CORAZON MINING LIMITED — Annual Report 2008

Sep 25, 2008

Graynic Metals Limited

(ABN: 87 112 898 025)

and Controlled Entities

Annual Report

For the Financial Year Ended 30 June 2008

CONTENTS

Corporate Directory	2
Directors' Report	3
Auditor's Independence Declaration	26
Income Statement	27
Balance Sheet	28
Statement of Changes in Equity	29
Statement of Cash Flows	30
Notes to the Financial Statements	31
Directors' Declaration	58
Independent Auditor's Report	59
Additional Information for Listed Public Companies	61
Corporate Governance	63

CORPORATE DIRECTORY

NON-EXECUTIVE CHAIRMAN Ivan Hoffman

MANAGING DIRECTOR Bronwyn Barnes (appointed 10 July 2007)

EXECUTIVE DIRECTOR Mark Fletcher (appointed 28 May 2008)

NON-EXECUTIVE DIRECTORS

Clive Jones Jonathan Downes

COMPANY SECRETARY David Round (appointed 19 July 2007)

PRINCIPAL & REGISTERED OFFICE

Level 1, 350 Hay Street SUBIACO WA 6008 Telephone: (08) 6364 0518 Facsimile: (08) 6210 1872

AUDITORS

Ord Nexia Level 2, 47 Colin Street WEST PERTH WA 6005

SHARE REGISTRAR

Advanced Share Registry Services 2/150 Stirling Highway NEDLANDS WA 6009 Telephone: (08) 9389 8033 Facsimile: (08) 9389 7871

STOCK EXCHANGE LISTINGS

Australian Securities Exchange (Home Exchange: Perth, Western Australia) Code: GYN

BANKERS

National Australia Bank 50 St Georges Terrace PERTH WA 6000

WEBSITE

www.graynicmetals.com.au

Your directors present their report on the company and its controlled entities (together the "consolidated entity") for the financial year ended 30 June 2008.

Directors

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

Ivan Hoffman	Non Executive Chairman
Bronwyn Barnes	Managing Director (appointed 10 July 2007)
Mark Fletcher	Executive Director (appointed 28 May 2008)
Clive Jones	Non Executive Director
Jonathan Downes	Non Executive Director

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

INFORMATION ON DIRECTORS

Mr Ivan Hoffman	—	Non-Executive Chairman
Qualifications	—	CPA, FCIS
Experience	—	Mr Ivan Hoffman is a Certified Practising Accountant and a Fellow of the Institute of Corporate Managers, Secretaries and Administrators. For 19 years, Mr Hoffman was a corporate advisory consultant specialising in mergers and acquisitions and company reconstructions, during which period he served on the boards of several public listed companies, including mineral exploration and mining companies. Before that, Mr Hoffman worked several years with local and international financial institutions, including four years in investment management and project financing with Lloyds Bank International. Mr Hoffman is currently chairman of the Fortron group of companies and a non-executive director of Saracen Mineral Holdings Limited.
Interest in Shares and Options	—	100,000 fully paid ordinary shares in Graynic Metals Ltd
		1,000,000 \$0.30 options exercisable on or before 31/10/08
Directorships held in other listed entities in the last three years	—	Saracen Mineral Holdings Limited from 13 May 2005 to date.

Ms Bronwyn Barnes	—	Managing Director (appointed 10 July 2007)
Qualifications	—	B.Arts, Grad Dip Bus
Experience	—	Ms Barnes has over 11 years experience in the resources sector most recently with BHP Billiton's Nickel West and previously WMC Resources. In addition she has held senior roles in the corporate divisions of ConocoPhillips, Methanex Australia and Anaconda Nickel. Ms Barnes holds a Bachelor of Arts from UWA and a Graduate Diploma of Business from Edith Cowan University. Her primary role is to focus on the potential of existing assets within the Graynic portfolio and consider growth opportunities.
Interest in Shares and Options	—	308,914 fully paid ordinary shares in Graynic Metals Limited
		2,000,000 \$0.30 options exercisable on or before 01/11/10
		1,000,000 \$0.45 options exercisable on or before 02/11/11
		1,000,000 \$0.65 options exercisable on or before 01/11/12
Directorships held in other listed entities in the last three years		Nil
C S M (Mark) Fletcher	—	Executive Director
Qualifications	—	B App Sc (Geol), Msc, MAIG, MSEG, MAICD
Experience	—	Mr Fletcher brings considerable exploration experience to the Board. He currently has responsibility for all exploration activities and technical advice for the company. In addition, he is working closely with the Board to identify new project opportunities on which to focus the company's efforts. Mr Fletcher joined Graynic from BHP Billiton where he was Project Leader – Base Metal and Bulk Commodities for the Australia South Asia Region and had responsibility for greenfields base metals exploration in the Olympic Dam area, regional base metals exploration and bulk commodities projects (manganese, coal and bauxite) in Australia and the South Asia region. Prior to working with BHP Billiton Mr Fletcher had 12 years
		experience with WMC Resources and was Senior Geoscientist at WMC at the time of the takeover by BHP Billiton.
Interest in Shares and Options	—	170,000 fully paid ordinary shares in Graynic Metals Limited
		2,000,000 \$0.30 options exercisable on or before 01/11/10
		1,000,000 \$0.45 options exercisable on or before 01/11/11
		1,000,000 \$0.65 options exercisable on or before 01/11/12
Directorships held in other listed entities in the last three years	—	Nil

Mr Clive Jones	—	Non-Executive Director
Qualifications	—	B App Sc (Geol)
Experience	—	Mr Jones is currently Joint Managing Director for Cazaly Resources Ltd which is listed on the ASX. Clive is also a Non Executive Director of Bannerman Resources Limited and Chairman of Cortona Resources Limited both of which are ASX listed companies. Clive has formerly been a director of ASX listed Hamill Resources Limited, International Goldfields Limited, Jackson Gold limited and Mount Burgess Mining Ltd. Clive has been involved in mineral exploration for over 20 years and has worked on the exploration for a range of commodities including gold, base metals, mineral sands, diamonds and industrial minerals.
Interest in Shares and Options	—	2,225,237 fully paid ordinary shares in Graynic Metals Limited
Directorships held in other listed	—	Bannerman Resources Limited from 12 January 2007 to date
entities in the last three years		Cortona Resources Limited from 17 March 2006 to date
		Cazaly Resources Limited from 15 September 2003 to date
		Jackson Gold Limited from 25 March 2002 to 4 December 2006
Mr Jonathan C Downes	—	Non-Executive Director
Qualifications	—	B Sc Geol, MAIG
Experience	—	Mr Downes has over thirteen years experience in the minerals industry and has worked in various geological and corporate capacities. Mr Downes has experience in nickel, gold and base metals and has been intimately involved with numerous private and public capital raisings. Mr Downes was a founding director of Hibernia Gold (now Moly Mines Limited) and Siberia Mining Corporation Limited. Mr Downes is currently Managing Director of Ironbark Gold Limited.
Interest in Shares and Options	—	390,291 fully paid ordinary shares in Graynic Metals Limited
Directorships held in other listed	—	Wolf Minerals Limited from 20 September 2006 to date
entities in the last three years		Ironbark Gold Limited from 18 April 2006 to date
		Sabre Resources Limited from 14 December 2007 to date
		Waratah Gold Limited from 17 July 2008 to date

Company Secretary

The following person held the position of company secretary at the end of the financial year:

David Round (appointed on 19 July 2007)

David Round was appointed Company Secretary on 19 July 2007. David Round is an experienced Accountant, Company Secretary and Corporate Advisor with over 16 years experience in Public Practice and Commerce. David has worked with KPMG, London as a Senior Manager and was also a senior consultant with Ernst & Young and Grant Thornton in Perth. David is a Certified Practising Accountant, Registered Tax Agent and holds a Masters in Business Administration.

Operating Results

The consolidated loss of the consolidated entity after providing for income tax and eliminating intercompany interests amounted to \$2,231,172 (2007: \$383,757).

Review of Operations

Graynic Metals Ltd is exploring projects in Western Australia and New South Wales. In Western Australia the company's key project is Quartz Circle, which is situated in the eastern portion of the Pilbara Craton. Other projects in WA include Walgidee Hills, Nookanbah and Napier Downs all within the Canning Basin, between the Pilbara and Kimberly regions in Western Australia. In New South Wales the Company has projects in two regions; the Gulf Creek project north of Tamworth in the New England Fold belt, and Yanco Glen, Wertago and Mt Dering to the north and northeast of Broken Hill.

With the change in company management at the commencement of the year, work for the 2008 year focused on assessing not only the technical merits of each project, but the strategic fit for the company moving forward. A new business plan was developed which included exploration plans for existing assets and a project generation strategy to identify new opportunities for the Company. The exploration plans focused on meeting defined outcomes at Quartz Circle and Gulf Creek, while an alternative targeting plan will move the Yanco Glen project forward in the future.

Western Australian Projects

Quartz Circle (Graynic 80%)

The Quartz Circle project, located 25km north-northeast of Nullagine in the East Pilbara District of Western Australia, consists of 2 exploration licences and 11 prospecting licences totalling 66.88km2 . The project area has been historically prospected for gold and base metals.

Exploration at Quartz Circle commenced in about 1971 and has been episodic rather than continuous and although there have been some good base metal intersections there has long been uncertainty about the nature of the target deposit and its likely size. A summary of exploration since 1971 is shown below:

Date	Company	Activities
1971-1973	Placer Dome Exploration	Cu Focus- Mapping, Stream and Soil Sampling
1976-1978	Alcoa Australia	Base metal Focus- Mapping,, RC and Diamond Drilling
1981	G.J. Hutton	Au Focus-Au assaying, RC drilling
1982	Penarroya	Rock Chip Sampling
1982-1983	BHP	Stream & Rock Chip Sampling, Airborne reconnaissance, Re logging
1983-1985	Clackline Refractories/RGC Ltd	Soil Sampling, RC drilling, Structural Mapping
1987	Renison Goldfields	Detailed 1:5000 Mapping, Rock Chip sampling, Structural
	Consolidated Exploration	Analysis, RC Drilling
1989	Herald Resources	Project Review
1989-1995	Pancontinental Resources	Mapping, Soil and Rock chip sampling, RC Drilling, SIROTEM and Gravity Survey, Pb Isotope Analysis, Petrographic analysis
1995-1998	RGC Resources	Au Focus. Gridding, Soil Sampling, Ground Magnetics, RC & Diamond Drilling
1997	Herald Resources/ RGC Resources JV	Resource Estimation
2003	MIM Exploration	MIMDAS Survey, Petrographic Analysis
2004	Cazaly Resources Ltd/ Straits Resources JV	Diamond Drilling
2004	Cazaly Resources Ltd	RC Drilling
2005	Graynic Metals Ltd	Aeromagnetic Survey
2005	Graynic Metals Ltd	RC and Diamond Drilling
2006	Graynic Metals Ltd	Electromagnetic Survey and RC and Diamond Drilling
2007	Graynic Metals Ltd	Gravity Survey and RC Drilling

Drill testing of this prospect has continued periodically over the past 30 years with a number of significant results (including ALCO019 17.74m@16.06% Zn from 46m and GMRC068 12m@5.48% Zn from 76m). However the controls on the mineralization have never been well understood owing to conflicting geological data gained from drilling and outcrop, resulting in varying drill orientations.

Review of the longitudinal-section of this mineralized trend shows a number of mineralized intersections in drilling (including ALCOA19, ALCOA26, and GMD21) and coincident chargeable IP anomalies, but no holes that actually test the trend at the optimal angle (two historically drilled holes were drilled perpendicular to strike but were not assayed for zinc, even though geological logging noted the presence of sphalerite).

Previously completed drilling at the Emperor Prospect with the best previously announced down-hole intersections of 16m @ 5.19% Zn from 50m in GMD21, 44m @ 2.1% Zn including 12m @ 3.7% Zn in GMRC34 and 4m @ 6.67% Zn, 39 g/t Ag and 0.47 g/t Au from 176m in GMRC36.

Emperor Zinc Prospect

During the year a review was undertaken on the Quartz Circle project including data compilation and interpretation. This review included the integration of geophysical, geochemical and drill-hole datasets and re-processing of existing datasets, both of which have added greatly to current understanding of the project. Reprocessing has included three dimensional inversion modelling of ground gravity and magnetics and reassay of drill sample pulps from holes testing the Emperor Prospect for an extensive suite of elements that will help define prospective alteration halos associated with the base metal mineralization.

Review of past structural work (Marjorbanks, 1986) and surface geochemical distribution of gold and base metals has highlighted the importance of northeast trending structures for base metal mineralisation, and north-northwest to north-south trending faults as a control of gold and copper mineralisation. These secondary structures also seem to offset the earlier base metal zones and may represent a tensional shear orientation in the Igloo area.

As noted by previous explorers, the main controls on mineralization are difficult to identify. The gravity inversion has highlighted a moderately dense body within the Emperor Prospect that strikes and plunges to the southwest and dips to the southeast. It appears to be disrupted by a north-northwest trending fault. The orientation is similar to a basic to intermediate regional dyke suite, although does not show a high magnetic signature like other dykes in the area. Density sampling of existing drill core showed it is unlikely the anomaly is influenced by sulphides, therefore it's likely a porphyritic intrusion intersected by a number of holes is responsible for the density anomaly.

Inverse polarization (IP) conducted by ALCOA in the late 1970s highlights some interesting chargeable zones associated with ,areas of interested sulphide. The MIMDAS also highlighted the chargeable zones, but surveys failed to provide targets with resolution of less than 100m. Petrophysical testing of mineralized drill core showed the IP response is consistent with that of the better mineralised intersections, but shows the main anomalies have not been adequately tested. As the sulphide mineralogy includes little ironbearing sulphides, little or no electromagnetic response is present.

The review outcome showed the potential for a significant body of sulphide has yet to be sufficiently tested in the area of IP anomalism. As the associated strong but diffuse surface geochemical anomaly could not sufficiently define a prospective horizon, it was determined the best method to define a direct drill target was close spaced surface samples across the prospect.

A close spaced surface sampling program (10m sample intervals on 100m spaced lines) was conducted at the Emperor Prospect in March 2008 over the broad surface geochemical anomaly using a Niton® XL3t portable "XRF" analyzer. A number of strong northeast-trending anomalies were defined, with one extending over 5 lines. To ensure validity of the original survey, a second survey involving 50m infill lines was completed in May 2008 and confirmed the target as real.

The best anomaly shows values of greater than 1000ppm Zn over every line, including persistent values above 5000ppm Zn. The anomalous values extend over 20-50m along the lines, with very high values (greater than 1%Zn) coincident with high manganese along cross-cutting north-northeast structures.

Igloo Copper Prospect

Graynic is assessing a small, near-surface copper deposit at the Igloo Prospect. The mineralisation is mainly oxidised and includes chalcocite, azurite, native copper and malachite occurring as a discrete pod of mineralisation at a depth of between 25m and 50m from surface.

A small zone of primary chalcopyrite also exists below the base of oxidation. This deposit, which was first recognised by Pancontinental in 1992, has returned historic drill results that include 2m @ 46%Cu, 1.5 g/t Au, 231 g/t Ag and 3m @ 47% Cu, 1.5 g/t Au, 298 g/t Ag.

A scoping study, including mineral resource estimate and mining study, is now underway to determine the potential for an economic outcome. Based on the results, further assessment work will be completed to enable a JORC-compliant mineral resource progression towards development of the deposit.

Reconnaissance – E46/541 and E45/2602

Reconnaissance rock chip sampling and mapping was conducted on E46/541 and E45/2602 testing the potential of where the mineralised north-northeast structures intersect the southern boundary of the McPhee Dome on E46/541 and general assessment of the various stratigraphic units in E45/2602.

Some areas of anomalous copper encountered on E46/541 will be followed up in a second phase of sampling while the eastern portion of E45/2602 will be surrendered in September 2008.

QUARTZ CIRCLE PROJECT LOCATION MAP

Diamond Exploration Projects

In December 2007 Graynic concluded a Joint Venture Agreement with King Leopard Diamonds Ltd covering Graynic's diamond tenements in Western Australia. Under the terms of the agreement Graynic was to receive an allotment of shares and options in a proposed new Initial Public Offering ("IPO") of King Leopard Diamonds in recognition of the transfer of an interest in diamond tenements Walgidgee Hills E04/1551, Nookanbah E04/1620, Boodallana E45/2788, Napier Downs E04/1557 and E04/1558 that are currently held by Graynic. In addition, on successful listing of King Leopard Diamonds, Graynic was to receive a \$100,000 payment in recognition of the value of the tenements and Graynic's expenditure to date.

King Leopard Diamonds Ltd advised Graynic in June 2008 that the planned Initial Public Offering (IPO) of King Leopard Ltd would not proceed and that King Leopard Diamonds Ltd were withdrawing from the agreement covering Graynic's diamond tenements in Western Australia.

Following the withdrawal of King Leopard Diamonds Ltd from the joint venture agreement, a review of the diamond tenement package took place and subsequently the Boodallana tenement E45/2788 was relinquished due to its small size and lack of prospectivity. Graynic continues to hold the remaining tenements that constitute the diamond tenements and is reviewing its options for the future management of these tenements.

The remaining diamond tenement package includes exploration Licence 04/1551, which hosts the entire Walgidee Lamproite Intrusion in the West Kimberley region of Western Australia. The Walgidee Lamproite is a known diamond-bearing intrusion from which 891 micro-diamonds and 62 macro-diamonds have been recovered. The 11 macro-diamonds recovered by Diamond Rose NL in 1998 comprised 6 white (colourless) stones, 4 brown and 1 yellow, ranging in size from 0.8mm to 1.5mm. The Walgidee Lamproite is reputedly the largest lamproite in the world.

It is the Company's opinion that the amount of testing to date on these tenements may have been inadequate for such a large intrusion and that there remains good potential for a commercial diamond deposit to be discovered. Whilst this project is not core to the Graynic strategy, a partner for this project is being sought.

New South Wales Projects

Gulf Creek

The Gulf Creek project is located approximately 100 kilometres north-northwest of Tamworth in the New England district of NSW and was one of the largest copper mines of its type that operated historically in the New England region between 1889 and 1912.

An induced polarisation ("IP") geophysical survey covering the historic mine workings and possible strike extensions to the mineralisation at Gulf Creek was completed in February 2008. Fourteen lines at 50m spacing were surveyed with a pole-dipole configuration. Pseudo-sections indicated a chargeable anomaly associated with, and beneath the known lode position that extends for approximately 250m along strike. The anomaly is about three to four times the intensity of background.

Development of both two and three dimensional inversion models has shown the known mineralised horizon to be associated with a chargeable response. The models have highlighted a zone of higher chargeability with a northwesterly plunge beyond the area previously mined, while a moderately chargeable zone may have been fault-offset to the southeast.

The IP has also identified chargeable anomalies associated with minor surface workings on another stratigraphic horizon 200m to the northeast of the historic Gulf Creek workings.

An Access Agreement was completed with the Nucoorilma Native Title claimants for Gulf Creek. A Section 31 Deed has also been executed by all parties with Ministerial Approval now received. All approvals are now in place in preparation for a drilling program to commence.

GULF CREEK LOCATION MAP

GULF CREEK LONGITUDINAL SECTION

During the year Graynic concluded Farm-In and Joint Venture Agreement with Proto Resources and Investments Limited ("Proto") (ASX Code: PRW) relating to Graynic's Wertago prospect in NSW.

The agreement has been structured in three phases. Under the first phase of the agreement, Proto was required to spend a minimum of \$150,000 within six months of the commencement of the Agreement, which would include assessment and interpretation of airborne EM; design, collection and interpretation of ground EM follow up; and geochemistry over a number of historical prospects and/or EM anomalies. This first phase was completed in the third quarter of FY2008 and Proto has commenced activities under the second phase of the agreement.

Under the terms of the second phase Proto commits to a minimum exploration investment commitment of \$350,000 and a maximum exploration investment commitment of \$500,000 over an 18 month period to earn a 60% interest in the Wertago prospect. On completion of this phase Proto can elect to proceed to a third phase where through the expenditure of \$500,000 of exploration investment expenditure within 18 months Proto can earn 80% of the project and will issue Graynic with an additional 500,000 shares at completion of this phase. Proto will act as Joint Venture Manager and have responsibility for design, implementation and interpretation of surveys and work programs during this time, including any land access negotiations or other requirements.

During the year Proto completed a number of work programs for Wertago, commencing with the re-assay of five previously un-sampled old drill holes found in the NSW Geological Survey's Londonderry core facility near Penrith. In addition Proto completed a review of historical work undertaken at Wertago in preparation for field mapping, ground electromagnetic survey over a number of VTEM anomalies and drilling activities that occurred during the year.

From this review Proto identified seven new targets for drilling at Wertago that were generated from a moving loop electromagnetic survey focused on VTEM airborne electromagnetic anomalies defined earlier from a survey flown in late 2006 by Graynic. A number of the targets are coincident with a recently interpreted deep magnetic anomaly previously ignored in the area.

A nine hole Reverse Circulation drill program for 1,156m was completed in April 2008 that tested seven moving loop electromagnetic anomalies and known copper-oxide mineralization associated with historic

workings. Results for those holes targeting the moving loop EM anomalies confirmed the fertile nature of the Koonenberry Fault zone with elevated base metals associated with weakly magnetic, skarn-style alteration. These observations suggest the Koonenberry Fault at this location could host analogous mineralisation to the Grasmere deposit held by Black Range Minerals Ltd (5.75Mt at 1.03% copper). Alternatively, those holes drilled under the historic copper-oxide workings conferred with historic drill results that suggest supergene enrichment at surface of a deeper copper sulphide source via veins and faults. Discrete results of <0.2% Cu associated with trace chalcopyrite in veinlets and shear zones suggest a porphyry-hosted sulphide source at depth.

Proto is moving ahead with further exploration activities at Wertago in line with the joint venture agreement with Graynic.

Yanco Glen

The Yanco Glen Project comprises an area of approximately 580sq km and is located 40km to the north of Broken Hill in eastern New South Wales. The Silver City highway traverses the tenement, and access is further provided by station tracks.

The project has very poorly recorded production information from the numerous copper and gold workings targeting quartz veins located in the northern part of the licence. Only the Anaconda area having been officially recorded with no published production figures. None of the prospects have been drill tested. Similarly, copper, lead and zinc have historically been mined in the southern regions of the licence but there are no production records available. The Yanco Glen lease represents a large strategic stake in the Broken Hill region as it covers the northern portion of the Broken Hill Block, a large portion of the similaraged Euriowie Block with the central area overlain by the northwest-trending Adelaidean Supergroup.

During the year a rock chip sampling program was completed along with follow up soil sampling around Anaconda mine workings targeting Cu-Au veins in the northern end of the Euriowie Block. Forty -80µm soil samples were taken on a 50m x 200m grid in addition to more comprehensive rock chip sampling along the entire 1.5km strike of historic workings. While only limited sampling was conducted along the historic Anaconda mine workings, results were encouraging, with gold recording between 1.9g/t and 2.37g/t and copper between 1.22% and 13.60%.

Sample ID	Easting	Northing	Copper (Cu) %	Gold (Au) g/t	Silver (Ag) g/t
CRSS0674	545806	6545329	0.2	0.04	0.5
CRSS0265	545578	6544852	17.95	0.29	65.3
CRSS0266	545614	6544879	3.77	0.32	12.9
CRSS0267	545684	6544988	14.35	0.11	8.3
CRSS0268	545710	6545092	10.65	0.14	5.1
CRSS0269	545778	6545233	10.25	1.6	8.7
CRSS0270	546179	6545990	7.51	2.87	21.7
CRSS0271	546253	6546249	7.44	3.53	3.1

Assay results from further rock chip sampling confirmed copper-gold mineralisation along a strike length of 1.2km, the results of which are below.

Results from previous rock chip sampling (AN001–AN007) conducted by Graynic in 2007 reported gold up to 2.37 g/t, copper up to 14.2% and silver at 74 g/t along a strike length of 20 meters.

It is likely these results represent supergene-enriched surface material overlying copper sulphide-bearing veins within a shear zone. Soil sampling completed during the same program showed little surface dispersion away from the outcropping shear-hosted veins. Sample CRSS0674 is a stream sediment sample taken from a creek, upstream from the host structure intersection.

YANCO GLEN PROJECT LOCATION MAP

Copper Ridge

Following the completion of a geochemical and rock chip sampling program a review of the Copper Ridge tenement EL6435 was undertaken. This review considered the likely potential for the tenement, and the fit with Graynic's strategy. This review has resulted in the tenements for Copper Ridge being relinquished, enabling the company to focus on other projects of higher interest and its project generation strategy.

Corporate

Option Conversion Program

In November 2007 Graynic's cash position was secured with the appointment of Indian Ocean Capital Pty Ltd as underwriters for the current option conversion program. More than 98% of options on issue were converted to fully paid shares and as part of the agreement with Indian Ocean Capital an additional three million (3 million) shares at \$0.20 (20 cents) were placed to Indian Ocean Capital Pty Ltd for a total sum of \$600,000. Combined with the placement completed in September through Indian Ocean Capital Pty Ltd, these funds will be used to progress Graynic's current exploration and drilling programs in WA and NSW.

Board Appointment

During the year Mark Fletcher was appointed to the Board as Executive Director – Exploration. This followed his appointment to Graynic Metals as Exploration Manager in November 2007. Mark has considerable experience in exploration having worked previously with both WMC Resources and BHP Billiton. Mr Fletcher's appointment to the Board represented a key step forward in the company's corporate development and his expertise will be of significant importance to Graynic's exploration and project development programs.

Project Generation

Graynic is actively seeking to expand the number of quality projects in its portfolio. Direction setting process has led us to believe that the acquisition of a project within a broader range of base and precious metals on a global scale would add significant value to the Company.

During the year a project generation strategy was implemented to target favorable regions for our preferred deposit types and identified a number of opportunities that may fit within our strategy. Work undertaken during the year included due diligence on new country entry, further technical review of specific opportunities and assessment of sub-province prospectivity. A number of specific opportunities are now being targeted and discussions have commenced with both private companies and government to secure such opportunities for Graynic. In line with our strategy we continue to review other opportunities as they are presented as well as continue to proactively identify opportunities suitable for the company.

Wolf Minerals Limited

In February 2007 Graynic transferred its interest in the tin and tungsten potential on the Yanco Glen Project in New South Wales to Wolf Minerals Limited ("Wolf"; ASX: WLF) in exchange for 2 million Wolf shares. During the year Wolf announced the acquisition of a world class Tungsten-Tin deposit in Hemerdon, United Kingdom. This acquisition moves Wolf towards becoming a world class tungsten and tin producer and Graynic's investment in Wolf offers a substantial investment to the company and its shareholders.

Financial Position

The net assets of the consolidated entity have increased by \$1,208,109 from 30 June 2007 to \$10,928,090 in 2008. This increase has largely resulted from the following factors:

• A capital raising of \$600,000 from the issue of shares and \$2,443,928 on conversion of options to shares.

As at 30 June 2008 the Consolidated Entity has \$2,467,807 cash on hand.

The Directors believe that the Consolidated Entity currently has sufficient capital to effectively explore its current landholdings.

Significant Changes in State of Affairs

The following significant changes in the state of affairs of the parent entity occurred during the financial year:

• i. On 10th July 2007 Ms Bronwyn Barnes was appointed Managing Director of the Company.
• ii. On 19th July 2007 Mr Kent Hunter resigned as Company Secretary.
• iii. On 19th July 2007 Mr David Round was appointed Company Secretary.
• iv. On 28th August 2007 the Company entered into a Farm In and Joint Venture Agreement with Proto Resources and Investments Ltd (Proto), whereby Proto can earn up to 80% interest in the Company's Wertago prospect in NSW by spending \$1,000 over 42 months and the issue of 500,000 shares in Proto at a price to be determined at the end of the 42 month period.
• v. On 3rd October 2007 Mr Mark Fletcher was appointed as Exploration Manager.
• vi. On 9th October 2007 the Company issued 3,000,000 ordinary shares at \$.20 each to institutional investor clients of Indian Ocean Capital raising \$600 before costs of the issue.
• vii. On 1st November 2007 option holders converted 12,219,643 options to shares raising \$2,443,393.
• viii. On 29th November 2007 the Company issued 250,000 employee options exercisable at \$0.30 on or before 18th October 2010, for nil consideration as passed by the members at the Annual General Meeting on 2nd November 2007.
• ix. On 29th November 2007 the Company issued 250,000 employee options exercisable at \$0.45 on or before 18th October 2011, for nil consideration as passed by the members at the Annual General Meeting on 2nd November 2007.
• x. On 29th November 2007 the Company issued 1,000,000 employee options exercisable at \$0.30 on or before 1st November 2010, for nil consideration as passed by the members at the Annual General Meeting on 2nd November 2007.
• xi. On 29th November 2007 the Company issued 1,000,000 employee options exercisable at \$0.30 on or before 2nd November 2010, for nil consideration as passed by the members at the Annual General Meeting on 2nd November 2007.
• xii. On 29th November 2007 the Company issued 1,000,000 employee options exercisable at \$0.45 on or before 1st November 2011, for nil consideration as passed by the members at the Annual General Meeting on 2nd November 2007.
• xiii. On 29th November 2007 the Company issued 1,000,000 director options exercisable at \$0.45 on or before 2nd November 2011, for nil consideration as passed by the members at the Annual General Meeting on 2nd November 2007.
• xiv On 29th November 2007 the Company issued 1,000,000 employee options exercisable at \$0.65 on or before 1st November 2012, for nil consideration as passed by the members at the Annual General Meeting on 2nd November 2007.
• xv. On 29th November 2007 the Company issued 1,000,000 director options exercisable at \$0.65 on or before 2nd November 2012, for nil consideration as passed by the members at the Annual General Meeting on 2nd November 2007.
• xvi. On 10th December 2007 the Company concluded a Joint Venture agreement in relation to its Australian diamond tenements with King Leopard Diamonds Ltd. Under the terms of the agreement the Company will receive 1,000,000 shares and 1,000,000 options in the IPO of King Leopard Diamonds in consideration of transferring an 80% interest in the tenements to King Leopard Diamonds. Upon the successful listing of King Leopard Diamonds the Company will also receive payment of \$100,000 in recognition of expenditure to date.
• xvii. On 28th May 2008 Mr Mark Fletcher was appointed to the Board of the Company as an Executive Director.
• xviii. On 30th June 2008 the Joint Venture agreement referred to in xvi above lapsed as King Leopard Diamonds failed to list.

After Balance Date Events

i. On 12th August 2008 the company signed a Joint Venture agreement with Global Nickel Investments Ltd. Under the terms of the agreement the company will transfer 90% of its legal and beneficial interest in the Mt Cornell tenement to Global Nickel. The company will receive \$40,000 in cash and 300,000 shares in Global Nickel.

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

Future Developments, Prospects and Business Strategies

The consolidated entity will continue its mineral exploration activity at and around its exploration projects with the object of identifying commercial resources.

Environmental Issues

The consolidated entity is aware of its environmental obligations with regards to its exploration activities and ensures that it complies with all regulations when carrying out any exploration work.

REMUNERATION REPORT (audited)

This report details the nature and amount of remuneration for each key management person of Graynic Metals Limited.

Names and positions held of consolidated and parent entity key management personnel in office at any time during the financial year are:

Key Management Personnel	Position
Ivan Hoffman	Non-Executive Chairman
Bronwyn Barnes	Managing Director (appointed 10 July 2007)
Clive Jones	Non-Executive Director
Jonathan Downes	Non-Executive Director
Mark Fletcher	Executive Director (appointed 28 May 2008)

Remuneration policy

This remuneration report, which forms part of the directors' report, sets out information about the remuneration of Graynic Metals Limited's key management personnel for the financial year ended 30 June 2008. Disclosures required under AASB 124 Related Party Disclosures have been transferred from the financial report and have been audited. The additional disclosures required by the Corporations Act 2001 and the Corporations Regulations 2001 have not been audited.

The remuneration policy of Graynic Metals Limited has been designed to align key management personnel 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 consolidated entity's financial results. The board of Graynic Metals Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best key management personnel to run and manage the consolidated entity, as well as create goal congruence between directors, executives and shareholders.

The board's policy for determining the nature and amount of remuneration for key management personnel of the consolidated entity is as follows:

• The remuneration policy, setting the terms and conditions for the key management personnel, was developed and approved by the board.
• All key management personnel receive a base salary (which is based on factors such as length of service and experience), superannuation, fringe benefits, options and performance incentives.
• The Board reviews key management personnel packages annually by reference to the consolidated entity's performance, executive performance and comparable information from industry sectors.

The board's remuneration policy is designed to attract the highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth.

Key management personnel are also invited to participate in employee option arrangements.

The key management personnel receive a superannuation guarantee contribution required by the government, which is currently 9%, and do not receive any other retirement benefits. Some individuals, however, have chosen to sacrifice part of their salary to increase payments towards superannuation.

All remuneration paid to key management personnel is valued at the cost to the company and expensed. Shares given to key management personnel are valued as the difference between the market price of those shares and the amount paid by the key management personnel. Options are valued using the Black-Scholes methodology.

The board policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The remuneration committee determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to nonexecutive directors is subject to approval by shareholders at the Annual General Meeting. Fees for nonexecutive directors are not linked to the performance of the consolidated entity. 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.

Current fee levels for key management personnel are set out in the table below.

Performance-based remuneration

The Company is an exploration entity and therefore speculative in terms of performance. Consistent with attracting and retaining talented executives, directors and senior executives are paid market rates associated with individuals in similar positions, within the same industry. The Board does not endorse the use of bonus payments for directors and senior executives at this point in time. Performance incentives will be issued in the event that the entity moves from an exploration to a producing entity, and key performance indicators such as growth and profits will be used as measurements for assessing Board performance.

Company performance, shareholder wealth and director and executive remuneration

The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives by the issue of options to some directors and key executives to encourage the alignment of personal and shareholder interests.

Key terms of employment contracts

• The contracts for service between the company and its executives are on a continuing basis, the terms of which are not expected to change in the immediate future. Upon retirement key management personnel are paid employee benefit entitlements accrued to date of retirement.
• The employment conditions of the managing director, Ms Bronwyn Barnes, Mr Mark Fletcher and other key management personnel are formalised in contracts of employment. All key management personnel are permanent employees of Graynic Metals Limited.
• The employment contracts state a four week resignation period. The company may terminate an employment contract without cause by providing four weeks' written notice or making payment in lieu of notice based on the individual's annual salary component.

a) Details of the nature and amount of compensation paid, payable or otherwise made available to directors are as follows:

Key Management Personnel Remuneration

2008

Key Management Personnel	Short Term Employee Benefits	Post Employment Benefits	Share Based Payments	Total	Performance Related
	Cash and salary	Superannuati on	Options
	\$000	\$000	\$000	\$000	%
Bronwyn Barnes	177	16	566	759	-
Ivan Hoffman	40	4	-	44	-
Clive Jones	37	-	-	37	-
Jonathan Downes	24	2	-	26	-
Mark Fletcher	110	40	566	716	-
	388	62	1,132	1,582	-

2007

Key Management Personnel	Short Term Employee Benefits	Post Employment Benefits	Share Based Payments	Total	Performance Related
	Cash and salary	Superannuati on	Options
	\$000	\$000	\$000	\$000	%
Ivan Hoffman	40	4	-	44	-
Clive Jones	36	-	-	36	-
Jonathan Downes	30	3	-	33	-
Ron Thom (resigned 19/6/07)	137	13	78	228	-
Nathan McMahon (resigned 5/12/06)	15	-	-	15	-
	258	20	78	356

(b) Compensation options granted during the year:

Options are issued to directors and executives as part of their remuneration. The options are not issued based on performance criteria, but are issued to the directors and executives of Graynic Metals Limited and its subsidiaries to increase goal congruence between executives, directors and shareholders.

The following table illustrates details of compensation options granted or vested during the financial year.

Options Granted as Remuneration During the Year

Terms & Conditions for Each Grant

		Granted	Vested	Grant	Value per	Exercise	First	Last
		No	No	Date	Option at Grant Date \$	Price \$	Exercise Date	Exercise Date
	Key Management Personnel
A	Mark Fletcher	2,000,000	-	02/11/07	\$0.300	\$0.30	02/11/08	01/11/10
B	Bronwyn Barnes	2,000,000	-	02/11/07	\$0.300	\$0.30	02/11/08	02/11/10
C	Mark Fletcher	1,000,000	-	02/11/07	\$0.298	\$0.45	02/11/09	01/11/11
D	Bronwyn Barnes	1,000,000	-	02/11/07	\$0.298	\$0.45	02/11/09	02/11/11
E	Mark Fletcher	1,000,000	-	02/11/07	\$0.301	\$0.65	02/11/10	01/11/12
F	Bronwyn Barnes	1,000,000	-	02/11/07	\$0.301	\$0.65	02/11/10	02/11/12

These options were granted for nil consideration and were valued using the Black & Sholes valuation model with the following inputs.

	Tranche A	Tranche B	Tranche C	Tranche D	Tranche E	Tranche F
Grant date share price (\$)	0.43	0.43	0.43	0.43	0.43	0.43
Exercise price (\$)	0.30	0.30	0.45	0.45	0.65	0.65
Expected volatility	95.00%	95.00%	95.00%	95.00%	95.00%	95.00%
Option life (years)	3.000	3.003	4.000	4.003	5.000	5.003
Dividend paid	Nil	Nil	Nil	Nil	Nil	Nil
Risk free interest free	6.77%	6.77%	6.77%	6.55%	6.55%	6.55%

(c) Shares issued on exercise of compensation options:

During the financial year ended 30 June 2007, no shares were issued on exercise of compensation options.

(d) Share and option holdings

(i) Shareholdings

Number of Shares held by Key Management Personnel

2008	Balance 1.7.2007	Received as Compen sation	Options Exercised	Net Change Other*	Balance 30.6.2008
Ivan Hoffman	-	-	-	100,000	100,000
Bronwyn Barnes	-	-	-	308,914	308,914
Clive Jones	1,775,124	-	528,845	(78,732)	2,225,237
Jonathan Downes	347,000	-	-	43,291	390,291
Mark Fletcher	-	-	-	170,000	170,000
Total	2,122,124	-	528,845	543,473	3,194,442

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

2007	Balance 1.7.2006	Received as Compen sation	Options Exercised	Net Change Other*	Balance at Resignation	Balance 30.06.2007
Ivan Hoffman	-	-		- -	-	-
Ronald Thom	524,000	-		- -	524,000	N/A
Clive Jones	1,057,689	-		- 717,435	-	1,775,124
Jonathan Downes	97,000	-		- 250,000	-	347,000
Nathan McMahon	1,260,150	-		- (1,074,869)	185,281	N/A
Total	2,938,839	-		- (107,434)	709,281	2,122,124

(ii). Options and Rights Holdings

Number of Options Held by Key Management Personnel

2008	Balance 1.7.2007	Granted as Compensation	Vested during the reporting period	Options Exercised*	Net Change Other*
Ivan Hoffman	1,000,000	-	-	-	-
Bronwyn Barnes	-	4,000,000	566,222	-	-
Clive Jones	1,528,845	-	-	(528,845)	(1,000,000)
Jonathan Downes	-	-	-	-	-
Mark Fletcher	-	4,000,000	566,222	-	-
Total	2,528,845	8,000,000	1,132,444	(528,845)	(1,000,000)

*The Net Change Other reflected above includes those options that have been forfeited by holders as well as options issued during the year under review.

2008	Balance 30.6.2008	Total Vested 30.6.2008	Total Exer cisable 30.6.2008	Total Unexer cisable 30.6.2008
Ivan Hoffman	1,000,000	1,000,000	1,000,000	-
Bronwyn Barnes	4,000,000	566,222	-	4,000,000
Clive Jones	-	-	-	-
Jonathan Downes	-	-	-	-
Mark Fletcher	4,000,000	566,222	-	4,000,000
Total	9,000,000	2,132,444	1,000,000	8,000,000

(ii). Options and Rights Holdings

Number of Options Held by Key Management Personnel

2007	Balance 1.7.2006	Granted as Compensation	Vested during the reporting period	Options Exercised*	Net Change Other*
Ivan Hoffman	1,000,000	-	-	-	-
Ronald Thom	1,262,000	1,000,000	-	-	(1,000,000)
Clive Jones	1,528,845	-	-	-	-
Jonathan Downes	-	-	-	-	-
Nathan McMahon	1,000,000	-	-	-	-
Total	4,790,845	1,000,000	-	-	(1,000,000)

*The Net Change Other reflected above includes those options that have been forfeited by holders as well as options issued during the year under review.

2007	Balance 30.6.2007	Total Vested 30.6.2007	Total Exer cisable 30.6.2007	Total Unexer cisable 30.6.2007
Ivan Hoffman	1,000,000	1,000,000	1,000,000	-
Ronald Thom	1,262,000	1,262,000	1,262,000	-
Clive Jones	1,528,845	1,528,845	1,528,845	-
Jonathan Downes	-	-	-	-
Nathan McMahon	1,000,000	1,000,000	1,000,000	-
Total	4,790,845	4,790,845	4,790,845	-

Meetings of Directors

During the financial year, 8 meetings of directors (including committees of directors) were held. Attendances by each director during the year were as follows:

	Directors' Meetings
	Number eligible to attend Number attended
Ivan Hoffman	8	8
Bronwyn Barnes	8	8
Jonathan Downes	8	6
Clive Jones	8	7
Mark Fletcher	-	-

Indemnifying Officers or Auditor

During or since the end of the financial year the company has given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay insurance premiums as follows:

The company has paid premiums to insure each of the following 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 amount of the premium was \$1,045 for each director.

Options

At the date of this report, the unissued ordinary shares of Graynic Metals Limited under option are as follows:

Grant Date	Date of Expiry	Exercise Price	Number under Option
06/12/05	31/10/08	\$0.30	2,000,000
22/12/06	31/07/09	\$0.30	1,000,000
25/10/06	24/10/11	\$0.46	250,000
02/11/07	18/10/10	\$0.30	250,000
02/11/07	01/11/10	\$0.30	2,000,000
02/11/07	02/11/10	\$0.30	2,000,000
02/11/07	18/10/11	\$0.45	250,000
02/11/07	01/11/11	\$0.45	1,000,000
02/11/07	02/11/11	\$0.45	1,000,000
02/11/07	01/11/12	\$0.65	1,000,000
02/11/07	02/11/12	\$0.65	1,000,000
			11,750,000

During the year ended 30 June 2008 12,219,643 ordinary shares of Graynic Metals Limited were issued on the exercise of options and 8,000,000 options lapsed.

No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other body corporate.

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.

No fees for non-audit services were paid/payable to the external auditors during the year ended 30 June 2008.

	Note	Consolidated Group		Parent Entity
		2008 \$000	2007 \$000	2008 \$000	2007 \$000
Revenue from continuing operations	2	126	95	126	95
Other income	2	2	182	2	182
Administrative expense		(74)	(51)	(73)	(51)
Employee benefits expense	3	(1,585)	(130)	(1,585)	(130)
Depreciation and amortisation expense		(12)	(4)	(12)	(4)
Consultancy expense		(52)	(75)	(52)	(75)
Compliance and regulatory expense		(62)	(57)	(62)	(57)
Occupancy expense		(30)	(33)	(30)	(33)
Directors fees		(101)	(246)	(101)	(246)
Insurance expense		(8)	(6)	(8)	(6)
Impairment of investment in controlled entity		-	-	(400)	-
Write-off of capitalised exploration expenditure	3	(434)	(96)	(23)	(96)
Finance costs		(1)	-	(1)	-
Increase/(Diminution) in value of held for trading financial assets		-	63	-	63
Loss on sale of held for trading financial assets		-	(26)	-	(26)
Loss before income tax	3	(2,231)	(384)	(2,219)	(384)
Income tax expense	4	-	-	-	-
Loss for the year		(2,231)	(384)	(2,219)	(384)
Basic loss per share (cents per share)	7	4.44	0.97
Diluted loss per share (cents per share)		-	0.59

INCOME STATEMENT FOR YEAR ENDED 30 JUNE 2008

BALANCE SHEET AS AT 30 JUNE 2008

	Note	Consolidated Group	Parent Entity
		2008 \$000	2007 \$000	2008 \$000	2007 \$000
ASSETS
CURRENT ASSETS
Cash and cash equivalents	8	2,467	576	2,467	561
Other receivables	9	27	70	27	70
TOTAL CURRENT ASSETS		2,494	646	2,494	631
NON-CURRENT ASSETS
Financial assets	10	2,072	2,730	4,042	5,114
Property, plant and equipment	12	36	7	36	7
Exploration and evaluation expenditure	13	6,392	6,424	4,644	4,265
TOTAL NON-CURRENT ASSETS		8,500	9,161	8,722	9,386
TOTAL ASSETS		10,994	9,807	11,216	10,017
CURRENT LIABILITIES
Trade and other payables	14A	35	69	35	69
Short-term provisions	15	31	18	19	6
TOTAL CURRENT LIABILITIES		66	87	54	75
NON-CURRENT LIABILITIES
Loans and bo	14B	-	-	222	222
TOTAL NON-CURRENT LIABILITIES		-	-	222	222
TOTAL LIABILITIES		66	87	276	297
NET ASSETS		10,928	9,720	10,940	9,720
EQUITY
Issued capital	16	12,826	9,682	12,826	9,682
Reserves	17	3,052	3,426	3,052	3,426
Accumulated losses		(4,950)	(3,388)	(4,938)	(3,388)
TOTAL EQUITY		10,928	9,720	10,940	9,720

STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED 30 JUNE 2008

	Issued Capital	Option Reserve	Asset Revaluati on Reserve	Share Based Payments Reserve	Accumula ted Losses	Total
Consolidated Entity	\$000	\$000	\$000	\$000	\$000	\$000
Balance at 1 July 2006	8,632	122	-	874	(3,004)	6,624
Profit attributable to members of parent entity	-	-	-	-	(384)	(384)
Shares issued during the year	1,105	-	-	-	-	1,105
Transaction costs	(55)	-	-	-	-	(55)
Asset revaluation reserve	-	-	2,300	-	-	2,300
Employee equity settled transactions	-	-	-	130	-	130
Balance at 30 June 2007	9,682	122	2,300	1,004	(3,388)	9,720
Options lapsed	127	-	-	(796)	669	-
Loss attributable to members of parent entity	-	-	-	-	(2,231)	(2,231)
Shares issued during the year	3,171	(122)	-	(5)	-	3,045
Transaction costs	(154)	-	-	-	-	(154)
Asset revaluation reserve	-	-	(658)	-	-	(658)
Employee equity settled transactions	-	-	-	1,207	-	1,207
Balance at 30 June 2008	12,826	-	1,642	1,410	(4,950)	10,928
Parent Entity Group
Balance at 1 July 2006	8,632	122	12	874	(3,004)	6,624
Profit attributable to members of parent entity	-	-	-	-	(383)	(383)
Shares issued during the year	1,105	-	-	-	-	1,105
Transaction costs	(55)	-	-	-	-	(55)
Asset revaluation reserve	-	-	2,300	-	-	2,300
Employee equity settled transactions	-	-	-	130	-	130
Balance at 30 June 2007	9,682	122	2,300	1,004	(3,388)	9,720
Options lapsed	127	-	-	(796)	669	-
Loss attributable to members of parent entity	-	-	-	-	(2,219)	(2,219)
Shares issued during the year	3,171	(122)	-	(5)	-	3,044
Transaction costs	(154)	-	-	-	-	(154)
Asset revaluation reserve	-	-	(658)	-	-	(658)
Employee equity settled transactions	-	-	-	1,207	-	1,207
Balance at 30 June 2008	12,826	-	1,642	1,410	(4,938)	10,940

CASH FLOW STATEMENT FOR YEAR ENDED 30 JUNE 2008

	Note		Consolidated Group		Parent Entity
		2008 \$000	2007 \$000	2008 \$000	2007 \$000
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees		(686)	(562)	(686)	(561)
Other revenue		-	12	-	12
Interest received		123	99	123	99
Payments for exploration and evaluation		(395)	(1,492)	(395)	(1,483)
Net cash used in operating activities	20	(958)	(1,943)	(958)	(1,933)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments		-	88	-	88
Purchase of property, plant and equipment		(41)	(4)	(41)	(4)
Purchase of investments		-	(12)	-	(12)
Net cash provided by/(used in) investing activities		(41)	72	(41)	72
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares		3,044	1,105	3,044	1,105
Payments for costs of issue of shares		(154)	(55)	(154)	(55)
Loan from related party		-	-	15	-
Repayment of borrowings		-	-	-	(10)
Net cash provided by financing activities		2,890	1,050	2,905	1,040
Net increase in cash held		1,891	(821)	1,906	(821)
Cash at beginning of financial year	8	576	1,397	561	1,382
Cash at end of financial year	8	2,467	576	2,467	561

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

This financial report includes the consolidated financial statements and notes of Graynic Metals Limited and controlled entities ('Consolidated Group' or 'Group'), and the separate financial statements and notes of Graynic Metals Limited as an individual parent entity ('Parent Entity') incorporated in and domiciled to Australia.

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

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below. They have been consistently applied unless otherwise stated.

Basis of Preparation

The financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. All amounts are presented in Australian Dollars unless otherwise noted.

a. Principles of Consolidation

A controlled entity is any entity over which Graynic Metals Limited has the power to govern the financial and operating policies so as to obtain benefits from its activities. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are considered.

A list of controlled entities is contained in Note 11 to the financial statements.

As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial statements as well as their results for the year then ended. Where controlled entities have entered (left) the consolidated group during the year, their operating results have been included (excluded) from the date control was obtained (ceased).

All inter-group 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 consistency with those adopted by the parent entity.

b. Income Tax

The income tax expense (benefit) for the year comprises current income tax expense (benefit) and deferred tax expense (benefit).

Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses.

Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity.

Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. 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.

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

c. Plant and Equipment

Plant and equipment is carried at cost or fair value as indicated 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.

The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

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 group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Depreciation

The depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding freehold land, is depreciated on a diminishing value basis over the asset's useful life to the consolidated group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

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

Class of Fixed Asset		Depreciation Rate
Plant and equipment		40%
Paintings		5%
	Office furniture and equipment	18%

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

c. Plant and Equipment (continued)

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. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

d. Exploration and Development 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.

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

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.

e. Financial Instruments

Recognition and Initial Measurement

Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention.

Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below.

Derecognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity is no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.

Classification and Subsequent Measurement

i. Financial assets at fair value through profit or loss

Financial assets are classified at fair value through profit or loss when they are held for trading for the purpose of short term profit taking, where they are derivatives not held for hedging purposes, or designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Realised and unrealised gains and losses arising from changes in fair value are included in profit or loss in the period in which they arise.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

e. Financial Instruments (continued)

ii. 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 subsequently measured at amortised cost using the effective interest rate method.

iii. Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the group's intention to hold these investments to maturity. They are subsequently measured at amortised cost using the effective interest rate method.

iv. Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated as such or that are not classified in any of the other categories. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. Gains and losses on available-for-sale investments are recognised as a separate component of equity until the investment is sold, collected or otherwise disposed of, or until the investment is determined to be impaired. At which time the cumulative gain or loss previously reported in equity is included in the Income Statement..

v. Financial Liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest rate method.

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 consolidated entity 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 an impairment has arisen. Impairment losses are recognised in the income statement.

f. Impairment of Assets

At each reporting date, the consolidated entity reviews the carrying values of its 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.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

Where it is not possible to estimate the recoverable amount of an individual asset, the consolidated entity estimates the recoverable amount of the cash-generating unit to which the asset belongs.

g. Investments in Associates

Investments in associate companies are recognised in the financial statements by applying the equity method of accounting. The equity method of accounting recognises the consolidated entity's share of post-acquisition reserves of its associates.

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

h. Employee Benefits

Provision is made for the company's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Those cashflows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cashflows.

i. Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments.

j. Revenue and Other Income

Interest revenue is recognised when receivable.

All revenue is stated net of the amount of goods and services tax (GST)

k. Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.

Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

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. Rounding of Amounts

The parent entity has applied the relief available to it under ASIC Class Order 98/100 and accordingly, amounts in the financial report and directors' report have been rounded off to the nearest \$1,000.

n. 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 group.

o. New Accounting Standards and Interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2008 reporting periods. The consolidated entity's and the parent entity's assessment of the impact of these new standards and interpretations is set out below.

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

o. New Accounting Standards and Interpretations (continued)

(i) AASB 8 Operating Segments and AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8

AASB 8 and AASB 2007-3 are effective for annual reporting periods commencing on or after 1 January 2009. AASB 8 will result in a significant change in the approach to segment reporting, as it requires adoption of a 'management approach' to reporting on the financial performance. The information being reported will be based on what the key decision-makers use internally for evaluating segment performance and deciding how to allocate resources to operating segments. The Group has not yet decided when to adopt AASB 8. Application of AASB 8 will not result in different segments, segment results and different type of information being reported in the segment note of the financial report. Nor is it expected to affect any of the amounts recognised in the financial statements.

(ii) Revised AASB 123 Borrowing Costs and AASB 2007-6 Amendments to Australian Accounting Standards arising from AASB 123 [AASB 1, AASB 101, AASB 107, AASB 111, AASB 116 & AASB 138 and Interpretations 1 & 12]

The revised AASB 123 is applicable to annual reporting periods commencing on or after 1 January 2009. It has removed the option to expense all borrowing costs and - when adopted - will require the capitalisation of all borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset. There will be no impact on the financial report of the consolidated entity, as the consolidated entity does not incur borrowing costs..

(iii) AASB-I 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

AASB-I 14 will be effective for annual reporting periods commencing 1 January 2008. It provides guidance on the maximum amount that may be recognised as an asset in relation to a defined benefit plan and the impact of minimum funding requirements on such an asset. As the consolidated entity has no defined benefit plans this standard will have no application to the consolidated entity.

(iv) Revised AASB 101 Presentation of Financial Statements and AASB 2007 8 Amendments to Australian Accounting Standards arising from AASB 101

A revised AASB 101 was issued in September 2007 is applicable for annual reporting periods beginning on or after 1 January 2009. It requires the presentation of a statement of comprehensive income and makes changes to the statement of changes in equity, but will not affect any of the amounts recognised in the financial statements. If an entity has made a prior period adjustment or has reclassified items in the financial statements, it will need to disclose a third balance sheet (statement of financial position), this one being as at the beginning of the comparative period. The Group intends to apply the revised standard from 30 June 2009.

p. Earnings Per Share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

p. Earnings Per Share (continued)

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

q. Contributed Equity

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.

If the entity reacquires its own equity instruments, for example as the result of a share buy-back, those instruments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in equity.

(i) Share-based payments

Share-based compensation benefits are provided to employees via the Graynic Metals Option Plan. Information relating to this scheme is set out in note 5.

The fair value of options granted under the Graynic Metals Option Plan is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options.

The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

The fair value of the options granted is adjusted to reflect market vesting conditions, but excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each reporting date, the entity revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. The impact of the revision to original estimates, if any, is recognised in the income statement with a corresponding adjustment to equity.

r. Trade and Other Payables

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of financial year which are unpaid.

s. Segment Reporting

A business segment is identified for a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. A geographical segment is identified when products or services are provided within a particular economic environment subject to risks and returns that are different from those of segments operating in other economic environments.

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

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 NOTE 2: REVENUE

			Consolidated Group		Parent Entity
		2008 \$000	2007 \$000	2008 \$000	2007 \$000
Revenue
-	Interest received	126	85	126	85
-	Other income	2	10	2	10
-	Profit from sale of assets	-	182	-	182
	Total Revenue	128	277	128	277

NOTE 3: LOSS FOR THE YEAR

		Consolidated Group		Parent Entity
		2008 \$000	2007 \$000	2008 \$000	2007 \$000
a.	Write-off of capitalised exploration expenditure	434	96	23	96
	Impairment of investment in controlled entity	-	-	400	-
b.	Significant Revenue and Expenses
	The following significant revenue and expense items are relevant in explaining the financial performance:
	- Employee benefit expense	1,585	130	1,585	130

NOTE 4: INCOME TAX EXPENSE

		Consolidated Group			Parent Entity
		2008 \$000	2007 \$000		2008 \$000	2007 \$000
a.	The components of tax expense comprise:
	Current tax		-	-		-	-
	Deferred tax		-	-		-	-
			-	-		-	-

	NOTE 4: INCOME TAX EXPENSE (continued)
b.	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% (2007: 30%)
		(669)	(115)	(666)	(115)
	Add:
	Tax effect of:
	— other non-allowable items	485	39	485	39
	— tax benefit of revenue losses not recognised	216	132	213	132
		701	171	698	171
	Less:
	Tax effect of:
	— tax benefit of equity raising costs not recognised	(32)	(56)	(32)	(56)
	Income tax attributable to entity	-	-	-	-
c.	Unrecognised deferred tax balances
	Deferred tax assets have not been recognised in respect of the following:
	Deferred Tax Assets:
	Carry forward revenue losses	1,789	1,504	1,789	1,504
	Capital raising costs	69	54	69	54
	Provisions and accruals	9	7	9	7
	Investments	729	729	729	729
		2,596	2,294	2,596	2,294
	Deferred Tax Liabilities:
	Exploration expenditure	(1,244)	(1,253)	(1,244)	(1,256)
	Other	(4)	(55)	(4)	(55)
	Net unrecognised deferred tax balances	1,348	986	1,348	986

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION

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

Key Management Personnel	Position
Ivan Hoffman	Non-Executive Chairman
Bronwyn Barnes	Managing Director (appointed 10 July 2007)
Clive Jones	Non-Executive Director
Jonathan Downes	Non-Executive Director
Mark Fletcher	Executive Director (appointed 28 May 2008)

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

b. Options and Rights Holdings

Number of Options Held by Key Management Personnel

2008	Balance 1.7.2007	Granted as Compensation	Vested during the reporting period	Options Exercised*	Net Change Other*
Ivan Hoffman	1,000,000	-	-	-	-
Bronwyn Barnes	-	4,000,000	566,222	-	-
Clive Jones	1,528,845	-	-	(528,845)	(1,000,000)
Jonathan Downes	-	-	-	-	-
Mark Fletcher	-	4,000,000	566,222	-	-
Total	2,528,845	8,000,000	1,132,444	(528,845)	(1,000,000)

*The Net Change Other reflected above includes those options that have been forfeited by holders as well as options issued during the year under review.

2008	Balance 30.6.2008	Total Vested 30.6.2008	Total Exer cisable 30.6.2008	Total Unexer cisable 30.6.2008
Ivan Hoffman	1,000,000	1,000,000	1,000,000	-
Bronwyn Barnes	4,000,000	566,222	-	4,000,000
Clive Jones	-	-	-	-
Jonathan Downes	-	-	-	-
Mark Fletcher	4,000,000	566,222	-	4,000,000
Total	9,000,000	2,132,444	1,000,000	8,000,000

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION (continued)

(ii). Options and Rights Holdings

Number of Options Held by Key Management Personnel

2007	Balance 1.7.2006	Granted as Compensation	Vested during the reporting period	Options Exercised*	Net Change Other*
Ivan Hoffman	1,000,000	-	-	-	-
Ronald Thom	1,262,000	1,000,000	-	-	(1,000,000)
Clive Jones	1,528,845	-	-	-	-
Jonathan Downes	-	-	-	-	-
Nathan McMahon	1,000,000	-	-	-	-
Total	4,790,845	1,000,000	-	-	(1,000,000)

*The Net Change Other reflected above includes those options that have been forfeited by holders as well as options issued during the year under review.

2007	Balance 30.6.2007	Total Vested 30.6.2007	Total Exer cisable 30.6.2007	Total Unexer cisable 30.6.2007
Ivan Hoffman	1,000,000	1,000,000	1,000,000	-
Ronald Thom	1,262,000	1,262,000	1,262,000	-
Clive Jones	1,528,845	1,528,845	1,528,845	-
Jonathan Downes	-	-	-	-
Nathan McMahon	1,000,000	1,000,000	1,000,000	-
Total	4,790,845	4,790,845	4,790,845	-

The options were valued using a Black and Scholes model and the inputs are disclosed under Note 21.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION (continued)

c. Shareholdings

Number of Shares held by Key Management Personnel

	Balance 1.7.2007	Received as Compen sation	Options Exercised	Net Change Other*	Balance 30.6.2008
Ivan Hoffman	-	-	-	-	-
Bronwyn Barnes	-	-	-	308,914	308,914
Clive Jones	1,775,124	-	528,845	(78,732)	2,225,237
Jonathan Downes	347,000	-	-	43,291	390,291
Mark Fletcher	-	-	-	170,000	170,000
David Round	-	-	75,249	-	75,249
Geoffrey Willets	-	-	-	-	-
Total	2,122,124	-	604,094	443,473	3,169,691

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

2007	Balance 1.7.2006	Received as Compen sation	Options Exercised	Net Change Other*	Balance at Resignation	Balance 30.06.2007
Ivan Hoffman	-	-		- -	-	-
Ronald Thom	524,000	-		- -	524,000	N/A
Clive Jones	1,057,689	-		- 717,435	-	1,775,124
Jonathan Downes	97,000	-		- 250,000	-	347,000
Nathan McMahon	1,260,150	-		- (1,074,869)	185,281	N/A
Total	2,938,839	-		- (107,434)	709,281	2,122,124

NOTE 6: AUDITORS' REMUNERATION

		Consolidated Group		Parent Entity
		2008 \$000	2007 \$000	2008 \$000	2007 \$000
	Remuneration of the auditor of the parent entity for:
—	auditing or reviewing the financial report	26	24	26	24
—	taxation services	-		-
—	due diligence services	-	-	-	-
—	taxation services provided by related practice of auditor	-	-	-	-

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 NOTE 7: LOSS PER SHARE

		Consolidated Group
		2008 \$000	2007 \$000
a.	Loss used in the calculation of basic and diluted EPS	2,231	384
		No.	No.
b.	Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS	50,250,462	39,702,302
	Weighted average number of options outstanding	20,177,576	24,994,334
	Weighted average number of ordinary shares outstanding during the year used in calculating diluted EPS	70,428,038	64,696,636

NOTE 8: CASH AND CASH EQUIVALENTS

	Consolidated Group		Parent Entity
	2008 \$000	2007 \$000	2008 \$000	2007 \$000
Cash at bank and in hand	2,166	327	2,166	312
Short-term bank deposits	301	249	301	249
	2,467	576	2,467	561

The effective interest rate on short-term bank deposits was 8% (2007: 6.29%); these deposits have an average maturity of 183 days.

Reconciliation of cash

Cash at the end of the financial year as shown in the cash flow statement is reconciled to items in the balance sheet as follows:

Cash and cash equivalents	2,467	576	2,467	561
	2,467	576	2,467	561

NOTE 9: OTHER RECEIVABLES

		Consolidated Group		Parent Entity
	2008 \$000	2007 \$000	2008 \$000	2007 \$000
CURRENT
Other receivables	27	70	27	70
	27	70	27	70

		Consolidated Group			Parent Entity
		2008	2007	2008	2007
		\$000	\$000	\$000	\$000
	NON-CURRENT
	Loans to controlled entities	-	-	317	331
	Shares in controlled entity at cost	-	-	4,491	4,491
	Less provision for impairment	-	-	(2,838)	(2,438)
				1,970	2,384
	Available-for-sale financial assets	2,072	2,730	2,072	2,730
		2,072	2,730	4,042	5,114
a.	Available-for-sale Financial Assets Comprise
	Listed investments, at fair value
	— shares in listed corporations	2,072	2,730	2,072	2,730
		2,072	2,730	2,072	2,730

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 NOTE 10: FINANCIAL ASSETS

Available-for-sale financial assets comprise investments in the ordinary issued capital of various listed entities. There are no fixed returns or fixed maturity date attached to these investments.

NOTE 11: CONTROLLED ENTITIES Controlled Entities Consolidated

	Country of Incorporation		Percentage Owned (%)*
		2008	2007
Subsidiary of Graynic Metals Ltd:
Resource Investment Group Pty Ltd	Australia	100	100

* Percentage of voting power is in proportion to ownership

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 NOTE 12: PROPERTY, PLANT AND EQUIPMENT

	Consolidated Group		Parent Entity
	2008 \$000	2007 \$000	2008 \$000	2007 \$000
Plant and equipment:
At cost	55	16	55	16
Accumulated depreciation	(21)	(9)	(21)	(9)
	34	7	34	7
Office furniture and equipment
At cost	3	1	3	1
Accumulated depreciation	(1)	-	(1)	-
	2	1	2	1
Total Property, Plant and Equipment	36	8	36	8

a.

	Plant and Equipment	Office Furniture	Total
	\$000	\$000	\$000
Consolidated Group:
Balance at 1 July 2006	6	1	7
Additions	5	-	5
Depreciation expense	(4)	-	(4)
Balance at 30 June 2007	7	1	8
Additions	40	1	41
Depreciation expense	(13)	-	(13)
Balance at 30 June 2008	34	2	36
Parent Entity
Balance at 1 July 2006	6	1	7
Additions	5	-	5
Depreciation expense	(4)	-	(4)
Balance at 30 June 2007	7	1	8
Additions	39	1	40

Depreciation expense (12) - (12) Balance at 30 June 2008 34 2 36

		Consolidated Group Parent Entity
	2008 \$000	2007 \$000	2008 \$000	2007 \$000
NON-CURRENT
Exploration expenditure capitalised
— exploration and evaluation phases	9,360	8,958	4,763	4,361
Accumulated impairment losses	(2,968)	(2,534)	(119)	(96)
Total exploration expenditure	6,392	6,424	4,644	4,265
Movement in carrying value:
Brought forward	6,424	5,268	4,265	2,896
Exploration assets acquired during the year	-	-	-	222
Exploration assets disposed of during the year	-	(222)	-	(222)
Exploration expenditure capitalised during the year	402	1,474	402	1,465
Impairment of exploration expenditure	(434)	(96)	(23)	(96)
At reporting date	6,392	6,424	4,644	4,265

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 NOTE 13: EXPLORATION AND EVALUATION EXPENDITURE

The value of the exploration expenditure is dependent upon:

− The continuance of the rights to tenure of the areas of interest;

• − The results of future exploration; and
• − The recoupment of costs through successful development and exploitation of the areas of interest or alternatively by their sale.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 NOTE 14A: TRADE AND OTHER PAYABLES

	Note	Consolidated Group		Parent Entity
		2008 \$000	2007 \$000	2008 \$000	2007 \$000
CURRENT
Unsecured liabilities
Trade payables		9	35	9	35
Sundry payables and accrued expenses		26	34	26	34
		35	69	35	69

NOTE 14B: LOANS AND BORROWINGS

	Note		Consolidated Group		Parent Entity
		2008 \$000	2007 \$000		2008 \$000	2007 \$000
NON-CURRENT
Unsecured liabilities
Amounts payable to:
— wholly-owned subsidiaries			-	-	222	222
			-	-	222	222

NOTE 15: PROVISIONS

	Employee benefits	Provision for taxation	Total \$000
Consolidated Entity	\$000	\$000
Opening balance at 1 July 2007	6	12	18
Additional provisions	13	-	13
Balance at 30 June 2008	19	12	31
Parent Entity
Opening balance at 1 July 2007	6	-	6
Additional provisions	13	-	13
Balance at 30 June 2008	19	-	19

Analysis of Total Provisions

		Consolidated Group		Parent Entity
	2008 \$000	2007 \$000	2008 \$000	2007 \$000
Current	31	18	19	6
Non-current	-	-	-	-
	31	18	19	6

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 NOTE 16: ISSUED CAPITAL

		Consolidated Group		Parent Entity
		2008	2007	2008	2007
		\$000	\$000	\$000	\$000
	55,485,415 (2007: 40,265,772) fully paid ordinary shares	12,826	9,682	12,826	9,682
		12,826	9,682	12,826	9,682
		Consolidated Group		Parent Entity
		2008	2007	2008	2007
		No.	No.	No.	No.
a.	Ordinary shares
	At the beginning of reporting period	40,265,772	37,004,607	40,265,772	37,004,607
	Shares issued during the year
	— Placement	3,000,000	3,235,294	3,000,000	3,235,294
	— Conversion of options	12,219,643	25,871	12,219,643	25,871
	At reporting date	55,485,415	40,265,772	55,485,415	40,265,772

Ordinary shares participate in dividends and the proceeds on winding up of the parent entity 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.

b. Options

• i. For information relating to the Graynic Metals Limited employee option plan, including details of options issued, exercised and lapsed during the financial year and the options outstanding at year-end, refer to Note 21 Share-based Payments.
• ii. For information relating to share options issued to key management personnel during the financial year, refer to Note 21 Share-based Payments.

NOTE 17: RESERVES

a. Asset Revaluation Reserve

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

b. Option Premium Reserve

The option reserve records the subscription value of listed options.

c. Share Based Payment Reserve

This reserve is used to record the value of share based payments made to the employees and directors and other parties.

NOTE 18: CAPITAL AND LEASING COMMITMENTS

Capital Expenditure Commitments

In order to maintain current rights of tenure to mining tenements, the Company has the following discretionary exploration expenditure requirements up until expiry of leases. These obligations, which are subject to renegotiation upon expiry of the leases, are not provided for in the financial reports.

	Note	Consolidated Group		Parent Entity
		2008 \$000	2007 \$000	2008 \$000	2007 \$000
Payable:
— Not longer than one year		468	505	468	505
— Longer than one year, but not longer than five years		1,875	2,019	1,875	2,019
— Longer than five years		2,344	2,523	2,344	2,523
		4,687	5,047	4,687	5,047

NOTE 19: SEGMENT REPORTING

The Company operates predominantly in one geographical segment, being Australia, and in one industry, mineral mining and exploration.

NOTE 20: CASH FLOW INFORMATION

	2008 \$000	2007 \$000	2008 \$000	2007 \$000
Reconciliation of Cash Flow from Operations with Net Loss
Loss after income tax	(2,231)	(384)	(2,219)	(383)
Non-cash flows in profit
Depreciation	13	4	13	4
Write-off of capitalised exploration expenditure	434	96	23	96
Net gain on disposal of property, plant and equipment	-	(178)	-	(178)
Impairment of investment	-	-	400	-
Net loss on disposal of investments	-	22	-	22
Unrealised gain on investments	-	(63)	-	(63)
Share options expensed	1,207	130	1,207	130
Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries
(Increase)/decrease in receivables and prepayments	42	(37)	42	(37)
Increase in exploration and evaluation expenditure	(402)	(1,474)	(402)	(1,465)
Increase/(decrease) in trade and other payables	(34)	(60)	(35)	(60)
Increase/(decrease) in provisions	13	1	13	1
Cashflow from operations	(958)	(1,943)	(958)	(1,933)
			Consolidated Group	Parent Entity

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 NOTE 20: CASH FLOW INFORMATION (continued)

b. Non-cash Financing and Investing Activities

i.

During the year the consolidated entity wrote off capitalised exploration expenditure of \$434,508. ii.

During the year the consolidated entity expensed \$1,207,028.

These transactions are not reflected in the cash flow statement.

NOTE 21: SHARE-BASED PAYMENTS

The following share-based payment arrangements were in existence during the current reporting period:

• A On 2nd November 2007, 2,000,000 share options were approved for issue to a director to accept ordinary shares at an exercise price of \$0.30. The options are exercisable after 2nd November 2008 but before 1st November 2010. The options hold no voting or dividend rights and are not transferable. When a director ceases employment the options are deemed to have lapsed. Since balance date, no director has ceased their employment. At balance date, no share option has been exercised.
• B On 2nd November 2007, 2,000,000 share options were approved for issue to a director to accept ordinary shares at an exercise price of \$0.30. The options are exercisable after 2nd November 2008 but before 2nd November 2010. The options hold no voting or dividend rights and are not transferable. When a director ceases employment the options are deemed to have lapsed. Since balance date, no director has ceased their employment. At balance date, no share option has been exercised.
• C On 2nd November 2007, 250,000 share options were approved for issue to an employee to accept ordinary shares at an exercise price of \$0.30. The options are exercisable after 18th October 2008 but before 18th October 2010. The options hold no voting or dividend rights and are not transferable. When a director ceases employment the options are deemed to have lapsed. Since balance date, no director has ceased their employment. At balance date, no share option has been exercised.
• D On 2nd November 2007, 1,000,000 share options were approved for issue to a director to accept ordinary shares at an exercise price of \$0.45. The options are exercisable after 2nd November 2009 but before 1st November 2011. The options hold no voting or dividend rights and are not transferable. When a director ceases employment the options are deemed to have lapsed. Since balance date, no director has ceased their employment. At balance date, no share option has been exercised.
• E On 2nd November 2007, 1,000,000 share options were approved for issue to a director to accept ordinary shares at an exercise price of \$0.45. The options are exercisable after 2nd November 2008 but before 2nd November 2011. The options hold no voting or dividend rights and are not transferable. When a director ceases employment the options are deemed to have lapsed. Since balance date, no director has ceased their employment. At balance date, no share option has been exercised.
• F On 2nd November 2007, 250,000 share options were approved for issue to an employee to accept ordinary shares at an exercise price of \$0.45. The options are exercisable after 18th October 2009 but before 18th October 2011. The options hold no voting or dividend rights and are not transferable. When a director ceases employment the options are deemed to have lapsed. Since balance date, no director has ceased their employment. At balance date, no share

NOTE 21: SHARE-BASED PAYMENTS (continued)

• G On 2nd November 2007, 1,000,000 share options were approved for issue to a director to accept ordinary shares at an exercise price of \$0.65. The options are exercisable after 2nd November 2010 but before 1st November 2012. The options hold no voting or dividend rights and are not transferable. When a director ceases employment the options are deemed to have lapsed. Since balance date, no director has ceased their employment. At balance date, no share option has been exercised.
• H On 2nd November 2007, 1,000,000 share options were approved for issue to a director to accept ordinary shares at an exercise price of \$0.65. The options are exercisable after 2nd November 2010 but before 2nd November 2012. The options hold no voting or dividend rights and are not transferable. When a director ceases employment the options are deemed to have lapsed. Since balance date, no director has ceased their employment. At balance date, no share option has been exercised.

All options granted to key management personnel are ordinary shares in Graynic Metals Limited, which confer a right of one ordinary share for every option held.

		Consolidated Group			Parent Entity
		2008		2007	2008		2007
	Number of Options '000	Weighted Average Exercise Price \$	Number of Options '000	Weighted Average Exercise Price \$	Number of Options	Weighted Average Exercise Price \$	Number of Options	Weighted Average Exercise Price \$
Outstanding at the beginning of the year	11,250	0.30	12,000	0.30	11,250	0.30	12,000	0.30
Granted	4,250	0.30	250	0.46	4,250	0.30	250	0.46
Granted	2,250	0.45	1,000	0.30	2,250	0.45	1,000	0.30
Granted	2,000	0.65	-	-	2,000	0.65	-	-
Exercised	-	-	-	-	-	-	-	-
Expired	(8,000)	0.30	(2,000)	0.20	(8,000)	0.30	(2,000)	0.20
Outstanding at year end	11,750		11,250		11,750		11,250
Exercisable at year end	3,250		11,250		3,250		11,250

There were no compensation options exercised during the year ended 30 June 2008.

The options outstanding at 30 June 2008 had a weighted average exercise price of \$0.30, \$0.45, \$0.46 and \$0.65 and a weighted average remaining contractual life of between 0.33 and 4.42 years. Exercise prices range from \$.30 to \$.65 in respect of options outstanding at 30 June 2008.

The weighted average fair value of the options granted during the year was between \$0.299 and \$0.301.

Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is indicative of future tender, which may not eventuate.

The life of the options is based on the historical exercise patterns, which may not eventuate in the future.

NOTE 21: SHARE-BASED PAYMENTS (Continued

Included under employee benefits expense in the income statement is \$1,207,028 (2007: \$130,400), and relates, in full, to equity-settled share-based payment transactions.

The options were valued using a Black and Scholes model with the following inputs.

	A	B	C	D	E	F	G	H
Grant date share price (\$)	0.43	0.43	0.43	0.43	0.43	0.43	0.43	0.43
Exercise price (\$)	0.30	0.30	0.30	0.45	0.45	0.45	0.65	0.65
Expected volatility	95.00%	95.00%	95.00%	95.00%	95.00%	95.00%	95.00%	95.00%
Option life (years)	3.000	3.003	4.000	4.000	4.003	3.962	5.000	5.003
Dividend paid	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil
Risk free interest free	6.77%	6.77%	6.77%	6.77%	6.55%	6.55%	6.55%	6.55%

NOTE 22: EVENTS AFTER THE BALANCE SHEET DATE

On 12th August 2008 the company signed a Joint Venture agreement with Global Nickel Investments Ltd. Under the terms of the agreement the company will transfer 90% of its legal and beneficial interest in the Mt Cornell tenement to Global Nickel. The company will receive \$40,000 in cash and 300,000 shares in Global Nickel.

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

NOTE 23: RELATED PARTY DISCLOSURES

• i. Interests in and loans to and from controlled entities are disclosed in Notes 10 and 11.
• ii. Key management personnel equity holdings are disclosed in Note 5.

Transactions between other related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. These transactions include payments for rent and shared occupancy and staff costs.

The company holds 50,000 shares in Ironbark Gold Ltd and 2,000,000 shares in Wolf Minerals Ltd both of whom are related parties.

NOTE 24: FINANCIAL RISK MANAGEMENT

a. Financial Risk Management Policies

The group's financial instruments consist mainly of deposits with banks, local money market instruments, short-term investments, accounts receivable and payable and loans to and from subsidiaries.

i. Treasury Risk Management

The Board of Directors meet on a regular basis to analyse financial risk exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts.

NOTE 24: FINANCIAL RISK MANAGEMENT (continued)

The Board's overall risk management strategy seeks to assist the consolidated group in meeting its financial targets, whilst minimising potential adverse effects on financial performance.

Risk management policies are approved and reviewed by the Board on a regular basis. These include the use of credit risk policies and future cash flow requirements.

ii. Financial Risk Exposures and Management

The main risks the consolidated entity are exposed to through its financial instruments are liquidity risk, credit risk and price risk.

Liquidity risk

Liquidity risk is the risk that the consolidated entity will not be able to meet its financial obligations as they fall due. The consolidated entity's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the group's reputation. Typically the consolidated entity ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 90 days; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. The Board estimates it currently has sufficient cash flow to meet its normal operating commitments for the next twelve months at least.

Credit risk

Credit risk is the risk of financial loss to the consolidated entity if a customer or counterparty to a financial instrument fails to meet its contractual obligations.

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

Price risk

The consolidated entity is exposed to equity price risk.

Equity price risk arises from available-for-sale equity securities held. Material investments are managed on an individual basis and all buy and sell decisions are approved by the Board of Directors.

The consolidated entity and the parent entity hold the following financial instruments:

	Consolidated		Parent
	2008 \$000	2007 \$000	2008 \$000	2007 \$000
Financial Assets:
Cash and cash equivalents	2,467	576	2,467	561
Receivables	27	70	27	70
Loan to controlled entity	-	-	1,653	2,053
Investments	2,072	2,730	2,072	3,061
Total Financial Assets	4,566	3,376	6,219	5,745
Financial Liabilities:
Bank loans and overdrafts	-	-	-	-
Trade and sundry payables	35	69	35	69
Amounts payable related parties	-	-	222	222
Total Financial Liabilities	35	69	257	291

NOTE 24: FINANCIAL RISK MANAGEMENT (Continued)

Trade and sundry payables are expected to be paid as followed:
Less than 6 months	35	69	35	69
Greater than 6 months less than 12 months	-	-	-	-
	35	69	35	69

iii. Net Fair Values

The net fair values of:

• Listed investments have been valued at the quoted market bid price at balance date, adjusted for transaction costs expected to be incurred. For unlisted investments where there is no organised financial market, the net fair value has been based on a reasonable estimation of the underlying net assets or discounted cash flows of the investment.
• Other assets and other liabilities approximate their carrying value.

No financial assets and financial liabilities are readily traded on organised markets in standardised form other than listed investments.

Fair values are materially in line with carrying values.

iv. Sensitivity Analysis

Interest Rate Risk and Price Risk

The consolidated entity has performed sensitivity analysis relating to its exposure to interest rate risk at balance date. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these risks.

a Interest Rate Sensitivity Analysis

At 30 June 2008, the effect on profit and equity as a result of changes in the interest rate, with all other variables remaining constant would be as follows:

			Consolidated Entity	Parent Entity
		2008 \$000	2007 \$000	2008 \$000	2007 \$000
Change in profit
— 1%	Increase in interest rate by	16	11	16	11
— 1%	Decrease in interest rate by	(16)	(11)	(16)	(11)
Change in Equity
— 1%	Increase in interest rate by	16	11	16	11
— 1%	Decrease in interest rate by	(16)	(11)	(16)	(11)

NOTE 24: FINANCIAL RISK MANAGEMENT (continued)

b Price Risk Sensitivity Analysis

The majority of the consolidated entity's and the parent entity's equity investments are publicly traded and are included in the ASX. The table below summarises the impact of increases/decreases of this index on the consolidated entity's and the parent entity's post tax profit for the year and on equity. The analysis is based on the assumption that equity indexes had increased/decreased by 10% (2007 10%) with all other variables held constant and all the group's equity instruments moved according to the historical correlation with the index.

		Consolidated Entity	Parent Entity
	2008 \$000	2007 \$000	2008 \$000	2007 \$000
Change in profit
Increase in ASX All Ordinaries Index by 10%	-	-	-	-
Decrease in ASX by 10%	-	-	-	-
Change in equity
Increase in ASX All Ordinaries Index by 10%	207	273	207	273
	(207)	(273)	(207)	(273)

The above interest rate and price risk sensitivity analysis has been performed on the assumption that all other variables remain unchanged.

NOTE 25: NEW STANDARDS AND INTERPRETATIONS

The following Australian Accounting Standards have been issued or amended and are applicable to the parent and consolidated entity but are not yet effective. They have not been adopted in preparation of the financial statements at reporting date.

AASB Amendment		Standards Affected	Outline of Amendment	Application Date of Standard	Application Date for Group
AASB 2007–3 Amendments to Australian Accounting Standards	AASB 5 AASB 6	Non-current Assets Held for Sale and Discontinued Operations Exploration for and Evaluation of Mineral	The disclosure requirements of AASB 114: Segment Reporting have been replaced due to the issuing of AASB 8: Operating Segments in February 2007.	1.1.2009	1.7.2009
	AASB Inventories 102	These amendments will involve changes
	AASB 107	Cash Flow Statements	to segment reporting disclosures within the
	AASB 119	Employee Benefits	financial report. However, it is anticipated there will
	AASB 127	Consolidated and Separate Financial Statements	be no direct impact on recognition and measurement criteria
	AASB 134	Interim Financial Reporting	amounts included in the financial report

NOTE 25: NEW STANDARDS AND INTERPRETATIONS

	AASB 136	Impairment of Assets
	AASB 1023	General Insurance Contracts
	AASB 1038	Life Insurance Contracts
AASB 8 Operating Segments	AASB 114	Segment Reporting	As above	1.1.2009	1.7.2009
AASB 2007–6 Amendments to Australian Accounting Standards	AASB 1	First time adoption of AIFRS	The revised AASB 123: Borrowing Costs issued in June 2007 has removed the option to expense all	1.1.2009	1.7.2009
	AASB 101	Presentation of Financial Statements	borrowing costs. This amendment will require the capitalisation of all
	AASB 107	Cash Flow Statements	borrowing costs directly attributable to
	AASB 111	Construction Contracts	the acquisition, construction or production of a qualifying asset. However, there will
	AASB 116	Property, Plant and Equipment
	AASB 138	Intangible Assets	be no direct impact to the amounts included in the financial group as they already capitalise borrowing costs related to qualifying assets.
AASB 123 Borrowing Costs	AASB 123	Borrowing Costs	As above	1.1.2009	1.7.2009
AASB 2007–8 Amendments to Australian Accounting Standards	AASB 101	Presentation of Financial Statements	The revised AASB 101: Presentation of Financial Statements issued in September 2007 requires the presentation of a statement of comprehensive income.	1.1.2009	1.7.2009
AASB 101	AASB 101	Presentation of Financial Statements	As above	1.1.2009	1.7.2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 NOTE 26: COMPANY DETAILS

The registered office of the company is:

Suite 5, Level 1 350 Hay Street Subiaco WA 6008

The principal place of business is: Graynic Metals Limited Suite 5, Level 1 350 Hay Street Subiaco WA 6008

ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES

The following additional information is required by the Australian Stock Exchange Ltd in respect of listed public companies only.

1. Shareholding

a.	Distribution of Shareholders		Number
	Category (size of holding)	Ordinary	Redeemable
	1 – 1,000	31,887	-
	1,001 – 5,000	490,673	-
	5,001 – 10,000	790,730	-
	10,001 – 100,000	9,912,907	-
	100,001 – and over	44,259,418	-
		55,485,415	-

b. There are no shareholders with less than a marketable parcel.

c. The names of the substantial shareholders listed in the holding company's register as at 30 June 2008 are:

		Number
Shareholder	Ordinary	Preference
Katrina Peta Downes	3,333,333	-

d. Voting Rights

The voting rights attached to each class of equity security are as follows:

Ordinary shares

— 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		Number of Ordinary Fully Paid Shares Held	% Held of Issued Ordinary Capital
1.	Katrina Peta Downes	3,333,333	6.008
2.	Megan Ruth Roberts	2,500,001	4.506
3.	Fleur Lesley Schell	2,500,000	4.506
4.	Australian Heritage Group Pty Ltd	2,500,000	4.506
5.	Margaret Ann Mullins	1,666,666	3.004
6.	Clive Bruce Jones	1,507,802	2.717
7.	UBS Wealth Management, Australia Nominees Pty Ltd	1,386,422	2.499
8.	Alastair Rowland Brown	1,330,000	2.397
9.	Alastair R Brown Pty Ltd	1,100,000	1.983
10.	Australian Heritage Group Pty Ltd	1,100,000	1.983
11.	Nathan Bruce McMahon	1,074,869	1.937
12.	Ninkasi Pty Ltd	975,000	1.757
13.	Mervyn Ian Leo Bassett & Shirley Ethel Bassett	887,322	1.599
14.	CPA Financial Services Pty Ltd	878,400	1.583
15.	Pylara Pty Ltd	800,000	1.442
16.	Jezza Nominees Limited	757,868	1.293
17.	Widerange Corporation Pty Ltd	717,435	1.293

e. 20 Largest Shareholders — Ordinary Shares

۰.

Name		Number of Ordinary Fully Paid Shares Held	% Held of Issued Ordinary Capital
18.	Jezza Nominees Ltd	670,306	1.208
19.	Ambersash Pty Ltd	600,000	1.081
20.	GW International Pty Ltd & A22 Pty Ltd	600,000	1.082
		26,885,424	48.455

2. The name of the Company Secretary is David Round.

1. The address of the principal registered office in Australia is Suite 5, Level 1, 350 Hay Street, Subiaco, WA 6008. Telephone +61 8 6364 0518.

2. Registers of securities are held at the following addresses

Western Australia Advanced Share Registry Services

2/150 Stirling Highway, Nedlands, WA 6009

5. Securities Exchange Listing

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

6. Unquoted Securities

Options over Unissued Shares

A total of 11,750,000 options are on issue. 2,000,000 options are on issue to 1 holder of ordinary securities. 9,750,000 options are on issue to 3 directors and 1 employee under the Graynic Metals Limited employee option plan.

CORPORATE GOVERNANCE

Unless disclosed below, all the best practice recommendations of the ASX Corporate Governance Council have been applied for the entire financial year ended 30 June 2008.

Board Composition

The skills, experience and expertise relevant to the position of each director who is in office at the date of the annual report and their term of office are detailed in the director's report.

The name of the independent directors of the company are:

• Ivan Hoffman
• Clive Jones

When determining whether a non-executive director is independent the director must not fail any of the following materiality thresholds:

• less than 10% of company shares are held by the director and any entity or individual directly or indirectly associated with the director;
• no sales are made to or purchases made from any entity or individual directly or indirectly associated with the director; and
• none of the directors' income or the income of an individual or entity directly or indirectly associated with the director is derived from a contract with any member of the economic entity other than income derived as a director of the entity.

Independent directors have the right to seek independent professional advice in the furtherance of their duties as directors at the company's expense. Written approval must be obtained from the chair prior to incurring any expense on behalf of the company.

The names of the members of the nomination committee and their attendance at meetings of the committee are detailed in the directors' report.

Trading Policy

The company's policy regarding directors and employees trading in its securities is set by the finance committee. The policy restricts directors and employees from acting on material information until it has been released to the market and adequate time has been given for this to be reflected in the security's prices.

Remuneration Policies

The remuneration policy, which sets the terms and conditions for the key management personnel, was developed by the board. All executives receive a base salary, superannuation, fringe benefits, performance incentives and retirement benefits. The Board reviews executive packages annually by reference to company performance, executive performance, comparable information from industry sectors and other listed companies and independent advice. The performance of executives is measured against criteria agreed half yearly which is based on the forecast growth of the company's profits and shareholders value. The policy is designed to attract the highest calibre executives and reward them for performance which results in long-term growth in shareholder value.

Executives are also entitled to participate in the employee share and option arrangements.

The amount of remuneration for all key management personnel for the company including all monetary and non monetary components, are detailed in the directors report under the heading Key Management Personnel Compensation. All remuneration paid to executives is valued at the cost to the company and expensed. Shares given to executives are valued as the difference between the market price of those shares and the amount paid by the executive. Options are valued using the Black-Scholes methodology.

The board expects that the remuneration structure implemented will result in the company being able to attract and retain the best executives to run the consolidated group. It will also provide executives with the necessary incentives to work to grow long-term shareholder value.

The payment of bonuses, options and other incentive payments are reviewed by the board annually as part of the review of executive remuneration and a recommendation is put to the board for approval. All bonuses, options and incentives must be linked to predetermined performance criteria. The board can exercise its discretion in relation to approving incentives, bonuses and options and can recommend

changes to the committee's recommendations. Any changes must be justified by reference to measurable performance criteria.

There are no schemes for retirement benefits other than statutory superannuation for non-executive directors.

Other Information

Further information relating to the company's corporate governance practices and policies has been made publicly available on the company's web site at www.graynicmetals.com.au.