BLACK ROCK MINING LIMITED — Interim / Quarterly Report 2012

Mar 14, 2012

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Interim Financial Report for the half year ended 31 December 2011

Green Rock Energy Limited ABN 59 094 551 336 Unit 10, 38 Colin Street, West Perth WA 6005 PO Box 1177, West Perth WA 6872 Telephone: (+61 8) 9482 0482 Facsimile: (+61 8) 9482 0499 Website: www.greenrock.com.au

Interim Financial Report for the half-year ended 31 December 2011

	Page
Directors’ report	2
Auditors’ independence declaration	7
Independent auditors’ review report	8
Directors’ declaration	10
Condensed consolidated statement of comprehensive income	11
Condensed consolidated statement of financial position	12
Condensed consolidated statement of changes in equity	13
Condensed consolidated statement of cash flows	14
Notes to the condensed consolidated financial statements	15

Green Rock Energy Limited Directors’ report

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Directors’ report

The Directors of Green Rock Energy Limited (“the Company”) submit herewith the condensed consolidated financial report for the half-year ended 31 December 2011. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows:

Names of directors

The names of the Directors of the Company during and since the end of the half-year are:

Name Jeffrey Schneider Non-Executive Chairman Richard Beresford Managing Director Adrian Larking Technical Director Jörg Baumgärtner Non-Executive Director

Directors have been in office for the entire period to the date of this report unless otherwise noted.

Review of operations

During the half year under review the Company achieved the following:

Mid West Geothermal Power Project

On 4 August 2011 Green Rock announced the execution of a binding Memorandum of Understanding (MoU) with leading Australian renewable energy company Pacific Hydro to cooperate on the development of power projects based on geothermal exploration permits and licences held by the companies in the North Perth Basin (“NPB”) in the Mid West region of WA and the Great Artesian Basin (“GAB”) in South Australia. Initial power projects of at least 25MW are contemplated in both the NPB and the GAB.

The agreement defines the key steps towards first power production and the rights and obligations of Green Rock and Pacific Hydro. The parties have jointly developed an Information Memorandum (IM) for the two projects directed at potential upstream ‘farm-in’ partners to substantially fund drilling of the wells required to prove up the conventional geothermal resource. The IM will be marketed globally through Green Rock’s, Pacific Hydro’s and their advisers’ networks.

Subsequent to the signing of the MoU with Pacific Hydro the Company announced, on 31 October 2011, the execution of a binding agreement with New World Energy Pty Ltd to jointly develop both companies geothermal exploration permits (GEPs) in the North Perth Basin in the Mid West region of Western Australia. A map of the combined permit areas is attached.

This agreement will give the joint venture the dominant position for geothermal power development in the Mid West which is the fastest growing electricity market in the State. Magnetite mining and processing projects in the region will require many hundreds of Megawatts of baseload electricity over the coming years

New World Energy is an unlisted dedicated geothermal energy exploration and development company based in Perth and focussed on Australia and the Asia-Pacific region. The company is the largest geothermal energy landholder in WA with permits covering the prospective areas in the Pilbara and Mid West regions, and is actively acquiring significant projects throughout the Asian “Ring of Fire.” In September 2011 it announced the acquisition by its Philippines subsidiary Geoenergy Inc of five highpotential geothermal projects in the Philippines.

Currently Green Rock has 100% interests in 9 GEPs in the North Perth Basin and New World Energy has 100% interest in 8 GEPs. The agreement contemplates the parties joint venturing across all the Permits subject to certain conditions being met:

• Green Rock and New World Energy being satisfied that the work programs and conditions imposed by the Government for the Permits, as may be amended, for the New World Energy Permits and Green Rock Energy Permits respectively are acceptable to each of them

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Green Rock Energy Limited Directors’ report

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• Green Rock and New World Energy being satisfied with arrangements between them for recovery of past expenditures on the Permits

• New World Energy agrees to the terms of the MoU between Green Rock and Pacific Hydro which includes the Mid West Geothermal Power Project, and Green Rock procures Pacific Hydro consent to farm-out Permit interests to New World Energy

Green Rock will be the initial operator of the joint venture.

The agreement gives Green Rock exposure to a much larger resource footprint and a second potentially attractive drilling target area while reducing its expenditure commitments to explore and develop geothermal resources. The joint venture will focus on identifying the most prospective drilling target for drilling two wells with the objective of an initial ~5MW of power generation capacity connected to existing power infrastructure.

Green Rock considers the Mid West Geothermal Power Project a strong contender for State and Commonwealth funding towards drilling the first two wells. Working jointly with New World Energy further strengthens Green Rock’s prospects for Commonwealth funding.

The mutually beneficial joint venture will create a single entity with access to the best geothermal areas in WA that are adjacent to transmission infrastructure and major baseload energy markets. This collaboration will allow both companies to pool their technical and financial resources to ensure the most timely and cost effective geothermal development.

Work continues on mapping the distribution of natural matrix and fracture permeability within these regions of highest heat flows with a view to selecting suitable drilling locations near existing power transmission lines for easy access to market. This work includes analysis of 3D seismic in these regions to map geological stratigraphy, structure and natural fracture patterns, analysis of data from petroleum wells to detect open fractures in relation to the existing structures and stratigraphy and the sub-surface stress field and collaboration in an MT research survey with the IESE at University of Auckland and Adelaide University.

This area has been an active petroleum exploration and production province with 135 petroleum wells drilled within our permit area. The extensive well and geological information provides a strong foundation for locating and designing geothermal wells, and drilling in the area is expected to be relatively straightforward.

Green Rock continues to cooperate with other petroleum and geothermal companies which are actively exploring in the Perth Basin for oil, tight gas and shale gas to form a consortium to secure a suitable drilling rig to be active in mid 2012.

In early December the Company announced that, following submission in September 2011 of an Expression of Interest for funding from the Commonwealth Government’s $126 million Emerging Renewables Program, it has now been invited to submit a Project Funding Application for the Mid West Geothermal Project

In announcing the new Emerging Renewables program on 8 August 2011, Minister Martin Ferguson stated that about one third of the $126 million fund is expected to go to geothermal projects.

While the Commonwealth Government’s invitation to submit a funding application cannot be construed to imply that funding will be offered, Green Rock considers that the Mid West Geothermal Power Project is a strong candidate for funding support.

Green Rock Energy’s application for funding from the Commonwealth Government’s $126 million Emerging Renewables Program was submitted to the Department of Renewable Energy and Tourism on 7 February 2012.

Canning Basin hydrocarbon farm-in and Area of Mutual Interest Agreement with New Standard Energy (NSE)

Green Rock earned a 15% interest in EP417 by funding 27.5% of the first $4.0 million of costs and 15% of further well costs in the process of deepening Lawford #1 and has requested New Standard Energy to do all that is necessary to effect the transfer of 15% of the permit to Green Rock Energy’s name.

The Company has the right to increase its interest in EP417 by funding 22.5% of the first $10 million of the costs of drilling a second well and 20% of any further costs such that after the completion of the earning phase of this farm-in arrangement, Green Rock will have a 20% interest in permit EP417.

Through the establishment of an up-stream alliance with New Standard Energy the company has moved to secure additional acreage through the granting of a Special Prospecting Authority (SPA) for the Seven Lakes area in the Canning Basin. In this

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Green Rock Energy Limited Directors’ report

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new acreage, Green Rock will have rights to a 40% interest.

Recent exploration success in the Canning Basin by Buru Energy Limited and the interest in the area being shown by international conglomerates such as Mitsubishi and Conoco-Phillips reinforce the value inherent in our position.

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Map of Laurel Project including the Seven Lakes SPA, EP417 and various prospective targets (courtesy of NSE)

Deepening of Lawford #1 Well

Deepening of the Lawford #1 well commenced on 27 August. On 24 October the EP417 joint venture partners (Green Rock Energy, New Standard Energy and Buru Energy) agreed to revise the target depth of the Lawford #1 well to the then current depth (2,690 metres) and as a result to log, plug and abandon the well with the Century Rig #7 then released to Buru without the Laurel Formation being intersected and evaluated.

At its final depth the well was drilling in clay stones and red beds of what is interpreted to be the Lower Anderson Formation and encountered slow drilling due to very hard and abrasive formations. Based on the slow drilling progress, thicker than expected Anderson Formation in this location leading to geological uncertainty about the depth of the target Laurel Formation, depth limitations of the rig and the lack of significant hydrocarbon shows, the joint venture partners decided to terminate the drilling of the well. Well logs and a Vertical Seismic Profile (VSP) were run before the well was plugged and abandoned. Interpretation of the VSP and logs will result in an improved understanding of the geology of the area.

The Laurel Formation is present below the Anderson Formation in all wells drilled to sufficient depth within the Fitzroy Trough and as a result is still expected to be present across EP417 and the Lawford Ridge. The Lawford #1 deepening indicates that the Laurel Formation is at a significantly greater depth on the Lawford Ridge than indicated by previous geological modeling. As a result the Laurel Formation will remain untested in the basin centre of the Fitzroy Trough with the overall hydrocarbon prospectivity remaining, albeit at greater than expected depths. Subsequent analysis of logging and seismic data has indicated that the top of the Laurel Formation is expected to be at around 3,000 metres.

The deepening of the Lawford #1 well fulfills the immediate work commitments across EP417 and enables its continued retention.

The EP417 and Seven Lakes SPA joint venture partners currently intend to conduct further geoscience studies on both acreage areas over the next 12 to 24 months ahead of any further drilling activity. This work will involve both basin centre targets as well as basin margin prospects similar to those being pursued elsewhere in the Fitzroy Trough.

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Green Rock Energy Limited Directors’ report

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In the intervening time the joint venture partners will benefit from data obtained from an acceleration of exploration drilling and appraisal activity in the region via the joint venture between Buru and Mitsubishi. This appraisal activity will continue to define the geological understanding of the Laurel play across the region.

Hungarian Geothermal JV with MOL

In Hungary our 50% owned geothermal developer Central European Geothermal Energy Company Ltd (CEGE) is preparing for the first geothermal concession tenders in Hungary which are anticipated to be issued in the first half of 2012. Public comment on the Environmental Impact Assessment of the target concession area closed on 15 January 2012.

From the work undertaken to date including well testing, both MOL and Green Rock are of the view that an economic geothermal resource exists in the area of focus. Data acquired from the well now owned by CEGE indicate a geothermal reservoir capacity expected to be capable of supporting several MW of power generation capacity.

Subject to securing the concession, project activity will step up in 2012 with first power production around a year after the drilling of a second well has been completed. Green Rock will seek to fund a large part of its interest from European investors.

Corporate Activities

Annual General Meeting

The 2011 Annual General Meeting of shareholders was held on 16 November 2011. The business before the meeting was:

• the adoption of the remuneration report;

• the re-election of Dr Jorg Baumgartner as a director;

• the issue of share incentive options to Directors Richard Beresford, Adrian Larking and

• ratification of issue of Options to Cygnet Capital Pty Ltd.

All resolutions were passed on a show of hands.

Share Incentive Options

In December the Company issued 1,900,000 share incentive options which vested 50% on 15 November 2011 and the balance vesting on 15 November 2012, with expiry on 15 November 2015 and exercisable at 2 cents per share to directors, staff and consultants .

Capital Raising - Non Renounceable Entitlements Issue

On 21 November 2011 the Company advised that a pro-rata non-renounceable entitlement issue of one (1) New Share for every three (3) shares held at the record date of 30 November 2011 would be made to shareholders of the Company at an issue price of 0.9 cents per share to raise approximately $2,031,241 . In addition that one (1) free Option would be granted for every New Share issued, exercisable at 3.6 cents on or before 31 March 2013. The offer was fully underwritten by Cygnet Capital Pty Ltd pursuant to an Underwriting Agreement.

The funds sought through the rights issue were to provide working capital to progress existing geothermal and hydrocarbon projects, to assess and progress potential new opportunities and to fund the issue costs associated with the offer.

A termination event in the Underwriting Agreement occurred over the period 2-4 January 2012 and Cygnet Capital advised the Company that it intended to rely on that event to terminate the Underwriting Agreement.

In light of this and the low take up of shareholder entitlements, the Company elected to withdraw the offer on 9 January 2012. All application proceeds received by the Company were refunded to shareholders shortly thereafter.

Following Cygnet Capitals termination of the Underwriting Agreement and given current capital market conditions, the Board has reconsidered the timing and extent of the Company’s capital requirements particularly in light of its ongoing cost reduction initiative.

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Green Rock Energy Limited Directors’ report

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Capital Raising – Placement by Cygnet Capital Pty Ltd

Subsequent to the termination of the November 2011 Non Renounceable Rights Issue referred to on page 5, Cygnet Capital confirmed on 31 January 2012 that it had received commitments for $500,000 through a first tranche placement to sophisticated investors of 100 million GRK shares at 0.5 cents per share , a 28.6 % discount to the closing price of 0.7 cents per share on 30 January 2012. These shares were issued and allotted on 31 January 2012.

Having received approval from shareholders at a General Meeting held on 8 March 2012, Cygnet Capital will use their best endeavors to raise a second tranche placement to sophisticated investors of $1 million and up to $1.5 million at its discretion at 0.5 cents per share.

All capital raised by Cygnet Capital will attract a 6% fee being $120,000 plus GST if the total raising of $2 million is achieved. On completion of the placement Green Rock will issue to Cygnet Capital or its nominees 40 million options exercisable at 1.2 cents per share before 31 January 2015.

General

The net loss after accounting for income tax for the half-year ended 31 December 2011 is $3,772,260 (2010: $1,616,025).

The total number of fully paid ordinary shares (GRK) on issue at 31 December 2011 was 677,080,479 . Listed options (GRKO) expiring on 31 March 2013 exercisable at 3.6 cents each totalled 243,949,438 .

In addition there were 43,600,000 (2010: 45,550,000) unquoted incentive options on issue at 31 December 2011.

Auditor’s independence declaration

The Auditor’s independence declaration is included on page 7 of the condensed consolidated half-year financial report and forms part of this report.

Signed in accordance with a Resolution of the Directors of Green Rock Energy Limited and made pursuant to s.306(3) of the Corporations Act 2001.

On behalf of the Directors.

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Richard Beresford Managing Director

Perth , Western Australia, Australia.

14 March 2012

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Green Rock Energy Limited Auditor’s independence declaration

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Independence declaration

to the Directors of Green Rock Energy Limited

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Green Rock Energy Limited Auditor’s independent review report

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Green Rock Energy Limited Auditor’s independent review report

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Green Rock Energy Limited Directors’ declaration

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Directors’ declaration

The Directors declare that:

• (a) in the Directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and

• (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 consolidated entity.

Signed in accordance with a Resolution of the Directors made pursuant to section 303 (5) of the Corporations Act 2001.

On behalf of the Directors.

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Richard Beresford Managing Director

Perth, Western Australia, Australia.

14 March 2012

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Green Rock Energy Limited Condensed consolidated statement of comprehensive income

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Condensed Consolidated Statement of Comprehensive Income for the half-year ended 31 December 2011

Notes Revenue Interest income Total Revenue Expenses Employee benefits expense 7 Administration expense Consulting expense Depreciation and amortisation Exchange losses Exploration expenditure expensed as incurred Share of net loss of associates accounted for using the equity method 6 Other expenses from ordinary activities Total expenses Loss before income tax benefit Income tax benefit Net loss for the period Other comprehensive income Foreign currency translation differences for foreign operations Income tax on other comprehensive income Other comprehensive income for the period, net of income tax Total comprehensive income for the period attributable to members of Green Rock Energy Limited Loss per share: Basic and diluted loss per share (cents per share)	Consolidated
	31 December 2011 $ 31 December 2010 $
	51,415 27,596
	51,415 27,596 (407,742) (515,375) (52,385) (53,358) (331,624) (349,479) (19,163) (14,276) (2,624) (1,410) (2,624,059) (298,500) (197,600) (275,098) (188,478) (136,125)
	(3,823,675) (1,643,621) (3,772,260) (1,616,025) - -
	(3,772,260) (1,616,025)
	(16,407) (10,983) -
	(16,407) (10,983)
	(3,788,667) (1,627,008)
	(0.55) (0.45)

Notes to the financial statements are included on pages 15 to 20.

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Green Rock Energy Limited Condensed consolidated statement of financial position

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Condensed Consolidated Statement of Financial Position as at 31 December 2011

Notes Current assets Cash and cash equivalents Other receivables Other assets Total current assets Non-current assets Other financial assets Deferred exploration expenditure 5 Investments accounted for using the equity method 6 Plant and equipment Total non-current assets Total assets Current liabilities Trade and other payables Provisions Total current liabilities Non-current liabilities Provisions Total non-current liabilities Total liabilities Net assets Equity Issued capital 3 Reserves Accumulated losses Total equity	Consolidated
	31 December 2011 $ 30 June 2011 $
	496,275 3,825,574 689,651 732,255 10,963 4,980
	1,196,889 4,562,809
	123,959 123,959 8,746,513 8,710,319 1,014,538 1,205,677 142,162 183,068
	10,027,172 10,223,023
	11,224,061 14,785,832
	677,880 571,101 83,527 74,993
	761,407 646,094
	40,216 39,471
	40,216 39,471
	801,623 685,565
	10,422,438 14,100,267
	26,679,763 26,665,747 914,711 1,032,736 (17,172,036) (13,598,216)
	10,422,438 14,100,267

Notes to the financial statements are included on pages 15 to 20.

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Green Rock Energy Limited Condensed consolidated statement of changes in equity

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Condensed Consolidated Statement of Changes In Equity for the half-year ended 31 December 2011

For the period ended 31 December 2011 At beginning of period Net loss for the year Other comprehensive income Total comprehensive income for the period Transactions with owners in their capacity as owners: Issued capital Costs of capital raising Share based payments Options expired during the year At end of period For the period ended 31 December 2010 At beginning of period Net loss for the year Other comprehensive income Total comprehensive income for the period Transactions with owners in their capacity as owners: Issued capital Costs of capital raising Share based payments Options expired during the year At end of period	Ordinary Shares $ Option Premium Reserve $ Share Based Payment Reserve $ Foreign Currency Reserves $ Accumulated Losses $ Total Equity $
	26,665,747 158,332 928,276 (53,872) (13,598,216) 14,100,267
	- - - - (3,772,260) (3,772,260) - - - (16,407) - (16,407)
	- - - (16,407) (3,772,260) (3,788,667)
	14,016 - - - - 14,016 - - - - - - - - 96,822 - - 96,822 - - (198,440) - 198,440 -
	14,016 - (101,618) - 198,440 110,838
	26,679,763 158,332 826,658 (70,279) (17,172,036) 10,422,438
	Ordinary Shares $ Option Premium Reserve $ Share Based Payment Reserve $ Foreign Currency Reserves $ Accumulated Losses $ Total Equity $
	20,513,942 158,332 548,822 (58,270) (11,015,806) 10,147,020 - - - - (1,616,025) (1,616,025) - - - (10,983) - (10,983)
	- - - (10,983) (1,616,025) (1,627,008)
	2,707,571 - - - - 2,707,571 (476,516) - - - - (476,516) - - 425,306 - - 425,306 - - (70,000) - 70,000 -
	2,231,055 - 355,306 - 70,000 2,656,361
	22,744,997 158,332 904,128 (69,253) (12,561,831) 11,176,373

Notes to the financial statements are included on pages 15 to 20.

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Green Rock Energy Limited Condensed consolidated statement of cash flows

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Condensed Consolidated Statement of Cash Flows for the half-year ended 31 December 2011

Cash flows from operating activities Payments to suppliers and employees Exploration expenditure Government grant received Research and development concession received Net cash used in operating activities Cash flows from investing activities Payments for plant and equipment Payments for exploration and evaluation expenditure Interest received Investment in associate Net cash provided by/(used in) investing activities Cash flows from financing activities Proceeds from issues of shares and options Payment for share issue costs Net cash provided by financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period	31 December 2011 $ 31 December 2010 $
	(758,147) (1,241,888) (2,581,455) - - 350,000 - 71,743
	(3,339,602) (820,145)
	(473) (9,188) (36,194) (11,015) 51,415 27,596 (6,461) (1,173,734)
	8,287 (1,166,341)
	2,016 2,707,571 - (151,516)
	2,016 2,556,055
	(3,329,299) 569,569 3,825,574 926,515
	496,275 1,496,084

Notes to the financial statements are included on pages 15 to 20.

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Green Rock Energy Limited Notes to the condensed consolidated financial statements

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Notes to the condensed consolidated financial statements for the half year ended 31 December 2011

1. Summary of accounting policies

Statement of Compliance

The condensed half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 ‘Interim Financial Reporting’. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 ‘Interim Financial Reporting’.

The condensed half-year financial report does not include notes of the type normally included in an annual financial report and should be read in conjunction with the most recent annual financial report and any public announcements made by the Company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX Listing Rules.

Basis of Preparation

The condensed financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. The Company is domiciled in Australia and all amounts are presented in Australian dollars, unless otherwise noted.

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted in the Company’s 2011 annual financial report for the financial year ended 30 June 2011, unless disclosed below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

For the purpose of preparing the half year report, the half year has been treated as a discrete reporting period.

New Standards and Interpretations

(a) Changes in Accounting Policies and Disclosures

The consolidated entity has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board that are relevant to their operations and are effective for the current financial reporting period.

Standard / Interpretation	Effective for annual reporting periods beginning/ending on or after	Expected to be applied be consolidated entity
AASB 124 Related Party Disclosures (2009) and AASB 2009-12 Amendments toAustralian Accounting Standards	1 January 2011	30 June 2012
AASB 2010-4 Further Amendments to Australian Accounting Standards arisingfrom Annual ImprovementsProject	1 January 2011	30 June 2012
AASB 2010-5 Amendments to Australian Accounting Standards	1 January 2011	30 June 2012
AASB 2010-6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets	1 July 2011	30 June 2012

The adoption of these standards and interpretations have not had an impact to the consolidated entity.

(b) Accounting Standards and Interpretations issued but not yet effective.

The following Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective and have not been adopted by the consolidated entity for the half year ending 31 December 2011.

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Green Rock Energy Limited Notes to the condensed consolidated financial statements

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Management are in the process of assessing the impact of the adoption of these standards and interpretations on the consolidated entity.

Standard / Interpretation	Effective for annual reporting periods beginning/ending on orafter	Expected to be applied be consolidated entity
AASB 9: Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-9 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010)	1 January 2013	30 June 2014
AASB 2010-8 Amendments to Australian Accounting Standards – Deferred Tax: Recovery ofUnderlyingAssets’	1 January 2012	30 June 2013
AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements	1 July 2013	30 June 2014
AASB 10 Consolidated Financial Statements	1 January 2013	30 June 2014
AASB 11 Joint Arrangements	1 January 2013	30 June 2014
AASB 12 Disclosure of Interests in Other Entities	1 January 2013	30 June 2014
AASB 127 'Separate Financial Statements' (2011), AASB 128 'Investments in Associates and JointVentures'(2011)	1 January 2013	30 June 2014
AASB 2011-7 ‘Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards	1 January 2013	30 June 2014
AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13: Tier 2 Proposals	1 January 2013	30 June 2014
AASB 2011-9 Amendments to Accounting Standards Presentation of Items of Other Comprehensive Income	1 July 2012	30 June 2013

Going concern

The consolidated entity has incurred net losses after taxes of $3,772,260 (2010: $1,616,025) and experienced net cash outflows from operating and investing activities of $3,331,315 (2010: $1,986,486) for the half-year ended 31 December 2011.

These conditions indicate a material uncertainty that may cast significant doubt about the consolidated entity’s ability to continue as a going concern.

The ability of the consolidated entity to continue as a going concern is dependent upon the ability of the consolidated entity to raise additional funding, sufficient to fund exploration commitments, project development and to provide adequate working capital for a further 12 months from the date of signature of this half year financial report. This funding is expected to include direct funding by joint venture partners in permits and projects.

The directors took steps during the period under review to ensure that the consolidated entity continued as a going concern including reducing non-essential operating expenditure, conducting a private placement of $500,000 (before costs) in January 2012 and obtaining shareholder approval for the further private placement of a total of $1.5 million (before costs) which is expected to be completed by the end of March 2012.

The directors have prepared a cash flow forecast for the period ending 31 March 2013 which indicates that the current cash resources may not meet expected cash outgoings, without additional funding. Based on the cash flow forecasts, the consolidated entity will need to successfully complete the $1.5m private placement referred to above before 31 August 2012 to fund its current operations through to at least 31 March 2013.

The directors are confident of their ability to raise additional capital as necessary and, based on the cash flow forecasts and achieving future funding, the directors are satisfied that the going concern basis of preparation is appropriate. The financial report has therefore been prepared on a going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.

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Green Rock Energy Limited Notes to the condensed consolidated financial statements

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Should the consolidated entity be unable to raise the funding referred to above, there is a material uncertainty whether the consolidated entity will be able to continue as a going concern and, therefore, whether it will be required to realise its assets and extinguish its liabilities in the normal course of business and at amounts stated in the financial report.

The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that may be necessary should the consolidated entity be unable to continue as a going concern.

2. Subsequent events

Non Renounceable Rights Issue - Withdrawal of offer

On 22 November 2011, Green Rock Energy Limited announced its intention to undertake a rights issue on the basis of one (1) new fully paid ordinary share in the Company for every three (3) shares held together with one (1) free option for each new share issued, to all shareholders pursuant to an offer document.

The Offer was fully underwritten by Cygnet Capital pursuant to an underwriting agreement. A termination event in the Underwriting Agreement occurred and Cygnet Capital advised the Company that it intended to rely on that event to terminate the Underwriting Agreement.

In light of this and the low take up of shareholders’ entitlements, the Company elected on 9 January 2012 to withdraw the Offer. All application proceeds received by the Company were refunded to shareholders shortly thereafter.

Capital Raising – Placement by Cygnet Capital Pty Ltd

Subsequent to the termination of the November 2011 Non Renounceable Rights Issue referred to above, Cygnet Capital confirmed on 31 January 2012 that it had received commitments for $500,000 through a first tranche placement to sophisticated investors of 100 million GRK shares at 0.5 cents per share, a 28.6 % discount to the closing price of 0.7 cents per share on 30 January 2012. These shares were issued on 31 January 2012.

Having received approval from shareholders at a General Meeting held on 8 March 2012, Cygnet Capital will use their best endeavors to raise a second tranche placement to sophisticated investors of $1 million and up to $1.5 million at its discretion at 0.5 cents per share.

All capital raised by Cygnet Capital will attract a 6% fee being $120,00 plus GST if the total raising of $2 million is achieved.

On completion of the placement Green Rock will issue to Cygnet Capital or its nominees 40 million options exercisable at 1.2 cents per share before 31 January 2015.

3. Issuances, repurchases and repayments of securities

During the half-year reporting period, the Company completed the following transactions in its securities:

• 12 July 2011 issued 5,000,000 listed options to acquire ordinary shares at an exercise price of 3.6 cents each expiring on 31 March 2013 in consideration for corporate advisory services. These options vest immediately.

• 9 August 2011 and 20 September 2011 a total of 55,998 options were exercised at 3.6 cents per share.

• 8 November 2011 issued 1,000,000 fully paid ordinary shares in consideration for corporate services.

• 15 November 2011 issued 1,250,000 options to acquire ordinary shares at an exercise price of 2 cents each expiring on 15 November 2015 to Directors. 50% of these options vest immediately and the balance on 15 November 2012.

• 15 November 2011 issued 250,000 options to acquire ordinary shares at an exercise price of 2 cents each expiring on 15 November 2015 to the Company Secretary. 50% of these options vest immediately and the balance on 15 November 2012.

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Green Rock Energy Limited Notes to the condensed consolidated financial statements

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• 15 November 2011 issued 150,000 options to acquire ordinary shares at an exercise price of 2 cents each expiring on 15 November 2015 to an employee. 50% of these options vest immediately and the balance on 15 November 2012.

• 15 November 2011 issued 250,000 options to acquire ordinary shares at an exercise price of 2 cents each expiring on 15 November 2015 to two consultants. 50% of these options vest immediately and the balance on 15 November 2012.

Further details of options granted and share based payments during the half-year are disclosed in note 7.

4. Segment reporting

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance is focused on the geographical location of resources being explored and evaluated for.

The Group’s principal activities involves geothermal energy development operating in Australia and Hungary.

For the six months ended 31 December 2011

Segment revenue Segment result Segment assets For the six months ended 31 December 2010 Segment revenue Segment result Segment assets	Australia Hungary Consolidated
	51,414 1 51,415
	(3,569,480) (202,780) (3,772,260)
	10,123,881 1,100,180 11,224,061
	27,591 5 27,596
	(1,336,931) (279,094) (1,616,025)
	10,700,818 1,192,906 11,893,724

5. Deferred exploration costs

Costs brought forward Exploration expenditure capitalised during the period Cost carried forward	31 Dec 2011 30 June 2011
	8,710,319 8,672,024
	36,194 38,295
	8,746,513 8,710,319

Total exploration costs of $2,624,059 were expensed.

6. Investments accounted for using the equity method

Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting and are carried at cost after adjustments for share of losses.

Investment in Central European Geothermal Energy Private Company Limited (CEGE) Additional investment during the period Share of losses after income tax (50%) Carrying amount at the end of the financial period	31 Dec 2011 30 June 2011
	1,205,677 92,185
	6,461 1,336,824
	(197,600) (223,332)
	1,014,538 1,205,677

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Green Rock Energy Limited Notes to the condensed consolidated financial statements

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The Group’s share of the results and aggregated assets (including goodwill) and liabilities are as follows:

Group’s share of:

Ownership Interest % 31 December 2011 Central European Geothermal Energy Private Company Limited (CEGE) 50 30 June 2011 Central European Geothermal Energy Private Company Limited (CEGE) 50	Assets Liabilities Revenues Profit/(Loss)
	1,695,872 63,733 5,573 (395,201)
	2,325,614 77,656 19,661 (446,665)

7. Share based payments

Included in staff costs is an amount of $66,822 relating to share based payments (December 2010: $100,307). Included in share capital is an amount of $12,000 (December 2010: $0) for advisory services provided, 1,000,000 shares were issued on 8 November 2011, the share price on this day was 1.20 cents. Included in corporate services is an amount of $30,000 (December 2010: $0) for advisory services provided. Included in capital raising costs is nil relating to a share based payment of placement costs (December 2010: $325,000).

Share based payments is the fair value of options issued and expensed over the vesting period. The fair value of the equity-settled share options granted is independently estimated as at the date of grant using a Binomial model taking into account the terms and conditions upon which the options are granted. Expected volatility is based on the movement of the underlying share price around its average price over the expected term of the option.

On 15 November 2011, two consultants, one employee, the Company Secretary Nigel Hodder and Directors, Richard Beresford, Adrian Larking and Jörg Baumgärtner were granted options with the details shown on page 19:

	Unlisted options exercisable at 2 cents per share on or before 15 November 2015
Grant date	15 November 2011
No of options issued	1,900,000
Vesting conditions	50% vesting immediately and the balance on 15 November 2012
Fair value atgrant date	0.90 cents
Shareprice	1.30 cents
Exerciseprice	2 cents
Volatility	110%
Risk free rate	3.60%

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Green Rock Energy Limited Notes to the condensed consolidated financial statements

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On 11 July 2011, Cygnet Capital were granted options with the following details:

	Listed options exercisable at 3.6 cents per share on or before 31 March 2013
Grant date	11 July2011
No of options issued	5,000,000
Vesting conditions	Vestingimmediately
Fair value atgrant date	0.60 cents
Shareprice	2.10 cents
Exerciseprice	3.6 cents
Volatility	110%
Risk free rate	4.57%

Commitments 8.

In respect of its various South Australian projects, the Company continues to be required to maintain with the Minister security of $100,000 for the satisfaction of any obligations arising under the South Australian Petroleum Act of 2000. The security lodged with the Minister covers all South Australian GEL’s granted to the Company.

In relation to the various South Australian geothermal exploration licences (“GEL’s”) that are held by the Company, in accordance with their applications for these GEL’s, a “minimum work requirement” was submitted with estimated costs of $8.47 million to meet the minimum work requirements for the next 12 months.

The Western Australian geothermal exploration permits (“GEP’s”) which have been granted for a period of six years are each bound by a “minimum work program.” Indicative costs for the work programs were given at the time of making application. Green Rock is currently in its third year of the work programs for the majority of these GEP’s. Green Rock’s share of the indicative costs of the minimum work programs accepted by the Department of Mines for the various GEP’s is a total of approximately $4.18 million in the third year of the work programs.

Management’s plan in the coming year is to seek approval from regulators to relinquish several permits/licences and possibly apply for the suspension of several other permits/licences on certain projects to manage the Company’s exploration expenditure commitments.

In relation to Green Rock’s farm-in to Exploration Permit 417 (“EP” 417) in the Canning Basin, the Company has earned its 15% equity interest in all hydrocarbon rights across EP 417 during the current period. Green Rock has committed to meeting a share of the costs of drilling a second well on EP 417 (location and timing to be agreed but targeted for 2013) to earn an additional 5% equity interest (an increase from 15% to 20%) in EP 417 through committing to funding 22.5% of the costs of drilling, coring, fracing and testing the second well subject to a cap of $10 million on total costs, over and above which any additional expenditure will be payable 20% by Green Rock.

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