COMPLII FINTECH SOLUTIONS LTD — Annual Report 2012

Sep 27, 2012

RESOURCE STAR LIMITED ABN 71 098 238 585

ANNUAL FINANCIAL REPORT 30 June 2012

CONTENTS

	Page
CORPORATE INFORMATION	1
DIRECTORS’ REPORT	2
AUDITOR’S INDEPENDENCE DECLARATION	12
CORPORATE GOVERNANCE STATEMENT	13
STATEMENT OF COMPREHENSIVE INCOME	24
STATEMENT OF FINANCIAL POSITION	25
STATEMENT OF CASH FLOWS	26
STATEMENT OF CHANGES IN EQUITY	27
NOTES TO THE FINANCIAL STATEMENTS	28
DIRECTORS’ DECLARATION	54
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RESOURCE STAR LIMITED	55
ASX ADDITIONAL INFORMATION	57

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

DIRECTORS’ REPORT

DIRECTORS

Mr A Bell (Chairman) Mr R Kestel Mr R Benussi Mr S Heggen

REGISTERED OFFICE

Level 2 Spectrum, 100 Railway Road Subiaco WA 6008

PRINCIPAL PLACE OF BUSINESS

Level 9, 440 Collins Street Melbourne VIC 3000

COMPANY SECRETARY

Ms E Kestel

AUDITORS

HLB Mann Judd (Vic Partnership) Level 1, 160 Queen Street Melbourne VIC 3000

SOLICITORS

Steinepreis Paganin Level 4 The Read Buildings 16 Milligan Street Perth WA 6000

SHARE REGISTRY

Computershare Investor Services Pty Limited Level 2, 45 St Georges Terrace Perth WA 6000

INTERNET ADDRESS

www.resourcestar.com.au

ASX CODES

Shares RSL

COUNTRY OF INCORPORATION AND DOMICILE Australia

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

1

DIRECTORS’ REPORT

Your directors submit the annual financial report together with the consolidated financial statements of Resource Star Limited (“the Company”) which include the financial statements of the Group. The Group comprises the Company and the entities it controlled during the year ended and as at 30 June 2012. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

Directors

The names of directors who held office during or since the end of the year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

Names, qualifications, experience and special responsibilities

A Bell , MA, LLB (Non-Executive Chairman)

Mr Bell was appointed director and chairman on 6 August 2007. Mr Bell is a former Mining Analyst, Fund Manager, and Investment Banker and is Chairman of Regency Mines plc and of Red Rock Resources plc, both companies listed on the AIM market of the London Stock Exchange.

Mr Bell was the Company’s acting Chief Executive Officer from 5 July 2010 to the appointment of Mr S Heggen as Chief Executive Officer on 1 May 2011.

Mr Bell is currently a non-executive director of the following ASX listed companies:

• Jupiter Mines Limited – May 2008 to current

During the past three years he has not served as a director of any other ASX listed companies.

R Kestel , B.Bus, CA, AICD (Non-Executive Director)

Mr Kestel was appointed director on 15 August 2006. Mr Kestel is a Chartered Accountant and was a director of a mid tier accounting practice for over 25 years and has a strong corporate and finance background.

He has acted as a director and company secretary of a number of public companies involved in mineral exploration, mining, mine services, property development, manufacturing and technology industries.

Mr Kestel is currently a non-executive director of the following ASX listed companies:

• Xstate Resources Limited – September 2006 to current

• Regis Resources Limited – July 2009 to current

• Equator Resources Limited – June 2011 to current

• Beadall Resources Limited – February 2012 to current

During the past three years he has also served as a non-executive director of the following ASX listed companies:

• VDM Group Limited - August 2005 to March 2011

• Jabiru Metals Limited – August 2003 to May 2011

• Jatenergy Limited – September 2007 to May 2012

• Dioro Exploration Limited – April 2009 to February 2010

Mr Kestel is a member of the Australian Institute of Company Directors.

He is Chairman of the Audit and Risk Management Committee.

R Benussi NIA (Non-Executive Director)

Mr Benussi was appointed director on 9 July 2009. He is the Chief Financial Officer, General Manager, Corporate and Company Secretary of Jupiter Mines Limited.

Mr Benussi holds a Diploma from the Institute of Public Accountants and remains a Member of the Institute. He has an extensive background in finance, stockbroking, corporate advisory and business development with companies such as Olin Corporation, Lend Lease, Dalgety and Lion Nathan.

Mr Benussi is currently a non-executive director of the following ASX listed companies:

• Bligh Resources Limited – June 2011 to current

During the past three years he has not served as a director of any other ASX listed companies.

He is a member of the Audit and Risk Management Committee.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

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DIRECTORS’ REPORT (continued)

S Heggen BEc. LLB ( Managing Director / Chief Executive Officer)

Mr Heggen was appointed as Chief Executive Officer on 1 May 2011 and has over 25 years of experience in corporate development, investment banking, and strategic planning, with almost half of his career in the resources sector. He has worked with some of Australia’s highest profile companies and individuals at managerial and Board level including: Boral, WMC Resources, Wesfarmers, Schroders Australia and members of the Smorgon Family.

During his career, Mr Heggen has led and managed transactions and projects in Australia, North and South America, Asia and southern Africa. He maintains an extensive network of contacts at senior levels in the resources, industrial and banking sectors.

Between 1995 and 2005, Mr Heggen was Group Manager Business Development at WMC Resources, the publicly-listed (formerly ASX: WMR) resources company that was acquired by BHP Billiton. In this role his responsibilities included corporate acquisitions and divestments, capital investment projects and strategic business development.

More recently, Mr Heggen has been the Director of a private corporate advisory company for which he most relevantly provided strategic advice to Lion Selection Group in relation to its agreed A$100 million merger with Catalpa Resources.

As a Director of Austock Corporate Finance from late 2007-2009, Mr. Heggen focused on equity capital market transactions and M & A transactions in the resources sector. Prior to this he was General Manager, Business Development & Strategic Planning for the Cement Division of Boral in Sydney.

During the past three years he has not served as a director of any other ASX listed companies.

C Geach B.Sc (Hons) (Non-Executive Director)

Mr Geach was appointed director on 22 April 2010 and resigned on 30 November 2011. Mr Geach has a Bachelor of Science (Hons-Geology), is currently a member of the Australian Institute of Geoscientists and formerly a Licentiate of Royal Society of Chemistry, past Fellow of the Geological Society and past Member of the AusIMM.

Company secretary

E Kestel , B.Bus, CPA

Ms Kestel was appointed company secretary on 3 November 2008. She has been a Certified Practising Accountant for over 15 years.

Ms Kestel is not an executive of the Company.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

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DIRECTORS’ REPORT (continued)

Interest in the shares and options of the company

As at the date of this report, the interests of the directors in the shares and options of the Company were:

A Bell R Kestel R Benussi S Heggen	Number of Ordinary Shares Number of Options
	45,908,745 11,947,648 Nil Nil 1,000,000 Nil 212,074 3,000,000

• The interest in shares and options displayed for Mr Bell are the shares and options owned by Red Rock Resources plc and Rubicon Nominees Pty Ltd. Mr Bell is a director of Red Rock Resources plc and Rubicon Nominees Pty Ltd.

• The interest in shares displayed for Mr Benussi are the shares owned by Intrepid Concepts Pty Ltd and the Benussi Superannuation Fund. Mr Benussi is a sole director of Intrepid Concepts Pty Ltd and trustee and beneficiary of the Benussi Superannuation Fund.

• The interest in shares displayed for Mr Heggen are the shares owned by the Heggen Family Trust and SDH Superannuation Fund. Mr Heggen is a director and potential beneficiary of the Heggen Family Trust and the trustee and beneficiary of the SDH Superannuation Fund.

Share options

Unissued shares

As at the date of this report, there were 51,514,091 (2011: 48,514,091) unissued ordinary shares under options (51,514,091 2011: 48,514,091) at the reporting date). Details of unissued ordinary shares are:

Unissued ordinary shares under options Listed options exercisable at $0.20 expiring on 30 September 2012 Unlisted incentive options exercisable as follows: �Exercisable at $0.20 and expire 15 July 2012; and �Exercisable at $0.22 and expire 15 July 2012. Unlisted options exercisable at $0.20 expiring 30 September 2012 Unlisted options exercisable as follows: �Exercisable at $0.15 and expire 1 December 2013; �Exercisable at $0.20 and expire 1 December 2013; and �Exercisable at $0.25 and expire 1 December 2013. Total	30 June 2012 Reporting date
	45,964,091 45,964,091 300,000 250,000 300,000 250,000 2,000,000 2,000,000 1,500,000 750,000 750,000 1,500,000 750,000 750,000
	51,514,091 51,514,091

Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body corporate or in the interest issue of any other registered scheme.

There have been no unissued shares or interests under option of any controlled entities within the Group during or since reporting date. For details of options issued to directors and executives as remuneration, refer to the Remuneration Report. No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other body corporate.

Dividends

No dividends have been paid or declared since the start of the year and the directors do not recommend the payment of a dividend in respect of the year ended 30 June 2012 (30 June 2011: $Nil).

Principal activities

The principal activity of the Group during the financial year was to undertake exploration of the Group’s tenements in Australia and Malawi (Africa) and to review various exploration opportunities.

There have been no significant changes in the nature of those activities during the year.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

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DIRECTORS’ REPORT (continued)

Review of operations

Resource Star entered the 2012 financial year with optimism and well considered plans to progress the projects that we control. This was despite the negative influences of the Japanese earthquake and tsunami, and subsequent events at the Fukushima nuclear power plant being fresh in everyone’s mind and the impact on the equity market’s view of uranium producers and explorers being keenly felt.

As the 2011 calendar year progressed a more general uncertainty descended on the global economy and equity markets as a consequence of the continued anaemic rate of growth in the US economy and the debt related economic recession that enveloped Europe. In the first half of calendar 2012 the negative sentiments, particularly in the Resources market, were compounded by the slowing growth of the Chinese economy and the consequent decline in bulk mining commodity and base metals prices.

These events prompted Resource Star to reduce expenditure levels prudently where necessary and to conserve cash to the extent possible while preserving value for shareholders. This has necessarily meant that exploration activity has been curtailed. It has also meant that some tenements in the Northern Territory have been reduced in size or relinquished.

In the first half of the financial year the uncertainty resulted in Resource Star agreeing not to proceed with the acquisition of a strategic interest in Cue Resources Ltd, a Canadian listed uranium exploration company, from Red Rock Resources plc (“Red Rock”) and Regency Mines plc. The parties agreed that proceeding would not have been in the interests of each company’s shareholders.

Also during the first half of the financial year and early into the second half, Resource Star was able to rely on the on-going financial support of its major shareholder Red Rock. This support ensured that Resource Star was able to subsequently undertake an equity raising at a time and in a manner of its choosing.

In February 2012 Resource Star announced a one for one non-renounceable Entitlement Offer (“the Offer”) to existing Shareholders to raise approximately $1.14 million, before costs. Under the Offer around 42% of the available shares were subscribed for by existing shareholders, Red Rock subscribed for around 32% of the available share pursuant to an Underwriting Agreement and the remaining approximately 26% of the available shares were taken up by an existing Substantial Shareholder pursuant to a Shortfall Placement.

As consequence of the Offer, Red Rock has increased its shareholding in the Company to around 40%.

Resource Star is grateful for the support shown by shareholders for the Offer. The proceeds of the Offer have been used to meet the expenses of the Offer, repay short term funding from Red Rock, and continue exploration work on the Company’s tenements and for working capital purposes.

The expenditure restraint referred to earlier has continued through calendar 2012. Resource Star has continued to work to add and preserve value for shareholders. A transaction was announced in May 2012 to restructure the joint venture arrangements with Globe Metals and Mining Limited in Malawi to effectively swap Resource Star’s remaining 80% interest in Machinga for the 80% interest in Livingstonia that the Company had not yet earned. The parties also agreed to swap royalty interests to retain exposure to the project being divested. During the year the northern boundary of the Livingstonia license was extended. As at 30 June 2012, regulatory approval for the swap remains outstanding and the swap was not reflected in the accounts.

Application has been made to the Malawi authorities to approve the transfer of the relevant licenses and a positive outcome is expected shortly. Discussions have also commenced to have the term of the license extended.

There was limited activity at the Ilomba Hill Rare Earth project in Malawi during the 2012 financial year. However, a limited rock chip sampling programme has been completed in the last couple of months and those samples are awaiting testing.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

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DIRECTORS’ REPORT (continued)

In the first three months of the 2012 financial year, Resource Star obtained permits for a proposed drilling programme at the Spinifex Uranium Project in WA and also was successful in getting the license extended for a further two years. The expenditure restraint implemented by the Company has resulted in reduced activity on this project for the remainder of the financial year.

Over the final three months of the 2012 financial year and into the first quarter of the 2013 financial year, Resource Star has been actively seeking out and reviewing acquisition opportunities. This includes opportunities in Australia and overseas and in commodities other than uranium and rare earths. Discussions continue with respect to some of these opportunities. Shareholders will be kept informed of developments.

Given the likely cost of any acquisition, shareholders would be expected to have the opportunity to approve such a transaction.

Operating results for the year

The statement of comprehensive income shows a net loss attributable to members of $1,426,244 (2011: loss of $1,292,271).

Significant changes in state of affairs

On 1 March 2012, 760,000 Fully Paid Ordinary Shares were released from escrow. These shares had been issued to Red Rock Resources Plc and were placed in a two (2) year holding lock as requested by the ASX at the time of re-listing.

In March 2012 the Company completed a Non-Renounceable Entitlement Issue of 41,928,182 Fully Paid Ordinary Shares at 2 cents per share.

In May 2012 the Company issued 15,000,000 Fully Paid Ordinary Shares at 2 cents per share to Ecometrix Pty Ltd representing shortfall fall funds from the Non-Renounceable Entitlement Issue.

Significant events after the reporting date

There has not been any matter or circumstance that has arisen after the end of the reporting period that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods.

Likely developments and future results

The management team and Board of Directors (“the Board”) of the Company are continuing to review opportunities available to the Company, which includes the exploration of the Group’s existing tenements and assessment of new opportunities.

Any additional information has not been provided since the Directors believe that there may be an unreasonable prejudice to the Company.

Environmental regulation and performance

The Company’s operations are subject to environmental regulations under Commonwealth and State legislation in Australia and Malawi. The Board believes that the Company has adequate systems in place for the management of its environmental requirements and is not aware of any breach of those environmental requirements as they apply to the Group.

Indemnification and insurance of officers and auditors

During the year, the Company paid a premium in respect of a contract insuring the directors of the Company (as named above), the company secretary, Ms E Kestel, and all executive officers of the Company and of any related body corporate against a liability incurred as a director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

The Company has not otherwise, during or since the period, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

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DIRECTORS’ REPORT (continued)

Proceedings on behalf of the Company

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

The Company was not a party to any such proceedings during the year.

Remuneration report (audited)

This report outlines the remuneration arrangements in place for key management personnel of the Company.

The following persons acted as directors during or since the end of the financial year:

Mr A Bell Director (non-executive) – appointed 6 August 2007 Mr R Kestel Director (non-executive) – appointed 15 August 2006 Mr R Benussi Director (non-executive) – appointed 9 July 2009 Mr S Heggen Director (executive) – appointed 1 May 2011 Mr C Geach Director (non-executive) – appointed 22 April 2010, resigned 30 November 2011

The term ‘senior management’ is used in this remuneration report to refer to Mr S Heggen.

The Board believes that the remuneration policy is appropriate and effective in its ability to attract and retain the best senior management to run and manage the Group.

Remuneration philosophy

The performance of the Company depends upon the quality of the directors and executives. The philosophy of the Company in determining remuneration levels is to:

• set competitive remuneration packages to attract and retain high calibre employees;

• ensure that there is transparency in setting of corporate arrangements;

• link executive rewards to shareholders’ value creation; and

• establish appropriate, demanding performance hurdles for variable executive remuneration. Incentives are only paid once pre-determined KPI’s have been met.

The Board of Directors of the Company is responsible for determining and reviewing compensation arrangements for the directors.

The Board of Directors assesses the appropriateness of the nature and amount of remuneration of directors and senior executives on a periodic basis by reference to relevant employment market conditions with an overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team.

Remuneration structure

In accordance with best practice Corporate Governance, the structure of non-executive director and executive remuneration is separate and distinct.

Non-executive director remuneration

The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.

The ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. The latest determination was at the Annual General Meeting held on 28 February 2007 when shareholders approved an aggregate remuneration of $210,000 per year.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

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DIRECTORS’ REPORT (continued)

Remuneration report (audited) (continued)

The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst directors is reviewed annually. The Board considers advice from external advisors as well as the fees paid to non-executive directors of comparable companies when undertaking the annual review process. No external advice was received during the year.

Each director receives a fee for being a director of the Company.

Senior Management and Executives

Remuneration consists of fixed remuneration and variable remuneration (comprising short-term and long-term incentive schemes).

Fixed remuneration

Fixed remuneration is reviewed annually by the Board. The process consists of a review of relevant comparative remuneration in the market and internally and, where appropriate, external advice on policies and practices. The Board has access to external, independent advice where necessary, no such advice was required during the year.

Variable remuneration

The objective of the short term incentive program is to link the achievement of the Company's operational targets with the remuneration received by the executives charged with meeting those targets. The total potential short term incentive available is set at a level so as to provide sufficient incentive to the senior manager to achieve the operational targets and such that the cost to the Company is reasonable in the circumstances.

Mr Heggen’s employment contract contains a performance based clause. The performance clause contains a number of provisions which are linked to the Company achieving growth and profitability.

Employment contracts

Executives

Mr Simon Heggen was appointed Managing Director/Chief Executive Officer on 1 May 2011. His employment contract provides:

• base annual remuneration of $225,000 exclusive of superannuation;

• granting of options which was approved by the Company’s shareholders in November 2011;

• termination of the employment contract by either party by giving three months notice;

• the Company may terminate the contract at any time if any serious or persistent breach of any of the provisions contained in the Executive Services Agreement is committed.

The following table provides details of the components of remuneration for each member of the key management personnel of the Group. All remuneration to Key Management Personnel is valued at the cost of the Company and expensed.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

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DIRECTORS’ REPORT (continued)

Remuneration report (audited) (continued)

Remuneration of directors and named executives

Table 1: Directors’ remuneration for the years ended 30 June:

			Short Term			Post Employment	Post Employment
		Salary &	Cash STI		Non	Super-	Retirement	Equity	Other	Total	%
		Fees		LTI	Monetary	annuation		Options			Performance
					Benefits						Related
A Bell	2011	45,000	-	-	-	-	-	68,906	-	113,906	-
Director	2012	45,000	-	-	-	-	-	-	-	45,000	-
R Kestel	2011	45,000	-	-	-	3,379	-	-	-	48,379	-
Director	2012	45,000	-	-	-	4,050	-	-	-	49,050	-
R Benussi	2011	40,000	-	-	-	-	-	-	-	40,000	-
Director	2012	40,000	-	-	-	-	-	-	-	40,000	-
C Geach ^	2011	40,000	-	-	-	-	-	-	-	40,000	-
Director	2012	16,667	-	-	-	-	-	-	-	16,667	-
Total	2011	170,000	-	-	-	3,379	-	68,906	-	242,285	-
	2012	146,667	-	-	-	4,050	-	-	-	150,717	-
^ Resigned 30 November 2011

Table 2: Executive Directors’ and named executives remuneration for the period/year ended 30 June:

			Short Term			Post Employment	Post Employment
		Salary &	Cash STI		Non	Super-	Retirement	Equity	Other	Total	%
		Fees		LTI	Monetary	annuation		Options			Performance
					Benefits						Related
S Heggen *	2011	37,500	-	-	-	3,375	-	-	-	40,875	-
Managing Director	2012	225,000	-	-	-	20,250	-	21,329	-	266,579	8%
Total	2011	37,500	-	-	-	3,375	-	-	-	40,875	-
	2012	225,000	-	-	-	20,250	-	21,329	-	266,579
Grand Total	2011	207,500	-	-	-	6,754	-	68,906	-	283,160	-
	2012	**371,667 **	-	-	-	24,300	-	21,329	-	417,296	-

• Appointed 1 May 2011

The Company employed only Simon Heggen as an Executive from the date of his appointment on 1 May 2011.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

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DIRECTORS’ REPORT (continued)

Remuneration report (audited) (continued)

Remuneration of directors and named executives

Options granted as part of remuneration:

During the 2012 year, 3,000,000 unlisted options were issued to Mr Simon Heggen as part of his remuneration, 1,500,000 of these options vested as at 30 November 2011 in accordance with the options terms and conditions. During the 2011 year, the Board resolved to issue 2,000,000 unlisted options to Mr Andrew Bell as part of his remuneration and 250,000 options issued to Mr Richard Evans were forfeited.

The contractual life of the options issued are as follows: 550,000 options expire on 15 July 2012, 2,000,000 options expire 30 September 2012, 3,000,000 options expire on 1 December 2013.

The following table illustrates the number (No.) and weighted average exercise prices of and movements in share options issued during the year and the prior year:

The following table illustrates the number (No.) issued during the year and the prior year:	and weighted average exercise prices of and movements in share options
Outstanding at the beginning of the year Granted during the year Forfeited during the year Outstanding at the end of the year Exercisable at the end of the year	30 June 2012 No. 30 June 2012 Weighted average exercise price 30 June 2011 No. 30 June 2011 Weighted average exercise price 2,550,000 $0.2020 800,000 $0.2220 3,000,000 $0.1875 2,000,000 $0.2000 - - (250,000) $0.2500
	5,550,000 $0.1941 2,550,000 $0.2020
	5,550,000 $0.1941 2,550,000 $0.2020

The outstanding balance as at 30 June 2012 is represented by:

• 300,000 options over ordinary shares with an exercise price of $0.20 each, exercisable until 15 July 2012;

• 250,000 options over ordinary shares with an exercise price of $0.22 each, exercisable until 15 July 2012;

• 2,000,000 options over ordinary shares with an exercise price of $0.20 each, exercisable until 30 September 2012;

• 1,500,000 options over ordinary shares with an exercise price of $0.15 each, exercisable until 1 December 2013;

• 750,000 options over ordinary shares with an exercise price of $0.20 each, exercisable until 1 December 2013;

• 750,000 options over ordinary shares with an exercise price of $0.25 each, exercisable until 1 December 2013.

• The outstanding balance as at 30 June 2011 is represented by:

• 300,000 options over ordinary shares with an exercise price of $0.20 each, exercisable until 15 July 2012;

• 250,000 options over ordinary shares with an exercise price of $0.22 each, exercisable until 15 July 2012;

• 2,000,000 options over ordinary shares with an exercise price of $0.20 each, exercisable until 30 September 2012.

The weighted average remaining contractual life for the share options outstanding as at 30 June 2012 is 0.86 years (2011: 1.20 years).

The weighted average exercise price for options outstanding at year end was $0.1941 (2011: $0.2020).

The fair value of options granted during the year was $21,329 (2011: $68,906).

The fair value of options forfeited during the year was $Nil (2011: $5,628).

The fair value of the equity-settled share options granted under the option plan is estimated as at the date of grant using a binomial model taking into account the terms and conditions upon which the options were granted.

	30 June 2012	30 June 2011
Volatility	123%	100%
Risk-free interest rate	3.12%	4.87%
Expected life of option	2.01 years	2.00 years
Exercise price	15 to 25 cents	20 cents

There have not been any alterations to the terms / conditions of any grants since grant date.

This concludes the remuneration report, which has been audited.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

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DIRECTORS’ REPORT (continued)

Directors’ meetings

The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attended by each director were as follows:

	Directors’	Directors’	Audit and Risk	Audit and Risk
	Meetings eligible	Meetings	Management	Management
	to attend	attended	Committee	Committee
			Meetings	Meetings
			eligible to	attended
			attend
Mr A Bell	15	12	-	-
Mr R Kestel	15	15	3	3
Mr R Benussi	15	13	3	3
Mr S Heggen	15	15	3	3
Mr C Geach	5	4	3	1

Non-audit services

The Board of Directors, in accordance with advice from the Audit and Risk Management Committee, is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons:

• all non-audit services are reviewed and approved by the Audit and Risk Management Committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and

• the nature of the services provided does not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.

Fees paid or payable to HLB Mann Judd for non-audit services provided during the year ended 30 June 2012 was $Nil (2011: $NIl).

Auditor’s Independence and non-audit services

Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the directors of the Company with an Independence Declaration in relation to the audit of the annual report. This Independence Declaration is set out on page 12 and forms part of this directors’ report for the year ended 30 June 2012.

Signed in accordance with a resolution of the Board of Directors.

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Simon Heggen Managing Director 28 September 2012

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

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Auditor’s Independence Declaration

As lead auditor for the audit of the financial report of Resource Star Limited for the year ended 30 June 2012, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• b) any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Resource Star Limited and the subsidiaries it controlled during the year.

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HLB Mann Judd Chartered Accountants

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Jude Lau Partner

Melbourne 28 September 2012

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CORPORATE GOVERNANCE STATEMENT

CORPORATE GOVERNANCE

The Board of Directors of Resource Star Limited is responsible for establishing the corporate governance framework of the economic entity. The Board guides and monitors the business and affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are accountable.

To ensure that the Board is well equipped to discharge its responsibilities, it has established guidelines and accountability as the basis for the administration of corporate governance.

CORPORATE GOVERNANCE DISCLOSURES

The Board and management are committed to corporate governance and to the extent that they are applicable to the Company have followed the Australian Securities Exchange Corporate Governance Council ( CGC ) published guidelines as well as its own corporate governance principles and recommendations.

In summary , Resource Star departs from the CGC’s recommendation in six (6) key areas:

• Recommendation 2.1

• The majority of the Board are not independent. Only two (2) of the four (4) Directors are considered independent; with one Director being the Managing Director and the other Director being a Director of a Company which is a Substantial Shareholder of Resource Star Limited.

• Recommendation 2.2

The Chair is not deemed to be independent. The current Chair is an Officer of a Company which is a Substantial Shareholder of Resource Star Limited.

Recommendation 2.4

• Resource Star Limited does not have a separate Nomination Committee. The Company is of a size and a level of current activity that enables the full Board to be able to deal with the matters normally attended to by the Nomination Committee.

Remuneration levels are set by the Company in accordance with industry standards to attract suitable qualified and experienced Directors and senior executives.

Recommendation 3.3

• Due to the current nature and scale of Resource Star Limited’s activities, the Company is yet to establish measurable objectives for achieving gender diversity to report against.

• Recommendation 4.2

Whilst Resource Star Limited has established an Audit Committee it currently does not have three (3) members following the resignation of Mr Geach in November 2011. There has been no replacement so the Committee is only comprised of two (2) members.

The Company will address this issue in the forthcoming year by appointing an additional member to the Committee.

• Recommendation 8.1

Resource Star Limited currently does not have a separate Remuneration Committee. The Company is of a size and a level of current activity that enables the full Board to be able to attend to the matters normally attended to by the Remuneration Committee.

The table below summarises Resource Star Limited’s compliance with the CGC’s recommendations.

Recommendation	Compliance Yes/No
Principle 1 – Lay Solid Foundations for management and oversight
1.1 Companies should formalise the functions reserved to the Board and those delegated to senior executives and disclose those functions. The Company’s Corporate Governance Polices includes a Board Charter, which discloses the specific responsibilities of the Board.	Yes

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Recommendation Compliance
Yes/No
Principle 2 – Structure the board to add value
1.2 Companies should disclose the process for evaluating the performance of senior executives. Yes
The Board monitors the performance of senior management including measuring actual
performance against planned performance.
1.3 Companies should provide the information indicated in Guide to reporting on Principle 1. Yes
The Company will provide details of any departures from Principle 1 in its Annual Report.
2.1 A majority of the Board should be independent directors. No
Only two (2) of the four (4) Board members are independent – one (1) Director is the Managing
Director and the other Director is a Director of a company which is a Substantial Shareholder
of Resources Star Limited.
2.2 The Chair should be an independent director No
The Chair is an officer of a company which is a substantial shareholder.
2.3 The roles of chair and chief executive officer should not be exercised by the same individual. Yes
During the 2011 financial year the Company appointed a Managing Director and so a
segregation of duties now exists.
2.4 The board should establish a nomination committee No
Resource Star Limited is not of a size to justify having a Nomination Committee. Matters
typically dealt with by such a Committee are dealt with by the full Board.
2.5 Companies should disclose the process for evaluating the performance of the board, its Yes
committees and the individual Directors.
The Board has adopted a policy to assist of evaluating Board performance.
2.6 Companies should provide the information indicated in Guide to reporting on Principle 2. Yes
The Company will provide details of any departures from Principle 2 in its Annual Report.
Principle 3 – Promote ethical and responsible decision-making
3.1 Companies should establish a code of conduct and disclose the code or a summary of the code Yes
as to:
3.1.1 the practices necessary to maintain confidence in the Company's integrity;
3.1.2 the practices necessary to take into account their legal obligations and reasonable
expectations of their stakeholders; and
3.1.3 the responsibility and accountability of individuals for reporting or investigating reports of
unethical practices.
The Company’s Corporate Governance Policies include a Directors and Executive officers’
Code of Conduct Policy, which provides a framework for decisions and actions in relation to
ethical conduct in employment.
3.2 Companies should establish a policy concerning diversity and disclose the policy or a summary of Yes
that policy. The policy should include requirements for the board to establish measurable
objectives for achieving gender diversity for the board to assess annually both the objectives and
progress in achieving them.
The Company has adopted a Diversity Policy.
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Recommendation	Compliance Yes/No
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. Due to the current nature and scale of Resource Star’s activities, the Board is yet to establish measurable objectives for achieving gender diversity to report against.	No
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. Resource Star Limited has one (1) female employee engaged in a clerical role, one (1) female in a senior position of Company Secretary and no females on the Board.	Yes
3.5 Companies should provide the information indicated in Guide to reporting on Principle 3. The Company will provide details of any departures from Principle 3 in its Annual Report.	Yes
Principle 4 – Safeguard integrity in financial reporting
4.1 The Board should establish an audit committee. Resource Star Limited has established an Audit and Risk Management Committee.	Yes
4.2 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 the chair of the Board; and � Has at least three (3) members The current Committee consists of only two (2) non-executive directors who are independent. The chair of the Committee is independent and does not chair the Board meetings. The Company recognises that there are only two (2) Members and will address this issue in the forthcoming year by appointing a third member to the Committee. The Managing Director has been in attendance at the Audit and Risk Management Committee Meetings by invite only. There has been no formal offer made to the Managing Director to join the Committee as a member and there is currently no intention to do so.	Yes Yes Yes No
4.3 The audit committee should have a formal operating charter. An Audit Committee Charter has been established and is followed.	Yes
4.4 Companies should provide the information indicated in Guide to reporting on Principle 4. The Company will provide details of any departures from Principle 4 in its Annual Report.	Yes
Principle 5 – Make timely and balanced disclosure
5.1 Companies should establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance. The Company has a Continuous Disclosure Policy which is designed to ensure compliance with the ASX Listing Rules requirements on disclosure and to ensure accountability at a Board level for compliance and factual presentation of the Company’s financial position.	Yes
5.2 Companies should provide the information indicated in Guide to reporting on Principle 5. The Company will provide details of any departures from Principle 5 in its Annual Report.	Yes

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Recommendation Compliance
Yes/No
Principle 6– Respect the rights of shareholders
6.1 Companies should design and disclose a communications policy to promote effective Yes
communication with shareholders and encourage effective participation at general meetings and
disclose the policy or a summary of the policy.
The Company’s Corporate Governance Policies includes a Shareholder Communications
Policy which aims to ensure that the shareholders are informed of all material developments
affecting the Company’s state of affairs.
6.2 Companies should provide the information indicated in Guide to reporting on Principle 6. Yes
The Company will provide details of any departures from Principle 6 in its Annual Report.
Principle 7– Recognise and manage risk
7.1 Companies should establish policies for the oversight and management of material business risks Yes
and disclose a summary of those policies.
The Company’s Corporate Governance Policies includes a Risk Management Policy which
aims to ensure that all material business risks are identified and mitigated. The Board
identifies the Company’s “risk profile” and is responsible for overseeing and approving risk
management strategies and policies, internal compliance and internal controls.
7.2 The Board should require management to design and implement the risk management and Yes
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.
The Board requires that the Managing Director designs and implements continuous risk
management and internal control systems and provides reports at relevant times.
7.3 The Board should disclose whether it has received assurance from the chief executive officer (or Yes
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 risk management
and internal control and that the system is operating effectively in all material respects in relation
to the financial reporting risks.
The Board seeks, at the appropriate times, the relevant assurances from the Managing
Director and the individual appointed to perform the role of Chief Financial Officer.
7.4 Companies should provide the information indicated in Guide to reporting on Principle 7. Yes
The Company will provide details of any departures from Principle 7 in its Annual Report.
Principle 8– Remunerate fairly and responsibly
8.1 The Board should establish a remuneration committee. No
Resource Star Limited is not of a size to justify having a remuneration committee. Matters
typically dealt with by such a committee are dealt with by the full Board.
8.2 The remuneration committee should be structured so that it: Not Applicable
� Consists of a majority of independent directors;
� Is chaired by an independent chair; and
� Has at least three (3) members
The remuneration committee when established will be structured as above.
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Recommendation	Compliance Yes/No
8.3 Companies should clearly distinguish the structure of non executive director’s remuneration from that of executive directors and senior executives. The Board distinguishes the structure of non executive director’s remuneration from that of executive directors and senior executives. The Company’s Constitution provides that the remuneration of non executive directors will not be more than the aggregate fixed sum by a general meeting of shareholders. The Board is responsible for determining the remuneration of any director or senior executive, without the participation of the affected director.	Yes
8.4 Companies should provide the information indicated in Guide to reporting on Principle 8. The Company will provide details of any departures from Principle 8 in its Annual Report.	Yes

Unless otherwise stated, Resource Star Limited’s corporate governance practices were in place throughout the year ended 30 June 2012.

There is a corporate governance section on the Company’s website which sets out the various policies, charters and codes of conduct which have been adopted to ensure compliance with the principles and recommendations referred to above.

A description of Resource Star’s main corporate governance practices are set out below.

The Board of Directors

Role and Responsibilities of the Board

In accordance with ASX Principle 1, the Resource Star Limited Board has established a Board Charter which is available on the Company website. This Charter outlines the functions of the Resource Star Board and the senior executives and shows that the role and responsibilities of the Board and the senior executives are quite clear and distinct.

The key responsibilities of the Board include:

• Appointing, evaluating, rewarding and if necessary the removal of the Managing Director and Chair;

• Development of corporate objectives and strategy with senior executives and approving plans, new investments, major capital and operating expenditures and major funding activities proposed by management;

• Monitoring actual performance against defined performance expectations and reviewing operating information to understand at all times the state of the health of the Company;

• Overseeing the management of business risks, safety and occupational health, environmental issues and community development;

• Monitoring senior executives’ performance and implementation of strategy;

• Ensuring appropriate resources are in place and available to the senior executives;

• Reviewing and approving the remuneration of the senior executives;

• Satisfying itself that the financial statements of the Company fairly and accurately set out the financial position and financial performance of the Company for the period under review;

• Satisfying itself that there are appropriate reporting systems and controls in place to assure the Board that proper operational, financial, compliance, risk management and internal control process are in place and functioning appropriately. Further, approving and monitoring financial and other reporting;

• Assuring itself that appropriate audit arrangements are in place;

• Ensuring that the Company acts legally and responsibly on all matters and assuring itself that the Company has adopted, and that the Company’s practice is consistent with, a number of guidelines, being:

• Directors and Executive Officers Code of Conduct;

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CORPORATE GOVERNANCE STATEMENT (CONTINUED)

• Dealings in Securities; and

• Reporting and Dealing with Unethical Practices.

• Reporting to and advising shareholders.

Composition of the Board

The Resource Star Board totals four (4) and is comprised of three Non Executive Directors and one (1) Executive Director. The table below sets out the detail of the tenure of each director at the date of this Report.

Director	Role of Director	First Appointed	Non Executive	Independent
Andrew BELL	Non Executive Chair	6 August 2007	Yes	No
Ross KESTEL	Non Executive	15 August 2006	Yes	Yes
Robert BENUSSI	Non Executive	9 July 2009	Yes	Yes
Simon HEGGEN	Managing Director	1 May 2011	No	No

Details of the Board including their experience, expertise and qualifications are set out in the Directors’ Report.

STRUCTURE OF THE BOARD

Independence

As outlined in ASX Principle 2, Directors of Resource Star are expected to contribute independent views.

Directors are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with or could reasonably be perceived to materially interfere with the exercise of their unfettered and independent judgment.

An independent Director is a non-executive director (i.e. is not a member of management) and:

• is not a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial shareholder of the Company;

• within the last three years has not been employed in an executive capacity by the Company or its subsidiaries, or been a Director after ceasing to hold any such employment;

• is not a principal or employee of a professional adviser to the Company or its subsidiaries whose billings are a material amount of the adviser's total revenue;

• is not a significant supplier or customer of the Company or its subsidiaries, or an officer of or otherwise associated directly or indirectly with a significant supplier or customer. A significant supplier is defined as one whose revenues from the Company are a material amount of the supplier's total revenue. A significant customer is one whose amounts payable to the Company are a material amount of the customer's total operating costs;

• has no material contractual relationship with the Company or its subsidiaries other than as a Director of the Company;

• 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;

• 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.

Mr Bell (substantial shareholder) and Mr Heggen (Managing Director) are not considered to be independent. Even though half the current Board are independent, the Board believes that the current composition of the Board is adequate for the current size and activities and includes an appropriate mix of skills and expertise, relevant to Resource Star’s activities.

When a Board vacancy exists, through whatever cause, or where it is considered that the Board would benefit from the service of a new Director with particular skills, in the absence of a Remuneration and Nomination Committee, the Board will consider a candidate or panel of candidates with the appropriate expertise.

The Board then appoints the most suitable candidate who must stand for election at the next general meeting of shareholders.

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CORPORATE GOVERNANCE STATEMENT (CONTINUED)

Notification

Resource Star has reviewed and considered the positions of each of the four (4) Directors in office at the date of this Annual Report and consider that two (2) of the four (4) Directors are independent. Messrs Kestel and Benussi are independent Directors In accordance with the definition of independence above.

Chair and Managing Director

The roles of the Chair and the Managing Director are not be exercised by the same individual.

The Chair is responsible for leading the Board, ensuring that Board activities are organised, efficiently conducted and ensuring that the Directors are properly briefed for meetings.

The Managing Director has responsibility for the day to day activities and operations and are totally accountable to the Board for all authority delegated to those positions.

The Chair must be appropriately qualified and have the required experience to discharge the responsibilities for leading, managing and delegating and in the absence of a Nomination Committee the Board from amongst themselves have nominated the Director that they believe can fulfil the role of Chair.

The Board has in place procedures to assess the performance of the Managing Director.

There are procedures in place, agreed by the Board, to enable the Directors in furtherance of their duties to seek independent professional advice at the Company’s expense.

Board Evaluation Process

In the absence of Nomination and Remuneration Committees, the Resource Star Board reviews its performance and the performance of individual Directors including the Managing Director.

External consultants are engaged where it is seen to be beneficial to the Company when undertaking the performance evaluation process.

A performance evaluation of the Resource Star Board took place during the 2012 financial year.

In relation to the term of office, the Constitution specifies that one third of all directors must retire from office annually and are eligible for re-election at the Company’s Annual General Meeting.

Remuneration and Nomination Committee

The Board has not established a formal Remuneration or Nomination Committee.

The full Board attends to the matters normally attended to by a Remuneration or Nomination Committee. The Board acknowledges that when the size and nature of the Company warrants a Remuneration and Nomination Committee then the Committee will operate under a Charter approved by the Board.

The Board is responsible for determining and reviewing compensation arrangements for the Directors themselves with remuneration levels being set in accordance with industry standards to attract suitable qualified and experienced Directors and senior executives.

As at the date of this Report there is no scheme to provide retirement benefits to non executive directors.

Details of the Company’s remuneration philosophy and framework and the remuneration received by directors and executives are provided in the Directors’ Report under the heading Remuneration Report.

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CORPORATE GOVERNANCE STATEMENT (CONTINUED)

Code of Conduct

The Board acknowledges the need for the highest standards of corporate governance and ethical conduct by all directors and senior executives. In light of this, Resource Star Limited has developed a Code of Conduct which has the full backing of the Board and is to be followed by the directors, senior executives and employees.

This policy is regularly reviewed and updated as necessary.

Diversity Policy

Resource Star Limited is committed to workplace diversity and recognises the benefits arising from having a broader pool of quality employees, improving employee retention rates and tapping into all available talent. Diversity includes such areas as gender, age and background.

Resource Star Limited developed and approved a Diversity Policy in 2011 which has a focus of improving gender balance and working towards increasing the representation of women in management roles. The Resource Star Limited Diversity Policy aims to achieve:

• developing a culture which takes into account domestic responsibilities of employees;

• as part of the annual remuneration review, assessing the gender pay parity across the business and implementing action plans to address any areas of concern;

• maintaining a workplace culture that supports difference and that enables each staff member to fully contribute to the best of their ability;

• identifying what is getting in the way of diversity success and taking action to address the issues;

• improved employment and career development opportunities for women;

• an environment that encourages the development of necessary skills and experience for leadership roles; and

• a workplace that is free for all forms of discrimination and harassment

The proportion of women in Resource Star Limited is as follows:

	Women	Proportion
Employees	1	50%
Senior executive position (Company Secretary)	1	20%
Board of Directors	0	0%

The Company currently only has two (2) full time employees comprising one (1) Managing Director and one (1) Clerical Officer.

Notification

ASX Principle 3 recommends that companies should disclose in each annual report measurable objectives for achieving gender diversity set by the Board in accordance with the Diversity Policy and progress towards achieving them.

Due to the current nature and scale of Resource Star’s activities, the Board is yet to establish measurable objectives for achieving gender diversity to report against. No measurable objectives will be established until the number of employees and level of activities of the Company have increased to sufficient levels to enable meaningful and achievable objectives to be developed.

Securities Trading

Resource Star Limited has adopted a Securities Dealing Policy which is derived largely from the Corporations Act 2001 requirements that applies to all directors, senior executives and employees.

Under this Policy and the Corporations Act 2001, it is illegal for directors, senior executives and employees who have access to price sensitive information which has not been published or is generally not available to:

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CORPORATE GOVERNANCE STATEMENT (CONTINUED)

• (a) apply for, acquire, dispose of or enter into an agreement to apply for, acquire or dispose of Resource Star Securities;

• (b) procure another person to apply for, acquire, dispose of or enter into an agreement to apply for, acquire or dispose of Resource Star Securities; or

• (c) directly or indirectly communicate the Material Non-Public Information to another person when the Insider knows, or ought reasonably to know, that the other person would or would be likely to:

• (i) apply for, acquire, dispose of or enter into an agreement to apply for, acquire or dispose of Resource Star Securities; or

• (ii) procure another person to apply for, acquire, dispose of or enter into an agreement to apply for, acquire or dispose of Resource Star Securities.

Corporate Reporting

In accordance with ASX Principle 7, the Managing Director and the Chair have made the following certifications to the Board:

• That the Company’s financial reports are complete and present a true and fair view, in all material respects, of the financial positions and operational results of Resource Star Limited; and

• The financial reports are founded in a sound system of internal control and risk management which implements the policies adopted by the Board and the Company’s risk management and internal controls are operating efficiently in all material respects.

Audit and Risk Management Committee

The Board has established an Audit and Risk Management Committee comprising of only two (2) Non-Executive Directors, Mr Ross Kestel (Chairman) and Mr Robert Benussi and Ms Kestel is the Secretary of the Committee. Mr Heggen has also been in attendance at the Meeting.

The Board operates a Charter approved by the Board which is available from the Company’s webpage. It is the Board’s responsibility to ensure that an effective internal control framework exists within the Company. The internal controls that the Company have in place include the safeguarding of assets, the maintenance of proper accounting records, identifying and managing risk and attesting to the reliability of financial information as well as non-financial considerations such as the benchmarking of key performance indicators. The Committee also provides the Board with assurance of the reliability of the financial information included in the Interim Financial and Annual Reports. The Audit and Risk Management Committee is also responsible for:

• Liaising with the external auditors on accounting policy and disclosure;

• Reviewing and meeting with the external auditors to review the Interim Financial and Annual Reports before submission to the Board;

• Overseeing risk management.

In accordance with ASX Principle 7, the Board has established a Risk Management policy, which is designed to safeguard the Company’s assets and to ensure the integrity of the financial reporting.

The Company has as a standing Agenda item Risk Management and on a regular basis the Board will assess the Risk Management matrix and amend accordingly.

The Company’s Policy is to appoint external auditors who clearly demonstrate independence. The performance of the external auditor is reviewed annually by the Board but when the Committee is established it will be the responsibility of the Committee to complete this review. The auditors have a policy of rotating the audit partner at least every 5 years.

External Auditors

Resource Star Limited’s current external auditors are HLB Mann Judd. As noted in the Audit and Risk Management Committee Charter, the performance and independence of HLB Mann Judd is reviewed by the Committee.

HLB Mann Judd attests to their independence by providing a statement as to their independence; which has been included in the 2012 Annual Report for the year ended 30 June 2012.

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CORPORATE GOVERNANCE STATEMENT (CONTINUED)

Risk Management

The Board recognises that the identification and management of risk, including calculated risk taking, is an essential part of creating long term shareholder value.

The Managing Director reports directly to the Board on the Company’s key risks and is responsible for designing, maintaining, implementing and reporting on the adequacy of the risk management and internal control systems.

The Board monitors the performance of the risk management and internal control systems and determines the extent to which it believes the risks are being managed and the adequacy and comprehensiveness of risk reporting from management.

The Board must satisfy itself, on a regular basis, that risk management and internal control systems for the Company have been fully developed and implemented.

The Company has identified specific risk management areas being strategic, operational and compliance. The Board has reviewed risks faced by the Company on a regular basis due to the potential impact of the global financial crisis.

A detailed risk identification matrix has been prepared by management. High and very high risk issues are reported to the Board. The Managing Director is responsible for ensuring the Company complies with its regulatory obligations.

The Managing Director and externally appointed CFO equivalent also provide written assurance to the Board on an annual basis that to the best of their knowledge and belief, the declaration provided by them 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 relation to financial reporting risks.

These assurances can only be reasonable rather than absolute due to factors such as the need for judgement and possible weaknesses in control procedures.

Any material changes in the Company’s circumstances are released to the ASX and included on the Company’s website.

Continuous Disclosure

In accordance with ASX Principle 5, Resource Star Limited has established a Disclosure Policy.

The Company is committed to:

• Ensuring that shareholders have the opportunity to access externally available information issued by the Company;

• Providing full and timely information to the market about the Company’s activities; and

• Complying with the obligations contained in the ASX Listing Rules and the Corporations Act 2001 relating to continuous disclosure.

The Chair and the Company Secretary have been nominated as the people responsible for communication with the ASX. This involves complying with continuous disclosure requirements outlined in ASX Listing Rules, ensuring that disclosure with the ASX is co-ordinated and being responsible for administering and implementing this Policy.

Shareholder Communication

In accordance with ASX Principle 6, Resource Star Limited has established a communications strategy policy.

The directors of Resource Star recognises the importance of forthright communication and in order to prosper and achieve growth, it must (among other things) earn the trust of employees, customers, suppliers, communities and shareholders by being forthright in its communications and consistently delivering on its commitments.

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CORPORATE GOVERNANCE STATEMENT (CONTINUED)

The Board aims to ensure that the shareholders on behalf of whom they act are informed of all information necessary in order to make effective decisions about Resource Star and to be kept informed of all major developments affecting the Company in a timely and effective manner. Resource Star follows three main forms of information disclosure:

• Continuous disclosure - which is its core disclosure obligation and primary method of informing the market and shareholders;

• Periodic disclosure - in the form of full-year and half-year reporting; and

• Specific information disclosure - as and when required, of administrative and corporate details, usually in the form of ASX releases.

Further it is a Corporations Act requirement that the auditor of Resource Star Limited attends the Annual General Meeting. This provides shareholders with the opportunity to ask the auditor questions concerning the conduct of the audit and the preparation and content of the Auditor Report as contained in the 2012 Annual Report.

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STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2012

Notes Other revenue 2(a) Tenement commitment written back Exploration expenditure written off 8 Expensed share issue costs Tenement commitment costs Depreciation Other expenses 2(b) Loss before income tax expense Income tax expense 3 Loss after tax from continuing operations Net loss for the year 14 Other comprehensive income / (loss) Total comprehensive income / (loss) for the year Net loss and comprehensive loss attributable to: Owners of the parent entity Non-controlling interest Basic loss per share (cents per share) 4 Basic loss per share from continuing operations (cents per share) 4 Diluted loss per share (cents per share) 4 Diluted loss per share from continuing operations (cents per share) 4	CONSOLIDATED 30 June 2012 $ 30 June 2011 $ 7,263 126,506 265,908 - (615,841) (431,184) (8,241) - - - (1,836) (1,571) (1,073,497) (986,022)
	(1,426,244) (1,292,271) - -
	(1,426,244) (1,292,271)
	(1,426,244) (1,292,271)
	- -
	(1,426,244) (1,292,271)
	(1,426,244) (1,292,271) - -
	(1,426,244) (1,292,271)
	(2.012) (2.339) (2.012) (2.339) (2.012) (2.339) (2.012) (2.339)

The accompanying notes form part of these financial statements.

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STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2012

Notes Current Assets Cash and cash equivalents 5 Trade and other receivables 6 Other 7 Total Current Assets Non-Current Assets Deferred exploration and evaluation expenditure 8 Property, plant and equipment 9 Total Non-Current Assets Total Assets Current Liabilities Trade and other payables 10 Employee benefits 11 Total Current Liabilities Total Liabilities Net Assets Equity Contributed equity 12 Reserves 13 Accumulated losses 14 Total Equity	CONSOLIDATED 2012 $ 2011 $ 342,338 481,324 33,400 64,153 11,708 12,510
	387,446 557,987
	2,748,019 3,225,998 2,367 3,487
	2,750,386 3,229,485
	3,137,832 3,787,472
	55,037 410,013 10,894 1,584
	65,931 411,597
	65,931 411,597
	3,071,901 3,375,875
	32,820,772 31,719,831 473,302 451,973 (30,222,173) (28,795,929)
	3,071,901 3,375,875

The accompanying notes form part of these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2012

Notes Cash flows from operating activities Interest income Payment to suppliers and employees Net cash flows provided by/(used in) operating activities 5(a) Cash flows from investing activities Payments for exploration and evaluation expenditure (Payments for) / proceeds from investments Payments for plant and equipment Net cash flows provided by/(used in) investing activities Cash flows from financing activities Proceeds from issue of shares and options Proceeds from loans Repayments of loans Share issue costs Net cash flows provided by/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at the end of the year 5	CONSOLIDATED 30 June 2012 $ 30 June 2011 $ 7,476 78,858 (1,064,156) (945,666)
	(1,056,680) (866,808)
	(182,535) (938,700) - 1,200,000 (716) (1,575)
	(183,251) 259,725
	1,129,518 829,641 368,954 - (368,954) - (28,573) (98,527)
	1,100,945 731,114
	(138,986) 124,031 481,324 357,293
	342,338 481,324

The accompanying notes form part of these financial statements.

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STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2012

Balance at 1 July 2010 Total comprehensive loss for the year Shares issued (net of costs) Options issued Options forfeited At 30 June 2011 Balance at 1 July 2011 Total comprehensive loss for the year Shares issued (net of costs) Options issued Options forfeited At 30 June 2012	Contributed equity $ Accumulated losses $ Reserves $ Total Equity $ 31,312,858 (27,509,286) 58,989 3,862,561 - (1,292,271) - (1,292,271)
	406,973 - - 406,973 - - 398,612 398,612 - 5,628 (5,628) -
	31,719,831 (28,795,929) 451,973 3,375,875
	31,719,831 (28,795,929) 451,973 3,375,875 - (1,426,244) - (1,426,244)
	1,100,941 - - 1,100,941 - - 21,329 21,329 - - - -
	32,820,772 (30,222,173) 473,302 3,071,901

The accompanying notes form part of these financial statements.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

27

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation

The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”) and complies with other requirements of the law.

The accounting policies detailed below have been consistently applied to all of the years presented unless otherwise stated. The financial statements are for the consolidated entity consisting of Resource Star Limited and its subsidiaries (collectively referred to as “the Group”).

The financial report has also been prepared on a historical cost basis, except for certain financial assets and liabilities, which have been measured at fair value. Cost is based on the fair values of the consideration given in exchange for assets.

The Company is a listed public company incorporated in Australia. The Company’s principal activity is mineral exploration.

(b) Adoption of new and revised standards

(i) Changes in accounting policy and disclosures

In the year ended 30 June 2012, the Group has reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for the current annual reporting period.

It has been determined by the Group that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change is necessary to Group accounting policies.

The Group has also reviewed all new Standards and Interpretations that have been issued but are not yet effective for the year ended 30 June 2012. As a result of this review the Directors have determined that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change necessary to Group accounting policies.

(c) Statement of Compliance

The financial report was authorised for issue on the day of the Directors’ Report.

The financial report complies with Australian Accounting Standards (“AASBs”). Compliance with AASBs ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS).

(d) Basis of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Resource Star Limited (‘company’ or ‘parent entity’) as at 30 June 2012 and the results of all subsidiaries for the year then ended. Resource Star Limited and its subsidiaries are referred to in this financial report as the group or the consolidated entity.

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

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

Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Control exists where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing when the Group controls another entity.

Business combinations have been accounted for using the acquisition method of accounting.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

28

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(e) Critical Accounting Estimates and Judgements

The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised if it affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Share-based payment transactions:

The Group measures the cost of equity-settled transactions with key management personnel by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using the binomial model.

Exploration and evaluation costs carried forward

The recoverability of the carrying amount of exploration and evaluation costs carried forward has been reviewed by the directors. The Group capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. While there are certain areas of interest from which no reserves have been extracted, the directors are of the continued belief that such expenditure should not be written off.

Recovery of deferred tax assets

Deferred tax assets are recognised as deductible temporary differences when management considers that it is probable that sufficient future tax profits will be available to utilise those temporary differences. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits over the next two years together with future tax planning strategies. The Company has been incurring losses and presently, it is not known when the Company will earn taxable income. As such, deferred taxes have not been recognised.

Accounting for the swap of the Group’s interest in its Machinga tenements

As announced to the market in May 2012, the Company reached agreement to swap its tenement with another party in return for receiving the tenement of the other party. The transfer of the project interest is subject to regulatory approval in Malawi, which as at 30 June 2012, had not been received. Accordingly the Company has not recognised the swap as at year end.

(f) Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

(i) Interest income

Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset, using the effective interest rate method.

(g) Cash and Cash Equivalents

Cash comprises cash at bank and on hand. Cash equivalents are short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.

For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

29

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(h) Trade and other receivables

Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method, less provision for impairment. Trade receivables are generally due for settlement within periods ranging from 15 days to 30 days.

Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by reducing the carrying amount directly. An allowance account is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original contractual terms. Factors considered by the Group in making this determination include known significant financial difficulties of the debtor, review of financial information and significant delinquency in making contractual payments to the Group. The impairment allowance is set equal to the difference between the carrying amount of the receivable and the present value of estimated future cash flows, discounted at the original effective interest rate. Where receivables are short-term discounting is not applied in determining the allowance.

The amount of the impairment loss is recognised in the statement of comprehensive income within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the statement of comprehensive income.

(i) Foreign Currency Translation

Both the functional and presentation currency of the Company and its subsidiaries is Australian dollars. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

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

All exchange differences in the consolidated financial report are taken to profit or loss.

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

Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

(j) Income tax

The income tax expense or benefit for the period is the tax payable on the current year’s taxable income (loss) based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary difference and to unused tax losses.

The current income tax charge (benefit) is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company’s subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the end of the reporting period.

Deferred income tax is provided on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except:

• when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or

• when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

30

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(j) Income tax (continued)

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit (loss) will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:

• when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or

• when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at the end of the reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at the end of the reporting period and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the end of the reporting period.

Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

(k) Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivables and payables, which are stated with the amount of GST included.

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

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

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

(l) Property, Plant and Equipment

Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

31

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(l) Property, Plant and Equipment (continued)

Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows:

Plant and equipment – over 1 to 7.5 years

The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.

(i) Impairment

The carrying values of plant and equipment are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired.

The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating unit to which the asset belongs, unless the asset's value in use can be estimated to be close to its fair value.

An impairment exists when the carrying value of an asset or cash-generating units exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount.

For plant and equipment, impairment losses are recognised in the statement of comprehensive income in the cost of sales line item.

(ii) Derecognition and disposal

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.

(m) Impairment of assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cashgenerating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the nature of the impaired asset.

An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

32

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(n) Trade and other payables

Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Group prior to the end of the financial year/period that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services.

(o) Borrowing Costs

Borrowing costs are capitalised where they are directly attributable to the acquisition, construction or production of qualifying assets where the borrowing cost is added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are expensed when incurred.

(p) Leases

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

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.

(q) Employee Leave Benefits

(i) Wages, salaries, and annual leave

Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised as a provision in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled inclusive of on-costs.

(i) Long service leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures, and period of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

(r) Issued capital

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.

(s) Earnings per share

Basic earnings per share is calculated as net profit/(loss) attributable to members of the parent entity, adjusted to exclude any costs of servicing equity (other than dividends) divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share is calculated as net profit/(loss) attributable to members of the parent, adjusted for:

• costs of servicing equity (other than dividends) and preference share dividends;

• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and

• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

33

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(t) Share based payment transactions

Equity settled transactions

The Group provides benefits to employees (including key management personnel) of the Group in the form of sharebased payments, whereby employees render services in exchange for shares or rights over shares (“equity settled transactions”).

The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using a binomial model, further details of which are given in Note 15 and the Remuneration Report.

The fair value of options issued in 2011 and 2012 as approved by the Directors and shareholders are recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options.

The fair value at grant date is independently determined using the binomial option pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non tradeable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

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

(u) Exploration and evaluation expenditure

Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation 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;

(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 exploration of the area of interest, or alternatively, by its sale; or

• (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 area of interest are continuing.

Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortised of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest.

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years.

Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to development.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

34

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(u) Exploration and evaluation expenditure (continued)

An ‘area of interest’ is an individual geological area which is considered to constitute a favourable environment for the presence of a mineral deposit or an oil or natural gas field, or has been proved to contain such a deposit or field.

(v) Going concern

Notwithstanding the loss incurred over the past 12 months and the Group’s financial position, the financial statements have been prepared on a going concern basis which contemplates continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business based on the factors outlined in note 23.

(w) Parent entity information

In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. The financial information for the Parent Entity is disclosed in note 24 and has been prepared on the same basis as the consolidated financial statements.

(x) Operating segments

Operating segments are presented in a manner consistent with the internal reporting provided to the chief operating decision makers (“CODM”). The CODM is responsible for the allocation of resources to operating segments and assessing their performance, and has been identified as the Board Directors of the Company.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

35

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

2. REVENUES AND EXPENSES (a) Other revenue Finance revenue – bank interest Foreign exchange gain (b) Other expenses Administration expenses Auditor’s remuneration ASX fees Directors’ fees and salaries Secretarial fees Professional accounting fees Foreign exchange loss Interest paid Share based payments 3. INCOME TAX EXPENSE The prima facie tax on profit/(loss) from continuing Operations before income tax is reconciled to the income tax expense as follows: Prima facie (benefit)/expense on profit/(loss) from continuing operations (30%) Tax effect of capitalised exploration costs Tax effect of permanent differences Deferred tax asset not brought to account Income tax expense for the year	CONSOLIDATED 30 June 2012 $ 30 June 2011 $ 7,263 57,142 - 69,364
	7,263 126,506
	463,861 546,713 37,150 45,375 21,648 14,740 405,276 170,000 54,808 70,515 59,952 69,708 6,244 - 3,229 - 21,329 68,971
	1,073,497 986,022
	(427,873) (387,681) (41,359) (154,351) 6,676 20,888
	(462,556) (521,144)
	462,556 521,144
	- -

The amounts of tax losses available have not been recognised at the date of the report. It is expected that a certain amount of tax losses would be deductible against future taxable income on the condition that certain criteria imposed by the tax legislation have been met.

The DTA not brought to account will only be realised if:

(a) future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised;

(b) the conditions for deductibility imposed by tax legislation continue to be complied with; and

(c) the Company and Group are able to meet the continuity of business and/or continuity of ownership tests.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

36

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

		CONSOLIDATED	CONSOLIDATED
		2012	2011
		Centsper share	Centsper share
4.	EARNINGS/(LOSS) PER SHARE
	Basic loss per share:
	Total basic loss per share	(2.012)	(2.339)
	Diluted loss per share
	Total diluted loss per share	(2.012)	(2.339)
	The earnings and weighted average number of ordinary shares used in
	the calculation of basic per share is as follows:	$	$
	Loss	(1,426,244)	(1,292,271)
		Number	Number
	Weighted average number of ordinary shares for the purposes of basic
	loss per share	70,883,969	55,243,250
	Effect of dilution:
	Class A performance shares	-	-
	Share options (a)	-	-
	Weighted average number of ordinary shares for the purposes of basic
	and diluted loss per share	70,883,969	55,243,250
	(a) Diluted loss per share arising from the options is not reflected as the result	is anti-dilutive in nature.
		CONSOLIDATED
		2012	2011
		$	$
5.	CASH AND CASH EQUIVALENTS
	Reconciliation of cash
	Cash at the end of the financial year as shown in the statement of cash
	flows is reconciled to items in the statement of financial position as
	follows:
	Cash at bank and cash in hand	342,338	481,324
		342,338	481,324

Cash at bank earns interest at floating rates based on daily bank deposit rates. There were no Deposits at call at the end of the 2011 or 2012 financial years.

The Group has no credit standby arrangements, loan or overdraft facilities.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

37

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

5. CASH AND CASH EQUIVALENTS (continued) (a) Reconciliation of net loss after tax to net cash flows from operations Net loss Adjustments for: Depreciation on property, plant and equipment Exploration expenditure written off Share based payments Changes in assets and liabilities: (Increase)/decrease in trade and other receivables (Decrease)/increase in trade payables and accruals (Increase)/decrease in prepayments Net cash provided by/(used in) operating activities

CONSOLIDATED 2012 $ 2011 $ (1,426,244) (1,292,271) 1,836 1,571 615,841 431,184 21,329 68,971 30,753 (67,193) (300,997) (6,750) 802 (2,320)

(1,056,680) (866,808)

6. TRADE AND OTHER RECEIVABLES

Current Accrued income Other receivables (i) (i) Other receivables are non-interest bearing and expected to be received in 30 days.	254 435 33,146 63,718
	33,400 64,153

The Group has no concentration of credit risk with respect to any single counter party or group of counter parties. All of the other receivables are based in Australia. No amounts of other receivables are past due nor impaired.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

38

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

7. OTHER CURRENT ASSETS Current Prepayments	CONSOLIDATED 2012 $ 2011 $ 11,708 12,510
	11,708 12,510

8. DEFERRED EXPLORATION AND EVALUATION EXPENDITURE Costs carried forward in respect of : Exploration and evaluation phase – at cost Balance at beginning of year Expenditure incurred Expenditure written off * Total deferred exploration and evaluation expenditure	3,225,998 2,711,495 137,862 945,687 (615,841) (431,184)
	2,748,019 3,225,998

• An assessment of the recoverable amount has been completed on all tenements and capitalised expenditure totalling $615,841 (2011: $431,184) was written off. Write-downs occurred where capitalised expenditure was considered to exceed the recoverable amount, not in the Group’s mandated area of “uranium and associated elements” or in relation to expired licenses.

9. PROPERTY, PLANT AND EQUIPMENT Plant and equipment At 1 July, net of accumulated depreciation and impairment Additions Disposals Depreciation charge for the year At 30 June, net of accumulated depreciation and impairment Cost Accumulated depreciation and impairment Net carrying amount	CONSOLIDATED 2012 $ 2011 $ 3,487 3,482 716 1,576 - - (1,836) (1,571)
	2,367 3,487
	13,687 12,971 (11,320) (9,484)
	2,367 3,487

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

39

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

	CONSOLIDATED	CONSOLIDATED
	2012	2011
	$	$
10. TRADE AND OTHER PAYABLES
Current
Unsecured Liabilities
Trade payables	37,203	116,917
Tenement commitment payable	-	265,908
Accrued expenses	17,834	27,188
	55,037	410,013
Included in the above balance are the following amounts	payable to Directors and related entities.
Directors and related entities	-	3,667
	-	3,667
11. EMPLOYEE BENEFITS
Current Liabilities
Liability for annual leave	10,894	1,584
	10,894	1,584
12. CONTRIBUTED EQUITY
Ordinary shares issued and fully paid	32,820,772	31,719,831
	32,820,772	31,719,831
Fully paid ordinary shares carry one vote per share and	carry the right to dividends. Changes to the then Corporations
Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998. Therefore, the
company does not have a limited amount of share capital and issued shares do not have a par value.
(i) Movement in ordinary shares on issue	Number	$
At 1 July 2010	51,928,182	31,312,858
Fully paid shares issued for cash
• Placement at 10 cents – 1 November 2010	5,000,000	500,000
Share issue costs	-	(93,027)
At 30 June 2011	56,928,182	31,719,831

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

40

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

ONTRIBUTED EQUITY (continued) At 1 July 2011 Fully paid shares issued for cash • Non-renounceable entitlements issue – 23 March 2012 • Non-renounceable entitlements issue (shortfall funds) - 1 May 2012 Share issue costs At 30 June 2012	CONSOLIDATED Number $ 56,928,182 31,719,831 41,928,182 838,563 15,000,000 300,000 - (37,622)
	113,856,364 32,820,772

12. CONTRIBUTED EQUITY (continued)

(a) Capital management

Management controls the capital of the Group in order to provide the shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern.

The Group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets. There are no externally imposed capital requirements.

Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues.

There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year.

RESERVES Options Reserve At 1 July 2010 Options issued Options expired/forfeited At 1 July 2011 Options issued At 30 June 2012	CONSOLIDATED Number $ 800,000 58,989 47,964,091 398,612 (250,000) (5,628)
	48,514,091 451,973 3,000,000 21,329
	51,514,091 473,302

13. RESERVES

The reserve is used to record the value of equity benefits provided to employees and directors as part of their remuneration.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

41

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

14. ACCUMULATED LOSSES Movements in accumulated losses At 1 July Loss attributable to the members of the parent entity Options forfeited At 30 June	CONSOLIDATED 2012 $ 2011 $ (28,795,929) (27,509,286) (1,426,244) (1,292,271) - 5,628
	(30,222,173) (28,795,929)

15. SHARE BASED PAYMENTS

Recognised share-based payment expenses

The expense recognised for employee and non-executive director services received during the year is shown in the table below: Expense arising from equity-settled share-based payment transactions - Directors Expense arising from equity-settled share-based payment transactions - Other Employees Total expense arising from share-based payment transactions	21,329 68,906 - 65
	21,329 68,971

The assessed fair value at grant date of options granted to the Directors in 2012 and 2011 were determined using the binomial option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date, the expected price volatility of the underlying share, the expected dividend yield and the riskfree rate for the term of the option.

The table below illustrates the number of options, the weighted average exercise price (WAEP) of and movements in share options issued by the Company during the year to key management personnel current and prior:

Outstanding at the beginning of the period Granted during the period Forfeited during the period Outstanding at the end of the period Exercisable at the end of the period	30 June 2012 No. 30 June 2012 Weighted average exercise price 30 June 2011 No. 30 June 2011 Weighted average exercise price 2,550,000 $0.2020 800,000 $0.2220 3,000,000 $0.1875 2,000,000 $0.2000 - - (250,000) $0.2500
	5,550,000 $0.1941 2,550,000 $0.2020
	5,550,000 $0.1941 2,550,000 $0.2020

The outstanding balance as at 30 June 2012 is represented by:

• 300,000 options over ordinary shares with an exercise price of $0.20 each, exercisable until 15 July 2012;

• 250,000 options over ordinary shares with an exercise price of $0.22 each, exercisable until 15 July 2012;

• 2,000,000 options over ordinary shares with an exercise price of $0.20 each, exercisable until 30 September 2012;

• 1,500,000 options over ordinary shares with an exercise price of $0.15 each, exercisable until 1 December 2013;

• 750,000 options over ordinary shares with an exercise price of $0.20 each, exercisable until 1 December 2013;

• 750,000 options over ordinary shares with an exercise price of $0.25 each, exercisable until 1 December 2013.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

42

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

15. SHARE BASED PAYMENTS (continued)

The options weighted average remaining contractual life for the share options outstanding as at 30 June 2012 is 0.86 years (2011: 1.20 years).

The weighted average exercise price for options outstanding at year end was $0.1941 (2011: $0.202).

The fair value of options granted during the year was $21,329 (2011: $68,906).

The fair value of options expired during the year was $Nil (2011: $5,628).

The fair value of the equity-settled share options granted under the option plan is estimated as at the date of grant using a binomial model taking into account the terms and conditions upon which the options were granted.

	30 June 2012	30 June 2011
Volatility	123%	100%
Risk-free interest rate	3.12%	4.87%
Expected life of option	2.01 years	2.00 years
Exercise price	15 to 25 cents	20 cents

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends that may also not necessarily be the actual outcome. No other features of options granted were incorporated into the measurement of fair value.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

43

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

16. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Board is responsible for monitoring and managing the Group’s financial risk exposures by monitoring the Group’s financial risk management policies and exposures and approves financial transactions within the scope of its authority. It also reviews the internal controls relating to currency risk, financing risk and interest rate risk. The overall risk management strategy seeks to assist the Group to meet its targets, while minimising potential adverse effects on financial performance.

The Group’s principal financial instruments comprise receivables, payables, cash and short-term deposits and interest bearing liabilities.

The main purpose of these financial instruments is to finance the Group’s operations. The Group has other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. The main risks arising from the Group’s financial instruments are cash flow interest rate risk, liquidity risk, foreign exchange risk and credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below.

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 1 to the financial statements.

Interest rate risk

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s cash, short-term deposits and short-term borrowings. The short-term debt is a fixed rate debt. Since the Group does not have any long-term debt obligations, the Group’s exposure to this risk is nominal.

Market risk

The Group’s exposure to the financial risks of changes in foreign currency exchange rates, interest rates and equity prices relates primarily to accounts payables and short-term borrowings. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising return.

Financial Assets Cash and cash equivalents Financial Liabilities Net exposure	CONSOLIDATED 2012 $ 2011 $ 342,338 481,324 - -
	342,338 481,324

Credit risk

Exposure to credit risk relating to financial assets arises from the potential non-performance by counter parties that could lead to financial loss to the Group. The Group’s policy is to trade only with recognised, creditworthy third parties.

It is the Group’s policy that all customers who wish to trade on credit terms will be subject to credit verification procedures. Cash and cash equivalents are held with Authorised Deposit Institutions (ADI) or an institution which has a Standard and Poor's (Australia) Pty Ltd rating of ‘A-1+’ for terms of a year or less.

In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. There are no significant concentrations of credit risk within the Group. Details with respect to credit risk of trade and other receivables are disclosed in note 6.

Liquidity risk

Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans and capital raising. The liquidity risk is currently managed by the Board by monitoring the Group’s cash flow and commitments on a monthly basis.

Refer to Note 23 for additional details.

The table below reflects all contractually fixed pay-offs and receivables for settlement, repayments and interest resulting from recognised financial assets and liabilities. Cash flows for financial assets and liabilities without fixed amount or timing are based on the conditions existing at 30 June 2012 and 2011.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

44

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

16. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

6 months or less 6-12 months or less 1-5 years Over 5 years	CONSOLIDATED 2012 $ 2011 $ 342,338 410,013 - - - - - -
	342,338 410,013

Foreign currency risk management

Exposure to foreign exchange risk may result in the fair value of cash flows of a financial instrument fluctuating due to movement in foreign exchange rates of currencies in which the Group holds financial investments which are other than the AUD currency of the Group.

The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise.

The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date is as follows:

date is as follows:
		Liabilities		Assets
	2012	2011	2012		2011
	$	$	$		$
US Dollar	-	265,908	-		-

Foreign currency sensitivity analysis

The Group is exposed to US Dollar (USD) currency fluctuations.

The following table details the Group’s sensitivity to a 10% increase and decrease in the Australian dollar against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans where the denomination of the loan is in a currency other than the currency of the lender or the borrower. A positive number indicates an increase in profit or loss and other equity where the Australian Dollar (AUD) strengthens against the respective currency. For a weakening of the Australian Dollar against the respective currency there would be an equal and opposite impact on the profit and other equity and the balances below would be negative.

	AUD	impact
	Consolidated
	2012	2011
	$	$
Profit or loss	-	28,500 /
		(28,500)

Fair values

Set out below is a comparison by category of carrying amounts and fair values of all of the Group’s financial instruments recognised in the financial statements.

The fair values of financial assets have been calculated using market interest rates.

As at the end of the current and prior financial years, the Group does not have any financial instruments held at fair value and accordingly, the fair value hierarchy is not required to be applied.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

45

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

16. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

				Carrying	Carrying	amount		Fair value
				2012		2011	2012		2011
				$		$	$		$
CONSOLIDATED
Financial assets
Cash				342,338		481,324	342,338		481,324
Other financial assets					-	-		-	-
Trade and other receivables				33,400		64,153	33,400		64,153
Financial liabilities on balance sheet
Trade and other payables				55,037		410,013	55,037		410,013
Interest rate risk
The following table sets out the carrying amount, by maturity, of the financial instruments:
									Weighted
									average
									effective
									interest
Year ended 30/6/2012	<1 year $	1-2 years $	2-3 years $	3-4	years $	4-5 years $	>5 years $	Total $	rate %
CONSOLIDATED
FINANCIAL ASSETS
Floating rate
Cash assets	342,338		-	-	-	-	-		3.25%
Fixed rate
Cash assets		-	-	-	-	-	-	-	0.00%
Trade & other receivables	33,400		-	-	-	-	-		0.00%
FINANCIAL LIABILITIES
Fixed rate
Trade & other payables	55,037		-	-	-	-	-		0.00%
Interest-bearing liabilities		-	-	-	-	-	-	-	0.00%

Y

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

46

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

16. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Period ended 30/6/2011	<1 year $ 1-2 years $ 2-3 years $ 3-4 years $ 4-5 years $ >5 years $ Total $ Weighted average effective interest rate %
CONSOLIDATED FINANCIAL ASSETS Floating rate Cash assets Fixed rate Cash assets Trade & other receivables FINANCIAL LIABILITIES Fixed Rate Trade & other payables Interest-bearing liabilities	481,324 - - - - - 481,324 4.25%
	- - - - - - - 0.00% 64,153 - - - - - 64,153 0.00%
	410,013 - - - - - 410,013 0.00% - - - - - - - 0.00%

17. CONTROLLED ENTITIES

The consolidated financial statements include the financial statements of Resource Star Limited and the controlled subsidiaries listed in the following table:

Country of Incorporation % Equity interest 2012 2011 Orion Exploration Pty Ltd Australia 100% 100% Eastbourne Exploration Pty Ltd Australia 100% 100%	Owing to Parent Company 2012 2011 852,101 805,184 1,514,833 1,430,051 2,366,934 2,235,235

The transactions with the subsidiaries were limited to the advance of funds during the year.

18. EVENTS AFTER THE END OF THE REPORTING PERIOD

There has not been any matter or circumstance that has arisen after the end of the reporting period that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods.

AUDITOR’S REMUNERATION The auditor of Resource Star Limited is HLB Mann Judd. Amounts received or due and receivable by HLB Mann Judd for: An audit or review of the financial report of the entity and any other entity in the consolidated group	CONSOLIDATED 30 June 2012 $ 30 June 2011 $ 37,150 45,375
	37,150 45,375

19. AUDITOR’S REMUNERATION

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

47

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

20. SEGMENT INFORMATION

The Group has identified its operating segment based on the internal reports that are reviewed and used by the Board of Directors (Chief operating decision makers) in assessing performance and determining the allocation of resources. The Group is managed primarily on the basis of its geographical segment.

During the year, the Group considers that it has operated in two segments, being mineral exploration in Australia and Malawi (Africa).

Segment information

The following table presents revenue and profit information and certain asset and liability information regarding the reporting segments for the years ended 30 June 2012 and 30 June 2011. The accounting policies used to determine the segment information are consistent with those used to prepare the Group’s financial statements.

	Australia	Malawi (Africa)	Total
	$	$	$
2012
Segment revenue	7,263	-	7,263
Segment net operating loss after tax	(1,313,067)	(113,177)	(1,426,244)
Segment assets	1,450,510	1,687,322	3,137,832
Segment liabilities	(61,993)	(3,938)	(65,931)
Cash flow information
Net cash flows provided by/(used in) investing activities	(126,653)	(56,598)	(183,251)
2011
Segment revenue	126,506	-	126,506
Segment net operating loss after tax	(1,276,947)	(15,324)	(1,292,271)
Segment assets	2,160,687	1,626,785	3,787,472
Segment liabilities	(145,689)	(265,908)	(411,597)
Cash flow information
Net cash flow provided by/(used in) investing activities	705,668	(445,943)	259,725

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

48

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

21. RELATED PARTY DISCLOSURES

(a) Details of key management personnel (KMP)

• (i) Directors

A Bell (Non-Executive Chairman) R Kestel (Non-Executive Director) R Benussi (Non-Executive Director) Appointed 9 July 2009 C Geach (Non-Executive Director) Resigned 30 November 2011

(ii) Executives

S Heggen (Executive Director) Appointed 1 May 2011

Key management personnel remuneration has been included in the Remuneration Report section of the Directors’ Report.

(b) Remuneration paid or payable

Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or payable to each member of the Group’s key management personnel for the years ended 30 June 2012 and 30 June 2011.

The total remuneration paid to KMP of the Company and the Group is as follows:

Short-term employee benefits Post-employment benefits Share-based payments	CONSOLIDATED 30 June 2012 $ 30 June 2011 $ 371,667 207,500 24,300 6,754 21,329 68,906
	417,296 283,160

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

49

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

21. RELATED PARTY DISCLOSURES (continued)

(c) Shareholdings of KMP

Shares held in the Company (number)

2012	Balance at beginning of year 01 July2011 Exercise options No Change / Other Balance of date of resignation Balance at 30 June 2012
A Bell R Kestel R Benussi C Geach S Heggen Total 2011	13,984,872 - 31,923,873 N/A 45,908,745 - - - N/A - 1,000,000 - - N/A 1,000,000 - - - - - - - - N/A -
	14,984,872 - 31,923,873 - 46,908,745
	Balance at beginning of year 01 July2010 Exercise options No Change / Other Balance of date of resignation Balance at 30 June 2011
A Bell R Kestel R Benussi C Geach R Evans S Heggen Total	13,984,872 - - N/A 13,984,872 - - - N/A - - - 1,000,000 N/A 1,000,000 - - - N/A - - - - - - - - - N/A -
	13,984,872 - 1,000,000 - 14,984,872

(d) Option holdings of KMP

(d) Option holdings of KMP
2012	Balance at beginning of year 01 July2011 Options Issued Options Forfeited Balance of date of resignation Balance at 30 June 2012
A Bell R Kestel R Benussi S Heggen* Total**	11,947,648 - - N/A 11,947,648 - - - N/A - - - - N/A - - 3,000,000 - N/A 3,000,000
	11,947,648 3,000,000 N/A 14,947,648
2011	Balance at beginning of year 01 July2010 Options Issued Options Forfeited Balance of date of resignation Balance at 30 June 2011
A Bell R Kestel R Benussi C Geach R Evans S Heggen Total*	9,947,648 2,000,000 - N/A 11,947,648 - - - N/A - - - - N/A - - - - N/A - 800,000 - (250,000) 550,000 - - - - N/A -
	10,747,648 2,000,000 (250,000) 550,000 11,947,648

• Appointed 6 July 2009, Resigned 5 July 2010 ** Appointed 1 May 2011

(e) Other transactions with directors

Other transactions with the Company or its controlled entities

The terms and conditions of transactions with Directors and Executives and their related entities were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to nonDirector related entities on an arms length basis.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

50

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

21. RELATED PARTY DISCLOSURES (continued)

(e) Other transactions with directors (continued)

The aggregate amount recognised during the year to Specified Directors and Specified Executives and their related entities were as follows:

Red Rock Resources plc

Red Rock Resources Plc is a substantial shareholder of the Company and holds more than 20% of the issued capital. The amount owed to Red Rock Resources plc (Red Rock) by the Group at 30 June 2012 was $Nil (2011: $Nil). Interest of $3,229 (2011: $Nil) was paid to Red Rock Resources Plc during the period.

22. CAPITAL AND OTHER COMMITMENTS

Exploration and other commitments

In order to maintain current rights of tenure to exploration of exploration licences, the Group is required to perform a minimum exploration work to meet the minimum expenditure requirements specified by various governments. These obligations are subject to renegotiation when application for a mining lease is made and at other times. For the exploration licences held at year end, the aggregate minimum expenditure requirement per annum is $959,524 (2011: $967,000).

Operating lease commitments – Group as lessee

The Group has entered into a commercial licence agreement on the lease of the office premises. The period of the licence is 12 months and is extendable on a month by month basis after the anniversary date. The minimum rentals payable per annum is $36,396 (2011: $32,756).

23. GOING CONCERN

In the past year the Group has continued its exploration programs. In the year ended 30 June 2012 the Company recorded a net loss of $1,426,244 and a net operating cash outflow of $1,056,680.

The Company will require further funding in order to meet day-to-day obligations as they fall due and to progress its exploration projects as budgeted. The Board of Directors is aware, having prepared a cashflow budget, of the Company’s working capital requirements and the need to access additional funding within the next 6 months. Should the Company be unable to raise sufficient funds, it would consider a number of options including:

• selectively reducing administrative and exploration costs

• entering into farm-in and joint venture agreements

• the sale or relinquishing of tenements, if necessary.

At this time the Directors are of the opinion that no asset is likely to be realised for an amount less than the amount at which it is recorded at 30 June 2012. Accordingly, no adjustments have been made to the financial report relating to the recoverability and classification of the asset carrying amounts or the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.

The Board is confident in securing sufficient additional funding to provide working capital for at least the next 12 months and would be able to negotiate with interested parties which include a Substantial Shareholder regarding a number of funding options that includes further debt and capital raisings.

As a result of these matters, the Directors have prepared the financial report on a going concern basis.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

51

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

PARENT ENTITY DISCLOSURES (a) Summary of Financial Information Financial position Assets Current assets Non-current assets Total assets Liabilities Current liabilities Total liabilities Net Assets Equity Contributed capital (Accumulated losses) Reserves Options reserve Share based payments reserve Total equity Financial performance Loss for the year Other comprehensive income (loss) Total comprehensive income (loss)	2012 $ 2011 $ 375,397 491,768 2,579,428 2,854,325
	2,954,825 3,346,093
	59,448 355,464
	59,448 355,464
	2,895,377 2,990,629
	32,820,772 31,719,831 (30,398,697) (29,181,175) 329,641 329,641 143,661 122,332
	2,895,377 2,990,629
	30 June 2012 $ 30 June 2011 $ (1,217,522) (1,288,431) - -
	(1,217,522) (1,288,431)

24. PARENT ENTITY DISCLOSURES

(b) Contractual commitments for the acquisition of property, plant and equipment

As at 30 June 2012, the Company had no contractual commitments for the acquisition of property, plant and equipment (2011: Nil), other than those disclosed in note 22.

(c) Guarantees and contingent liabilities

As at 30 June 2012, the Company had no guarantees or contingent liabilities (2011: Nil), other than those already disclosed in note 25.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

52

NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2012

25. CONTINGENCIES

A total of $Nil (2011: $265,908) has been included in Trade and Other Payables in relation to an amount under spent at the Group’s previously held Chintheche tenement. Under legislation in Malawi, amounts under spent are required to be paid to the Republic of Malawi. Given its decision to surrender its right to explore at Chintheche, the Group had recognised a liability for this under-spend. During the current year, the Group received formal advice from the Mines Department in Malawi that a waiver has been provided. Therefore the Group will not have to settle its obligation and as such the liability for this amount has been extinguished. There were no contingencies as at 30 June 2012 and 2011.

26. COMPANY DETAILS

The registered office of the company is: Level 2 Spectrum, 100 Railway Road Subiaco WA 6008

The principal place of business is: Level 9, 440 Collins Street Melbourne VIC 3000

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

53

DIRECTORS’ DECLARATION FOR THE YEAR ENDED 30 JUNE 2012

1. In the opinion of the directors of Resource Star Limited (the “Company”):

2. (a) the financial statements, notes and additional disclosures included in the director’s report designated as audited are in accordance with the Corporations Act 2001, including:

   • (i) giving a true and fair view of the Group’s financial position as at 30 June 2012 and of its performance for the year then ended; and

   • (ii) complying with Australian Accounting Standards (including the Australian Interpretations) and the Corporations Regulations 2001;

3. (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable, based on the factors outlined in note 23; and

4. (c) the financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board, as outlined in note 1(c).

5. This declaration has been made after receiving the declarations required to be made to the directors in accordance with sections 295A of the Corporations Act 2001 for the year ended 30 June 2012.

This declaration is signed in accordance with a resolution of the Board of Directors.

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Simon Heggen Managing Director

28 September 2012

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

54

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Independent Auditor’s Report to the Members of Resource Star Limited

Report on the Financial Report

We have audited the accompanying financial report of Resource Star Limited (“the company”), which comprises the statement of financial position as at 30 June 2012, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration for the consolidated entity. The consolidated entity comprises the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error.

In Note 1(c), the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements , that the consolidated financial statements comply with International Financial Reporting Standards.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 .

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Auditor’s Opinion

In our opinion:

• (a) the financial report of Resource Star Limited is in accordance with the Corporations Act 2001 , including:

• (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of its performance for the year ended on that date; and

• (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001 ; and

• (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1(c).

Emphasis of Matter

Without qualifying our opinion, we draw attention to the basis of preparation of the financial report as set out in notes 1(v) and 23, which identify that the 2012 financial report has been prepared using the going concern basis. The factors identified in note 23 of the financial report indicate the existence of a material uncertainty that may cast doubt upon the ability of the company and the consolidated entity to continue as a going concern and therefore the company and the consolidated entity may not be able to realise their assets and extinguish their liabilities in the normal course of business.

Report on the Remuneration Report

We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2012. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s Opinion

In our opinion, the Remuneration Report of Resource Star Limited for the year ended 30 June 2012 complies with section 300A of the Corporations Act 2001 .

Matters relating to the electronic presentation of the audited financial report and remuneration

report

This auditor’s report relates to the financial and remuneration reports of Resource Star Limited for the financial year ended 30 June 2012 published in the annual report and included on the company’s website. The company’s directors are responsible for the integrity of the company’s website. We have not been engaged to report on the integrity of this web site. The auditor’s report refers only to the financial and remuneration reports. It does not provide an opinion on any other information which may have been hyperlinked to/from the financial and remuneration reports. If users of the financial and remuneration reports are concerned with the inherent risks arising from publication on a website, they are advised to refer to the hard copy of the audited financial and remuneration reports to confirm the information contained in this website version of the financial and remuneration reports.

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HLB Mann Judd Chartered Accountants

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Jude Lau Partner

Melbourne 28 September 2012

ASX ADDITIONAL INFORMATION

Additional information required by the Australian Securities Exchange Ltd, and not shown elsewhere in this report is as follows. The information is current as at 25 September 2012.

(a) Distribution of equity securities

(i) Ordinary share capital

• 113,856,414 fully paid shares held by 1,506 shareholders. All issued ordinary shares carry one vote per share and carry the rights to dividends.

Analysis of numbers of equity security holders by size of holding are:

1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over	Class of Equity Security Number of Holders Fully Paid Ordinary Shares Number of Holders Listed Options 576 150,639 71 20,603 293 735,922 59 159,345 189 1,300,300 20 142,234 367 12,144,726 46 2,104,849 81 99,524,827 36 43,537,010
	1,506 113,856,414 232 45,964,041

1,343 Shareholders holding less than a marketable parcel

(ii) Unlisted options

• 1 holder of 2,000,000 unlisted options expiring 30 September 2012 exercisable at $0.20 each do not carry the right to vote or receive dividends;

• 1 holder of 1,500,000 unlisted options expiring 31 December 2013 exercisable at $0.15 each do not carry the right to vote or receive dividends;

• 1 holder of 750,000 unlisted options expiring 31 December 2013 exercisable at $0.20 each do not carry the right to vote or receive dividends;

• 1 holder of 750,000 unlisted options expiring 31 December 2013 exercisable at $0.25 each do not carry the right to vote of receive dividends

(b) Twenty largest holders of quoted equity securities (fully paid ordinary shares)

RUBICON NOMINEES PTY LTD ECOMETRIX PTY LTD JPMORGAN NOMINEES AUSTRALIA LIMITED VICPORT FISHERIES PTY LTD M & K KORKIDAS PTY LTD BE COPYMART PTY LTD ,B&E MCCONNELL S/F A/C> MR LESLIE MARTA TROMSO PTY LTD MR AUSTIN GALT INTREPID CONCEPTS PTY LTD MR MICHAEL DELOSA & MS FIONA DUNBAR-SMITH VIACAM PTY LIMITED DEUTSCHER LIMITED> MR SWEE FOONG MR VINCENZO & MRS RITA BRIZZI MR ANTHONY ELLIS HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED KINGS PARK SUPERANNUATION FUND PTY LTD A/C> NATIONAL NOMINEES LIMITED MR RODNEY WEBB & MRS DEIDRE WEBB

Number held Percentage % 45,908,554 40.32 22,098,506 19.41 3,725,546 3.27 1,750,000 1.54 1,408,824 1.24 1,210,000 1.06 1,200,000 1.05 1,200,000 1.05 1,000,000 0.88 885,000 0.78 700,000 0.61 650,000 0.57 635,295 0.56 632,942 0.56 523,531 0.46 503,321 0.44 502,722 0.44 501,861 0.44 501,001 0.44 455,000 0.40

85,992,103 75.53

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

57

ASX ADDITIONAL INFORMATION

(c) Twenty largest holders of quoted equity securities (listed options)

	Number held	Percentage
		%
ECOMETRIX PTY LTD	9,291,374	20.21
RED ROCK RESOURCES PLC	6,947,648	15.12
BE COPYMART PTY LTD ,B&E MCCONNELL S/F A/C>	3,400,000	7.40
RUBICON NOMINEES PTY LTD	3,000,000	6.53
HEELMO HOLDINGS PTY LTD	2,700,000	5.87
MR AUSTN GALT	2,000,000	4.35
CROFTBANK PTY LTD	1,999,292	4.35
M & K KORKIDAS PTY LTD	1,780,515	3.87
JORGENSON-WATTS PTY LTD	1,535,037	3.34
MR FREDRICK BELL	1,000,000	2.18
FEVERTREE RESOURCES PTY LTD	1,000,000	2.18
PEOLSOMI PTY LTD	1,000,000	2.18
YOON ENTERPRISES PTY LTD	900,000	1.96
MR TRAVIS RAYNER	730,000	1.59
JULIA WRIGHT	711,043	1.55
MR SIMON TRITTON	500,000	1.09
MR DAVID WALL	500,000	1.09
MR ANDREW BONWICK	467,100	1.02
ROBERT J YOUNG PTY LIMITED	420,000	0.91
MS MAGGIE NG	350,000	0.76
	40,232,009	87.55

(d) Substantial holders

Substantial holders in the company are set out below:

Substantial holders in the company are set out below:
	Number
	held	Percentage
Ordinary shares
RUBICON NOMINEES PTY LTD	45,908,554	40.32
ECOMETRIX PTY LTD	22,098,506	19.41
Options
ECOMETRIX PTY LTD	9,291,374	20.21
RED ROCK RESOURCES PLC	6,947,648	15.12
BE COPYMART PTY LTD ,B&E MCCONNELL S/F A/C>	3,400,000	7.40
RUBICON NOMINEES PTY LTD	3,000,000	6.53
HEELMO HOLDINGS PTY LTD	2,700,000	5.87

(e) Voting rights

All ordinary shares carry one vote per share without restriction.

(f) Business Objective

The Company has used its cash and assets that are readily convertible to cash in a way consistent with its business objectives.

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

58

ASX ADDITIONAL INFORMATION

(h) Schedule of Tenements as at 25 September 2012

NORTHERN TERRITORY

Project	Tenement	Interest
Edith River Project	EL23568	100%
	EL23569	100%
	EL26219	100%
	ELA25884	100%
	EL25885	100%
	EL26341	100%
	ELA27149	100%
	ELA28903	100%
Hayes Creek South	EL24432	100%
Daly River Road	EL24391	100%
Celia Prospect	ELA24414	100%
Woolgni Mine Area	MLA24342	100%

TASMANIA

Project	Tenement	Interest
Specimen Reef	EL11/2005	100%

MALAWI (AFRICA)

Project	Tenement	Interest
Machinga	EPL0230/07	80%
llomba Hill	EPL0264/08	90%
Ulindi	EPLA	90%
Mt Mwinje	EPLA	80%
Livingstonia	EPL187/05R	20%

RESOURCE STAR LIMITED

ANNUAL FINANCIAL REPORT 30 June 2012

59