. Interest on the convertible notes is payable at the rate of 8% per annum. The convertible notes may be redeemed or converted into 27,272,728 ordinary shares each (or 54,545,456 in total) in the parent entity if the share price is 11 cents per share or less at maturity. MGT Resources Limited received the $6,000,000 in cash on the 19 August 2013.

6. RESOURCES TABLES

Table 1 JORC Resources - Tin (Sn) (Note – owned by MGT Mining Limited of which MGT owns 83.48%)

Prospects	Tonnage	Grade	Contained Metal	JORC Category
Summer Hill
(MLA 20547)	491,000	0.5% Sn	2,455 tonne	Indicated
(Hard Rock)
Dalcouth
(MLA 20547)	102,400	0.34% Sn	348 tonne	Inferred
(Hard Rock)
Total(Average)	593,400	0.47% Sn	2,803 tonne

Table 2 JORC Resources - Gold (Au) (Note – owned by MGT Mining Limited of which MGT owns 83.48%)

Prospects	Tonnage	Grade	Contained Metal	JORC Category
Nymbool Gold	2,400,000	0.7g/t Au	59,260 oz	Indicated
(EPM 16948)	12,200,000	0.4g/t Au	172,137 oz	Inferred
Yarrol Gold	870,000	1.6g/t Au	49,100 oz	Measured
(EMP 8402)	270,000	1.5g/t Au	14,285 oz	Inferred
Mt Steadman	1,200,000	0.9g/t Au	38,095 oz	Indicated
Gold (EPM
12834)
Total (Average)	16,940,000	0.56g/t Au	332,877 oz

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OPERATIONS REPORT

Competent Persons Statements

The information about the Dalcouth resource at ML 20547 in this report that relates to the JORC Code information is based on information compiled by Mr Robert Pyper, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Pyper has sufficient experience which is relevant to the style of mineralisation and the 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 Pyper consents to the inclusion in the annual report of the matters based on his information in the form and context in which they appear.

The information about all resources other than the Dalcouth resource at MLA20547 in this report that relates to the JORC Code information is based on information compiled by Mr Gerard Stapleton, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Stapleton has sufficient experience which is relevant to the style of mineralisation and the 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 Stapleton consents to the inclusion in the annual report of the matters based on his information in the form and context in which they appear.

Information in this report related to exploration results at EPM 16948 and ML 20547 are based on information compiled by MGT technical staff and checked by Max Rangott of Rangott Mineral Exploration Pty Ltd, who is a member of both the AIG and the AusIMM. Mr Rangott has sufficient experience which is 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, Minerals Resources and Ore Reserves’. Mr Rangott consents to the inclusion in the report of the statements based on the information in the form and context in which it appears.

The information in this report that relates to exploration results on the Pyramid Project is based on information compiled by Dr Simon D. Beams, a full time employee of Terra Search Pty Ltd, geological consultants employed by MGT Resources. Dr. Beams has BSc Honours and PhD degrees in geology; he is a Member of the Australasian Institute of Mining and Metallurgy (Member #107121) and a Member of the Australian Institute of Geoscientists (Member # 2689). Dr Beams has sufficient relevant experience in respect of the style of mineralization, the type of deposit under consideration and the activity being undertaken to qualify as a Competent Person within the definition of the 2004 Edition of the AusIMM’s “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Dr Beams consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.

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DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

DIRECTORS’ REPORT

The Directors of MGT Resources Limited submit herewith the annual financial report of the company for the financial year ended 30 June 2013. In order to comply with the provisions of the Corporations Act 2001, the directors reports as follows:

DIRECTORS

The names of the Directors in office at any time during or since the end of the financial year are:

Name	Particulars
Jonathan Back	Executive Chairman, appointed 1 February 2010, Managing Director
	appointed
Gary Kuo	Director,appointed 7 January2011
Robert Vagnoni	Non-Executive Director,appointed 1 February2011
Li Hai Jun	Non-Executive Director,appointed 14 April 2009
George Monemvasitis	Director, appointed 30 June 2008, resigned as Executive Director 1 July
	2011 and appointed as Non-Executive Director 1 July 2011, resigned
	24 May2013

The above named directors held office during the whole of the financial year and since the end of the financial year except for:

George Monemvasitis

Resigned on 24 May 2013

PRINCIPAL ACTIVITIES

The principal activities of the consolidated entity during the financial year included exploration and evaluation activities. There were no significant changes in the nature of the principal activities during the year.

DIVIDENDS

There were no dividends paid or declared by the consolidated entity during the financial year.

REVIEW OF OPERATIONS

A complete operating review can be found in Operations Report pages 5 to 13.

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

There were no significant changes in the state of affairs of the consolidated entity during the financial year.

EVENTS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

The parent entity MGT Resources Limited issued convertible notes to Marvel Network Limited on 16 August 2013 with a principal sum of $3,000,000 and a term of 3 years. Interest on the convertible notes is payable at the rate of 8% per annum. The convertible notes may be redeemed or converted into 27,272,728 ordinary shares in the parent entity if the share price is 11 cents per share or less at maturity.

The parent entity, MGT Resources Limited also issued convertible notes to Cloud Adventurer Limited on 16 August 2013 with a principal sum of $3,000,000 and a term of 3 years. Interest on the convertible notes is payable at the rate of 8% per annum. The convertible notes may be redeemed or converted into 27,272,728 ordinary shares in the parent entity if the share price is 11 cents per share or less at maturity.

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FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

DIRECTORS’ REPORT

The convertible notes were approved at a General Meeting held on 13 August 2013, the results of which were announced to the ASX on that day. MGT Resources Limited received the $6,000,000 in cash related to the two convertible notes above on the 19 August 2013.

There has not been any other matter or circumstance occurring subsequent to the end of the financial year that has significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

On 28 August 2013, MGT Resources Limited acquired a further 3% of the issued capital in MGT Mining Limited by purchasing 23,710,950 shares at $0.21755 per share for a total of $5,158,318. The share placement was paid via conversion of the intercompany loan balance. This brings the total shareholding of MGT Resources Limited from 86.48% as at 30 June 2013 to 89.48% as at the signing of these accounts.

LIKELY FUTURE DEVELOPMENTS

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

ENVIRONMENTAL REGULATIONS

The operations and proposed activities of the consolidated entity are subject to laws and regulations concerning the environment. As with most exploration projects and mining operations, the consolidated entity’s activities are expected to have an impact on the environment. It is the consolidated entity’s intention to conduct its activities to the highest standard of environmental obligation, including compliance with all applicable environmental laws. Mining operations may have previously been conducted on some of the Company’s project areas and old workings including tailings dumps may remain from these operations. There may be a liability to rehabilitate these areas, details in relation to the abandonment and restoration obligation are included in Note 1 of the Notes to the financial statements.

INDEMNIFICATION OF OFFICERS AND AUDITORS

The company has insured all the Directors MGT Resources and its controlled entities against liabilities incurred while performing duties as Directors or Officers to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits the disclosure of the nature of the liabilities covered and amount the amount of the premium paid. The consolidated entity has not indemnified its auditor.

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FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

DIRECTORS’ REPORT

INFORMATION ON DIRECTORS AND SENIOR MANAGEMENT:

Mr Jonathan Paul Back (LLB, BCL) – Executive Chairman and Managing Director

Mr Jonathan Back is a qualified solicitor in England and Wales. Prior to working as a lawyer, Jonathan graduated from Oxford University and was awarded the Vinerian Scholarship for the best performance in the Bachelor of Civil Laws degree.

Jonathan has over 18 years of experience in law and finance internationally, having spent significant periods in Europe, Hong Kong and Australia.

Jonathan first worked as a lawyer for the leading UK firm Linklaters for 4 years, specialising in large project finance transactions. This included the acquisition of the Gladstone Power Station in Queensland by a consortium expanding the Boyne Island aluminium smelter. Jonathan then worked for Schroders in the UK and in Hong Kong where he also focused on large infrastructure and energy projects including large power station projects in Portugal and the UK as well as port and energy projects across Australia and Asia.

Following this Jonathan worked with Goldman Sachs in Hong Kong focusing on raising equity capital for telecoms and technology companies. Jonathan was then recruited by JPMorgan to join their equity team in Hong Kong, which he ran until 2007. During this time he worked on numerous transactions across different industries.

Mr Gary Kuo – Executive Director and Chief Operating Officer

With more than 10 years’ experience in international import & exporting, Mr Gary Kuo has extensive experience in commodities trading, international business development and strategic alliance planning.

Having bases in both Australia and China, Gary specialises in dealing with corporations in the mining & producing sector. Gary works closely with his wide network of corporate and governmental contacts in countries such as China, Taiwan, Hong Kong, Singapore, Malaysia and Indonesia.

Mr Robert Vagnoni – Independent Non-Executive Director

Mr Robert Vagnoni is a mechanical engineer with 28 years in the global mining and construction industry and has extensive experience in corporate, project development and implementation of a diverse range of projects in Australia and overseas.

He has held senior executive roles with major mining companies and engineering consultants specializing in project development and management, feasibilities, plant design and commissioning.

Robert was a co-founder of publically listed mining companies, Murchison Metals and Extract Resources.

Mr Li Hai Jun – Non- Executive Director

Mr Li Hai Jun holds a Bachelor of Mechanical Engineering degree from the Beijing Architecture Engineering University, China. He has worked for one of the biggest state owned companies which has imported plant and equipment for more than 280 projects for the nation in the iron & steel sector and other industrial sectors. Since 1989 Hai Jun has worked for a subsidiary company under Thyssen in Germany and then moved to Singapore to work as the Managing Director of Golden Mall Enterprise until 1999.

Hai Jun has rich experience in connecting foreign companies with Chinese enterprises and ever been involved in more than 30 big projects with success. At present Hai Jun is the Managing Director of Unico Development Limited in Beijing providing consulting services to clients globally.

In recent years Hai Jun has assisted Australian resources companies in establishing relationship with customers in China leading to a number of successful projects.

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DIRECTORS’ REPORT

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Mr George Monemvasitis (OMIE Aust, MAICD) – Non-Executive Director

Mr George Monemvasitis is an engineer and corporate investor. A graduate in Mechanical Engineering from the Institute of Technology, Sydney, George has over 10 years experience in engineering analysis of resource sector capital raising both within Australia and China. A member of the Australian Institute of Company Directors. George retired from the board on 24 May 2013.

Mr Dohn Taylor – Managing Director (MGT Mining Limited)

Mr Dohn Taylor has over 20 years of management experience in the manufacturing and resources sectors. He has worked with businesses at all stages of development, with extensive involvement in the incubation of strong, sustainable enterprises. Most recently, this includes the management of a start-up engineering company in the Oil and Gas industry in the Middle East, and assisting in the establishment of a clean technology company in Australia.

Dohn has an MBA (Finance) and is currently undertaking a post-graduate degree in Corporate Governance. He is an Associate Fellow of the Australian Institute of Management, and a Member of the Australian Institute of Company Directors.

Ms Jacqueline Butler – Chief Financial Officer

Ms Jacqueline Butler qualified as a Chartered Accountant with the Institute of Chartered Accountant, England and Wales (ICAEW) whilst working and training at Arthur Andersen in London. Prior to that Jacqueline graduated from the University of Exeter, UK with a Bachelor of Arts in Economics and Geography.

Jacqueline has worked within the UK and Europe in various financial roles before coming to Australia in 2005. Prior to joining MGT, Jacqueline was an Associate Director at a small Chartered Accounting firm, Azure Group Pty Ltd, in Sydney where she acted as CFO for a variety of clients including those in the resource sector.

Mr Alexander Moody - Company Secretary

Mr Alexander Moody has ten years of management and administrative experience in the small business sector. He has held company secretary roles at a number of Australian public resources companies.

Alexander holds a Bachelor of International Relations from Bond University, Queensland, and is currently completing an MBA at the Australian Graduate School of Management, University of New South Wales.

DIRECTORS’ INTERESTS

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

Name of Director	Directors’ Interests in OrdinaryShares	Number of Options Granted
Jonathan Back	79,329,727	750,000
Gary Kuo	27,258,000	750,000
Robert Vagnoni	8,443,000	1,450,000
Li Hai Jun	22,850,000	250,000

REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT

Information about the remuneration of directors and senior management is set out in Note 26 of the financial report.

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FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

DIRECTORS’ REPORT

DIRECTORS’ MEETINGS

The following table sets out the number of directors’ meetings held during the financial year and the number of meetings attended by each director (while they were a director).

Directors	Directors’ meetings	Attended
	eligible to attend
Jonathan Paul Back	8	8
Gary Kuo	8	8
Robert Vagnoni	8	8
Hai Jun Li	8	8
George Monemvasitis	8	6

TRADING IN THE COMPANY’S SECURITIES BY DIRECTORS, OFFICERS AND STAFF

Upon listing on the ASX, the Board adopted a share trading policy which applies to all directors, officers and employees of MGT and its subsidiary companies. The policy was set up in order to avoid ‘insider trading.’ The trading policy restricts employees, directors and officers from trading in MGT securities during certain ‘prohibited periods.’ A full copy of the policy can be found at www.mgt.net.au.

NON-AUDIT SERVICES

During the year, $17,930 (inc GST) of fees were earned by the auditors for non-audit services in relation to the preparation of the Independent Audit Report and other IPO related services for the listing on the ASX in January 2013.

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied for leave of Court to bring proceedings on behalf of the consolidated entity or intervene in any proceedings to which the consolidated entity is a party for the purpose of taking responsibility on behalf of the consolidated entity for all or any part of these proceedings. The consolidated entity was not part to any such proceedings during the year.

AUDITOR’S INDEPENDENCE DECLARATION

The auditor’s independence declaration is included on page 28 of the financial report.

This directors’ report has been made and signed in accordance with a resolution of the directors made pursuant to s.298(2) of the Corporations Act 2001.

On behalf of the Directors

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Gary Kuo Managing Director Dated: 6 September 2013

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CORPORATE GOVERNANCE STATEMENT

CORPORATE GOVERNANCE STATEMENT

INTRODUCTION

MGT Resources Limited ACN 131 715 645 ( Company ) has adopted a comprehensive system of control and accountability as the basis for the administration of corporate governance.

The board of directors of the Company ( Board ) is committed to the principles underpinning good corporate governance, applied in a manner which is most suited to the Company, and to best addressing the Company's directors' ( Directors ) accountability to shareholders and other stakeholders.

The Company’s corporate governance principles and policies are structured with reference to the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (2nd edition) with 2010 Amendments ( ASX Corporate Governance Principles ), which are as follows:

Recommendation 1 Lay solid foundations for management and oversight Recommendation 2 Structure the board to add value Recommendation 3 Promote ethical and responsible decision making Recommendation 4 Safeguard integrity in financial reporting Recommendation 5 Make timely and balanced disclosure Recommendation 6 Respect the rights of shareholders Recommendation 7 Recognise and manage risk Recommendation 8 Remunerate fairly and responsibly

In accordance with recommendations of the ASX, information published on the Company’s website includes charters of the Board and its subcommittees, codes of conduct and other policies and procedures relating to the Board and its responsibilities. The following policies and procedures have been implemented and are available in full on the Company website at www.mgt.net.au:

Code of Conduct;
Board Charter;
Nomination and Remuneration Policy;
Continuous Disclosure Policy and Shareholder Communications Policy;
Audit and Risk Management Committee Policy;
Share Trading Policy; and
Diversity Policy.

The ASX Corporate Governance Principles are not prescriptive regarding the conduct of ASX listed companies. Rather, an ASX listed company is required to disclose the reasons why it is not complying fully with its obligations under the ASX Corporate Governance Principles. This Corporate Governance Statement serves to disclose the measures undertaken by the Company to comply with the ASX Corporate Governance Principles and to disclose the extent to which the Company is not yet fully complying with those principles and recommendations. To the extent that they are relevant to the organisation, the Company has adopted the eight ASX Corporate Governance Principles.

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CORPORATE GOVERNANCE STATEMENT

As a measure of its stated commitment to good corporate governance principles, the Board will continue to review and continually improve its governance practices and monitor developments in good corporate governance.

Adopted ! Not adopted x

PRINCIPLE

Principle 1: Lay solid foundations for management and oversight ! Companies should establish and disclose the respective roles and responsibilities of board and management.

Recommendation 1.1:

Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions.

Disclosure:

The Company has adopted a Board Charter, which sets out the specific responsibilities of the Board. A summary of the Board Charter is available on the Company's website at www.mgt.net.au under the section marked "Corporate Governance".

Recommendation 1.2:

Companies should disclose the process for evaluating the performance of senior executives.

Disclosure:

The Board Charter states that the Board will review the performance of all senior executives on an ongoing basis.

Recommendation 1.3:

Companies should provide the information indicated in the Guide to reporting on Principle 1.

Disclosure:

The Company will disclose any departures from Principles 1.1, 1.2 and 1.3 of the ASX Corporate Governance Principles (if any) in future annual reports.

PRINCIPLE

Principle 2: Structure the board to add value x

Companies should have a board of effective composition, size and commitment to adequately discharge its responsibilities and duties.

Recommendation 2.1:

A majority of the board should be independent directors.

Disclosure :

The Board currently comprises two (2) non-executive Directors and two (2) executive Directors. Of the four Directors, only Mr Robert Vagnoni, a non-executive Director is considered as independent.

The composition of the Board has been determined in accordance with the following framework:

" the Company’s Constitution provides for the number of Directors to be not less than three (3) and not more than ten (10) as determined by the Directors from time to time;
" consistent with the Company's objective that the Board should encompass a broad range of relevant expertise, the present Board comprises Directors with a range of diverse skills, qualifications and experience as more fully detailed in the Company’s Annual Report.

There is no shareholding requirement imposed upon Directors under the Company’s Constitution. However, all of the Directors do hold shares in the Company. Details of all holdings by Directors are detailed within the Directors’ Report.

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CORPORATE GOVERNANCE STATEMENT

A Director will be considered independent where he or she:

is not a substantial shareholder of the Company or an officer of, or otherwise associated directly with a substantial shareholder of the Company;
has not, within the last 3 years, been employed in an executive capacity by the Company or another group member, or been a Director after ceasing to hold any such employment;
has not, within the last 3 years, been a principal of a material professional adviser or a material consultant to the Company or another group member, or an employee materially associated with the service provided;
is not a material supplier or customer of the Company or other group member, or an officer of or otherwise associated, directly or indirectly, with a material supplier or customer;
has no material contractual relationship with the Company other than as a Director;
has not served on the Board for a period which could, or could reasonably be perceived to, materially interfere with the Director’s ability to act in the best interests of the Company; and
is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the Director’s ability to act in the best interests of the Company.

Materiality is assessed on a case by case basis by reference to the Director’s individual circumstances rather than general materiality thresholds. The Board has made its own assessment to determine the independence of each Director on the Board. It is the Board’s view that only Mr. Robert Vagnoni is considered an independent non-executive Director.

In view of the size of the Company and the nature of its activities, the Board considers that the current mix of skills, qualifications and experience on the Board is consistent with the Company's current circumstances and its long-term interests. The Board will continue to consider the requirement for independent Directors in the context of the Company’s then existing circumstances and communicated long term objectives.

The Board has established criteria for assessing the independence of its Directors.

Recommendation 2.2:

The Chair should be an independent director.

Disclosure :

The Company's Chairman, Jonathan Back, is an executive Director appointed by the Board.

The Board has considered:

! whether it would be beneficial to appoint a lead independent Director;
! other positions held by the existing chair and the other non-executive Directors and the time that each Director is able to devote to the Company; and
! the skills, qualifications and experience of the existing non-executive Directors. The Board having taken these circumstances into account has determined that it is not appropriate for the Company at this time to adopt Recommendation 2.2 to appoint:
! a lead independent Director; or
! an independent chairman.

The Board will continue to assess the requirements of this recommendation in the context of the Company’s individual circumstances and its communicated long-term objectives.

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CORPORATE GOVERNANCE STATEMENT

Recommendation 2.3:

The roles of chair and chief executive officer should not be exercised by the same individual.

Disclosure:

The roles of the chair and chief executive officer are exercised by Jonathan Back. Given the current size and structure of the Board and the current circumstances of the Company, the Board has elected not to adopt Recommendation 2.3.

Recommendation 2.4:

The board should establish a nomination committee.

Disclosure:

The full Board considers those matters that would usually be the responsibility of a nomination committee.

Given the size of the Board and the Company's current circumstances, the Board considers that no efficiencies or other benefits would be gained by establishing a separate committee. Items that are usually required to be discussed by a Nomination Committee are marked as separate agenda items at Board meetings when required. When the Board convenes as the Nomination Committee it will operate under the Nomination and Remuneration Policy. The Nomination and Remuneration Policy provides for the Board to meet at least annually and otherwise as required.

Recommendation 2.5: ! Companies should disclose the process for evaluating the performance of the board, its committees and individual directors.

Disclosure:

The full Board, in its capacity as the Nomination Committee, is responsible for evaluating the performance of the Board, its committees and individual Directors. The Board, committees and individual Directors will be evaluated annually by way of informal meetings. If required, the Board may also engage the services of independent performance evaluation consultants to assist in the evaluation of all or some of its Directors.

Recommendation 2.6:

Companies should provide the information indicated in the Guide to reporting on Principle 2.

Disclosure:

It is the Board’s view that Mr Robert Vagnoni is the only independent non-executive Director.

The current Chairman and chief executive officer, Jonathan Back, is an executive Director appointed by the Board.

To assist Directors to make independent judgments, it is the Board's policy that the Directors may seek independent professional advice at the Company's expense, subject to prior consultation with the Chair of the Board.

The full Board carries out the role of the Nomination Committee. To assist the Board to fulfil its function as the Nomination Committee, it has adopted a Nomination and Remuneration Policy, which is publicly available on the Company's website under the section marked "Corporate Governance".

The Board recognises that Board renewal is critical to performance and the impact of Board tenure on succession planning. The process for re-election of a Director is in accordance with the Company’s

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CORPORATE GOVERNANCE STATEMENT

Constitution, which requires that each year, at least one-third of the Directors (excluding the Managing Director) retire from office at the Annual General Meeting. The retiring Directors may be eligible for re-election.

The Company will provide an explanation of any departures from Principles and Recommendations 2.1, 2.2, 2.3, 2.4 or 2.5 of the ASX Corporate Governance Principles (if any) in its future annual reports.

Principle 3: Promote ethical and responsible decision-making Companies should actively promote ethical and responsible decision-making.

Recommendation 3.1:

Companies should establish a code of conduct and disclosure the code or a summary of the code as to:

the practices necessary to maintain confidence in the company’s integrity
the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders
• the responsibility and accountability of individuals for reporting and investigating reports of unethical practices

Disclosure:

The Board has adopted a Code of Conduct which is available on the Company's website at www.mgt.net.au under the section marked "Corporate Governance".

Recommendation 3.2:

Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the board to establish measurable objectives for achieving gender diversity and for the board to assess annually both the objectives and progress in achieving them.

Disclosure:

The Board has adopted a Diversity Policy which is available on the Company's website at www.mgt.net.au under the section marked "Corporate Governance". To comply with the Diversity Policy, the Board must establish measurable objectives for achieving diversity (including gender diversity) in its personnel, senior executives and Directors.

Recommendation 3.3:

Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress towards achieving them.

Disclosure:

The Board has not yet set measurable objectives for achieving gender diversity. The Directors are in the process of collecting information to enable them to set meaningful, measurable objectives which are appropriate to the size of the Company and the Company's current operational needs and taking into account the prevailing labour market.

The Company’s annual report will include the measurable objectives that the Board has set for achieving gender diversity in accordance with the Diversity Policy and the progress the Company has made towards achieving those objectives.

Recommendation 3.4:

Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the board.

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CORPORATE GOVERNANCE STATEMENT

Disclosure:

The Company’s annual report will include the proportion of woman employees within the organisation as a whole and in senior positions within the Company, together with the measurable objectives set by the Board and the Company's progress towards achieving these objectives.

Recommendation 3.5:

Companies should provide the information indicated in the Guide to reporting on Principle 3.

Disclosure:

The Company will disclose any departures from ASX Corporate Governance Principles 3.1, 3.2, 3.3, 3.4 or 3.5 (if any) in its future annual reports.

Principle 4: Safeguard integrity in financial reporting. Companies should have a structure to independently verify and safeguard the integrity of their financial reporting

Recommendation 4.1: x

The board should establish an audit committee.

Recommendation 4.2: x

The audit committee should be structured so that it:

consists only of non-executive directors
consists of a majority of independent directors
is chaired by an independent chair, who is not chair of the board
has at least three members

Disclosure for Principles and Recommendations 4.1 and 4.2:

The Company does not comply with Principles 4.1 and 4.2 of the ASX Corporate Governance Principles regarding the establishment and composition of an audit committee. The Board will, however, continue to monitor the requirements of these ASX Corporate Governance Principles in the context of the Company’s position and circumstances at the relevant time.

Reflecting the relative small size of the Company, the Board remains responsible for the:

" review of the annual and half yearly financial reporting carried out by the Company;
" review of the accounting policies of the Company;
" review the scope and operation of audit programmes conducted by the external auditors and any material issues arising from these audits;
" oversight of the independence of the external auditors and the procedure for the rotation of audit partners; and
" the preparation of the report to the Board on the effectiveness of the Company’s systems of accounting and internal controls.
" the sufficiency of, and compliance with, ethical guidelines and Company policies affecting corporate governance, financial reporting and corporate control, together with compliance with the law;
" identification of the full range of actual and potential risk exposures which are material to the Company and its business; and
" the effectiveness of the Company's risk management systems and strategies.

Recommendation 4.3:

The audit committee should have a formal charter.

Disclosure :

The Company has an Audit and Risk Management Committee Policy, a copy of which is available on the Company's website at www.mgt.net.au under the section marked "Corporate Governance".

Recommendation 4.4: !

Companies should provide the information indicated in the Guide to reporting on Principal 4.

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CORPORATE GOVERNANCE STATEMENT

Disclosure :

The Company will disclose any departures from Principles 4.1, 4.2, 4.3 or 4.4 of the ASX Corporate Governance Principles (if any) in its future annual reports.

Principle 5: Make timely and balanced disclosure. ! Companies should promote timely and balanced disclosure of all material matters concerning the company

Recommendation 5.1:

Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.

Disclosure:

The Board has adopted a Continuous Disclosure and Shareholder Communications Policy and has designated the Company Secretary as the person responsible for overseeing and coordinating disclosure of information to the ASX as well as communicating with the ASX. A copy of the Company’s Continuous Disclosure Policy and Shareholder Communications Policy is available on the Company website.

Recommendation 5.2:

Companies should provide the information indicated in the Guide to reporting on Principle 5

Disclosure:

The Company will disclose any departures from Principles 5.1 and 5.2 of the ASX Corporate Governance Principles (if any) in its future annual reports.

Principle 6: Respect the rights of shareholders. ! Companies should respect the rights of shareholders and facilitate the effective exercise of those rights

Recommendation 6.1:

Companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy.

Disclosure:

The Company respects the rights of its shareholders and, to facilitate the effective exercise of those rights, the Company has established its Continuous Disclosure and Shareholder Communications Policy. This policy is intended to ensure that the Company communicates effectively with its shareholders. The Continuous Disclosure and Shareholder Communications Policy ensure that shareholders are provided with ready access to balanced and understandable information about the Company. A summary of the Company's Continuous Disclosure and Shareholder Communications Policy is available on the Company's website at www.mgt.net.au under the section marked "Corporate Governance".

Recommendation 6.2:

Companies should provide the information indicated in the Guide to reporting on Principle 6.

Disclosure:

The Company will disclose any departures from Principles 6.1 and 6.2 of the ASX Corporate Governance Principles (if any) in its future annual reports.

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CORPORATE GOVERNANCE STATEMENT

Principle 7: Recognise and manage risk ! Companies should establish a sound system of risk oversight and management and internal control Recommendation 7.1: !

Recommendation 7.1:

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

Disclosure:

The Company has established an Audit and Risk Management Committee Policy and a copy of the Audit and Risk Management Committee Policy is available on the Company's website at www.mgt.net.au under the section marked "Corporate Governance".

Recommendation 7.2:

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

Disclosure:

The full Board currently comprises, and performs the obligations of, the Audit and Risk Management Committee. The Company has adopted systematic processes for the identification, analysis, evaluation, treatment, monitoring and review of the material business risks it faces. These risks are outlined in the Company’s Audit and Risk Management Committee Policy.

At each of the Board meetings, the Managing Director/Chief Executive Officer, Finance Manager and Company Secretary are required to provide assurances to the Board as to the effectiveness of the systems in place for the management of the material risks to the Company and its business. Periodically, the Board and senior managers undertake a strategic risk assessment workshop to reassess the Company's material risks and determine whether the current controls are adequate and effective.

Recommendation 7.3:

The board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.

Disclosure:

Once the Company is listed on the ASX, the Board intends to seek written assurances from the Managing Director and CFO (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting.

Recommendation 7.4:

Companies should provide information indicated in the Guide to reporting on Principle 7. Disclosure:

The Company will disclose any departures from Principles 7.1, 7.2, 7.3 or 7.4 of the ASX Corporate Governance Principles (if any) in its future annual reports.

Principle 8: Remunerate fairly and responsibly

Companies should ensure that the level and composition of remuneration is sufficient and reasonable and that its relationship to performance is clear.

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CORPORATE GOVERNANCE STATEMENT

Recommendation 8.1:

The board should establish a remuneration committee.

Recommendation 8.2:

The remuneration committee should be structured so that it:

consists of a majority of independent directors;
is chaired by an independent chair;
has at least three members.

Disclosure for Principles and Recommendations 8.1 and 8.2

The Company has not established a separate Remuneration Committee.

Given the size of the Board and the Company's current operations, the Board considers that no efficiencies or other benefits would be gained by establishing a separate committee. Items that are usually required to be discussed by a Remuneration Committee are marked as separate agenda items at Board meetings when required. When the Board convenes as the Remuneration Committee it will operate as the Remuneration Committee under the Nomination and Remuneration Policy. The Nomination and Remuneration Policy provides for the Board to meet at least annually as the Remuneration Committee and otherwise as required.

Under the Nomination and Remuneration Policy, the role of the Board (when convening as the Remuneration Committee) is to review the Company's remuneration practices and policies and to establish appropriate remuneration levels, including incentive policies for Directors and senior executives.

Recommendation 8.3:

Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior executives.

Disclosure:

As noted above, the full Board performs the function of the Remuneration Committee. To assist the Board to fulfil this function, it has adopted a Nomination and Remuneration Policy, a copy of which is available on the Company's website at www.mgt.net.au under the section marked "Corporate Governance".

The explanation for departure set out under Recommendation 8.1 above explains how the functions of the Remuneration Committee are performed. There are no termination or retirement benefits for non-executive Directors (other than for superannuation).

The Nomination and Remuneration Policy requires that the Board will distinguish the structure of nonexecutive Directors’ remuneration from that of executive Directors and senior executives.

Recommendation 8.4:

Companies should provide the information indicated in the Guide to reporting on Principle 8.

The Company will disclose any departures from Principles 8.1, 8.2, 8.3 or 8.4 of the ASX Corporate Governance Principles (if any) in its future annual reports.

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2013

Revenue Cost of sales Gross loss Investment income Other gains and losses Employee benefits expense Depreciation and amortisation expense Interest expense Administration expense Exploration and evaluation expenditure written off Other expenses Loss before tax Income tax expense/(benefit) Loss for the year Loss for the year is attributable to: Owners of the parent Non-controlling interest Other comprehensive income Available-for-sale financial assets Total comprehensive income Total comprehensive income for the year is attributable to: Owners of the parent Non-controlling interest Loss per share Basis (cents per share) Diluted (cents per share)	Note 3 5 6 7 19 19	Consolidated 2013 $ 172,461 (173,580) (1,119) 79,818 63,428	Consolidated 2012 $
			- -
			- 58,188 (144,000) (1,625,181) (291,655) (130,249) (385,214) (2,663) (510,116)
		(904,012)
		(347,093) (264,032) (323,284) (241,245) (646,580) (2,584,119) - (2,584,119) (2,287,765) (296,354) (2,584,119) (6,000) (2,591,391) (2,294,226) (297,165) (2,591,391) (0.79) (0.66)
			(3,030,890) -
			(3,030,890)
			(2,563,445) (467,445)
			(3,030,890)
			199,887
			(2,831,003)
			(2,363,558) (467,445)
			(2,831,003)
			(0.98) (0.95)

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

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 JUNE 2013

Current assets Cash and cash equivalents Trade and other receivables Inventories Total current assets Non-current assets Trade and other receivables Other financial assets Exploration and evaluation expenditure Plant & equipment Total non-current assets Total assets Total liabilities Trade and other payables Borrowings Provisions Total current liabilities Non-current liabilities Borrowings Provisions Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Retained earnings/(losses) Non-controlling interest Total equity	Note 22(a) 9 9 10 11 12 13 14 15 14 15 16(a) 17 18	Consolidated 2013 $ 1,104,967 142,647 31,581 1,279,195 - 4,364 5,845,931 3,721,158 9,571,453 10,850,648 670,910 1,494,948 77,907 2,243,765 1,475,343 104,747 1,580,090 3,823,855 7,026,793 12,919,634 1,202,062 (7,426,907) 332,004 7,026,793	Consolidated 2012 $
			3,185,842 113,920 -
			3,299,762 36,108 10,364 4,719,367 3,856,618
			8,622,457
			11,922,219
			2,226,756 21,932 60,144
			2,308,832
			2,945,321 21,823
			2,967,144
			5,275,976
			6,646,243
			9,831,962 1,942,503 (4,881,246) (246,976)
			6,646,243

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

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Consolidated

Balance at 1 July 2012 (Loss) for the period Reallocation of equity (note 1c) Other comprehensive income Transfer to retained earnings Contributions of equity, net of transaction costs and tax Transactions with non- controlling interest Balance at 30 June 2013 Balance at 1 July 2011 (Loss) for the period Other comprehensive income Transactions with owners in their capacity as owners Contributions of equity, net of transaction costs and tax Acquisition of non-controlling interest Balance at 30 June 2012	Fully paid ordinary shares Retained earnings/ (losses) Reserves Non-controlling interest Total $ $ $ $ $
	9,831,962 (4,881,246) 1,942,503 (246,976) 6,646,243 - (2,287,765) - (296,354) (2,584,119) - (448,885) - 448,885 - - - (5,189) (811) (6,000) - 733,169 (733,169) - - 3,087,672 - - - 3,087,672 - (542,180) (2,083) 427,260 (117,003)
	12,919,634 (7,426,907) 1,202,062 332,004 7,026,793
	Fully paid ordinary shares Retained earnings Reserves Non-controlling interest Total $ $ $ $ $
	9,076,237 (2,371,855) 1,742,616 276,937 8,723,935 - (2,563,445) - (467,445) (3,030,890) 199,887 199,887 755,725 - - - 755,725 - 54,054 - (56,468) (2,414)
	9,831,962 (4,881,246) 1,942,503 (246,976) 6,646,243

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

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Interest paid Other revenue Net cash provided by/(used in) operating activities Cash flows from investing activities Payment for property, plant and equipment Payments for exploration costs Net cash provided by/(used in) investing activities Cash flows from financing activities Proceeds from issues of equity securities Proceeds from borrowings Proceeds received from shares not yet issued Repayment of borrowings – related parties Lease payments Proceeds from conversion of options to shares Net cash provided by/(used in) financing activities Net (decrease)/increase in cash and cash equivalents Cash at the beginning of the financial year Cash at the end of the financial year	Note 22(b) 13 22(a)	Consolidated 2013 $ 172,461 (2,166,250) 85,695 (240,049) 64,602 (2,083,541) (195,633) (1,235,130) (1,430,763) 1,455,361 - - - (21,932) - 1,433,429 (2,080,875) 3,185,842 1,104,967	Consolidated 2012 $
			- (1,874,997) 50,590 (87,202) -
			(1,911,609)
			(846,382) (876,799)
			(1,723,181)
			(266,402) 3,000,000 1,622,400 (424,483) (80,247) 325,000
			4,176,268
			541,478 2,644,364
			3,185,842

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

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

1. Summary of significant accounting policies

The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and complies with other requirements of the law.

Accounting Standards include Australian equivalents to International Financial Reporting Standards (‘A-IFRS’). Compliance with A-IFRS ensures that the financial statements and notes of the group comply with international financial reporting standards.

(a) Basis of preparation

The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

Critical accounting estimates and judgements

The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are:

Exploration and evaluation assets

The Group’s accounting policy for exploration and evaluation expenditure is set out below. The application of this policy necessarily required management to make certain estimates and assumptions as to future events and circumstances, in particular, the assessment of whether economic quantities of reserves are found. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised expenditure under our policy, we conclude that we are unlikely to recover the expenditure by future exploitation or sale, then the relevant capitalised amount will be written off to the income statement.

Estimated useful lives of assets

The estimation of the useful lives of assets has been based on historical experience as well as manufacturers’ warranties. In addition, the condition of assets is assessed at least once per year and considered against the remaining useful life. Adjustments to useful lives are made when considered necessary.

Provision for rehabilitation

The Group’s accounting policy for the recognition of closure and rehabilitation provisions requires significant estimates and assumptions such as: requirements of the relevant legal and regulatory framework; the magnitude of possible contamination; and the timing, extent and costs of required closure and rehabilitation activity. These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision recognised for each site is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs for operating sites are recognised in the balance sheet by adjusting both the closure and rehabilitation asset and provision.

(b) Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of MGT Resources Limited (''company'' or ''parent entity'') as at 30 June 2013 and entities controlled by the company for the year then ended. MGT Resources Limited and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity.

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Principles of consolidation (continued)

Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The Group applies a policy of treating transactions with non-controlling interests as transactions with parties external to the Group. Disposals to non-controlling interests result in gains and losses for the Group that are recorded in the statement of comprehensive income. Purchases from non-controlling interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of identifiable net assets of the subsidiary.

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of comprehensive income and statement of financial position respectively.

Investments in subsidiaries are accounted for at cost in the individual financial statements of MGT Resources Limited.

(c) Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

The interest of minority shareholders in the acquiree is initially measured at the minorities proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

The group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of MGT Resources Limited.

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Business combinations (continued)

When the group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities.

This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. If the ownership interest in a jointly-controlled entity or an associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.

A reallocation of retained earnings between the non-controlling interest and the group was completed during the financial year to reflect the simultaneous equity issue at the time of initial acquisition.

(d) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group's activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenue is recognised for the major business activities as follows:

Commodity sales

Revenue from the sale of goods and disposal of other assets is recognised when persuasive evidence (usually in the form of an executed sales agreement) of an arrangement exists and: • there has been a transfer of risks and rewards to the customer;

no further work or processing is required by the Group;
the quantity and quality of the goods has been determined with reasonable accuracy;
the price is fixed or determinable;
collectability is reasonably assured.

Revenue is therefore generally recognised when title passes. In the majority of sales for most commodities, sales agreements specify that title passes on the bill of lading date, which is the date the commodity is delivered to the shipping agent. For these sales, revenue is recognised on the bill of lading date. For certain sales, title passes and revenue is recognised when the goods have been delivered.

In cases where the terms of the executed sales agreement allow for an adjustment to the sales price based on a survey of the goods by the customer (for instance an assay for mineral content), recognition of the sales revenue is based on the most recently determined estimate of product specifications. The sales price is determined on a provisional basis at the date of sale; adjustments to the sales price subsequently occurs based on movements in quoted market or contractual prices up to the date of final pricing. The period between provisional invoicing and final pricing is typically between 30 and 60 days. Revenue on provisionally priced sales is recognised based on the estimated fair value of the total consideration receivable. The revenue adjustment mechanism embedded within provisionally priced sales arrangements has the character of a commodity derivative. Accordingly, the fair value of the final sales price adjustment is re-estimated continuously and changes in fair value are recognised as an adjustment to revenue.

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Revenue recognition (continued)

Interest income

Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

(e) Foreign currencies

The consolidated financial statements are expressed in Australian dollars (‘$’), which is the functional currency of the Company and the presentation currency for the consolidated financial statements.

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the date of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Nonmonetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences on monetary items are recognised in profit and loss in the period in which they arise.

For the purpose of presenting consolidated financial statements, assets and liabilities are translated in Australian dollars using the exchange rate prevailing at the end of the reporting period. Income and expense items are translated at the exchange rates at the dates of the transaction.

(f) Income tax

Current tax

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

Deferred tax

Deferred tax is accounted for using the balance sheet liability method. Temporary differences are differences between the tax base of an asset or liability and its carrying amount in the balance sheet. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes.

In principle, deferred tax liabilities are recognised for all taxable temporary differences.

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

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

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Income tax (continued)

Current and deferred tax for the period

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

(g) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash, which are subject to an insignificant risk of changes in value and have a maturity of three months or less at the date of acquisition.

(h) Financial assets

Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs except for those financial assets classified as at fair value through profit or loss which are initially measured at fair value.

Subsequent to initial recognition, investments in subsidiaries are measured at cost in the company financial statements.

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

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Assets in this category are classified as current assets if they are expected to be settled within 12 months; otherwise they are classified as non-current.

Available-for-sale financial assets

Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of the investment within 12 months of the end of the reporting period. Investments are designated as available-for-sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term.

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Financial assets (continued)

Loans and receivables

Trade receivables, loans and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting period which are classified as non-current assets.

Measurement

At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Loans and receivables are subsequently carried at amortised cost using the effective interest method. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' category are presented in profit or loss within other income or other expenses in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in profit or loss as part of revenue from continuing operations when the group's right to receive payments is established. Interest income from these financial assets is included in the net gains/(losses).

Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income. Changes in the fair value of other monetary and non-monetary securities classified as available-for-sale are recognised in other comprehensive income.

Impairment of financial assets

The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are impaired.

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Financial assets (continued)

Assets carried at amortised cost

For loans and receivables, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the group may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated income statement.

Assets classified as available-for-sale

If there is objective evidence of impairment for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in profit or loss. Impairment losses on equity instruments that were recognised in profit or loss are not reversed through profit or loss in a subsequent period. If the fair value of a debt instrument classified as available-for-sale increases in a subsequent period and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through profit or loss.

(i) Property, plant and equipment

Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the income statement during the reporting period in which they are incurred.

Depreciation is calculated using the straight-line method to allocate their cost or re-valued amounts, net of their residual values, over their estimated useful lives. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period, which the effect of any changes recognised on a prospective basis.

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

" Office equipment 3 - 10 years " Mine infrastructure 20 years " Motor Vehicle 5 – 8 years

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Property, plant and equipment (continued)

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting 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.

(j) Leases

Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the leased asset to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are initially recognised at their fair value or, if lower, at amounts equal to the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy on borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.

Finance leased assets are amortised on a straight-line basis over the estimated useful life of the asset.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

(k) Impairment of assets

At each reporting date, the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). The estimate of the asset’s recoverable amount is calculated as being the higher of fair value less direct costs to sell and the asset’s value in use.

Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. Fair value for mineral assets is generally determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset, including any expansion prospects, and its eventual disposal, using assumptions that an independent market participant may take into account. These cash flows are discounted at an appropriate rate to arrive at a net present value of the asset.

Value in use is determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset in its present form and its eventual disposal. Value in use is determined by applying assumptions specific to the Group’s continued use and cannot take into account future development. These assumptions are different to those used in calculating fair value and consequently the value in use calculation is likely to give a different result (usually lower) to a fair value calculation.

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

(l) Exploration and evaluation of assets

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

(i) The rights to tenure of the area of interest are current; and
(ii) At least one of the following conditions is also met:
(a) the exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; and
(b) 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.

Exploration and evaluation assets are initially measured at cost and include acquisition rights to explore, topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource. General and administrative costs are allocated to, and included in, the cost of an exploration and evaluation asset, but only to the extent that those costs can be related directly to operational activities in the area of interest to which the exploration and evaluation asset relates.

(m) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

(n) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Preference shares, which are mandatorily redeemable on a specific date, are classified as liabilities. The dividends on these preference shares are recognised in profit or loss as finance costs.

The fair value of the liability portion of a convertible bond is determined using a market interest rate for an equivalent non-convertible bond. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or maturity of the bonds. The remainder of the proceeds is allocated to the conversion option. This is recognised and included in shareholders' equity, net of income tax effects.

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Borrowings (continued)

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.

Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

(o) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable 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.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cashflows estimated to settle the present obligation, its carrying amount is the present value of those cashflows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Site Restoration

A provision for restoration and rehabilitation is recognised when there is a present obligation as a result of exploration and development activities undertaken, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the provision can be measured reliably. The Group records the estimated cost of legal and constructive obligations to restore operating locations in the period in which the obligation is incurred. The nature of restoration activities includes dismantling and removing structures, dismantling operating facilities, closure of plant and restoration, reclamation and revegetation of affected areas.

Additional disturbances or changes in rehabilitation costs will be recognised as additions or changes to the corresponding asset and rehabilitation liability when incurred.

The provision for future restoration costs is the best estimate of the expenditure required to settle the restoration obligation at the reporting date based on current legal and other requirements and technology. When the liability is initially recorded, the estimated cost is capitalised by increasing the carrying amount of the related mining assets. The carrying amount capitalised is amortised over the life of the related asset.

(p) Employee benefits

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

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

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Employee benefits (continued)

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

(q) Contributed equity

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.

If the entity reacquires its own equity instruments, for example as the result of a share buy-back, those instruments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in equity.

(r) Goods and Services Tax (GST)

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

$% Where the amount of GST incurred is not recoverable from the taxation authority. It is recognised as part of the cost of acquisition of an asset or as part of an item of expense. Or
$$% For receivables and payables which are recognised inclusive of GST.

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

All cash outflows in respect of GST, including payments to suppliers and employees, payments for exploration and evaluation, property, plant and equipment, and payments for exploration inventory are included in payments to suppliers and employees from operation activities.

All cash inflows in respect of GST, including receipts from customers and receipts of GST paid by the company and subsequently refunded by taxation authorities are included in receipts from customers from operating activities.

All cash flows from investing activities and from financing activities are net of GST as all associated GST cash flows are included in operating activities.

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

(s) New accounting standards and interpretations

The accounting policies adopted are consistent with those of the previous financial year except the following which the Group adopted from 1 July 2012:

Amendments to AASB 101‘Presentation of Financial Statements’

The amendment (part of AASB 2011-9 ‘Amendments to Australian Accounting Standards - Presentation of Items of Other Comprehensive Income’ introduce new terminology for the statement of comprehensive income and income statement. Under the amendments to AASB 101, the statement of comprehensive income is renamed as a statement of profit or loss and other comprehensive income and the income statement is renamed as a statement of profit or loss. Further, the amendments to AASB 101 require items of other comprehensive income to be grouped into two categories in the other comprehensive income section: (a) items that will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. The amendments have been applied retrospectively, and hence the presentation of items of other comprehensive income has been modified to reflect the changes. Other than the above mentioned presentation changes, the application of the amendments to AASB 101 does not result in any impact on profit or loss, other comprehensive income and total comprehensive income.

Deferred exploration expenditure

The Group has determined that it was appropriate to change its accounting policy in respect of the costs capitalised as deferred exploration expenditure, in accordance with AASB 6 Exploration for and Evaluation of Mining Resources for the current financial year. The standard permits the capitalisation of general and administrative costs to the extent that these costs can be related directly to operational activities in the area of interest to which the exploration and evaluation asset relates. In all other cases, these costs are expensed as incurred. The group has determined that in respect of the current year, an amount of $347,049 was incurred in general costs which were directly related to the operational activities in the Groups current areas of interest and as a result were capitalised as part of deferred exploration expenditure.

There are no other new and revised Standards and Interpretations adopted in these financial statements affecting the reporting results or financial position.

(t) New accounting standards and interpretations but not yet effective

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the entity for the annual reporting period ended 30 June 2013. The new standards, interpretations and amendments are not expected to have a significant impact on the financial statements.

AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (effective for annual reporting periods beginning on or after 1 January 2015). AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities. The standard is expected to be initially applied in the financial year ending 30 June 2016.

AASB 10 ‘Consolidated Financial Statements’ and AASB 2011-7 ‘Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards’ (effective for annual reporting periods beginning on or after 1 January 2013). Under AASB 10, there is only one basis for consolidation. That is control. In addition, AASB 10 includes a new definition of control that contains three elements: (a) power over an investee, (b) exposure, or rights, to variable returns from its involvement with the investee, and (c) the ability to use its power over the investee to affect the amount of the investor's returns. The standard is expected to be initially applied in the financial year ending 30 June 2014.

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

New accounting standards and interpretations but not yet effective (continued)

AASB 12 Disclosure of Interests in Other Entities (effective for annual reporting periods beginning on or after 1 January 2013). AASB 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure requirements in AASB 12 are more extensive than those in the current standards. The standard is expected to be initially applied in the financial year ending 30 June 2014.

AASB 13 Fair Value Measurement (effective from 1 January 2013) establishes a single source of guidance for determining the fair value of assets and liabilities when fair value is required or permitted. Application may result in different fair values being determined for the relevant assets. AASB 13 also expends the disclosure requirements for all assets or liabilities carried at fair value including assumptions made and the qualitative impact of those assumptions on the fair value Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the entity for the annual reporting period ended 30 June 2013. The new standards, interpretations and amendments are not expected to have a significant impact on the financial statements.

AASB 119 Employee Benefits (effective from 1 January 2013). The revised standard changed the definition of short-term employee benefits. The distinction between short-term and other long-term employee benefits is now based on whether the benefits are expected to be settled wholly within 12 months after the reporting date. The standard is expected to be initially applied in the financial year ending 30 June 2014.

AASB 2011-4 Amendments to Australian Accounting Standards to remove Individual Key Management Personnel Disclosure Requirement: These amendments are applicable to annual reporting periods beginning on or after 1 July 2013 with early adoption not permitted. They amend AASB 124 ‘Related Party Disclosures’ by removing disclosure requirements for individual key management personnel. As the aggregate disclosures are still required by AASB 124, it is expected that the amendments will not have a material impact on the consolidated entity. determined. The standard is expected to be initially applied in the financial year ending 30 June 2014.

(u) Going concern

The financial statements are prepared on a going concern basis, which contemplates the continuation of normal business activity and the realisation of assets and liabilities in the normal course of business.

As at 30 June 2013 the consolidated entity incurred a net loss after tax of $2,584,119 and cash outflows from operating and investing activities of $3,514,304. Furthermore, the Group is party to a convertible note agreement which expires in the first quarter of the 2014 financial year. The ability of the company to continue as a going concern and to pay their debts as and when they due is dependent on the consolidated entity’s ability to raise additional funds through either debt financing or capital raising arrangement. Further, the Directors have the ability to reduce discretionary expenditure such that the impact on cash outflows is minimised whilst maintaining key operational activities.

Having regard to the above, the Directors have a reasonable expectation that the entity will have adequate resources to continue operating for the foreseeable future. For this reason they continue to adopt the going concern basis in preparation of the accounts.

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

2. Financial risk management

The consolidated group’s activities expose it to a variety of financial risks: market risk, credit risk, currency risk and liquidity risk. The consolidated group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effect on the financial performance of the Group.

The Group hold the following financial instruments:

Financial assets Cash and cash equivalents Trade and other receivables Other financial assets Financial liabilities Trade and other payable Interest bearing liabilities	Consolidated Consolidated 2013 $ 2012 $
	1,104,967 3,185,842 147,011 113,920 - 10,364
	1,251,978 3,310,126
	670,910 2,226,756 2,970,291 2,967,253
	3,641,201 5,194,009

(a) Market risk

i. Foreign exchange risk

Consolidated group sensitivity – foreign exchange risk

The consolidated entity has no foreign currency exposure risk as at reporting date.

ii. Price risk

The consolidated group is exposed to equity securities price risk. This arises from investments held by the Group and classified on the balance sheet either as available-for-sale or at fair value through profit or loss. The consolidated group is not exposed to commodity price risk as at reporting date.

The majority of the group’s equity investments are publicly traded on the Australian ASX and the Canadian stock exchange.

The table below summarises the impact of increase/decrease of these two indexes on the Group’s post-tax loss for the year and on equity. The analysis is based on the assumption that the equity indexes had increased/decreased by 10% with all other variables held constant and all the Group’s equity instruments moved according to historical correlation with the index.

Index	Impact on	post-tax loss	Impact on other	components of equity
	Consolidated	Consolidated	Consolidated	Consolidated
	2013	2012	2013	2012
	$	$	$	$
Increase 10%	-	-	436	1,000
Decrease 10%	-	-	(436)	(1,000)

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Financial risk management (continued)

iii Interest rate risk

The consolidated group’s exposure to interest rate risk is summarised in the table below:

	Weighted average effective interest rate	Non interest bearing	Floating interest	Fixed interest rate	Total
	2013 %	2013 $	2013 $	2013 $	2013 $
Financial assets
Bank	7.21%	47,039	1,057,928	-	1,104,967
Financial liabilities
Borrowings	8.8%	-	-	3,000,000	3,000,000

	Weighted average effective interest rate	Non interest bearing	Floating interest	Fixed interest rate	Total
	2012 %	2012 $	2012 $	2012 $	2012 $
Financial assets
Bank	1.82%	1,670,526	1,380,316	135,000	3,185,842
Financial liabilities
Lease liabilities	30.07%	-	-	21,932	21,932
Borrowings	4.11%	-	-	3,000,000	3,000,000

Consolidated group sensitivity – interest rate risk

The following sensitivity analysis has been based on the interest rate risk exposures in existence at 30 June 2013, had the variable interest rate on cash balances increased by 100 basis points and decreased by 50 basis points. The effect is calculated on year end balances and the impact on pretax loss is outlined below.

Consolidated	30 June 2013 $	30 June 2012 $
+ 1%(100 basispoints)	10,579	15,153
-0.5 %(50 basispoints)	(5,290)	(7,576)

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Financial risk management (continued)

(b) Credit risk

Credit risk is managed on a group basis and reviewed regularly. Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, including outstanding receivables and committed transactions.

As at 30 June 2013 there were no trade receivable balances.

Credit risk from balances with banks and financial institutions is regularly monitored and reviewed by The Board. No material exposure is considered to exist as the consolidated group’s policy is to invest its cash and cash equivalents with financial institutions having a credit rating of at least AAA.

	Consolidated	Consolidated
	2013	2012
	$	$
Cash at bank and short-term bank deposits	1,104,967	3,185,842

(c) Foreign currency risk

During the period, the Group sold its first consignment of tin. The sales price of tin is arrived at using the London Metal Exchange’s spot price of tin, denominated in US Dollars. Payment is made in US Dollars into a US Dollar denominated bank account. All US Dollar amounts were converted to Australian Dollars during the period such that no conversion of foreign currencies were required at period end.

Until more regular tin consignments are underway, Management intends to monitor the US/Australian Dollar exchange rate and evaluate appropriate times to convert any US dollar receivables to Australian Dollars that occur in the future. When more regular tin consignments occur, Management will revisit hedging options.

(d) Liquidity risk

Liquidity risk arises from the possibility that there will be sufficient funds available to make payment as and when required. The consolidated group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

Maturities of financial liabilities

The tables below analyses the consolidated Group’s and the parent entity’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

30 June 2013	Less than 6 months $	6-12 months $	Between 1 & 2 years $	Between 2 & 5 years $	Over 5 years $	Total $
Non interest bearing
Accounts payables	125,187	-	-	-	-	125,187
Fixed rate
Borrowings	1,500,000	-	1,500,000	-	-	3,000,000

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Financial risk management (continued)

30 June 2012	Less than 6 months $	6-12 months $	Between 1 & 2 years $	Between 2 & 5 years $	Over 5 years $	Total $
Non interest bearing
Accounts payables	154,012	46,253	-	-	-	200,265
Fixed rate
Lease liabilities	21,932	-	-	-	-	21,932
Borrowings	-	-	1,500,000	1,500,000	-	3,000,000

(e) Fair value of financial instruments

The directors consider that the carrying amounts of financial assets and financial liabilities recognised at amortised cost in the financial statements were stated at approximate their fair values.

Revenue An analysis of the Group’s revenue for the year is as follows: Revenue	Consolidated 2013 $ 172,461 172,461	Consolidated 2012 $
		- -

3. Revenue

The tin concentrate sold consisted of approximately 50% purchased from local hobby tin miners and 50% from MGT Mining Limited’s existing stock and mill trial runs since MGT Resources Limited purchased MGT Mining Limited in 2009.

4. Segment information

The Group operates predominantly in one business segment and one geographical segment being the mining industry in Australia. The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (the chief operating decision makers) in assessing performance and in determining the allocation of resources.

(a) Revenue from major products

An analysis of the Group’s revenue from continuing operations from its major products.

Tin concentrate (b) Geographical information An analysis of the Group’s revenue from continuing operations from external customers by location. Taiwan	172,461 172,461 172,461 172,461	-
		-
		-
		-

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Segment information (continued)

(c) Information about major customers

MGT Resources Limited entered into an off-take agreement with Taimetco International Co, Limited on 5 August 2012 agreeing to MGT Resources Limited selling a minimum of 20% of its annual production of tin metal or in the event that 20% of tin production is less than 50 tonnes of tin metal, 100% of its tin production to Taimetco International Co, Limited.

During the year, all of the revenues arising from sales of tin concentrate were revenues to Taimetco International Co, Limited.

5. Investment income Interest revenue 6. Other gains and losses Loss for the year has been arrived at after crediting the following gains and losses: Net foreign exchange gains/(losses) Fuel tax rebate Other Cumulative loss reclassified from equity on impairment of available-for-sale investments 7. Other expenses Vehicle and freight costs Repairs and maintenance costs Travel expense Legal and professional expense Other expenses	Consolidated 2013 $ 79,818 79,818 7,603 49,589 6,236 - 63,428 62,383 23,508 63,827 258,756 238,106 646,580	Consolidated 2012 $
		58,188
		58,188
		- - - (144,000)
		(144,000)
		36,294 20,126 64,620 283,019 106,057
		510,116

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

8. Income taxes Tax expense/(income) comprises: Current tax expense/(income) in respect of the current year	Consolidated 2013 $ -	Consolidated 2012 $
		-

(a) The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense in the financial statements as follows:

Loss before income tax Income tax expense calculated at 30% Effect of expenses that are not deductible in determining taxable profit Non-deductible items Unrecognised losses and timing differences Net adjustment to deferred tax assets and liabilities for tax losses and temporary difference not recognised (b) Unused tax losses for which no deferred tax assets has been recognised Temporary differences for which no deferred tax liability has been recognised: - Exploration expenditure Potential tax benefit at 30%	(2,584,119) (775,235) 929 (370,906) (1,145,212) 1,145,212 - 14,796,145 (5,736,415) 9,059,730 2,717,919	(2,563,445)
		(769,033) 173,537 (176,121)
		(771,617) 771,617
		-
		9,058,574 (4,609,850)
		4,448,724
		1,334,617

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

9.	Trade and other receivables Current Prepayments Other receivables GST refund Rental bond Non-current Rental bond	Consolidated 2013 $ 52,257 12,812 41,470 36,108 142,647 -	Consolidated 2012 $
			33,433 36,845 43,642 -
			113,920

			36,108

10. Other financial assets Available for sale investments carried at fair value:

11	Non-Current Shares 4,364 10,364 4,364 10,364 . Exploration and evaluation expenditure Costs carried forward in respect of areas of interest in the exploration and evaluation phase: Balance at the beginning of the year 4,719,367 3,845,068 Tenement abandonment (241,245) (2,500) Expenditure incurred during the year 1,367,809 876,799 Balance at the end of the year 5,845,931 4,719,367	Non-Current Shares 4,364 10,364 4,364 10,364 . Exploration and evaluation expenditure Costs carried forward in respect of areas of interest in the exploration and evaluation phase: Balance at the beginning of the year 4,719,367 3,845,068 Tenement abandonment (241,245) (2,500) Expenditure incurred during the year 1,367,809 876,799 Balance at the end of the year 5,845,931 4,719,367
		4,719,367

11. Exploration and evaluation expenditure

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation of asset may exceed its recoverable amount. The ultimate recoverability of exploration and evaluation expenditure is dependent upon the successful development or sale.

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

12. Plant and equipment

At 30 June 2013 Cost or fair value Accumulated depreciation Net book value Year ended 30 June 2013 Balance at the beginning of the financial year: Additions Depreciation expense Balance at the end of the financial year At 30 June 2012 Cost or fair value Accumulated depreciation Net book value Year ended 30 June 2012 Balance at the beginning of the financial year: Additions Written down value Depreciation expense Balance at the end of the financial year	Office equipment $ Mine infrastructure $ Motor vehicle $ Total $ 513,964 3,683,045 317,621 4,514,630 (227,968) (429,636) (151,868) (809,472)
	285,996 3,253,409 165,753 3,705,158
	349,722 3,418,878 88,018 3,856,618 23,249 57,562 130,822 211,633 (86,975) (207,031) (53,087) (347,093)
	285,996 3,269,409 165,753 3,721,158
	Office equipment $ Mine infrastructure $ Motor vehicle $ Total $ 490,853 3,641,483 186,799 4,319,135 (141,131) (222,605) (98,781) (462,517)
	349,722 3,418,878 88,018 3,856,618
	216,303 2,993,677 103,491 3,313,471 222,366 605,789 18,227 846,382 (11,580) - - (11,580) (77,367) (180,588) (33,700) (291,655)
	349,722 3,418,878 88,018 3,856,618

13. Trade and other payables Trade payables Other payables Cash received on shares not yet issued Accrued expenses	Consolidated 2013 $ 153,525 30,317 - 487,068 670,910	Consolidated 2012 $
		200,265 57,553 1,622,400 346,538
		2,226,756

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

14. Borrowings Current Convertible note (i) Commercial loan (iii) Non-current Convertible note (ii) Convertible note (i)	Consolidated 2013 $ 1,494,948 - 1,494,948 1,475,343 - 1,475,343	Consolidated 2012 $
		- 21,932
		21,932
		1,481,672 1,463,649
		2,945,321

(i) The parent entity MGT Resources Limited issued convertible notes to Armstrong Industries HK Limited on 11 November 2011 with a principal sum of $1,500,000 and a term of 2 years. Interest on the convertible notes is payable at the rate of 8% per annum. The convertible note may be redeemed or converted into 10,000,000 ordinary shares in the parent entity if the share price is 15 cents per share or less at maturity.
(ii) The parent entity MGT Resources Limited issued convertible notes to Armstrong Industries HK Limited on 11 May 2012 with a principal sum of $1,500,000 and a term of 3 years. Interest on the convertible notes is payable at the rate of 8% per annum payable six monthly in arrears. The convertible note may be redeemed or converted into 7,500,000 ordinary shares in the parent entity if the share price is 20 cents per share or less at maturity.

The convertible notes have been accounted for in accordance with AASB 139: Financial Instruments: Recognition and Measurement. Both a liability and an equity instrument have been recognised as at 30 June 2013.

(iii) The chattel mortgage was secured by way of a fixed charge over a motor vehicle of MGT Resources Limited. The charge was registered on 3 July 2009 and was in favour of Mercedes-Benz Financial Services Australia Pty Ltd. The chattel mortgage has now been completed paid off.

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

15. Provisions Current Employee benefits (i) Rental provision (ii) Non-current Employee benefits (i) Rental provision (ii) Mine rehabilitation and restoration (iii) Disclosed in the financial statements as: Current provisions Non-current provisions	Consolidated 2013 $ 65,088 12,819 77,907 28,615 - &'()*+ 104,747 77,907 104,747 182,654	Consolidated 2012 $
		48,743 11,401
		60,144 9,004 12,819 "
		21,823 60,144 21,823
		81,967

(i) Employee benefits

Represents annual leave and long service leave.

(ii) Rental provision

Represents obligations owing on the head office rental agreement.

(iii) Mine rehabilitation and restoration

The Group recognises that it has an obligation to restore its mine sites to their original condition at the end of the life of the mine. Mine rehabilitation costs are provided for and based on estimated future expenditure when the liability is incurred. Although the ultimate cost to be incurred is uncertain, the Group has estimated its using current restoration standards and techniques.

When this liability is recognised, a corresponding asset is also recognised as part of the development costs of the mine and is amortised across the same useful life. $16,000 of the provision relates to the restoration and rehabilitation of the mine infrastructure and has been capitalised as part of property, plant and equipment. This will be amortised over the remaining life of the mill. The remaining $60,132 has been capitalised as part of exploration expenditure in relation to the Summer Hills (ML 20547) tenement. This will be amortised over the life of the tenement once this is established.

16. Issued capital (a) Share capital 288,157,040 fully paid ordinary shares (2012: 268,635,040) Share option conversion Capital raising costs	13,646,142 - (726,508) 12,919,634	9,973,096 297,126 (438,261)
		9,831,962

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Issued capital (continued) (b)Movements in ordinary share capital Opening balance February 2012 for cash on exercise of convertible loan March 2012 for cash on exercise of director share options October 2012 issue of shares December 2012 issue of shares Total	Consolidated 2013 $ No. of shares Issue price 268,635,040 - 0.0625 - 0.1250 13,212,000 0.160 6,310,000 0.200 288,157,040	Consolidated 2012 $
		No. of shares 259,635,040 6,400,000 2,600,000 - -
		268,635,040

(c) Capital risk management

The group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Consistently with others in the industry, the group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘borrowings’ and ‘trade and other payables’ as shown in the balance sheet) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the balance sheet (including non –controlling interests) plus net debt.

During 2013, the group’s strategy, which was unchanged from 2012, was to maintain a gearing ratio below 30%. The gearing ratios at 30 June 2013 and 30 June 2012 were as follows:

Total borrowings Less: Cash and cash equivalents Net debt Total equity Total capital Gearing ratio	Consolidated 2013 $ 3,641,200 (1,104,967) 2,536,233 7,026,793 9,563,026 27%	Consolidated 2012 $
		5,194,009 (3,185,842)
		2,008,167 6,646,242
		8,654,410 23%

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Consolidated 17. Reserves 2013 (a) Revaluation reserves $ Balance at beginning of financial year - Revaluation increments/(decrements) (6,000) Transactions with non-controlling interest (1,272) Balance at end of financial year (7,272) (b) Share option reserves Balance at beginning of financial year 1,878,147 Options expired during the year (733,169) Share option issued - Fair value share option converted - Balance at end of financial year 1,144,978 (c) Embedded derivative element of convertible loan Balance at beginning of financial year 64,356 Embedded derivative created on issue of convertible loan - Balance at end of financial year 64,356 Balance at end of financial year 1,202,062 18. Retained earnings Balance at beginning of financial year (4,881,246) Reallocation of equity (note 1c) (448,885) Transfer to retained earnings 733,169 Transactions with non-controlling interest (542,180) Net loss attributable to members of the parent entity (2,287,765) Balance at end of financial year (7,426,907)	Consolidated 2012 $
	(92,087) 92,087 -
	-
	1,834,703 - 340,570 (297,126)
	1,878,147 - 64,356
	64,356
	1,942,503
	(2,371,855) - 54,054 (2,563,445)
	(4,881,246)

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Earnings per share Basis earning per share Diluted earnings per share Basis earning per share The earning and weighted average number of ordinary shares used in the calculation of basis earning per share are as follows: Net loss Earning used in the calculation of basic EPS from continuing operations Weighted average number of ordinary shares for the purpose of basic earnings per share Diluted earnings per share The earning and weighted average number of ordinary shares used in the calculation of diluted earnings per share are as follows: Net loss Earning used in the calculation of diluted EPS from continuing operations Weighted average number of ordinary shares for the purpose of diluted earnings per share	Cents per share (0.79) (0.66) $ (2,287,765) (2,287,765) No. 288,157,038 $ (2,023,733) (2,023,733) No. 307,657,038	Cents per share (0.98) (0.95) $ (2,563,445)
		(2,563,445) No. 262,590,654 $ (2,690,312)
		(2,690,312) No. 284,090,928

19. Earnings per share

Options attached to converting financial instruments were excluded from the diluted weighted average number of ordinary shares calculation as their effect would have been anti-dilutive.

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

20. Commitments

(a) Future exploration

MGT Mining Limited has certain obligations to expend minimum amounts on exploration in tenement areas. These obligations may be varied from time to time and are expected to be fulfilled in the normal course of operations.

The commitments to be undertaken are as follows:

Payable: No later than 1 year Later than 1 year and not later than 5 years Later than five years	Consolidated 2013 $ 830,034 786,344 - 1,616,378	Consolidated 2012 $
		733,332 1,265,834 -
		1,999,166

To keep tenements in good standing, work programs should meet certain minimum expenditure requirements. If the minimum expenditure requirements are not met, MGT Mining Limited has the option to negotiate new terms or relinquish the tenements. MGT Mining Limited also has the ability to meet expenditure requirements by joint venture or farm-in agreements.

(b)Chattel mortgage Chattel mortgage related to motor vehicle with lease term of 3 years: No later than 1 year Later than 1 year and not later than 5 years Later than five years Minimum future lease payments Less future finance charges Present value of minimum lease payments Disclosed in the financial statements as borrowing: " Current (c)Non-cancellable operating leases Operating leases related to office rented with an option to extend. No later than 1 year Later than 1 year and not later than 5 years Later than five years	- - - - - - - - 65,717 - - 65,717	21,932 - -
		21,932 -
		21,932
		21,932
		21,932
		68,862 65,717 -
		134,579

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

21. Related party transactions

(a) Subsidiaries

21. Related party transactions (a) Subsidiaries
		Ownership	Ownership
		interest	interest
	Country of	2013	2012
Name of subsidiary	incorporation	%	%
MGT Mining Limited	Australia	86.48%(ii)	81.33%(ii)
Garimperos Pty Limited (i)	Australia	100.00%	100.00%

(i) Garimperos Pty Limited is 100% owned by MGT Mining Limited.
(ii) During the financial year, MGT Resources Limited acquired an additional 5.15% of the issued shares of MGT Mining Limited. The acquisitions took place via share placements totalling 15,089,074 new ordinary shares with total consideration of $3,442,680. The share placements were paid partly in cash $117,000 and via conversion of intercompany loan balance $3,325,680.

(b) Key management personnel

Disclosures relating to key management personnel are set out in Note 26.

(c) Transactions with related parties

(c) Transactions with related parties
Loan from directors Beginning of the year Loan advanced Loan repayments Loan conversion to equity (i) Interest charged (ii) End of the year	Consolidated 2013 $ - - - - -	Consolidated 2012 $
		860,483 - (424,483) (400,000) 23,819
		59,819

(i) The $400,000 loan was converted to equity on 28 February 2012 by way of 6,400,000 shares in MGT Resources Ltd at $0.0625 per share.

(ii) Interest is charged at 9% per annum with $23,819 interest charged in the period prior to the conversion of the $400,000 loan to equity on 28 February 2012.

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

22. Notes to the cash flow statement

(a) Reconciliation of cash and cash equivalents

For the purpose of the cash flow statement, cash and cash equivalents included cash on hand and in bank. Cash and cash equivalents at the end of the financial year as shown in the cash flow statement is reconciled to the related items in the balance sheet as follows:

	Consolidated	Consolidated
	2013	2012
	$	$
Cash and cash equivalents	1,104,967	3,185,842
	1,104,967	3,185,842
Reconciliation of loss for the period to net cash	flows from operating activities
Loss for the year	(2,584,119)	(3,030,890)
Non-cash flow items
Share-based payment transaction expenses	-	432,657
Accrued interest expenses	5,877	(7,598)
Tenement impairment	241,245	2,500
Depreciation expense	347,093	291,655
Add back of shares	-	(12,773)
Written down revaluation reserve	-	144,000
Written down fixed assets value	-	11,580
Difference arising in equity	(123,002)	-
Interest adjustment on borrowings	23,983	-
Other	-	(2,412)
Decrease/(Increase) in current receivables	(28,085)	43,671
Increase in inventory	37,090	-
Increase in other current assets	10,680	-
Increase in non-current assets	42,108	(44,063)
Decrease in other current liabilities	5,304	-
Increase/(Decrease) in trade creditors	(86,270)	236,211
Increase in Provisions	24,555	23,853
Net cash from operating activities	(2,083,541)	(1,911,609)

(b) Reconciliation of loss for the period to net cash flows from operating activities

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

23. Parent entity disclosure

(a) Financial position

Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Equity Issued equity Retained earnings Reserves Total equity (b) Financial performance Loss for the year Other comprehensive income Total comprehensive income 24. Auditors remuneration Audit services Audit and review of financial reports		2013 $ 7,642,814 6,528,780 14,171,594 1,691,017 1,489,959 3,180,976 12,919,633 (3,138,349) 1,209,334 10,990,618 2013 $ (392,150) - (392,150) Consolidated 2013 $ 64,271		2012 $ 9,992,436 3,143,661

				13,136,097
				1,878,180 2,962,820
				4,841,000
				9,831,961 (3,479,367) 1,942,503
				8,295,097
				2012 $ (664,402) - (664,402) Consolidated 2012 $ 72,500

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

25. Share-based payments

(a) Employee share option plan

The Group has an ownership-based compensation scheme for executives and senior employees. In accordance with the terms of the plan, as approved by shareholders at a previous annual general meeting, executives and senior employees may be granted options to purchase ordinary shares at various exercise prices.

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

The following share-based payment arrangements were in existence during the current and prior reporting periods:

Option	No. of	Grant date	Expiry date	Exercise	Fair value at
series	options			price	grant date
				($)	($)
A	300,000	17 October 2011	17 October 2014	0.3000	0.1109
B	1,200,000	25 November 2011	25 November 2014	0.2000	0.1262
C	2,250,000	25 November 2011	25 November 2014	0.3000	0.1102

In accordance with the terms of the share-based arrangement, options issued during the financial year ended 30 June 2012 vested at the date of their issue.

Movements in share options during the year

The following reconciles the share options outstanding at the beginning and end of the year:

Balance at beginning of year Granted during the year Forfeited during the year - Exercised during the year Expired during the year Balance at end of the year Exercisable at end of year	2013 No. of options Weighted average exercise price $ 17,400,000 0.2366 - - - - - (11,400,000) 0.1750 6,000,0000.2613 -	2012 No. of options Weighted average exercise price $ 16,250,000 0.1518 3,750,000 0.2875 - - (2,600,000) 0.1250 - - 17,400,000 0.2366 - -

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

26. Key management personnel disclosures

Details of key management personnel

The directors and other members of key management personnel of the Group during the year were:

Name

Position

Jonathan Back Chairman and executive Director Non-executive Director Gary Kuo Executive Director Chief Operating Officer Hai Jun Li Non-executive Director Robert Vagnoni Non-executive Director George Monemvasitis Non-executive Director

Date

Appointed 1 Feb 2010 Appointed 4 Sept 2008 Appointed 7 Jan 2011 Appointed 7 Jan 2011 Appointed 14 Apr 2009 Appointed 1 Feb 2011 Resigned 24 May 2013

(a) Key management personnel compensation

	Short-	Post-	Long-term		Share-based	Total
2013	term	employment	benefits		payments
	employee	benefit
	benefit
	$	$	$		$	$
Non-executive directors
George Monemvasitis	-	-		-	-	-
Robert Vagnoni	-	-		-	-	-
Hai Jun Li	50,000	-		-	-	50,000
Total:	50,000	-		-	-	50,000
Key management personal compensation (Group)
Jonathan Back	120,000	-		-	-	120,000
Gary Kuo	134,400	10,800		-	-	145,200
Total:	254,400	10,800		-	-	265,200

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

(a) Key management personnel compensation (continued)

	Short-	Post-	Long-term		Share-based	Total
2012	term	employment	benefits		payments
	employee	benefit
	benefit
	$	$	$		$	$
Non-executive directors
George Monemvasitis	-	-		-	27,546	27,546
Robert Vagnoni	25,000	-		-	179,031	204,031
Hai Jun Li	-	-		-	27,546	27,546
Total:	25,000	-		-	234,123	259,123
Key management personal compensation (Group)
Jonathan Back	120,000	-		-	82,637	202,637
Gary Kuo	134,400	10,800		-	82,637	227,837
Total:	254,400	10,800		-	165,274	430,474

(b) Directors of Consolidated Group - Share holdings

(i) Ordinary shares

Financial Year 2013	Balance at the start of the year	Received during the year on exercise of options	Received during the year on conversion of loan	Other changes during the year	Balance at the end of the year
Jonathan Back(Direct)	79,029,727	-	-	-	79,029,727
George Monemvasitis	4,482,358	-	-	-	4,482,358
GaryKuo	27,208,000	-	-	-	27,208,000
Hai Jun Li	22,800,000	-	-	-	22,800,000
Robert Vagnoni	8,443,000	-	-	-	8,443,000

Financial Year 2012	Balance at the start of the year	Received during the year on exercise of options	Received during the year on conversion of loan	Other changes during the year	Balance at the end of the year
Jonathan Back(Direct)	68,029,727	1,600,000	6,400,000	3,000,000	79,029,727
George Monemvasitis	5,415,692	-	-	(933,334)	4,482,358
Gary Kuo	39,160,000	-	-	(11,952,00 0)	27,208,000
Hai Jun Li	19,800,000	1,000,000	-	2,000,000	22,800,000
Robert Vagnoni	4,500,000	-	-	3,943,000	8,443,000

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Directors of Consolidated Group - Share holdings (continued)

(ii) Share options

2013	Balance at the start of the year	Received during the year	Option exercised during the year	Options expired during the year	Balance at the end of the year
Jonathan Back	2,400,000 exercisable @ 20 cents, expiry 29 June 2013 and 750,000 exercisable @ 30 cents expiring 25 November 2014	-	-	(2,400,000)	750,000 exercisable @ 30 cents expiring 25 November 2014
Gary Kuo	2,000,000 exercisable @ 20 cents, expiry 29 June 2013 and 750,000 exercisable @ 30 cents, expiry 25 November 2014	-	-	(2,000,000)	750,000 exercisable @ 30 cents, expiry 25 November 2014
George Monemvasitis	4,000,000 exercisable @ 20 cents, expiry 29 June 2013 and 250,000 exercisable @ 30 cents, expiry 25 November 2014	-	-	(4,000,000)	250,000 exercisable @ 30 cents, expiry 25 November 2014
Hai Jun Li	250,000 exercisable @ 30 cents, expiry 25 November 2014	-	-	-	250,000 exercisable @ 30 cents, expiry 25 November 2014
Robert Vagnoni	1,200,000 exercisable @ 20 cents, expiring 25 November 2014 and 250,000 exercisable @ 30 cents, expiring 25 November 2014	-	-	-	1,200,000 exercisable @ 20 cents, expiring 25 November 2014 and 250,000 exercisable @ 30 cents, expiring 25 November 2014

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Directors of Consolidated Group - Share holdings (continued)

2012	Balance at the start of the year	Received during the year	Option exercised during the year	Other changes during the year	Balance at the end of the year*
Jonathan Back	4,000,000 exercisable @ 12.5 cents, expiry 29 June 2013	750,000 exercisable @ 30 cents, expiry 25 November 2014	(1,600,000)	-	2,400,000 exercisable @ 20 cents, expiry 29 June 2013 and 750,000 exercisable @ 30 cents expiring 25 November 2014
Gary Kuo	2,000,000 exercisable @ 12.5 cents, expiry 29 June 2013	750,000 exercisable @ 30 cents, expiry 25 November 2014	-	-	2,000,000 exercisable @ 20 cents, expiry 29 June 2013 and 750,000 exercisable@ 30 cents, expiry 25 November 2014
George Monemvasitis	4,000,000 exercisable @12.5 cents, expiry 29 June 2013	250,000 exercisable @ 30 cents, expiry 25 November 2014	-	-	4,000,000 exercisable @ 20 cents, expiry 29 June 2013 and 250,000 exercisable @ 30 cents, expiry 25 November 2014
Hai Jun Li	1,000,000 exercisable @ 10 cents, expiry 29 June 2013	250,000 exercisable @ 30 cents, expiry 25 November 2014	(1,000,000)	-	250,000 exercisable @ 30 cents, expiry 25 November 2014
Robert Vagnoni	-	1,200,000 exercisable @ 20 cents, expiring 25 November 2014 and 250,000 exercisable @ 30 cents, expiring 25 November 2014	-	-	1,200,000 exercisable @ 20 cents, expiring 25 November 2014 and 250,000 exercisable @ 30 cents, expiring 25 November 2014

*On 5 March 2012, an option amendment agreement was signed by Directors holding share options valued at 12.5 cents, agreeing to have the exercise price amended from 12.5 cents to 20.0 cents. J. Back exercised 1,600,000 of his 12.5 cents share options for $200,000 prior to signing the option amendment agreement to have the exercise price of the remaining 2,400,000 options changed from 12.5 cents to 20.0 cents. H. Li exercised all his 1,000,000 options held at 12.5 cents for $125,000. The remaining Directors holding 12.5 cents options signed the option amendment agreement to have the exercise price changed to 20.0 cents.

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

Directors of Consolidated Group - Share holdings (continued)

(iii) Convertible notes

2013	Balance at the start of the year	Received during the year	Option exercised during the year	Other changes during the year*	Balance at the end of the year
J. Back	-	-	-	-	-
2012
J. Back	6,400,000	-	(6,400,000)	-	-

(c) Related Party Transactions

Jonathan Back, provided services to MGT Resources Limited in his capacity as Executive Chairman and Managing Director through his company, Ocean Central Limited for a total value of $120,000 during the period to 30 June 2013 (2012: $120,000).

Li Hai Jun, received fees from MGT Resources Limited in his capacity as Non-Executive Director of $50,000 through his company Parkridge Capital Inc during the period to 30 June 2013 (2012: Nil).

Robert Vagnoni, has accrued fees of $25,000 from MGT Resources Limited for his role as Non-Executive Director during the period to 30 June 2013. (2012: $27,500 inc GST).

27. Events occurring after the reporting period

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MGT RESOURCES LIMITED AND ITS CONTROLLED ENTITIES DIRECTOR’S DECLARATION FOR THE YEAR ENDED 30 JUNE 2013

The directors declare that:

(a) In the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable;
(b) In the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the company and the consolidated entity;
(c) In the directors’ opinion, the financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board; and
(d) The directors’ have been given the declarations required by s.295A of the Corporations Act 2001.

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

On behalf of the Directors

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Gary Kuo Executive Director Dated: 6 September 2013

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ADDITIONAL STOCK EXCHANGE INFORMATION

The shareholder information set out below was applicable as at 6 September 2013.

A. Distribution of equity securities

Analysis of numbers of equity security holder by size of holding:

Holding 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over	Class of equity security Ordinary shares Redeemable preference shares Convertible notes Shares Options 2 - - - 10 - - - 71 - - - 220 - - - 140 9 - 3
	443 9 - 3

B. Equity security holders

Twenty largest quoted equity security holders

The names of the twenty largest holders of quoted equity securities are listed below:

	Ordinary
	Shares
Name	Number held	Percentage of
		issued shares
JONATHAN PAUL BACK	79,029,727	27.43%
KUOKAI PTY LTD	27,208,000	9.44%
LI HAI JUN	22,800,000	7.91%
ARMSTRONG INDUSTRIES HK LTD	15,450,000	5.36%
ALAN KAI-YUAN CHENG	8,352,500	2.90%
TAIMETCO INTERNATIONAL CO LTD	7,187,500	2.49%
MR KOKI INOMATA	6,700,000	2.33%
IRON ORE TRADING PTY LTD	4,482,354	1.56%
WILLIAM RICHARD PIRIE	4,200,000	1.46%
NATIONAL NOMINEES LIMITED	3,700,000	1.28%
TSUMO H.K. CO. LIMITED	3,500,000	1.21%
MS LISA HUANG	3,364,000	1.17%
JASON RALPH COX	3,200,000	1.11%
MR SING FUNG STEVE NGAN	3,200,000	1.11%
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED	3,156,672	1.10%
MISS JENNY CHENG	3,000,000	1.04%
ERIDITUS PTY LTD	3,000,000	1.04%
ROBERT HOWE + ROSE HOWE	2,920,000	1.01%
CLIVE JAMES MCKERR	2,900,000	1.01%
DJW HIP POCKET PTY LIMITED	2,826,100	0.98%

==> picture [171 x 31] intentionally omitted <==

AI assistant

AVIRA RESOURCES LTD — Annual Report 2013

64473_rns_2013-09-05_d1ef4b68-e725-4361-a458-1c1748406351.pdf

CORPORATE DIRECTORY 2013

DIRECTORS

SHARE REGISTRY

COMPANY SECRETARY

BANKERS

NOTICE OF ANNUAL GENERAL MEETING

SOLICITORS TO THE COMPANY

PRINCIPAL REGISTERED OFFICE

AUDITORS

STOCK EXCHANGE LISTING

CONTENTS

CONTENTS

CHAIRMAN’S LETTER

Dear Shareholders,

HIGHLIGHTS

OPERATIONS REPORT

1. MOUNT GARNET TIN PROJECT

1.1 MOUNT VETERAN TIN PROCESSING PLANT (ML 4349)

First Shipment of Tin Concentrate Sold to Off-take Partner

1.2 SUMMER HILLS (ML 20547)

Flagship Mining Lease Granted

OPERATIONS REPORT

New Geological Model Confirmed by MGT Geologists

2013 Summer Hills Drilling Program Successful

1.3 NYMBOOL (EPM 16948)

1.3.1 SMITHS CREEK MINE PROSPECT

1.3.2 ML 20655 – HEADS OR TAILS (ML 20655)

OPERATIONS REPORT

Pyramid Gold Drilling Highlights:

OPERATIONS REPORT

4. CORPORATE

ASX Listing will greatly strengthen MGT’s growth prospects

Off-take agreement with Taiwanese metals buyer

Further increased holding of MGT Mining Limited

5. FINANCIAL RESOURCES

OPERATIONS REPORT

6. RESOURCES TABLES

OPERATIONS REPORT

Competent Persons Statements

DIRECTORS’ REPORT

DIRECTORS

PRINCIPAL ACTIVITIES

DIVIDENDS

REVIEW OF OPERATIONS

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

EVENTS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

DIRECTORS’ REPORT

LIKELY FUTURE DEVELOPMENTS

ENVIRONMENTAL REGULATIONS

INDEMNIFICATION OF OFFICERS AND AUDITORS

DIRECTORS’ REPORT

INFORMATION ON DIRECTORS AND SENIOR MANAGEMENT:

Mr Jonathan Paul Back (LLB, BCL) – Executive Chairman and Managing Director

Mr Gary Kuo – Executive Director and Chief Operating Officer

Mr Robert Vagnoni – Independent Non-Executive Director

Mr Li Hai Jun – Non- Executive Director

Mr George Monemvasitis (OMIE Aust, MAICD) – Non-Executive Director

Mr Dohn Taylor – Managing Director (MGT Mining Limited)

Ms Jacqueline Butler – Chief Financial Officer

Mr Alexander Moody - Company Secretary

DIRECTORS’ INTERESTS

REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT

DIRECTORS’ REPORT

DIRECTORS’ MEETINGS

TRADING IN THE COMPANY’S SECURITIES BY DIRECTORS, OFFICERS AND STAFF

NON-AUDIT SERVICES

PROCEEDINGS ON BEHALF OF THE COMPANY

AUDITOR’S INDEPENDENCE DECLARATION

CORPORATE GOVERNANCE STATEMENT

INTRODUCTION

CORPORATE GOVERNANCE STATEMENT

PRINCIPLE

Recommendation 1.1:

Disclosure:

Recommendation 1.2:

Disclosure:

Recommendation 1.3:

AVIRA RESOURCES LTD Annual Report 2013

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