CULLEN RESOURCES LIMITED — Interim / Quarterly Report 2012

Mar 13, 2012

CULLEN RESOURCES LIMITED

ABN 46 006 045 790

FINANCIAL REPORT FOR THE HALF YEAR ENDED

31 DECEMBER 2011

Directors' Report

Your directors submit their report for the half-year ended 31 December 2011.

Directors

The names of the company's directors in office during the half year and until the date of this report are as below. Directors were in office for the entire period.

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

Dr 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 its 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 Non-Executive Chairman of Hill End Gold Limited.

Dr Chris Ringrose, BSc, PhD, MBA, MAIMM, MAICD (Managing Director)

Dr 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 vears. Dr Ringrose has also completed an MBA at Deakin University and brings to the Company significant management, exploration and project evaluation experience gained both in Australia and overseas.

Grahame Hamilton, BSc, MSc, MAIG (Non -Executive Director)

Mr 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, Mr Hamilton worked with Getty Oil Development Co. minerals division as Queensland Manager.

John Horsburgh, BSc MSc, FAIMM (Non-Executive Director)

Mr 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. Mr Horsburgh is Executive Chairman of AIM-listed public company Mariana Resources Limited.

Wayne John Kernaghan, BBus, ACA, FAICD, ACIS (Non-Executive Director & Company Secretary)

Mr 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 Gulf Industrials Limited.

Principal Activities

The principal activity for the economic entity during the course of the half-year was 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 \$1,130,075 after income tax [2010: Loss of \$1,088,841].

Directors' Report (continued)

Review of Operations

Cullen is a mineral exploration company seeking deposits of gold, nickel, coal, copper, uranium and iron ore either in its own right, or managed by other partners in Joint Ventures.

During the half-year under review, the Company continued its mineral exploration activities including: project generation, database reviews, field mapping and geochemical surveying, drilling programmes, and farm-out of projects. Company exploration activities, including Joint Venture managed projects. were focused in Western Australia with additional activities in New South Wales, Northern Territory, South Australia and Queensland as follows:

• Ashburton Province, WA (Hardey Junction JV, Mt Stuart JV, Wyloo JV, Paraburdoo JV and Tunnel Creek /Saltwater Pool JVs- gold, uranium and /or iron ore projects)
• North Eastern Goldfields, WA (Gunbarrel, Laverton, Agnew and Irwin Bore, gold and nickel $\bullet$ projects)
• Eastern Goldfields, WA (Killaloe JV, gold and nickel projects) $\bullet$
• Forrestania, WA (Forrestania JV, gold and nickel project) $\bullet$
• Central Lachlan Fold Belt, NSW (Minter tungsten project)
• Eromanga, Millungera and Galilee Basins, NW Queensland (coal and copper-gold projects)

The company's principal asset is its 30% interest of the Catho Well channel iron deposit in the West Pilbara (Mt Stuart JV), for which a Maiden Reserve have been determined.

Also during the half year the Company continued exploration activities in Namibia. Sweden and Finland. Also overseas, Cullen completed an EM survey of the "TL Property" project in south-east British Columbia in a search for base metals and following on from a first pass trenching programme Cullen conducted which had discovered high-grade zinc mineralisation at surface.

Cullen will continue to identify and evaluate both advanced and "grass roots" projects throughout Australia and in selected overseas locations. Cullen's portfolio is under continual evaluation to focus on projects likely to result in discovery of an economic mineral deposit.

Events Subsequent to Reporting Date

There are no known events subsequent to reporting date that would have a material effect on these financial statements other than the company on 14 March 2012 entering into an agreement with a stockbroker for the raising of approximately \$2million of equity via a placement to sophisticated and professional investors.

Auditor's Independence Declaration

We have obtained an independence declaration from our auditors, Ernst & Young, which follows the Directors' Report.

Signed in accordance with a resolution of the directors.

C. Ringrose

Director Perth 14 March 2012

Auditor's independence declaration to the directors of Cullen Resources Limited

In relation to our review of the half-year financial report of Cullen Resources Limited for the half-year ended 31 December 2011, 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.

Ernst & Young

Peter McIver Partner Perth 14 March 2012

Consolidated Statement of Financial Position
for the half-year ended 31 December 2011

Consolidated 31 December 2011 \$	Consolidated 30 June 2011 \$
1,668,476 37,768	2,632,257 69,156
1,706,244	2,701,413
361,605 8,670 3,402,920	540,450 11,608 3,142,502
3,773,195	3,694,560
5,479,439	6,395,973
386,132 145,680	194,816 135,956
531,812	330,772
19,557	17,056
19,557	17,056
551,369	347,828
4,928,070	6,048,145
34,610,266 (10,000) 1,280,125 (30, 952, 321)	34,610,266 (20,000) 1,280,125 (29, 822, 246)
4,928,070	6,048,145

Consolidated Statement of Comprehensive Income
for the half-year ended 31 December 2011

	Consolidated 31 December 2011 \$	Consolidated 31 December 2010 \$
Revenue (note 3) Other income (note 3)	20,517 98,000	63,159 400,000
Rent Salaries and consultants' fees Compliance expenses Impairment of exploration expenditure(note 5) Exploration and evaluation expenses Share based payments (note 8) Depreciation Impairment of available for sale investments Other expenses	(19, 531) (189, 324) (92,055) (813, 433) (2,938) (6, 845) (124,466)	(20, 189) (181, 203) (93, 807) (567,073) (95, 205) (443, 200) (4,007) (165, 129)
Loss before income tax expense	(1, 130, 075)	(1, 106, 654)
Income tax benefit		17,813
Net loss	(1, 130, 075)	(1,088,841)
Other comprehensive income Net change in fair value of available for sale assets (net of income tax) Total comprehensive income for the period	10,000 (1, 120, 075)	77,000 (1,011,841)
Basic loss per share attributable to ordinary equity holders of the parent (cents per share)	(0.18)	(0.18)
Diluted loss per share attributable to ordinary equity holders of the parent (cents per share)	(0.18)	(0.18)

Consolidated Statement of Cash Flows
for the half-year ended 31 December 2011

	Consolidated 31 December 2011 \$	Consolidated 31 December 2010 \$
Cash flows from operating activities
Cash payments in the course of operations Interest received Net cash flows used in operating activities	(190, 447) 20,517 (169,930)	(773, 830) 63,159 (710,671)
Cash flows from investing activities Payments for exploration & evaluation Proceeds from sale of tenements Payment for plant and equipment Proceeds from sale of financial assets Net cash flows used in investing activities	(1,073,851) 280,000 (793, 851)	(518, 783) 100,000 (1, 123) (419,906)
Cashflow from financing activities Proceeds from issue of shares Share issue costs Net cash flows from financing activities		2,936,235 (50, 625) 2,885,610
Net increase/(decrease) in cash and cash equivalents	(963, 781)	1,755,033
Cash and cash equivalents at beginning of the financial period	2,632,257	2,066,700
Cash and cash equivalents at end of the financial period	1,668,476	3,821,733

$\overline{\phantom{a}}$

Consolidated Statement of Changes in Equity
for the half-year ended 31 December 2011

	Contributed Available Equity for sale Payment reserve		Share Based reserve	Accumulated Losses	Total Equity
	\$	\$	\$	\$	\$
At 1 July 2010	31,724,656		728,925	(28, 182, 159)	4,271,422
Loss for the period Other comprehensive				(1,088,841)	(1,088,841)
Income (net of tax)		77,000			77,000
Total comprehensive Income for the period		77,000		(1,088,841)	(1,011,841)
Issue of share capital Share issue costs	2,936,235				2,936,235
(net of tax) Share based payments	(35, 438)		443,200		(35, 438) 443,200
At 31 December 2010	34,625,453	77,000	1,172,125	(29, 271, 000)	6,603,578
At 1 July 2011	34,610,266	(20,000)	1,280,125	(29, 822, 246)	6,048,145
Loss for the period Other comprehensive				(1, 130, 075)	(1, 130, 075)
income		10,000			10,000
Total comprehensive Income for the period		10,000		(1, 130, 075)	(1, 120, 075)
At 31 December 2011	34,610,266	(10,000)	1,280,125	(30,952,321)	4,928,070

$\ddot{\phantom{a}}$

Note 1 Corporate Information

The financial report of Cullen Resources Limited and its subsidiaries ("the consolidated entity") for the half-year ended 31 December 2011 was authorised for issue in accordance with a resolution of the directors on 14 March 2012. Cullen Resources Limited is a company incorporated in Australia and limited by shares, which are publicly traded on the Australian Stock Exchange.

____________________________________________________________________________________________

Note 2 Basis of Preparation & Accounting Policies

(a) Basis of preparation

This general purpose condensed financial report for the half year ended 31 December 2011 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001. The half-year financial report has been prepared on an historical cost basis.

For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period.

The half-year financial report does not include all notes of the type normally included within the 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.

It is recommended that the half-year financial report should be read in conjunction with the annual Financial Report of Cullen Resources Limited as at 30 June 2011 and considered together with any public announcements made by Cullen Resources Limited and its controlled entities during the half-year ended 31 December 2011 in accordance with the continuous disclosure obligations of the ASX listing rules.

Where appropriate prior year comparatives have been reclassified for consistency with current year disclosures.

(b) New and Amending Accounting Standards and Interpretations

The accounting policies applied by the Group in these financial statements are the same as those applied by the Group in the consolidated financial statements for the year ended 30 June 2011 except for the adoption of the following new and revised Accounting Standards.

• AASB 124 Related Party Disclosures ( Revised)
• AASB 2009-12 Amendments to Australian Accounting Standards (AASBs 5, 8, 108,110,112,119,133,137,139,1023 &1031 and interpretations 2,4,16,1039 & 1052)
• AASB 2009-14 Amendments to Australian Accounting Standards Prepayments of a minimum Funding Requirement (AASB Interpretation 14)
• AASB 1054 Australian Additional Disclosures
• AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project (AASB 1, AASB 7, AASB 101, AASB 134 and interpretation 13),
• AASB 2010-5 Amendments to Australian Accounting Standards [AASB 1, 3, 4,5,101,107,112,118,119,121,132,133,134,137,139,140,1023 & 1038 and Interpretations 112,115,127,132 & 1042]
• AASB 2010-6 Amendments to Australian Accounting Standards Disclosures on Transfers of Financial Assets (AASB 1 & AASB 7)
• AASB 2011-1 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence project [AASB 1, AASB 5, AASB 101, AASB 107, AASB 108, AASB 112 AASB 132,AASB 134, interpretation2,interpretation 112,interpretation 113]

The adoption of these amendments did not have any impact on the financial position or the performance of the Group.

(c) Significant accounting policies

The half-year consolidated financial statements have been prepared using the same accounting policies as used in the annual financial statements for the year ended 30 June 2011.

Note 3 Revenue & Other Income

Loss before income tax has been determined after:

	31 December 2011 \$	31 December 2010 S
Revenue and other income
Interest revenue	20,517	63,159
Sale of tenements(i)		400,000
Profit on sale of financial assets	98,000
	118,517	463.159

(i) On 2 August 2007, Kurana Pty Ltd and Killoran Pty Ltd granted an option to Cullen to purchase the Kurana and Killoran tenements in exchange for 3,000,000 shares.

During the prior period, Cullen exercised the option by issuing 3,000,000 shares, totalling \$200,000, as per the agreement.

In conjunction with the exercise of this option, Cullen assigned the Option Rights under the above agreement to MacPhersons Reward Pty Ltd ("MacPhersons"), a third party, in return for \$200,000 in cash and either:

The allotment of \$300,000 of shares if MacPhersons lists by 30 November 2010 on the ASX, or $(a)$

\$150,000 in cash if the above is not achieved. $(b)$

During the half-year ended 31 December 2010, MacPherson Reward listed on ASX and by mutual agreement Cullen received 1,000,000 MacPherson's shares worth \$300,000, which have been treated as other income and the shares classified as available-for-sale.

In addition to the above, Cullen was reimbursed \$100,000 cash as part of a farm out of tenements, the carrying value of which was nil and therefore this receipt has been treated as income.

Note 4 Other Financial Assets

	31 December 2011 \$	30 June 2011 \$
Security deposits Available for sale financial assets comprise: Listed investments at fair value	10,000	10.000
Shares in listed corporation	351,605	530,450
	361,605	540,450

Note 5 Exploration & Evaluation

	31 December 2011 S	30 June 2011 S	31 December 2010 \$
Costs carried forward in respect of areas of interest in the exploration and evaluation phase
Opening balance	3.142.502	2.861.626	2,616,296
Expenditure incurred	1,073,851	952,990	812.403
Written off during the period	(813, 433)	(672, 114)	(567,073)
Closing balance	3,402,920	3.142.502	2,861,626

The recoverability of the carrying amount of deferred exploration and evaluation expenditure is dependent on successful development and commercial exploration or alternatively by the sale of the respective areas of interest.

$(a)$ Impairment

The directors have reviewed all exploration projects for indicators of impairment in light of approved budgets. Where substantive expenditure is neither budgeted or planned the area of interest has been written down to its fair value less costs to sell. In determining fair value less costs to sell the directors had regard to the best evidence of what a willing participant would pay in an arms length transaction. Where no such evidence was available, areas of interest were written down to nil pending the outcome of any future farm out arrangement. The Company will continue to look to attract farm-in partners and/or recommence exploration should circumstances change.

Note 6 Contributed Equity

Contributed Equity	31 December 2011	30 June 2011
623,089,431 Ordinary shares		S
(issued and fully paid)*
(30 June 2011 : 623,089,431)	34,610,266	34.610.266

* Fully paid ordinary shares carry one vote per share and carry the right to dividends.

Movement in issued shares for the half year	31 December 2011		30 June 2011
	Number of Shares	\$	Number of Shares	\$
Beginning of the financial period: Movement:	623,089,431	34,610,266	557,839,763	31.724.656
Issued at 4.50 cents each Less share issue expenses	-		65,249,668	2,936,235
(net of tax)	۰		۰	(50,625)
End of the financial period:	623,089,431	34,610,266	623,089,431	34,610,266

During the period no options were issued, exercised or lapsed.

Note 7 Available for Sale Reserve

This relates to the movement in the fair valuation of financial assets	31 December 2011 \$	30 June 2011 \$	31 December 2010 \$
Beginning of the financial period Net change in fair value of financial assets	(20,000)	110,000
during the period	10,000	(259, 550)	110,000
Release of unrealised loss reserve due to impairment		129.550
End of the financial period	(10.000)	(20,000)	110.000

Note 8 Share Based Payments

During the prior period, the Company granted 16,000,000 options to Directors in accordance with shareholder approval given at the Annual General Meeting of the Company. These options vested on issue and have expensed in the prior period.

The fair value of the share options granted is estimated as at the date of grant using a Black and Scholes model taking into account the terms and conditions upon which the options were granted.

	2010
Expected volatility (%)	104.11%
Risk-free interest rate range (%)	4.98%
Term	3 years
Option exercise price	\$0.075
Expected dividend yield range	$\blacksquare$
Value per option	\$0.0277

These options have a remaining contractual life of 2.92 years.

Equity share options	Number of Options	Weighted Average Exercise Price \$
Opening balance	14,000,000	0.1043
Granted during the period	16,000,000	0.0750
Forfeited/Cancelled during the year
Exercised during the period
Expired during the period	(8,000,000)	0.1338
Closing balance at 31 December 2010	22,000,000	0.0723

There were no share based payments for the period ended 31 December 2011.

$\mathbb{R}^2$

Note 9 Cash & Cash Equivalents

For the purpose of the half-year cash flow statement, cash and cash equivalents are comprised of the following:

	31 December 2011	30 June 2011	31 December 2010
Cash at Bank and in Hand	637.814	1.601.595	736.799
Short Term Deposits	1,030,662	1.030.662	3.084.934
	1.668.476	2.632.257	3,821,733

Note 10 Operating Segments

For management purposes, the Company is organised into one main operating segment, which involves the exploration of minerals in Australia. All of the Company's activities are interrelated, and discrete financial information is reported to the Board (Chief Operating Decision Maker) as a single segment. Accordingly, all significant operating decisions are based upon analysis of the Company as one segment. The financial results from this segment are equivalent to the financial statements of the Company as a whole.

Note 11 Dividends Paid or Provided for on Ordinary Shares

No amounts have been paid, declared or recommended by Cullen Resources Limited by way of dividend since the commencement of the half-year, and up to the date of this report.

Note 12 Contingent Liabilities

There are no contingent liabilities at 31 December 2011. (30 June 2011: Nil)

Note 13 Events Subsequent to Reporting Date

There are no known events subsequent to reporting date that would have a material effect on these financial statements other than the company on 14 March 2012 entering into an agreement with a stockbroker for the raising of approximately \$2million of equity via a placement to sophisticated and professional investors.

Note 14 Commitments

The Consolidated entity has the following minimum expenditure commitments to keep its tenements and ownership interests in good standing over the next year:

• \$200,000 for the Mt Stuart Joint Venture; and
• \$300,740 for other tenements.

CULLEN RESOURCES LIMITED

Directors' Declaration

In accordance with a resolution of the directors of Cullen Resources Limited, I state that:

In the opinion of the directors:

• $(a)$ the financial statements and associated notes of the consolidated entity are in accordance with Corporations Act 2001 including;
• $(i)$ give a true and fair view of the financial position as at 31 December 2011 and the performance for the half year ended on that date of the consolidated entity; and
• $(ii)$ comply with Accounting Standard AASB 134 "Interim Financial Reporting" and the Corporations Regulations 2001; and
• $(b)$ there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

On behalf of the Board

Chlingon

C Ringrose Director

Perth 14 March 2012

To the members of Cullen Resources Limited

Report on the 31 December 2011 Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Cullen Resources Limited, which comprises the statement of financial position as at 31 December 2011, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, 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 half-year end or from time to time during the half-year.

Directors' Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity's financial position as at 31 December 2011 and its performance for the halfyear ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of [name of entity] and the entities it controlled during the half-year, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written Auditor's Independence Declaration, a copy of which is included in the Directors' Report.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Cullen Resources Limited is not in accordance with the Corporations Act 2001, including:

• a) giving a true and fair view of the consolidated entity's financial position as at 31 December 2011 and of its performance for the half-year ended on that date; and
• b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

Ernst & Young

Peter McIver Partner Perth 14 March 2012