CARNAVALE RESOURCES LIMITED — Interim / Quarterly Report 2011

Jul 31, 2011

29 July 2011

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QUARTERLY ACTIVITY REPORT For the period ended 30 June 2011

Lambouka Oil and Gas Exploration Project (20%)

The Company and its partners continue to compile and review all existing information and data to work out the most efficient way to advance the Lambouka project.

The Lambouka prospect was drilled to its planned TD and an initial suite of wireline logs were run in the well. Due to deterioration of the wellbore, the partners decided against running additional logs and further attempts to flow test the well.

Parmegiana Iron Ore Project, Brazil (100%)

Vale advised that it would not exercise its option to continue with the Parmegiana Iron Ore Project. The Company is currently reviewing all technical data from work completed by Vale to determine the way forward for the Parmegiana Iron Ore Project.

Corporate

The Company advises that during the quarter it continued to review, and is continuing to undertake due diligence on a number of project investment opportunities, some of which have the potential to meet the Company’s investment criteria.

The Company has completed a preliminary technical review on an entity that holds an exploration licence over a gold project in West Africa. Technical data collated during the review is currently being compiled and assessed by the Company’s independent technical experts in Australia.

The preliminary review, which has indicated that the asset has the potential to meet the Company’s investment criteria, is subject to comprehensive legal due diligence and the Company has commenced commercial discussions with the vendor.

The Company remains diligent in its assessment of assets at all times and is therefore prepared to commit necessary expenditure on due diligence and other studies before committing to a transaction. The Company can give no assurance that these due diligence investigations and/or discussions will successfully conclude in an acquisition.

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Ron Gajewski Executive Director

CARNAVALE RESOURCES LIMITED

ABN 49 119 450 243 30 Ledgar Road, Balcatta Western Australia 6021 T: +61 8 9240 6876 F: +61 8 9240 2406

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E: admin @carnavaleresources.com W: www.carnavaleresources.com

Appendix 5B Mining exploration entity quarterly report

Appendix 5B

Mining exploration entity quarterly report

Name of entity

CARNAVALE RESOURCES LIMITED

ABN Quarter ended (“current quarter”) 49 119 450 243 30 June 2011

Consolidated statement of cash flows
Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration and evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other – Due diligence expenses Net Operating Cash Flows	Current quarter $A’000	Year to date (12 months) $A’000
	- - - - (210) - 17 - - -	- (3,999) - - (646) - 163 - - -
	(193)	(4,482)
Cash flows related to investing activities 1.8 Payment for purchase or renewal of: (a) prospects (b) equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other – Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)	- - - - - - - - -	- - - - - - - 23 -
	-	23
	(193)	(4,459)

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Appendix 5B Mining exploration entity quarterly report

1.13 Total operating and investing cash flows (brought forward)	(193)	(4,459)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other – share issue expenses Net financing cash flows	- - - - - -	542 - - - - -
	-	542
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter	(193) 2,458 (11)	(3,917) 6,312 (141)
	2,254	2,254

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

Payments to related entities of the entity and associates of the	related entities
1.23 Aggregate amount of payments to the parties included in item 1.2 1.24 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
	99
	-

1.25	Explanation necessaryfor anunderstanding of thetransactions
	A$’000 Directors fees, consultancy charges and remuneration 81 Accounting ,secretarial and legal expenses 18

Non-cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

N/A.

• 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

N/A

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Appendix 5B Mining exploration entity quarterly report

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000	Amount used $A’000
	-	-
	-	-

Estimated cash outflows for next quarter

4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A’000
	600
	-
	-
	150
Total	750

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details)	972 1,282 - -	104
		2,354
		-
		-
Total: cash at end of quarter(item 1.22)	2,254	2,458

Changes in interests in mining tenements

Tenement reference	Nature of interest	Interest at beginning ofquarter	Interest at end of quarter

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Appendix 5B Mining exploration entity quarterly report

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number quoted	Issue price per security (cents)	Amount paid up persecurity (cents)
7.1 Preference +securities (description) 7.2 Changes during quarter	-	-	-	-
	-	-	-	-
7.3 +Ordinary securities 7.4 Changes during quarter	87,739,708	87,739,708
7.5 +Convertible debt securities (description) 7.6 Changes during quarter	-	-	-	-
	-	-	-	-
7.7 Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Cancelled/Expired during quarter	79,588,524	79,588,524	Exercise price 20 cents	Expiry date 28 February 2013
	-	-	-	-
	-	-	-	-
7.11 Debentures (totals only)	-	-
7.12 Unsecured notes (totals only)	-	-

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Appendix 5B Mining exploration entity quarterly report

Compliance statement

• 1 This statement has been prepared under accounting policies, which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

• 2 This statement gives a true and fair view of the matters disclosed.

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Sign here: Date: 29 July 2011 Print name: Paul Jurman Company Secretary

Notes

1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

3 Issued and quoted securities. The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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