CULLEN RESOURCES LIMITED — Interim / Quarterly Report 2005

Feb 21, 2005

ACN 006 045 790

HALF-YEAR FINANCIAL REPORT

AT

31 DECEMBER 2004

Directors' Report

The directors present the financial report of the economic entity at 31 December 2004 including the consolidated statement of financial position as at 31 December 2004 and the statement of financial performance and statement of cashflows for the half-year then ended and report as follows:

Directors

The directors of the company in office during the half year and until the date of this report are:

Dr Denis Clarke BSc, BA, PhD, FAIMM (Independent Non-Executive Chairman)

Denis Clarke has more than 30 years experience in exploration and mining operations. Over 15 years with Plutonic Resources ("Plutonic"), he contributed significantly at the General Manager level to it's success as it developed from a small explorer in 1983 to one of Australia's largest gold miners prior to its take-over in 1998 in a transaction which valued Plutonic at \$1 billion. Dr. Clarke at various times managed the exploration, finance, administration and corporate divisions. He brings to the Board broad technical, financial, administrative and corporate experience and a wide range of industry contacts. Currently Dr. Clarke is a Non-Executive Director of Troy Resources NL and Anglo Australian Resources NL

Grahame Hamilton BSc, MSc, MAIG (Executive Director)

Grahame Hamilton, a graduate of the University of NSW, has extensive experience over 30 years in exploration, corporate and project management. He has wide ranging expertise in project evaluation. Between 1994 and 1996 he managed the Brocks Creek exploration, environmental impact statement, feasibility study, mine development and construction for Solomon Pacific Resources NL. Before Solomon, Grahame worked with Getty Oil Development Co-minerals division as Oueensland Manager.

John Horsburgh BSc MSc, FAIMM (Executive Director)

John Horsburgh, a graduate of the Royal School of Mines, has over 32 years industry experience including 11 years with Solomon Pacific Resources NL. Prior to this he gained extensive experience in Australia and overseas with Getty Oil Development Co., Billiton and RTZ Group.

Wayne John Kernaghan (Non-Executive Director and Company Secretary)

Wayne Kernaghan is a member of the Institute of Chartered Accountants in Australia with a number of years experience in various areas of the mining industry. He is also a Fellow of the Australian Institute of Company Directors. Mr Kernaghan is also a Director of Goldlink IncomePlus Limited.

Dr Chris Ringrose BSc, Phd, MBA, MAIMM (Exploration Director)

Chris Ringrose has been an exploration geologist based mainly in Western Australia since he completed his geology degrees in Scotland in 1982. His career has included experience with EZ, Chevron and Aztec, and prior to joining Cullen, Chris was Exploration Manager with Troy Resources NL. for nine years. Chris has also completed an MBA at Deakin University and brings to the Company significance management, exploration and project evaluation experience gained both in Australia and overseas.

Principal Activities

The principal activities for the economic entity during the course of the half year were mineral exploration. There was no significant change in the nature of the economic entity during the half year.

Results for the half-Year

The loss of the economic entity for the half-year was \$352,933 [2003: Loss of \$373,844.]

Review of Operations

Exploration in the half-year has focused on the economic entity's three main projects, being:

• Ashburton Province (Yanks Bore, Red Hill West, De Courcy, Hardey Junction, Mt Stuart, Cardo Bore and Catho Well Gold Projects)
• Northern Goldfields (Gunbarrel Gold and Nickel Projects, Irwin Bore and Wonganoo Projects)
• $\bullet$ Eastern Goldfields (Killaloe Gold and Nickel Projects)

Consultant group Newexco Services Pty Ltd reviewed the nickel sulphide potential of the Wongano project generating several new target areas for drilling.

Several new joint ventures have been negotiated: Newmont Australia Ltd for Gunbarrel Gold; Nickel Australia Ltd for Killaloe Nickel; and Aquila for iron ore on selected Ashburton projects.

State of Affairs

In the opinion of the directors there were no significant changes in the state of affairs of the economic entity that occurred during the half-year under review.

Auditor's Independence Declaration

The Directors have received a declaration from the auditors in respect to their independence and this is set out on page 4 of this Half Yearly Report.

Dated at Sydney this 21st day of February 2005.

Signed in accordance with a resolution of the directors

سرهايا

J Horsburgh Director

Gestamthe

G Hamilton Director

EILENST & YOUNG

@ Trast & Virang Centre 680 Goorge Skeet Sydney NSM 2000 Austrilia

@ Tel 61 2 9248 5553 Fax 81 2 9248 5959
DX - Sydney Stock Exchange 10172

GRO Box 2646 Sydney NSW 2001

Auditor's Independence Declaration to the Directors of Cullen Resources Limited

In relation to our review of the financial report of Cullen Resources Limited for the halfyear ending 31 December 2004, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

Ent & Jag

Ernst & Young

M. Ellatt

Michael Elliott Partner 21 February 2005

Statement of Financial Position at 31 December 2004

	Consolidated 31 December 2004	Consolidated 30 June 2004 S	Consolidated 31 December 2003 $\mathbf S$
Current Assets
Cash Assets	2,153,056	1,066,357	1,940,868
Total Current Assets	2,153,056	1,066,357	1,940,868
Non Current Assets
Other Financial Assets (note 6)	106,400	122,800	12,800
Property & Equipment	38,270	46,208	48,074
Other - Exploration	4,705,408	4,442,905	4,730,928
Total Non Current Assets	4,850,078	4,611,913	4,791,802
Total Assets	7,003,134	5,678,270	6,732,670
Current Liabilities
Payables	32,649	61,677	48,781
Provisions	55,161	49,640	47,434
Total Current Liabilities	87,810	111,317	96,215
Non Current Liabilities
Provisions	16,118	4,814
Total Non Current Liabilities	16,118	4,814
Total Liabilities	103,928	116, 131	96,215
Net Assets	6,899,206	5,562,139	6,636,455
Equity
Contributed Equity (note 4)	20,214,506	18,524,506	18,524,506
Accumulated Losses	(13,315,300)	(12, 962, 367)	(11,888,051)
Total Equity	6,899,206	5,562,139	6,636,455

Statement of Financial Performance for the half-year ended 31 December 2004

	Consolidated 31 December 2004	Consolidated 31 December 2003
	S	S
Revenues from ordinary activities (note 3)	330,026	44,748
Rent	(44,270)	(50, 496)
Salaries and Consultants	(148, 767)	(111, 529)
Compliance	(52,511)	(150, 518)
Exploration expenditure written off (note 3)	(337, 648)	(32,108)
Depreciation	(13, 115)	(12,258)
Administration	(51,219)	(21,706)
Other expenses from ordinary activities	(35, 429)	(39, 977)
Loss from ordinary activities before income tax expense	(352, 933)	(373, 844)
Income tax relating to ordinary activities
Net loss from ordinary activities after income tax expense	(352,933)	(373, 844)
Total changes in equity other than those resulting from transactions with owners as owners	(352,933)	(373, 844)
Basic loss per share (cents per share)	(0.1)	(0.1)
Diluted loss per share (cents per share)	(0.1)	(0.1)

Statement of Cash Flows for the half-year ended 31 December 2004

	Consolidated 31 December 2004 S Inflows/ (Outflows)	Consolidated 31 December 2003 S Inflows/ (Outflows)
Cash flows from operating activities
Cash payments to suppliers and employees Interest received	(344, 399) 20,286	(356, 288) 44,748
Net cash flows from operating activities	(324, 113)	(311, 540)
Cash flows from investing activities Payments for exploration Payment for plant and equipment Receipts from sale of investments Repayment of security deposit Net investing cash flows	(600, 151) (5,177) 316,140 10,000 (279, 188)	(827, 614) (827, 614)
Cash flows from financing activities
Proceeds from issue of shares Share issue expenses Net financing cash flows	1,715,000 (25,000) 1,690,000	1,566,867 1,566,867
Net increase/(decrease) in cash held	1,086,699	427,713
Cash at beginning of the financial period	1,066,357	1,513,155
Cash at end of the financial period	2,153,056	1,940,868

Notes to the Financial Report For the half-vear ended 31 December 2004

Note 1 Basis of Preparation of Half-year Financial Statements

This general purpose consolidated financial report has been prepared for the half-year ended 31 December 2004 and is the consolidated financial report of the company, Cullen Resources Limited, and entities controlled at the end of, or during the half-year. These financial statements have been made out in accordance with applicable Australian accounting standards including AASB 1029: "Interim Financial Reporting", other mandatory professional reporting requirements (Urgent Issues Group Consensus Views) and the Corporations Act 2001. It is recommended that this Report should be read in conjunction with the 30 June 2004 Annual Report of Cullen Resources Limited and any public announcements made by Cullen Resources Limited and its controlled entities during the half-year in accordance with the continuous disclosure obligations of the Corporations Act 2001 and Australian Stock Exchange Listing Rules.

The accounting policies adopted are consistent with those of the previous financial year and corresponding half-year. The half year financial report has been prepared in accordance with the historical cost convention.

The notes to the financial statements do not include all information normally contained within notes to an annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.

Note 2 Other Assets-Exploration

The ultimate recoupment of capitalised expenditure relating to areas of interest in the exploration/evaluation phase is dependent upon the successful development and commercial exploitation or, alternatively, sale of the respective areas of interest and the consolidated entity's ability to continue to meet the financial obligations to maintain the areas of interest. Successful development and commercial exploitation is dependant upon the consolidated entity's ability to raise further equity funds and/or enter into joint venture arrangements.

Notes to the Financial Report For the half-year ended 31 December 2004

Loss Before Income Tax Note 3

Loss before income tax has been determined after:

	2004	31 December 31 December 2003
	S
(a) Crediting as revenue
Interest from other persons	20,286	44,748
Profit on sale of investments	309,740
	330,026
(b) Charging as expense:
Exploration expenditure written off	337,648	32.108

Contributed Equity Note 4

Issued capital

363.856.282 (2003: 320.981.282)	20.214.506	18.524.506

Movement in issued shares for the half year

Number of		Number of
Shares		Shares
320,981,282	18,524,506	268,752,376	16,957,639
10,000,000	400,000
32,875,000	1,315,000
		52,228,906	1,566,867
	(25,000)
363,856,282	20,214,506	320,981,282	18,524,506

Note 5 Segment Information

The consolidated entity operated during the period in one geographical segment, being Australia.

The consolidated entity operated in one business segment being exploration.

Note 6 Other Financial Assets

Non current	31 December	30 June
	2004	2004
		S
Security deposits	100,000	110,000
Shares quoted on stock exchanges	6,400	12,800
	106,400	22,800

The market value of the listed shares at 31 December 2004 was \$278,048 (2004: \$437,895).

Note 7 Contingent Liabilities

There are no known contingent liabilities. There have been no changes in contingent liabilities or contingent assets since the last annual reporting date.

Note 8 Events subsequent to Balance Date

There are no known events subsequent to balance date that would have a material effect on these financial statements.

Note 9 Impact of Adopting AASB Equivalents to International Financial Reporting Standards

The Company is continuing with the transitioning of its accounting policies and financial reporting from current Australian standards to Australian equivalents of International Financial Reporting Standards (IFRS). The Company has allocated internal resources and has performed initial impact assessments to isolate key areas that will be impacted by the transition to IFRS. The Company has identified the underlying areas which may impact the Company's financial accounts. The Board of Directors will oversee the progress of the implementation of IFRS and make necessary decisions. As the Company has a 30 June year end, priority will be given to considering the preparation of an opening balance sheet in accordance with AASB equivalents to IFRS as at 1 July 2004. This will form the basis of accounting for Australian equivalents of IFRS in the future, and is required when the Company prepares its first fully IFRS compliant financial report for the year ended 30 June 2006.

Set out below are the key areas where accounting policies will change and may have an impact on the financial report of the Company. At this stage the Company has not been able to reliably quantify the impacts on the financial report.

Exploration and Evaluation Costs (AASB 6)

The AASB has issued a standard dealing with exploration and evaluation costs. AASB 6 states that entities can elect to continue to recognise and measure exploration and evaluation assets in accordance with the accounting policies applied in their most recent annual financial statements. Therefore, the Company could continue to capitalise exploration and evaluation costs. However, the capitalised costs would be subject to annual impairment testing, which may impact future earnings.

Income Taxes (AASB 112)

Under the AASB 112 the Company will be required to use the balance sheet liability method which focuses on the tax effects of transactions and other events that effect amounts recognised in either the Statement of Financial Position or a tax based balance sheet. It is not expected that there will be any material impact as a result of the adoption of this standard.

Directors' Declaration

The directors declare that:

• the financial statements and associated notes of the consolidated entity $(a)$ comply with Accounting Standard AASB 1029 "Interim Financial Reporting" and the Corporations Regulations 2001;
• $(b)$ the financial statements and notes give a true and fair view of the financial position as at 31 December 2004 and performance of the consolidated entity for the half-year then ended; and
• $(c)$ in the directors' opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Made in accordance with a resolution of the directors.

J Horsburgh Director

attan=10

G Hamilton Director

Sydney 21^st February 2005

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Independent review report to members of Cullen Resources Limited

Scope

The financial report and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the financial statements, and the directors' declaration for Cullen Resources Limited (the company), for the six months ended 31 December 2004.

The directors of the company are responsible for preparing a financial report that gives a true and fair view of the financial position and performance of the company, and that complies with Accounting Standards AASB 1029 "Interim Financial Reporting", in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Review approach

We conducted an independent review of the financial report in order to make a statement about it to the members of the company and in order for the company to lodge the financial report with the Australian Stock Exchange and the Australian Securities and Investments Commission.

Our review was conducted in accordance with Australian Auditing Standards applicable to review engagements, in order to state whether, on the basis of the procedures described. anything has come to our attention that would indicate that the financial report is not presented fairly in accordance with the Corporations Act 2001, Accounting Standard AASB 1029 "Interim Financial Reporting" and other mandatory financial reporting requirements in Australia, so as to present a view which is consistent with our understanding of the company's financial position, and of its performance as represented by the results of its operations and cash flows.

A review is limited primarily to inquiries of company personnel and analytical procedures applied to the financial data. These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Independence

We are independent of the company, and have met the independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001. We have given to the director's of the company a written Auditor's Independence Declaration, a copy of which is included in the Director's Report.

Statement

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the financial report of Cullen Resources Limited is not in accordance with:

• $(a)$ the Corporations Act 2001, including:
• giving a true and fair view of the financial position of Cullen Resources $(i)$ Limited at 31 December 2004 and of its performance for the six months ended on that date; and
• complying with Accounting Standard AASB 1029 "Interim Financial $(ii)$ Reporting" and the Corporations Regulations 2001; and
• $(b)$ other mandatory financial reporting requirements in Australia.

Enst & Jay

Ernst & Young

M. Ellad

Michael Elliott Partner

Sydney 21 February 2005