CORE LITHIUM LTD - Annual Report 2012

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ANNUAL REPORT 2012

Corporate information

Directors

Greg English NON-EXECUTIVE CHAIRMAN

Stephen Biggins MANAGING DIRECTOR

Michael Schwarz EXECUTIVE DIRECTOR - EXPLORATION

CFO/Company Secretary

Jaroslaw (Jarek) Kopias

Registered and Principal Office

Level 2 143 Hutt St Adelaide South Australia 5000 Telephone: + 618 7324 2987 Facsimile: + 618 8312 2002

Postal address

P.O. Box 7298 Hutt Street Adelaide South Australia 5000

Auditors

Grant Thornton Audit Pty Ltd

Level 1

67 Greenhill Rd Wayville South Australia 5034

Solicitors

Norman Waterhouse Lawyers Level 15 45 Pirie St Adelaide, South Australia 5000

Home Stock Exchange

Exchange Centre 20 Bridge Street Sydney NSW 2000

ASX Code: CXO

Share Registry

Security Transfers Registrars Pty Ltd 770 Canning Highway Applecross Western Australia 6153

Web address

www.coreexploration.com.au/

Core Exploration Limited ACN 146 287 809

The information in this report that relates to exploration results, mineral resources or ore reserves is based on information compiled by Mr Stephen Biggins who is a member of the Australasian Institute of Mining and Metallurgy. Mr Biggins is the Managing Director of Core Exploration Ltd. Mr Biggins has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Biggins consents to the inclusion in this ASX Release of the matters based on his information in the form and context in which it appears.

Chairman’s Letter	2
Managing Director’s Report	4
Project Overview	6
Tenement Schedule	14
Directors’ Report	15
Auditor’s Independence Declaration	22
Corporate Governance Statement	23
Statement of Comprehensive Income	28
Statement of Financial Position	29
Statement of Changes in Equity	30
Statement of Cash Flows	31
Notes to The Consolidated Financial Statements	32
Directors’ Declaration	47
Independent Audit Report	48
ASX additional information	51

This Annual Report covers Core Exploration Ltd (“Core” or the “Company”) as a Group consisting of Core Exploration Ltd and its subsidiaries, collectively referred to as the “Group”. The financial report is presented in the Australian currency.

Core is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Core Exploration Ltd

Level 2, 143 Hutt Street Adelaide SA 5000

CORE EXPLORATION LTD ANNUAL REPORT 2012

Chairmans letter

The past 12 months have been a period of consolidation for the Company.

During the 2011 financial year the focus of Core’s exploration effort was the Yorke Peninsula and Fitton projects. Highlights of the past 12 months include:

Completion of a total of 4000 m of air-core and 2000 m of diamond drilling on the Yorke Peninsula.
Discovery of the Scott Lee prospect at Fitton where copper, uranium and gold mineralisation has been identified along a strike length of over 600 m.
Discovery of new prospects to the south of Scott Lee.

At Yorke Peninsula the Company undertook its maiden drill program to explore for copper mineralisation analogous to the nearby Hillside project. A follow up diamond drill program intersected the basement rock with multiple low-level copper intersections. The discovery of copper mineralisation was the first on this part of the Yorke Peninsula, where there is no outcrop and basement rocks are covered by sediments. The Company considers it a major achievement to discover copper mineralisation in a maiden drill program on a greenfield site.

At Fitton, geophysical data sets identified several copper and uranium targets which have been

followed up with field surveys. A large copper and uranium target has been identified at the Scott Lee prospect which extends for over 600 m along strike. Follow up magnetic surveys confirmed the extent of the Scott Lee prospect and also led to the discovery of new targets to the south. At Core, we believe that we have only just scratched the surface of the greater potential of our ground at Fitton and intend to drill Fitton late in 2012.

More importantly, the year has been one that has advanced our understanding of the Company’s assets and we are now firmly focused on managing the strategy to develop a pipeline of greenfields and advanced projects in the medium term. This strategy has led to the application for additional tenements in the Fitton and Roxby Downs project areas. Since ASX listing, the Company has increased its footprint by about 30%, and Core is in discussion with third parties about growing the portfolio further.

During the year Core was not immune to the reduction in share price experienced by nearly all exploration companies as a result of problems in overseas debt markets and general global

uncertainty. Whilst global financial markets have been turbulent in recent times, the outlook for copper demand remains positive. The Company is of the belief that it still remains a good time to make a copper discovery and will continue to explore our projects and identify new investment opportunities.

At Core, we realise that there is nothing that we can do to influence global financial markets however, we continue to prudently manage our cash reserves whilst continuing to actively explore our tenements.

The outlook for Core remains positive. We have put in place a small and highly skilled management team that has worked with a high degree of motivation and focus throughout the year, not only enhancing the value of all of our assets which are 100% owned and controlled by the Company but also establishing the Company with a clear growth strategy that should deliver strong shareholder value in the future.

Greg English C h a i r m a n

CORE EXPLORATION LTD ANNUAL REPORT 2012

considerable progress towards the discovery of copper deposits on the Yorke Peninsula and Fitton

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CORE EXPLORATION LTD ANNUAL REPORT 2012

Managing Director’s Report

Core Exploration’s first full year of operations as a listed Company has led to the discovery of high-grade copper and uranium on its Fitton Project and confirmation of the potential for a large scale copper system on the Yorke Peninsula Project in South australia.

Corporate activity surrounding our recently granted Roxby South tenements near Olympic Dam also highlight this projects future value to Core and its shareholders.

The investment and operating environment has been difficult for the junior mining sector since 2008, but during 2012 acute macro-economic problems not under control of the Company have influenced the investment performance of the sector and Core along with it.

Exploration by the Company during 2012 on our Fitton Project in northern South Australia, has discovered new high-grade copper and uranium mineralisation. Core’s followup of a single anomalous 50 ppm uranium sample through “boots-on-ground” exploration led to grades of 10% copper and 0.3% U3O8 in samples of outcropping shear-zone (Table 2 on page 10). As at the time of writing, Core is undertaking further phases of mapping, sampling and geophysics in the lead up to the first drilling program at Fitton.

Core’s first diamond drilling program on the Yorke Peninsula intersected copper sulphides and has confirmed the Company’s view on the potential for hosting a large-scale IOCG copper system. Core’s exploration work

during 2012 has also highlighted the similarities between the Company’s IOCG targets within the Palace Structural Zone and the geological setting for the Rex Minerals Hillside project (Total Mineral Resource of 330 Mt @ 0.6% copper, 0.16 g/t gold and 13.7% iron) on the adjacent tenement.

Key tenements comprising the Roxby South tenements were successfully granted to Core in one of the world’s most fertile IOCG terrains. The project covers approximately 400 km[2] of prospective IOCG geology between BHPB’s Olympic Dam mine and Oz Mineral’s huge Carrapateena copper/gold project.

Core’s geophysical work on Roxby South during 2012 has defined and modelled a number of high-quality drill targets with strong geophysical features on the tenements. Because Core’s tenements are recently granted, Core is in a unique position of holding a large footprint of 100% owned tenure in an area dominated by the major mining houses.

Shareholders should be encouraged by the recent corporate activity within South Australia’s copper sector that highlights the attractive nature of this highly sought after mining

province. Core’s exploration and tenement position coincides with an intense period of interest in exploration projects in the Gawler Craton/Stuart Shelf region, in particular those tenement areas close to the world class Olympic Dam operations and on the Yorke Peninsula.

The hard work and efforts of Core’s Exploration and Administration team should be recognised as the Company continues to make headway on driving its projects from early exploration toward development.

Shareholders can be confident that Core has added and will continue to add substantial value to its assets by recognising value early and through focussed, efficient exploration in a tough market. We expect as the market confidence returns, investors will re-evaluate the obvious value of the Company’s projects and its shares highly.

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Stephen Biggins m a n a g i n g D i r E C T o r

CORE EXPLORATION LTD ANNUAL REPORT 2012

rock chips collected at Fitton assayed to 10.5% and copper 0.3% U O 3 8 (uranium)

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CORE EXPLORATION LTD ANNUAL REPORT 2012

Project Overview

Wauraltee IOCG PrOjeCt – YOrke PenInsula

el 4177

Core Exploration’s Yorke Peninsula copper project (EL 4177) covers 243 km[2] of the Olympic Dam Copper-Gold-Uranium Province of the Gawler Craton.

rocks (basement) with anomalous copper, silver and rare earth element results being returned from all these three prospects.

Early exploration by Core Exploration consisted of detailed gravity and airborne magnetic surveys on the Yorke Peninsula in the search for iron oxide coppergold deposits similar to Rex Minerals Ltd’s (ASX:RXM) Hillside project ((Total Mineral Resource of 330 Mt @ 0.6% copper, 0.16 g/t gold and 13.7% iron) on the adjacent tenement. The surveys defined a large-scale set of magnetic and gravity drill targets within the 12 km long, 2-4 km wide Palace Structural Zone. Drill targets consisted of semi coincident magnetic and gravity anomalies which can be caused by magnetite/hematite iron oxide alteration systems and potentially IOCG style mineralisation.

Of the eight completed drillholes, WTDD001, WTDD002 and WTDD008 drilled on the Wauraltee Prospect, had IOCG style alteration and associated minor copper mineralisation. Mineralisation consisted of minor copper sulphides (dominantly chalcopyrite) in association with alteration. Alteration assemblages are similar to high temperature IOCG style alteration and consist of albite-epidote-amphibolecarbonate +/- magnetite, pyrite and chalcopyrite. The most pervasive zones of alteration are associated with granitic and metasedimentary units, generally with a strong structural fabric. The widths of alteration intersected in drill core vary from narrow veins a few centimetres wide up to 15 metres.

In August 2011, six semi coincident gravity and magnetic targets were subjected to firstpass aircore drilling. Approximately 40 drillholes were drilled over the six targets in seven traverses. Drill holes ranged from 46146 m in depth and were deeper than expected due to a thicker package of cover rocks. Of the six prospects targeted, only three of those reached the target

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NT
QLD
WA
SA
NSW
VIC
TAS Wallaroo
-34° 00' Kadina
Moonta
Port Wakefield
EL4177
EL4177
EL3875
Maitland
Ardrossan
EL3874
-34°30' Port Victoria EL4514
Hillside Project
Location of drill program
EL3875
EL4177
Port Vincent
Minlaton
Stansbury
-35° 00' Warooka
Yorketown
0 30 Exploration Licence - Core Exploration
kilometers Exploration Licence - Rex Minerals
00'
°
37
1 137° 30' 138° 00'
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Figure 1 Location of EL 4177 Yorke Peninsula, South Australia.

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735,000mE 735,000mE
0 2
kilometres 6,175,000mN 6,175,000mN
0 2
kilometres
6,170,000mN 6,170,000mN
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Figure 2 Location of diamond drill Figure 3 Residual Gravity, Area 3, holes on magnetic (RTP) image. Yorke Peninsula Project, S.A.

CORE EXPLORATION LTD ANNUAL REPORT 2012

mineralisation consisted of minor copper sulphides dominantly chalcopyrite

Table 1. Significant copper drill intersections, Palace Structural Zone, Yorke Peninsula.

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DrIllhOle FrOm (m) tO (m) WIDth (m) GraDe COPPer (Cu)
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WTDD001	226	228	2	0.23%
including	227	228	1	0.45%
WTDD002	147.8	151	3.2	0.07%
including	147.8	150	2.2	0.10%
WTDD002	159	160	1	0.07%
WTDD002	165	166	1	0.26%
WTDD002	181	185	4	0.06%
WTDD002	201	202	1	0.05%
WTDD002	242	245	3	0.13%
including	242	245	2	0.19%
WTDD002	247	250	3	0.09%
including	249	250	1	0.25%
WTDD006	239	241	2	0.06%
WTDD006	250	255	5	0.05%
including	254	255	1	0.17%
WTDD006	259	263	4	0.05%
WTDD006	269	270	1	0.07%
WTDD006	346	349	3	0.16%
including	347	348	1	0.37%
WTDD007	139	141	2	0.07%
WTDD008	195	196	1	0.07%
WTDD008	197	202	5	0.10%
including	199	200	1	0.36%

(Assays above 500 ppm with 100 ppm cut-off. Samples were collected from half

NQ drill core. A 40 g charge of pulverised sample was digested with Aqua Regia. Analysis was undertaken by ICP-MS/ICP-AES)

CORE EXPLORATION LTD ANNUAL REPORT 2012

Palace Structural Zone and the Wauraltee Prospect

Core Exploration has been very encouraged by the results of the diamond drilling program completed earlier this year. Prior to commencement of Core’s exploration program very little to nothing was known of the geology or IOCG of the region within Core’s exploration licences. To date the Company has established;

The tenement contains a 12 km long zone of semicoincident gravity and magnetic anomalies consistent with IOCG mineralising systems.
The geological host rocks are similar to those at the Hillside IOCG deposit, including the Hiltaba Suite granites, mafic equivalents, and Wallaroo Group Metasediments.
The Wauraltee Prospect and the Palace Structural Zone appear to be controlled by contemporaneous structures with the Pine Point Fault.
Both appear to be related to higher temperature carbonateamphibole+/-magnetite alteration although as stated previously, magnetite alteration is not a dominant feature of the alteration intersected so far at Wauraltee.
Most importantly the drilling has confirmed that the alteration system is carrying copper mineralisation.

The next phase of exploration will be focussed on targeting areas within the Palace Structural Zone which have the potential to host economic concentrations of IOCG alteration and mineralisation. In order to do this the Company is currently undertaking a program of detailed infill ground magnetic and gravity data at a number of prospects. Once completed, processing and interpretation of this data will be undertaken to define drill targets for the next round of drilling. In conjunction with geophysical surveys the company is undertaking discussions with landowners to gain access for the next round of drilling.

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Figure 4 Palace Structural Zone and Pine Point Fault Zone comparison on magnetic image, Yorke Peninsula region, S.A.

CORE EXPLORATION LTD ANNUAL REPORT 2012

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NT
QLD
WA
SA
NSW
VIC
TAS
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FIttOn PrOjeCt el 4569

The Fitton Project covers 106 km² adjacent to the Mt Painter Inlier. Mount Painter is well known for its multi-metallic breccia complexes at Mt Gee and large-scale secondary uranium occurrences at Beverley and Beverly Four Mile.

Core has been focussing exploration on the northern part of the Fitton project area that covers areas of Radium Creek Metamorphics and other prospective host rocks of the Mt Painter Inlier.

Initial geological mapping of this region identified copper mineralisation at surface associated with highly radioactive, uraniuferous rocks. Detailed mapping of this part of the tenement area revealed the mineralisation was focussed along shear zones within megacrystic granites. The shear zones appear to be a focus for highly chlorite altered rocks that are interpreted to represent original mafic dykes. These shear zones have been intensely altered and appear to have focused a mineralising fluid rich in copper and uranium with minor gold also identified in the latest sampling.

Further mapping and a program of soil sampling over the region revealed that the shear zone appeared to be more extensive than first thought. Copper and uranium in the soil survey correlated well with known surface

mineralisation and suggested a much larger footprint. Numerous smaller shears occur within a larger zone of shearing and vary individually in width from a metre to over 25 metres. To date, the zone of shearing and mineralisation has been mapped for over 2 km at surface. Scintillometer measurements along the 2 km structure indicate that the entire length is anomalously radioactive.

Rock chip sampling has returned encouraging grades of copper and uranium mineralisation from the Scott Lee prospect. A sample of chloritised schist within the shear zone contained 2858 ppm uranium (0.34% U3O8). In addition, a number of samples contained highly anomalous uranium above 100 ppm for a strike length of over 800 m. A number of samples from the same shear zone graded above 1% copper over a strike length of 150 m with a maximum of 10.5% copper from one sample.

Previously unidentified gold anomalism (0.91 g/t gold) in a rock chip sample of quartz rich gossan 2.2 km southwest of the high uranium and copper samples is also of interest and worthy of further exploration. A sample with elevated gold (up to 0.37 g/t), is associated with high uranium and copper at the Scott Lee prospect.

Core has recently identified quartz-magnetite veining associated with the uranium and copper mineralisation. Recently completed ground magnetic surveys have identified a strong magnetic response from the shear zone containing mineralisation. A number of other similar magnetic anomalies may indicate further occurrences of similar mineralisation.

The style of mineralisation encountered at the Scott Lee prospect is believed to be relatively new within the Mt Painter Inlier.

a) Core is currently finalising collection and processing of new magnetic data over the Scott Lee prospect and extensions to the original survey which identified further magnetic shear zones. Further mapping and sampling was completed in August 2012 at Scott Lee and several other prospects. Results from this program are due in late September 2012.
b) A reverse circulation drill program is planned for early October 2012. The program of approximately 3000 m will focus on the Scott Lee prospect but also test the new zone of gold anomalism and several new areas of surface copper mineralisation.

CORE EXPLORATION LTD ANNUAL REPORT 2012

Table 2 Anomalous rock chip results, EL 4569, Fitton Project, SA

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name PrOsPeCt eastInG nOrthInG samPle tYPe Cu PPm u PPm u3O8 PPm au G/t
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MP0009	Scott Lee	365712	6686800	Rock chip	155	51.29	60.48	X
MP0010	Scott Lee	365699	6686831	Rock chip	103	624.43	736.33	X
MP0011	Scott Lee	365455	6686935	Rock chip	105184	121.37	143.12	0.12
MP00451	Scott Lee	366351	6688378	Rock chip	107	2.39	2.82	0.01
MP00459	Scott Lee	365842	6687056	Rock chip	16	120.99	142.67	X
MP00467	Scott Lee	365306	6686951	Rock chip	200	157.41	185.62	X
MP00473	Scott Lee	365336	6686984	Rock chip	33	132.25	155.95	X
MP00474	Scott Lee	365442	6686928	Rock chip	963	35.31	41.64	X
MP00476	Scott Lee	365458	6686931	Rock chip	75900	77.44	91.32	0.06
MP00477	Scott Lee	365455	6686938	Rock chip	143	5.87	6.92	X
MP00479	Scott Lee	365497	6686933	Rock chip	148	3.3	3.89	X
MP00480	Scott Lee	365566	6686926	Rock chip	21718	426.96	503.47	0.08
MP00481	Scott Lee	365556	6686927	Rock chip	185	15.01	17.70	X
MP00482	Scott Lee	365657	6686878	Rock chip	X	2857.83	3369.95	X
MP00486	Scott Lee	366737	6686592	Rock chip	234	2.2	2.59	X
MP00492	Scott Lee	365857	6686686	Rock chip	571	239.7	282.65	X
MP00493	Scott Lee	363551	6685728	Rock chip	680	10.55	12.44	0.91
MP00496	Scott Lee	365105	6686983	Rock chip	219	499.34	588.82	0.37
MP00497	Scott Lee	365214	6686964	Rock chip	64	62.43	73.62	X
MP00498	Scott Lee	365312	6686960	Rock chip	111	268.33	316.41	X
MP00499	Scott Lee	365406	6686937	Rock chip	160	37.06	43.70	X
MP00500	Scott Lee	365450	6686924	Rock chip	19862	86.5	102.00	0.06
MP00502	Scott Lee	365555	6686934	Rock chip	19257	217.06	255.96	0.02
MP00503	Scott Lee	365500	6686931	Rock chip	7933	13.71	16.17	X
MP00512	Scott Lee	365619	6686903	Rock chip	103	9.93	11.71	X
MP00546	Choppy	365277	6686632	Rock chip	5	6.35	7.49	X
MP00547	Choppy	365214	6686620	Rock chip	47235	8.28	9.76	0.76
MP00552	Choppy	365065	6686577	Rock chip	2509	26.94	31.76	1
MP00553	Choppy	365067	6686581	Rock chip	2019	9.81	11.57	0.08
MP00560	Regional	364980	6686561	Rock chip	1491	10.97	12.93	0.04
MP00561	Regional	364978	6686564	Rock chip	1205	33.27	39.23	X
MP00562	Choppy	365046	6686574		199	5.3	6.25	0.01

When samples contain either Copper >100 ppm or Uranium >50 ppm Au: FA25//AA Lead Collection Fire Assay: U: 4A/MS 4 Acid Digest Mass Spectrometry: Cu: 4A/OE 4 Acid Digest Inductively Coupled Plasma Optical Emission Spectrometry The presence of this mapped surface mineralisation and alteration may or may not extend at depth and this can only be confirmed by drilling which is planned in the coming months.

CORE EXPLORATION LTD ANNUAL REPORT 2012

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365,200mE 365,400mE 365,600mE 365,800mE
121ppm U, 16ppm Cu
120ppm U, 10.5% Cu
499ppm U, 219ppm Cu, 0.37g/t Au
?
132ppm U, 33ppm Cu 6,687,000mN
216ppm U, 1.9% Cu
268ppm U, 111ppm Cu
62ppm U, 64ppm Cu
157ppm U, 200ppm Cu
86ppm U, 2% Cu
426ppm U, 2.2% Cu
2857ppm U
84ppm U, 16ppm Cu 624ppm U, 103ppm Cu
Inset - Figure 6 51ppm U, 155ppm Cu 6,686,800mN
240ppm U, 571ppm Cu
Location
EL 4569 New rock chip sample
Area of map Rock chip sample 0 100
Interpreted fault Metres 6,686,600mN
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Figure 5 Location of rock chip sampling at the Scott Lee prospect on EL 4569, Fitton.

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365,500mE 365,600mE 365,700mE
14ppm U, 0.8% Cu 216ppm U, 1.9% Cu
426ppm U, 2.2% Cu
77ppm U, 7.6% Cu
86ppm U, 2% Cu
120ppm U, 10.5% Cu 6,686,900mN
2857ppm U
84ppm U, 16ppm Cu
624ppm U, 103ppm Cu
New rock chip sample
Rock chip sample 0 50
Interpreted fault Metres
6,686,800mN
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Figure 6 Inset location map of rock chip sampling at the Scott Lee prospect on EL 4569, Fitton.

CORE EXPLORATION LTD ANNUAL REPORT 2012

rOxbY DOWns PrOjeCt el 4906 and el 4816

The new Roxby Downs (EL 4906) and previously granted Sandy Point (EL 4816) tenements comprise Core’s “Roxby South project” which covers more than 400 km[2] near BHP Billiton’s Olympic Dam mine in northern South Australia. The two tenements are located approximately 40 kilometres south of the Olympic Dam Cu–Au-U mine and within kilometres of known IOCGU mineralisation at the Wirrda Well, Acropolis and Horse Well prospects. Core’s geophysical modelling and review of previous exploration has identified high priority drill targets which the Company considers are yet to be adequately defined and drill tested.

Drill targets on the highly prospective northern section of the Roxby Downs EL include targets covering part of the same gravity feature as BHP’s Olympic Dam mine and Acropolis prospect. Copper sulphide bearing breccias have been drilled within 3 km of one of the drill targets on the Sandy Point EL tenement. Exploration targets are beneath more than 500 m of cover sediment in most locations.

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NT
WPA Access Zone QLD
Defence periodic use
WA
SA
NSW
VIC
Olympic Dam Mine Andamooka
TAS
Roxby Downs
WPA
Access
Zone
Defence
continuous use
EL 4906
EL 4816
NT
QLD
WA
SA
NSW
VIC
TAS Woomera
Carrapateena Project
Core Exploration tenure
Other Major company tenure 0 20 km
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Figure 7 Core Exploration’s Roxby South Project and surrounding tenements.

Note: Based on Core’s review of public information, the tenements in grey are interpreted to be held in conjunction with major mining companies. However, the circumstances surrounding these tenements are subject to change over time.

CORE EXPLORATION LTD ANNUAL REPORT 2012

hOneYmOOn sOuth PrOjeCt el 4174 and el 4568

EL 4174 is located to the south of the Honeymoon Mine and of the Junction Dam uranium prospect being explored for palaeochannel hosted uranium. Much of the area is covered and there is potential for locating palaeochannels which host roll-front style uranium. In addition there is some potential to locate IOCG-U style Au– Cu-U deposits in the underlying basement rocks.

Airborne EM surveys coordinated by DMITRE and Geoscience Australia have been completed over a large region of the Curnamona Craton. This data will be vital for evaluating prospectivity and potential for palaeochannel systems on EL 4174 and EL 4568. Modelling and reprocessing of airborne electromagnetic data has been undertaken followed by detailed interpretation of palaeochannel systems from the models. An assessment of the data has led to a re-evaluation of prospects and target locations.

lake FrOme PrOjeCt el 4379

Roll-front uranium deposits are located to the northwest and southeast of the Frome licence and it is likely that palaeochannels, or even multiple palaeochannels on different sedimentary horizons cross the licence area. There is the potential to locate roll-front type uranium deposits in these channels.

Core Exploration has advanced its understanding of the potential for uranium mineralisation within the tenement after modelling and reprocessing of airborne electromagnetic data flown by DMITRE and Geoscience Australia.

amaDeus PrOjeCt el28349

The Amadeus project consists of one exploration licence application located approximately 30 km southeast of Alice Springs in the Santa Teresa region, an arid part of central Australia, located in the Northern Territory. The project is to the east of known roll-front, uranium mineralisation at the Angela-Pamela uranium deposits. The company has completed a review of historical exploration data and is planning a detailed exploration program to explore for roll-front uranium mineralisation.

CORE EXPLORATION LTD ANNUAL REPORT 2012

Tenement Schedule

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PrOjeCt tenement status equItY %
Yorke Peninsula EL4177 Granted 100%
Honeymoon South – Bundera EL4174 Granted 100%
Honeymoon South – Olary EL4568 Granted 100%
Fitton (formerly Mt Painter) EL4569 Granted 100%
Roxby Downs – Sandy Point EL4816 Granted 100%
Roxby Downs EL4906 Granted 100%
Lake Frome EL4379 Granted 100%
Amadeus EL28349 Granted 100%
136° 138° 140°
Marree
Prominent Hill
Fitton Project
S O U T H A U S T R A L I A Beverly 4-mile 30°
Mt Gee Beverly
Olympic Dam
Roxby Downs
Roxby Downs Lake Frome
Project Project
Carrapateena
Honeymoon
Honeymoon South 32°
Project
Port Augusta
Whyalla
Kimba Port Pirie
Clare
Kadina
Moonta 34°
Yorke
Peninsula Hillside
Project
Port Lincoln
Adelaide
Main road
Railway
0 100 km Town
Lake
Exploration Licence
Exploration Licence Application
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Figure 8 Location of Core Exploration tenure, South Australia.

CORE EXPLORATION LTD ANNUAL REPORT 2012

Directors’ Report

Core’s Directors have pleasure in submitting their second report on the Company and its subsidiaries, for the year ended 30 June 2012.

DIreCtOrs

The names and details of Directors in office at any time during the reporting period are:

Stephen applied his MBA (Master of Business Administration) to the finance and management of exploration and resources projects and has built prospective portfolios of gold, uranium and base metal exploration projects in Australia, Asia and Africa.

Stephen was previously Managing Director of Southern Gold Limited (SAU) and also founding Non-Executive Director of Investigator Resources Limited (IVR).

Greg English, B.E. (Hons) Mining, LLB

Non-Executive Chairman (appointed 10 September 2010)

Other current directorships of listed companies None.

Experience and expertise

Greg is a qualified Mining Engineer and Lawyer with over 20 years’ experience in multi-commodity projects throughout Australasia. Greg is currently a Non-Executive Chairman of ASX listed Archer Exploration (ASX:AXE) and was a Director of Gawler Resources (ASX:GRL) prior to its merger with Elixir Petroleum (ASX:EXR).

As a Mining Engineer, Greg worked on numerous underground and open pit mines in Australia and gained a First Class Mine Manager’s Ticket in Northern Territory and Western Australia. During this time, Greg worked for a number of large mining companies (MIM, Shell Coal and Normandy Mining) in various mine production, mine planning, mine management, project management and various commercial and business development roles.

Greg is currently Team Leader of the Corporate and Commercial Team at Norman Waterhouse Lawyers, one of Adelaide’s oldest and largest law firms.

Other current directorships of listed companies

Non-Executive Director of Archer Exploration, appointed 16 February 2007, and Non-Executive Chairman, appointed 14 July 2008.

Other directorships held in listed companies in the last three years None.

Interest in shares

5,665,000 Ordinary Shares held directly and by an entity in which Mr English has a beneficial interest.

Interest in options

3,000,000 unlisted Options, exercisable at $0.25 expiring on 30 June 2014, held by an entity in which Mr English has a beneficial interest.

Stephen Biggins, MBA, BSc (Hons) Geology, MAusIMM

Managing Director (appointed 10 September 2010)

Experience and expertise

Stephen has accumulated broad experience as a geologist and geophysicist in the mining industry throughout Australia and Internationally for over 20 years.

Other directorships held in listed companies in the last three years Managing Director of Southern Gold Limited from April 2005 until 2 July 2010.

Non-Executive Director of Investigator Resources Limited (formerly Southern Uranium Limited) from April 2007 until 24 February 2009.

Interest in shares

5,941,000 Ordinary Shares held by entities in which Mr Biggins has a beneficial interest.

Interest in options

3,000,000 unlisted Options, exercisable at $0.25 expiring 30 June 2014, held by an entity in which Mr Biggins has a beneficial interest.

Michael Schwarz, BSc (Hons) Geology, AIG

Executive Director - Exploration (appointed 10 September 2010 as Non-Executive Director and 12 March 2011 as Executive Director - Exploration)

Experience and expertise

Michael is a qualified geologist with 15 years’ experience in mineral exploration and prospectivity assessment. As the founding Managing Director of Monax Mining Ltd (ASX:MOX) he built a portfolio of multicommodity projects, including iron oxide-copper-gold (IOCG), uranium, gold and base metals. Michael was also a founding Director of uranium explorer Marmota Energy Ltd (ASX:MEU).

Michael has over 15 years’ experience in mineral exploration within industry and government. He has extensive experience on South Australian and Gawler Craton geology and mineralisation styles and has led research projects with the SA Government, Geoscience Australia and various universities.

As the former Managing Director of Monax Mining Ltd, Michael has been responsible for building a portfolio of highly prospective tenements with a focus on iron oxide-copper-gold and uranium. From this base, the Company successfully listed on the ASX in 2005 with an oversubscribed $5 million IPO. During his time with the Company, he was instrumental in the discovery of both the Punt Hill IOCG project and Waddikee Manganese project with over $10 million of equity finance raised to develop these projects.

CORE EXPLORATION LTD ANNUAL REPORT 2012

Directors’ Report

Michael was also a founding Director of Marmota Energy Ltd. He built a strong portfolio of prospective uranium tenements and successfully managed the heavily oversubscribed IPO process, raising a total of $15 million in 2007.

Other current directorships of listed companies

None.

Other directorships held in listed companies in the last three years Managing Director of Monax Mining Limited, from 21 September 2005 to until 31 August 2009.

Interest in shares

250,000 Ordinary shares held by an entity in which Mr Schwarz has a beneficial interest.

Interest in options

1,000,000 unlisted Options exercisable at $0.25 expiring 30 June 2014 held by Mr Schwarz.

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

COmPanY seCretarY

Jarek Kopias, BCom, CPA, ACIS, ACSA

Encouraged by these results Core Exploration undertook further infill geophysical surveys (detailed gravity and ground magnetics) to better define targets for diamond drilling. In February 2012 six targets were subjected to follow up diamond drilling via eight diamond drillholes totalling 2000 m. Of the eight completed drillholes, WTDD001, WTDD002 and WTDD008 drilled on the Wauraltee Prospect, had IOCG style alteration and associated minor copper mineralisation. Mineralisation consisted of minor copper sulphides (dominantly chalcopyrite) in association with alteration.

Fitton (formerly Mt Painter) Project

The Fitton Project covers 106 km[2] adjacent to the Mt Painter Inlier, host to the large Mt Gee uranium deposit of 68 million lbs (31,300 tonnes) U3O8. Mt Gee is the fifth largest uranium deposit in Australia (Resource of 51 Mt @ 615 ppm). The region is well known for its numerous breccia complex uranium occurrences within the Mt Painter Inlier.

Initial geological mapping of this region identified copper mineralisation at surface associated with highly radioactive, uraniferous rocks. Detailed mapping of this part of the tenement area revealed the mineralisation was focussed along shear zones within megacrystic granites. Copper and uranium in the soil survey correlated well with known surface mineralisation and suggested a much larger footprint. To date, the zone of shearing and mineralisation has been mapped for over 2,000 m at surface.

Company Secretary / Chief Financial Officer (appointed 7 June 2011)

Jarek is a qualified Certified Practising Accountant who has worked extensively in the resource sector in various corporate and mine site roles. He holds a Bachelor of Commerce Degree, from the Flinders University of South Australia, is a Chartered Secretary and an Associate of the Institute of Certified Practising Accountants in Australia.

PrInCIPal aCtIvItIes

Core’s principal activities are the exploration for iron oxide-copper-golduranium (IOCGU) deposits in South Australia.

Rock chip sampling has returned encouraging grades of copper and uranium mineralisation from the Scott Lee Prospect. A sample of chloritised schist within the shear zone contained 2858 ppm uranium (0.28% U). In addition, a number of samples contained highly anomalous uranium above 100 ppm for a strike length of over 800 m. A number of samples from the same shear zone graded above 1% copper over a strike length of 150 m with a maximum of 10.5% copper from one sample. A sample with elevated gold of (up to 0.37 g/t), is associated with high uranium and copper at the Scott Lee prospect.

Roxby Downs Project

OPeratInG anD FInanCIal revIeW

Core Exploration has projects comprising eight tenements covering over 2,000 km[2] in the highly prospective Gawler Craton and Curnamona Craton of South Australia and Amadeus Basin in the Northern Territory.

The net loss of the Company, from the year ended 30 June 2012, was $1,195,497 (2010/11 $623,539) after providing for income tax.

Yorke Peninsula Project

Core Exploration’s Yorke Peninsula Copper Project covers 243 km[2] of the Olympic Dam Copper-Gold-Uranium Province of the Gawler Craton. The Yorke Peninsula Project is located adjacent to the west of Rex Minerals’ (ASX:RXM) tenements on the Yorke Peninsula in South Australia. The Project is considered highly prospective for the discovery of IOCGUs similar to Hillside, Olympic Dam, Prominent Hill and Carrapateena; as well as shear zone hosted massive sulphide copper-gold deposits like those found in the Moonta area.

In August 2011, six semi coincident gravity and magnetic targets were subjected to first-pass aircore drilling. Of the six prospects targeted, only three of those reached the target rocks (basement) with anomalous copper, silver and rare earth element results being returned from all these three prospects.

The Roxby Downs (EL 4906) and Horse Well (EL 4816) tenement applications cover approximately 522 km[2] of the Olympic Dam CopperGold-Uranium Province of the Gawler Craton. The tenements are located approximately 30 km southwest of the world class Olympic Dam Cu-Au-U mine and within kilometres, and adjacent to, known IOCG(U) mineralisation at the Acropolis, Acropolis West and Aphrodite prospects.

The projects are located on the eastern margin of the Gawler Craton within the Olympic iron oxide-copper-gold (IOCG) Province. The Olympic IOCG Province is host to the world class Olympic Dam deposit, Prominent Hill, and recently discovered Carrapateena Prospect.

Core’s geophysical modelling and review of previous exploration has identified high priority drill targets which the Company considers are yet to be adequately defined and drill tested.

CORE EXPLORATION LTD ANNUAL REPORT 2012

Honeymoon South Project

Lake Frome Project

The Lake Frome Project consists of one EL which covers 331 km[2] of Lake Frome, a salt lake that stands about 12 m above sea level. The area is within the region defined by the Beverley, Four Mile, Honeymoon, Gould’s Dam and Oban roll-front uranium mines and projects and is situated in a similar geological setting. Roll-front uranium deposits are located to the northwest and southeast of the Frome licence and it is likely that palaeochannels, or even multiple palaeochannels on different sedimentary horizons cross the licence area. There is the potential to locate roll-front type uranium deposits in these channels. Core Exploration has advanced it understanding of the potential for uranium mineralisation within the tenement after modelling and reprocessing of airborne electromagnetic data flown by DMITRE and Geoscience Australia.

Amadeus Project

The Amadeus Project comprises an exploration licence in the Northern Territory within the Amadeus Basin. The Amadeus Basin was the centre of active uranium exploration during the 1970s, with the focus on rollfront uranium mineralisation.

A number of significant uranium deposits and occurrences were identified within the Amadeus Basin, including the 10.7 Mt 1,130 ppm U3O8 Pamela Angela uranium deposit held in Joint Venture by Cameco and Paladin. The Pamela and Angela uranium deposits are located along the northern basin margin approximately 10 km west of the Group’s exploration licence area and around 25 km south of Alice Springs.

events arIsInG sInCe the enD OF the rePOrtInG PerIOD

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

lIkelY DevelOPments

The likely developments for the Company include drilling at Fitton to unlock expected potential of the area for copper and uranium discoveries. As well as Fitton, Yorke Peninsula and other tenements held by the Company, Core will continue to identify, evaluate and prioritise numerous other projects and opportunities.

DIreCtOrs’ meetInGs

The number of Directors’ meetings held during the reporting period and the number of meetings attended by each Director is as follows:

Directors	Meetings attenDeD	Meetings entitleD to attenD
GD English	11	11
SR Biggins	11	11
MP Schwarz	11	11

At this time there are no separate Board committees as all matters usually delegated to such committees are handled by the Board as a whole.

unIssueD shares unDer OPtIOn

Unissued ordinary Shares of Core under option at the date of this report are:

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

Date options granteD expiry Date exercise price nuMber unDer
of shares option
----- End of picture text -----

11 November 2010	30 June 2014	$0.25	3,000,000
11 November 2010	31 October 2014	$0.25	1,500,000
31 January 2011	30 June 2014	$0.25	4,000,000
19 September 2011	19 September 2013	$0.20	75,000
18 June 2012	18 June 2014	$0.11	100,000
Total			8,675,000

sIGnIFICant ChanGes In the state OF aFFaIrs

All options are unlisted.

There have been no significant changes in the state of affairs of the Company that occurred during the reporting period that has not otherwise been disclosed in this report or the financial statements.

DIvIDenDs

These options do not entitle the holders to participate in any share issue of the Company or any other body corporate.

During the reporting period no ordinary shares were issued as a result of the exercise of an option.

There were no dividends paid or declared during the reporting period or to the date of this report.

CORE EXPLORATION LTD ANNUAL REPORT 2012

Directors’ Report

Remuneration Report (Audited)

The Directors of Core Exploration Limited present the Remuneration Report in accordance with the Corporations Act 2001 and the Corporations Regulations 2001.

The Remuneration Report is set out under the following main headings:

A. Principles used to determine the nature and amount of remuneration
B. Details of remuneration
C. Service agreements
D. Share-based remuneration

A. Principles used to determine the nature and amount of remuneration

The Company’s remuneration policy has been designed to align objectives of Directors and executives with objectives of shareholders and the business, by providing a fixed remuneration component and offering specific long-term incentives through the issue of options. The Board believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best key management personnel and Directors to run and manage the Company. The key management personnel of the Company are the Board of Directors and Executive Officers.

The Board’s policy for determining the nature and amount of remuneration for its members and key management personnel of the Company is as follows:

The remuneration policy, setting the terms and conditions for the executive Directors and key management personnel, was developed by the Board. All key management personnel are remunerated on a consultancy or salary basis based on services provided by each person. The Board annually reviews the packages of key management personnel by reference to the Group’s performance, executive performance and comparable information from industry sectors and other listed companies in similar industries.
The Board policy is to remunerate non-executive Directors at market rates for comparable companies 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 (currently $300,000). Fees for non-executive Directors are not linked to the performance of the Company. However, to align Directors’ interests with shareholder interests, the Directors are encouraged to hold shares in the Company and are able to participate in employee option plans, which may exist from time to time.

During the reporting year, the Chairman conducted an informal performance review of senior executives.

Performance based remuneration

The remuneration policy has been tailored to increase goal congruence between shareholders, directors and key management personnel. Currently, this is facilitated through the issue of options to key management personnel to encourage the alignment of personal and shareholder interests. The Company believes this policy will be effective in increasing shareholder wealth.

Voting and comments made at the company’s 2011 Annual General Meeting

Core received more than 95% of “yes” votes on its remuneration report for the 2011 financial year. The company did not receive any specific feedback at the AGM on its remuneration report.

The Board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract the highest calibre of key management personnel and reward them for performance that results in long-term growth in shareholder wealth.
Key management personnel are also entitled to participate in employee share and option arrangements.

CORE EXPLORATION LTD ANNUAL REPORT 2012

B. Details of remuneration

Details of the nature and amount of each element of the remuneration of the Company’s key management personnel (KMP) are shown below:

Director and other Key Management Personnel Remuneration

2012	shOrt term beneFIts	shOrt term beneFIts	POst- emPlOYment beneFIts	share-baseD PaYments		% OF remuneratIOn that Is equItY baseD
	salarY anD Fees $	COntraCt PaYments $	suPer- annuatIOn $	OPtIOns $	tOtal $
Non-Executive Directors
G English	-	60,000	-	-	60,000	0%
Executive Directors
S Biggins	-	220,673	-	-	220,673	0%
M Schwarz	220,183	-	19,817	-	240,000	0%
Other Key Management Personnel
J Kopias1	-	70,055	-	-	70,055	0%
Total	220,183	350,728	19,817	-	590,728
2011	shOrt term beneFIts		POst- emPlOYment beneFIts	share-baseD PaYments		% OF remuneratIOn that Is equItY baseD
	salarY anD Fees $	COntraCt PaYments $	suPer- annuatIOn $	OPtIOns $	tOtal $
Non-Executive Directors
G English	-	22,500	-	34,500	57,000	61%
Executive Directors
S Biggins	-	84,375	-	34,500	118,875	29%
M Schwarz	73,394	-	6,606	34,500	114,500	30%
Other Key Management Personnel
J Kopias1	-	4,258	-	-	4,258	0%
J Ward2	-	39,051	-	-	39,051	0%
Total	73,394	150,184	6,606	103,500	333,684

1 Fees paid to Kopias Consulting and Barker Wentworth – commenced 7 June 2011

2 Fees paid to Ventnor Capital Pty Ltd – ceased 30 June 2011

No component of remuneration is performance based.

CORE EXPLORATION LTD ANNUAL REPORT 2012

Directors’ Report

Remuneration Report (Audited)

C. Service agreements

Remuneration and other terms of employment for the Executive Directors and other KMP are formalised in service agreements. The major provisions of the agreements relating to remuneration are set out below:

name	base remuneratIOn	unIt OF measure	term OF aGreement	nOtICe PerIOD	termInatIOn beneFIts
S Biggins1	$225,000	per annum contract	2 years	Three months	Three months’ notice
M Schwarz	$240,000	per annum salary	3 years	Three months	Three months’ notice
J Kopias2	variable	hourly rate contract	Unspecified	One month	None

1 S Biggins is to provide on average 3 days per week, during normal working hours.

2 J Kopias commenced providing services on 7 June 2011.

D. Share-based remuneration

All options refer to options over ordinary shares of the Company, which are exercisable on a one-for-one basis under the terms of the agreements.

Details of options over ordinary shares in the Company that were granted as remuneration to each KMP during the year are set out below:

No options were granted to KMP during 2011/12.

Details of options granted in 2010/11:

	GranteD		terms anD	COnDItIOns OF	eaCh Grant
2011	number GranteD	Grant Date	FaIr value at Grant Date	exerCIse PrICe $	FIrst exerCIse Date	last exerCIse Date
G English	1,000,000	11/11/2010	$0.0345	$0.25	11/11/2010	30/6/2014
S Biggins	1,000,000	11/11/2010	$0.0345	$0.25	11/11/2010	30/6/2014
M Schwarz	1,000,000	11/11/2010	$0.0345	$0.25	11/11/2010	30/6/2014

All options issued to Directors have vested.

During the current and previous reporting periods, there were no ordinary shares issued on the exercise of options previously granted as compensation and no options that were previously granted as compensation lapsed.

On the resignation of Directors, any options issued as remuneration are retained by the relevant party.

END OF AUDITED REMUNERATION REPORT

CORE EXPLORATION LTD ANNUAL REPORT 2012

envIrOnmental leGIslatIOn

The Directors believe that the Company has, in all material respects, complied with all particular and significant environmental regulations relevant to its operations.

The Company’s operations are subject to various environmental regulations under the Commonwealth and State Laws of Australia. The majority of its activities involve low level disturbance associated with exploration drilling programs. Approvals, licences, hearings and other regulatory requirements are performed, as required, by the Company’s management for each permit or lease in which the Company has an interest.

InDemnItIes GIven anD InsuranCe PremIums PaID tO auDItOrs anD OFFICers

During the reporting period, the Company paid a premium to insure officers of the Group. The officers of the Group covered by the insurance policy include all officers.

The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else to cause detriment to the Group.

Details of the amount of the premium paid in respect of the insurance policies is not disclosed as such disclosure is prohibited under the terms of the contract.

The Group has not otherwise, during or since the end of the reporting period, except to the extent permitted by law, indemnified or agreed to indemnity any current or former officer or auditor of the Group against a liability incurred as such by an officer or auditor.

nOn-auDIt servICes

During the reporting period Grant Thornton performed certain other services in addition to its statutory duties.

The Board has considered the non-audit services provided during the reporting period by the auditor and is satisfied that the provision of those non-audit services is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:

The non-audit services do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.

Details of the amounts paid to the auditors of the Company and its related practices for audit and non-audit services provided during the reporting period are set out in note 14 to the Financial Statements.

A copy of the Auditor’s Independence Declaration as required under s307C of the Corporations Act 2001 is included on page 22 of this Financial Report and forms part of this Directors’ Report.

PrOCeeDInGs On behalF OF the COmPanY

No person has applied to the Court under section 237 of the Corporations Act 2011 for leave 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.

Signed in accordance with a resolution of the Directors.

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Stephen Biggins m a n a g i n g D i r E C T o r

Adelaide

13 September 2012

CORE EXPLORATION LTD ANNUAL REPORT 2012

Auditor’s Independence Declaration

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Level 1, 67 Greenhill Rd Wayville SA 5034 GPO Box 1270 Adelaide SA 5001 T 61 8 8372 6666 F 61 8 8372 6677 E [email protected] W www.grantthornton.com.au

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF CORE EXPLORATION LIMITED

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Core Exploration Limited for the year ended 30 June 2012, I declare that, to the best of my knowledge and belief, there have been:

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

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

J L Humphrey Director – Audit & Assurance

Adelaide, 13 September 2012

Grant Thornton Audit Pty Ltd ABN 91 130 913 594 ACN 130 913 594

a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

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

Liability limited by a scheme approved under Professional Standards Legislation

CORE EXPLORATION LTD ANNUAL REPORT 2012

Corporate Governance Statement

The Board is committed to achieving and demonstrating the highest standards of corporate governance. As such, Core Exploration Ltd and its controlled entities (‘the Group’) have adopted a corporate governance framework and practices to ensure they meet the interests of shareholders.

The Group complies with the Australian Securities Exchange Corporate Governance Council’s Corporate Governance Principles and Recommendations 2nd Edition (‘the ASX Principles’). This statement incorporates the disclosures required by the ASX Principles under the headings of the eight core principles. All of these practices, unless otherwise stated, were in place for the full reporting period.

Information about the Company’s corporate governance practices are set out below. All of these practices were put in place subsequent to the listing of the Company in February 2011.

the bOarD OF DIreCtOrs

The Company’s Constitution provides that the number of Directors shall not be less than three. There is no requirement for any shareholding qualification.

If the Company’s activities increase in size, nature and scope, the size of the Board will be reviewed periodically and the optimum number of Directors required to adequately supervise the Company’s activities will be determined within the limitations imposed by the Constitution and as circumstances demand.

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

Directors are initially appointed by aPPOIntments tO

the full Board, subject to election Other bOarDs by shareholders at the next Directors are required to take Annual General Meeting. Under the Company’s Constitution the conflicts of interest when tenure of a Director (other than Managing Director, and only one boards. Managing Director where the position is jointly held) is subject InDePenDent to reappointment by shareholders PrOFessIOnal aDvICe not later than the third anniversary following their last appointment. Subject to the requirements of the Corporations Act, the Board does in connection with their duties not subscribe to the principle of retirement age and there is no maximum period of service as a Director. A Managing Director may be appointed for the period and for legal advice in relation to on any terms the Directors think fit and, subject to the terms of any agreement entered into, the is subject to prior approval of appointment may be revoked on notice.

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

InDePenDent PrOFessIOnal aDvICe

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

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

CORE EXPLORATION LTD ANNUAL REPORT 2012

Corporate Governance Statement

COntInuOus revIeW OF COrPOrate GOvernanCe

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

CODe OF COnDuCt anD traDInG POlICY

The Company has adopted a Code of Conduct its executives that promotes the highest standards of ethics and integrity in carrying out their duties to the Company. The Company has adopted a trading blackout period which requires that executives in possession of confidential information are prohibited from trading in the Company’s securities until two days after the information has been released to the market.

The Code of Conduct and the Trading Policy can be found on the Company’s website at www.coreexploration.com.au.

DIversItY POlICY

Diversity includes, but is not limited to, gender, age, ethnicity and cultural background. The company is committed to diversity and recognises the benefits arising from employee and board diversity and the importance of benefiting from all available talent. A summary of the diversity policy is available on the Company’s website. This diversity policy acknowledges the importance of diversity, but the company has not developed measurable objectives for achieving diversity at this stage due to its size and extent of operations.

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genDer Diversity report total positions helD by woMen
----- End of picture text -----

Board	3	0
Senior management	1	0
Other employees	2	1
Total	6	1

rIsk manaGement sYstems

The identification and management of risk, including calculated risktaking activity is viewed by management as an essential component in creating shareholder value.

Management, through the Managing Director, is responsible for developing, maintaining and improving the Company’s risk management and internal control system. Management provides the Board with periodic reports identifying areas of potential risks and the safeguards in place to efficiently manage material business risks. These risk management and internal control systems are in place to protect the financial statements of the entity from potential misstatement, and the Board is responsible for satisfying itself annually, or more frequently as required, that management has developed a sound system of risk management and internal control.

Strategic and operational risks are reviewed at least annually as part of the forecasting and budgeting process. The Company has identified, and actively monitors, risks inherent in the industry in which it operates.

The Board also receives a written assurance from the Chief Executive Officer and Chief Financial Officer that, to the best of their knowledge and belief, the declaration provided to the Board in accordance with section 295A of the Corporations Act, is founded on a sound system of risk management and internal control, and that the system is operating effectively in relation to financial reporting risks.

The Board notes that due to its nature, internal control assurance from the Chief Executive Officer and Chief Financial Officer can only be reasonable rather than absolute. This is due to such factors as the need for judgement, the use of testing on a sample basis, the inherent limitations in internal control and because much of the evidence is persuasive rather than conclusive and therefore is not and cannot be designed to detect all weaknesses in internal control procedures.

CORE EXPLORATION LTD ANNUAL REPORT 2012

asx PrInCIPles OF GOOD COrPOrate GOvernanCe

The Board has reviewed its practices in light of the ASX Corporate Governance Principles and Recommendations with 2010 Amendments 2[nd] Edition with a view to making amendments where applicable after considering the Company’s size and available resources.

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

The following table sets out the Company’s compliance with the ASX Corporate Governance Guidelines:

Checklist of Corporate Governance Principles and Recommendations

Principle 1 - Lay solid foundations for management and oversight

1.1	Establish the functions reserved to the board and those delegated to senior executives and	Establish the functions reserved to the board and those delegated to senior executives and	
	disclose those functions.
1.2	Disclose the process for evaluating the performance of senior executives.		
1.3	Provide the information indicated in Guide to reporting on Principle 1.		
Principle 2 - Structure the Board to add value
2.1	A majority of the board should be independent directors.		
2.2	The chair should be an independent director.		
2.3	The roles of the chair and chief executive officer should not be exercised by the same individual.		
2.4	The board should establish a nomination committee.		
2.5	Disclose the process for evaluating the performance of the board, its committees and individual		
	directors.
2.6	Provide the information indicated in Guide to reporting on Principle 2.		
Principle 3 - Promote ethical and responsible decision-making
3.1	Establish a code of conduct and disclose the code or a summary of the code as to:
	• the practices necessary to maintain confidence in the Company’s integrity;
	• the practice necessary to take into account their legal obligations and the reasonable		
		expectations of stakeholders; and
	• the responsibility and accountability of individuals for reporting and investigating reports of
		unethical practices.
3.2	Companies should establish a policy concerning diversity and disclose the policy or a summary of
	that policy. The policy should include requirements for the board to establish measurable objectives		
	for achieving gender diversity for the board to assess annually both the objectives and progress in
	achieving them..
3.3	Companies should disclose in each annual report the measurable objectives for achieving gender
	diversity set by the board in accordance with the diversity policy and progress towards achieving		
	them.
3.4	Companies should disclose in each annual report the proportion of women employees in the whole		
	organisation, women in senior executive positions and women on the board.
3.5	Provide the information indicated in Guide to reporting on Principle 3.		

CORE EXPLORATION LTD ANNUAL REPORT 2012

Corporate Governance Statement

Principle 4 - Safeguard integrity in financial reporting	Principle 4 - Safeguard integrity in financial reporting
4.1	The board should establish an audit committee.	
4.2	Structure the audit committee so that it:
	• consists only of non-executive directors;
	• consists of a majority of independent directors;	
	• is chaired by an independent chair, who is not the chair of the board; and
	• has at least three members.
4.3	The audit committee should have a formal charter.	
4.4	Provide the information indicated in Guide to reporting on Principle 4.	
Principle 5 - Make timely and balanced disclosure
5.1	Establish written policies designed to ensure compliance with ASX Listing Rule disclosure
	requirements and to ensure accountability at a senior executive level for that compliance and	
	disclose those policies or a summary of those policies.
5.2	Provide the information indicated in Guide to reporting on Principle 5.	
Principle 6 - Respect the rights of shareholders
6.1	Design a communications policy for promoting effective communication with shareholders and
	encouraging their participation at general meetings and disclose the policy or a summary of the	
	policy.
6.2	Provide the information indicated in Guide to reporting on Principle 6.	
Principle 7 - Recognise and manage risk
7.1	Establish policies for the oversight and management of material business risks and disclose a	
	summary of those policies.
7.2	The board should require management to design and implement the risk management and internal
	control system to manage the Company’s material business risks and report to it on whether those	
	risks are being managed effectively. The board should disclose that management has reported to it
	as to the effectiveness of the Company’s management of its material business risks.
7.3	The board should disclose whether it has received assurance from the chief executive officer (or
	equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance
	with section 295A of the Corporations Act is founded on a sound system of risk management and	
	internal control and that the system is operating effectively in all material respects in relation to
	financial reporting risks.
7.4	Provide the information indicated in Guide to reporting on Principle 7.	
Principle 8 - Remunerate fairly and responsibly
8.1	The board should establish a remuneration committee.	
8.2	The remuneration committee should be structured.	
8.3	Clearly distinguish the structure of non-executive directors’ remuneration from that of executive	
	directors and senior executives.
8.4	Provide the information indicated in Guide to reporting on Principle 8.	

CORE EXPLORATION LTD ANNUAL REPORT 2012

Where the Group has not complied with the Corporate Governance Principles, comments are included below:

ASX Principle	ASX Principle	Reference / Comment
Principle 2 - Structure the Board to		add value
2.1	A majority of the Board	Given the Company’s present size and scope, it is currently not Company
	should be independent	policy to have a majority of independent Directors. Persons have been
	Directors.	selected as Directors to bring specific skills and industry experience to the
		Company.
2.2	The Chair should be an	The Chairman, Greg English, is not independent under definition in the
	independent Director.	ASX Corporate Governance Guidelines. The Board believes the alignment
		of the interests of Directors with those of shareholders as being the most
		efficient way to ensure shareholders’ interests are protected. The Board
		believes that this is both appropriate and acceptable at this stage of the
		Company’s development.
2.4	The Board should establish a	The Board has no formal nomination committee. Acting in its ordinary
	nomination committee.	capacity from time to time as required, the Board carries out the process
		of determining the need for, screening and appointing new Directors.
		In view of the size and resources available to the Company, it is not
		considered that a separate nomination committee would add any
		substance to this process.
Principle 3 – Promote ethical and responsible decision-making
3.3	The Company should	While the Company subscribes to the principles of gender diversity, it
	disclose the measurable	has not set measurable objectives for achieving gender diversity due to
	objectives for achieving	the company’s current size and nature of its operations. The Company is
	gender diversity.	committed to the engagement of the best people available to meet the
		requirements of the Company, the Board and its business, regardless of
		gender.
Principle 4 - Safeguard integrity in financial reporting
4.1 to	The Board should establish	The Company does not have an Audit Committee. The Board believes
4.3	an audit committee.	that, with only three Directors, the Board itself is the appropriate forum to
		deal with this function.
Principle 8 - Remunerate fairly and		responsibly
8.1	The Board should establish a	Given the current size of the Board, the Company does not have a
	remuneration committee.	remuneration committee. The Board as a whole reviews remuneration
		levels on an individual basis, the size of the Company making individual
		assessment more appropriate than formal remuneration policies. In
		doing so, the Board seeks to retain professional services as it requires,
		at reasonable market rates, and seeks external advice and market
		comparisons where necessary.
8.2	Clearly distinguish the	The Board acknowledges the grant of options to Directors is contrary to
	structure of non-executive	Recommendation 8.2 of the ASX Corporate Governance Principles and
	Directors’ remuneration from	Recommendations. However, the Board considers the grant of Director
	that of executive Directors	Options to be reasonable in the circumstances, given the necessity to
	and senior executives.	attract and retain the highest calibre of professionals to the Company,
		whilst maintaining the Company’s cash reserves.

CORE EXPLORATION LTD ANNUAL REPORT 2012

Statement of Comprehensive Income

For the year ended 30 June 2012

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nOtes 2012 2011
$ $
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Interest income Administration costs Employee benefits expense 17(a) Exploration expense Impairment Depreciation 7 Other expenses Loss before tax Income Tax (expense) / benefit 2 Loss for the year Other Comprehensive income Total Comprehensive loss for the reporting period Loss attributable to: Owners of the parent entity Total Comprehensive Loss attributable to: Owners of the parent entity Earnings Per Share from Continuing Operations Basic Loss – cents per share 3	195,321 125,957 (463,780) (405,594) (252,309) (197,900) (25,449) - (602,032) - (46,048) (3,008) (1,200) (3,460)
	(1,195,497) (484,005) - (139,534)
	(1,195,497) (623,539) - -
	(1,195,497) (623,539)
	(1,195,497) (623,539) (1,195,497) (623,539) 2.88 2.84

This statement should be read in conjunction with the notes to the financial statements. Comparatives for 2011 relate to the period from 10 September 2010 through 30 June 2011.

CORE EXPLORATION LTD ANNUAL REPORT 2012

Statement of Financial Position

As at 30 June 2012

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nOtes 2012 2011
$ $
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ASSETS Current assets Cash and cash equivalents 4 Trade and other receivables 5 Total current assets Non-current assets Exploration and evaluation expenditure 6 Plant and equipment 7 Total non-current assets TOTAL ASSETS LIABILITIES Current liabilities Trade and other payables 8 Employee provisions 9 Total current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 10 Reserves 11 Accumulated losses TOTAL EQUITY	2,221,037 4,363,411 139,398 111,933
	2,360,435 4,475,344
	3,359,841 2,555,208 113,506 77,039
	3,473,347 2,632,247
	5,833,782 7,107,591
	84,402 180,770 24,340 9,440
	108,742 190,210
	108,742 190,210
	5,725,040 6,917,381
	7,145,760 7,146,570 398,316 394,350 (1,819,036) (623,539)
	5,725,040 6,917,381

This statement should be read in conjunction with the notes to the financial statements.

CORE EXPLORATION LTD ANNUAL REPORT 2012

Statement of Changes in Equity

For the year ended 30 June 2012

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2012 share CaPItal OPtIOn reserve retaIneD tOtal equItY
earnInGs
$ $ $ $
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Balance at beginning of year Issue of options to employees Share issue expenses Transactions with owners Other comprehensive income: Total comprehensive income for the reporting year Balance 30 June 2012	7,146,570 394,350 (623,539) 6,917,381 - 3,966 - 3,966 (810) - - (810)
	7,145,760 398,316 (623,539) 6,920,537
	- - (1,195,497) (1,195,497)
	7,145,760 398,316 (1,819,036) 5,725,040

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2011 share CaPItal OPtIOn reserve retaIneD tOtal equItY
earnInGs
$ $ $ $
----- End of picture text -----

Balance at registration	-	-	-	-
Issue of founders’ shares	25,000	-	-	25,000
Issue of seed shares, net of issue costs	494,250	-	-	494,250
Issue of shares and options to acquire
Sturt Exploration Pty Ltd and DBL
Blues Pty Ltd	2,100,000	138,000	-	2,238,000
Issue of IPO shares, net of issue costs
and tax	4,680,170	-	-	4,680,170
Issue of options to advisors and
directors	(152,850)	256,350	-	103,500
Transactions with owners	7,146,570	394,350	-	7,540,920
Other comprehensive income:
Total comprehensive income for the
reporting period	-	-	(623,539)	(623,539)
Balance 30 June 2011	7,146,570	394,350	(623,539)	6,917,381

This statement should be read in conjunction with the notes to the financial statements. Comparatives for 2011 relate to the period from 10 September 2010 through 30 June 2011.

CORE EXPLORATION LTD ANNUAL REPORT 2012

Statement of Cash Flows

For the year ended 30 June 2012

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nOtes 2012 2011
$ $
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Operating activities Interest received Payments to suppliers and employees Payments for expensed exploration Net cash used in operating activities 12 Investing activities Payments for plant and equipment Payments for capitalised exploration expenditure Net cash used in investing activities Financing activities Proceeds from issue of share capital Capital raising costs Net cash (used in) from financing activities Net change in cash and cash equivalents Cash and cash equivalents, beginning of reporting period Cash and cash equivalents, end of year 4 (a)	256,956 52,936 (840,193) (418,923) (25,449) -
	(608,686) (365,987)
	(104,681) (64,399) (1,428,197) (266,089)
	(1,532,878) (330,488)
	- 5,525,000 (810) (465,114)
	(810) 5,059,886
	(2,142,374) 4,363,411 4,363,411 -
	2,221,037 4,363,411

This statement should be read in conjunction with the notes to the financial statements. Comparatives for 2011 relate to the period from 10 September 2010 through 30 June 2011.

CORE EXPLORATION LTD ANNUAL REPORT 2012

Notes to the consolidated financial statements

For the year ended 30 June 2012

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

This consolidated general purpose financial statements of the Group has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. Compliance with Australian Accounting Standards results in full compliance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Core Exploration Limited is a listed company, registered and domiciled in Australia. Core Exploration Limited is a for profit entity for the purpose of preparing the financial statements.

The consolidated financial statements for the reporting period ended 30 June 2012 were approved and authorised by the Board of Directors on 13 September 2012.

The Financial Report has been prepared on an accruals basis, and is based on historical costs, modified by the measurement at fair value of selected oncurrent assets, financial assets and financial liabilities.

Comparatives

As the company was registered on 10 September 2010 comparative information for 2011 reflects the period from that date through 30 June 2011. The significant policies which have been adopted in the preparation of this financial report are summarised below.

a) Principles of consolidation

Subsidiaries

The Group financial statements consolidate those of the parent company and all of its subsidiary undertakings drawn up to 30 June 2012. Subsidiaries are all entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from its activities. The Group obtains and exercises control through more than half of the voting rights. All subsidiaries have a reporting date of 30 June.

A list of controlled entities is contained in note 13 to the Financial Statements.

All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a Group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted, where necessary, to ensure consistency with the accounting policies adopted by the Group.

Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the reporting period are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.

Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss and net assets that is not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests.

b) Business combinations

The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquiree’s financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values.

Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of a) fair value of consideration transferred, b) the recognised amount of any non-controlling interest in the acquiree and c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (ie gain on a bargain purchase) is recognised in the Statement of Comprehensive Income immediately.

c) Segment reporting

An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. This includes start-up operations which are yet to earn revenues. Management will also consider other factors in determining operating segments such as the existence of a line manager and the level of segment information presented to the Board of Directors.

Operating segments have been identified based on the information provided to the chief operating decision makers – being the Board.

The Group aggregates two or more operating segments when they have similar economic characteristics, and the segments are similar in the nature of the minerals targeted.

Operating segments that meet the quantitative criteria, as prescribed by AASB 8, are reported separately. However, an operating segment that does not meet the quantitative criteria is still reported separately where information about the segment would be useful to users of the financial statements.

The Directors have considered the requirements of AASB 8 – Operating Segments and the internal reports that are reviewed by the Board in allocating resources have concluded that at this time there are no separately identifiable segments.

d) Finance income and expense

Finance income comprises interest income on funds invested, gains on disposal of financial assets and changes in fair value of financial assets held at fair value through profit or loss. Finance expenses comprise changes in the fair value of financial assets held at fair value through profit or loss and impairment losses on financial assets.

Interest income is recognised as it accrues in the Statement of Comprehensive Income, using the effective interest rate method. All income is stated net of goods and services tax (GST).

The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred.

CORE EXPLORATION LTD ANNUAL REPORT 2012

e) Plant and equipment

Plant and equipment is stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the items. Repairs and maintenance are charged to the statement of comprehensive income during the reporting period in which they were incurred.

Depreciation is calculated using the straight-line method to allocate asset costs over their estimated useful lives, as follows:

Exploration equipment	3 years
Office and IT equipment	3 years
Leasehold improvements	5 years

The assets residual values and useful lives are reviewed and adjusted at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement of Comprehensive Income. When revalued assets are sold, it is the Group’s policy to transfer any amounts included in other revenues in respect of those assets to retained earnings.

f) Exploration, development and evaluation expenditure

Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that right of tenure is current and those costs are expected to be recouped through the successful development of the area (or, alternatively by its sale) or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves and operations in relation to the area are continuing.

Accumulated costs, in relation to an abandoned area, are written off in full against profit in the period 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.

Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis.

Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly, the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.

g) Financial instruments

Initial recognition and measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the provisions to the instrument. For financial assets this is equivalent to date that the Group commits itself to either the purchase or sale of the asset.

Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified as ‘fair value through profit and loss’, in which case the costs are expensed to the statement of comprehensive income immediately.

Classification and subsequent measurement

Financial instruments are subsequently measured at either fair value or amortised cost using the interest method or cost. Fair value represents the amount for which an asset could be exchanged, or a liability settle, between knowledgeable willing parties. Where available, quoted prices in an active market are used to determine fair value.

The Group does not designate any interest in subsidiaries as being subject to the requirements of accounting standards specifically applicable to financial instruments:

i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. Loans and receivables are included in current assets except for those not expected to mature within 12 months after the end of the reporting period.

ii) Financial liabilities

Non-derivative financial liabilities are subsequently measured at cost.

Impairment

At each reporting date, the Group assesses whether there is objective evidence that a financial instrument has been impaired.

h) Impairment of assets

At each reporting date, the Group 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 statement of comprehensive income.

Where it is not probable to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cashgenerating unit to which the asset belongs.

i) Trade and other receivables

Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivables. They are included in current assets, except for those with maturities greater than 12 months after the balance date which are classified as non-current assets.

Trade and other receivables are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method, less provision for impairment. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of comprehensive income.

CORE EXPLORATION LTD ANNUAL REPORT 2012

Notes to the consolidated financial statements continued

For the year ended 30 June 2012

j) Trade and other payables

Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the reporting period which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially at their fair value and subsequently amortised cost using the effective interest rate method.

Trade and other payables are stated at amortised cost.

k) Income tax

Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity.

Current income tax assets and/or liabilities comprise those obligations to, or claims from, the Australian Taxation Office (ATO) and other fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements.

Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred tax on temporary differences associated with investments in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future.

Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are always provided for in full.

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

Deferred tax assets and liabilities are offset only when the Group has a right and intention to set-off current tax assets and liabilities from the same taxation authority.

Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss, except where they relate to items that are recognised in other comprehensive income (such as the revaluation of land) or directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or equity, respectively.

The Company and its wholly-owned Australian resident subsidiaries will form a tax-consolidated group upon lodgement of the taxation return.

l) Leases

In accordance with AASB 117 Leases, the economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is then recognised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease payments plus incidental payments, if any. A corresponding amount is recognised as a finance leasing liability, irrespective of whether some of

these lease payments are payable up-front at the date of inception of the lease. Leases of land and buildings are classified separately and are split into a land and a building element, in accordance with the relative fair values of the leasehold interests at the date the asset is recognised initially.

Depreciation methods and useful lives for assets held under finance lease agreements correspond to those applied to comparable assets which are legally owned by the Group. The corresponding finance leasing liability is reduced by lease payments less finance charges, which are expensed as part of finance costs.

The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to profit or loss over the period of the lease. All other leases are treated as operating leases. Payments on operating lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred.

m) Earnings per share

i) Basic earnings per share

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

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 tax effect 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.

n) Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.

o) Share-based payments

The Group has provided payment to related parties in the form of sharebased compensation, whereby related parties render services in exchange for shares or rights over shares (‘equity-settled transactions’). The cost of these equity-settled transactions is measured by reference to the fair value at the date at which they are granted. The fair value is determined using a Black and Scholes methodology depending on the nature of the option terms.

The Black and Scholes option pricing model 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. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each balance date, the entity revises its estimates of the number of options that are expected to become exercisable.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant parties become fully entitled to the award (‘vesting date’).

CORE EXPLORATION LTD ANNUAL REPORT 2012

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the directors of the Group, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification.

p) Employee benefits

The Group provides post-employment benefits through various defined contribution plans.

A defined contribution plan is a superannuation plan under which the Group pays fixed contributions into an independent entity. The Group has no legal or constructive obligations to pay further contributions after its payment of the fixed contribution. The Group contributes to several plans and insurances for individual employees that are considered defined contribution plans. Contributions to the plans are recognised as an expense in the period that relevant employee services are received.

Short-term employee benefits, including annual leave entitlement, are current liabilities included in ‘employee provisions’, measured at the undiscounted amount that the Group expects to pay as a result of the unused entitlement.

q) 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 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 statement of financial position are shown inclusive of GST.

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

r) Parent entity

The financial information of the parent entity, Core Exploration Limited, disclosed in the notes to the financial report has been prepared on the same basis as the consolidated financial statements.

s) Critical accounting estimates and judgements

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

i) Key estimates- impairment

The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined.

ii) Key judgements – exploration and evaluation expenditure

The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale.

Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, which could impact the cost of mining, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices.

To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future, profits and net assets will be reduced in the period in which this determination is made.

In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. To the extent it is determined in the future that this capitalised expenditure should be written off, profits and net assets will be reduced in the period in which this determination is made.

iii) Share-based payment transactions

The Group measures the cost of equity-settled transactions with management and other parties by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by the Board of Directors with reference to quoted market prices or using the Black-Scholes valuation method taking into account the terms and conditions upon which the equity instruments were granted. The assumptions in relation to the valuation of the equity instruments are detailed in note 11. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity.

t) Adoption of the new and revised accounting standards

i) Overall considerations

The Group has adopted the following revisions and amendments to AASBs issued by the Australian Accounting Standards Board and IFRS issued by the International Accounting Standards Board, which are relevant to and effective for the Group’s financial statements for the annual period beginning 1 July 2011.

ii) Adoption of AASBs and improvements to AASBs 2011 – AASB 1054 and AASB 2011-11

The AASB has issued AASB 1054 Australian Additional Disclosures and 2011-1 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project, and made several minor amendments to a number of AASBs. These standards eliminate a large portion of the differences between the Australian and New Zealand accounting standards and IFRS and retain only additional disclosures considered necessary. These changes also simplify some current disclosures for Australian entities and remove others.

CORE EXPLORATION LTD ANNUAL REPORT 2012

Notes to the consolidated financial statements continued

For the year ended 30 June 2012

u) Recently issued accounting standards to be applied in future accounting periods

The accounting standards that have not been early adopted for the year ended 30 June 2012, but will be applicable to the Group in future reporting periods are detailed below. Apart from these standards, we have considered other accounting standards that will be applicable in future reporting periods, however they have been considered insignificant to the Group.

i) AASB 9 Financial Instruments (effective from 1 January 2013) The AASB aims to replace AASB 139 Financial Instruments: Recognition and Measurement in its entirety. The replacement standard (AASB 9) is being issued in phases. To date, the chapters dealing with recognition, classification, measurement and derecognition of financial assets and liabilities have been issued. These chapters are effective for annual periods beginning 1 January 2013. Further chapters dealing with impairment methodology and hedge accounting are still being developed. Management have yet to assess the impact that this amendment is likely to have on the financial statements of the Group. However, they do not expect to implement the amendments until all chapters of AASB 9 have been published and they can comprehensively assess the impact of all changes.

ii) Consolidation Standards

A package of consolidation standards are effective for annual periods beginning or after 1 January 2013. Information on these new standards is presented below. The Group’s management have yet to assess the impact of these new and revised standards on the Group’s consolidated financial statements.

a) AASB 10 Consolidated Financial Statements (AASB 10) AASB 10 supersedes the consolidation requirements in AASB 127 Consolidated and Separate Financial Statements (AASB 127) and Interpretation 112 Consolidation – Special Purpose Entities. It revised the definition of control together with accompanying guidance to identify an interest in a subsidiary. However, the requirements and mechanics of consolidation and the accounting for any non-controlling interests and changes in control remain the same.
b) AASB 11 Joint Arrangements (AASB 11)

AASB 11 supersedes AASB 131 Interests in Joint Ventures (AASB 131). It aligns more closely the accounting by the investors with their rights and obligations relating to the joint arrangement. It introduces two accounting categories (joint operations and joint ventures) whose applicability is determined based on the substance of the joint arrangement. In addition, AASB 131’s option of using proportionate consolidation for joint ventures has been eliminated. AASB 11 now requires the use of the equity accounting method for joint ventures, which is currently used for investments in associates.

c) AASB 12 Disclosure of Interests in Other Entities (AASB 12) AASB 12 integrates and makes consistent the disclosure requirements for various types of investments, including unconsolidated structured entities. It introduces new disclosure requirements about the risks to which an entity is exposed from its involvement with structured entities.

iii) AASB 2011-9 Amendments to Australian Accounting Standards Presentation of Items of Other Comprehensive Incomes (AASB 101 Amendments)

The AASB 101 Amendments require an entity to group items presented in other comprehensive income into those that, in accordance with other IFRSs:

a) will not be reclassified subsequently to profit or loss and
b) will be reclassified subsequently to profit or loss when specific conditions are met.

It is applicable for annual periods beginning on or after 1 July 2012. The Group’s management expects this will change the current presentation of items in other comprehensive income; however, it will not affect the measurement or recognition of such items.

iv) Amendments to AASB 119 Employee Benefits (AASB 119 Amendments)

The AASB 119 Amendments include a number of targeted improvements throughout the Standard. The main changes relate to defined benefit plans. They:

a) eliminate the ‘corridor method’, requiring entities to recognise all gains and losses arising in the reporting period in other comprehensive income
b) streamline the presentation of changes in plan assets and liabilities
c) enhance the disclosure requirements, including information about the characteristics of defined benefit plans and the risks that entities are exposed to through participation in them.

The amended version of AASB 119 is effective for financial years beginning on or after 1 January 2013. The Group’s management have yet to assess the impact of this revised standard on the Group’s consolidated financial statements.

v) AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements (AASB 124 Amendments)

AASB 2011-4 makes amendments to AASB 124 Related Party Disclosures to remove individual key management personnel disclosure requirements, to achieve consistency with the international equivalent (which includes requirements to disclose aggregate (rather than individual) amounts of KMP compensation), and remove duplication with the Corporations Act 2011. The amendments are applicable for annual periods beginning on or after 1 July 2013. The Group’s management have yet to assess the impact of these amendments.

vi) Other

In addition to the above recently issued accounting standards that are applicable in future years, we not the following new accounting standards that are applicable in future years:

Amendments to IAS 32 “Financial Instruments: Presentation and IFRS 7 Financial Instruments: Disclosures”;
AASB Interpretation 20 “Stripping Costs in the Production Phase of a Surface Mine”;
Consequential amendments to AASB 127 Separate Financial Statements (AASB 127) and AASB 128 Investments in Associates and Joint Ventures (AASB 128); and
AASB 13 Fair Value Measurement (AASB 13).

We do not expect these standards to materially impact our financial results upon adoption.

CORE EXPLORATION LTD ANNUAL REPORT 2012

2 INCOME TAX EXPENSE

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2012 2011
$ $
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	2012 $ 2011 $
Loss before tax Domestic tax rate Expected tax benefit Deferred tax assets not recognised for capital raising costs Exploration expenditure capitalised Impairment Other differences Actual tax benefit Deferred tax asset not brought to account Income tax (benefit) / expense attributable to operating loss	(1,195,497) (484,005) 30% 30%
	(358,649) (145,201)
	- 139,534 (422,184) (94,643) 180,610 - (4,906) 25,382
	(246,480) (70,273)
	605,129 70,273
	358,649 139,534

A deferred tax asset in relation to accumulated tax losses of $1,357,235 (2010/11 $752,106) has not been recognised as future taxable profits are not considered probable in the near term.

3 EARNINGS PER SHARE

The weighted average number of shares for the purpose of diluted earnings per share can be reconciled to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows:

	loss per share (cents)	2012 #	2011 #
Weighted average number of shares used in basic
earnings per share	2.88	41,500,000	41,500,000

In accordance with AASB 133 ‘Earnings per Share’, there are no dilutive securities.

4 CASH AND CASH EQUIVALENTS

Cash and cash equivalents include the following:

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2012 2011
$ $
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	2012 $ 2011 $
Cash at hand and in bank: Cash at bank Short-term deposits Cash and cash equivalents a) Reconciliation of cash at the end of the period. The above figures are reconciled to cash at the end of the financial period as shown in the statement of cash flows as follows: Cash and cash equivalents	561,283 349,268 1,659,754 4,014,143
	2,221,037 4,363,411

	2,221,037 4,363,411

5 TRADE AND OTHER RECEIVABLES

Trade and other receivables include the following:

	2012 $ 2011 $
Interest receivable GST receivable Other receivables Total receivables	11,386 73,021 73,012 38,912 55,000 -
	139,398 111,933

No receivables are considered past due and / or impaired.

CORE EXPLORATION LTD ANNUAL REPORT 2012

Notes to the consolidated financial statements continued

For the year ended 30 June 2012

6 EXPLORATION AND EVALUATION EXPENDITURE

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2012 2011
$ $
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	2012 $ 2011 $
Opening balance Acquired on acquisition of subsidiaries Expenditure on exploration during the year Impairment of capitalised exploration Exploration expenditure expensed Closing balance	2,555,208 - - 2,236,354 1,432,114 318,854 (602,032) - (25,449) -
	3,359,841 2,555,208

The impairment of capitalised exploration represents the write down to fair value of the Honeymoon and Lake Frome projects. The board has assessed the prospectivity of each tenement in determining the fair value.

7 PLANT AND EQUIPMENT

2012	exploration equipMent $ office anD it equipMent $ leaseholD iMproveMents $ total $
Gross carrying amount Opening balance Additions Disposals Balance 30 June 2012 Depreciation and impairment Opening balance Depreciation1 Disposals Balance 30 June 2012 Carrying amount 30 June 2012	20,060 29,640 31,297 80,997 4,942 85,591 - 90,533 - (1,689) - (1,689)
	25,002 113,542 31,297 169,841
	(950) (2,622) (386) (3,958) (6,518) (36,775) (9,273) (52,566) - 189 - 189
	(7,468) (39,208) (9,659) (56,335)
	17,534 74,334 21,638 113,506

2011	exploration equipMent $ office anD it equipMent $ leaseholD iMproveMents $ total $
Gross carrying amount Balance at registration Additions Balance 30 June 2011 Depreciation and impairment Balance at registration Depreciation1 Balance 30 June 2011 Carrying amount 30 June 2011	- - - - 20,060 29,640 31,297 80,997
	20,060 29,640 31,297 80,997
	- - - - (950) (2,622) (386) (3,958)
	(950) (2,622) (386) (3,958)
	19,110 27,018 30,911 77,039

1 Exploration equipment depreciation is charged to exploration assets. The remaining depreciation of $46,048 (2011: $3,008) is charged to the statement of comprehensive income.

8 TRADE AND OTHER PAYABLES

Trade and other payables, which are all current, recognised in the statement of financial position can be analysed as follows:

	2012 $ 2011 $
Trade and other payables Accrued expenses Total trade and other payables	66,452 163,270 17,950 17,500
	84,402 180,770

CORE EXPLORATION LTD ANNUAL REPORT 2012

9 SHORT TERM PROVISIONS

All provisions are considered current. The carrying amounts may be analysed as follows:

	2012 $ 2011 $
Opening balance / carrying amount at registration Additional provisions – employee entitlements Closing balance 10 ISSUED CAPITAL	9,440 - 14,900 9,440
	24,340 9,440

2012	nuMber of shares $
a) Issued and paid up capital Fully paid ordinary shares b) Movements in fully paid shares Capital raising costs Balance as 30 June 2012	41,500,000 7,146,570
	41,500,000 7,146,570
	- (810)
	41,500,000 7,145,760

2011	nuMber of shares $
a) Issued and paid up capital Fully paid ordinary shares b) Movements in fully paid shares Issued on registration Seed capital issued Issued on acquisition of subsidiaries – refer note 13 Issued on initial public offering Capital raising costs Balance as 30 June 2011	41,500,000 7,146,570
	41,500,000 7,146,570
	1,000,000 25,000 5,000,000 500,000 10,500,000 2,100,000 25,000,000 5,000,000 - (478,430)
	41,500,000 7,146,570

The share capital of Core Exploration Ltd consists only of fully paid ordinary shares. All shares are eligible to receive dividends and the repayment of capital and represent one vote at the shareholders’ meeting of Core Exploration Ltd.

None of the parent’s shares are held by any company in the Group.

The shares do not have a par value and the Company does not have a limited amount of authorised capital.

In the event of winding up the Group, ordinary shareholders rank after all creditors and are fully entitled to any proceeds of liquidation.

c) Capital management

Management effectively manages the group’s capital by assessing the group’s financial risks and adjusting its capital structure accordingly. 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 responses include share issues. The Group’s capital is shown as issued capital in the statement of financial position.

CORE EXPLORATION LTD ANNUAL REPORT 2012

Notes to the consolidated financial statements continued

For the year ended 30 June 2012

11 RESERVES

Share based payments are in line with the Core Exploration Limited remuneration policy, details of which are outlined in the director’ report. Listed below are summaries of options granted:

2012

share option reserve	nuMber of options 2012 $ weighteD average exercise price
Opening balance Issued to employees Balance at 30 June 2012 2011	8,500,000 394,350 $0.25 175,000 3,966 $0.15
	8,675,000 398,316 $0.25

share option reserve	nuMber of options 2011 $ weighteD average exercise price
Balance at registration Issued to Directors – November 2010 as remuneration Issued to IPO advisors – November 2010 Issued on acquisition of subsidiaries – January 2011 Balance at 30 June 2011	- - - 3,000,000 103,500 $0.25 1,500,000 152,850 $0.25 4,000,000 138,000 $0.25
	8,500,000 394,350 $0.25

On 11 November 2010, 3,000,000 share options were granted to directors as remuneration under the Core Exploration Limited to take up ordinary shares at an exercise price of $0.25 each. These options are exercisable on or before 30 June 2014 (refer note 17).

On 11 November 2010, 1,500,000 share options were granted to the IPO financial advisor of the Company to take up ordinary shares at an exercise price of $0.25 each. These options are exercisable on or before 31 October 2014.

On 31 January 2011, 4,000,000 share options were granted as consideration as part of the acquisition of Sturt Exploration to take up ordinary shares at an exercise price of $0.25 each. These options are exercisable on or before 30 June 2014 (refer note 13).

During 2011/12, a further 175,000 options were issued to employees as remuneration under their employment agreements. The options were due to be issued after a minimum period of employment was satisfied.

For information relating to share options issued to directors in the prior year, refer to note 17.

Nature and purpose of reserves

The share option reserve is used to recognise the fair value of all options.

12 RECONCILIATION OF CASHFLOWS FROM OPERATING ACTIVITIES

Operating activities

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2012 2011
$ $
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	2012 $ 2011 $
Loss after tax Deferred tax asset written off Share based payments expense Exploration impairment Depreciation expense Net change in working capital Net cash used in operating activities	(1,195,497) (623,539) - 139,534 3,966 103,500 602,032 - 46,048 3,008 (65,235) 11,510
	(608,686) (365,987)

13 INVESTMENTS IN CONTROLLED ENTITIES

a) Controlled Entities

The Company has the following subsidiaries:

naMe of subsiDiary	country of incorporation	class of shares	percentage helD 2011 anD 2012
Sturt Exploration Pty Ltd	Australia	Ordinary	100%
DBL Blues Pty Ltd	Australia	Ordinary	100%

CORE EXPLORATION LTD ANNUAL REPORT 2012

b) Acquisition of Controlled Entities in prior financial year

On 31 January 2011 the parent entity acquired 100% of Sturt Exploration Pty Ltd (Sturt) and DBL Blues Pty Ltd (DBL). The consideration for the purchases were as follows:

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sturt Dbl
$ $
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Purchase consideration: Ordinary Shares Fair value of Options Total fair value of purchase consideration	1,600,000 500,000 138,000 -
	1,738,000 500,000

The assets and liabilities arising from the Sturt Exploration Pty Ltd acquisition were as follows:

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pre-acquisition fair value recogniseD values
carrying aMount aDjustMents on acquisition
$ $ $
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Cash Trade and other receivables Exploration expenditure Trade and other payables Total purchase consideration	200 - 200 675 - 675 5,910 1,734,566 1,740,476 (3,351) - (3,351)
	3,434 1,734,566 1,738,000

The assets and liabilities arising from the DBL Blues Pty Ltd acquisition are as follows:

	pre-acquisition carrying aMount $ fair value aDjustMents $ recogniseD values on acquisition $
Cash Trade and other receivables Exploration expenditure Total purchase consideration	200 - 200 400 - 400 819 498,581 499,400
	1,419 498,581 500,000

14 AUDITOR REMUNERATION

	2012 $ 2011 $
Audit services Auditors of Core Exploration Limited – Grant Thornton Audit and review of Financial Reports Audit services remuneration Other services Auditors of Core Exploration Limited – Grant Thornton Investigating accountant report for IPO prospectus Taxation compliance and advice Total other services remuneration Total remuneration received by Grant Thornton	25,950 21,000
	25,950 21,000
	- 9,250 16,300 3,800
	16,300 13,050
	42,250 34,050

CORE EXPLORATION LTD ANNUAL REPORT 2012

Notes to the consolidated financial statements continued

For the year ended 30 June 2012

15 COMMITMENTS AND CONTINGENCIES

Lease commitments

The Company has entered into a three year operating lease in relation to its head office premises at Level 2, 143 Hutt Street, Adelaide commencing 1 June 2011. Minimum lease payments recognised as an expense during the period amount to $50,000. Remaining amounts due are:

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2012 2011
$ $
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	2012 $ 2011 $
Within one year Within two years to five years Greater than five years	50,000 45,833 45,833 95,833 - -
	95,833 141,666

The Group’s operating lease agreements do not contain any contingent rent clauses. The rental lease contains a renewal clause for a further three years.

Exploration commitments

In order to maintain rights of tenure to exploration permits, the Group has certain obligations to perform minimum exploration work and expend minimum amounts of money.

Due to the nature of the Group’s operations in exploring and evaluating areas of interest, it is difficult to accurately forecast the nature or amount of future expenditure. It will be necessary for the Group to incur expenditure in order to retain present interests in exploration licences.

Bank guarantee

The Group has a bank guarantee in place for $39,950 in relation to its office rental. The guarantee is funded via term deposit for the same amount.

Contingent liabilities

The Group has no contingent assets or liabilities.

16 RELATED PARTY TRANSACTIONS

The Group’s related party transactions include its subsidiaries and key management personnel.

a) Transactions with subsidiaries

Loans between entities in the wholly owned Group are not interest bearing, unsecured and are payable upon reasonable notice having regard to the financial stability of the Company.

b) Transactions with key management personnel

Transactions with key management personnel are made on normal commercial terms and conditions and at market rates. Outstanding balances are unsecured and are repayable in cash.

Stephen Biggins

BR1 Holdings Pty Ltd, a company of which Mr Biggins holds a beneficial interest, was paid Managing Director and consulting fees during the period totalling $220,673 (2011: $84,375). The total amount of fees due to BR1 Holdings Pty Ltd as at 30 June 2012 was $Nil (2011: $Nil).

Greg English

Core Exploration engages Norman Waterhouse Lawyers, a firm in which Mr English is a partner, on commercial term for the provision of legal advice. Core exploration has incurred $7,184 (2011: $7,915) of legal fees during the financial period.

Michael Schwarz

Core Exploration purchased a software licence previously paid by an entity controlled by Mr Schwarz. The cost of the licence to the company was $5,045 which is at or below the commercial rate for the licence.

Jarek Kopias

Kopias Consulting and Barker Wentworth, businesses of which Jarek Kopias is a Director, were paid consulting fees during the period totalling $70,055 (2011: $4,258) and are disclosed in the remuneration report. The total amount of fees due to Barker Wentworth as at 30 June 2012 was $7,703 (2011: $4,258).

CORE EXPLORATION LTD ANNUAL REPORT 2012

c) Share holdings of key management personnel

The number of ordinary shares of Core Exploration Limited held, directly, indirectly or beneficially, by each Director and Company Secretary, including their personally-related entities as at balance date:

2012

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Directors anD coMpany secretary helD at MoveMent During options exerciseD helD at
30 june 2011 year [1] 30 june 2012
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Directors anD coMpany secretary	helD at 30 june 2011 MoveMent During year1 options exerciseD helD at 30 june 2012
G English S Biggins M Schwarz J Kopias2 Total	5,665,000 - - 5,665,000 5,791,000 150,000 - 5,941,000 250,000 - - 250,000 15,000 45,000 - 60,000
	11,721,000 195,000 - 11,916,000

2011

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Directors anD coMpany secretaries helD at MoveMent During options helD at
registration year [4] exerciseD 30 june 2011
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Directors anD coMpany secretaries	helD at registration MoveMent During year4 options exerciseD helD at 30 june 2011
G English S Biggins M Schwarz J Kopias2 J Ward3 Total	- 5,665,000 - 5,665,000 - 5,791,000 - 5,791,000 - 250,000 - 250,000 - 15,000 - 15,000 - 10,000 - 10,000
	- 11,731,000 - 11,731,000

1 Movement represents purchase of shares on market during the year.
2 J Kopias movement relates to a purchase of shares by an entity associated with Mr Kopias during the year.
3 J Ward is not one of the key management personnel at 30 June 2012 upon resignation as company secretary prior to 30 June 2011.
4 Movement represents issue of director and vendor shares and purchases during the year.

d) Options holdings of key management personnel

The number of options over ordinary shares in Core Exploration Limited held, directly, indirectly or beneficially, by each specified Director and specified executive, including their personally-related entities as at balance date, is as follows:

2012

Directors	helD at 30 june 2011 MoveMent During year exerciseD helD at 30 june 2012 vesteD anD exercisable at 30 june 2012
G English S Biggins M Schwarz J Kopias Total 2011	3,000,000 - - 3,000,000 3,000,000 3,000,000 - - 3,000,000 3,000,000 1,000,000 - - 1,000,000 1,000,000 - - - - -
	7,000,000 - - 7,000,000 7,000,000

Directors	helD at registration MoveMent During year exerciseD helD at 30 june 2011 vesteD anD exercisable at 30 june 2011
G English S Biggins M Schwarz J Kopias Total	- 3,000,000 - 3,000,000 3,000,000 - 3,000,000 - 3,000,000 3,000,000 - 1,000,000 - 1,000,000 1,000,000 - - - - -
	- 7,000,000 - 7,000,000 7,000,000

CORE EXPLORATION LTD ANNUAL REPORT 2012

Notes to the consolidated financial statements continued

For the year ended 30 June 2012

17 EMPLOYEE REMUNERATION

a) Employee benefits expense

Expenses recognised for employee benefits are analysed below:

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2012 2011
$ $
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	2012 $ 2011 $
Salaries / contract payments for Directors and employees Share based payments – Director and employee options Superannuation Employee benefits expense Less: Transfer to exploration assets	574,834 177,037 3,966 103,500 30,505 8,340 25,060 24,049 (382,056) (115,026)
	252,309 197,900

b) Share based employee remuneration

As at 30 June 2012 the Group maintained an option plan for employee and director remuneration. No options were granted to directors during the year and 175,000 options were granted to employees.

The table below outlines the inputs used in the Black Scholes fair value calculation:

	Range of values
Exercise price	$0.11 to $0.20
Option life	2 years
Underlying share price	$0.08 to $0.14
Expected share price volatility	104% to 55%
Risk free interest rate	2.49% to 3.53%

On 11 November 2010 the Company issued 3,000,000 Director Options to Directors or their nominees. There are no voting rights attached, the options are transferable by instrument in the form commonly used for the transfer of options, and they may be exercised at any time until 30 June 2014. The details of the options issued to Directors were follows:

	granteD		terMs anD	conDitions of each grant	conDitions of each grant
2011	nuMber granteD	grant Date	fair value at grant Date	exercise price $	first exercise Date	last exercise Date
G English	1,000,000	11/11/2010	$0.0345	$0.25	11/11/2010	30/6/2014
S Biggins	1,000,000	11/11/2010	$0.0345	$0.25	11/11/2010	30/6/2014
M Schwarz	1,000,000	11/11/2010	$0.0345	$0.25	11/11/2010	30/6/2014

All options issued to Directors have vested.

Share options and weighted average exercise prices are as follows:

2012	nuMber of shares weighteD average exercise price ($)
Opening balance - remuneration options Granted as remuneration on 11 November 2010 Forfeited / expired Outstanding as at 30 June 2012	3,000,000 0.25 175,000 0.15 - -
	3,175,000 0.24

2011	nuMber of shares weighteD average exercise price ($)
Granted as remuneration on 11 November 2010 Forfeited / expired Outstanding as at 30 June 2011	3,000,000 0.25 - -
	3,000,000 0.25

Fair value of options granted

The fair value at grant date of the Director options has been 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 non-tradeable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

CORE EXPLORATION LTD ANNUAL REPORT 2012

18 FINANCIAL RISK MANAGEMENT AND CAPITAL MANAGEMENT

The Group’s financial instruments consist mainly of deposits with banks and accounts receivable and payable.

The total for each category of financial instruments are as follows:

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note 2012 2011
$ $
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note	2012 $ 2011 $
Financial assets Cash and cash equivalents 4 Loans and receivables 5 Financial liabilities Trade and other payables 8	2,221,037 4,363,411 139,398 111,933
	2,360,435 4,475,344
	84,402 180,770

Financial risk management policy

Risk management is carried out by the Managing Director under policies approved by the Board of Directors. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as interest rate and credit risk.

a) Liquidity risk

Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities.

The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate working capital is maintained for the coming months. Upcoming capital needs and the timing of raisings are assessed by the board. Financial liabilities are expected to be settled within 12 months.

b) Interest rate risk

The Group’s exposure to interest rate risk is the risk that a financial instrument’s value will fluctuate as a result in changes in market interest rates. Cash is the only asset affected by interest rate risk as cash is the Group’s only financial asset exposed to fluctuating interest rates.

The Group is exposed to interest rate risk on cash balances and term deposits held in interest bearing accounts. The Board constantly monitors its interest rate exposure and attempts to maximise interest income by using a mixture of fixed and variable interest rates, whilst ensuring sufficient funds are available for the Group’s operating activities. The Group’s net exposure to interest rate risk at 30 June 2012 approximates the value of cash and cash equivalents.

c) Sensitivity analysis

Interest rate

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

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2012 effect on:
sensitivity profit equity
$ $
Interest rate +1.50% +47,000 +47,000
-1.50% +47,000 +47,000
2011 effect on:
sensitivity profit equity
$ $
Interest rate +1.50% +60,000 +60,000
-1.50% -60,000 -60,000
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*The method used to arrive at the possible change of 150 basis points was based on the analysis of the absolute nominal change of the Reserve Bank of Australia (RBA) monthly issued cash rate. Historical rates indicate that for the past five financial years, interest rate movements ranged between 0 to 150 basis points. It is considered that 150 basis points a ‘reasonably possible’ estimate as it accommodates for the maximum variations inherent in the interest rate movement over the past five years.

The fair values of all financial assets and liabilities of the Group approximate their carrying values.

CORE EXPLORATION LTD ANNUAL REPORT 2012

Notes to the consolidated financial statements continued

For the year ended 30 June 2012

d) Net fair values of financial assets and financial liabilities

Fair values are amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.

The net fair values of financial assets and liabilities are determined by the Group based on the following:

i) Monetary financial assets and financial liabilities not readily traded in an organised financial market are carried at book value.
ii) Non-monetary financial assets and financial liabilities are recognised at their carrying values recognised in the Statement of financial position.

The carrying amount of financial assets and liabilities is equivalent to fair value at reporting date.

19 PARENT ENTITY IFORMATION

Information relating to Core Exploration Limited (the parent entity).

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2012 2011
$ $
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Statement of financial position
Current assets	2,360,435	4,475,343
Total assets	6,442,204	7,111,423
Current and total liabilities	108,742	190,210
Issued capital	7,145,760	7,146,570
Retained losses	1,210,613	619,708
Share based payment reserve	398,316	394,350
Statement of comprehensive income
Loss for the period	590,906	619,708

The parent entity has not entered into a deed of cross guarantee nor are there any contingent liabilities at the end of the reporting period. The parent has a bank guarantee in place for $39,950 in relation to its office rental. The guarantee is funded via term deposit for the same amount.

20 OPERATING SEGMENTS

The Directors have considered the requirements of AASB 8 – Operating Segments and the internal reports that are reviewed by the chief operating decision maker (the Board) in allocating resources have concluded that at this time there are no separately identifiable segments.

21 EVENTS ARISING SINCE THE END OF THE REPORTING PERIOD

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

CORE EXPLORATION LTD ANNUAL REPORT 2012

Directors’ Declaration

In the opinion of the Directors of Core Exploration Limited:

a) the consolidated financial statements and notes of Core Exploration Limited are in accordance with the Corporations Act 2001, including:
i. giving a true and fair view of its financial position as at 30 June 2012 and of its performance for the financial period ended on that date; and
ii. complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
b) there are reasonable grounds to believe that Core Exploration Limited will be able to pay its debts when they become due and payable.

The directors have been given the declaration required by section 295A of the Corporations Act 2001 from the Managing Director and Chief Financial Officer for the financial year ended 30 June 2012.

The consolidated financial statements comply with International Financial Reporting Standards.

Signed is made in accordance with a resolution of the Directors:

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Stephen Biggins m a n a g i n g D i r E C T o r

Adelaide

13 September 2012

CORE EXPLORATION LTD ANNUAL REPORT 2012

Independent Audit Report

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Level 1, 67 Greenhill Rd Wayville SA 5034 GPO Box 1270 Adelaide SA 5001 T 61 8 8372 6666 F 61 8 8372 6677 E [email protected] W www.grantthornton.com.au

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CORE EXPLORATION LIMITED

Report on the financial report

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

Directors responsibility for the financial report

The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view of the financial report in accordance with Australian Accounting Standards and the Corporations Act 2001. This responsibility includes such internal controls as the Directors determine are necessary to enable the preparation of the financial report to be free from material misstatement, whether due to fraud or error. The Directors also state, in the notes to the financial report, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.

Auditor’s responsibility

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

Grant Thornton Audit Pty Ltd ABN 91 130 913 594 ACN 130 913 594

a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

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

Liability limited by a scheme approved under Professional Standards Legislation

CORE EXPLORATION LTD ANNUAL REPORT 2012

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An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.

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

Independence

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

Auditor’s opinion

In our opinion:

a the financial report of Core Exploration Limited is in accordance with the Corporations Act 2001, including:
i giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of its performance for the year ended on that date; and
ii complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b the financial report also complies with International Financial Reporting Standards as disclosed in the notes to the financial statements.

Report on the remuneration report

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

CORE EXPLORATION LTD ANNUAL REPORT 2012

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Auditor’s opinion on the remuneration report

In our opinion, the remuneration report of Core Exploration Limited for the year ended 30 June 2012, complies with section 300A of the Corporations Act 2001.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

J L Humphrey Director – Audit & Assurance

Adelaide, 13 September 2012

CORE EXPLORATION LTD ANNUAL REPORT 2012

ASX Additional Information

Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this report is set out below. This information is effective as at 31 August 2012.

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

The Company is listed on the Australian Securities Exchange.

substantIal sharehOlDers

The number of substantial shareholders and their associates are set out below:

Nowak Investment Pty Ltd and Genex Resources Pty Ltd	5,941,000
Greg English, LEC Nominees Pty Ltd and GDE Exploration (SA) Pty Ltd	5,665,000
HSBC Custody Nominees (Australia) Ltd	2,236,977

vOtInG rIGhts

Ordinary shares On a show of hands, every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Options No voting rights.

DIstrIbutIOn OF equItY bY seCurItY hOlDers

	orDinary shares
holDing	shares options (unquoteD)
1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Number of Holders	6 - 21 - 109 - 289 5 59 8
	484 13

There were 32 holders of less than a marketable parcel of ordinary shares ($500 amounts to 6,667 shares).

There are 11,600,000 ordinary restricted securities on issue. The escrow period for these shares ends on 10 February 2013.

There are 8,675,000 options issued but unquoted at the date of this report.

CORE EXPLORATION LTD ANNUAL REPORT 2012

tWentY larGest sharehOlDers

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nO. OF shares helD % helD
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1	Nowak Investments Pty Ltd	5,250,000	12.65
2	GDE Exploration (SA) Pty Ltd	4,000,000	9.64
3	HSBC Custody Nominees (Australia) Ltd	2,236,977	5.39
4	LEC Nominees Pty Ltd	1,250,000	3.01
5	Kahala Keys Pty Ltd	1,164,000	2.80
6	Mr Andrew William Blackman	850,000	2.05
7	Bill Brooks Pty Ltd	550,000	1.33
8	Mr William Douglas Goodfellow	500,000	1.20
9	Forty Traders Ltd	500,000	1.20
10	Nowak Investments Pty Ltd	475,000	1.14
11	UBS Wealth Management Australia Nominees Pty Ltd	460,000	1.11
12	Carnethy Investments Pty Ltd	450,000	1.08
13	Riverview Corporation Pty Ltd	438,926	1.06
14	Beilex Investments Pty Ltd	420,000	1.01
15	Jaek Holdings Pty Ltd	400,000	0.96
16	LEC Nominees Pty Ltd	375,000	0.90
17	Mr Tim Martin	350,000	0.84
18	Milstern Enterprises Pty Ltd	300,000	0.72
19	Avanteos Investments Ltd	300,000	0.72
20	HS Superannuation Pty Ltd	275,000	0.66
		50,544,903	49.47

CORE EXPLORATION LTD ANNUAL REPORT 2012

AI assistant

CORE LITHIUM LTD — Annual Report 2012

64737_rns_2012-09-12_c0d1ac21-8729-4472-925e-66272af00f6c.pdf

Corporate information

Directors

CFO/Company Secretary

Registered and Principal Office

Postal address

Auditors

Solicitors

Home Stock Exchange

Share Registry

Web address

Contents

Chairmans letter

Managing Director’s Report

Project Overview

Wauraltee IOCG PrOjeCt – YOrke PenInsula

el 4177

Palace Structural Zone and the Wauraltee Prospect

FIttOn PrOjeCt el 4569

rOxbY DOWns PrOjeCt el 4906 and el 4816

hOneYmOOn sOuth PrOjeCt el 4174 and el 4568

lake FrOme PrOjeCt el 4379

amaDeus PrOjeCt el28349

Tenement Schedule

Directors’ Report

DIreCtOrs

Greg English, B.E. (Hons) Mining, LLB

Experience and expertise

Other current directorships of listed companies

Interest in shares

Interest in options

Stephen Biggins, MBA, BSc (Hons) Geology, MAusIMM

Experience and expertise

Interest in shares

Interest in options

Michael Schwarz, BSc (Hons) Geology, AIG

Experience and expertise

Directors’ Report

Other current directorships of listed companies

Interest in shares

Interest in options

COmPanY seCretarY

Jarek Kopias, BCom, CPA, ACIS, ACSA

Fitton (formerly Mt Painter) Project

PrInCIPal aCtIvItIes

Roxby Downs Project

OPeratInG anD FInanCIal revIeW

Yorke Peninsula Project

Honeymoon South Project

Lake Frome Project

Amadeus Project

events arIsInG sInCe the enD OF the rePOrtInG PerIOD

lIkelY DevelOPments

DIreCtOrs’ meetInGs

unIssueD shares unDer OPtIOn

sIGnIFICant ChanGes In the state OF aFFaIrs

DIvIDenDs

Directors’ Report

Remuneration Report (Audited)

A. Principles used to determine the nature and amount of remuneration

Performance based remuneration

Voting and comments made at the company’s 2011 Annual General Meeting

B. Details of remuneration

Remuneration Report (Audited)

C. Service agreements

D. Share-based remuneration

END OF AUDITED REMUNERATION REPORT

envIrOnmental leGIslatIOn

InDemnItIes GIven anD InsuranCe PremIums PaID tO auDItOrs anD OFFICers

nOn-auDIt servICes

PrOCeeDInGs On behalF OF the COmPanY

Auditor’s Independence Declaration

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF CORE EXPLORATION LIMITED

Corporate Governance Statement

the bOarD OF DIreCtOrs

InDePenDent PrOFessIOnal aDvICe

COntInuOus revIeW OF COrPOrate GOvernanCe

CODe OF COnDuCt anD traDInG POlICY

CORE LITHIUM LTD Annual Report 2012