CODEIFAI LIMITED — Audit Report / Information 2004

Mar 3, 2005

6 St Georges Terrace Perth WA 6000 GPO Box R1253 Perth WA 6844 T +61 8 9261 9100 F +61 8 9261 9101 www.rsml.com.au

E-mail: andy.gilmour@rsmi.com.au Direct line: 9261 9447 AIG:SET

22 February 2005

The Board of Directors Australis Mining Corporation Limited Level 36 AMP Building 50 Bridge Street Sydney NSW 2000

Dear Sirs

Investigating Accountant's Report - Review of Revised Proforma Statement of Financial Position as at 30 June 2004

1. Introduction

• $1.1.$ This report has been prepared by RSM Bird Cameron Corporate Pty Ltd ("RSMBC") at the request of the Directors of Australis Mining Corporation Limited ("Australis" or "the Company") and in response to a request from the Australian Stock Exchange ("ASX") as per the ASX facsimile to Minter Ellison dated 18 February 2005. In response to requirement (1) of that facsimile, we have performed a review of Australis' Revised Proforma Statement of Financial Position as at 30 June 2004.
• $1.2.$ This report is supplementary to the Investigating Accountant's Report that we prepared dated 16 November 2004, and which was included in the Prospectus issued by the Company on 19 November 2004 and the Replacement Prospectus issued by the Company on 9 December 2004, inviting participation in the issue by the Company of 17,500,000 new shares at 20 cents per share to raise \$3,500,000 ("the Replacement Prospectus"), with a right for the Company to accept oversubscriptions up to a further \$2,500,000.

2. Basis of Preparation

'Llability is limited by the Accountants' Scheme pursuant to the NSW Professional Standards Act 1994"

RSM Blrd Cameron Corporate Pty Ltd ABN 32 050 508 024 Licensed Investment Adviser No 255847

Major Offices In: Parth, Sydney, Melbourne, Adelaide and Canberra

RSM Bird Cameron Corporate Pty Ltd is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms.

• $2.1.$ This report has been prepared solely for the purpose set out in Section 1.1 above.
• $2.2.$ The financial information included in this report was extracted from the audited financial statements of Australis for the period from 6 April 2004 to 30 June 2004.

$3.$ Scope of Examination

• You have requested that RSM Bird Carneron Corporate Pty Ltd review the Revised $3.1.$ Proforma Statement of Financial Position of the Company and its controlled entities ("Economic Entity") as at 30 June 2004,
• The Revised Proforma Statement of Financial Position of the Economic Entity as at $3.2.$ 30 June 2004 was prepared by the Directors of Australis.
• 3.3. Our review was conducted in accordance with Australian Auditing and Assurance Standard AUS 902 "Review of Financial Reports". We made such enquiries and performed such procedures as we, in our professional judgment, considered reasonable in the circumstances, including:
• a review of work papers, accounting records and other documents;
• a review of proforma transactions made to audited historical financial $\bullet$ information; and
• enquiry of directors, management and others. $\bullet$
• $3.4.$ The procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

$\overline{4}$ Subsequent Events

To the best of our knowledge and belief, there have been no material items, $4.1.$ transactions or events outside the ordinary course of the Economic Entity's business subsequent to 30 June 2004 that are not otherwise disclosed in the Replacement Prospectus, which require further comment or adjustment to this report, or which would cause the information in this report to be misleading.

$S_{\bullet}$ Opinion

5.1. In our opinion, based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the financial information set out in the Appendix to this report does not present fairly the Revised Proforma Statement of Financial Position of Australis and its controlled entities at 30 June 2004 adjusted to include funds raised pursuant to the Replacement Prospectus.

6. Declaration

• RSMBC is licensed as an Australian Financial Services Licensee pursuant to Section $6.1.$ 913B of the Corporations Act 2001 and is beneficially owned by the directors of RSM Bird Cameron, a large national firm of chartered accountants.
• $6.2.$ Mr A J Gilmour CA is a director and authorised representative of RSMBC, a director of RSM Bird Cameron and a partner in RSM Bird Cameron Partners. He has professional qualifications and experience appropriate to the advice offered.

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RSMBC does not have any interest in the outcome of this issue, other than in $6,3.$ connection with the preparation of this report, the Investigating Accountant's Report and the report entitled Independent Review of Directors' Forecast Financial Information and participation in due diligence procedures for which normal professional fees will be received. RSM Bird Cameron Partners is the auditor of Australis and from time to time, RSM Bird Cameron also provides Australis with certain other professional services for which normal professional fees are received.

Yours faithfully

Andy Coilmons

A J GILMOUR Director and Authorised Representative

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APPENDIX

Australis Mining Corporation Limited
Statement of Financial Position

	Notes	Economic Entity Actual Audited	Economic Entity Proforma Reviewed	Economic Entity Revised Proforma Reviewed
		As at 30 June 04	As at 30 June 04	As at 30 June 04
CURRENT ASSETS		\$	\$	T
Cash assets
Receivables	2	323,250	1,711,834	1,820,606
Other		456	456	456
TOTAL CURRENT ASSETS		118,662
		442,368	1,712,290	1,821,062
NON-CURRENT ASSETS
Property, plant & equipment	3	3,532,165	3,821,507	3,821,507
Development expenditure	4	11,958,779	11,958,779	11,958,779
TOTAL NON-CURRENT ASSETS		15,490,944	15,780,286	15,780,286
TOTAL ASSETS		15,933,312	17,492,576	17,601,348
CURRENT LIABILITIES
Bank overdraft		1,601
Payables	5	1,558,226	582,573	501,974
Interest bearing liabilities	6	701,776
TOTAL CURRENT LIABILITIES		\$2,261,603	582,573	501,974
NON-CURRENT LIABILITIES
Payables	5	2,761,747	2,761,747
TOTAL NON-CURRENT				2,676,078
LIABILITIES		\$2,761,747	2,761,747	2,676,078
TOTAL LIABILITIES		5,023,350	3,344,320	3,178,052
NET ASSETS		10,909,962	14,148,256	14,423,296
EQUITY
Contributed equity	7	11,295,000	15,328,103	15,604,040
Accumulated losses	8	(385,038)	(1, 179, 847)	(1, 180, 744)
TOTAL EQUITY		10,909,962	14,148,256	14,423,296

The above Statements of Financial Position should be read in conjunction with the accompanying notes.

Note 1: Summary of Significant Accounting Policies

a. Basis of Accounting

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The audited Statements of Financial Performance and Financial Position have been prepared in accordance with applicable accounting standards, Corporations Act and mandatory professional reporting requirements and we have made such disclosures as considered necessary. They have also been prepared on the basis of historic cost and do not take into account changing money values. The accounting policies have been consistently applied, unless otherwise stated.

b. Principles of consolidation

A controlled entity is any entity controlled by Australis Mining Corporation Limited. Control exists where Australis Mining Corporation Limited has the capacity to dominate the decision-making in relation to the financial and operating policies of another entity so that the other entity operates with Australis Mining Corporation Limited to achieve the objectives of Australis Mining Corporation Limited.

All inter-company balances and transactions between entities in the economic entity, including any unrealised profits or losses, have been eliminated on consolidation.

Where a controlled entity has entered or left the economic entity during the year its operating results have been included from the date control was obtained or until the date control ceased.

e. Income Tax

The company adopts the liability method of tax effect accounting whereby the income tax expense is based on the operating profit adjusted for any permanent differences.

Timing differences, which arise due to the different accounting periods in which items of revenue and expense are included in the determination of accounting profit and taxable income, are brought to account as either a provision for deferred income tax or as a future income tax benefit at the rate of income tax applicable to the period in which the benefit will be received or the liability will become payable.

Future income tax benefits are not brought to account unless realization of the asset is assured beyond any reasonable doubt. Future income tax benefits in relation to tax losses are not brought to account unless there is virtual certainty of realization of the benefit.

The amount of benefits brought to account or which may be realized in the future is based on the assumption that no adverse change will occur in income taxation legislation, and the anticipation that the company will derive sufficient future assessable income to enable the benefit to be realized and comply with the conditions of deductibility imposed by the law.

d. Accounts Payable

Accounts payable represent the principal amounts outstanding at balance date, plus where applicable, any accrued interest.

Recoverable amount of non-current assets e.,

The carrying amount of non-current assets are reviewed annually by Directors to ensure they are not in excess of the recoverable amounts from those assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employed and subsequent disposal.

Note 1: Summary of Significant Accounting Policies (Cont.)

f. Property, plant and equipment

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation.

Property

Freehold land and buildings are measured on the fair value basis, being the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction. It is the policy of the economic entity to have an independent valuation every three years, with annual appraisals being made by the directors.

Plant and equipment and mining lease

Plant and equipment and mining lease are measured on the fair value basis, except for office equipment which is measured on the cost basis.

The carrying amount of plant and equipment and mining lease is reviewed annually by directors to ensure it is not in excess of the recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to present values in determining the recoverable amount based on the prevailing industry weighted cost of capital. An annual appraisal of the fair value will be made by the directors.

Revaluation

Increments arising from the valuation of non-current assets have been taken to Asset Revaluation Reserve. Decrements have been offset against previous increments relating to the same class of assets and the balance taken to the Statement of Financial Performance.

Depreciation

The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land, are depreciated on a straight line basis over their useful lives to the company commencing from the time the asset is held ready for use. Properties held for investment purposes are not subject to a depreciation charge. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

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

Class of fixed asset	Depreciation rate
Buildings	25%
Plant and equipment	15% - 40%
Mining lease	20%

Note 1: Summary of Significant Accounting Policies (Cont.)

g. Exploration, evaluation and development expenditure

Exploration, evaluation and development expenditure, including costs of acquisition in relation to separate areas of interest for which rights of tenure are current, are brought to account in the year in which they are incurred and are carried at cost or valuation.

Exploration and development expenditure will be carried forward as an asset in the Statement of Financial Position where:

• it is expected that the expenditure will be recovered through the successful development and $\bullet$ exploitation of an area if interest or by its sale; or
• exploration activities are continuing in an area and activities have not reached a stage which permits a reasonable estimate of the existence or otherwise of economically recoverable reserves.

Where an area or project of interest has been abandoned, the expenditure incurred thereon is written off in the year in which the decision is made.

Where a decision has been made to proceed with development, accumulated expenditure is amortised over the life of the associated resource once mining operations commence.

	Economic Entity Audited	Economic Entity Proforma	Economic Entity Revised Proforma
		Period ended Period ended Period ended
		30 June 2004 30 June 2004 30 June 2004
Note 2: Cash
Balance 30 June	\$323,250	\$323,250	\$323,250
Pre-IPO transactions
Shares issued		\$1,275,000	\$1,275,000
Advance from related party			1,000,000
Repayment of JMO shareholder loan		(\$101, 150)	(\$186, 819)
Settlement of asset acquisition from QSM		$(\$205,000)$	(\$205,000)
Repayment of overdraft		(S1,601)	(S1,601)
IPO expenses paid		(578, 235)	$(*478,709)$
Operating expenses		$(\$754,308)$	(S754,308)
Capital expenditure		(\$289,342)	(\$289,342)
IPO transactions
New Shares issued		\$3,500,000	\$3,997,221
Payment of JMO creditors		(\$469,505)	$(\$550,104)$
Repayment of JMO shareholder loan		$(\$200,000)$	$(\$200,000)$
Repayment of interest bearing loans		$(\$742,275)$	(S743, 174)
Payment of outstanding IPO expenses		(\$545,000)	(\$365,808)
Repayment of loan to related party			(1,000,000)
	\$323,250	\$1,711,834	\$1,820,606

4.MAR.2005

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Notes to and forming part of the Financial Statements as at 30 June 2004.

	Economic Entity Audited	Economic Entity Proforma	Economic Entity Revised Proforma
		Period ended Period ended Period ended
		30 June 2 004 30 Jun e 20 04 30 June 2004
Note 3: Property, Plant & Equipment
Land & buildings
$-$ at cost	\$238,400	\$238,400	\$238,400
Less accumulated depreciation	( \$5,749)	(55,749)	(\$5,749)
Total land & buildings	\$232,651	\$232,651	\$232,651
Plant & equipment
- independent valuation 2004	\$904,203	\$904,203	\$904,203
- at cost	\$2,574,725	\$2,574,725	\$2,574,725
- at $cost - pre-PO$ acquisitions		\$289,342	\$289,342
Less accumulated depreciation	(\$179,414)	(\$179, 414)	(\$179,414)
Total plant & equipment The carrying value of plant & equipment has been revalued based on a valuation prepared by an independent valuer dated 22 July 2004, being a company engaged in the manufacture and sale of similar processing equipment as that used by JMO and experienced in the equipment used by JMO.	\$3,299,514	\$3,588,856	\$3,588,856
Total Property Plant & Equipment	\$3,532,165	\$3,821,507	\$3,821,507
Note 4: Development Expenditure
- directors valuation 2004	\$11,746,439	\$11,746,439	\$11,746,439
- at cost	\$212,340	\$212,340	\$212,340
	\$11,958,779	\$11,958,779	\$11.958,779

The carrying value of development expenditure has been revalued based on a detailed forecast and valuation model prepared by the company. In formulating the forecast and valuation model supporting information or reviews were provided by:

• the information contained in the Independent Geologist Report prepared by BR Senior & $\sim$ Associates Pty Limited contained in Section 6;
• the conclusions of a further report prepared by BR Senior & Associates Pty Limited date 20 $\blacksquare$ August 2004 that reviewed historic selling prices; and
• a review of the proposed mining and operation and costs estimates by Behre Dolbear Australia, $\frac{1}{2}$ provided in a report dated 20 August 2004.

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Notes to and forming part of the Financial Statements as at 30 June 2004.

	Economic Entity Audited	Economic Entity Proforma	Economic Entity Revised Proforma
	Period ended 30 June 2004		Period ended Period ended 30 June 2004 30 June 2004
Note 5: Payables
Trade creditors & accruals	\$807,282	\$133,777	\$52,643
JMO shareholder loan (1)	\$3,062,897	\$2,761,747	\$2,676,078
Due to director (2)	\$111,615	\$111,615	\$111,615
Due to director related entity (3)	\$338,181	\$338,181	\$338,181
Total	\$4,319,975	\$3,344,320	\$3,178,052
Shown as:
Current	\$1,558,228	\$582,573	\$501,974
Non-current	\$2,761,747	\$2,761,747	\$2,676,078
	\$4,319,975	\$3,344,320	\$3,178,052
Movement in payables consists of:
Balance 30 June	\$4,319,975	\$4,319,975	\$4,319,975
Pre-IPO transactions
Settlement of asset acquisition from QSM		$(*205,000)$	(\$205,000)
Repayment of JMO shareholder loan from pre-IPO funds IPO transactions		(\$101, 150)	(\$186, 819)
Payment of accounts payable		(\$469,505)	(\$550,104)
Repayment of JMO shareholder loan from IPO funds		$(*200,000)$	(\$200,000)
	\$4,319,975	\$3,344,320	\$3,178,052
(1) The loan is unsecured and interest free until 12 months after the proposed listing of the Company. Since 30 June 2004 an amount of \$186,819 has been repaid and a further \$200,000 is due upon the proposed listing of the company. The loan was incurred by a controlled entity.
(2) Unpaid wages and expenses owed to Mr Anthony Damianos by a controlled entity. The amount is paid after the proposed listing of the Company from the operating cash flows of the Company. (3) Legal fees are payable to Tzovaras legal for
work completed for a controlled entity prior to its acquisition.

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Notes to and forming part of the Financial Statements as at 30 June 2004.

	Economic Entity Audited	Economic Entity Proforma	Economic Entity Revised Proforma
		Period ended Period ended Period ended 30 June 2004 30 June 2004	30 June 2004
Note 6: Interest Bearing Liabilities
Secured loans	\$701,776	\$-	\$-
Movement in interest bearing liabilities consists of:
Balance 30 June	\$701,776	\$701,776	\$701,776
Capitalised interest		\$40,499	\$41,398
Repayment of loan		(S742, 275)	(5743, 174)
	\$701,776	\$-	\$-
The loan is secured by a registered first mortgage over the freehold properties held by related parties, a fixed and floating charge over a controlled entity's assets and guarantees by related parties. Interest is charged at 12% pa. The loan is repayable in full 3 months after the company becomes listed on the ASX.
The carrying amounts of non-current assets pledged as security:
First mortgage Freehold land and buildings	\$232,651	\$-
Floating charge	\$15,258,293	\$-	\$- \$-
Total assets pledged as security	15,490,944	\$-	\$-
Note 7: Contributed Equity
a) Ordinary fully paid shares – number of shares issued At the beginning of the reporting period	# of shares	# of shares	# of shares
50,000,000 for acquisition of shares in JMO	50,000,000	50,000,000	50,000,000
12,950,000 shares issued @ 10 cents each	12,950,000	12,950,000	12,950,000
12,750,000 shares issued $@$ 10 cents each		12,750,000	12,750,000
17,500,000 IPO shares @ 20 cents each		17,500,000	17,500,000
2,486,105 IPO shares @ 20 cents each			2,486,105
	62,950,000	93,200,000	95,686,105
b) Ordinary fully paid shares - value of shares issued At the beginning of the reporting period
50,000,000 for acquisition of shares in JMO	\$10,000,000	\$10,000,000	\$10,000,000
12,950,000 shares issued @ 10 cents each	\$1,295,000	\$1,295,000	\$1,295,000
12,750,000 pre-IPO shares @ 10 cents each		\$1,275,000	\$1,275,000
17,500,000 IPO shares @ 20 cents each		\$3,500,000	\$3,500,000
2,486,105 IPO shares @ 20 cents each			497,221
Less issue costs	\$11,295,000	\$16,070,000 (5741, 897)	\$16,567,221 (\$963,181)
	\$11,295,000	\$15,328,103	\$15,604,040

	Economic Entity Audited	Economic Entity Proforma	Economic Entity Revised
Note 7: Contributed Equity (Cont.)	Period ended Period ended 30 June 2004	30 June 2004	Proforma Period ended 30 June 2004
c) Options	# of options	# of options	# of options
Options on issue at 30 June 2004	12,950,000	12,950,000	12,950,000
12,750,000 exercisable at 20 cents issued with pre- IPO shares, expiry 31 December 2006		12,750,000	12,750,000
8,750,000 exercisable at 20 cents issued with IPO shares, expiry 31 December 2006		8,750,000	8,750,000
1,243,053 exercisable at 20 cents issued with IPO shares, expiry 31 December 2006			1,243,053
	12,950,000	34,450,000	35,693,053
Note 8: Accumulated Losses
Movements in accumulated losses consist of:
Balance 30 June 2004	(5385,038)	$($ \$385,038 $)$	( \$385,038)
Operating costs		$(*754,308)$	(\$754,308)
Interest on debt capitalised		(\$40,501)	( \$41,398)
	(\$385,038)	(\$1,179,847)	(\$1,180,744)

Note 9: Revised Pro Forma Transactions

The Revised Proforma Statement of Financial Position has been prepared as at 30 June 2004 and reflects the following adjustments. Certain pre-IPO adjustments have been included so that IPO transactions can be properly reflected.

Pre-IPO transactions

• a. Issue of 12,750,000 ordinary fully paid shares at 10 cents pre-IPO to raise \$1,275,000
• b. Repayment of the JMO shareholder loan of \$186,819
• c. Settlement of asset acquisition from QSM by payment of \$205,000
• d. IPO expenses paid pre-IPO of \$478,709
• e. Expenses of share issue of \$118,662 accounted for as a prepayment at 30 June 2004 have been written off against share capital
• f. Operating expenses incurred of \$754,308 and interest capitalised of \$41,398, total \$795,706
• g. Capital expenditure of \$289,342
• h. Advance of and repayment of a loan of \$1,000,000 from a related party IPO transactions
• a. Issue of 19,986,105 ordinary fully paid shares at 20 cents each pursuant to the Prospectus to raise \$3,997,221
• b. The payment of outstanding expenses of the public issue totalling an estimated \$365,808
• c. Repayment of the JMO shareholder loan of \$200,000
• d. Payment of JMO creditors of \$550,104
• e. Repayment of interest bearing loans of \$743,174

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	Economic Entity Audited	Economic Entity Proforma	Economic Entity Revised
	30 June 2004	Period ended Period ended Period ended 30 June 2004	Proforma 30 June 2004
Note 10: Contingent Liabilities Bank guarantees issued by a bank secured over assets of Junior Mining (Operations) Pty Ltd. The guarantees were issued to the Queensland Department of Mines to secure rectification work required on leases held by the economic entity.	\$54.180	\$54,180	\$54,180
Bank guarantees not yet issued for mining activities in

respect of the Nardoo leases are estimated to be $$28,000.$

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Australis Mining Corporation Limited & Controlled Entities
Statements of Financial Position

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		Notes	Australis Actual Audited	Australis Froforma Reviewed	Australia Updated Proforma Not reviewed As at 30 June 04 As at 30 June 04 As at 30 June 04
			S.	ŝ.	串
s v	CURRENT ASSETS
	Cash assets	2	\$323,250	\$1,711,634	\$1,135,222
	Other		\$118.662	60	\$27,530
	Receivables		8456	3456	80.
	TOTAL CURRENT ASSETS		\$442.368	81,712,290	\$1,162,752
	NON-CURRENT ABSETS
	Property, plant & equipment	3	\$5,532,165	#3,821,507	\$4,192,939
	Development expenditure	4	\$11.958.779	\$11,958,779	\$12,123,195
	TOTAL NON-CURRENT ASSETS		515,490,944	\$15,780,286	\$16,316,134
	TOTAL ASSETS		815.933.312	617.492,576	S17,478,886
	CURRENT LIABILITIES
	Bank overdraft		61.601	SO.	\$0
	Payables	5	\$1,558,226	6582.573	8868.958
	Interest bearing liabilities	6	3701.776	30	\$56,931
	TOTAL CURRENT LIABILITIES		\$2,361,603	3582,573	\$925,889
	NON-CURRENT LIABILITIES
	Payables	5	\$2,761,747	\$2,761.747	\$2,676,078
	Interest bearing liabilities	6	\$0	80	\$142,024
	TOTAL NON-CURRENT LIABILITIES		32,761,747	\$2,761.747	\$2,818,102
	TOTAL LIABILITIES		55,023,350	\$5.344.320	\$3.743.991
	NET ABSETS		\$10,909,962	814,148,256	\$13,734,895
	EQUIT
	Contributed equity	7	811,295,000	\$15,328,103	\$15,604,040
	Retained profits/(losses)	8	(\$385,038)	(61,179,847)	(\$1,869,145]
	TOTAL EQUITY		\$10,909,962	614,148,256	\$13,734,895
			\$0	50	80

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Australis Mining Corporation Limited & Controlled Entities Notes to Statement of Financial Position

	Australia Actual Audited Period ending 30 June 2004	Australia Proforms Reviewed Period ending 50 June 2004	Australis Updated prof orm a Not reviewed Period ending 30 June 2004
NOTE 2: CASH
Balance 30 June	6323.250	8323,250	6323,250
Pre-IPO transactions
Shares Issued pre-IPO		\$1,275,000	\$1,275,000
Advance of Nikiti Corporation loan		30	\$1,000.000
Repayment of JMO shareholder loan from pre-IPO funds		(\$101.150)	(\$186,819)
Settlement of asset acquisition from QSM		(\$205,000)	(\$205,000)
Repayment of overdraft		(\$1,601)	(31.601)
IPO expenses paid pre-IPO		(878, 235)	(\$506.171)
Operating costs		(3754, 300)	(81, 265, 998)
Capital expenditure - plant		(\$289.342)	(\$373.117)
Capital expenditure - mine development		BО	(F44, 412)
Lease repayments		\$0	(\$10.045)
IPO transactions
Shares issued pursuant to IPO		\$3,500,000	83.997.221
Payment of JMO creditors		(6469, 505)	(\$550,104)
Repayment of JMO shareholder loan		(\$200,000)	(\$200,000)
Payment of interest bearing loans		(5742.275)	(\$743,174)
IPO expenses paid from IPO funds		(8545,000)	(\$365,808)
Repayment of Nikiti Corporation loan			(\$1,000,000)
	\$325.250	\$1,711,834	\$1.185.222
NOTE 3: PROPERTY, PLANT & EQUIPMENT
Land & buildings
- at cost	\$238,400	\$238.400	\$238,400
- at cost			\$4,545
Less accumulated depreciation	(\$5.719)	(\$5,749)	(95, 749)
Less accumulated depreciation			(3849)
Total land & buildings	\$232.651	\$232,651	8236,547

Land & buildings held by the economic entity are utilised as part of the mining operations located at Emerald, Queensland, The properties were valued by an independent valuer in January 2002 at their cost of acquisition. The directors believe that the current market value of these properties is in-excess of the carrying value.

Plant & equipment
- independent valuation 2004	8904.203	\$904.203	\$904,203
- at cost	\$2,574,725	82,574,725	\$2,574,725
- at cost		\$289,342	\$289.342
- at cost			\$169,725
- at cost (acquisitions paid via leage)			8217,000
Less accumulated depreciation	(5179.414)	(179.414)	(3179.414)
Less accumulated depreciation			(818,989)
	\$3,299,514	\$3.588,856	\$3,956,592
	\$3,532,165	\$3,621,507	\$4,192,939
NOTE 4: DEVELOPMENT EXPENDITURE
- directors valuation 2004	\$11,746,439	\$11,746,439	\$11,746,439
- at cost	\$212.340	\$212,340	\$212.340
- at cost			\$164,416
Less accumulated depreciation	80	80	-60
	\$11,958,779	\$11,958.779	S12,128.195

Australis Mining Corporation Limited & Controlled Entities Notes to Statement of Financial Position

	Australia Actual Audited Period ending 30 June 2004	Anatralis Proforma Reviewed Period ending 30 June 2004	Australia Updated proforma Not reviewed Period ending 30 June 2004
NOTE 5: PAYABLES
Trade creditors & accruals	\$907,747	\$133.242	\$419,627
JMO shareholder loan (1)	\$3.062,897	\$2,761,747	\$2,676,078
Due to director $(2)$	\$111,150	\$111,150	0111,150
Due to director related antity (3)	\$338.181	\$338.181	\$338.181
Total	84.319.975	\$3,344,520	\$3,545,096
Shown in the accounts as:
Current	\$1,559,228	\$582,573	\$669,958
Non-current	\$2,761,747	82,761,747	\$2,676,078
	\$4,319,975	\$3,344,320	\$5.545.036
Movement in payables consists of:
Balance 30 June	\$4,319,975	\$4,319,675	\$4,319,975
Net change in creditors			\$366,984
Payment of accounts payable		(8469, 505)	(\$550,104)
Settlement of asset acquisition from QSM		(\$205,000)	(\$205,000)
Repayment of JMO shareholder loan from pre-IPO funde		(8101.150)	(\$186,819)
Repayment of JMO shareholder loan from IPO junds		(\$200,000)	(\$200,000)
Payment of IPO costs
	\$4,319,975	53.344.320	\$3,545,036

(1) The loan is unsecured and interest free until 12 months expansion and an interest material and the company. Since 30 June 2004
after a proposed listing of the company. Since 30 June 2004
an amount of \$186.819 has been repadd and a further
\$200.000 is due upon the proposed listi

listing of the company, at date to be mutually agreed. The loan arose from unpaid wages and expenses paid on behalf of a controlled entity.

(3) The fees are payable to Tzovaras Legal after the proposed listing of the company, at date to be mutually agreed. The fees were incurred by a controlled entity.

NOTE 6: INTEREST BEARING LIABILITIES - RESI

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Secured loans	\$701,776	SO.	80
Movement in interest bearing liabilities consists of:
Balance 30 June	\$701,776	\$701,776	\$701,776
Capitalised interest		\$40,499	841,398
Repayment of loan		$(*742.275)$	(\$743,174)
	\$701,776	80	30
NOTE 7: INTEREST BEARING LIABILITIES - LEASE FACILITIES
Secured loans	\$O	80.	\$198,955
Movement in interest bearing liabilities consists of:
Balance 30 June	80	50	80
Lease finance		80	\$217,000
Repayments		(879.056)	(918.045)
	80	(879,056)	3196.955
NOTE 7: ADVANCE BY PARENT ENTITY
Unsecured Loan by Nikiti Corporation Sdn Bhd	\$0	80	50
Movement in interest bearing liabilities consists of;
Balance 30 June	80	80	-50
Advances	60	80	\$1,000,000
Repayment of Ioan	80	60	(81,000,000)
	80	80	70

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Australis Mining Corporation Limited & Controlled Entities Notes to Statement of Financial Position

	فللفتاعتنف Actual Audited Period ending	Australis Proforma Raviawed Period ending	Anstruks Updated proforma Not reviewed Period ending
NOTE 8: CONTRIBUTED EQUITY	30 June 2004	30 June 2004	30 June 2004
a) Ordinary fully paid shares - number of shares issued At the beginning of the reporting period	Folshares	e of shares	f of phares
50,000.000 for acquisition of shares in JMO	50.000,000	50,000,000	50,000.000
12,950,000 shares issued @ 10 cents each	12,950,000	12,950,000	12,950,000
12,750,000 pre-IPO shares @ 10 cents each		12,750,000	12,750,000
17.5000.000 IPO shares @ 20 cents each		17,500,000	19,986 105
	62,950,000	93,200,000	95.686.105
b) Ordinary fully paid shares - value of shares issued
At the beginning of the reporting period	80	80	80
50,000,000 for acquisition of shares in JMO	\$10,000,000	\$10,000,000	\$10,000,000
12,950,000 shares issued @ 10 cents each	\$1,295,000	\$1,295,000	81,295,000
12,750,000 pre-IPO shares @ 10 cents each		\$1,275,000	\$1,275.000
17.5000.000 IPO shares @ 20 cents each	\$11,295,000	\$3,500,000 \$16,070,000	83,997,221 \$16,567.221
Less issue costs	ßΟ	(8741,897)	(3963, 181)
	811.295.000	815,326,103	615.604.040
In the event that the maximum over subscriptions of \$2,500,000 were achieved, the contributed equity would be \$19,328,103 and there would be 113,200,000 shares on tesue.
b Options	# of options	# of options	# of options
Options on issue at 30/6/04	12,950,000	12,950,000	12,950.000
25,700,000 exercisable at 20 cents issued with pre-IPO sharea, expiry 31/12/06		12,750,000	12,750,000
8.750.000 exercisable at 20 cents issued with IPO shares. expary 31/12/06		8.750.000	9,993,053
	12,950,000	34,450,000	35,693,053
NOTE 9: RETAINED EARNINGS
Balance 30 June	(\$365.033)	(\$385,038)	(2395.033)
Operating costs		(5754, 305)	(\$1,431,247)
Capitalised interest		(\$40,499)	(\$52,860)
	(5385,036)	(81, 179, 845)	151.869.1451
NOTE 10: PRO-FORMA TRANSACTIONS The pro-forma Statement of Financial Position reflects the following adjustments. Certain pre-IPO adjustments have been included so as IPO transactions can be
Pre-IPO transactions: a. The issue of 12,750,000 ordinary fully paid shares at 10 cents pre-IPO to raise	61,275,000
b. Repayment of the JMO shareholder of loan of \$186,819 c. Settlement of asset acquisition from GSM by payment of	\$206,000
d IPO expenses paid pre-IPO of e Operating expenses incurred of	8506 171 81,265,998
Capital expenditure of τ.	8417.529
g Lease repayments	818045
IPO transactions: a. The issue of 19,986,105 ordinary fully paid shares at 20 cents each pursuant to the Prospectus to raise \$3,997,221
b. The payment of outstanding expenses of the public issue totaling an estimated	8965.806
c. Repayment of the JMO shareholder of loan of	\$200.000
d. Payment of JMO creditors of	\$550,104
e. Repayment of interest bearing loans of	\$743.174

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Australis Mining Corporation Limited & Controlled Entities Notes to Statement of Financial Position

	Australis Actual Audited Period ending 30 June 2004	Australie Proforma Reviewed Period ending 30 June 2004	Australie Updated proforma Not reviewed Period ending 30 June 2004
NOTE 10: CONTINGENT LIABILITIES
Bank guarantees issued by a bank secured over assets of Junior Mining (Operations) Fty Limited. The guarantees were issued to the Queensland Department of Mines to secure rectification work require on leases held by the economic eauty.	\$54.180	\$54,180	648.000

Bank guarantees not yet issued for mining activities in respect of the Nardoo leases are estimated to be \$28,000

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