Graynic Metals Limited

(ABN: 87 112 898 025)

and Controlled Entities

Annual Report

For the Financial Year Ended 30 June 2009

Corporate Directory	2
Directors' Report	3
Auditor's Independence Declaration	14
Income Statement	15
Balance Sheet	16
Statement of Changes in Equity	17
Statement of Cash Flows	18
Notes to the Financial Statements	19
Directors' Declaration	41
Independent Auditor's Report	42
Additional Information for Listed Public Companies	44
Corporate Governance	46

CORPORATE DIRECTORY

NON-EXECUTIVE CHAIRMAN

Clive Jones (appointed 28 January 2009) Ivan Hoffman (resigned 28 January 2009)

MANAGING DIRECTOR Bronwyn Barnes (resigned 3 September 2009)

INTERIM MANAGING DIRECTOR Adrian Byass (appointed 3 September 2009)

EXECUTIVE DIRECTOR Mark Fletcher (resigned 3 September 2009)

NON-EXECUTIVE DIRECTOR Jonathan Downes

COMPANY SECRETARY David Round

PRINCIPAL & REGISTERED OFFICE

Level 1, 350 Hay Street SUBIACO WA 6008 Telephone: (08) 6461 6350 Facsimile: (08) 6210 1872

AUDITORS

Ord Partners Level 1, 47 Stirling Highway NEDLANDS WA 6009

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 2009.

Directors

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

Clive Jones	Non Executive Chairman (appointed Chairman 28 January 2009)
Ivan Hoffman	Non Executive Chairman (resigned 28 January 2009)
Bronwyn Barnes	Managing Director (resigned 3 September 2009)
Mark Fletcher	Executive Director (resigned 3 September 2009)
Jonathan Downes	Non Executive Director
Adrian Byass	Interim Managing Director (appointed 3 September 2009)

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

Prior to his appointment as Chairman Mr Jones was a Non Executive Director.

INFORMATION ON DIRECTORS

Mr Ivan Hoffman	—	Non-Executive Chairman (resigned 28 January 2009)
Qualifications	—	CPA, FCIS
Experience — Directorships held in other listed —		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.
entities in the last three years		Saracen Mineral Holdings Limited from 13 May 2005 to date.
Ms Bronwyn Barnes	—	Managing Director (resigned 3 September 2009)
Qualifications	—	B.Arts, Grad Dip Bus
Experience	—	Ms Barnes has over 12 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.
Directorships held in other listed entities in the last three years		Nil

		DIRECTORS' REPORT
Mr Mark Fletcher	—	Executive Director (resigned 3 September 2009)
Qualifications	—	B App Sc (Geol), Msc, MAIG, MSEG, MAICD
Experience	—	Mr Fletcher brings considerable exploration experience to the Board. 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.
Directorships held in other listed entities in the last three years	—	Nil
Mr Clive Jones	—	Non-Executive Chairman (appointed Chairman 28th January 2009)
Qualifications	—	B App Sc (Geol)
Experience	—	Mr Jones is currently Joint Managing Director for Cazaly Resources Ltd which is listed on the ASX. Mr Jones is also a Non-Executive Director of Bannerman Resources Limited and Chairman of Cortona Resources Limited all of which are ASX listed companies. Mr Jones was formerly a director of ASX listed Hamill Resources Limited, International Goldfields Limited, Jackson Gold limited and Mount Burgess Mining Ltd. Mr Jones has been involved in the mineral exploration for over 21 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 held at the date of this report	—	2,225,237 fully paid ordinary shares in Graynic Metals Limited
Directorships held in other listed	—	Bannerman Resources Ltd from 12 January 2007 to date
entities in the last three years		Cortona Resources Ltd from 17 March 2006 to date
		Cazaly Resources Ltd from 15 September 2003 to date
		Jackson Gold Ltd 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 14 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 held at the date of this report	—	491,541 fully paid ordinary shares in Graynic Metals Limited
Directorships held in other listed	—	Ironbark Gold Limited from 18 April 2006 to date
entities		Wolf Minerals Limited from 20 September 2006 to date
		Sabre Resources Limited from 14 December 2007 to date
		Waratah Gold Limited from 17 July 2008 to date

– 4 –

Mr Adrian P Byass	—	Interim Managing Director (appointed 3 September 2009)
Qualifications	—	B Sc Hon (Geol), B Econ, FSEG, MAIG
Experience	—	Mr Byass has over 13 years experience in the mining and minerals industry. This experience has principally been gained through mining, resource estimation, and mine development roles for several gold and nickel mining and exploration companies. Through his experience in resource estimation and professional association membership, Mr Byass is a competent person for reporting to the ASX for certain minerals. Mr Byass has also gained experience in corporate finance and financial modelling during his employment with publicly listed mining companies. Mr Byass was a founder of Siberia Mining Corporation Limited and Hibernia Gold (now Moly Mines Limited). Mr Byass is currently a non- Executive Director of Wolf Minerals Limited, an Executive Director of Ironbark Gold Limited and was appointed Interim Managing Director of Graynic Metals Limited on 3 September 2009.
Interest in Shares and Options	—	2,797,696 fully paid Ordinary Shares in Graynic Metals
		Limited.
Directorships held in other listed entities	—	Ironbark Gold Limited from 18 April 2006 to date
		Wolf Minerals Limited from 20 September 2006 to date

Company Secretary

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

David Round

David Round is an experienced Accountant, Company Secretary and Corporate Advisor with over 17 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 \$4,674,098 (2008: \$2,231,172)

Review of Operations

During the past year, Graynic has continued to engage in the search for high quality resource projects, principally focusing on nickel whilst ensuring its projects in Australia continue to be explored through involvement with joint venture partners or the company where appropriate. This strategy is designed to maintain and add value to existing assets whilst trying to secure a world class opportunity to drive shareholder value.

As part of its search for world class nickel projects, the company identified Central America as a highly prospective area for nickel laterite resources which have economic potential for development. A detailed process of project identification resulted in the company entering into an agreement with Canadian based Nichromet Extraction Inc. (Nichromet) to earn up to a 75% interest in a highly prospective Izabal and Baja Verapaz nickel laterite projects in Guatemala through the expenditure of up to US\$6.4 million over 3 years.

Furthermore a Letter of Intent has been entered into with Geominera of Cuba to examine resource prospects in Cuba covering a range of mineralisation types and models.

Joint Venture partners in Australia have continued work on the Yanco Glen and Wertago projects in New South Wales and the company has also conducted work on the Gulf Creek and Quartz Circle projects.

Financial Position

The net assets of the consolidated entity have decreased by \$4,837,633 from 30 June 2008 to \$6,090,456 at 30 June 2009. The decrease has largely resulted from the impairment of exploration expenditure capitalised on now relinquished tenements.

As at 30 June 2009 the Consolidated Entity had \$1,284,531 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 29th July 2008 the company announced that King Leopard Diamonds Ltd was withdrawing from the Joint Venture agreement over the company's diamond tenements, Walgidgee Hills, Nookanbah, Boodallana and Napier Downs. Full ownership of these tenements reverted to Graynic Metals.
ii. On 12th August 2008 the company announced a farm in agreement with Global Nickel Investment Limited for the company's Mt Cornell tenement package. Graynic is to transfer 90% of its interest in Mt Cornell for \$40,000 and 300,000 shares in Global Nickel. As at the date of this report the Mt Cornell tenement was still under application by Graynic therefore the transaction has not been brought to account.
iii. On 29th October 2008 the company announced the sale of its Yanco Glen project to Silver City Mining Ltd (subject to Silver City listing by 30th June 2010). The consideration is shares and options in Silver City together with participation in a pool of converting performance shares. At year end considerable doubt remained as to whether or not the conditions would be satisfied therefore the transaction has not been brought to account. Between year end and the date of this report Silver City has informed the company that it will not be proceeding with the transaction.
iv. On 28th January 2009 Ivan Hoffman resigned as Non Executive Chairman for personal reasons.
v. On 28th January 2009 Clive Jones was appointed Non Executive Chairman.
vi. On 4th March 2009 the company announced a Nickel Farm-In and Joint Venture Agreement with private Canadian company Nichromet Extractions Inc for nickel projects in Cuba and Guatemala. Graynic is to spend up to US\$2,400,000 within 36 months of signing the agreement to acquire a 50% interest in the project. Graynic then has the option to spend up to a further US\$4,000,000 within a further 36 month period to acquire an additional 25% interest in the project. At year end the Joint Venture Agreement had not been signed. The agreement was signed as at the date of this report. This is mentioned at point ii below.

After Balance Date Events

i. On 16th July 2009 Silver City Mining Ltd withdrew from a Sales Agreement in relation to the company's Yanco Glen project, EL6489 (iii) above.
ii. On 10th July 2009 the company completed the Joint Venture agreement with Nichromet discussed in vi. above.
iii. On 3rd September 2009 Bronwyn Barnes resigned as Managing Director.
iv. On 3rd September 2009 Mark Fletcher resigned as Executive Director.
v. On 3rd September 2009 Adrian Byass was appointed Interim Managing Director.

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 (resigned 28 January 2009)
Bronwyn Barnes	Managing Director (resigned 3 September 2009)
Clive Jones	Non-Executive Chairman (appointed 28 January 2009)
Jonathan Downes	Non-Executive Director
Mark Fletcher	Executive Director (resigned 3 September 2009)
Adrian Byass	Interim Managing Director (appointed 3 September 2009)

A REMUNERATION POLICY (audited)

This remuneration report, which forms part of the directors' report, sets out information about the remuneration of Graynic Metals Limited's key management personnel, comprising the directors of the company, for the financial year ended 30 June 2009. 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) and their package may include 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.

REMUNERATION REPORT (audited) (continued)

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.

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 option pricing model.

The board policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The board 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 non-executive directors is subject to approval by shareholders at the Annual General Meeting. Fees for non-executive directors are not linked to the performance of the 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 incentive scheme ('EIS').

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 directors 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 interim managing director, Mr Adrian Byass, is formalised in a contract of employment. He is a permanent employee of Graynic Metals Limited.
The employment contract states a four week resignation notice 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.

REMUNERATION REPORT (audited) (continued)

B DETAILS OF THE NATURE AND AMOUNT OF COMPENSATION PAID, PAYABLE OR OTHERWISE MADE AVAILABLE TO DIRECTORS (audited)

Key Management Personnel Remuneration

2009

Key Management Personnel	Short Term Employee Benefits	Post Employment Benefits	Share Based Payments	Total	Perform ance Related	Value of Options as proportion of Remuneration
	Cash and salary	Superannuation	Options
	\$	\$	\$	\$	%	%
Bronwyn Barnes	180,000	16,200	449,333	645,533	-	70%
Ivan Hoffman	23,333	2,100	-	25,433	-	-
Clive Jones	33,909	-	-	33,909	-	-
Jonathan Downes	21,600	1,944	-	23,544	-	-
Mark Fletcher	170,000	15,300	449,333	634,633	-	71%
	428,842	35,544	898,666	1,363,052	-	-

2008

Bronwyn Barnes	176,769	15,909	566,222	758,900	-	73%
Ivan Hoffman	40,496	3,645	-	44,141	-	-
Clive Jones	36,905	-	-	36,905	-	-
Jonathan Downes	24,000	2,160	-	26,160	-	-
Mark Fletcher	109,933	40,200	566,222	716,355	-	79%
	388,103	61,914	1,132,444	1,582,461	-	-

C COMPENSATION OPTIONS GRANTED DURING THE YEAR (audited)

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.

D SHARES ISSUED ON EXERCISE OF COMPENSATION OPTIONS (audited)

During the financial year ended 30 June 2009, no shares were issued on exercise of compensation options.

E OPTIONS LAPSED DURING THE PERIOD (audited)

During the financial year ended 30 June 2009, 1,000,000 options with a value of \$36,332 lapsed.

REMUNERATION REPORT (audited) (continued)

F SHARE AND OPTION HOLDINGS

(i) Shareholdings (unaudited)

Number of Shares held by Key Management Personnel

Balance 1.7.2008	Options Exercised	Net Change Other	Balance on Resignation	Balance 30.6.2009
100,000	-	-	100,000	N/A
308,914	-	62,500	-	371,414
2,225,237	-	-	-	2,225,237
390,291	-	101,250	-	491,541
170,000	-	85,000	-	255,000
3,194,442	-	248,750	100,000	3,343,192
		- - - - - -

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

(i) Shareholdings (unaudited)

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.

(ii). Options and Rights Holdings (audited)

Number of Options Held by Key Management Personnel

2009	Balance 1.7.2008	Granted as Compensa tion	Options Exercised	Net Change Other	Balance	Total Vested and Exercisable	Total Vested During the Period
Ivan Hoffman	1,000,000	-	-	(1,000,000)	-	-	-
Bronwyn Barnes	4,000,000	-	-	-	4,000,000	2,000,000	2,000,000
Clive Jones	-	-	-	-	-	-	-
Jonathan Downes	-	-	-	-	-	-	-
Mark Fletcher	4,000,000	-	-	-	4,000,000	2,000,000	2,000,000
Total	9,000,000	-	-	(1,000,000)	8,000,000	4,000,000	4,000,000

REMUNERATION REPORT (audited) (continued)

2008	Balance 1.7.2007	Granted as Compensa tion	Options Exercised	Net Change Other	Balance	Total Vested and Exercisable	Total Vested During the Period
Ivan Hoffman	1,000,000	-	-	-	1,000,000	-	-
Bronwyn Barnes	-	4,000,000	-	-	4,000,000	-	-
Clive Jones	1,528,845	-	(528,845)	(1,000,000)	-	-	-
Jonathan Downes	-	-	-	-	-	-	-
Mark Fletcher	-	4,000,000	-	-	4,000,000	-	-
Total	2,528,845	8,000,000	(528,845)	(1,000,000)	9,000,000	-	-

Meetings of Directors

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

		Directors' Meetings
	Number eligible to attend	Number attended
Ivan Hoffman	4	4
Bronwyn Barnes	8	8
Jonathan Downes	8	7
Clive Jones	8	8
Mark Fletcher	8	8

Indemnifying Officers

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 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 \$1,074 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
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	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
			8,000,000

During the year ended 30 June 2009 no ordinary shares of Graynic Metals Limited were issued on the exercise of options and 2,750,000 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.

Non-Audit Services

No fees for non-audit services were paid/payable to the external auditors during the year ended 30 June 2009.

To the Board of Directors of Graynic Metals Limited

Dear Sirs

AUDITORS INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001

I declare that, to the best of my knowledge and belief, in relation to the audit for the year ended 30 June 2009, there have been:

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

Yours faithfully ORD PARTNERS

Ian Macpherson Partner

Perth

25 September 2009

P A R T N E R S CHARTERED ACCOUNTANTS O R D

Ian K Macpherson CA

Robert W Parker CA

Level 1, 47 Stirling Highway Nedlands WA 6009 PO Box 3437 Broadway Nedlands WA 6009 +61 8 9321 3514 +61 8 9321 3523

[email protected] www.ordnexia.com.au

Liability limited by a scheme approved under Professional Standards Legislation

Chartered Accountants

INCOME STATEMENTS FOR YEAR ENDED 30 JUNE 2009

	Note	Consolidated Group			Parent Entity
		2009 \$	2008 \$	2009 \$	2008 \$
Other income		17,066	1,844	4,736	1,844
Administrative expense		(59,612)	(73,722)	(59,612)	(73,435)
Employee benefits expense	2	(1,113,375)	(1,578,851)	(1,113,375)	(1,578,851)
Depreciation and amortisation expense		(22,677)	(12,446)	(22,677)	(12,446)
Consultancy expense		(29,374)	(51,470)	(29,374)	(51,470)
Compliance and regulatory expense		(56,389)	(62,220)	(56,389)	(62,220)
Occupancy expense		(42,954)	(30,421)	(42,954)	(30,421)
Directors fees		(82,886)	(106,710)	(82,886)	(106,710)
Insurance expense		(10,790)	(7,915)	(10,790)	(7,915)
Impairment of investment in controlled entity	2	-	-	(800,000)	(400,000)
Write-off of capitalised exploration expenditure	2	(3,074,250)	(434,508)	(2,274,250)	(23,086)
Finance income		90,122	126,477	90,122	126,477
Finance costs		(13)	(1,230)	(13)	(1,230)
Exploration expense		(288,966)	-	(288,966)	-
Loss before income tax	2	(4,674,098)	(2,231,172)	(4,686,428)	(2,219,463)
Income tax benefit	3	-	-	-	-
Loss for the year		(4,674,098)	(2,231,172)	(4,686,428)	(2,219,463)
Basic and diluted loss per share (cents	6	8.45	4.44

Basic and diluted loss per share (cents per share)

BALANCE SHEETS AS AT 30 JUNE 2009

Note			Parent Entity
	2009	2008	2009	2008
				\$


				2,466,807
				27,207
	1,303,489	2,494,014	1,302,782	2,494,014

9	1,010,048	2,072,248	2,180,013	4,041,505
11	43,730	36,271	43,730	36,271
12	3,800,023	6,391,976	2,852,584	4,644,537
	4,853,801	8,500,495	5,076,327	8,722,313
			6,379,109	11,216,327

13A	52,161	35,225	52,161	35,225
14	14,673	31,195	14,673	18,864
	66,834	66,420	66,834	54,089

13B	-	-	221,901	221,901
	-	-	221,901	221,901
	66,834	66,420	288,735	275,990
			6,090,374	10,940,337

15			12,825,841	12,825,841
	2,689,238	3,052,420	2,689,238	3,052,420
			(9,424,705)	(4,937,924)
			6,090,374	10,940,337
	7 8	\$ 1,284,531 18,958	Consolidated Group \$ 2,466,807 27,207 6,157,290 10,994,509 6,090,456 10,928,089 12,825,841 12,825,841 (9,424,623) (4,950,172) 6,090,456 10,928,089	\$ 1,284,531 18,251

STATEMENTS OF CHANGES IN EQUITY FOR YEAR ENDED 30 JUNE 2009

	Issued Capital	Option Reserve	Fair Value Reserve	Share Based Payments Reserve	Accumulated Losses	Total
CONSOLIDATED ENTITY	\$	\$	\$	\$	\$	\$
BALANCE AT 1 JULY 2007	9,681,818	122,501	2,299,900	1,003,994	(3,388,232)	9,719,981
Available for sale asset movement	-	-	(657,572)	-	-	(657,572)
Loss for the period	-	-	-	-	(2,231,172)	(2,231,172)
TOTAL RECOGNISED INCOME AND EXPENSE FOR THE PERIOD	-	-	(657,572)	-	(2,231,172)	(2,888,744)
Options lapsed	126,524	-	-	(795,756)	669,232	-
Shares issued during the year	3,171,604	(122,501)	-	(5,174)	-	3,043,929
Transaction costs	(154,105)	-	-	-	-	(154,105)
Employee equity settled transactions	-	-	-	1,207,028	-	1,207,028
BALANCE AT 30 JUNE 2008	12,825,841	-	1,642,328	1,410,092	(4,950,172)	10,928,089
Available for sale asset movement	-		- (1,062,201)	-	-	(1,062,201)
Loss for the period	-	-	-	-	(4,674,098)	(4,674,098)
TOTAL RECOGNISED INCOME AND EXPENSE FOR THE PERIOD	-		- (1,062,201)	-	(4,674,098)	(5,736,299)
Options lapsed	-	-	-	(199,647)	199,647	-
Employee equity settled transactions	-	-	-	898,666	-	898,666
BALANCE AT 30 JUNE 2009	12,825,841	-	580,127	2,109,111	(9,424,623)	6,090,456
PARENT ENTITY
BALANCE AT 1 JULY 2007	9,681,818	122,501	2,299,900	1,003,994	(3,387,693)	9,720,520
Available for sale asset movement	-	-	(657,572)	-	-	(657,572)
Loss for the period	-	-	-	-	(2,219,463)	(2,219,463)
TOTAL RECOGNISED INCOME AND EXPENSE FOR THE PERIOD	-	-	(657,572)	-	(2,219,463)	(2,877,035)
Options lapsed	126,524	-	-	(795,756)	669,232	-
Shares issued during the year	3,171,604	(122,501)	-	(5,174)	-	3,043,929
Transaction costs	(154,105)	-	-	-	-	(154,105)
Employee equity settled transactions	-	-	-	1,207,028	-	1,207,028
BALANCE AT 30 JUNE 2008	12,825,841	-	1,642,328	1,410,092	(4,937,924)	10,940,337
Available for sale asset movement	-		- (1,062,201)	-	-	(1,062,201)
Loss for the period	-	-	-	-	(4,686,428)	(4,686,428)
TOTAL RECOGNISED INCOME AND EXPENSE FOR THE PERIOD	-		- (1,062,201)	-	(4,686,428)	(5,748,629)
Options lapsed	-	-	-	(199,647)	199,647	-
Employee equity settled transactions	-	-	-	898,666	-	898,666
BALANCE AT 30 JUNE 2009	12,825,841	-	580,127	2,109,111	(9,424,705)	6,090,374

CASH FLOW STATEMENTS FOR YEAR ENDED 30 JUNE 2009

	2009 \$	2008 \$	2009 \$	2008 \$

	(763,974)	(686,412)	(763,974)	(686,130)
	4,736	-	4,736	-
	94,370	123,135	94,370	123,135
	(486,565)	(394,579)	(486,565)	(394,580)
19	(1,151,433)	(957,856)	(1,151,433)	(957,575)

	(30,136)	(40,984)	(30,136)	(40,984)
	(707)	-	-	-
	(30,843)	(40,984)	(30,136)	(40,984)

	-	3,043,930	-	3,043,930
	-	(154,105)	-	(154,105)
	-	-	(707)	14,777
	-	2,889,825	(707)	2,904,602
	(1,182,276)	1,890,985	(1,182,276)	1,906,044
7	2,466,807	575,822	2,466,807	560,763
7	1,284,531	2,466,807	1,284,531	2,466,807
	Note		Consolidated Group	Parent Entity

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. The financial report and notes comply with International Financial Reporting Standards and interpretations adopted by the International Accounting Standards Board. 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, the group and parent entity's functional and presentation currency, unless otherwise noted.

Critical Accounting Estimates and Judgments

The preparation of the financial report requires management to make judgements, estimates and assumptions of assets, liabilities, income and expenses. Actual results may differ from these estimates. The directors evaluate the estimates and judgments incorporated into the financial report based on a regular basis using 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. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future period affected.

Estimates in the financial statements relate to the following:

(i) impairment of exploration assets (Note 12); and

(ii) the valuation of share based payments (Note 20).

Going Concern

The 30 June 2009 financial report has been prepared on the going concern basis that contemplates the continuity of normal business activities and the realisation of assets and extinguishment of liabilities in the ordinary course of business. For the year ended 30 June 2009 the group recorded a loss of \$4,674,098 and had a net working capital surplus of \$1,236,655 (2008 \$2,427,594).

The group will require further funding during the 2010 financial year in order to meet day to day obligations as they fall due and progress its exploration projects.

In the event that the group is not successful in raising funds from the issue of new equity there exists uncertainty as to whether the group will be able to continue as a going concern and realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.

The directors anticipate that future financing for exploration and mining activities will be secured in a reasonable timeframe and accordingly the directors consider it appropriate to prepare the financial statements on a going concern basis.

Significant Accounting Policies

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 10 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).

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)

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.

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 is calculated on the balance sheet method providing for 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.

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 less any accumulated depreciation and impairment losses.

Recognition and Measurement

Cost includes expenditure that is directly attributable to the acquisition of the asset.

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 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.

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

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)

Class of Fixed Asset	Depreciation Rate
Plant and equipment	30-40%
Paintings	1.5%
Office furniture and equipment	18%

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

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

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

d. Exploration and Development Expenditure

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest.

Exploration and evaluation expenditure is only recognised as an exploration and evaluation asset where right of tenure of the area of interest is current and expected to be recouped through sale or successful development and exploitation of the area of interest, or, where exploration and evaluation activities in the area of interest 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 comprising of cash and cash equivalents, other receivables, financial assets, trade and other payables and loans and borrowings are recognised when the entity becomes a party to the contractual provisions of the instrument.

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. Available-for-sale financial assets

Available-for-sale financial assets comprise investments in the equity of other entities and are measured at fair value. 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.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)

e. Financial Instruments (cont)

ii. Other

Other non-derivative financial instruments are measured at amortised cost using the effective interest rate method less any impairment losses.

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.

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.

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.

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. 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.

h. Cash and Cash Equivalents

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

i. Finance Income and Expenses

Finance income comprises interest income on funds invested (including available-for-sale financial assets), dividend income and gains on the disposal of available-for-sale financial assets. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Dividend income is recognised in profit or loss on the date that the consolidated entity's right to receive payment is established, which the case of quoted securities is the ex-dividend date.

Finance expenses comprise interest expense on borrowings and impairment losses recognised on financial assets. All borrowing costs are recognised in profit or loss using the effective interest method.

j. 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.

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)

k. New Accounting Standards and Interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2009 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.

(i) Revised AASB 3 Business Combinations, AASB 127 Consolidated and Separate Financial Statements and AASB 2008-3 Amendments to Australian Accounting Standards arising from AASB 3 and AASB 127 (effective 1 July 2009).The revised AASB 3 continues to apply the acquisition method to business combinations, but with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently remeasured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets. All acquisition-related costs must be expensed.

The revised AASB 127 requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is remeasured to fair value, and a gain or loss is recognised in the loss.

(ii) 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. 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.

(iii) 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 1 July 2009.

(iv) AASB 2008 -1 Amendments to Australian Accounting Standards Share Based Payments: Vesting Conditions and Cancellations. This standard makes amendments to AASB 2 Share Based Payments and is applicable for annual reporting periods beginning on or after 1 January 2009. The amendments clarify that vesting conditions comprise service conditions and performance conditions only and that other features of a share-based payment transaction are not vesting conditions. They also specify that all cancellations, whether by the entity or by other parties, should receive the same accounting treatment. The group intends to apply the revised standard from 1 July 2009.
(v) AASB 2009 -2 Amendments to Australian Accounting Standards Improving Disclosure about Financial Instruments. This Standard makes amendments to the following Australian Accounting Standards:
1. AASB 4 Insurance Contracts;
1. AASB 7 Financial Instruments: Disclosures;
1. AASB 1023 General Insurance Contracts; and
1. AASB 1038 Life Insurance Contracts.

The amendments require enhanced disclosures about fair value measurements and liquidity risk. The standard is applicable to annual reporting periods beginning on or after 1 January 2009. The amendments to AASB 7 require enhanced disclosures about fair value measurements and liquidity risk. The group intends to apply the revised standard from 1 July 2009.

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)

k. New Accounting Standards and Interpretations (cont)

(vi) AASB 2009 -5 Further amendments to Australian Accounting Standards arising from the Annual Improvements Process. The standard is applicable to annual reporting periods beginning on or after 1 January 2009. The amendments to some standards result in accounting changes for presentation, recognition or measurement purposes, while some amendments that relate to terminology and editorial changes are expected to have no or minimal effect on accounting. The group intends to apply the revised standard from 1 July 2009.

l. 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.

(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, which comprise share options granted.

m. Issued Capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or share 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.

n. Share-based Payments

Share-based compensation benefits are provided to employees via the Graynic Metals Employee Incentive Scheme.

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.

o. 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.

NOTE 2: LOSS FOR THE YEAR

		Consolidated Group		Parent Entity
		2009 \$	2008 \$	2009 \$	2008 \$
a.	Write-off of capitalised exploration expenditure	3,074,250	434,508	2,274,250	23,086
	Impairment of investment in controlled entity	-	-	800,000	400,000
b.	Significant Revenue and Expenses
	The following significant revenue and expense items are relevant in explaining the financial performance:
	- Employee benefit expense	214,709	371,823	214,709	371,823
	- Share based payments	898,666	1,207,028	898,666	1,207,028
	NOTE 3: INCOME TAX EXPENSE
		Consolidated Group 2009 \$	2008 \$	Parent Entity 2009 \$	2008 \$
a.	The components of tax expense comprise:
	Current tax	-	-	-	-
	Deferred tax	- -	- -	- -	- -
b.	The prima facie tax on loss from ordinary activities before income tax is reconciled to the income tax as follows:
	Prima facie tax payable on loss from ordinary activities before income tax at 30% (2008: 30%)
		(1,402,229)	(669,352)	(1,405,929)	(665,839)
	Add:
	Tax effect of:
	— other non-allowable items	274,687	484,730	270,988	484,730
	— tax benefit of revenue losses not recognised	1,159,275	216,355	1,166,674	212,842
		1,433,962	701,085	1,437,662	697,572
	Less:
	Tax effect of:
	— tax benefit of equity raising costs not recognised	(31,733)	(31,733)	(31,733)	(31,733)
	Income tax attributable to entity	-	-	-	-

NOTE 3: INCOME TAX EXPENSE (continued)

		Consolidated Group		Parent Entity
		2009 \$	2008 \$	2009 \$	2008 \$
c.	Unrecognised deferred tax balances
	Deferred tax assets have not been recognised in respect of the following:
	Deferred Tax Assets:
	Carry forward revenue losses	2,176,077	1,788,689	2,230,994	1,788,603
	Capital raising costs	36,809	68,542	36,809	68,542
	Provisions and accruals	1,216	9,260	1,216	9,260
	Investments	1,091,400	729,220	1,091,400	729,220
		3,305,502	2,595,711	3,360,419	2,595,625

The tax benefits of the above Deferred Tax Assets will only be obtained if:

(a) The company derives future assessable income of a nature and an amount sufficient to enable the benefits to be utilised; and
(b) The company continues to comply with the deductibility conditions imposed by the Income Tax Assessment Act 1997; and
(c) No change in income tax legislation adversely affects the company in utilising the benefits.

Deferred Tax Liabilities:
Exploration expenditure	(466,023)	(1,243,609)	(466,023)	(1,243,609)
Other	-	(4,152)	-	(4,152)
Net unrecognised deferred tax balances	2,839,479	1,347,950	2,894,396	1,347,864

The above Deferred Tax Liabilities have not been recognised as they have given rise to the carry forward revenue losses for which the Deferred Tax Assets have not been recognised.

NOTE 4: KEY MANAGEMENT PERSONNEL COMPENSATION

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

	Consolidated Group
	2009 \$	2008 \$
Short Term Employee Benefits	428,842	388,103
Post Employment Benefits	35,544	61,914
Share Based Payments	898,666	1,132,444
Total	1,363,052	1,582,461

NOTE 4: KEY MANAGEMENT PERSONNEL COMPENSATION (cont)

a. Option holdings

Number of Options held by Key Management Personnel

2009	Balance 1.7.2008	Granted as Compensa tion	Options Exercised	Options Lapsed	Balance	Total Vested and Exercisable	Total Vested During the Period
Ivan Hoffman	1,000,000	-	-	(1,000,000)	-	-	-
Bronwyn Barnes	4,000,000	-	-	-	4,000,000	2,000,000	2,000,000
Clive Jones	-	-	-	-	-	-	-
Jonathan Downes	-	-	-	-	-	-	-
Mark Fletcher	4,000,000	-	-	-	4,000,000	2,000,000	2,000,000
Total	9,000,000	-	-	(1,000,000)	8,000,000	4,000,000	4,000,000

2008	Balance 1.7.2007	Granted as Compensa tion	Options Exercised	Options Lapsed	Balance	Total Vested and Exercisable	Total Vested During the Period
Ivan Hoffman	1,000,000	-	-	-	1,000,000	-	-
Bronwyn Barnes	-	4,000,000	-	-	4,000,000	-	-
Clive Jones	1,528,845	-	(528,845)	(1,000,000)	-	-	-
Jonathan Downes	-	-	-	-	-	-	-
Mark Fletcher	-	4,000,000	-	-	4,000,000	-	-
Total	2,528,845	8,000,000	(528,845)	(1,000,000)	9,000,000	-	-

The options were valued using a Black and Scholes model and the inputs are disclosed under Note 20.

b. Shareholdings

Number of Shares held by Key Management Personnel

2009	Balance 1.7.2008	Received as Compen sation	Options Exercised	Balance on Resignation	Net Change Other*	Balance 30.6.2009
Ivan Hoffman	100,000	-	-	100,000	-	-
Bronwyn Barnes	308,914	-	-	-	62,500	371,414
Clive Jones	2,225,237	-	-	-	-	2,225,237
Jonathan Downes	390,291	-	-	-	101,250	491,541
Mark Fletcher	170,000	-	-	-	85,000	255,000
Total	3,194,442	-	-	100,000	248,750	3,343,192

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

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	2,222,124	-	528,845	443,473	3,194,442

NOTE 4: KEY MANAGEMENT PERSONNEL COMPENSATION (cont)

NOTE 5: AUDITORS' REMUNERATION

			Consolidated Group		Parent Entity
		2009	2008	2009	2008
		\$	\$	\$	\$
	Remuneration of the auditor of the parent entity for:
—	auditing or reviewing the financial report	30,000	25,445	30,000	25,445
—	taxation services	-	-	-	-

NOTE 6: LOSS PER SHARE

		Consolidated Group
		2009 \$	2008 \$
a.	Loss used in the calculation of basic and diluted EPS	4,674,098	2,231,172
b.	Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS	No.	No.
	Issued ordinary shares at 1 July	55,485,415	40,265,772
	Effect of share options exercised	-	12,219,643
	Effect of shares issued	-	3,000,000
	Weighted average number of ordinary shares at 30 June	55,485,415	55,485,415

NOTE 7: CASH AND CASH EQUIVALENTS

	Consolidated Group		Parent Entity
	2009 \$	2008 \$	2009 \$	2008 \$
Cash at bank and in hand	724,531	2,166,397	724,531	2,166,397
Short-term bank deposits	560,000	300,410	560,000	300,410
	1,284,531	2,466,807	1,284,531	2,466,807

NOTE 8: OTHER RECEIVABLES

2009 \$	2008 \$	2009 \$	2008 \$

18,958	27,207	18,251	27,207
18,958	27,207	18,251	27,207

-	-	317,246	316,538
-	-	4,491,147	4,491,147
-	-	(3,638,428)	(2,838,428)
-	-	1,169,965	1,969,257
1,010,048	2,072,248	1,010,048	2,072,248
1,010,048	2,072,248	2,180,013	4,041,505
		Consolidated Group	Parent Entity

All loans to controlled entities are initially stated at cost. All carrying values approximate to fair values.

The amounts due to the parent company have no fixed repayment date and no interest is charged.

The consolidated entity's exposure to credit, market and liquidity risk related to financial assets is disclosed in Note 23 (iii).

	Consolidated Group		Parent Entity
Available-for-sale Financial Assets Comprise	2009 \$	2008 \$	2009 \$	2008 \$
Listed investments, at fair value
— shares in listed corporations	1,010,048	2,072,248	1,010,048	2,072,248
	1,010,048	2,072,248	1,010,048	2,072,248

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. Fair value is determined in whole by direct reference to a published price on the Australian Securities Exchange.

NOTE 10: CONTROLLED ENTITIES

	Country of Incorporation		Percentage Owned (%)*
		2009	2008
Subsidiary of Graynic Metals Ltd:
Graynic Metals (Guatemala) Pty Ltd	Australia	100	-
Resource Investment Group Pty Ltd	Australia	100	100

* Percentage of voting power is in proportion to ownership

Graynic Metals (Guatemala) Pty Ltd was incorporated on 4th June 2009 at a total cost of \$100 and is a wholly owned subsidiary of Graynic Metals Ltd.

NOTE 11: PLANT AND EQUIPMENT

	Consolidated Group		Parent Entity
	2009 \$	2008 \$	2009 \$	2008 \$
Plant and equipment:
At cost	85,368	55,232	85,368	55,232
Accumulated depreciation	(43,151)	(20,806)	(43,151)	(20,806)
	42,217	34,426	42,217	34,426
Office furniture and equipment
At cost	2,713	2,713	2,713	2,713
Accumulated depreciation	(1,200)	(868)	(1,200)	(868)
	1,513	1,845	1,513	1,845
Total Plant and Equipment	43,730	36,271	43,730	36,271

	Plant and Equipment	Office Furniture	Total
	\$	\$	\$
Consolidated Group:
Balance at 1 July 2007	6,829	904	7,733
Additions	39,717	1,267	40,984
Depreciation expense	(12,120)	(326)	(12,446)
Balance at 30 June 2008	34,426	1,845	36,271
Additions	30,136	-	30,136
Depreciation expense	(22,345)	(332)	(22,677)
Balance at 30 June 2009	42,217	1,513	43,730
Parent Entity
Balance at 1 July 2007	6,829	904	7,733
Additions	39,717	1,267	40,984
Depreciation expense	(12,120)	(326)	(12,446)
Balance at 30 June 2008	34,426	1,845	36,271
Additions	30,136	-	30,136
Depreciation expense	(22,345)	(332)	(22,677)
Balance at 30 June 2009	42,217	1,513	43,730

	Consolidated Group		Parent Entity
	2009 \$	2008 \$	2009 \$	2008 \$
NON-CURRENT
Exploration expenditure capitalised
— exploration and evaluation phases	9,842,074	9,359,777	5,245,844	4,763,546
Accumulated impairment losses	(6,042,051)	(2,967,801)	(2,393,260)	(119,009)
Total exploration expenditure	3,800,023	6,391,976	2,852,584	4,644,537
Movement in carrying value:
Brought forward	6,391,976	6,423,717	4,644,537	4,264,856
Exploration expenditure capitalised during the year	482,297	402,767	482,297	402,767
Impairment of exploration expenditure	(3,074,250)	(434,508)	(2,274,250)	(23,086)
At reporting date	3,800,023	6,391,976	2,852,584	4,644,537

NOTE 12: 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.

NOTE 13A: TRADE AND OTHER PAYABLES

		Consolidated Group Parent Entity
	2009 \$	2008 \$	2009 \$	2008 \$
CURRENT
Trade payables	26,220	8,704	26,220	8,704
Sundry payables and accrued expenses	25,941	26,521	25,941	26,521
	52,161	35,225	52,161	35,225
NOTE 13B: LOANS AND BORROWINGS NON-CURRENT
Amounts payable to:
— wholly-owned subsidiaries	-	-	221,901	221,901
	-	-	221,901	221,901

NOTE 14: PROVISIONS

	Employee benefits \$	Provision for taxation \$	Total \$
Consolidated Entity
Opening balance at 1 July 2008	18,865	12,330	31,195
Additional provisions	(4,192)	(12,330)	(16,522)
Balance at 30 June 2009	14,673	-	14,673

	Employee benefits	Provision for taxation	Total
	\$	\$	\$
Parent Entity
Opening balance at 1 July 2008	18,865	-	18,865
Additional provisions	(4,192)	-	(4,192)
Balance at 30 June 2009	14,673	-	14,673

Analysis of Total Provisions

		Consolidated Group		Parent Entity
	2009 \$	2008 \$	2009 \$	2008 \$
Current	14,673	31,195	14,673	18,865
Non-current	-	-	-	-
	14,673	31,195	14,673	18,865

NOTE 15: ISSUED CAPITAL

55,485,415 (2008: 55,485,415) fully paid ordinary shares		12,825,841	12,825,841	12,825,841	12,825,841
		12,825,841	12,825,841	12,825,841	12,825,841
		Consolidated Group		Parent Entity
		2009	2008	2009	2008
		No.	No.	No.	No.
a.	Ordinary shares
	At the beginning of reporting period	55,485,415	40,265,772	55,485,415	40,265,772
	Shares issued during the year
	— Placement	-	3,000,000	-	3,000,000
	— Conversion of options	-	12,219,643	-	12,219,643
	At reporting date	55,485,415	55,485,415	55,485,415	55,485,415

NOTE 15: ISSUED CAPITAL (cont)

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

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 yearend, refer to Note 20 Share-based Payments.

NOTE 16: RESERVES

a. Fair Value Reserve

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

b. 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 17: CAPITAL AND LEASING COMMITMENTS

Capital Expenditure Commitments

In order to maintain current rights of tenure to exploration tenements the consolidated entity is required to perform minimum exploration work to meet the minimum expenditure requirements specified by various State governments. These obligations can be reduced by selective relinquishment of exploration tenure or renegotiation. Due to the nature of the Company's operations in exploring and evaluating areas of interest, exploration expenditure commitments beyond twelve months cannot be reliably determined. It is anticipated that expenditure commitments in subsequent years will be similar to that for the forthcoming twelve months. The terms of the Nichromet Joint Venture agreement signed after year end require the company to spend up to US\$2,400,000 in a 36 month period to obtain 50% of the project. The company may then elect to earn a further 25% of the project by spending up to an additional US\$4,000,000 in the following 36 month period. These obligations are not provided for in the financial report.

	Consolidated Group		Parent Entity
	2009 \$000	2008 \$000	2009 \$000	2008 \$000
Payable:
— Not longer than one year	1,151,983	468,700	1,151,983	468,700

NOTE 18: SEGMENT REPORTING

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

NOTE 19: CASH FLOW INFORMATION

	Consolidated Group		Parent Entity
a.	2009	2008	2009	2008
	\$	\$	\$	\$
Reconciliation of Cash Flow from Operations with Net Loss
Loss after income tax	(4,674,098)	(2,231,171)	(4,686,428)	(2,219,463)
Non-cash flows in profit
Depreciation	22,677	12,446	22,677	12,446
Impairment of investment	-	-	800,000	400,000
Share options expensed	898,666	1,207,028	898,666	1,207,028
Write off exploration	3,074,250	434,508	2,274,250	23,086
Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries
(Increase)/decrease in receivables and prepayments	8,958	42,751	8,958	42,745
(Increase)/decrease in exploration and evaluation expenditure	(482,297)	(402,767)	(482,297)	(402,767)
Increase/(decrease) in trade and other payables	16,936	(34,131)	16,936	(34,131)
Increase/(decrease) in provisions	(16,525)	13,480	(4,195)	13,481
Cashflow from operations	(1,151,433)	(957,856)	(1,151,433)	(957,575)
b.
Financing facilities available
At reporting date, the following credit card facility had been negotiated and was available:
Total facility	60,000	60,000	60,000	60,000
Facility used at reporting date	-	-	-	-
Facility unused at reporting date	60,000	60,000	60,000	60,000

NOTE 20: SHARE-BASED PAYMENTS

The following share-based payment arrangements were in existence during the current and comparative 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, 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.
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 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.
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 \$0.65. 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.
F 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.

NOTE 20: SHARE-BASED PAYMENTS (cont)

		Consolidated Group			Parent Entity
	2009		2008		2009		2008
	Number of Options	Weighted Average Exercise Price \$	Number of Options	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	11,750,000	0.39	11,250,000	0.30	11,750,000	0.39	11,250,000	0.30
Granted	-		4,250,000	0.30	-		4,250,000	0.30
Granted	-		2,250,000	0.45	-		2,250,000	0.45
Granted	-		2,000,000	0.65	-		2,000,000	0.65
Exercised	-	-	-	-	-	-	-	-
Expired	(2,750,000)	0.30	(8,000,000)	0.30	(2,750,000)	0.30	(8,000,000)	0.30
Outstanding at year-end	9,000,000	0.41	11,750,000		9,000,000	0.41	11,750,000
Exercisable at year-end	4,000,000	0.30	-	-	4,000,000	0.30	-	-

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

No compensation options were exercised or forfeited during the year ended 30 June 2009.

The options outstanding at 30 June 2009 had a weighted average exercise price of \$0.41 and a weighted average remaining contractual life of 23.22 months. Exercise prices range from \$.30 to \$.65 in respect of options outstanding at 30 June 2009.

Included under employee benefits expense in the income statement is \$898,666 (2008: \$1,207,028), and relates, in full, to equity-settled share-based payment transactions.

The options were valued using a Black and Scholes option pricing model.

NOTE 21: EVENTS AFTER THE BALANCE SHEET DATE

i. On 16th July 2009 Silver City Mining Ltd withdrew from a Sales Agreement in relation to the company's Yanco Glen project. The terms of the agreement were outlined in the Directors' Report under 'Significant Changes in State of Affairs', item iii, but not brought to account in the financial statements due to considerable uncertainty that the conditions would be satisfied.
ii. On 10th July 2009 the company signed the Joint Venture agreement with Nichromet Extractions Inc for nickel projects in Cuba and Guatemala. This agreement is also referred to in the Directors' Report under "significant Changes in State of Affairs, item vi.
iii. On 3rd September 2009 Bronwyn Barnes resigned as Managing Director.
iv. On 3rd September 2009 Mark Fletcher resigned as Executive Director.
v. On 3rd September 2009 Adrian Byass was appointed Interim Managing Director.

NOTE 22: RELATED PARTY DISCLOSURES

a. Subsidiaries

Interests in and loans to and from controlled entities are disclosed in Note 9 and Note 10.

b. Key Management Personnel

Key management personnel equity holdings are disclosed in Note 4.

NOTE 22: RELATED PARTY DISCLOSURES (cont)

c. Other

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. At 30th June 2009 the company owed \$12,260 to Ironbark Gold Ltd for rent and shared occupancy 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 23: FINANCIAL RISK MANAGEMENT

a. Financial Risk Management Policies

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

i. Capital Management

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital, which the Consolidated Entity defines as net operating income divided by total shareholders' equity.

ii. 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.

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.

iii. 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.

(a) 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.

The consolidated entity currently does not have major funding in place. However, the consolidated entity continuously monitors forecasts and actual cash flows and the maturity profiles of financial assets and liabilities to manage its liquidity risk. Surplus funds are generally only invested in short term bank deposits.

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.

The decision on how the consolidated entity will raise future capital will depend on market conditions existing at that time.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009 NOTE 23: FINANCIAL RISK MANAGEMENT (cont)

(b) Market Risk

Market risk is the risk that changes in market prices, such as interest rates and equity prices will affect the Consolidated Entity's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Credit risk arises from the financial assets of the Consolidated Entity, which comprise cash and cash equivalents, other receivables and available-for-sale financial assets. Receivable balances are monitored on an ongoing basis with the result that the Consolidated Entity's exposure to bad debts is not significant. The Consolidated Entity has adopted the policy of only dealing with credit worthy counterparties.

The Group's exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments.

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.

(d) Equity Price risk

The Group is exposed to equity securities price risk from investments held that are classified on the balance sheet as available for sale. Material investments are managed on an individual basis and all buy and sell decisions are approved by the Board.

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

	Consolidated Parent
	2009 \$	2008 \$	2009 \$	2008 \$
Financial Assets:
Cash and cash equivalents	1,284,531	2,466,807	1,284,531	2,466,807
Receivables	18,958	27,207	18,251	27,207
Investment in controlled entity	-	-	1,169,257	1,969,257
Investments	1,010,048	2,072,248	1,010,048	2,072,248
Total Financial Assets	2,313,537	4,566,262	3,482,087	6,535,519
Financial Liabilities:
Trade and sundry payables	52,161	35,225	52,161	35,225
Amounts payable related parties	-	-	221,901	221,901
Total Financial Liabilities	52,161	35,225	274,062	257,126
Trade and sundry payables are expected to be paid as followed:
Less than 1 month	52,161	35,225	52,161	35,225
Greater than 1 year	-	-	221,901	221,901
	52,161	35,225	274,062	257,126

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009 NOTE 23: FINANCIAL RISK MANAGEMENT (cont)

iv. 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.
Cash and cash equivalents, receivables and payables are carried at fair value.
__ The investment in subsidiary is carried at fair value at the date of acquisition less impairment.

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.

v. 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 2009, 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
		2009 \$	2008 \$	2009 \$	2008 \$
	Change in profit
—	Increase in interest rate by 1%	18,756	15,214	18,756	15,137
—	Decrease in interest rate by 1%	(18,756)	(15,214)	(18,756)	(15,137)
	Change in Equity
—	Increase in interest rate by 1%	18,756	15,214	18,756	15,137
—	Decrease in interest rate by 1%	(18,756)	(15,214)	(18,756)	(15,137)

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% (2008 10%) with all other variables held constant and all the group's equity instruments moved according to the historical correlation with the index.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009 NOTE 23: FINANCIAL RISK MANAGEMENT (cont)

		Consolidated Entity		Parent Entity
	2009 \$	2008 \$	2009 \$	2008 \$
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%	101,005	207,225	101,005	207,225
Decrease in ASX All Ordinaries Index by 10%	(101,005)	(207,225)	(101,005)	(207,225)

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

NOTE 24: 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

NOTE 25: CONTINGENT ASSETS AND LIABILITIES

The Company is unaware of any contingent assets or liabilities that that may have a material impact on the company's financial position.

Director
Adrian Byass

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF GRAYNIC METALS LIMITED

Report on the financial report

We have audited the accompanying financial report of Graynic Metals Limited, which comprises the balance sheet as at 30 June 2009, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the year's end or from time to time during the financial year.

Directors' responsibility for the financial report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial report, comprising the financial statements and notes complies with International Financial Reporting Standards.

Auditor's responsibility

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

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

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

Independence

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

Ian K Macpherson CA

Robert W Parker CA

Level 1, 47 Stirling Highway Nedlands WA 6009 PO Box 3437 Broadway Nedlands WA 6009 +61 8 9321 3514 +61 8 9321 3523

[email protected] www.ordnexia.com.au

Liability limited by a scheme approved under Professional Standards Legislation

Auditor's opinion

In our opinion:

(a) the financial report of Graynic Metals Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the company's and consolidated entity's financial position as at 30 June 2009 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Material uncertainty regarding going concern

Without qualifying the opinion expressed above, attention is drawn to the following matter. As a result of matters referred to in Note 1 "Going Concern" to the financial statements, the ability of the Company to continue as a going concern and meet its planned and committed expenditures including exploration expenditures is dependent upon the Company raising further working capital. In the event that the Company cannot raise further working capital, there is significant uncertainty whether the Company will be able to pay its debts as and when they become due and payable. Should the Company be unable to continue as a going concern, it may be required to realise its assets and extinguish its liabilities other than in the normal course of business and at amounts different from those stated in the financial report. The financial report does not include any adjustments relating to the recoverability and classification of recorded assets nor to the amounts and classification of liabilities that might be necessary should the entity not continue as a going concern.

Report on the remuneration report

We have audited the Remuneration Report consisting of sections A to E and F(ii) in the directors' report for the year ended 30 June 2009. The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporation Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in with Australian Auditing Standards.

Auditor's opinion

In our opinion, the Remuneration Report of Graynic Metals Limited for the year ended 30 June 2009, that are consisting of sections A to E and F(ii) in the directors' report complies with Section 300A of the Corporation Act 2001.

ORD PARTNERS

Chartered Accountants

Ian Macpherson Partner

Perth

25 September 2009

ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES

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

1. Shareholding

Distribution of Shareholders		Number
Category (size of holding)	Ordinary	Redeemable
1 – 1,000	30,669	-
1,001 – 5,000	464,283	-
5,001 – 10,000	774,762	-
10,001 – 100,000	9,460,883	-
100,001 – and over	44,754,818	-
	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 31 July 2009 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.	Mr Richard Grant Manners Hill and Mrs Fleur Lesley Schell	2,000,000	3.605
4.	Dr Alistair Rowland Bronw (Hipiki Staff Fund A/c>	1,554,300	2.801
5.	Mr Clive Bruce Jones	1,507,802	2.717
6.	Alastair R Brown Pty Ltd	1,455,000	2.622
7.	UBS Wealth Management, Australia Nominees Pty Ltd	1,386,422	2.499
8.	Margaret Anne Mullins	1,100,000	1.983
9.	First Island Trustees Limited <westerhill a="" c?<="" td="">	1,081,549	1.949	1,081,549	1.949
10.	Nathan Bruce McMahon	1,074,869	1.937
11.	Ninkasi Pty Ltd	1,072,347	1.933
12.	Mervyn Ian Leo Bassett & Shirley Ethel Bassett <y-z superFund A/C>	887,322	1.599
13.	CPA Financial Services Pty Ltd	878,400	1.583
14.	Boorongagil Investments Pty Ltd	800,000	1.442
15.	Tregunter Investments (HK) Limited	785,000	1.415
16.	Jezza Nominees Ltd	757,868	1.366
17.	Widerange Corporation Pty Ltd	717,435	1.293

e. 20 Largest Shareholders — Ordinary Shares

Name		Number of Ordinary Fully Paid Shares Held	% Held of Issued Ordinary Capital
18.	Debra Lee McMahon	670,306	1.208
19.	GW International PL and A22 PL Group # 889096	629,589	1.135
20.	OD & J Lukies Pty Ltd	608,710	1.097
		24,800,253	44.697

1. 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.
1. 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 9,000,000 options are on issue. 1,000,000 options are on issue to 1 holder of ordinary securities. 8,000,000 options are on issue to 2 directors 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 2009.

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 (resigned 28th January 2009)

Clive Jones (appointed Chairman 28th January 2009)

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.

Trading Policy

The company's policy regarding directors and employees trading in its securities is set by the Board. 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 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 Remuneration Report. 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 option pricing model.

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.

CORPORATE GOVERNANCE

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.

AI assistant

CORAZON MINING LIMITED — Annual Report 2009

64747_rns_2009-09-24_dc2b567f-068b-4d58-8f44-cdd3230ed40d.pdf

Graynic Metals Limited

and Controlled Entities

CONTENTS

CORPORATE DIRECTORY

NON-EXECUTIVE CHAIRMAN

PRINCIPAL & REGISTERED OFFICE

AUDITORS

SHARE REGISTRAR

STOCK EXCHANGE LISTINGS

BANKERS

WEBSITE

Directors

INFORMATION ON DIRECTORS

Company Secretary

Operating Results

Review of Operations

Financial Position

Significant Changes in State of Affairs

After Balance Date Events

Future Developments, Prospects and Business Strategies

Environmental Issues

REMUNERATION REPORT (audited)

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

A REMUNERATION POLICY (audited)

REMUNERATION REPORT (audited) (continued)

Performance-based remuneration

Company performance, shareholder wealth and director and executive remuneration

Key terms of employment contracts

REMUNERATION REPORT (audited) (continued)

B DETAILS OF THE NATURE AND AMOUNT OF COMPENSATION PAID, PAYABLE OR OTHERWISE MADE AVAILABLE TO DIRECTORS (audited)

2008

C COMPENSATION OPTIONS GRANTED DURING THE YEAR (audited)

D SHARES ISSUED ON EXERCISE OF COMPENSATION OPTIONS (audited)

E OPTIONS LAPSED DURING THE PERIOD (audited)

REMUNERATION REPORT (audited) (continued)

F SHARE AND OPTION HOLDINGS

(i) Shareholdings (unaudited)

Number of Shares held by Key Management Personnel

(i) Shareholdings (unaudited)

Number of Shares held by Key Management Personnel

(ii). Options and Rights Holdings (audited)

Number of Options Held by Key Management Personnel

REMUNERATION REPORT (audited) (continued)

Meetings of Directors

Indemnifying Officers

Options

Proceedings on Behalf of Company

Non-Audit Services

Dear Sirs

AUDITORS INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001

P A R T N E R S CHARTERED ACCOUNTANTS O R D

Ian K Macpherson CA

Robert W Parker CA

INCOME STATEMENTS FOR YEAR ENDED 30 JUNE 2009

BALANCE SHEETS AS AT 30 JUNE 2009

STATEMENTS OF CHANGES IN EQUITY FOR YEAR ENDED 30 JUNE 2009

CASH FLOW STATEMENTS FOR YEAR ENDED 30 JUNE 2009

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

Basis of Preparation

Critical Accounting Estimates and Judgments

Going Concern

Significant Accounting Policies

a. Principles of Consolidation

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)

b. Income Tax

c. Plant and Equipment

Recognition and Measurement

Depreciation

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)

d. Exploration and Development Expenditure

e. Financial Instruments

Recognition and Initial Measurement

Derecognition

Classification and Subsequent Measurement

i. Available-for-sale financial assets

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)

CORAZON MINING LIMITED Annual Report 2009