ECHOIQ LIMITED - Annual Report 2011

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ABN 48 142 901 353

AND ITS CONTROLLED ENTITY

AUDITED FINANCIAL REPORT FOR THE PERIOD FROM

31 MARCH 2010 TO 30 JUNE 2011

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONTENTS
Corporate Directory	2
Corporate Governance Statement	3
Directors‟ Report	9
Auditor‟s Independence Declaration	20
Consolidated Statement of Comprehensive Income	21
Consolidated Statement of Financial Position	22
Consolidated Statement of Changes in Equity	23
Consolidated Statement of Cash Flows	24
Consolidated Notes to the Financial Statements	25
Directors‟ Declaration	50
Independent Auditor‟s Report	51
Shareholder Information	54
Tenement Report	55

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CORPORATE DIRECTORY

Directors

John Robins (appointed 17 December 2010) Dean Besserer (appointed 17 December 2010) Nigel Gellard (appointed 17 December 2010) Leigh Junk (appointed 17 December 2010) John Williamson (appointed 17 December 2010) Sean Mager (appointed 17 December 2010) Stephen Swatton (appointed 17 December 2010)

Non-Executive Chairman Managing Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director

Company Secretary

Jay Stephenson (appointed 17 December 2010)

Registered Office

Level 4, 66 Kings Park Road West Perth Western Australia 6005 Telephone +61 8 6141 3500 Facsimile +61 8 6141 3599 Website: www.sentosamining.com Email: [email protected]

Auditor

Grant Thornton Audit Pty Ltd Level 1, 10 Kings Park Road West Perth Western Australia 6005 Telephone +61 8 9480 2000 Facsimile +61 8 9322 7787 Website: www.granthornton.com.au Email: [email protected]

Share Registry

Computershare Investor Services Pty Ltd Level 2, 45 St Georges Terrace Perth Western Australia 6000 Telephone 1300 557 010 Telephone +61 3 9415 4000 Outside Australia Facsimile +61 8 9323 2033 Email: [email protected]

Home Exchange

Australian Securities Exchange Limited Exchange Plaza 2, The Esplanade Perth WA 6000 ASX Code – SEO

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CORPORATE GOVERNANCE STATEMENT

As the framework of how the Board of Directors of Sentosa Mining Limited (“ the Company”) carries out its duties and obligations, the Board has considered the eight principles of corporate governance as set out in the ASX Good Corporate Governance and Best Practice Recommendations.

The essential corporate governance principles are:

1 Lay solid foundations for management and oversight;
2 Structure the Board to add value;
3 Promote ethical and responsible decision-making;
4 Safeguard integrity in financial reporting;
5 Make timely and balanced disclosure;
6 Respect the rights of shareholders;
7 Recognise and manage risk;
8 Remunerate fairly and responsibly.

1. Lay solid foundations for management and oversight.

Recommendation 1.1: Companies should establish the functions reserved to the Board and those delegated to senior executives and disclose those functions.

Roles and Responsibilities:

The roles and responsibilities carried out by the Board are to:

Oversee control and accountability of the Company;
Set the broad targets, objectives, and strategies;
Monitor financial performance;
Assess and review risk exposure and management;
Oversee compliance, corporate governance, and legal obligations;
Approve all major purchases, disposals, acquisitions, and issue of new shares;
Approve the annual and half-year financial statements;
Appoint and remove the Company‟s Auditor;
Appoint and assess the performance of the Managing Director and members of the senior management team;
Report to shareholders.

Recommendation 1.2: Companies should disclose the process for evaluating the performance of senior executives.

The Board regularly reviews the performance of senior executives.

Recommendation 1.3: Provide the information indicated in the ASX Corporate Governance Council’s Guide to Reporting on Principle 1.

The evaluation of performance of senior executives has taken place throughout the period.

2. Structure the Board to add value.

Recommendation 2.1: A majority of the Board should be independent Directors. - All Directors are independent. Refer general comment below.

Recommendation 2.2: The Chairperson should be an independent Director. – The Chairman is independent. Refer general comment below.

Recommendation 2.3: The roles of the Chairperson and Chief Executive Officer should not be exercised by the same individual.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CORPORATE GOVERNANCE STATEMENT

Recommendation 2.4: Establishment of a Nomination Committee.

Recommendation 2.5: Disclose the process for evaluating the performance of the Board, its Committees and individual Directors.

Recommendation 2.6: Provide the information indicated in the ASX Corporate Governance Council’s Guide to Reporting on Principle 2.

General Comments:

Membership

The Board‟s membership and structure is selected to provide the Company with the most appropriate direction in the areas of business controlled by the Company. The Board currently consists of six Non-Executive Directors. Refer to the Directors‟ Report for details of each Director‟s profile. The majority of the Board is independent.

Chairman and Managing Director

The Company has a Managing Director. The Chairman is responsible for leading the Board in its duties, and facilitating effective discussions at Board level.

Nomination Committee

The Company has a formal charter for the Nomination Committee, however, no Committee has been appointed to date. The Board as a whole deals with areas that would normally fall under the charter of the Nomination Committee. These include matters relating to the renewal of Board members and Board performance.

Refer to the table of departure from best practice recommendations.

Skills

The Directors bring a range of skills and background to the Board including Legal, Accounting, and Finance.

Experience

The Directors have considerable experience in business at both operational and corporate levels.

Meetings

The Board endeavours to meet at least bi-monthly on a formal basis, although the Board regularly meets informally.

Independent professional advice

Each Director has the right to seek independent professional advice at the Company‟s expense for which the prior approval of the Chairman is required, and is not unreasonably withheld.

3. Promote ethical and responsible decision-making.

Recommendation 3.1: Establish a code of conduct to guide the Directors, the Chief Executive Officer (or equivalent) and any other key executives as to:

3.1.1 The practices necessary to maintain confidence in the Company’s integrity;
3.1.2 The practices necessary to take into account legal obligations and the reasonable expectations of shareholders;
3.1.2 The responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CORPORATE GOVERNANCE STATEMENT

Recommendation 3.2: 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 team.

General Comments:

The Company believes that the promotion of diversity on Boards, in senior management and within the organisation generally broadens the pool for recruitment of high quality Directors and employees; is likely to support employee retention; through the inclusion of different perspectives, is likely to encourage greater innovation; and is socially and economically responsible governance practice.

The Company is in compliance with the ASX Corporate Governance Council‟s Principles & Recommendations on Diversity. The Board of Directors is responsible for adopting and monitoring the Company‟s diversity policy. The policy sets out the beliefs and goals and strategies of the Company with respect to diversity within the Company. Diversity within the Company means all the things that make individuals different to one another including gender, ethnicity, religion, culture, language, sexual orientation, disability and age. It involves a commitment to equality and to treating of one another with respect.

The Company is dedicated to promoting a corporate culture that embraces diversity. The Company believes that diversity begins with the recruitment and selection practices of its Board and its staff. Hiring of new employees and promotion of current employees are made on the bases of performance, ability and attitude.

Recommendation 3.3: 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.

Recommendation 3.4: Disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the Board.

General Comments:

Currently there are no women employees in the whole organisation, in senior executive positions, or on the Board. Given the present size of the Company, there are no plans to establish measurable objectives for achieving gender diversity at this time. The need for establishing and assessing measurable objectives for achieving gender diversity will be re-assessed as the size of the Company increases.

Recommendation 3.5: Provide the information indicated in the ASX Corporate Governance Council’s Guide to Reporting on Principle 3.

4. Safeguard integrity in financial reporting.

Recommendation 4.1: The Board should establish an Audit Committee.

Recommendation 4.2: Structure the Audit Committee so that it consists of:

Only Non-Executive Directors;
A majority of independent Directors;
An independent Chairperson, who is not Chairperson of the Board;
At least three members.

Recommendation 4.3: The Audit Committee should have a formal charter.

Recommendation 4.4: Provide the information indicated in the ASX Corporate Governance Council’s Guide to Reporting on Principle 4.

General Comments:

Integrity of Company’s Financial Condition

The Company‟s Financial Controller and Company Secretary report in writing to the Board that the financial statements of the Company for the half and full financial year present a true and fair view, in all material respects, of the Company‟s financial condition and operational results in accordance with relevant accounting standards.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CORPORATE GOVERNANCE STATEMENT

Audit Committee

The Company has a formal charter for an Audit Committee, however no Committee has been appointed to date. The Board as a whole deals with areas that would normally fall under the charter of the Audit Committee.

Refer to the table of departure from best practice recommendations.

5. Make timely and balanced disclosure .

Recommendation 5.1: Establish written policies and procedures designed to ensure compliance with ASX Listing rules disclosure requirements and to ensure accountability at a senior management level for that compliance.

Being a listed entity on the ASX, the Company has an obligation under the ASX Listing Rules to maintain an informed market with respect to its securities. Accordingly, the Company advises the market of all information required to be disclosed under the Rules that the Board believes would have a material affect on the price of the Company's securities.

The Company Secretary has been appointed as the person responsible for communication with the Australian Securities Exchange (ASX). This role includes responsibility for ensuring compliance with the continuous disclosure requirements of the ASX Listing Rules, and overseeing and co-ordinating information disclosure to the ASX, analysts, brokers, shareholders, the media, and the public.

All shareholders have access to the annual report on the Company‟s website. Shareholders who have elected to receive a hardcopy will do so.

Recommendation 5.2: Provide the information indicated in the ASX Corporate Governance Councils’ Guide to Reporting on Principle 5.

Disclosure is reviewed as a routine agenda item at each Board meeting.

6. Respect the rights of shareholders.

Recommendation 6.1: Design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy.

Recommendation 6.2: Provide the information indicated in the ASX Corporate Governance Councils’ Guide to Reporting on Principle 6.

General Comments:

The Company is committed to keeping shareholders fully informed of significant developments at the Company. In addition to public announcements of its financial statements and significant matters, the Company provides the opportunity for shareholders to question the Board and management about its activities at the Company's annual general meeting.

The Company's auditor, Grant Thornton Audit Pty Ltd, will be in attendance at the annual general meeting and will also be available to answer questions from shareholders about the conduct of the audit and the preparation and content of the auditor's report.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CORPORATE GOVERNANCE STATEMENT

7. Recognise and manage risk

Recommendation 7.1: The Board or appropriate Board Committee should establish policies on risk oversight and management of material business risks and disclose a summary of those policies.

Recommendation 7.2: The Chief Executive Officer (or equivalent) and the Chief Financial Officer (or equivalent) to state in writing to the Board that:

7.2.1 The statement given in accordance with best practice recommendation 4.1 (the integrity of financial statements) is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board.

7.2.2 The Company's risk management and internal compliance and control system is operating efficiently and effectively in all material respects.

Recommendation 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 system of risk management and internal control and that the system is operating effectively in all material respects in relation to the financial reporting risks.

Recommendation 7.4: Provide the information indicated in the ASX Corporate Governance Council’s Guide to reporting on Principle 7.

General Comments:

The Board oversees the Company's risk profile. The financial position of the Company and matters of risk are considered by the Board. The Board is responsible for ensuring that controls and procedures to identify, analyse, assess, prioritise, monitor and manage risk are in place, being maintained and adhered to.

The Chief Financial Officer/Company Secretary state in writing to the Board that:

The statement given in accordance with best practice recommendation 4 (the integrity of financial statements) is founded on a sound system of risk management and internal compliance and control, which implements the policies adopted by the Board.
The Company's risk management and internal compliance and control system is operating efficiently and effectively in all material respects.

8. Remunerate fairly and responsibly

Recommendation 8.1: The Board should establish a Remuneration Committee.

Recommendation 8.2: The Remuneration Committee should be structured so that it:

consists of a majority of independent Directors;
is chaired by an independent chair;
has at least three members.

Recommendation 8.3: Clearly distinguish the structure of Non-Executive Directors' remuneration from that of executives and senior executives.

Recommendation 8.4: Provide the information indicated in the ASX Corporate Governance Council’s Guide to Reporting on Principle 8.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CORPORATE GOVERNANCE STATEMENT

General Comments:

Principles used to determine the nature and amount of remuneration

The objective of the Company's remuneration framework is to ensure reward for performance is competitive and appropriate to the results delivered. The framework aligns executive reward with the creation of value for shareholders, and conforms to market best practice.

Remuneration Committee

The Company has a formal charter for the Remuneration Committee, however, no Committee has been appointed to date. The entire Board act as the Remuneration and Nomination Committee. The Board as a whole deals with areas that would normally fall under the charter of the Remuneration Committee.

Refer to the table of departure from best practice recommendations.

Directors' Remuneration

Further information on Directors' and executives' remuneration is set out in the Directors' Report and Note 18 to the financial statements.

Departure from Best Practice Recommendations

From the Company‟s incorporation, the Company has complied with each of the Eight Essential Corporate Governance Principles and Best Practice Recommendations published by the ASX Corporate Governance Council, other than those items in the departure table below.

Recommendation Reference – ASX Guidelines	Notification of Departure	Explanation for Departure
2.4	A separate Nomination Committee has not been formed	The Board considers that the Company is not currently of a size to justify the formation of a Nomination Committee. The Board as a whole undertakes the process of reviewing the skill base and experience of existing Directors to enable identification of attributes required in Directors.
4.1, 4.2	A separate Audit Committee has not been formed.	The Board considers that the Company is not of a size, nor is its financial affairs of such complexity to justify the formation of an Audit Committee. The Board as a whole undertakes the selection and proper application of accounting policies, the integrity of financial reporting, the identification and management of risk and review of operation of the internal control systems.
8.1, 8.2, 8.3	A separate Remuneration Committee has not been formed.	The Board considers that the Company is not currently of a size to justify the formation of a Remuneration Committee. The Board as a whole undertakes the process of reviewing the remuneration levels of the Board, and where required, outside advice is sought.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

DIRECTORS’ REPORT

Your Directors present their first financial report, together with the financial statements of Sentosa Mining Limited (“the Company”) and its controlled entity Toro Mining Pty Ltd (“the Group”) for the financial period from 31 March 2010 to 30 June 2011.

Directors

The following persons were Directors of the Company and were in office for the entire period, and up to the date of this report, unless otherwise stated:

Company Secretary

The following person held the position of Company Secretary at the end of the financial period:

Jay Richard Stephenson - Chartered Secretary (FCIS) Master of Business Administration (MBA), Certified Management Accountant (CMA), Member of the Australian Institute of Company Directors (MAICD), Fellow of the Chartered Institute of Secretaries, was appointed as Company Secretary for Sentosa Mining Limited on 17 December 2010.

Principal Activity and Operations

The Company is primarily involved in the exploration of its Jaurdi Hills project in Western Australia and acquisition and development of South East Asian gold and copper projects.

During the period, the Company investigated a number of potential acquisitions in South East Asia.

Results of Operations

The loss of the Group for the period amounted to $928,618.

Financial Position

The net assets of the Group at 30 June 2011 were $3,279,753.

Significant Changes in State of Affairs

The Company was incorporated on 31 March 2010.

During the financial period, the Company completed its Initial Public Offering Prospectus for the issue of up to 20,000,000 shares at an issue price of $0.20 per share to raise $4,000,000.

The Company was listed on the Australian Securities Exchange on 17 December 2010.

On 28 October 2010, the Company entered into a share sale agreement with Matador Mining Pty Ltd to acquire 100% of Toro Mining Pty Ltd (“Toro”). The purchase was satisfied by the issue of 1,000,000 ordinary shares at $0.20. Toro holds interests in various granted mining tenements and in various applications for the grant of mining tenements located in Western Australia.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

DIRECTORS’ REPORT

On 11 May 2011, the Company announced a pro-rata non-renounceable entitlement issue on the basis of one Loyalty Option for every two shares held by shareholders at an issue price of $0.005 per Loyalty Option to raise approximately $82,000 exercisable on or before 17 December 2013 at an exercise price of $0.25 per Loyalty Option.

No other significant changes in the nature of the Group‟s activities have occurred during the period.

Dividends Paid or Recommended

No dividends were declared or paid during the period and the Directors do not recommend the payment of a dividend.

Significant events after the reporting date

On 20 July 2011, the Company announced that it has signed a Memorandum of Agreement (“MOA”) specific to the Boston Gold Property (“the Property”), Eastern Mindanao, Philippines. The Property comprised of Exploration Permit No. 000002-00 XI covering 338.86 hectares and is located in the highly prospective Barangay Caatijan, Municipality of Boston, Province of Davao Oriental (“the Area”).

Subject to signing the definitive agreement, the Company will pay US$875,000 (“First Payment”) and issue 3,000,000 ordinary shares in the Company to the relevant shareholder(s) in exchange for 70% of the total issued and outstanding capital stock of Boston Minerals Mining Corp. (“BMMC”) which owns a 100% interest in the Property.

Within 3 months from the First Payment date, the Company will pay an additional US$125,000 in exchange for an additional 10% of the total issued and outstanding capital stock of BMMC.

Within 6 months from the First Payment date, the Company will pay an additional US$250,000 in exchange for an additional 2.5% of the total issued and outstanding capital stock of BMMC.

Within 12 months from the First Payment date, the Company will pay an additional US$750,000 in exchange for an additional 7.5% of the total issued and outstanding capital stock of BMMC.

The Company has, at its sole discretion, the exclusive option to acquire an additional 5% of the total issued and outstanding capital stock of BMMC for US$1,000,000 as long as the Company remains a shareholder in BMMC within 12 months from the completion of a final feasibility study in respect of the Area.

The remaining 5% interest in the property is free carried.

Other than the items above, there has not arisen in the interval between the end of the financial period and the date of this report any other item, transaction, or event of a material and unusual nature not otherwise dealt with in the financial statements, likely in the opinion of the Directors of the Group, to affect significantly the operations of the Group, the results of the operations or the state of affairs of the Group in future financial years.

Likely Development

Likely developments, future prospects and business strategies of the operations of the Group and the expected results of those operations have not been included in this report as the Directors believe, on reasonable grounds, that the inclusion of such information would be likely to result in unreasonable prejudice to the Group.

Proceedings on behalf of the Company

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

DIRECTORS’ REPORT

Indemnifying Officers or Auditor

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

The Company has entered into agreements to indemnify all Directors and provide access to documents, against any liability arising from a claim brought by a third party against the Company. The agreement provides for the Company to pay all damages and costs which may be awarded against the Directors.
The Company has paid premiums to insure each of the Directors against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of Director of the Company, other than conduct involving a willful breach of duty in relation to the Company. The amount of the premium was $8,500.
No indemnity has been paid to auditors.

Information on Directors

John Robins

Qualifications and Experience

Non-Executive Chairman - Appointed 17 December 2010

John is a professional geologist based in Vancouver, Canada, with over 25 years of experience as an independent exploration geologist and entrepreneur. A 1984 graduate of the University of British Columbia with a Bachelor of Science in Geology, Mr. Robins initially worked as a self employed prospector and geologist in British Columbia and Northern Canada. In 1988, he founded Hunter Exploration Group, one of Canada's most successful private exploration companies. Mr. Robins has also been active in starting several successful public exploration and development companies culminating in 2005 with his co-founding of the Discovery Group of Companies. In addition to his role with the Discovery Group, Mr. Robins also sits on the Boards of several successful publically traded exploration companies. His experience in everything from grass roots exploration to production is complemented by his success in the capital markets and financing activities.

In 2008, Mr. Robins was recognised for his achievements in mining exploration by the Association for Mineral Exploration British Columbia with the H.H. "Spud" Huestis Award. This is recognised as the highest award given for mineral exploration and is awarded to those who have made a significant contribution to enhance the mineral resources of British Columbia and/or the Yukon Territory, through the original application of prospecting techniques or other geoscience technology.

Interest in Shares and Options

Special Responsibilities Directorships held in other listed entities

1,100,000 ordinary shares

250,000 options None Kivalliq Energy Corporation (since July 2008) Indicator Minerals Inc (since May 2008) Kaminak Gold Corporation (since November 2005) Grayd Resources Ltd (since January 2004) Niblack Mineral Development Corp (since August 2002) Troon Ventures Ltd (since February 1997)

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

DIRECTORS’ REPORT

Information on Directors

Dean Besserer

Qualifications and Experience

Managing Director – Appointed 17 December 2010

Dean is a graduate of the University of Western Ontario (1995), and has been a geological consultant since 1994. During 2001, Mr. Besserer became a principal and Managing Director at APEX Geoscience Ltd., a geological consulting firm with offices in Canada and Australia. His industry experience includes exploration and property evaluations in Canada, Australia, Russia, South East Asia, South America and Africa for numerous major and junior mining companies for commodities including gold, base metals and diamonds. Also, Mr. Besserer has managed exploration programs with annual exploration budgets in excess of $10 million.

Mr. Besserer is a member of The Association of Professional Engineers, Geologists and Geophysicists of Alberta, and the Australian Institute of Geoscientists.

Interest in Shares and Options

Special Responsibilities

Directorships held in other listed entities

Nigel Gellard

Qualifications and Experience

1,200,000 ordinary shares

500,000 options

None

Niblack Mineral Development Inc (since April 2010)

Brilliant Mining Corp (since June 2011)

Non-Executive Director – Appointed 17 December 2010

Nigel has over 20 years experience in the resources, agricultural and financial services/funds management sectors. Previously, Nigel was co-founder and Executive Director of a privately owned boutique funds management firm. Prior to this Nigel spent five years dealing in the equities markets, most notably with Patersons Securities Limited.

Prior to entering into the financial services and funds management industry, Nigel was Commercial Adviser to the Director of Exploration for Rio Tinto Plc, and based in London where he was responsible for advising on commercial matters relating to Rio Tinto's activities in Europe, Eastern Europe, South America and Africa. He was also responsible for the negotiation of commercial agreements and risk management.

Nigel is a fellow of the Australian Institute of Company Directors.

Interest in Shares and Options

Special Responsibilities Directorships held in other listed entities

1,100,000 ordinary shares

250,000 options

None

JBZ Capital Inc (since April 2010)

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

DIRECTORS’ REPORT

Information on Directors

Leigh Junk

Qualifications and Experience

Non-Executive Director – Appointed 17 December 2010

Leigh obtained a Diploma of Surveying from Wembley Technical College in 1992 and graduated from the University of Ballarat with a Graduate Diploma of Mining Engineering in 2000, and a Masters in Mineral Economics from Curtin University in 2008. Mr. Junk commenced his professional career in 1992 and went on to hold senior positions in several West Australian mining companies. In 1999 he co-founded Donegal Resources, a private mining company which obtained interests in several nickel mines in the Kambalda region of Western Australia.

Due to the success of Donegal Resources, Leigh received in 2003 the E&Y Young Entrepreneur of the Year Award and the Goldfields Business of the Year Award. He is a specialist in the area of planning mining operations involving project evaluation and feasibility studies, and has considerable experience in raising finance for mining operations. Mr. Junk is also a Director of Goldfields Credit Union.

Interest in Shares and Options

Special Responsibilities

Directorships held in other listed entities

1,100,000 ordinary shares

250,000 options

None

Brilliant Mining Corp (since 2006)

Doray Minerals Ltd (since May 2011)

Aura Energy Ltd (since May 2011)

John Williamson

Qualifications and Experience

Non-Executive Director – Appointed 17 December 2010

John has a Bachelor of Science, Specialisation in Geology, (1988) from the University of Alberta. He is an independent consultant and entrepreneur with more than twenty years experience, including fourteen years in the management, development and governance of public companies conducting worldwide mineral exploration and mining. He is a founder of ten junior resource and/or mining companies with gold, nickel and diamond-based operations in Canada, Western Australia, South America and Africa.

Mr. Williamson is a professional geologist registered with the Association of Professional Engineers, Geologists and Geophysicists of Alberta (APEGGA). He is also a Fellow of the Geological Association of Canada and Member of the Society of Economic Geologists.

Interest in Shares and 1,100,000 ordinary shares Options 250,000 options

Special Responsibilities None Directorships held in other North Country Gold Corp (since April 2010) listed entities Niblack Mineral Development Inc (since April 2010) CBR Gold Corp (August 1998 to May 2010) Brilliant Mining Corp (since September 2003) Kaminak Gold Corporation (since November 2005) Cedar Mountain Exploration Inc (since March 2006)

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

DIRECTORS’ REPORT

Information on Directors

Sean Mager

Qualifications and Experience

Non-Executive Director – Appointed 17 December 2010

Sean has a Bachelor of Commerce (1989) from the University of Alberta and more than twenty years of experience in management and governance of private and public enterprise. Since 1998, Mr. Mager has co-founded and developed several public companies conducting exploration and mining worldwide, with precious metal, base metal and diamond interests in North and South America, Australia and Africa.

Interest in Shares and Options 1,100,000 ordinary shares

250,000 options

Special Responsibilities None Directorships held in other listed entities

North Country Gold Corp (since February 2010)

Niblack Mineral Development Inc (since July 2002) Brilliant Mining Corp (since September 2003) Cedar Mountain Exploration Inc (since March 2006) Altiplano Minerals Ltd (since October 2010) Grizzly Discoveries Inc (since March 2009) Kaminak Gold Corporation (April 2007 to April 2011)

Stephen Swatton

Qualifications and Experience

Interest in Shares and Options

Special Responsibilities

Directorships held in other listed entities

Non-Executive Director – Appointed 17 December 2010

Stephen graduated with a BSc.,(Hons.lli), in Geology from Portsmouth University, England and subsequently obtained a MSc., Exploration Geology, from the University of Alberta, Canada. He has held several senior executive positions within large multi-national mining companies such as BHP Billiton Limited and Rio Tinto Limited. Stephen was Business Development Manager for BHP Billiton where he was responsible for elevating new mineral resource opportunities to the attention of senior executives and has also acted as the Head of Exploration Research for BHP Billiton. He has also worked in the financial markets as an analyst and has held CEO level positions with a number of junior mining companies. Stephen possesses a wide range of technical and commercial skills underpinned by strong project generation and evaluation experience together with an ability to apply innovative conceptual geology to mineral exploration.

1,100,000 ordinary shares 250,000 options

None

Brazil Resources Inc (since August 2010)

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

DIRECTORS’ REPORT

Meetings of Directors

The number of Directors‟ meetings and meetings of Committees of Directors held in the period and the number of meetings attended by each of the Directors of the Company during the period are:.

	Board of	Directors‟ Meetings
	Number attended	Number eligible to attend
John Robins	2	2
Dean Besserer	2	2
Nigel Gellard	2	2
Leigh Junk	2	2
John Williamson	2	2
Sean Mager	2	2
Stephen Swatton	2	2

Options

At the date of this report, the un-issued ordinary shares of the Company under option are as follows:

Grant Date Date of Expiry Exercise Price 21 May 2010 25 August 2014 $0.20 11 May 2011 17 December 2013 $0.25 27 June 2011 30 June 2014 $0.28	Number under Option 2,000,000 9,190,172 335,000
	11,525,172

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

No options were exercised during the period.

Non-audit Services

The Board of Directors is satisfied that the provision of non-audit services during the period is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . Non-audit service fees related to the period amounted to $2,500 for taxation services for the period ended 30 June 2011.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

DIRECTORS’ REPORT

Environmental Regulations

In the normal course of business, there are no environmental regulations or requirements that the Group is subject to.

The Directors have considered the recently enacted National Greenhouse and Energy Reporting Act 2007 (the NGER Act) which introduces a single national reporting framework for the reporting and dissemination of information about the greenhouse gas emissions, greenhouse gas projects, and energy use and production of corporations. At the current stage of development, the Directors have determined that the NGER Act will have no effect on the Company for the current, nor subsequent, financial year. The Directors will reassess this position as and when the need arises.

Auditor’s Independence Declaration

The lead auditor‟s independence declaration for the period ended 30 June 2011 has been received and can be found on page 20 of the financial report.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

REMUNERATION REPORT (AUDITED)

This report details the nature and amount of remuneration for each Director of the Company, and Key Management Personnel receiving the highest remuneration.

A. Key Management Personnel Remuneration Policy

The remuneration policy of the Company has been designed to align Director and management objectives with shareholder and business objectives by providing a fixed remuneration component, and offering specific longterm incentives based on key performance areas affecting the Company‟s financial results. The Board of the Company believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best management and Directors to run and manage the Company, as well as create goal congruence between Directors, executives and shareholders.

The Board‟s policy for determining the nature and amount of remuneration for Board members and senior executives of the Company is as follows:

The remuneration policy, setting the terms and conditions for the Executive Directors and other senior executives, was developed by the Board. All executives receive a base salary (which is based on factors such as length of service and experience), superannuation, options and performance incentives. The Board reviews executive packages annually by reference to the Company‟s performance, executive performance, and comparable information from industry sectors and other listed companies in similar industries.

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

The Non-Executive Directors and executives receive a superannuation guarantee contribution required by the government, which is currently 9%, and do not receive any other retirement benefits.

All remuneration paid to Directors and executives is valued at the cost to the Company and expensed. Options given to Directors and employees are valued using the Black-Scholes methodology.

The Board policy is to remunerate Non-Executive Directors at commercial 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. Fees for NonExecutive 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.

The remuneration policy has been tailored to increase the direct positive relationship between shareholders‟ investment objectives and Directors‟ and executives‟ performance. Options are issued to Directors and executives to encourage the alignment of personal and shareholder interests. The Company believes this policy will be effective in increasing shareholder wealth.

For details of Directors‟ and executives‟ interests in options at period end, refer to Note 7 of the financial statements.

B. Details of remuneration for the period ended 30 June 2011

There were no cash bonuses paid during the period and there are no set performance criteria for achieving cash bonuses. The following table of benefits and payment details, in respect to the financial period, the components of remuneration for each member of the Key Management Personnel (KMP) of the Group.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

REMUNERATION REPORT (AUDITED)

Table of Benefits and Payments for the Period Ended 30 June 2011

2011 Key Management Personnel Directors: John Robins Dean Besserer Nigel Gellard Leigh Junk John Williamson Sean Mager Stephen Swatton* Company Secretary: Jay Stephenson *	Short-term benefits Post employment benefits Equity- settled share-based payments Total Percentage of remuneration that is
	Salary, fees and leave Superannuation Options performance based $ $ $ $ % 26,882 - - 26,882 - 96,774 - - 96,774 - 16,129 1,452 - 17,581 - 16,129 1,452 - 17,581 - 16,129 - - 16,129 - 16,129 - - 16,129 - 16,129 - - 16,129 - - - - - -
	204,301 2,904 - 207,205 -

Dean Besserer, Nigel Gellard, Stephen Swatton and Jay Stephenson are also paid by related parties of the Group – refer to Note 18 for disclosure of related party transactions.

C. Service agreements

The service agreement between the Company and the Managing Director stipulates a 4 weeks‟ termination notice in writing. The Company may terminate the agreement without cause by providing 4 weeks‟ written notice or making a payment in lieu of notice based on the individual‟s annual salary component. Termination payments are generally not payable on resignation or dismissal for serious misconduct. In the instance of serious misconduct, the Company can terminate employment at any time.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

REMUNERATION REPORT (AUDITED)

D. Options issued as part of remuneration for the period ended 30 June 2011

Incentive Option Scheme

Options are granted under the Company‟s Incentive Option Scheme. Eligible participants shall be full time or part time employees or consultants of the Company or an Associate Body Corporate. Options issued pursuant to the Scheme will be issued free of charge. The ability for the employee to exercise the options is restricted in accordance with the terms and conditions detailed in the Incentive Option Scheme. The exercise period may also be affected by other events as detailed in the terms and conditions in the Incentive Option Scheme.

Each option entitles the holder to subscribe for and be allotted one share. Shares issued pursuant to the exercise of options including bonus issues and new issues rank equally and carry the same rights and entitlements as other shares on issue.

Directors and KMP Options Granted

There has been no options issued to Directors and KMP as part of remuneration for the period ended 30 June 2011.

For details of Directors and executives interests in options at period end, refer to Note 7 of the financial statements.

E. Loans to Directors and Executives

No loans have been made to Directors or executives of the Company during, or since, the period ended 30 June 2011.

F. Company performance, shareholder wealth and Directors’ and executives’ remuneration

The remuneration policy has been tailored to increase the direct positive relationship between shareholders investment objectives and Directors and executives‟ performance. This will be facilitated through the issue of options to the majority of Directors and executives to encourage the alignment of personal and shareholder interests. The Company believes this policy will be effective in increasing shareholder wealth. At commencement of mine production, performance based bonuses based on key performance indicators are expected to be introduced.

End of Remuneration Report

This report of the Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board of Directors.

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John Robins

Chairman

Perth

30 September 2011

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Grant Thornton Audit Pty Ltd ABN 94 269 609 023

10 Kings Park Road West Perth WA 6005 PO Box 570 West Perth WA 6872

T +61 8 9480 2000 F +61 8 9322 7787 E [email protected] W www.grantthornton.com.au

Auditor’s Independence Declaration To the Directors of Sentosa Mining Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Sentosa Mining Limited for the year ended 30 June 2011, 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

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C A Becker Director - Audit & Assurance

Perth, 30 September 2011

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

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 30 JUNE 2011

Note Accounting fees Due diligence expenses Audit fees 8 Legal fees Consulting fees Share registry and listing fees Directors‟ fees Employee benefit expenses Conferences Travel and accommodation expenses Other administration expenses Results from operating activities Financial income Financial expense Net financing income Loss before income tax Income tax expense 6 Loss for the period Other comprehensive income for the period, net of income tax Total comprehensive loss for the period attributable to members of the Company Basic/diluted loss per share (cents) 9	31 March 2010 to 30 June 2011 $ (57,545) (109,633) (20,350) (22,697) (227,459) (14,894) (204,301) (2,903) (48,048) (268,733) (47,281)
	(1,023,844) 95,424 (198)
	95,226
	(928,618) -
	(928,618) -
	(928,618)
	(5.12)

The above statement should be read in conjunction with the accompanying notes.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011

Note CURRENT ASSETS Cash and cash equivalents 10 Trade and other receivables 11 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Exploration and evaluation expenditure 12 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 13 TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Provisions 14 TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 16 Accumulated losses TOTAL EQUITY	2011 $ 2,845,007 24,956
	2,869,963
	707,604
	707,604
	3,577,567
	256,414
	256,414
	41,400
	41,400
	297,814
	3,279,753
	4,208,371 (928,618)
	3,279,753

The above statement should be read in conjunction with the accompanying notes.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2011

Balance at 31 March 2010 Loss attributable to members of the Company Other comprehensive income Total comprehensive loss for the period Transactions with owners, recognised directly in equity Shares issued during the period Loyalty options issued during the period Capital raising costs Balance at 30 June 2011	Issued Capital Accumulated Losses Total $ $ $ - - - - (928,618) (928,618) - - -
	- (928,618) (928,618)
	4,694,000 - 4,694,000 45,951 45,951 (531,580) - (531,580)
	4,208,371 (928,618) 3,279,753

The above statement should be read in conjunction with the accompanying notes.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED 30 JUNE 2011

CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Interest received Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payments for exploration and evaluation expenditure Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Proceeds from issue of loyalty options Capital raising costs paid Net cash from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial period Cash and cash equivalents at the end of the financial period	Note 17 10	2011 $ (957,585) 95,424
		(862,161)
		(301,203)
		(301,203)
		4,494,000 45,951 (531,580)
		4,008,371
		2,845,007 -
		2,845,007

The above statement should be read in conjunction with the accompanying notes.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 1: REPORTING ENTITY

The financial report includes the consolidated financial statements and notes of Sentosa Mining Limited („the Company”) and its controlled entity (“the Consolidated Group” or „the Group”). Sentosa Mining Limited is a listed public company, incorporated and domiciled in Australia. The address of the Company‟s registered office is Level 4, 66 Kings Park Road, West Perth, Western Australia 6005. The Company is primarily involved in the exploration of its Jaurdi Hills project in Western Australia and acquisition and development of South East Asian gold and copper projects.

NOTE 2: BASIS OF PREPARATION

(a) Statement of Compliance

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (“AASBs”) (including Australian interpretations) adopted by the Australian Accounting Standard Board (“AASB”) and the Corporations Act 2001. The financial report of the Group also complied with the International Financial Reporting Standards (“IFRSs”) and interpretations adopted by the International Accounting Standards Board (“IASB”).

The financial statements were approved by the Board of Directors on 30 September 2011.

Basis of Measurement

The financial report has been prepared on an accruals basis and is based on historical costs modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

(b) Functional and presentation currency

The financial report is presented in Australian dollars, which is the Group‟s functional currency.

(c) Use of estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised if it affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Share-based payment transactions:

The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an external valuer using a Black and Scholes model.

Impairment of capitalised 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.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 3: SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in this financial report.

(a) Principles of Consolidation

The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by Sentosa Mining Limited at the end of the reporting period. A controlled entity is any entity over which Sentosa Mining Limited has the power to govern the financial and operating policies so as to obtain benefits from the entity‟s activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are also considered.

Where controlled entities have entered or left the Group during the year, the financial performance of those entities are included only for the period of the year that they were controlled.

A list of controlled entities is contained in Note 21 to the financial statements.

Business Combinations

Business combinations occur where an acquirer obtains control over one or more businesses and results in the consolidation of its assets and liabilities.

A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The acquisition method requires that for each business combination one of the combining entities must be identified as the acquirer (ie parent entity). The business combination will be accounted for as at the acquisition date, which is the date that control over the acquiree is obtained by the parent entity. At this date, the parent shall recognise, in the consolidated accounts, and subject to certain limited exceptions, the fair value of the identifiable assets acquired and liabilities assumed. In addition, contingent liabilities of the acquiree will be recognised where a present obligation has been incurred and its fair value can be reliably measured.

The acquisition may result in the recognition of goodwill or a gain from a bargain purchase. The method adopted for the measurement of goodwill will impact on the measurement of any non-controlling interest to be recognised in the acquiree where less than 100% ownership interest is held in the acquiree.

The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form the cost of the investment in the separate financial statements. Consideration may comprise the sum of the assets transferred by the acquirer, liabilities incurred by the acquirer to the former owners of the acquiree and the equity interests issued by the acquirer.

Fair value uplifts in the value of pre-existing equity holdings are taken to the Cosolidated Statement of Comprehensive Income. Where changes in the value of such equity holdings had previously been recognised in other comprehensive income, such amounts are recycled to profit or loss.

Included in the measurement of consideration transferred is any asset or liability resulting from a contingent consideration arrangement. Any obligation incurred relating to contingent consideration is classified as either a financial liability or equity instrument, depending upon the nature of the arrangement. Rights to refunds of consideration previously paid are recognised as a receivable. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or a liability is remeasured each reporting period to fair value through the Consolidated Statement of Comprehensive Income unless the change in value can be identified as existing at acquisition date.

All transaction costs incurred in relation to the business combination are expensed to the Consolidated Statement of Comprehensive Income.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 3: SIGNIFICANT ACCOUNTING POLICIES

(b) Income Tax

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

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

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

Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability.

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

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

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

(c) Exploration and Evaluation Expenditure

Exploration and evaluation costs, including costs of acquiring licenses, are capitalised as exploration and evaluation assets on an area of interest basis. Costs of acquiring licences which are pending the approval of the Department of Mines and Petroleum, as at the date of reporting are capitalised as exploration and evaluation cost if in the opinion of the Directors it is virtually certain the Company will be granted the licences.

Exploration and evaluation assets are only recognised if the rights of tenure to the area of interest are current and either:

i) The expenditures are expected to be recouped through successful development and exploitation of the area of interest, or
ii) Activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in, or in relation to, the area of interest are continuing.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 3: SIGNIFICANT ACCOUNTING POLICIES

(c) Exploration and Evaluation Expenditure

Exploration and evaluation assets are assessed for impairment when:

i) Sufficient data exists to determine technical feasibility and commercial viability, and
ii) Facts and circumstances suggest that the carrying amount exceeds the recoverable amount (see impairment accounting policy in Note 3(e). For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which exploration activity relates. The cash generating unit shall not be larger than the area of interest.

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified from Intangible assets to mining property and development assets within property, plant and equipment.

(d) Financial Instruments

Initial recognition and measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the Company commits itself to either the purchase or sale of the asset (ie trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified „at fair value through profit or loss‟, in which case transaction costs are expensed to profit or loss immediately.

The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial instruments.

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 which are not expected to mature within 12 months after the end of the reporting period. (All other loans and receivables are classified as non-current assets).

Financial liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm‟s length transactions, reference to similar instruments and option pricing models.

Impairment

At each reporting date, the Group assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for sale financial instruments, a significant and prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the Consolidated Statement of Comprehensive Income.

Derecognition

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

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 3: SIGNIFICANT ACCOUNTING POLICIES

(e) Impairment

Non-financial assets

The carrying amounts of the Company‟s non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset‟s recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit” or “CGU”).

Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.

The Company‟s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.

An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset‟s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Financial assets (including receivables)

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Company on terms that the Company would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.

The Company considers evidence of impairment for receivables at a specific asset level. All receivables are individually assessed for specific impairment.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset‟s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against receivables. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 3: SIGNIFICANT ACCOUNTING POLICIES

(f) Employee Benefits

Provision is made for the Group‟s liability for employee benefits arising from services rendered by employees to reporting date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

Equity-settled compensation

The Group operates an Incentive Option Scheme share-based compensation plan. The bonus element over the exercise price of the employee services rendered in exchange for the grant of shares and options is recognised as an expense in the Consolidated Statement of Comprehensive Income. The total amount to be expensed over the vesting period is determined by reference to the fair value of the shares of the options granted.

(g) Provisions

Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will results and that outflow can be reliably measured.

(h) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the Consolidated Statement of Financial Position.

(i) Revenue and Other Income

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

Rental income is recognised on an accrual basis.

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

(j) Trade and Other Payables

Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services received by the Group during the reporting period which remains unpaid. The balance is recognised as a current liability with the amount being normally paid within 30 days of recognition of the liability.

(k) Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in the Consolidated Statement of Comprehensive Income in the period in which they are incurred.

(l) Goods and Services Tax (GST)

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

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

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 3: SIGNIFICANT ACCOUNTING POLICIES

(m) Earnings Per Share

i. Basic earnings per share

Basic earnings per share is determined by dividing the profit/(loss) attributable to equity holders of the Company, excluding any costs of service 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 figure used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financial costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(n) Segment reporting

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company‟s other components. All operating segments‟ results are regularly reviewed by the Company‟s Managing Director to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

(o) New Accounting Standards for Application in Future Periods

The AASB has issued new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods and which the Group has decided not to early adopt. A discussion of those future requirements and their impact on the Group is as follows:

AASB 9: Financial Instruments (December 2010) (applicable for annual reporting periods commencing on or after 1 January 2013).

This Standard is applicable retrospectively and includes revised requirements for the classification and measurement of financial instruments, as well as recognition and derecognition requirements for financial instruments. The Group has not yet determined any potential impact on the financial statements.

The key changes made to accounting requirements include:

simplifying the classifications of financial assets into those carried at amortised cost and those carried at fair value;
simplifying the requirements for embedded derivatives;
removing the tainting rules associated with held-to-maturity assets;
removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost;
allowing an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument;
requiring financial assets to be reclassified where there is a change in an entity‟s business model as they are initially classified based on: (a) the objective of the entity‟s business model for managing the financial assets; and (b) the characteristics of the contractual cash flows; and
requiring an entity that chooses to measure a financial liability at fair value to present the portion of the change in its fair value due to changes in the entity‟s own credit risk in other comprehensive income, except when that would create an accounting mismatch. If such a mismatch would be created or enlarged, the entity is required to present all changes in fair value (including the effects of changes in the credit risk of the liability) in profit or loss.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 3: SIGNIFICANT ACCOUNTING POLICIES

(o) New Accounting Standards for Application in Future Periods

AASB 124: Related Party Disclosures (applicable for annual reporting periods commencing on or after 1 January 2011).
This Standard removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities and clarifies the definition of a “related party” to remove inconsistencies and simplify the structure of the Standard. No changes are expected to materially affect the Group.
AASB 1053: Application of Tiers of Australian Accounting Standards and AASB 2010–2: Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements [AASB 1, 2, 3, 5, 7, 8, 101, 102, 107, 108, 110, 111, 112, 116, 117, 119, 121, 123, 124, 127, 128, 131, 133, 134, 136, 137, 138, 140, 141, 1050 & 1052 and Interpretations 2, 4, 5, 15, 17, 127, 129 & 1052] (applicable for annual reporting periods commencing on or after 1 July 2013).

AASB 1053 establishes a revised differential financial reporting framework consisting of two tiers of financial reporting requirements for those entities preparing general purpose financial statements:

Tier 1: Australian Accounting Standards; and
Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements.

Tier 2 of the framework comprises the recognition, measurement and presentation requirements of Tier 1, but contains significantly fewer disclosure requirements.

The following entities are required to apply Tier 1 reporting requirements (ie full IFRS):

for-profit private sector entities that have public accountability; and
the Australian Government and state, territory and local governments.

Since the Group is a for-profit private sector entity that has public accountability, it does not qualify for the reduced disclosure requirements for Tier 2 entities.

AASB 2010–2 makes amendments to Australian Accounting Standards and Interpretations to give effect to the reduced disclosure requirements for Tier 2 entities. It achieves this by specifying the disclosure paragraphs that a Tier 2 entity need not comply with as well as adding specific “RDR” disclosures.

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] (applicable for annual reporting periods commencing on or after 1 January 2011).

This Standard makes a number of editorial amendments to a range of Australian Accounting Standards and Interpretations, including amendments to reflect changes made to the text of IFRSs by the IASB. The Standard also amends AASB 8 to require entities to exercise judgment in assessing whether a government and entities known to be under the control of that government are considered a single customer for the purposes of certain operating segment disclosures. The amendments are not expected to impact the Group.

AASB 2009–14: Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement [AASB Interpretation 14] (applicable for annual reporting periods commencing on or after 1 January 2011).

This Standard amends Interpretation 14 to address unintended consequences that can arise from the previous accounting requirements when an entity prepays future contributions into a defined benefit pension plan.

This Standard is not expected to impact the Group.

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] (applicable for annual reporting periods commencing on or after 1 January 2011).

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 3: SIGNIFICANT ACCOUNTING POLICIES

(o) New Accounting Standards for Application in Future Periods

This Standard details numerous non-urgent but necessary changes to Accounting Standards arising from the IASB‟s annual improvements project. Key changes include:

clarifying the application of AASB 108 prior to an entity‟s first Australian-Accounting-Standards financial statements;
adding an explicit statement to AASB 7 that qualitative disclosures should be made in the context of the quantitative disclosures to better enable users to evaluate an entity‟s exposure to risks arising from financial instruments;
amending AASB 101 to the effect that disaggregation of changes in each component of equity arising from transactions recognised in other comprehensive income is required to be presented, but is permitted to be presented in the statement of changes in equity or in the notes;
adding a number of examples to the list of events or transactions that require disclosure under AASB 134; and
making sundry editorial amendments to various Standards and Interpretations.

This Standard is not expected to impact the Group.

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] (applicable for annual reporting periods beginning on or after 1 January 2011).

This Standard makes numerous editorial amendments to a range of Australian Accounting Standards and Interpretations, including amendments to reflect changes made to the text of IFRSs by the IASB. However, these editorial amendments have no major impact on the requirements of the respective amended pronouncements.

– AASB 2010–6: Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets [AASB 1 & AASB 7] (applicable for annual reporting periods beginning on or after 1 July 2011). This Standard adds and amends disclosure requirements about transfers of financial assets, especially those in respect of the nature of the financial assets involved and the risks associated with them. Accordingly, this Standard makes amendments to AASB 1: First-time Adoption of Australian Accounting Standards, and AASB 7: Financial Instruments: Disclosures, establishing additional disclosure requirements in relation to transfers of financial assets.

This Standard is not expected to impact the Group.

AASB 2010–7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127] (applies to periods beginning on or after 1 January 2013).

This Standard makes amendments to a range of Australian Accounting Standards and Interpretations as a consequence of the issuance of AASB 9: Financial Instruments in December 2010. Accordingly, these amendments will only apply when the entity adopts AASB 9.

As noted above, the Group has not yet determined any potential impact on the financial statements from adopting AASB 9.
AASB 2010–8: Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets [AASB 112] (applies to periods beginning on or after 1 January 2012).
This Standard makes amendments to AASB 112: Income Taxes.

The amendments brought in by this Standard introduce a more practical approach for measuring deferred tax liabilities and deferred tax assets when investment property is measured using the fair value model under AASB 140: Investment Property.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 3: SIGNIFICANT ACCOUNTING POLICIES

(o) New Accounting Standards for Application in Future Periods

Under the current AASB 112, the measurement of deferred tax liabilities and deferred tax assets depends on whether an entity expects to recover an asset by using it or by selling it. The amendments introduce a presumption that an investment property is recovered entirely through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale.

The amendments brought in by this Standard also incorporate Interpretation 121 into AASB 112.

The amendments are not expected to impact the Group.

AASB 2010–9: Amendments to Australian Accounting Standards – Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters [AASB 1] (applies to periods beginning on or after 1 July 2011).

This Standard makes amendments to AASB 1: First-time Adoption of Australian Accounting Standards.

The amendments brought in by this Standard provide relief for first-time adopters of Australian Accounting Standards from having to reconstruct transactions that occurred before their date of transition to Australian Accounting Standards.

Furthermore, the amendments brought in by this Standard also provide guidance for entities emerging from severe hyperinflation either to resume presenting Australian-Accounting-Standards financial statements or to present Australian-Accounting-Standards financial statements for the first time.

This Standard is not expected to impact the Group.
AASB 2010–10: Further Amendments to Australian Accounting Standards – Removal of Fixed Dates for First-time Adopters [AASB 2009–11 & AASB 2010–7] (applies to periods beginning on or after 1 January 2013).

This Standard makes amendments to AASB 2009–11: Amendments to Australian Accounting Standards arising from AASB 9, and AASB 2010–7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2010).

The amendments brought in by this Standard ultimately affect AASB 1: First-time Adoption of Australian Accounting Standards and provide relief for first-time adopters from having to reconstruct transactions that occurred before their transition date.

[The amendments to AASB 2009–11 will only affect early adopters of AASB 2009–11 (and AASB 9: Financial Instruments that was issued in December 2009) as it has been superseded by AASB 2010–7.]

This Standard is not expected to impact the Group.

Carbon Tax

On 10 July 2011, the Commonwealth Government announced the “Securing a Clean Energy Future - the Australian Government‟s Climate Change Plan”. Whilst the announcement provides further details of the framework for a carbon pricing mechanism, uncertainties continue to exist on the impact of any carbon pricing mechanism on the Group as legislation must be voted on and passed by both houses of Parliament. In addition, as the Group will not fall within the “Top 500 Australian Polluters”, the impact of the Carbon Scheme will be through indirect effects of increased prices on many production inputs and general business expenses as suppliers subject to the carbon pricing mechanism are likely to pass on their carbon price burden to their customers in the form of increased prices. Directors expect that this will not have a significant impact upon the operation costs within the business, and therefore will not have an impact upon the valuation of assets and/or going concern of the business.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 4: DETERMINATION OF FAIR VALUES

A number of the Company‟s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and / or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Trade and other receivables

The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes.

Share-based payment transactions

Share-based payment arrangements in which the Company receives goods or services as consideration for its own equity instruments are accounted for as equity-settled share-based payment transactions, regardless of how the equity instruments are obtained by the Company, based on the value of goods and services provided, unless the value of the goods and services cannot be determined an options price model is used to determine value.

NOTE 5: LOSS BEORE INCOME TAX Loss before income tax includes the following specific expenses: Due diligence expenses Directors‟ remuneration Employee benefit expenses NOTE 6: INCOME TAX Reconciliation between tax expense and pre-tax loss: Loss before income tax Income tax benefit using the domestic corporate tax rate of 30% Expenditure not allowed for income tax purposes Deferred tax assets not brought to account Income tax expense reported in the Consolidated Statement of Comprehensive Income Unused tax losses Temporary differences from capital raising costs Potential benefit @ 30% Tax benefits offset against deferred tax liability temporary differences Unrecognised tax benefit	2011 $ 109,633 204,301 2,903 (928,618)
	(278,585) 180,907 97,678
	-
	2,997,483 425,263
	3,422,746
	1,026,824 (723,578)
	303,246

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 6: INCOME TAX

All unused tax losses were incurred in Australia.

Potential deferred tax assets net of deferred tax liabilities attributable to tax losses have not been brought to account because the Directors do not believe it is appropriate to regard realisation of the future income tax benefits as probable as at the date of this report.

The benefits of these tax losses will only be obtained if:

(i) Future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised;
(ii) The conditions for deductibility imposed by tax legislation continue to be complied with; and
(iii) No changes in tax legislation adversely affect the Group in realising the benefit.

NOTE 7: KEY MANAGEMENT PERSONNEL DISCLOSURES

(a) Directors and Key Management Personnel

Names and positions held of Directors and Key Management Personnel in office at any time during the period are:

John Robins (appointed 17 December 2010) Non-Executive Chairman Dean Besserer (appointed 17 December 2010) Managing Director Nigel Gellard (appointed 17 December 2010) Non-Executive Director Leigh Junk (appointed 17 December 2010) Non-Executive Director John Williamson (appointed 17 December 2010) Non-Executive Director Sean Mager (appointed 17 December 2010) Non-Executive Director Stephen Swatton (appointed 17 December 2010) Non-Executive Director Jay Stephenson (appointed 17 December 2010) Company Secretary

(b) Directors and Key Management Personnel Compensation

Short-term employee benefits Post employment benefits	2011 $ 204,301 2,904
	207,205

Other transactions with Directors and Key Management Personnel

There were no loans made to or from Directors and Key Management Personnel of the Group during the period ended 30 June 2011, or subsequently thereto.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 7: KEY MANAGEMENT PERSONNEL DISCLOSURES

(c) Equity Instruments Disclosure Relating to Directors and Key Management Personnel

Number of shares and options held by Directors of the Company, including their personally related parties, are set out below:

(i) Shares

(i) Shares
			Received during
2011	Balance at 1 April	Received during the period as	the period on the exercise of	Other changes	Balance at 30
	2010	compensation	options	during the period	June 2011
John Robins	-	-	-	1,100,000	1,100,000
Dean Besserer	-	-	-	1,200,000	1,200,000
Nigel Gellard	-	-	-	1,100,000	1,100,000
Leigh Junk	-	-	-	1,100,000	1,100,000
John Williamson	-	-	-	1,100,000	1,100,000
Sean Mager	-	-	-	1,100,000	1,100,000
Stephen Swatton	-	-	-	1,100,000	1,100,000
Jay Stephenson	-	-	-	120,000	120,000
Total	-	-	-	7,920,000	7,920,000

(ii) Options

			Received during
2011	Balance at 1 April	Received during the period as	the period on the exercise of	Other changes during the period	Balance at 30
	2010	compensation	options	*	June 2011
John Robins	-	-	-	250,000	250,000
Dean Besserer	-	-	-	600,000	600,000
Nigel Gellard	-	-	-	250,000	250,000
Leigh Junk	-	-	-	250,000	250,000
John Williamson	-	-	-	250,000	250,000
Sean Mager	-	-	-	250,000	250,000
Stephen Swatton	-	-	-	250,000	250,000
Jay Stephenson	-	-	-	330,000	330,000
Total	-	-	-	2,430,000	2,430,000

Other changes during the period include 2,000,000 Founder Options to Directors. These 2,430,000 options were not issued as part of Directors and Key Management Personnel remuneration for the period ended 30 June 2011.

(d) Other transactions with Directors and Key Management Personnel

There have been no other transactions with Key Management Personnel involving equity instruments other than those described in the tables above.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

	2011
NOTE 8: AUDITOR’S REMUNERATION	$
Remuneration of the auditor of the Group for:
- Auditing or reviewing the financial report	20,350

NOTE 9: EARNINGS PER SHARE (EPS)

(i) Basic earnings per share (cents)

Basic earnings per share are calculated by dividing the profit/(loss) attributable to equity holders of the Company by the weighted average of ordinary shares outstanding during the period.

a. Reconciliation of earnings to profit/(loss) Net loss attributable to ordinary equity holders Earnings used to calculate basic EPS	2011 $ 928,618
	928,618

b. Weighted average number of ordinary shares outstanding during the period used to calculate basic EPS

Weighted average number of ordinary shares outstanding during the period used in calculating basic EPS 18,125,236

Potential shares as a result of options outstanding at the end of the period are not dilutive and therefore have not been included in the calculation of diluted earnings per share.

NOTE 10: CASH AND CASH EQUIVALENTS

Cash at bank Total cash and cash equivalents in the Consolidated Statement of Cash Flows NOTE 11: TRADE AND OTHER RECEIVABLES CURRENT Trade and other receivables GST receivable Prepaid expenses	2,845,007
	2,845,007
	390 20,293 4,273
	24,956

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 12: EXPLORATION AND EVALUATION ASSETS Exploration and evaluation phases – at cost (a) Exploration and evaluation Opening balance Exploration expenditure Additions through acquisition of assets (refer to Note 15) Additions through acquisition of assets – restoration and rehabilitation (refer Note 15) Closing balance	2011 $ 707,604
	- 361,195 305,009 41,400
	707,604

The Directors‟ assessment of the carrying amount for the Group‟s exploration properties was after consideration of prevailing market conditions; previous expenditure for exploration work carried out on the tenements; and the potential for mineralisation based on the Group‟s independent geological reports.

The ultimate value of these assets is dependent upon recoupment by commercial development or the sale of the whole or part of the Group‟s interests in these exploration properties for an amount at least equal to the carrying value. There may exist on the Group‟s exploration properties, areas subject to claim under Native Title or containing sacred sites or sites of significance to Aboriginal people.

As a result, the Group‟s exploration properties or areas within the tenements may be subject to exploration and mining restrictions.

NOTE 13: TRADE AND OTHER PAYABLES CURRENT Trade and other payables Accrued expenses NOTE 14: PROVISIONS NON-CURRENT Additions through acquisition of assets – restoration and rehabilitation (refer Note 15)	217,518 38,896
	256,414
	41,400

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 15: ACQUISITION OF ASSETS

Acquisition of Toro Mining Pty Ltd

On 28 October 2010, the Company acquired Toro Mining Pty Ltd (“Toro”). Toro holds interests in various granted mining tenements and in various applications for the grant of mining tenements located in Western Australia The consideration consisted of 1,000,000 ordinary shares at $0.20 per share. This acquisition has not been accounted for as a business combination under AASB 3: “Business Combination” as Toro‟s assets were not considered to constitute a business. Accordingly, the Toro acquisition has been accounted for as an acquisition of assets, at cost based on the fair value of shares used for the acquisition.

The purchase price has been allocated to the identifiable assets and liabilities of Toro as of the date of acquisition as follows:

Note Cash Trade and other receivables Exploration and evaluation assets 12 Exploration and evaluation 12 Total value of assets acquired Deduct liabilities assumed: Trade and other payables Restoration and rehabilitation provision 14 Net assets acquired Acquisition date fair value of consideration: Shares issued	$ 45,932 11,918 305,009 41,400
	404,259 (162,859) (41,400)
	200,000
	200,000

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 16: ISSUED CAPITAL

NOTE 16: ISSUED CAPITAL (a) Share Capital 32,870,000 fully paid ordinary shares (b) Movements in Ordinary Capital Balance at 1 April 2010 Shares issued during the period: Founder shares Seed capital Shares issued on 28 October 2010 (i) Shares issued on 22 November 2010 Transaction costs relating to share issues Balance at 30 June 2011 Loyalty options issued during the period (ii)	Number Issue price per share - 7,000,000 $0.001 4,870,000 $0.100 1,000,000 $0.200 20,000,000 $0.200 32,870,000 9,190,172 $0.005	2011 $ 4,208,371
		$ - 7,000 487,000 200,000 4,000,000 (531,580)
		4,162,420
		45,951
		4,208,371

(i) On 28 October 2010, 1,000,000 fully paid ordinary shares were issued at $0.20 per share to Toro Mining Pty Ltd shareholders as part of the acquisition of Toro Mining Pty Ltd. (refer Note 15).

(ii) On 11 May 2011, the Company announced a pro-rata non-renounceable entitlement issue on the basis of one Loyalty Option for every two shares held by shareholders at an issue price of $0.005 per Loyalty Option. Exercisable on or before 17 December 2013 at an exercise price of $0.25 per Loyalty Option.

Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has a vote on a show of hands.

(c) Movements in Options Balance at 1 April 2010 Options issued during the period: Options issued on 21 May 2010 (iii) Loyalty options issued on 11 May 2011 (iv) Options issued on 27 June 2011 (v) Balance at 30 June 2011	Number - 2,000,000 9,190,172 335,000
	11,525,172

(iii) On 21 May 2010 2,000,000 options were issued to Directors for nil consideration. These options have an exercise price of $0.20 and expire on 25 August 2014. These options were calculated to have negligible value at date of grant therefore no share based payment expense has been recognised.

(iv) On 11 May 2011, the Company announced a pro-rata non-renounceable entitlement issue on the basis of one Loyalty Option for every two shares held by shareholders at an issue price of $0.005 per Loyalty Option. Exercisable on or before 17 December 2013 at an exercise price of $0.25 per Loyalty Option.

(v) On 27 June 2011, 335,000 options were issued to employees for nil consideration exercisable on or before 30 June 2014 at an exercise price of $0.28 per option. These options have a 4 month vesting period and no expense has been recognised as at 30 June 2011.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 16: ISSUED CAPITAL

At the end of the reporting period, options over unissued shares are as follows:

Grant Date Date of Expiry Exercise Price 21 May 2010 25 August 2014 $0.20 11 May 2011 17 December 2013 $0.25 27 June 2011 30 June 2014 $0.28	Number under Option 2,000,000 9,190,172 335,000
	11,525,172

Capital risk management

The Directors‟ objectives when managing capital is to safeguard its ability to continue as a going concern, so that it may continue to provide returns for shareholders and benefits for other stakeholders.

Due to the nature of the Group‟s activities, being mineral exploration, the Group does not have ready access to credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Group‟s capital risk management is to maintain sufficient current working capital position to meet the requirements of the Group to meet exploration programmes and corporate overheads. The Group‟s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required.

The working capital position of the Group at 30 June 2011 are as follows:

Cash and cash equivalents Trade and other receivables Trade and other payables Working capital position	$ 2,845,007 24,956 (256,414)
	2,613,549

NOTE 17: CASH FLOW INFORMATION (a) Reconciliation of Cash Flow from Operating Activities with the Loss after tax Loss after income tax Changes in assets and liabilities (Increase)/decrease in receivables Increase/(decrease) in payables Cash flow used in operating activities	2011 $ (928,618) (24,956) 91,413
	(862,161)

(b) Acquisition of Entities

Refer Note 15 for details.

(c) Credit Standby Facilities

The Company had no credit standby facilities as at 30 June 2011.

(d) Non-Cash Financing and Investing activities

Share issue

On 28 October 2010, 2,000,000 ordinary shares were issued at $0.20 each as consideration for the purchase of Toro Mining Pty Ltd.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 18: RELATED PARTY TRANSACTIONS

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

Transactions with related parties, inclusive of Directors‟ Remuneration:

Apex Geoscience Ltd Dean Besserer is a Director of Apex Geoscience Ltd. In addition to his Director fees, Dean charges Sentosa Mining Limited for the provision of geological consulting services. Director fees Geological consulting fees (including reimbursable expenses) Apex Geoscience Australia Pty Ltd Dean Besserer is also a Director of Apex Geoscience Australia Pty Ltd. Apex Geoscience Australia Pty Ltd charges Toro Mining Pty Ltd for the provision of geological consulting services. Geological consulting fees (including reimbursable expenses) 878160 Alberta Ltd Dean Besserer is also a Director of 878160 Alberta Ltd. 878160 Alberta Ltd charges Sentosa Mining Limited for certain corporate expenses. Corporate expenses	2011 $ 96,774 300,962 147,934 6,177
	551,847

Apex Geoscience Ltd
Dean Besserer is a Director of Apex Geoscience Ltd. In addition to his Director fees, Dean
charges Sentosa Mining Limited for the provision of geological consulting services.
Director fees
Geological consulting fees (including reimbursable expenses)
Apex Geoscience Australia Pty Ltd
Dean Besserer is also a Director of Apex Geoscience Australia Pty Ltd. Apex
Geoscience Australia Pty Ltd charges Toro Mining Pty Ltd for the provision of
geological consulting services.
Geological consulting fees (including reimbursable expenses)
878160 Alberta Ltd
Dean Besserer is also a Director of 878160 Alberta Ltd. 878160 Alberta Ltd charges Sentosa
Mining Limited for certain corporate expenses.
Corporate expenses

2011
$
96,774
300,962
147,934
6,177

551,847

As at 30 June 2011, $15,299 was payable to Apex Geoscience Ltd, $52,324 to Apex Geoscience Australia Pty Ltd and $nil to 878160 Alberta Ltd, respectively.

Gellard Enterprises

Nigel Gellard is a Director of Gellard Enterprises. In addition to his Director fees, Nigel charges Sentosa Mining Limited for the provision of consulting services.

Director fees Consulting fees	16,129 44,000
	60,129

As at 30 June 2011, $nil was payable to Gellard Enterprises.

Baggy Point Metals

Stephen Swatton is a Director of Baggy Point Metals. In addition to his Director fees, Stephen charges Sentosa Mining Limited for the provision of geological consulting services. Director fees Geological consulting fees (including reimbursable expenses)	16,129 113,833
	129,962

As at 30 June 2011, $39,906 was payable to Baggy Point Metals.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 18: RELATED PARTY TRANSACTIONS

Wolfstar Group Pty Ltd

2011 $

Jay Stephenson is a Director of Wolfstar Group Pty Ltd. Jay charges Sentosa Mining Limited for the provision of corporate secretarial and accounting services.

Corporate secretarial and accounting services fees (including reimbursable expenses) Capital raising expenses	53,652 105,600 159,252

As at 30 June 2011, $8,398 was payable to Wolfstar Group Pty Ltd.

NOTE 19: CAPITAL COMMITMENTS

Capital expenditure commitments contracted for:

Exploration tenement minimum expenditure requirements

Amounts payable:

Amounts payable:
- not later than 12 months - between 12 months and 5 years - greater than 5 years	566,765 1,520,787 1,240,911
	3,328,462

Commitments relate to granted exploration and prospecting tenements.

NOTE 20: FINANCIAL RISK MANAGEMENT

Overview

The Group‟s financial instruments consist mainly of deposits with banks, local money market instruments, short-term investments, and accounts receivable and payable.

The main purpose of non-derivative financial instruments is to raise finance for Group operations.

The Group does not speculate in the trading of derivative instruments.

A summary of the Group‟s financial assets and liabilities is shown below.

2011 Financial assets Cash and cash equivalents Trade and receivables Total Financial assets Weighted average interest rate – cash assets Financial Liabilities at amortised cost Trade and other payables Total Financial Liabilities Net Financial Assets	Floating Interest Rate Non-interest bearing Total $ $ $ 2,845,007 - 2,845,007 - 390 390
	2,845,007 390 2,845,397
	5.63% - 256,414 256,414
	- 256,414 256,414
	2,845,007 (256,024) 2,588,983

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 20: FINANCIAL RISK MANAGEMENT

Specific Financial Risk Exposures and Management

The main risk the Group is exposed to through its financial instruments are credit risk, liquidity risk and market risk consisting of interest rate, foreign currency risk and equity price risk.

a. Credit risk

Credit risk exposures

Credit exposure represents the extent of credit related losses that the Group may be subject to on amounts to be received from financial assets. Credit risk arises principally from trade and other receivables including related party loans. The objective of the Group is to minimise the risk of loss from credit risk. Although revenue from operations is minimal, the Group trades only with creditworthy third parties. In addition, receivable balances are monitored on an ongoing basis with the result that the Group‟s exposure to bad debts is insignificant. The Company‟s maximum credit risk exposure is limited to the carrying value of its financial assets as indicated on the Consolidated Statement of Financial Position.

Trade and other receivables are expected to be settled within 30 days.

Credit risk related to balances with banks and other financial institutions is managed by the Group in accordance with approved Board policy. Such policy requires that surplus funds are only invested with counterparties with a Standard and Poor‟s rating of at least AA-. The following table provides information regarding the credit risk relating to cash and money market securities based on Standard and Poor‟s counterparty credit ratings.

ratings.
		2011
	Note	$
Cash and cash equivalents
- AA Rated	10	2,845,007

b. 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 continuously monitoring forecast and actual cash flows and ensuring sufficient cash and marketable securities are available to meet the current and future commitments of the Group. Due to the nature of the Group‟s activities, being mineral exploration, the Group does not have ready access to credit facilities, with the primary source of funding being equity raisings. The Board of Directors constantly monitor the state of equity markets in conjunction with the Group‟s current and future funding requirements, with a view to initiating appropriate capital raisings as required. Any surplus funds are invested with major financial institutions.

The financial liabilities of the Group are confined to trade and other payables as disclosed in the Consolidated Statement of Financial Position. All trade and other payables are non-interest bearing and due within 12 months of the reporting date.

c. Market risk

The Board meets on a regular basis to analyse currency and interest rate exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 20: FINANCIAL RISK MANAGEMENT

Specific Financial Risk Exposures and Management

i. Interest rate risk

Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The Group is also exposed to earnings volatility on floating rate instruments.

Interest rate risk is managed by closely monitoring the interest rates at various financial institutions. The Company has no debt and as such the interest rate risk is limited to the Company‟s investments in term deposits and other interest bearing investments.

Sensitivity Analysis

The following table illustrates sensitivities to the Group‟s exposures to changes in interest rates. The table indicates the impact on how profit and equity values reported at reporting date would have been affected by changes in the relevant risk variable that management considers to be reasonably possible. These sensitivities assume that the movement in a particular variable is independent of other variables.

	Consolidated	Consolidated
	Profit	Equity
Period ended 30 June 2011	$	$
+/-1% in interest rates	+/- 16,940	+/- 16,940

Net Fair Values

Fair value estimation

The fair values of financial assets and financial liabilities are presented in the following table and can be compared to their carrying values as presented in the Consolidated Statement of Financial Position. Fair values are those amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm‟s length transaction.

Other assets and other liabilities approximate their carrying value.

Aggregate net fair values and carrying amounts of financial assets and financial liabilities at reporting date:

Financial Assets Cash and cash equivalents Trade and other receivables Total Financial Assets Financial Liabilities at amortised cost Trade and other payables Total Financial Liabilities	2011 Carrying Amount $ 2011 Net Fair Value $ 2,845,007 2,845,007 390 390
	2,845,397 2,845,397
	256,414 256,414
	256,414 256,414

Cash and cash equivalents, trade and other receivables, and trade and other payables are short-term investments in nature whose carrying value is equivalent to fair value.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 21: PARENT ENTITY DISCLOSURES Note (a) Financial Position of Sentosa Mining Limited CURRENT ASSETS Cash and cash equivalents Trade and other receivables TOTAL CURRENT ASSETS NON-CURRENT ASSETS Investment in controlled entity 22(b) Loan to subsidiary TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued Capital Options Reserve Accumulated Losses TOTAL EQUITY (b) Financial asset Shares in controlled entity at cost Controlled entity Country of Incorporation Class of Shares Toro Mining Pty Ltd Australia Ordinary	2011 $ 2,802,469 14,322
	2,816,791
	200,000 443,996
	643,996
	3,460,787
	176,411
	176,411
	176,411
	3,284,376
	4,162,420 45,951 (923,995)
	3,284,376
	200,000
	Percentage Owned 100%

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 21: PARENT ENTITY DISCLOSURES

NOTE 21: PARENT ENTITY DISCLOSURES
(c) Financial Performance of Sentosa Mining Limited Loss for the period Other comprehensive income, net of tax Total comprehensive loss	2011 $ (923,995) -
	(923,995)

(d) Guarantees entered into by Sentosa Mining Limited to the debts of its subsidiary

There are no guarantees entered into by Sentosa Mining Limited for the debts of its subsidiary as at 30 June 2011.

(e) Contingent liabilities of Sentosa Mining Limited

There were no contingent liabilities as at 30 June 2011.

(f) Commitments by Sentosa Mining Limited

There were no commitments as at 30 June 2011.

NOTE 23: CONTINGENT LIABILITIES

The Group had no contingent liabilities as at 30 June 2011.

NOTE 24: OPERATING SEGMENTS

Unless stated otherwise, all amounts reported to the Board of Directors, being the chief decision maker with respect to operating segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group.

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources. The information presented in the financial report is the same information that is reviewed by the Directors.

The Group is currently operative in Australia. There are a number of exploration projects located in Western Australia at various stages of development. According to AASB 8 Operating Segments , two or more operating segments may be aggregated into a single operating segment if the segments have similar economic characteristics, and the segments are similar in each of the following respects:

The nature of the products and services;
The nature of the production processes;
The type or class of customer for their products and services;
The methods used to distribute their products or provide their services; and
If applicable, the nature of the regulatory environment, for example; banking, insurance and public utilities.

Management has identified that all projects in Australia have similar economic characteristics and are similar in nature taking into account each of the abovementioned aspects. The principal activity for all projects is exploration of gold and copper. Each project is likely to have the same methods to distribute the gold and copper in future and the nature of the regulatory environment which is Australia, is the same for each project. Accordingly, management has identified one operating segments based on the location of the projects, that being Australia.

As only one operating segment has been identified, no segmental information has been disclosed as the information presented in the financial statements represents the segmental information for Australia.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2011

NOTE 25: EVENTS SUBSEQUENT TO REPORTING DATE

Within 3 months from the First Payment date, the Company will pay an additional US$125,000 in exchange for an additional 10% of the total issued and outstanding capital stock of BMMC.

Within 6 months from the First Payment date, the Company will pay an additional US$250,000 in exchange for an additional 2.5% of the total issued and outstanding capital stock of BMMC.

Within 12 months from the First Payment date, the Company will pay an additional US$750,000 in exchange for an additional 7.5% of the total issued and outstanding capital stock of BMMC.

The remaining 5% interest in the property is free carried.

NOTE 26: COMPANY DETAILS

Registered Office

Level 4, 66 Kings Park Road

West Perth

Western Australia 6005 Telephone +61 8 6141 3500 Facsimile +61 8 6141 3599 Website: www.sentosamining.com Email: [email protected]

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

DIRECTORS’ DECLARATION

The Directors of the Company declare that:

The financial statements and notes, as set out on pages 21 to 49, are in accordance with the Corporations Act 2001 and:
(a) comply with Accounting Standards; and
(b) are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board, as stated in Note 2(a) to the financial statements; and
(c) give a true and fair view of the financial position as at 30 June 2011 and of the performance for the period ended on that date of the Group;
the Chief Executive Officer and Chief Finance Officer have each declared that:
(a) the financial records of the Company for the financial period have been properly maintained in accordance with s 286 of the Corporations Act 2001 ;
(b) the financial statements and notes for the financial period comply with the Accounting Standards; and (c) the financial statements and notes for the financial period give a true and fair view;
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.

This declaration is made in accordance with a resolution of the Board of Directors.

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John Robins

Chairman

Perth

30 September 2011

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Grant Thornton Audit Pty Ltd ABN 94 269 609 023

10 Kings Park Road West Perth WA 6005 PO Box 570 West Perth WA 6872

T +61 8 9480 2000 F +61 8 9322 7787 E [email protected] W www.grantthornton.com.au

Independent Auditor’s Report To the Members of Sentosa Mining Limited

Report on the financial report

We have audited the accompanying financial report of Sentosa Mining Limited (the ‘Company’), which comprises the consolidated statement of financial position as at 30 June 2011, 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 entity 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.

Liability limited by a scheme approved under Professional Standards Legislation

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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.

Electronic presentation of audited financial report

This auditor’s report relates to the financial report of Sentosa Mining Limited and its controlled entity for the year ended 30 June 2011 included on the Company’s web site. The Company’s Directors are responsible for the integrity of its web site. We have not been engaged to report on the integrity of the Company’s web site. The auditor’s report refers only to the statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/from these statements. If users of this report are concerned with the inherent risks arising from electronic data communications they are advised to refer to the hard copy of the audited financial report to confirm the information included in the audited financial report presented on this web site.

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 Sentosa Mining 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 2011 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.

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Report on the remuneration report

We have audited the remuneration report included in pages 17 to 19 of the directors’ report for the year ended 30 June 2011. 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.

Auditor’s opinion on the remuneration report

In our opinion, the remuneration report of Sentosa Mining Limited for the year ended 30 June 2011, complies with section 300A of the Corporations Act 2001.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

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C A Becker Director - Audit & Assurance

Perth, 30 September 2011

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES

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

1 Shareholding as at 29 September 2011

(a) Distribution of Shareholders

Distribution of Shareholders
Category (size of holding) 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – and over	Number of Shareholders 2 66 26 183 19
	296

(b) The number of shareholdings held in less than marketable parcels is 149.

(c) Voting Rights

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

Ordinary shares

Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote on a show of hands.

(d) 20 Largest Shareholders — Ordinary Shares as at 29 September 2011

		Number of Ordinary
		Fully Paid Shares	% Held of Issued
Name		Held	Ordinary Capital
1.	Merrill Lynch (Australia) Nominees Pty Ltd	1,420,000	4.32
2.	Gellard Enterprises Pty Ltd	1,100,000	3.35
3.	Mr Leigh Stanley Junk	1,100,000	3.35
4.	Mr Stephen Paul Swatton	1,100,000	3.35
5.	Mr Dean Besserer	1,000,000	3.04
6.	Citicorp Nominees Pty Ltd	1,000,000	3.04
7.	Sean Richard William Mager	1,000,000	3.04
8.	Matador Mining Pty Ltd	1,000,000	3.04
9.	John Edward Robins	1,000,000	3.04
10.	John Williamson	1,000,000	3.04
11.	Milstern Enterprises Pty Ltd	925,000	2.81
12.	William Henry Hernstadt	850,000	2.59
13.	JP Morgan Nominees Australia Limited	827,500	2.52
14.	National Nominees Limited	595,094	1.81
15.	HSBC Custody Nominees (Australia) Limited	500,000	1.52
16.	St Barnabas Investments Pty Ltd	350,000	1.06

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

17. Kevin Campbell 18. AWD Consultants Pty Ltd 19. Caves Road Investments Pty Ltd 20. Grant Thomas Paterson	312,500 0.95 300,000 0.91 300,000 0.91 300,000 0.91
	15,980,094 48.61

2 The name of the Company Secretary is Jay Richard Stephenson.
3 The address of the principal registered office in Australia is Level 4, 66 Kings Park Road WA 6005. Telephone (08) 6141 3500.

4 Registers of securities are held at the following addresses

Computershare Investor Services Limited

Level 2, Reserve Bank Building

45 St Georges Terrace

Perth, Western Australia 6000

5 Stock Exchange Listing

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

6 Unquoted Securities

Options over Unissued Shares

A total of 11,525,172 options are on issue of which 2,000,000 options are on issue to the seven Directors.

7 Use of Funds

The Company has used its funds in accordance with its initial business objectives.

TENEMENT SCHEDULE

Project Area	Tenement Numbers
Jaurdi Hills	P16/2411, P16/2412, P16/2413, P16/2414, P16/2433, P16/2434, P16/2435, P16/2436, P16/2437, P16/2438, P16/2439, P16/2440, P16/2441, P16/2442, P16/2443, P16/2444, P16/2460, P16/2627, P16/2653, P16/2654, P16/2655, P16/2656, P16/2657, P16/2658, P16/2659, P16/2678, M16/35, M16/113, M16/114, M16/193, M16/194, M16/201, M16/202, M16/203, M16/204, M16/205, M16/254, M16/255, M16/301, M16/365, M16/425, M16/462, E15/1061, P16/2672, P16/2673, P16/2674, P16/2675
Coolgardie	P16/2118, P16/2119, P16/2120, P16/2121

Project Area

Tenement Numbers

Jaurdi Hills

P16/2411, P16/2412, P16/2413, P16/2414, P16/2433, P16/2434, P16/2435,
P16/2436, P16/2437, P16/2438, P16/2439, P16/2440, P16/2441, P16/2442,
P16/2443, P16/2444, P16/2460, P16/2627, P16/2653, P16/2654, P16/2655,
P16/2656, P16/2657, P16/2658, P16/2659, P16/2678, M16/35, M16/113, M16/114,
M16/193, M16/194, M16/201, M16/202, M16/203, M16/204, M16/205, M16/254,
M16/255, M16/301, M16/365, M16/425, M16/462, E15/1061, P16/2672, P16/2673,
P16/2674, P16/2675

Coolgardie

P16/2118, P16/2119, P16/2120, P16/2121

AI assistant

ECHOIQ LIMITED — Annual Report 2011

64833_rns_2011-09-29_96a6f6ed-e66f-4557-94da-14aed02e299f.pdf

ABN 48 142 901 353

AND ITS CONTROLLED ENTITY

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CORPORATE DIRECTORY

Directors

Company Secretary

Registered Office

Auditor

Share Registry

Home Exchange

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CORPORATE GOVERNANCE STATEMENT

1. Lay solid foundations for management and oversight.

Roles and Responsibilities:

2. Structure the Board to add value.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CORPORATE GOVERNANCE STATEMENT

General Comments:

Membership

Chairman and Managing Director

Nomination Committee

Skills

Experience

Meetings

Independent professional advice

3. Promote ethical and responsible decision-making.

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CORPORATE GOVERNANCE STATEMENT

General Comments:

General Comments:

4. Safeguard integrity in financial reporting.

General Comments:

Integrity of Company’s Financial Condition

CORPORATE GOVERNANCE STATEMENT

Audit Committee

5. Make timely and balanced disclosure .

6. Respect the rights of shareholders.

General Comments:

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

CORPORATE GOVERNANCE STATEMENT

7. Recognise and manage risk

General Comments:

8. Remunerate fairly and responsibly

CORPORATE GOVERNANCE STATEMENT

General Comments:

Principles used to determine the nature and amount of remuneration

Remuneration Committee

Directors' Remuneration

Departure from Best Practice Recommendations

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

DIRECTORS’ REPORT

Directors

Company Secretary

Principal Activity and Operations

Results of Operations

Financial Position

Significant Changes in State of Affairs

DIRECTORS’ REPORT

Dividends Paid or Recommended

Significant events after the reporting date

Likely Development

Proceedings on behalf of the Company

SENTOSA MINING LIMITED AND ITS CONTROLLED ENTITY ABN 48 142 901 353 FINANCIAL REPORT 30 JUNE 2011

DIRECTORS’ REPORT

Indemnifying Officers or Auditor

Information on Directors

John Robins

Non-Executive Chairman - Appointed 17 December 2010

DIRECTORS’ REPORT

Information on Directors

Dean Besserer

Managing Director – Appointed 17 December 2010

Nigel Gellard

Non-Executive Director – Appointed 17 December 2010

DIRECTORS’ REPORT

Information on Directors

Leigh Junk

ECHOIQ LIMITED Annual Report 2011