CONICO LTD - Annual Report 2011 | FinancialReports.eu

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for the Year Ended 30 June 2011

Highlights for the Year to 30 June 2011	3
Corporate Directory	4
Review of Operations	5
Corporate Governance Statement	12
Directors’ Report	16
Auditor’s Independence Declaration	21
Statement of Comprehensive Income	22
Statement of Financial Position	23
Statement of Changes in Equity	24
Statement of Cash Flows	25
Notes to the Financial Statements	26
Directors’ Declaration	38
Independent Auditor’s Report	39
Additional Information for Listed Public Companies	42
Tenement Schedule	43

* Cover Photo: Cuttings from drill hole through mineralised zone - Mt Thirsty Nickel-Cobalt-Manganese Oxide Project

ASX Code: FIS

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Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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HIGHLIGHTS FOR THE YEAR TO 30 JUNE 2011

Mt Thirsty Project (WA)

Co-Ni Oxide Resource:

Mt Thirsty project showcased at Cobalt Conference in Capetown
Infill resource drilling completed
New Resource estimate:
10% increase in contained nickel and cobalt contents
7% increase in contained manganese content

Increased confidence in Ni-Co-Mn Inferred Resource

Negotiations progressing with Native Title holders towards grant of Mining Lease

Ni Sulphide Exploration:

Further RC drilling intersects high grade nickel in three holes:

MTRC020 - 2m @ 5.9% nickel

MTRC022 - 2m @ 3.5% nickel, including 1m @ 4.7% nickel

MTRC030 - 1m @ 4% nickel from 199 to 200m

Diamond drilling indicates nickel sulphide prospect truncated at depth by pegmatite intrusion
Further 4km of untested footwall contact

ASX Code: FIS

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Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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CORPORATE DIRECTORY

DIRECTORS:

Gregory H Solomon LLB (Executive) Douglas H Solomon BJuris LLB (Hons) (Non-Executive) Guy T Le Page B.A., B.Sc. (Hons).,M.B.A., F.FIN., MAusIMM (Non-Executive) James B Richardson (Non-Executive)

COMPANY SECRETARY:

Aaron P Gates B.Com CA

REGISTERED OFFICE:

Level 40, Exchange Plaza 2 The Esplanade Perth, Western Australia 6000 Tel +61 8 9282 5889 Fax +61 8 9282 5866 Email: [email protected] Website: www.fissionenergy.com.au

SOLICITORS:

Solomon Brothers Level 40, Exchange Plaza 2 The Esplanade Perth, Western Australia 6000

AUDITORS:

Grant Thornton Audit Pty Ltd Chartered Accountants Level 1 10 Kings Park Road West Perth, Western Australia 6005

SHARE REGISTRY:

Advance Share Registry Services 150 Stirling Highway Nedlands, Western Australia 6009

STOCK EXCHANGE LISTING:

ASX Code: FIS (ordinary shares)

Quotation has been granted for all the ordinary shares of the company on all Member Exchanges of the Australian Securities Exchange Limited.

ASX Code: FIS

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Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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REVIEW OF OPERATIONS

MT THIRSTY Co -Ni -Mn PROJECT (Fission 50%)

The Mt Thirsty Cobalt –Nickel -Manganese oxide project covering an area of 58km2 is located 20km north-northwest of Norseman (Figure 1). Fission through its wholly owned subsidiary Meteore Metals Limited owns 50% of the project in joint venture with Barra Resources Limited. The Mt Thirsty deposit has the potential to emerge as a significant world cobalt supplier. Metallurgical testwork indicates that high recoveries of cobalt, nickel and manganese can be achieved through low temperature atmospheric leaching.

Mt Thirsty has a JORC compliant Indicated Resource of 16.6 million tonnes at 0.14% Cobalt, 0.60% Nickel and 0.98% Manganese and a JORC compliant Inferred Resource of 15.3 million tonnes at 0.11% Cobalt, 0.51% Nickel and 0.73% Manganese over a length of 1.6 kilometres and a width of up to 850 metres.

As well as the Cobalt-Nickel–Manganese oxide resource, the Mt Thirsty joint venture tenements have potential for nickel sulphide mineralisation at greater depth within the same ultramafic sequence which hosts the near surface oxide deposit. A nickel sulphide discovery was made early in 2010.

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Figure 1: Mt Thirsty project location and regional geology

Mt Thirsty Co–Ni-Mn Oxide Deposit

The Mt Thirsty oxide deposit contains relatively high cobalt values. The particular mineralogy of the deposit, which is a product of a unique weathering history, allows for rapid high leaching recoveries (80% Co and 50% Ni), at moderate temperatures and normal atmospheric pressure utilising weak, acidic reagents. Based on the current flowsheet design, approximately 27,000 tonnes of mixed Ni –Co sulphide (40% Ni, 10% Co) and 33,000 tonnes of manganese carbonate could be produced from Mt Thirsty each year.

Infill Resource Drilling

Further infill resource drilling was completed during the year with 151 air core holes drilled on E63/373 for a total of 6,507m, mostly on the western side of the oxide deposit within the area of the previous Inferred Resource.

There is some potential for incremental oxide resources within the untested MTJV tenements to the north of E63/373 in two areas mapped as laterite by the GSWA and which overlie ultramafics.

Resource Estimation

Independent mining and geological consulting firm Golder Associates Pty Ltd were engaged to estimate a new JORC+ compliant Indicated and Inferred Resource within E63/373 which is summarised in Table 1. The figures shown in this table were estimated within a wireframed mineralised envelope which was based mostly on a 0.06% Co cut off. In some

ASX Code: FIS

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places where Co was less than 0.06% a Ni cut off of 0.7% was used. The locations of the Indicated and Inferred Resources are shown in Figure 2.

Table 1

Table 1	Table 1	Table 1	Table 1
Mt Thirsty Oxide Resources February 2011
Category	Tonnes	Co%	Ni%	Mn%
Indicated Resource	16,600,000	0.14	0.60	0.98
Inferred Resource	15,340,000	0.11	0.51	0.73
Total Resource	31,940,000	0.13	0.55	0.86

+Joint Ore Reserves Committee - Resource compiled in accordance with the guidelines defined in the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2004.

The total Indicated and Inferred Resource above contains approximately 177,000 tonnes of nickel, 40,000 tonnes of cobalt and 274,000 tonnes of manganese. This is a 10% increase in cobalt and nickel and a 7% increase in manganese on the 2008 resource estimate which previously had an Indicated Resource of 14.8 million tonnes at 0.14% Co, 0.59% Ni and 0.99% Mn and an Inferred Resource of 14.2 million tonnes at 0.11% Co, 0.52% Ni and 0.77% Mn (Total Indicated and Inferred Resource 29.0 mt at 0.12% Co, 0.56% Ni and 0.88% Mn).

The upgraded resource is based on the infill aircore drilling referred to above and 1,870 m (45 holes) of mostly extensional drilling completed in mid 2009 at the southern end of the deposit. The most recent drilling has improved confidence in the inferred resource as the drilling density within the area of the inferred resource was increased from a 100m by 80m to a 50m by 80m spacing.

The classification of this near surface resource is shown in Table 2 at varying cobalt cut-off grades with a summary of the estimation methodology utilised is included below.

Table 2

Mt Thirsty Resource 2011 at Varying Cobalt Cut-off Grades

(estimated within wireframed mineralised envelope)

Resource at Varied cut-offs	Indicated Resource Category	Indicated Resource Category	Inferred Resource Category	Inferred Resource Category	Total Resource	Total Resource
Cobalt	Tonnage	Co%/Ni%/Mn%	Tonnage	Co%/Ni%/Mn%	Tonnage	Co%/Ni%/Mn%
0.00%*	16,600,000	0.14/0.60/0.98	15,340,000	0.11/0.51/0.73	31,940,000	0.13/0.55/0.86
0.06%	16,280,000	0.14/0.60/1.00	15,210,000	0.11/0.51/0.74	31,490,000	0.13/0.55/0.87
0.08%	14,180,000	0.15/0.60/1.07	12,940,000	0.12/0.52/0.79	27,120,000	0.13/0.56/0.94
0.10%	10,900,000	0.16/0.61/1.21	8,510,000	0.14/0.53/0.91	19,410,000	0.15/0.57/1.08
0.20%	2,160,000	0.28/0.66/2.06	610,000	0.25/0.66/1.72	2,770,000	0.27/0.66/1.98
0.30%	570,000	0.39/0.73/2.79	70,000	0.36/0.78/0.73	650,000	0.39/0.74/2.73

Note: The table above shows rounded tonnages. This may cause some apparent computational discrepancies.

* Where Co was less than 0.06% a 0.7% Ni cut off was used.

Interpretation of the mineralisation was carried out by the Mt Thirsty Joint Venture, in conjunction with Golder Associates Pty Ltd, on 50 metre spaced sections through the deposit. The cut-off grades used to define the mineralised envelopes are similar to those used for the previous estimate. These interpretations were digitized and wireframed in 3D using Vulcan software.

Internal waste was also interpreted and wireframed. Domain codes were assigned to each wireframe. The wireframes were used to capture the 1 metre drill hole assays within each domain code.

The block model utilized a block size of 25 metres wide by 25 metres long by 5 metres high. Sub-blocks with dimensions 5 metres wide by 5 metre long by 1 metre high were also used when required.

Domain statistics were generated and variography was conducted on the main domain.

The Mt Thirsty resource grades were estimated using the ordinary kriging method. The elements estimated were Ni, Co, Mn, Fe, Mg & Al.

Bulk densities are based on data collected from PQ diamond core holes drilled prior to the 2008 resource estimate and average densities were applied on a domain basis. This resulted in an average bulk density of about 1.89 for the main mineralized domain as for the previous model.

ASX Code: FIS

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Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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The resource estimate has been classified based on data quality, data density, geological continuity and confidence in the estimation.

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----- Start of picture text -----

Inferred
Resource
Indicated
Resource
E63/373
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Figure 2: Distribution of Mt Thirsty Co-Ni-Mn Oxide Resources (AGD84 Zone 51)

Feasibility Study

The Mt Thirsty Joint Venture partners are seeking a joint venture partner that would help to fund the feasibility study and enter into a suitable off-take agreement for the Ni, Co and Mn that will be produced.

Mt Thirsty has the following advantages compared to other nickel-cobalt oxide projects elsewhere in the world:

World class cobalt orebody, with
Favourable metallurgy, single stage leach which requires no autoclaves for high recoveries and has low acid consumptions
Large proportion of revenue from cobalt which is perceived to have strong future price fundamentals
Located in a developed country with low sovereign risk
Located in a mining friendly state with very significant experience in the operation of hydrometallurgical treatment plants for nickel laterites
Low rainfall area which allows disposal of tailings without the requirement for ocean disposal of plant effluents (compared with many global laterite projects)
Good infrastructure – close to main highway, railway, gas and potable water pipelines, Esperance port etc.

Mining Lease

Negotiations are progressing with the Native Title holders concerning a compensation package that will pave the way towards grant of Mining Lease covering the Mt Thirsty cobalt - nickel oxide deposit.

Nickel Sulphide Exploration

A very thick sequence of originally olivine-rich, cumulate - textured ultramafic rocks has been intersected in previous holes drilled at Mt Thirsty. These rocks contain variable amounts of disseminated, vein and stringer-style sulphide mineralisation. The footwall contact where the best concentration of nickel sulphides might be expected was unable to be reached in any holes drilled by the MTJV until quite recently. Basal lava channel embayments located on ultramaficbasalt contacts are a preferred location for nickel sulphide accumulations eg. in the Kambalda region. A possible basal embayment type structure was identified in the southern portion of E63/373 and this was a priority exploration target.

The highlight of the recent nickel sulphide exploration program was the discovery of massive stringer nickel sulphides (6m @ 3.4% Ni) adjacent to the footwall contact in hole MTRC015 which was drilled within E63/373 in May 2010.

ASX Code: FIS

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Follow up RC drilling (15 holes 3,248m) was completed at the Mt Thirsty nickel sulphide prospect during the last 12 months and a further three holes returned significant nickel sulphide intercepts. (refer Table 3 and long section Figure 3). Low grade disseminated mineralisation averaging 0.34% Ni over 2m from 197 to 199m also occurs immediately above the intersection in hole MTRC030.

The geology appears quite complex with several flat dipping pegmatite sills breaking up the stratigraphy into segments similar to the geological setting of Western Areas Flying Fox Nickel Deposit at Forrestania. The mineralisation in holes MTAC15, 20 & 30 appears to be on the same contact whereas that in hole MTRC022 may have been remobilised from its original position, possibly as a result of pegmatite intrusion.

Table 3

Mt Thirsty Nickel Sulphide Prospect – Summary of Latest Nickel Intersections*

Hole No	East	North	Total Depth (m)	From (m)	To (m)	Intersection (m)	Ni Grade (%)
MTRC020	370970	6446514	234 includes:	208 209	210 210	2 1	5.9 8.1
MTRC022	370898	6446513	132 includes:	118 119	120 120	2 1	3.5 4.7
MTRC030	370970	6446543	220	199 197	200 199	1 2	4.0 0.34

*Down hole width slightly less than true width, all holes drilled RC and inclined -60[o] to the west. Ni analysis by acid digest/ICP-OES on approx. 4kg sample split from 1m RC samples.

All the RC holes were drilled to test for continuations of the nickel sulphide mineralisation (interpreted to be dipping easterly at about 70[o] ) discovered in hole MTRC015 at shallow depths from 100 to 200m and determine the likely plunge direction of the mineralisation to aid siting of deeper diamond drill holes.

Based on the geological logs, a petrographic study and whole rock chemistry the nickel sulphide mineralisation in holes MTRC015, 20 & 30 is associated with a relatively high MgO komatiite overlying lower MgO komatiites and basaltic - komatiite rocks.

The RC drilling has shown that the nickel sulphide mineralisation intersected to date, although high grade, is inconsistent and in some cases appears to have been replaced by intruding pegmatite.

A diamond hole (MTDD028) was drilled from the bottom of previous RC hole MTRC010 from 204m to a final depth of 474.8m. Hole MTRC010 was originally inclined at 60[o] to the west but had steepened to 68[o] by the end of the hole. This diamond hole was aimed at testing the down plunge extension of the nickel sulphide mineralisation as well as a deeper footwall position. A geological interpretation indicated that the nickel sulphide mineralisation intersected in the RC holes most likely occupies a “hanging wall” position and that potential still exists at depth for stronger nickel sulphide mineralisation at the footwall contact.

Hole MTDD028 intersected a thick pegmatite intrusion from 276m to the bottom of the hole. This pegmatite is interpreted as being relatively flat lying suggesting that a significant down plunge portion of any nickel sulphide mineralisation would have been stoped out by the pegmatite intrusion over a vertical thickness in excess of 220m from ~200m below surface (refer Figure 3).

A down hole EM survey did not detect any conductors (ie. sulphide mineralisation) but is only likely to detect any strong conductors present within a 50 to 100m radius around the hole.

Further drill testing of this prospect would have to be aimed at extensions of the mineralisation below the thick pegmatite intrusion at greater than 400m vertical depth.

ASX Code: FIS

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Figure 3: Longitudinal Section Showing Nickel Sulphide Intersections

ASX Code: FIS

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Further Potential

There is a further 4km of untested footwall contact in E63/1267, a Mt Thirsty Joint Venture tenement 2km to the north of E63/373 (Figure 4). Considering that nickel sulphides have been discovered in the vicinity of this contact in E63/373 the continuation of this contact into E63/1267 is a high priority target for nickel sulphides at shallow depth which can be easily tested by a surface EM survey. Also, this area is further from the granite contact and is less likely to be disrupted by pegmatite intrusions.

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Figure 4: Location of Mt Thirsty JV tenements and Nickel Sulphide Prospect on TMI Airborne Magnetic Image. Interpreted Location of Footwall Contact shown in yellow.

ASX Code: FIS

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Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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The information in this report which relates to the Mt Thirsty Mineral Resource is based on information compiled by Alan Miller, a full time employee of Golder Associates Pty Ltd and who is a member of the Australasian Institute of Mining and Metallurgy. Alan Miller has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves prepared by the Joint Ore Resources Committee, the Australian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and the Mineral Council of Australia.” Alan Miller consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.

The interpretations and conclusions reached in this report are based on current geological theory and the best evidence available to the authors at the time of writing. It is the nature of all scientific conclusions that they are founded on an assessment of probabilities and, however high these probabilities might be, they make no claim for complete certainty. Any economic decisions that might be taken on the basis of interpretations or conclusions contained in this report will therefore carry an element of risk.

The information in this announcement, insofar as it relates to Mineral Exploration activities and Mineral Resources, is based on information compiled by Michael J. Glasson and Robert N Smith, who are members of the Australian Institute of Geoscientists, both of whom have more than five years experience in the field of activity being reported on. Mr Glasson and Mr Smith are consultants. Mr Glasson and Mr Smith have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Glasson and Mr Smith consent to the inclusion in the report of the matters based on their information in the form and context in which it appears.

It should not be assumed that the reported Exploration Results will result, with further exploration, in the definition of a Mineral Resource.

ASX Code: FIS

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CORPORATE GOVERNANCE STATEMENT

The Board of Directors

The Company’s constitution provides that the number of directors shall not be less than three and not more than ten. There is no requirement for any share holding qualification.

As and if the Company’s activities increase in size, nature and scope the size of the board will be reviewed periodically, and as circumstances demand.

The membership of the board, its activities and composition, is subject to periodic review. The criteria for determining the identification and appointment of a suitable candidate for the board shall include quality of the individual, background of experience and achievement, compatibility with other board members, credibility within the Company’s scope of activities, intellectual ability to contribute to board’s duties and physical ability to undertake board’s duties and responsibilities.

Directors are initially appointed by the full board subject to election by shareholders at the next general meeting. Under the Company’s constitution the tenure of a director (other than managing director, and only one managing director where the position is jointly held) is subject to reappointment by shareholders not later than the third anniversary following his or her last appointment. Subject to the requirements of the Corporation Act 2001, the board does not subscribe to the principle of retirement age and there is no maximum period of service as a director. A managing director may be appointed for any period and on any terms the directors think fit and, subject to the terms of any agreement entered into, may revoke the appointment.

The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the formation of separate or special committees at this time. The board as a whole is able to address the governance aspects of the full scope of the Company’s activities and to ensure that it adheres to appropriate ethical standards.

Role of the Board

The Board’s primary role is the protection and enhancement of long-term shareholder value.

To fulfil this role, the board is responsible for oversight of management and the overall corporate governance statement of the Company including its strategic direction, establishing goals for management and monitoring the achievement of these goals.

Appointments to Other Boards

Directors are required to take into consideration any potential conflicts of interest when accepting appointments to other boards.

Independent Professional Advice

The Board has determined that individual directors have the right in connection with their duties and responsibilities as directors, to seek independent professional advice at the Company’s expense. With the exception of expenses for legal advice in relation to director’s rights and duties, the engagement of an outside adviser is subject to prior approval of the Chairman and this will not be withheld unreasonably.

Continuous Review of Corporate Governance

Directors consider, on an ongoing basis, how management information is presented to them and whether such information is sufficient to enable them to discharge their duties as directors of the Company. Such information must be sufficient to enable the directors to determine appropriate operating and financial strategies for time to time in light of changing circumstances and economic conditions. The directors recognise that mineral exploration is an inherently risky business and that operational strategies adopted should, notwithstanding, be directed towards improving or maintaining the net worth of the Company.

ASX Principles of Good Corporate Governance

The board has reviewed its current practices in light of the ASX Principles of Good Corporate Governance and Best Practice Guidelines with a view to making amendments where applicable after considering the Company’s size and the resources it has available.

As the Company’s activities develop in size, nature and scope, the size of the board and the implementation of any additional formal corporate governance committees will be given further consideration.

The following table sets out the Company’s present position with regard to adoption of these Principles.

ASX Code: FIS

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	ASX Principle	Reference/comment
Principle 1: Lay solid foundations for management and oversight
1.1	Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions.	The Company has not adopted this recommendation to formalise and disclose the functions reserved to the board and those delegated to management. The roles and functions within the Company must remain flexible in order for it to best function within its level of available resources.
1.2	Companies should disclose the process for evaluating the performance of senior executives.	The Company does not have any senior executives and as such has not developed a process for evaluating the performance of senior executives.
1.3	Companies should provide the information indicated in the Guide to Reporting on Principle 1.	See above.
Principle 2: Structure the board to add value
2.1	A majority of board should be independent directors.	Due to the Company’s size, nature and extent of operations, the Company has departed from this principle
2.2	The chair should be an independent director.	Due to the Company’s size, nature and extent of operations, the Company has departed from this principle
2.3	The roles of chair and chief executive officer should not be exercised by the same individual.	The Company does not have a Chief Executive Officer.
2.4	The board should establish a nomination committee.	Acting in its ordinary capacity from time to time as required, the board carries out the process of determining the need for, screening and appointing new directors. In view of the size and resources available to the Company, it is not considered that a separate nomination committee is warranted.
2.5	Companies should disclose the process for evaluating the performance of the board, its committees and individual directors.	Acting in its ordinary capacity, the board from time to time carries out the process of considering and determining performance issues. Whenever relevant, any such matters are reported to the ASX.
2.6	Companies should provide the information indicated in Guide to Reporting on Principle 2.	The skills and experience of directors are set out in the Company’s Annual Report and on its website.
Principle 3: Promote ethical and responsible decision-making
3.1	Companies should establish a code of conduct and disclose the code or summary of the code as to: • the practices necessary to maintain confidence in the Company’s integrity • the practices necessary to take into account their legal obligations and the responsible expectations of their stakeholders • the responsibility and accountability of individuals reporting or investigating reports of unethical practices.	The Company has a Code of Conduct which can be viewed on the Company’s website.
3.2	Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the board to establish measurable objectives for achieving gender diversity and for the board to assess annually both the objectives and progress in achieving them.	Due to the Company’s size, nature and extent of operations, the company has departed from this principle.

ASX Code: FIS

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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 Company’s size, nature and extent of operations, the company has departed from this principle.
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.	Fission does not have any women employees in the whole organisation, women in senior executive positions or women on the board.
3.5	Companies should provide the information indicated in Guide to Reporting on Principle 3.	See above.

Principle 4: Safeguard integrity in financial reporting

4.1	The board should establish an audit committee.	Due to the Company’s size, nature and extent of operations, the company has departed from this principle. The Board itself is the forum that deals with this function.
4.2	The audit committee should be structured so that it: • consists only non-executive directors • consists of a majority of independent directors • is chaired by an independent chair, who is not the chair of the board • At least three members	See 4.1
4.3	The audit committee should have a formal charter.	See 4.1
4.4	Companies should provide the information indicated in Guide to Reporting on Principle 4.	See 4.1
Principle 5: Make timely and balanced disclosure
5.1	Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance and disclose those policies or a summary of those policies.	The Company has a Continuous Disclosure Policy which can be viewed on the Company’s website.
5.2	Companies should provide the information indicated in Guide to Reporting on Principle 5	See above.
Principle 6: Respect the rights of shareholders
6.1	Companies should design and disclose a communications policy for promoting effective communication with shareholders and encourage their participation at general meetings and disclose their policy or a summary of that policy.	The Company has a Communications Policy which can be viewed on the Company’s website.
6.2	Companies should provide the information indicated in Guide to Reporting on Principle 6.	See above.

ASX Code: FIS

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Principle 7: Recognise and manage risk

7.1	Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.	Due to the size and nature of the Company, the Company does not have formalised policies on risk management. The board recognises its responsibility for identifying areas of material business risk and for ensuring that arrangements are in place for adequately managing these risks. This issue is regularly reviewed at board meetings and risk management culture is encouraged amongst employees and contractors.
7.2	The board should require management to design and implement the risk management and internal control system to manage the company’s material business risks and report to it on whether those risks are being managed effectively. The board should disclose that management has reported to it as to the effectiveness of the company’s management of its material business risks.	Due to the size and nature of the Company, the Company does not have formalised a risk management and internal control system. The board recognises its responsibility for identifying areas of material business risk and for ensuring that arrangements are in place for adequately managing these risks. This issue is regularly reviewed at board meetings and risk management culture is encouraged amongst employees and contractors.
7.3	The board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.	The Executive Chairman and the Chief Financial Officer make this assurance to the board.
7.4	Provide information indicated in Guide to Reporting on Principle 7.	See above.
Principle 8: Remunerate fairly and responsibly
8.1	The board should establish a remuneration committee.	Due to the size and nature of the Company, the Company does not have a remuneration committee. The Company’s Constitution allows for a maximum amount per annum to be paid to non-executive directors, any changed to the annual amount must be approved at a General Meeting of members of the Company.
8.2	The remuneration committee should be structured so that it: • consists of a majority of independent directors • is chaired by an independent chair • has at least three members.	See 8.1
8.3	Companies should clearly distinguish the structure of non-executive directors remuneration from that of executives.	See 8.1
8.5	Companies should provide information indicated in ASX Guide to Reporting on Principle 8.	No schemes exist for retirement benefits for non-executive directors other than statutory superannuation.

ASX Code: FIS

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Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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DIRECTORS’ REPORT

Your directors present their report on the company for the financial year ended 30 June 2011.

Directors

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

Gregory H Solomon

Douglas H Solomon

Guy T Le Page

James B Richardson

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

Company Secretary

The following person held the position of Company Secretary at the end of the financial year:

Mr Aaron P Gates has worked for Fission Energy Ltd for the past 3 years. He is a Chartered Accountant and Chartered Secretary, has completed a Bachelor of Commerce (Curtin University) with majors in accounting and business law and completed a Diploma of Corporate Governance. Prior to joining Fission he worked in public practice in audit and corporate finance roles.

Principal Activities

The principal activity of the company during the financial year ended 30th June 2011 was mineral exploration for uranium, cobalt, nickel and manganese.

Operating Results

The loss of the company after providing for income tax amounted to $261,229 (2010: $780,138).

Dividends Paid or Recommended

No dividends were paid or declared for payment during the year.

Review of Mineral Exploration Operations

A review of the operations of the Group during the year ended 30 June 2011 is set out in the Review of Operations on Page 5.

Financial position

The net assets of the Group have decreased by $226,979 from 30 June 2011 to $15,096,712 in 2011. This decrease has largely resulted from the loss posted during the period.

Significant Changes in State of Affairs

In the opinion of the directors, other than disclosed elsewhere in this report, there were no significant changes in the state of affairs of the company that occurred during the period of review.

After Balance Date Events

No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the company, the results of those operations, or the state of affairs of the company in future financial years.

Future Developments, Prospects and Business Strategies

The Company proposes to continue with its exploration program as detailed in the Review of Operations.

Environmental Issues

The Company is the subject of environmental regulation with respect to mining exploration and will comply fully with all requirements with respect to rehabilitation of exploration sites.

ASX Code: FIS

Page 16 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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Information on Directors

Gregory H Solomon

Qualifications Experience

Interest in Shares and Options Directorships held in other listed entities

Executive Chairman

LLB

Appointed chairman March 2006. Board member since March 2006. A solicitor with more than 30 years Australian and international experience in a wide range of areas including mining law, commercial negotiation (including numerous mining and exploration joint ventures) and corporate law. He is a partner in the Western Australian legal firm, Solomon Brothers and has previously held directorships of various public companies since 1984 including two mining/exploration companies.

500,000 Ordinary Shares 1,000,000 Options

Eden Energy Ltd Tasman Resources Ltd

Douglas H Solomon

Non-Executive

Qualifications BJuris LLB (Hons) Experience

Board member since 30 March 2006. A Barrister and Solicitor with more than 20 years experience in the areas of mining, corporate, commercial and property law. He is a partner in the legal firm, Solomon Brothers. 350,000 Ordinary Shares 1,000,000 Options

Interest in Shares and Options Directorships held in other listed entities

Eden Energy Ltd Tasman Resources Ltd

Guy T Le Page

Qualifications Experience

Interest in Shares and Options Directorships held in other listed entities

Non-Executive

B.A., B.Sc. (Hons).,M.B.A., F.FIN., MAusIMM

Board member since 30 March 2006. Currently a corporate adviser specialising in resources. He is actively involved in a range of corporate initiatives from mergers and acquisitions, initial public offerings to valuations, consulting and corporate advisory roles. He previously spent 10 years as an exploration and mining geologist in Australia, Canada and the United States. His experience spans gold and base metal exploration and mining geology and he has acted as a consultant to private and public companies.

14,654,524 Ordinary Shares

Eden Energy Ltd Tasman Resources Ltd Soil Sub Technologies Ltd

Palace Resources Ltd Red Sky Energy Ltd

James B Richardson

Qualifications Experience

Interest in Shares and Options Directorships held in other listed entities

Non-Executive

Dip, Fin Plan

Board member since 11 November 2008. Currently a corporate advisor where he has been actively involved in a range of corporate activities, including the development, documentation, negotiation and marketing of a number of successful financial instruments for various companies encompassing various sectors of the investment market. He has also been employed as a specialist business development executive in some of the more successful national financial services organisations. Additionally, he has extensive experience in evaluating investment opportunities, structuring projects and negotiating financial transactions to meet the expectations of the investment market. 16,158,888 Ordinary Shares

None

ASX Code: FIS

Page 17 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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Remuneration Report (Audited)

This report details the nature and amount of remuneration for each director of Fission Energy Ltd, and for the executives receiving the highest remuneration.

Remuneration Policy

The remuneration policy of Fission Energy Ltd has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas affecting the company’s financial results. The board believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the company, as well as create goal congruence between directors, executives and shareholders.

The board’s policy for determining the nature and amount of remuneration for board members and senior executives of

the company is as follows:

All executives receive a base salary (which is based on factors such as length of service and experience), superannuation, fringe benefits and options. Executives are also entitled to participate in the employee share and option arrangements. All directors and executives receive a superannuation guarantee contribution where required by the government, which is currently 9%, and do not receive any other retirement benefits.

All remuneration paid to directors and executives is valued at the cost to the company and expensed. Options are valued using the Black-Scholes methodology and other market based pricing. The board policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities.

The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting. Fees for non-executive directors are not linked to the performance of the company. However, to align directors’ interests with shareholder interests, the directors are encouraged to hold shares in the company and are able to participate in the employee option plan.

Details of Remuneration for Year Ended 30 June 2011

The remuneration for each director and each of the executive officers of the company during the year was as follows:

Key Management Personnel Remuneration –

Key Management Person 2011 Gregory H Solomon Douglas H Solomon Guy T Le Page James B Richardson Aaron P Gates 2010 Gregory H Solomon Douglas H Solomon Guy T Le Page James B Richardson Aaron P Gates	Short-term Benefits Post- employment benefits Other long- term benefits Share-based payments Total Perfor- mance Related Salary and Fees Cash profit share Non- cash benefit Other Super- annuation Other Equity Options $ $ $ $ $ $ $ $ $ % 150,000 - - - 13,500 - - - 163,500 - 24,000 - - - 2,160 - - - 26,160 - 24,000 - - - 2,160 - - - 26,160 - 24,000 - - - 2,160 - - - 26,160 - (i) - - - - - - 6,310 6,310 -
	222,000 - - - 19,980 - - 6,310 248,290 -
	150,000 - - - 13,500 - - 40,300 203,800 - 24,000 - - - 2,160 - - 40,300 66,460 - 24,000 - - - 2,160 - - 40,300 66,460 - 24,000 - - - 2,160 - - - 26,160 - (i) - - - - - - 6,310 6,310 -
	222,000 - - - 19,980 - - 127,210 369,190 -

i - These management personnel are remunerated by Princebrook Pty Ltd under the Princebrook Management Services Contract.

ASX Code: FIS

Page 18 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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Options issued as part of remuneration for the year ended 30 June 2011

No options were issued to directors and employees as part of their remuneration during the year.

Directors Meetings

During the financial year, 1 meeting of directors were held. Attendances by each director were as follows:

	Directors’ Meetings	Directors’ Meetings
	Number eligible	Number
	to attend	attended
Gregory H Solomon	1	1
Douglas H Solomon	1	1
Guy T Le Page	1	1
James B Richardson	1	1

Indemnifying Officers or Auditor

The company has arranged for an insurance policy to insure the directors against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director of the company, other than conduct involving a wilful breach of duty in relation to the company. The total premium payable is approximately $9,100.

Proceedings on Behalf of 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.

Options

At the date of this report, the unissued ordinary shares of Fission Energy Ltd under option are as follows:

Grant Date Date of Expiry Exercise Price 16 October 2008 26 May 2013 $0.19 17 April 2009 16 April 2012 $0.20 20 November 2009 20 November 2012 $0.1375 8 February 2010 8 February 2013 $0.12	Number under Option 500,000 511,508 3,000,000 888,888
	4,900,396

During the year ended 30 June 2011, no ordinary shares of Fission Energy Ltd were issued on the exercise of options granted under the Fission Energy Ltd Employee Share Option Plan. No shares have been issued since that date. No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of any other body corporate.

Non-audit Services

The board of directors 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 prior to commencement to ensure they do not adversely affect the
integrity and objectivity of the auditor; and

• the nature of the services provided do 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.

No fees for non-audit services were paid/payable to the external auditors during the year ended 30 June 2011.

ASX Code: FIS

Page 19 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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Auditor’s Independence Declaration

The auditor’s independence declaration for the year ended 30 June 2011 has been received and can be found on page 21.

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

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Gregory H Solomon Chairman

Dated this 19[th] day of September 2011

ASX Code: FIS

Page 20 of 43

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10 Kings Park Road West Perth WA 6005 PO BOX 570 West Perth WA 6872

Auditor’s Independence Declaration To the Directors of Fission Energy Limited

T +61 8 9480 2000 F +61 8 9322 7787 E [email protected] W www.grantthornton.com.au

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Fission Energy Limited for the year ended 30 June 2011, I declare that, to the best of my knowledge and belief, there have been:

a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b no contraventions of any applicable code of professional conduct in relation to the audit.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

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M J Hillgrove Director - Audit & Assurance

Perth, 19 September 2011

Grant Thornton Audit Pty Ltd ACN 130 913 594, a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389.

Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards Legislation.

Page 21 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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STATEMENT OF COMPREHENSIVE INCOME FOR YEAR ENDED 30 JUNE 2011

Note Other Income 2 Accounting and audit Depreciation and amortisation Employee benefits expense Impairment expense Legal and other consultants Management fees Administrative expenses Other expenses Loss before income tax Income tax expense 4 Loss for the year Other Comprehensive Income Revaluations of financial assets Income tax relating to comprehensive income Loss attributable to members of the parent entity Total Comprehensive Income / (Loss) attributable to members of the parent Basic/Diluted earnings per share (cents per share) 7	Consolidated 2011 $ 2010 $ 376,284 156,406 (41,675) (29,025) (13,722) (15,774) (286,495) (433,103) (7,224) (167,048) (23,902) (20,870) (194,670) (194,670) (54,129) (72,423) (15,696) (3,631)
	(261,229) (780,138) - -
	(261,229) (780,138) 34,250 (184,596) - -
	34,250 (184,596) (226,979) (964,734)
	(0.21) (0.62)

The accompanying notes form part of these financial statements.

ASX Code: FIS

Page 22 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011

		Consolidated	Consolidated
	Note	2011	2010
		$	$
ASSETS
CURRENT ASSETS
Cash and cash equivalents	8	630,036	1,350,670
Trade and other receivables	9	61,000	113,155
TOTAL CURRENT ASSETS		691,036	1,463,825
NON-CURRENT ASSETS
Property, plant and equipment	10	68,017	80,840
Exploration and evaluation	11	14,589,952	14,181,960
Financial Assets	12	104,250	70,000
TOTAL NON-CURRENT ASSETS		14,762,219	14,332,800
TOTAL ASSETS		15,453,255	15,796,625
CURRENT LIABILITIES
Trade and other payables	15	106,543	222,934
TOTAL CURRENT LIABILITIES		106,543	222,934
CURRENT LIABILITIES
Provisions	16	250,000	250,000
TOTAL NON-CURRENT LIABILITIES		250,000	250,000
TOTAL LIABILITIES		356,543	472,934
NET ASSETS		15,096,712	15,323,691
EQUITY
Issued capital	17	16,618,474	16,618,474
Reserves	18	383,601	349,351
Accumulated losses		(1,905,363)	(1,644,134)
TOTAL EQUITY		15,096,712	15,323,691

The accompanying notes form part of these financial statements.

ASX Code: FIS

Page 23 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED 30 JUNE 2011

Consolidated Group

Balance at 30 June 2009 Shares issued during the year Options issued during the year Total comprehensive Income / (Loss) Balance at 30 June 2010 Shares issued during the year Options issued during the year Total comprehensive Income / (Loss) Balance at 30 June 2011	Ordinary Share Capital Financial Asset Reserve Option Reserve Retained Earnings Total $ $ $ $ $
	15,467,874 56,497 336,550 (863,996) 14,996,925
	1,150,600 - - - 1,150,600 - - 140,900 - 140,900 - (184,596) - (780,138) (964,734)
	16,618,474 (128,099) 477,450 (1,644,134) 15,323,691
	- - - - - - -- - - - - 34,250 - (261,229) (226,979)
	16,618,474 (93,849) 477,450 (1,905,363) 15,096,712

The accompanying notes form part of these financial statements.

ASX Code: FIS

Page 24 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 30 JUNE 2011

Note CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Net cash provided by (used in) operating activities 25 CASH FLOWS FROM INVESTING ACTIVITIES Exploration and evaluation expenditure Payment for subsidiary, net of cash acquired Purchase of property, plant and equipment Proceeds from sale of tenement Net cash provided by (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Net cash provided by (used in) financing activities Net increase / (decrease) in cash held Cash at beginning of financial year Cash at end of financial year 8	Consolidated 2011 $ 2010 $ 375,623 47,817 (723,013) (573,789) 42,870 72,421
	(304,520) (453,551)
	(765,215) (1,178,809) - (405,915) (899) (2,229) 350,000 -
	(416,114) (1,586,953)
	- 1,150,600
	- 1,150,600
	(720,634) (889,904) 1,350,670 2,240,574
	630,036 1,350,670

The accompanying notes form part of these financial statements.

ASX Code: FIS

Page 25 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001 .

The financial report covers the consolidated group of Fission Energy Ltd and controlled entities, and Fission Energy Ltd as an individual parent entity. Fission Energy Ltd is a listed public company, incorporated and domiciled in Australia.

The financial report of Fission Energy Limited and controlled entities, and Fission Energy Limited as an individual parent entity complies with all International Financial Reporting Standards (IFRS) in their entirety.

The following is a summary of the material accounting policies adopted by the group in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

Basis of Preparation

The accounting policies set out below have been consistently applied to all years presented.

Reporting Basis and Conventions

The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

Going Concern

These financial statements have been prepared on a going concern basis, which contemplates continuity of normal business activities the realisation of assets and extinguishment of liabilities in the ordinary course of business. After considering the minimum exploration expenditure and corporate overheads required for the next twelve months, the directors believe the Group currently has sufficient cash flow resources available to continue as a going concern.

Accounting Policies

a. Principles of Consolidation

A controlled entity is any entity Fission Energy Ltd has the power to control the financial and operating policies of so as to obtain benefits from its activities. A list of controlled entities is contained in Note 13 to the financial statements. All controlled entities have a June financial year-end.

All inter-company balances and transactions between entities in the consolidated group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.

Minority equity interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial report.

b. Interests in Joint Ventures

The consolidated group’s interests in joint venture entities are brought to account using the proportionate consolidation method of accounting in the consolidated financial statements. Details of the consolidated group’s interests are shown at Note 14.

c. Income Tax

The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

ASX Code: FIS

Page 26 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

c. Income Tax Continued

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the company will derive sufficient future assessable income to enable the benefit to be realised.

d. Property, Plant and Equipment

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

Plant and equipment

Plant and equipment are measured on the cost basis.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably.

Depreciation

The depreciable amount of all fixed assets including building and capitalised lease assets, but excluding freehold land, is depreciated on a straight-line basis over their useful lives to the company commencing from the time the asset is held ready for use.

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

Class of Fixed Asset	Depreciation Rate
Plant and equipment	15.00–50.00%

Assets’ residual values and useful lives are reviewed and adjusted if appropriate, at each reporting date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the income statement.

e. Exploration and Evaluation Expenditure

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation.

f. Impairment of Non-financial Assets

At each reporting date, the company reviews the carrying values of its non-financial / tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the income statement. Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

ASX Code: FIS

Page 27 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

g. Cash and cash equivalents
Cash comprises current deposits with banks.

h. Revenue

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.

i. Equity-settled compensation

The company operates a number of share-based compensation plans. These include both a share option arrangement and an employee share scheme. The bonus element over the exercise price of the employee services rendered in exchange for the grant of shares and options is recognised as an expense in the income statement. The total amount to be expensed over the vesting period is determined by reference to the fair value of the shares of the options granted.

j. Financial Instruments

Recognition

Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.

Available-for-sale financial assets

Available-for-sale financial assets include any financial assets not included in the above categories. Availablefor-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity.

Financial liabilities

Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation.

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

Impairment

At each reporting date, the group assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether impairment has arisen. Impairment losses are recognised in the income statement.

k. Provisions

Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

l. Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

m. New accounting standards and interpretations not yet adopted

The directors have assessed the new accounting standards issued but not yet effective at 30 June 2011 and noted no impact on the entity’s financial statements.

ASX Code: FIS

Page 28 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

Critical Accounting Estimates and Judgments

The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the company.

Key Estimates — Exploration and Evaluation

The Group’s policy for exploration and evaluation is discussed in Note 1(e). The application of this policy requires management to make certain assumptions as to future events and circumstances. Any such estimates and assumptions may change as new information becomes available. At the date of this report the Group has sufficient reason to believe:

rights to explore in specific areas, once expired, will be renewed;
substantive expenditure on further exploration and evaluation in specific areas has been budgeted;
exploration in specific areas is ongoing and the entity has not decided to discontinue such activities; and
no specific sufficient data exists that indicates that the carrying amount of the exploration and evaluation asset is unlikely to be recovered.

Key Estimates — Share-based payment transactions

The consolidated entity measures the cost of equity settled transactions with suppliers by reference to the fair value of the equity instruments as at the date at which they are granted. The fair value is determined using a Black-Scholes model. The assumptions used in the valuation of share based transactions are discussed in Note 21.

The financial report was authorised for issue on 19 September 2011 by the board of directors.

NOTE 2: OTHER INCOME — sale of goods / services — interest received Total Revenue NOTE 3: LOSS FOR THE YEAR a. Significant Expenses — depreciation expense NOTE 4: INCOME TAX EXPENSE a. The prima facie tax on profit from ordinary activities before income tax is reconciled to the income tax as follows: Prima facie tax payable on profit from ordinary activities before income tax at 30% (2010: 30%) Add tax effect of: — Deferred tax assets not brought to account Income tax attributable to entity The weighted average effective tax rates: b. Unrecognised Deferred Tax Balances: Unrecognised deferred tax asset - losses Unrecognised deferred tax asset - other Unrecognised deferred tax liabilities Net Unrecognised deferred tax assets	2011 $ 2010 $ 333,414 83,985 42,870 72,421
	376,284 156,406
	13,722 15,774 (78,369) (234,041)
	(78,369) (234,041) 78,369 234,041
	- -
	Nil% Nil% 1,433,138 1,318,146 89,915 95,189 (1,102,249) (979,852)
	420,804 433,483

ASX Code: FIS

Page 29 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011 NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION

a. Names and positions held of key management personnel in office at any time during the financial year:

Key Management Person Position

Gregory H Solomon Executive Director Douglas H Solomon Non-Executive Director Guy T Le Page Non-Executive Director James B Richardson Non-Executive Director Aaron P Gates Company Secretary/CFO

Key management personnel remuneration is included in the Remuneration Report of the Directors’ Report

b. Options and Rights Holdings

Number of Options Held by Key Management Personnel

	Balance	Granted as	Options		Net Change	Balance	Total	Total Exer-	Total Unexer-
	1.7.2010	Compen-	Exercised		Other*	30.6.2011	Vested	cisable	cisable
		sation					30.6.2011	30.6.2011	30.6.2011
Gregory H Solomon	1,200,000	-		-	(200,000)	1,000,000	1,000,000	1,000,000	-
Douglas H Solomon	1,125,000	-		-	(125,000)	1,000,000	1,000,000	1,000,000	-
Guy T Le Page	-	-		-	-	-	-	-	-
James B Richardson	-	-		-	-	-	-	-	-
Aaron P Gates	500,000	-		-	-	500,000	400,000	400,000	100,000
Total	2,825,000	-		-	(325,000)	2,500,000	2,400,000	2,400,000	100,000

Net Change Other refers to options purchased, sold or lapsed during the financial year.

c. Shareholdings

Number of Shares held by Key Management Personnel

Gregory H Solomon Douglas H Solomon Guy T Le Page James B Richardson Aaron P Gates Total	Balance 1.7.2010 Received as Compen- sation Options Exercised Net Change Other* Balance 30.6.2011 500,000 - - - 500,000 350,000 - - - 350,000 15,878,837 - - (1,224,313) 14,654,524 17,383,200 -- - (1,224,312) 16,158,888 - - - - -
	34,112,037 - - (2,448,625) 31,663,412

Net Change Other refers to shares purchased or sold during the financial year.

ASX Code: FIS

Page 30 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
Note NOTE 6: AUDITOR’S REMUNERATION Remuneration of the auditor for: — auditing or reviewing the financial report NOTE 7: EARNINGS PER SHARE a. Reconciliation of earnings to profit or loss Profit/(loss) Earnings used to calculate basic EPS b. Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS The share options on issue are not potentially dilutive shares. NOTE 8: CASH AND CASH EQUIVALENTS Cash at bank 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 balance sheet as follows: Cash and cash equivalents NOTE 9: TRADE AND OTHER RECEIVABLES Other receivables NOTE 10: PROPERTY, PLANT AND EQUIPMENT Equipment: At cost Accumulated depreciation Total Plant and Equipment	2011 $ 2010 $ 20,096 23,055 (261,229) (780,138)
	(261,229) (780,138) 126,930,258 124,633,653
	630,036 1,350,670
	630,036 1,350,670
	630,036 1,350,670
	630,036 1,350,670
	61,000 113,155
	61,000 113,155
	123,365 122,466 (55,348) (41,626)
	68,017 80,840

a. Movements in Carrying Amounts

Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year

Movement in the carrying amounts for each class of property, plant and equipment and the end of the current financial year	between the beginning
Balance at 1 July 2010 Additions Depreciation expense Balance at 30 June 2011	Equipment Total $ $ 80,840 80,840 899 899 (13,722) (13,722)
	68,017 68,017

b. Impairment losses

The total impairment loss recognised in the statement of comprehensive income during the current year amounted to $Nil (2010: Nil).

ASX Code: FIS

Page 31 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
Note NOTE 11: EXPLORATION AND EVALUATION Balance at the beginning of the financial year Expenditure incurred during the year Impairment losses Exploration interest disposed of during the year Balance at the end on the financial year	2011 $ 2010 $ 14,181,960 13,170,199 765,216 1,178,809 (7,224) (167,048) (350,000) -
	14,589,952 14,181,960

Recoverability of the carrying amount of exploration assets is dependent on the successful exploration and sale of the minerals.

Capitalised costs amounting to $765,216 (2010: $1,178,809) have been included in cash flows from investing activities in the statement of cash flows for the consolidated entity.

NOTE 12: FINANCIAL ASSETS

Available-for-sale financial assets	Available-for-sale financial assets	104,250	70,000
		104,250	70,000
a.	Available-for-sale financial assets comprise
	Unlisted investments, at fair value
	- unlisted options in listed public companies	104,250	70,000
	Total available-for-sale financial assets	104,250	70,000

NOTE 13: CONTROLLED ENTITIES

	Country of	Percentage Owned (%)*	Percentage Owned (%)*
Controlled Entities Consolidated	Incorporation	2011	2010
Meteore Metals Pty Ltd	Australia	100	100

* Percentage of voting power is in proportion to ownership

NOTE 14: JOINT VENTURE

A controlled entity, Meteore Metals Pty Ltd, has a 50% interest in the Mt Thirsty Joint Venture, whose principal activity is the exploration and the development of the Mt Thirsty nickel, cobalt and manganese project. The interests in joint venture entities are accounted for using the proportionate consolidation method of accounting.

Note Share of joint venture entity’s results and financial position Current Assets Non-Current Assets Total Assets Current Liabilities Total Liabilities Revenues Expenses Profit / (Loss) before income tax Income tax expense Profit / (Loss) after income tax	2011 $ 2010 $ 123,995 164,928 4,223,106 1,347,190
	4,347,101 1,512,118
	44,022 172,697
	44,022 172,697
	15,139 5,885 (135,903) (10,400)
	(120,764) (4,515) - -
	(120,764) (4,515)

ASX Code: FIS

Page 32 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

	Note	2011	2010
		$	$
NOTE 15: TRADE AND OTHER PAYABLES
Trade payables		58,067	153,713
Sundry payables and accrued expenses		48,476	69,221
		106,543	222,934
NOTE 16: PROVISIONS
NON-CURRENT
Other	16a	250,000	250,000
		250,000	250,000

a. Non-Current Provisions

A provision of $250,000 has been recognised in relation to the Group’s 50% share of the liability to pay the original owners of the Mt Thirsty project $500,000 upon the commencement of mining on the tenements. The directors believe this will not become due for at least a couple of years.

NOTE 17: ISSUED CAPITAL

126,930,258 (2010: 126,930,258) ordinary shares a. Ordinary shares At the beginning of reporting period Shares issued prior year Shares issued during the year At reporting date	2011 2010 16,618,474 16,618,474
	16,618,474 16,618,474
	126,930,258 119,280,258 - 7,650,000 - -
	126,930,258 126,930,258

Ordinary shares participate in dividends and the proceeds of winding up in proportion to the number of shares held. At the shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. The Company has no authorised share capital or par value.

b. Options

At the beginning of reporting period Options issued prior year Options lapsed prior year Options lapsed during the year — 28 February 2011 — 31 March 2011 Options issued during the year At reporting date	50,725,388 44,011,500 - 7,713,888 - (1,000,000) - - (44,824,992) - (1,000,000) - - -
	4,900,396 50,725,388

c. Capital Management

Management controls the working capital of the Company in order to maximise the return to shareholders and ensure that the Company can fund its operations and continue as a going concern. Management effectively manages the Company’s capital by assessing the Company’s financial risks and adjusting its capital structure in responses to changes in these risks and in the market. These responses include the management of expenditure and debt levels, distributions to shareholders and share and option issues.

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

ASX Code: FIS

Page 33 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTE 18: RESERVES

a. Option Reserve

The option reserve records items recognised as expenses on valuation of employee share options.

b. Financial Asset Reserve

The financial asset reserve records revaluations of non-current assets. Under certain circumstances dividends can be declared from this reserve.

NOTE 19: PARENT COMPANY INFORMATION

a. Parent Entity Assets Current assets Non-current assets Total Assets Liabilities Current liabilities Non-current liabilities Total liabilities Equity Issued Capital Retained Earnings Reserves Financial assets reserve Option reserve Total reserves Financial performance Profit / (Loss) for the year Other comprehensive income Total comprehensive income Contingent Liabilities The Directors are not aware of any contingent liabilities as at 30 June 2011. NOTE 20: CAPITAL AND LEASING COMMITMENTS Note a. Capital Expenditure Commitments Payable: — not later than 12 months — between 12 months and 5 years — greater than 5 years	2011 $ 2010 $ 600,001 1,278,618 14,251,306 14,079,382
	14,851,307 15,358,000 84,532 72,641 - -
	84,532 72,641 16,618,474 16,618,474 (2,235,300) (1,682,466) (93,849) (128,099) 477,450 477,450
	383,601 349,351 (552,834) (830,757) 34,250 (184,596)
	(518,584) (1,015,353) 2011 $ 2010 $ - - - - - -
	- -

ASX Code: FIS

Page 34 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTE 20: CAPITAL AND LEASING COMMITMENTS CONTINUED

b. Exploration Expenditure Commitments

In order to maintain current rights of tenure to exploration tenements, the company is required to perform minimum exploration work to meet the requirements specified by various State governments. Due to the nature of the company’s operations in exploring and evaluating areas of interest, it is very difficult to forecast the nature and amount of future expenditure. It is anticipated that expenditure commitments for the twelve months will be tenement rentals of $25,000 (2010: $25,000) and exploration expenditure of $165,000 (2010:$197,000). JV parties may effectively meet a significant portion of the commitment costs. These obligations can also be reduced by selective relinquishment of exploration tenure or application for expenditure exemptions.
Pursuant to the agreement made between the Company and Tasman Resources Ltd (“Tasman”) dated 2 April 2007, the Company was assigned all the rights to all uranium mineralisation which may be discovered in a number of tenements held by Tasman. The Company has no exploration commitments for these tenements however is committed to contribute towards fees, rents, rates and other monies payable under the Mining Act 1978 (SA) by Tasman Resources Ltd.

NOTE 21: SHARE-BASED PAYMENTS

The following share-based payment arrangements existed at 30 June 2011:

On 16 October 2008, 500,000 share options were granted to consultants to accept ordinary shares at an exercise price of $0.19. The options are exercisable at any date before 26 May 2013. The options are not transferable.

On 17 April 2009, 511,508 share options were granted to consultants to accept ordinary shares at an exercise price of $0.20. The options are exercisable at any date before 16 April 2012. The options are not transferable.

On 20 November 2009, 3,000,000 share options were granted to directors to accept ordinary shares at an exercise price of $0.1375. The options are exercisable at any date before 20 November 2012.

On 8 February 2010, 888,888 share options were granted to consultants to accept ordinary shares at an exercise price of $0.12. The options are exercisable at any date before 8 February 2013. The options are not transferable.

Outstanding at the beginning of the year Granted Exercised Lapsed Outstanding at year-end Exercisable at year-end	2011 2010 Number of Options Weighted Average Exercise Price $ Number of Options Weighted Average Exercise Price $ 5,900,396 0.16 2,011,508 0.20 - - 3,888,888 0.13 - - - - (1,000,000) 0.20 - -
	4,900,396 5,900,396 0.16
	4,800,396 5,700,396 0.16

There were no options exercised during the year ended 2011.

The options outstanding at 30 June 2011 had a weighted average exercise price of $0.15 and a weighted average remaining life of 1.18 years. Exercise prices range from $0.12 to $0.20 for options outstanding at 30 June 2011.

The weighted average fair value of the options granted during the year was Nil (2010: $0.036).

Included under employee benefits expense in the income statement is $6,310 (2010: $147,210), and relates, in full, to equity settled share-based payment transactions.

NOTE 22: SEGMENT REPORTING

The company operates predominately in one geographical segment and one business segment, being mineral exploration and development in Western Australia and South Australia. Operating segments are identified based on internal reports reviewed by the chief operating decision maker/s.

NOTE 23: CONTINGENT LIABILITIES AND CONTINGENT ASSETS

The Directors are not aware of any contingent assets or contingent liabilities as at 30 June 2011.

NOTE 24: EVENTS AFTER THE BALANCE SHEET DATE

ASX Code: FIS

Page 35 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTE 25: CASH FLOW INFORMATION
a. Reconciliation of Cash Flow from Operations with Profit after Income Tax
Loss after income tax
Non-cash flows in profit
Depreciation
Impairment expense
Options expense
Changes in assets and liabilities, net of the effects of purchase and disposal of
subsidiaries
(Increase)/decrease in trade and term receivables
Increase/(decrease) in trade payables and accruals
Cash flow from operations

2011
$
2010
$
(261,229)
(780,138)
13,722
15,774
7,224
167,048
-
147,210
52,154
(27,851)
(116,391)
24,406

(304,520)
(453,551)

NOTE 26: RELATED PARTY TRANSACTIONS

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

Transactions with related parties:

a.	Key Management Personnel
	Management fees and administration fees paid to Princebrook Pty Ltd, a company
	in which Mr GH Solomon and Mr DH Solomon have an interest.	194,670	194,670
	Legal and professional fees paid to Solomon Brothers, a firm of which Mr GH
	Solomon and Mr DH Solomon are partners.	20,747	6,371
	Commissions on placement of shares and consulting fees paid to R M Capital Pty
	Ltd, a company in which Mr G T Le Page and J B Richardson have an interest.	-	73,400
	Consulting fees paid to R M Corporate Finance Pty Ltd, a company in which Mr G T
	Le Page and Mr J B Richardson have an interest.	2,600	2,500
b.	Associated Companies
	Reimbursement to Tasman Resources Ltd (which has a 19% fully diluted interest in
	the Company) for employee costs on a hourly basis, in relation to Tasman staff
	utilised by the Company	93,898	36,963
	Hire charges from Tasman Resources Ltd (which has a 19% fully diluted interest in
	the Company) for hire of a vehicle owned by the Company	8,500	8,900

NOTE 27: FINANCIAL INSTRUMENTS

a. Financial Risk Exposures and Management

The main risks the company is exposed to through its financial instruments are interest rate risk, liquidity risk and credit risk.

i. Interest Rate Risk

Interest rate risk is managed by investing cash with major institutions in both cash on deposit and term deposit accounts. At 30 June 2011, the effect on the loss and equity as a result of a 2% increase in the interest rate, with all other variables remaining constant would be a decrease in loss by $12,600 (2010: $27,000) and an increase in equity by $12,600 (2010: $27,000). The effect on the loss and equity as a result of a 2% decrease in the interest rate, with all other variables remaining constant would be a increase in loss by $12,600 (2010: $27,000) and an decrease in equity by $12,600 (2010: $27,000).

ASX Code: FIS

Page 36 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTE 27: FINANCIAL INSTRUMENTS CONTINUED

a. Financial Risk Exposures and Management

ii. Liquidity Risk
The Company manages liquidity risk by monitoring forecast cash flows and ensuring that adequate funding is maintained. The Company’s operations require it to raise capital on an on-going basis to fund its planned exploration program and to commercialise its tenement assets. If the company does not raise capital in the short term, it can continue as a going concern by reducing planned but not committed exploration expenditure until funding is available and/or entering into joint venture arrangements where exploration is funded by the joint venture partner.
iii. Credit risk

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in a financial loss to the company. The company has adopted a policy of only dealing with credit worthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults.

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the balance sheet and notes to the financial statements.

The Company does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the company.

b. Financial Instruments

i. Net Fair Values
The aggregate net fair values of the Financial assets and financial liabilities, at the balance date, are approximated by their carrying value.
ii. Interest Rate Risk

The company’s exposure to interest rate risk and effective weighted average interest rates on classes of financial assets and financial liabilities, is as follows:

	Weighted	Average
	Effective	Interest	Floating Interest Rate		Non Interest	Bearing	Total
	Rate
	2011	2010	2011	2010	2011	2010	2011	2010
			$	$	$	$	$	$
Financial Assets:
Cash and cash equivalents	4.25%	3.80%	630,036	1,350,670	-	-	630,036	1,350,670
Trade and other receivables	-	-	-	-	61,000	113,155	61,000	113,155
Total Financial Assets	4.25%	3.80%	630,036	1,350,670	61,000	113,155	691,036	1,463,825
Financial Liabilities:
Trade and sundry payables	-	-	-	-	106,543	222,934	106,543	222,934
Total Financial Liabilities	-	-	-	-	106,543	222,934	106,543	222,934

NOTE 28: COMPANY DETAILS

The registered office of the company is:

The principal place of business is:

Fission Energy Limited Fission Energy Limited Level 40, Exchange Plaza Level 40, Exchange Plaza 2 The Esplanade 2 The Esplanade Perth Western Australia 6000 Perth Western Australia 6000

ASX Code: FIS

Page 37 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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DIRECTORS’ DECLARATION

In the opinion of the directors of Fission Energy Ltd (the “Company”):

a. the financial statements and notes set out on pages 22 to 37, and the Remuneration disclosures that are contained in page 18 of the Remuneration Report in the Directors’ Report, 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 2011 and of its performance, for the financial year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
(iii) complying with International Financial Reporting Standards as disclosed in Note 1.
b. the remuneration disclosures that are contained in page 18 of the Remuneration Report in the Directors’ Report comply with Australian Accounting Standard AASB 124 Related Party Disclosures and
c. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Executive Chairman and Chief Financial Officer for the financial year ended 30 June 2011.

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

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Gregory H Solomon Chairman

Dated this 19[th] day of September 2011

ASX Code: FIS

Page 38 of 43

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10 Kings Park Road West Perth WA 6005 PO BOX 570 West Perth WA 6872

T +61 8 9480 2000 F +61 8 9322 7787 E [email protected] W www.grantthornton.com.au

Independent Auditor’s Report To the Members of Fission Energy Limited

Report on the financial report

We have audited the accompanying financial report of Fission Energy Limited (the “Company”), which comprises the consolidated statement of financial position as at 30 June 2011, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated 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 of the consolidated entity comprising 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 of the financial report in accordance with Australian Accounting Standards and the Corporations Act 2001. This responsibility includes such internal controls as the Directors determine are necessary to enable the preparation of the financial report to be free from material misstatement, whether due to fraud or error. The Directors also state, in the notes to the financial report, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies 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 which require us to 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.

Grant Thornton Audit Pty Ltd ACN 130 913 594, a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389.

Liability limited by a scheme approved under Professional Standards Legislation.

Page 39 of 43

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.

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.

Auditor’s opinion

In our opinion:

a the financial report of Fission Energy 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 2011 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 the notes to the financial statements.

Report on the remuneration report

We have audited the remuneration report included in pages 18 to 19 of the directors’ report for the year ended 30 June 2011. 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.

Grant Thornton Audit Pty Ltd ABN 94 269 609 023, a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389. Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia. Liability limited by a scheme approved under Professional Standards Legislation.

Page 40 of 43

Auditor’s opinion on the remuneration report

In our opinion, the remuneration report of Fission Energy Limited for the year ended 30 June 2011, complies with section 300A of the Corporations Act 2001.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

==> picture [143 x 55] intentionally omitted <==

M J Hillgrove Director - Audit & Assurance

Perth, 19 September 2011

Grant Thornton Audit Pty Ltd ACN 130 913 594, a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389. Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia. Liability limited by a scheme approved under Professional Standards Legislation.

Page 41 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES

Shareholding as at 31 August 2011

a.	Distribution of Shareholders	Number of
	Category (size of holding)	Shareholders
	1 – 1,000	16
	1,001 – 5,000	80
	5,001 – 10,000	172
	10,001 – 100,000	354
	100,001 – and over	110
		732

b. The number of shareholdings held in less than marketable parcels at 30 June 2011 is 289.
c. The names and relevant interests of the substantial shareholders listed in the holding company’s register as at 31 August 2011 are:

August 2011 are:
Shareholder	Number of Ordinary shares
Tasman Resources Ltd	25,000,000
J Richardson	22,013,575
G T Le Page	20,509,212

d. Voting Rights

Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote on a show of hands.

e 20 Largest Shareholders — Ordinary Shares

Name 1. Tasman Resources Ltd 2. Tadea Pty Ltd 3. RBC Dexia Investor Services Australia Nominees Pty Ltd 4. Hiwan Pty Ltd 5. Gasmere Pty Limited 6. Guy Le Page & Dina Le Page 7. Mr Guy Le Page & Mrs Dina Le Page 8. Boulevade Investments Pty Ltd 9. Wise Owl Limited 10. Mr Allen Tapp & Ms Maria Polymeneas 11. HSBC Custody Nominees (Australia) Limited 12. Eternal Family Group Pty Ltd 13. AMI Global Holdings Inc 14. Lawrence Crowe Consulting Pty Ltd 15. Upper Mantle Investments Pty Ltd 16. Mr Abdallah Wehbe 17. SA Capital Funds Management Limited 18. Mr De Zhong Chen 19. JT Services (Aust) Pty Ltd 20. Peto Pty Ltd	Number Shares Held % of Issued Capital 25,000,000 19.696% 15,960,150 12.574% 11,327,886 8.924% 9,733,750 7.669% 6,986,470 5.504% 3,415,313 2.691% 2,015,131 1.588% 2,000,000 1.576% 1,766,875 1.392% 1,600,000 1.261% 1,400,000 1.103% 1,250,000 0.985% 1,000,000 0.788% 1,000,000 0.788% 997,850 0.786% 954,498 0.752% 700,000 0.551% 700,000 0.551% 670,000 0.528% 670,000 0.528%
	89,147,923 70.240%

Name
1.
Tasman Resources Ltd
2.
Tadea Pty Ltd
3.
RBC Dexia Investor Services Australia Nominees Pty Ltd
4.
Hiwan Pty Ltd
5.
Gasmere Pty Limited
6.
Guy Le Page & Dina Le Page
7.
Mr Guy Le Page & Mrs Dina Le Page
8.
Boulevade Investments Pty Ltd
9.
Wise Owl Limited
10. Mr Allen Tapp & Ms Maria Polymeneas
11. HSBC Custody Nominees (Australia) Limited
12. Eternal Family Group Pty Ltd
13. AMI Global Holdings Inc
14. Lawrence Crowe Consulting Pty Ltd
15. Upper Mantle Investments Pty Ltd
16. Mr Abdallah Wehbe
17. SA Capital Funds Management Limited
18. Mr De Zhong Chen
19. JT Services (Aust) Pty Ltd
20. Peto Pty Ltd

Number
Shares Held
% of Issued
Capital
25,000,000
19.696%
15,960,150
12.574%
11,327,886
8.924%
9,733,750
7.669%
6,986,470
5.504%
3,415,313
2.691%
2,015,131
1.588%
2,000,000
1.576%
1,766,875
1.392%
1,600,000
1.261%
1,400,000
1.103%
1,250,000
0.985%
1,000,000
0.788%
1,000,000
0.788%
997,850
0.786%
954,498
0.752%
700,000
0.551%
700,000
0.551%
670,000
0.528%
670,000
0.528%

89,147,923
70.240%

ASX Code: FIS

Page 42 of 43

Fission Energy Ltd Annual Report for Year Ending 30 June 2011

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2. Unlisted Options

.Unlisted Options
Holder Name Date of Expiry Exercise Price ESOP 26 May 2013 $0.19 ESOP 16 April 2012 $0.20 Directors 20 November 2012 $0.1375 ESOP 8 February 2013 $0.12	Number under Option Number of Holders 500,000 511,508 3,000,000 888,888
	4,900,396

TENEMENT SCHEDULE

Table 1 lists further details on the tenements.

Table 1: Fission Energy Tenement Schedule

State	Licence Type	Number	Interest %	Locality	Location
SA	EL	4168	100*	Wartaka	Approximately 50 km west of Port Augusta
SA	EL	4206	100*+	White Cliff	Approximately70 km NNW of Andamooka
SA	EL	4405	100*+	Fergusson Hill	Approximately120km northwest of Andamooka
SA	EL	4300	100*+	Andamooka	ImmediatelyENE of Andamooka
SA	ELA	2008/436	100*+	Todds Dam	Approximately45km west of Andamooka
SA	EL	4322	100*+	Andamooka North	Approximately140 km northwest of Leigh Creek
SA	EL	4475	100*	Iron Knob	Approximately50 km WSW of Port Augusta
SA	EL	3343	100*	Sandstone	Approximately90 km southwest of Coober Pedy
SA	EL	3423	100*	Wildingi Claypan	Approximately95 km southwest of Coober Pedy
SA	EL	3532	100*	GalaxyTank	Approximately85 km southwest of Coober Pedy
SA	EL	3739	100*	Old Wartaka	Approximately70 km west of Port Augusta
WA	ELA	EA28/1744	100	Ponton Creek	Approximately170 km ENE of Kalgoorlie
WA	PL	P63/1453	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	PL	P63/1491	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	PL	P63/1497	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	PL	P63/1498	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	PL	P63/1499	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	PL	P63/1500	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	PL	P63/1501	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	PL	P63/1502	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	PL	P63/1749	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	EL	E63/1113	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	EL	E63/373	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	EL	E63/1267	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	EL	E63/1268	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	EL	E63/1303	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	EL	E63/1304	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	MLA	MLA63/527	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	MiscLA	LA63/60	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	MiscLA	LA63/61	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	MiscLA	LA63/62	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	MiscLA	LA63/66	50	Mt Thirsty	Approximately20 km NW of Norseman
WA	MiscLA	LA63/67	50	Mt Thirsty	Approximately20 km NW of Norseman

Fission has the uranium rights in these tenements under an agreement with Tasman.
In ELs 4206, 4300, 4322, 4405 and 2008/436 Fission only has the right to uranium mineralisation in rocks above the basement.

ASX Code: FIS

Page 43 of 43

AI assistant

CONICO LTD — Annual Report 2011

64678_rns_2011-09-18_33bf621d-f3db-4ffd-a490-45d2f5afb9fd.pdf

Table of Contents

HIGHLIGHTS FOR THE YEAR TO 30 JUNE 2011

Mt Thirsty Project (WA)

Co-Ni Oxide Resource:

Ni Sulphide Exploration:

CORPORATE DIRECTORY

DIRECTORS:

COMPANY SECRETARY:

REGISTERED OFFICE:

SOLICITORS:

AUDITORS:

SHARE REGISTRY:

STOCK EXCHANGE LISTING:

REVIEW OF OPERATIONS

MT THIRSTY Co -Ni -Mn PROJECT (Fission 50%)

Mt Thirsty Co–Ni-Mn Oxide Deposit

Infill Resource Drilling

Resource Estimation

Mt Thirsty Resource 2011 at Varying Cobalt Cut-off Grades

Figure 2: Distribution of Mt Thirsty Co-Ni-Mn Oxide Resources (AGD84 Zone 51)

Feasibility Study

Mining Lease

Nickel Sulphide Exploration

Table 3

Mt Thirsty Nickel Sulphide Prospect – Summary of Latest Nickel Intersections*

Further Potential

CORPORATE GOVERNANCE STATEMENT

The Board of Directors

Role of the Board

Appointments to Other Boards

Independent Professional Advice

Continuous Review of Corporate Governance

ASX Principles of Good Corporate Governance

Principle 4: Safeguard integrity in financial reporting

DIRECTORS’ REPORT

Directors

Gregory H Solomon

Douglas H Solomon

Guy T Le Page

James B Richardson

Company Secretary

Principal Activities

Operating Results

Dividends Paid or Recommended

Review of Mineral Exploration Operations

Financial position

Significant Changes in State of Affairs

After Balance Date Events

Future Developments, Prospects and Business Strategies

Environmental Issues

Information on Directors

Gregory H Solomon

Executive Chairman

LLB

Douglas H Solomon

Guy T Le Page

Non-Executive

B.A., B.Sc. (Hons).,M.B.A., F.FIN., MAusIMM

James B Richardson

Non-Executive

Dip, Fin Plan

Remuneration Report (Audited)

Remuneration Policy

Details of Remuneration for Year Ended 30 June 2011

Key Management Personnel Remuneration –

Options issued as part of remuneration for the year ended 30 June 2011

Directors Meetings

Indemnifying Officers or Auditor

Proceedings on Behalf of Company

Options

Non-audit Services

Auditor’s Independence Declaration

Auditor’s Independence Declaration To the Directors of Fission Energy Limited

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

STATEMENT OF COMPREHENSIVE INCOME FOR YEAR ENDED 30 JUNE 2011

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011

STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED 30 JUNE 2011

CONICO LTD Annual Report 2011