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DiamonEx Limited ABN 26 091 951 978

Level 1 349 Coronation Drive Milton Qld 4064 Australia Telephone: +61 7 3720-8944 Facsimile: +61 7 3720-8988 e-mail : [email protected] Postal Address: PO Box 1357 Milton Qld 4064

ASX ANNOUNCEMENTS AUSTRALIAN STOCK EXCHANGE

5 September 2007

AUDITED FINANCIAL REPORT 2007

Attached is the company’s Directors’ Report and Financial Statements for the year ended 30 June 2007.

Yours faithfully DiamonEx Limited

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Paul Crawford Company Secretary

For further information, contact:

Dan O’Neill (Managing Director) Greg King (Chairman) +61 7 37208944 (Office) +61 7 37208944 (Office) +61 7 37208988 (Fax) +61 7 37208988 (Fax) +61 407596942 (Mobile) +61 411473730 (Mobile) [email protected] (Email) [email protected] (Email)

DiamonEx is a Brisbane, Australia-based specialist diamond company planning to develop a 330,000 carat per year diamond mine based on an established 3.7 million carat resource at Lerala in eastern Botswana, within an area that produces 30% of the world’s diamonds by value

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2007

DIAMONEX LIMITED AND CONTROLLED ENTITIES ABN 26 091 951 978

DIRECTORS’ REPORT

Your directors present their report of the company and its controlled entities for the financial year ended 30 June, 2007.

Directors

The directors of the company at any time during or since the end of the year are listed below. During the year there were 4 meetings of the full board of directors and 4 other matters dealt with by circulating resolutions. The meetings attended by each director were:

DIRECTORS	ELIGIBLE TO ATTEND	ATTENDED
G.M. King	8	8
D.C. O’Neill	8	8
P.A. Crawford	8	8
D. N. Magang	8	6
D. J. Duncan	8	7
S. N. Chong (Resigned 15 March 2007)	5	3
P. Chong (alternate to S. N. Chong)
(Resigned 15 March 2007)	-	-

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

The Company does not have an Audit Committee. The role of the Audit Committee has been assumed by the full Board. The size and nature of the Company’s activities does not justify the establishment a committee at this time.

Company Secretary

Paul A. Crawford held the position of company secretary at the end of the financial year. Mr Crawford is a CPA and holds the following qualifications: Bachelor of Business – Accountancy; Master of Financial Management; Graduate Diploma in Business Law; Graduate Diploma in Company Secretarial Practice. Mr Crawford has been company secretary and a director of DiamonEx Limited since its incorporation in 2000.

Principal Activities

The principal activities of the economic entity in the course of the year were:

mineral exploration;
commencement of development of the Lerala Diamond Mine.

The significant change in business activity arose following the granting of the mining licence by the Botswana Government for the Lerala Diamond Mine tenements. This enabled the company to move from exploration phase to development phase on the relevant tenements. It is anticipated that the construction phase will complete in calendar year 2007, with the company moving through the commissioning phase and into full production early in calendar year 2008.

DIAMONEX LIMITED AND CONTROLLED ENTITIES ABN 26 091 951 978

DIRECTORS’ REPORT

Review of Operations

The entity’s consolidated operating loss for the financial year, after applicable income tax was $2,129,881 (2006: $1,034,873). Development, exploration and evaluation expenditure during the year totalled $7,557,585 (2006: $1,580,600).

The major achievement during the year was being granted a mining licence for the Lerala Diamond Mine in September 2006, and moving into the development phase of this mine.

The Lerala Diamond Mine will process 1.32 Million tonnes per year of ore for the production of 330,000 carats per year over an 11 year mine life. Initial mining is scheduled to commence late in 2007 and diamond production is targeted for early 2008. Capital costs are estimated at $28 million (US$22 million).

While activity this year has largely centred on the Lerala Diamond Mine development, exploration can again focus on finding new diamond resources.

Financial Position

The net assets of the economic entity have increased by $6,961,812 during the year to 30 June 2007 to $12,640,418 including cash balances of $880,890. This change is primarily attributable to:

(i) Share issues and conversion of options raising $10,286,871; and
(ii) Exploration, evaluation and development expenditure in relation to the Lerala Diamond Mine project and other projects.

The directors believe that the Group is in a stable financial position and is completing funding options to expand and grow through the development of the Lerala Diamond Mine project and other opportunities.

Dividends

No dividend has been proposed or paid since the start of the year.

Significant Changes in State of Affairs

The following significant changes in the state of affairs of the parent entity occurred during the financial year:

(i) In July 2006 the parent entity issued 10,777,774 shares on conversion of share options for cash to raise $2,155,555;
(ii) In September 2006 the Botswana Government issued the mining licence for the Lerala Diamond Mine project;
(iii) In November 2006 the parent entity issued 2,000,000 options for shares to executive directors. The options may be exercised before November 2011 at a price of 35 cents;
(iv) In December 2006 the parent entity issued 10,416,667 shares to Babcock & Brown Infrastructure Australia Pty Limited for cash to raise $2,500,000;
(v) In April 2007 the parent entity issued 12,835,161 shares to institutional investors for cash to raise $3,978,900;
(vi) In May 2007 the parent entity issued 4,814,247 shares to existing shareholders under a Shareholders Participation Plan (SPP) for cash to raise $1,492,417; and
(vii) During the year development work commenced on the Lerala Diamond Mine

DIAMONEX LIMITED AND CONTROLLED ENTITIES ABN 26 091 951 978

DIRECTORS’ REPORT

Information on Directors

The company's Directors have a strong background in mineral exploration, mining engineering, mine management, finance and accounting, with considerable international experience including Australia, Argentina, China, South East Asia, South Africa, Botswana and Indonesia.

The names and qualifications of current directors are summarised as follows:

Gregory M King	Executive Chairman
Qualifications:	Bachelor of Applied Science – Applied Geology
Experience:	Appointed Chairman 2004. Board member since 2000, 27 years
	experience in exploration project management.
Interest in Shares:	Founding shareholder and currently holds 10,620,000 ordinary
	shares and 1,000,000 options.
Dennis C O’Neill	Managing Director (Executive)
Qualifications:	Bachelor of Science – Geology
Experience:	Board member since 2000, 29 years experience in exploration
	project and corporate management.
Interest in Shares:	Founding shareholder and currently holds 5,000,000 ordinary
	shares and 1,000,000 options.
Paul A Crawford	Director – Non-executive
Qualifications:	Bachelor of Business – Accountancy; CPA; Master of Financial
	Management; Graduate Diploma in Business Law; Graduate
	Diploma in Company Secretarial Practice.
Experience:	Board member since 2000, Director Oroplata Limited, 26 years
	experience in accounting and commercial management, Principal
	of corporate consultancy firm.
Interest in Shares:	Founding shareholder and currently holds 4,054,300 ordinary
	shares.
Directorships in Other Listed	ActivEX Limited
Companies:
David N Magang	Director – Non-executive
Qualifications:	LLB (Honours), Barrister and Attorney
Experience:	Board member since April 2004, resident of Botswana, member of
	the Botswana Parliament for 23 years, including 4 years as
	Minister for Minerals, Energy and Water Affairs.
Interest in Shares:	Currently holds 516,100 ordinary shares.
Donald J Duncan	Director – Non-executive)
Qualifications:	Bachelor of Science (Honours)
Experience:	Appointed to the Board in June 2005. A geologist with over 26
	years experience, worldwide in diamond exploration and
	development.
Interest in Shares :	Currently holds 500,000 ordinary shares.

DIAMONEX LIMITED AND CONTROLLED ENTITIES ABN 26 091 951 978

DIRECTORS’ REPORT

Resignation of Directors

During March 2007 Mr Shey N. Chong resigned as director of the company, and Mr Paul Chong resigned as alternate director to Mr Shey Chong. The Board thanks these gentlemen for their contribution to the company during their time in office.

Future Developments, Prospects and Business Strategies

To further improve the economic entity’s asset base and maximise shareholder wealth, the following developments are being pursued:

(i) Applying for listing on the Alternative Investment Market (AIM) in London;
(ii) Completion of funding arrangements with Fleming Advisors (Pty) Ltd and European Investment Bank to complete and commission the Lerala Mine; and
(iii) The company is well progressed with the development of the Lerala Diamond Mine which is expected to commission and commence production early in calendar year 2008. Negotiations are currently in progress for the marketing and sales process for the diamonds. Once full production is achieved the company will be in a stable financial position.

Remuneration Report

This report details the nature and amount of remuneration for each director and if relevant, the executives receiving the highest remuneration.

The company’s remuneration policy seeks to align director and executive objectives with those of shareholders and business, while at the same time, recognising the early development stage of the company and the criticality of funds being utilised to achieve development objectives. The Board believes that the current policy has been appropriate and effective in achieving a balance of objectives.

The remuneration structure for executive officers, including executive directors, is based on a number of factors, including length of service, particular experience of the individual concerned, and overall performance of the company.

The company’s policy for determining the nature and amount of remuneration of board members and senior executives of the company is as follows:

The remuneration policy, setting the terms and conditions for the executive directors was developed and approved by non-executive directors. Executive directors receive a base salary, superannuation and fringe benefits, and in the current year, equity based performance remuneration. Superannuation payments consist of the 9% superannuation guarantee contribution. Individuals may elect to salary sacrifice part of their salary to increased payments towards superannuation. No other form of retirement benefit is paid.

Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and responsibilities. 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 and are not linked to the performance of the economic entity. However, to align directors’ interests with shareholder interests, directors are encouraged to hold shares in the company.

Formation of a remuneration committee is under review. Its role will be to review the company’s remuneration policy, remuneration levels and performance of both executive and non-executive directors. Independent external advice will be sought when required.

DIAMONEX LIMITED AND CONTROLLED ENTITIES ABN 26 091 951 978

DIRECTORS’ REPORT

The remuneration of each director and specified executive officers of the consolidated entity during the year was as follows:

Key Management Personnel Gregory M. King Dennis C. O'Neill Paul A. Crawford David N. Magang Shay N. Chong Donald J. Duncan Mark Coetzee Michael Whillier	Short term benefits Post Employment Salary & Fees Non- Cash Benefits Benefits Super - annuation Equity Settled Options Total Performance Related
	$ $ $ $ $ % 183,486 11,360 16,514 5,929 217,289 2.73 151,283 50,214 14,600 5,929 222,026 2.67 - - 22,000 - 22,000 - 22,000 - - - 22,000 - 14,297 - 1,287 - 15,584 - 22,000 - - - 22,000 - 171,456 8,272 - - 179,728 - 21,585 3,920 4,613 - 30,136
	586,107 73,766 59,032 11,858 730,763 1.62

The maximum aggregate amount of fees that can be paid to non-executive directors approved by shareholders is currently $100,000.

Options granted as remuneration

Key Management Personnel Mr G King Mr D O’Neill	Terms & Conditions for Each Grant Vested Number Granted Number Grant Date Value per Option at Grant Date Exercise price $ First Exercise Date Last Exercise Date 1,000,000 1,000,000 30.11.2006 5.08 cents 35 cents 30.11.2006 30.11.2011 1,000,000 1,000,000 30.11.2006 5.08 cents 35 cents 30.11.2006 30.11.2011 2,000,000 2,000,000

All options vest immediately and expire within 5 years of granting.

All options are granted for nil consideration.

In the current year the company has issued equity based performance remuneration to the executive directors, in the form of share options. This was approved by the shareholders at the 2006 Annual General Meeting. The grant of the options to the Directors is intended to act as a strong incentive to align the interests of the Directors’ with the Company's strategic plan focusing on seeking improved performance, the growth of the Company and better returns for shareholders.

In the past few years the company performance with its increased exploration base in Botswana has resulted in the identification of a proven resource of the Lerala Diamond Mine which has now moved into the development phase.

The employment conditions of the executive chairman, Mr King and the managing director, Mr O’Neill are formalised in contracts of employment. The company may terminate the contracts without cause at any time, but is required to payout the remaining term of the contract together with accrued entitlements, subject to a minimum payment of $50,000.

Termination payments are not payable on resignation or dismissal for serious misconduct. In the case of serious misconduct, the company can terminate employment at any time.

DIAMONEX LIMITED AND CONTROLLED ENTITIES ABN 26 091 951 978

DIRECTORS’ REPORT

Executives are employed on standard commercially based contracts. These agreements may be terminated by either party on 1 month notice. No termination payment is payable under the contracts.

Subsequent Events

(a) Shareholder matters

On 16 July 2007 shareholders ratified the issue (in April 2007) of 12,835,161 shares in the parent entity.

On 22 August 2007 shareholders ratified the issue of up to 27,000,000 shares in the parent entity. 9,758,212 of these shares were issued on 23 July and funds totalling $3,025,046 were received. A further 13,520,000 of these shares were issued on 20 August and funds totalling $4,191,000 were received.

(b) Lerala Mine development

During the year the economic entity announced the decision to proceed with the development of the Lerala Diamond Mine in Botswana, and the various related capital and debt funding arrangements. In July the economic entity signed agreements for a Botswana Pula 50 million convertible bond facility, and is expecting to sign an agreement in September for a Euro 5 million debt facility.

(c) Listing matters

During the year the parent entity announced its intentions to list on the London Alternate Investment Market. Work towards that listing has continued since balance date. As part of this process a shareholder meeting is to be held on 21 September 2007 to consider changes to the parent entity's constitution.

Environmental Regulations

The company is not subject to any significant environmental regulation under the law of the Commonwealth and a State or Territory.

Under the terms of the mining licence granted by the Botswana Government in relation to the proposed Lerala Mine, the economic entity will be required to operate in accordance with the Government approved Environmental Management Program.

The Directors monitor the economic entity’s compliance with environmental regulation under the law of Botswana, in relation to its exploration activities. The Directors are not aware of any compliance breach arising during the year.

Options

At the date of this report, there are 2,000,000 unissued ordinary shares of the company under option.

These options have a grant date of 30 November 2006, expiry date of 30 November 2011 and an exercise price of $0.35.

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

DIAMONEX LIMITED AND CONTROLLED ENTITIES ABN 26 091 951 978

DIRECTORS’ REPORT

Indemnifying Directors’ and Auditors’

The economic entity has paid premiums to insure each of the directors of the company against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director of the company, other than conduct involving a wilful breach of duty in relation to the company. The amount of the premium was $22,160.

The Company has not given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay insurance premiums in respect of any person who is or has been an auditor of the Company or a related body corporate during the year and up to the date of this report.

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. The company was not a party to any such proceedings during the year.

Corporate Governance

In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of DiamonEx Limited support and where practicable or appropriate have adhered to the ASX Principles of Corporate Governance. The Company’s corporate governance statement is contained within this annual report.

Non-audit Services

The board of directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. Non-audit services consist of fees paid to the auditor of Diamonex (Botswana) Limited, a controlled entity. Services relate to the provision of share registry services to the parent entity in relation to the trading of its shares on the Botswana Stock Exchange and services in relation to Botswana income taxation.

The directors are satisfied that the services disclosed below did not compromise the external auditors’ independence for the following reasons:

All non-audit services are reviewed and approved prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and
The nature of the services provided do not compromise the general principles relating to auditor independence as set out in the Institute of Chartered Accountants in Australia and CPA Australia’s Professional Statement P1: Professional Independence.

The following fees for non-audit services to PricewaterhouseCoopers, Botswana, the auditor of Diamonex Botswana Ltd during the year ended 30 June 2007:

Share Registry Services in Botswana

$ 3,463

No fees for non-audit services were paid to Robertsons Audit & Assurance Pty Ltd, the lead auditor of Diamonex Limited and its controlled entities.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

DIRECTORS’ REPORT

Auditor’s Independence Declaration

The lead auditor’s independence declaration for the year ended 30 June 2007 has been received and is attached to the directors’ report.

Signed in accordance with a resolution of the Board of Directors.

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G M King Chairman

D C O’Neill

Managing Director

Signed: 3 September 2007 Brisbane, Queensland

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DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

INCOME STATEMENT

for the year ended 30 June 2007

Note	2007 2006 2007 2006 $ $ $ $ Parent Entity Economic Entity
Revenue and other income 2 Exploration & evaluation expenditure Administrative expenses Employee benefit expense Occupancy expenses Finance costs Loss before income tax expense 3 Income tax expense 4 Loss for the year Loss attributable to members of the parent entity Earnings per Share Basic earnings per share (cents per share) 7 Diluted earnings per share (cents per share) 7 Dividends per share (cents per share)	123,170 46,603 434,957 240,714 (621,492) - (621,492) - (1,190,276) (820,955) (1,026,890) (701,370) (277,506) (184,842) (277,506) (184,842) (109,216) (75,679) (92,542) (60,925) (7) - (7) -
	(2,075,327) (1,034,873) (1,583,480) (706,423) 54,554 - 54,554 -
	(2,129,881) (1,034,873) (1,638,034) (706,423)
	(2,129,881) (1,034,873) (1,638,034) (706,423)
	(2.41) (1.73) (2.41) (1.70) - -

The accompanying notes form part of these financial statements.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

BALANCE SHEET

As at 30 June 2007

Note	2007 2006 2007 2006 $ $ $ $ Parent Entity Economic Entity
CURRENT ASSETS Cash and cash equivalents 8 Trade and other receivables 9 Other 10 Total Current Assets NON-CURRENT ASSETS Trade and other receivables 9 Property, plant and equipment 11 Financial assets 12 Exploration and evaluation asset 13 Mine development asset 14 Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 15 Total Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 16 Reserves 17 Accumulated losses TOTAL EQUITY	880,890 3,081,816 689,367 2,985,261 355,026 81,440 45,053 3,892,900 34,637 13,794 10,651 13,794
	1,270,553 3,177,050 745,071 6,891,955
	- - 8,464,735 - 962,080 167,484 118,147 138,799 - - 3,277,478 13 608,494 4,836,765 337,211 2,239,924 10,748,145 - 2,790,414 -
	12,318,719 5,004,249 14,987,985 2,378,736

	13,589,272 8,181,299 15,733,056 9,270,691
	948,854 2,502,693 493,684 2,475,784
	948,854 2,502,693 493,684 2,475,784

	948,854 2,502,693 493,684 2,475,784
	12,640,418 5,678,606 15,239,372 6,794,907
	19,411,030 9,340,389 19,411,030 9,340,389 (1,519,023) (540,075) 11,858 - (5,251,589) (3,121,708) (4,183,516) (2,545,482)
	12,640,418 5,678,606 15,239,372 6,794,907

The accompanying notes form part of these financial statements.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

STATEMENT OF CHANGES IN EQUITY

for the year ended 30 June 2007

Note Share Capital Accumulated Losses Foreign Currency Translation Reserve Option Reserve Total $ $ $ $ $	Note Share Capital Accumulated Losses Foreign Currency Translation Reserve Option Reserve Total $ $ $ $ $
Economic Entity Balance at 1 July 2005 Shares issued during the period 16 Loss attributable to members of entity Translation of foreign controlled entities Balance at 30 June 2006 Shares issued during the period 16 Loss attributable to members of entity Translation of foreign controlled entities Share based payment - employee share options expense Balance at 30 June 2007 Parent Entity Balance at 1 July 2005 Shares issued during the period 16 Loss attributable to members of entity Translation of foreign controlled entities Balance at 30 June 2006 Shares issued during the period 16 Loss attributable to members of entity Translation of foreign controlled entities Share based payment - employee share options expense Balance at 30 June 2007	6,821,569 (2,086,835) - - 4,734,734 2,518,820 - - - 2,518,820 - (1,034,873) - - (1,034,873) - - (540,075) - (540,075)
	9,340,389 (3,121,708) (540,075) - 5,678,606
	10,070,641 - - - 10,070,641 - (2,129,881) - - (2,129,881) - - (990,806) - (990,806) - - - 11,858 11,858
	19,411,030 (5,251,589) (1,530,881) 11,858 12,640,418
	6,821,569 (1,839,059) - - 4,982,510 2,518,820 - - - 2,518,820 - (706,423) - - (706,423) - - - - -
	9,340,389 (2,545,482) - - 6,794,907
	10,070,641 - - - 10,070,641 - (1,638,034) - - (1,638,034) - - - - - - - - 11,858 11,858
	19,411,030 (4,183,516) - 11,858 15,239,372

The accompanying notes form part of these financial statements.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

CASH FLOW STATEMENT

for the year ended 30 June 2007

Note	2006 2005 2007 2006 $ $ $ $ Parent Entity Economic Entity
CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Interest received Finance costs Foreign taxes paid Net cash provided by (used in) operating activities 18 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Exploration & evaluation expenditure Development expenditure Proceeds from sale of property, plant and equipment Investment in controlled entity Advance to controlled entity Net cash provided by (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Proceeds from share applications Costs associated with share issue Net cash provided by (used in) financing activities Net increase in cash held Cash at beginning of financial year Effect of exchange rates on cash holdings in foreign currencies Cash at end of financial year 8	(2,254,178) (992,905) (1,749,501) (716,624) 123,170 46,603 434,957 240,714 (7) - (7) - (54,554) - (54,554) -
	(2,185,569) (946,302) (1,369,105) (475,910)
	(997,851) - (36,390) - (546,076) (1,580,600) (274,793) (658,971) (6,230,017) - (452,908) - - - - - - - (3,277,465) - - - (4,640,319) (1,206,895)
	(7,773,944) (1,580,600) (8,681,875) (1,865,866)
	7,971,317 2,518,820 7,971,317 2,518,820 - 2,155,555 - 2,155,555 (216,231) - (216,231) -
	7,755,086 4,674,375 7,755,086 4,674,375
	(2,204,427) 2,147,473 (2,295,894) 2,332,599 3,081,816 936,411 2,985,261 652,662 3,501 (2,068) - -
	880,890 3,081,816 689,367 2,985,261

The accompanying notes form part of these financial statements.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements for the financial year ended 30 June 2007

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial report is a general purpose financial report that has been prepared in accordance with the Corporations Act 2001 , Australian Accounting Standards, including Australian Accounting Interpretations and other authoritive pronouncements of the Australian Accounting Standards Board.

The financial report covers the economic entity of DiamonEx Limited and controlled entities, and DiamonEx Limited as an individual parent entity. DiamonEx Limited is a listed public company, incorporated and domiciled in Australia. The financial report has been prepared on an accruals basis and is based on historical cost modified by the revaluation of selected non-current assets, financial assets and liabilities for which the fair value basis of accounting has been applied.

The financial report complies with all International Financial Reporting Standards (IFRS) in their entirety.

The following is a summary of the material accounting policies adopted by the economic entity in the preparation of the financial report. The accounting policies have been consistently applied unless otherwise stated.

Principles of Consolidation

A controlled entity is any entity DiamonEx Limited has the power to control the financial and operating policies of so as to obtain benefits from its activities. A list of controlled entities is contained in Note 12 to the financial statements. All controlled entities have a financial year end and accounting policies consistent with the parent entity.

All inter-company balances and transactions between entities in the economic entity, including any unrealised profits or losses, have been eliminated on consolidation.

Where controlled entities have entered or left the economic entity during the year, their operating results have been included from the date control was obtained or until the date control ceased.

Income Tax

The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. 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 is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

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

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements

for the financial year ended 30 June 2007

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

Leases

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred. Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

Property, Plant and Equipment

Each class of plant and equipment is brought to account at cost or fair value, less where applicable, any accumulated depreciation or amortisation, and impairment losses.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets' employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

The depreciable amount of all fixed assets is depreciated on a straight line basis, over their useful lives to the economic entity, commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

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

Plant and Equipment 20% - 30% Leasehold Improvements 30%

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

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

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

Exploration and Evaluation Assets

Exploration and evaluation expenditure incurred is recognised as exploration and evaluation assets, measured on the cost basis and classified as an intangible asset. The expenditure incurred is accumulated in respect of each identifiable area of interest. Costs are only carried forward to the extent that rights of tenure are current and either they are expected to be recouped through the successful development of the area, or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements for the financial year ended 30 June 2007

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Recoverability of the carrying amount of the exploration and evaluation assets is dependent on the successful development and commercial exploitation or alternatively sale of the respective areas of interest.

Mine Development Asset

Development expenditure incurred by or on behalf of the economic entity is accumulated separately for each area of interest in which economically recoverable reserves have been identified to the satisfaction of the Directors. Such expenditure comprises net direct costs and an appropriate proportion of related overhead expenditure having a specific nexus with the mine development asset. Once a development decision has been taken, any deferred exploration and evaluation expenditure is transferred to Mine Development Asset in respect of the area of interest.

All expenditure incurred prior to the commencement of commercial levels of production from each development property is carried forward to the extent to which the recoupment out of revenue to be derived from the sale of production from the relevant property, or from the sale of that property, is reasonably assured.

No amortisation is provided in respect of development properties until they are reclassified following a decision to commence mining.

Restoration Costs

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

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

The economic entity currently has no obligation for any restoration costs in relation to discontinued operations, nor is it currently liable for any future restoration costs in relation to current areas of interest. Consequently, no provision for restoration has been deemed necessary.

Impairment of Assets

At each reporting date, the econmoic entity reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the income statement.

Advances to Controlled Entities

Advances by the company to controlled entities (refer to note 9) are principally contributions towards exploration and evaluation expenditure. The value and recoverability of these amounts is related to the company’s policies with regards to exploration and evaluation expenditure as described in note 1. Should the underlying asset values be insufficient to recover the advances, the amounts are reviewed for impairment.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements for the financial year ended 30 June 2007

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Available for Sale Investments (Investment in Subsidiaries)

Investments in subsidiaries are recognised in the parent entity as available for sale investments and are measured on the cost basis, as the best indicator of fair value. The carrying amount of investments is reviewed annually by directors to ensure it is not in excess of the recoverable amount of these investments. The recoverable amount is assessed from the underlying net assets.

Foreign Currency Transactions and Balances

Functional and presentation currency:

The functional currency of each of the group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

Transaction and balances:

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Nonmonetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the income statement, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement.

Group companies:

The financial results and position of foreign operations whose functional currency is different from the group’s presentation currency are translated as follows:

assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the group’s foreign currency translation reserve in the balance sheet. These differences are recognised in the income statement in the period in which the operation is disposed.

Employee Benefits

Provision is made for the company’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within 1 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 1 year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Contributions are made by the entity to employee superannuation funds and are charged as expenses when incurred.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements for the financial year ended 30 June 2007

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Equity Settled Compensation

The parent entity has issued remuneration based options to executive directors. The fair value of options granted is recognised as an expense with a corresponding increase in equity. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted.

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 result and that outflow can be reliably measured.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of less than 3 months, and bank overdrafts.

Reveivables

Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.

Payables

Liabilities for trade creditors and other amounts are carried at cost, which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the economic entity.

Issued Capital

Ordinary shares are classified as equity. Transaction costs (net of tax, where the deduction can be utilised) arising on the issue of ordinary shares are recognised in equity as a reduction of the share proceeds received.

Where share application monies have been received, but the shares have not been allotted, these monies are shown as a payable in the balance sheet.

Revenue

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

Goods and Services Tax (GST)

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

Cash flows are presented in the cash flow statement on a gross basis except for the GST component of investing activities which are disclosed as operating cash flow.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements for the financial year ended 30 June 2007

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Comparative Figures and Financial Period

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

Earnings per Share (EPS)

Basic earnings per share

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

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

Critical Accounting Estimates and Judgements

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

Key estimates – Impairment

The economic entity assess impairment at each reporting date by evaluating conditions specific to the economic entity that may lead to impairment of assets. Where and impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.

No impairment of assets has been identified for the year ended 30 June 2007.

Key Estimates – Impairment of Exploration and Evaluation Expenditure, and Mine Development Asset

The economic entity assesses impairment at each reporting date by evaluating conditions specific to the economic entity that may lead to impairment of these assets. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area, or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

Key Judgements – Carry-forward of Exploration and Evaluation Expenditure, and Mine Development Asset

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements

for the year ended 30 June 2007

	2007 2006 2007 2006 $ $ $ $ Economic Entity Parent Entity
NOTE 2: REVENUE AND OTHER INCOME Operating activities: Interest received from other persons 123,170 46,603 71,266 28,758 Interest received from wholly owned controlled entity - - 363,691 211,956 123,170 46,603 434,957 240,714 NOTE 3: PROFIT/(LOSS) FOR THE YEAR Capitalised exploration & evaluation expenditure write-off - - - - Depreciation 101,841 115,145 57,042 100,693 Amortisation 9,223 3,261 - - Impairment of available for sale investments - - - - Foreign currency translation losses/(gains) 10,969 (11,656) 10,580 74 Rental expense on operating leases - minimum lease payments 105,165 74,042 88,490 59,288 NOTE 4: INCOME TAX EXPENSE (622,598) (310,462) (475,044) (211,927) Adjust for tax effect of: Tax losses and temporary differences not brought to account 597,712 293,046 470,531 210,933 Non-allowable items 60,482 994 59,067 994 Effects of different tax rates on foreign tax losses 18,958 16,422 - - 54,554 - 54,554 - Income tax expense/(benefit) attributable to entity Included in expenses are the following items: The prima facie tax on loss from ordinary activities is reconciled to the income tax as follows: Prima facie tax payable/(benefit) on loss from ordinary activities before income tax at 30% (2006: 30%).	123,170 46,603 71,266 28,758 - - 363,691 211,956
	123,170 46,603 434,957 240,714
	- - - - 101,841 115,145 57,042 100,693 9,223 3,261 - - - - - - 10,969 (11,656) 10,580 74 105,165 74,042 88,490 59,288
	54,554 - 54,554 -

The economic entity has unrecouped unconfirmed carry forward tax losses of approximately $13,923,000 (2006: $7,270,000) comprising unrecouped unconfirmed losses arising in Australia of $7,595,000 (2006: $4,985,000) and in Botswana of $6,328,000 (2006: $2,285,000). The Botswana carry forward losses are quarantined under Australian tax legislation and are only available to be offset against future taxable income derived in Botswana.

Deferred Tax

erred Tax	erred Tax
Balances not brought to account, the benefits of which will only be realised if the		conditions for	deductibility set out in Note
1 occur:
Temporary differences (comprising exploration
expenditure, provisions and other items)	3,445,686	1,421,869	955,272	642,817
Tax losses	(4,176,939)	(2,181,380)	(2,278,471)	(1,495,485)
Net unbooked deferred tax asset	(731,253)	(759,511)	(1,323,199)	(852,668)

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements for the year ended 30 June 2007

Economic Entity Parent Entity 2007 2006 2007 2006 $ $ $ $

NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION & EQUITY

The names of key management personnel of the economic entity who have held office during the financial year are:

Key Management Person Position

Gregory M. King Chairman - Executive Dennis C. O'Neill Managing Director - Executive Paul A. Crawford Director - Non-Executive David N. Magang Director - Non-Executive Donald J. Duncan Director - Non-Executive Shay N. Chong Director - Non-Executive (resigned 15 March 2007) Paul Chong Alternate Director for S N Chong (resigned 15 March 2007) Mark Coetzee Project Manager - DiamonEx (Botswana) Limited Michael Whillier Group Financial Controller (appointed 26 February 2007)

(a) Policy

The economic entity’s policy for determining the nature and amount of compensation of key management is as follows:

The compensation structure for key management personnel is based on a number of factors, including length of service, particular experience of the individual concerned, relevant employment market conditions and overall performance of the company. The managing director and executive chairman also received performance based remuneration in the year by way of share options.

All executives are employed on standard commercially based salary arrangements with a standard requirement of a 1 month notice period for termination of service.

The company may terminate the managing director's and executive chairman's contract without cause by giving 3 months notice. If terminated without cause, the managing director and executive chairman is entitled to payment of accrued entitlements, together with the payout of the remaining term of the contract, subject to a minimum payment of $50,000. Termination payments are not payable on resignation or serious misconduct. In the case of serious misconduct the company can terminate employment at any time.

Company policy is to remunerate non-executive directors at relevant market rates for time, commitment and responsibilities. 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.

The non-executive directors of the company determine the level of total compensation for each key management personnel. Compensation, other than the grant of options, may be in the form of cash, non-cash benefits or superannuation.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements for the year ended 30 June 2007

NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION & EQUITY (continued)

(b) Key Management Personnel Compensation	(b) Key Management Personnel Compensation		Post
	Short term benefits		Employment
2007	Salary & Fees Non-Cash & Leave Entitlement s		Benefits Super - annuation	Equity Settled Options	Total	Performance Related
	$	$	$	$	$	%
Gregory M. King	183,486	11,360	16,514	5,929	217,289	2.73%
Dennis C. O'Neill	151,283	50,214	14,600	5,929	222,026	2.67%
Paul A. Crawford	-	-	22,000	-	22,000	0.00%
David N. Magang	22,000	-	-	-	22,000	0.00%
Shay N. Chong
(resigned March 2007)	14,297	-	1,287	-	15,584	0.00%
Donald J. Duncan	22,000	-	-	-	22,000	0.00%
Mark Coetzee	171,456	8,272	-	-	179,728	0.00%
Michael Whillier
(Appointed 26
February 2007)	21,585	3,920	4,631	-	30,136	0.00%
	586,107	73,766	59,032	11,858	730,763	1.62%
			Post
	Short term benefits		Employment
2006	Salary & Fees Non-Cash & Leave Entitlement s		Benefits Super - annuation	Equity Settled Options	Total	Performance Related
	$	$	$	$	$	%
Gregory M. King	130,505	-	11,745	-	142,250	0.00%
Dennis C. O'Neill	108,744	23,179	10,327	-	142,250	0.00%
Paul A. Crawford	-	-	22,000	-	22,000	0.00%
David N. Magang	22,000	-	-	-	22,000	0.00%
Shay N. Chong	20,183	-	1,817	-	22,000	0.00%
Donald J. Duncan	22,000	-	-	-	22,000	0.00%
Mark Coetzee	176,399	-	-	-	176,399	0.00%
	479,831	23,179	45,889	-	548,899	0.00%

(c) Compensation Options

During the year the company granted 2,000,000 options to executive directors as part of their remuneration. Details are as follows:

Key Management Personnel Mr G King Mr D O’Neill	Vested Number Granted Number Grant Date Value per Option at Grant Date Exercise price $ First Exercise Date Last Exercise Date 1,000,000 1,000,000 30.11.2006 5.08 cents 35 cents 30.11.2006 30.11.2011 1,000,000 1,000,000 30.11.2006 5.08 cents 35 cents 30.11.2006 30.11.2011 2,000,000 2,000,000 Terms & Conditions for Each Grant	Terms & Conditions for Each Grant

All options vest immediately and expire within 5 years of granting.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements

for the year ended 30 June 2007

8 tatements une 2007
Economic	Entity	Parent	Entity
2007	2006	2007	2006
$	$	$	$

NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION & EQUITY (continued)

(d) Shares Issued on Exercise of Compensation Options

No shares were issued on the exercise of compensation options during the reporting period.

(e) Number of shares held by Key Management Personnel

Key Management Personnel (i) Gregory M King Dennis C O'Neill Paul A Crawford David N Magang Shay N. Chong (resigned 15 March 2007) (iii) Donald J. Duncan Mark Coetzee Michael Whillier Total	Balance 1July 2006 Remun- eration(ii) Purchased / (Sold) Balance 30 June 2007
	10,620,000 - - 10,620,000 5,000,000 - - 5,000,000 4,022,100 - 32,200 4,054,300 - - 516,100 516,100 4,010,000 - (4,010,000) - 500,000 - - 500,000 - - - - - - 16,000 16,000
	24,152,100 - (3,445,700) 20,706,400

(i) Represents shares held directly, indirectly or beneficially.

(ii) The parent entity does not issue shares as a form of remuneration.

(iii) This was the share balance at the date of resignation

(f) Number of compensation options held by Key Management Personnel

Key Management Personnel (i) Gregory M King Dennis C O'Neill Paul A Crawford David N Magang Shay N. Chong Donald J. Duncan Mark Coetzee Michael Whillier Total	Balance 1 July 2006 Remun- eration Purchased / (Sold) Balance 30 June 2007
	- 1,000,000 - 1,000,000 - 1,000,000 - 1,000,000 - - - - - - - - - - - - - - - - - - - - - - - -
	- 2,000,000 - 2,000,000

(i) Represents options held directly or indirectly.

(ii) In the prior year certain key management personnel held options in their capacity as shareholders. These options were exercised or expired on 30 June 2006.

(iii) All of these options have vested and are exerciseable.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements

for the year ended 30 June 2007

	2007 2006 2007 2006 $ $ $ $ Economic Entity Parent Entity
NOTE 6: AUDITORS' REMUNERATION Remuneration of the auditor of the parent entity for: - auditing or reviewing the financial report 17,150 13,500 17,150 13,500 - other services - - - - Remuneration of the auditor of Diamonex (Botswana) Ltd for: - auditing or reviewing the financial report 7,960 7,706 - - - other compliance services 3,463 26,942 - - NOTE 7: EARNINGS PER SHARE No. No. 88,506,439 59,860,891 - 1,110,423 88,506,439 60,971,314 NOTE 8: CASH AND CASH EQUIVALENTS Cash at bank and on hand 305,016 1,350,841 118,203 1,254,286 Short-term bank deposits 575,874 1,730,975 571,164 1,730,975 Total cash 880,890 3,081,816 689,367 2,985,261 The earnings figure used in the calculation of both the basic EPS and the dilutive EPS are the same. Options to acquire ordinary shares in the parent entity are the only securities considered as potential ordinary shares in determination of diluted EPS. Options issued in the current year are not presently dilutive and have been excluded from the calculation of diluted EPS. Weighted average number of ordinary shares outstanding during the year used in the calculation of basic EPS Weighted average number of dilutive options outstanding during the year used in the calculation of basic EPS Weighted average number of ordinary shares and potential ordinary shares outstanding during the year used in the calculation of diluted EPS	17,150 13,500 17,150 13,500 - - - -
	7,960 7,706 - - 3,463 26,942 - -
	880,890 3,081,816 689,367 2,985,261

The effective interest rate on short-term bank deposits was 6.2% (2006: 5.2%). These deposits have an average maturity of 30 days.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements for the year ended 30 June 2007

	2007 2006 2007 2006 $ $ $ $ Economic Entity Parent Entity
NOTE 9: TRADE AND OTHER RECEIVABLES Current: Other Debtors Amount receivable from wholly owned controlled entities - Unsecured, interest bearing Total Current Non-Current: Amount receivable from wholly owned controlled entities - Unsecured, interest bearing Total Non- Current NOTE 10: OTHER ASSETS Current: Prepayments NOTE 11: PROPERTY, PLANT AND EQUIPMENT Plant and equipment At cost Accumulated depreciation Total Plant and equipment Leasehold Improvements At cost Accumulated amortisation Total Leasehold Improvements Total Property, Plant and Equipment Reconciliation Balance at 1 July 2005 Additions Disposals Foreign currency translation movement Depreciation and amortisation expense Balance at 1 July 2006 Additions Disposals Foreign currency translation movement Depreciation and amortisation expense Carrying amount at 30 June 2007 Reconciliation of the carrying amounts for property, plant and equipment is set out below:	355,026 81,440 45,053 68,484 - - - 3,824,416
	355,026 81,440 45,053 3,892,900
	- - 8,464,735 -
	- - 8,464,735 -
	34,637 13,794 10,651 13,794
	753,324 391,119 380,926 344,537 (327,220) (228,666) (262,779) (205,738)
	426,104 162,453 118,147 138,799
	549,801 10,511 - - (13,825) (5,480) - -
	535,976 5,031 - -
	962,080 167,484 118,147 138,799
	Economic Entity Parent Entity
	Plant and Equipment Leasehold Improve. Plant and Equipment Leasehold Improve.
	294,196 10,890 239,492 - - - - - - - - - (16,598) (2,598) (115,145) (3,261) (100,693) -
	162,453 5,031 138,799 - 435,281 562,570 36,390 - - - - - (69,789) (22,402) - - (101,841) (9,223) (57,042) -
	426,104 535,976 118,147 -

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements

for the year ended 30 June 2007

8 tatements une 2007
Economic	Entity	Parent	Entity
2007	2006	2007	2006
$	$	$	$

NOTE 12: FINANCIAL ASSETS

Non-current Available for sale investments Shares in Unlisted Controlled Entities: Lake Exploration Pty Ltd, incorporated in Australia. The parent entity holds 100% (2006: 100%) of the ordinary shares of the entity, carried at recoverable amount Diamonex (Botswana) Ltd, incorporated in Botswana. The parent entity holds 100% (2006: 100%) of the ordinary shares of the entity, carried at cost. Total available for sale investments NOTE 13: EXPLORATION AND EVALUATION ASSET Exploration and evaluation phase - at cost Opening balance - at cost Capitalised exploration expenditure Written off from abandoned areas of interest Transferred to development asset Foreign currency translation movement Carrying amount at the end of year Movement in exploration and evaluation asset: Exploration and evaluation expenditure carried forward in respect of areas of interest are:	- - 3 3 - - 3,277,475 10
	- - 3,277,478 13
	608,494 4,836,765 337,211 2,239,924
	4,836,765 3,769,875 2,239,924 1,580,953 546,076 1,580,600 274,793 658,971 - - - - (4,774,347) - (2,177,506) - - (513,710) - -
	608,494 4,836,765 337,211 2,239,924

Exploration tenements are registered in the name of the parent entity and Diamonex (Botswana) Limited. Both entities undertake exploration activities.

Recoverability of the carrying amount of exploration assets is dependent on the successful exploration and development of projects or alternatively through the sale of the areas of interest.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements

for the year ended 30 June 2007

	2007 2006 2007 2006 $ $ $ $ Economic Entity Parent Entity
NOTE 14: MINE DEVELOPMENT ASSET Mine development phase - at cost Opening balance - at cost Capitalised development expenditure Transferred from exploration and evaluation asset Foreign currency translation movement Carrying amount at the end of year Movement in mine development asset: Recoverability of the carrying amount of mine development assets is dependent on revenue to be derived from sale of production from the relevant development property, or from the sale of that property. During the financial year, a mining licence covering the proposed mine development area (Lerala Diamond Mine) within the Martin's Drift Diamond Project was granted. Economically recoverable reserves have been identified and the decision has been taken to proceed with development of the mine. Development expenditure carried forward in respect of areas of interest are:	10,748,145 - 2,790,414 -
	- - - - 6,390,017 - 612,908 - 4,774,347 - 2,177,506 - (416,219) - - -
	10,748,145 - 2,790,414 -

NOTE 15: TRADE AND OTHER PAYABLES Current: Trade creditors Sundry creditors and accrued expenses Accrued employee benefits Share application monies received Total trade & other payables (unsecured)	436,856 18,873 - - 358,523 231,065 340,209 223,029 153,475 97,200 153,475 97,200 - 2,155,555 - 2,155,555
	948,854 2,502,693 493,684 2,475,784

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements for the year ended 30 June 2007

	2007 2006 2007 2006 $ $ $ $ Economic Entity Parent Entity
NOTE 16: ISSUED CAPITAL 108,112,863 (2006: 68,769,014) fully paid ordinary shares Ordinary shares Balance at the beginning of the reporting period Shares issued during the year for cash: Prior year issues 10,743,774 on 7 July 2006 (a) 34,000 on 20 July 2006 (a) 10,416,667 on 18 December 2006 500,000 on 29 December 2006 (b) 12,835,161 on 11 April 2007 4,814,247 on 18 May 2007 Transaction costs relating to share issues Balance at reporting date Balance at the beginning of the reporting period Shares issued during the year: Prior year issues 7 July 2006 (a) 20 July 2006 18 December 2006 29 December 2006 11 April 2007 18 May 2007 Balance at reporting date	19,411,030 9,340,389 19,411,030 9,340,389
	9,340,389 6,821,569 9,340,389 6,821,569 - 2,518,820 - 2,518,820 2,148,755 - 2,148,755 - 6,800 - 6,800 - 2,500,000 - 2,500,000 - 160,000 - 160,000 - 3,978,900 - 3,978,900 - 1,492,417 - 1,492,417 - (216,231) - (216,231) -
	19,411,030 9,340,389 19,411,030 9,340,389
	No. No. No. No. 68,769,014 55,291,667 68,769,014 55,291,667 - 13,477,347 - 13,477,347 10,743,774 - 10,743,774 - 34,000 - 34,000 - 10,416,667 - 10,416,667 - 500,000 - 500,000 - 12,835,161 - 12,835,161 - 4,814,247 - 4,814,247 -
	108,112,863 68,769,014 108,112,863 68,769,014

Ordinary shares participate in dividends and the proceeds on winding up of the parent entity 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 one vote on a show of hands.

Effective 1 July 1998, the Corporations legislation in place abolished the concepts of authorised capital and par value shares. Accordingly, the company does not have authorised capital or par value in respect of its issued shares.

(a) These issues relate to conversion of options. Of the amount shown, $2,155,555 relates to the share application monies shown as payables in the 30 June 2006 financial statements.

(b) Shares issued in accordance with a shareholder resolution at the parent entity's Annual General Meeting, to Mr D Magang, a non-executive director. The issue was 500,000 shares valued at $0.32 per share, being market price at the close of trading on the day of the AGM.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements

for the year ended 30 June 2007

8 tatements une 2007
Economic	Entity	Parent	Entity
2007	2006	2007	2006
$	$	$	$

NOTE 16: ISSUED CAPITAL (continued)

Options

During the year, the parent entity granted options to the executive directors, pursuant to shareholder approval at the entity's Annual General Meeting. The terms and conditions of the grants are as follows:

			Number of	Contractual
Grant Date & Vesting			Options	Life of
				Option
Options granted and vesting on 30 November 2006			2,000,000	5 years
The value of share options and assumptions for the year ended 30
June 2007:
Fair value at grant date			5.08 cents
Share price			22 cents
Exercise price			35 cents
Expected volatility (expressed as weighted average
volatility used in the modelling under binomial lattice
model)			33.40%
Option life (expressed as weighted average life used in
the modelling under binomial lattice model)			5 years
Expected dividends			nil
Risk-free interest rate (based on government bonds)			5.75%
Historical volatility has been the basis for determining
expected share price volatility as it is assumed that this
is indicative of future tender, which may not eventuate.
	No.	No.	No.	No.
Balance at the beginning of the reporting period	-	32,567,500	-	32,567,500
Options exercised and shares allotted	-	(4,644,887)	-	(4,644,887)
Options exercised but shares not yet allotted	-	(10,777,775)	-	(10,777,775)
Options expired 30 June 2006	-	(17,144,838)	-	(17,144,838)
Options issued during the year	2,000,000	-	2,000,000	-
Balance at reporting date	2,000,000	-	2,000,000	-

NOTE 17: RESERVES

Foreign currency translation reserve

The foreign currency translation reserve records exchange differences arising on translation of a foreign controlled subsidiary.

Options reserve

The options reserve records amounts recognised as expenses on valuation of employee share options.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements for the year ended 30 June 2007

	2007 2006 2007 2006 $ $ $ $ Economic Entity Parent Entity
NOTE 18: CASH FLOW INFORMATION Loss from ordinary activities after income tax Non-cash flows in profit from ordinary activities: Depreciation/Amortisation Movement in employee benefits Employee options expense Changes in operating assets and liabilities: (Increase)/Decrease in receivables (Increase)/Decrease in prepayments (Decrease)/Increase in creditors and accruals Cash flows from operations Reconciliation of Cash Flow from Operations with Loss from Ordinary Activities after Income Tax:	(2,129,881) (1,034,873) (1,638,034) (706,423) 111,064 118,406 57,042 100,693 56,275 90,900 56,275 90,900 11,858 - 11,858 - (553,193) (14,608) 23,431 (26,684) (49,901) (5,971) 3,143 (8,488) 368,209 (100,156) 117,180 74,092
	(2,185,569) (946,302) (1,369,105) (475,910)

2007
2006
2007
2006
$
$
$
$
Economic Entity
Parent Entity

NOTE 18: CASH FLOW INFORMATION
Loss from ordinary activities after income tax
Non-cash flows in profit from ordinary activities:
Depreciation/Amortisation
Movement in employee benefits
Employee options expense
Changes in operating assets and liabilities:
(Increase)/Decrease in receivables
(Increase)/Decrease in prepayments
(Decrease)/Increase in creditors and accruals
Cash flows from operations
Reconciliation of Cash Flow from Operations with Loss
from Ordinary Activities after Income Tax:

(2,129,881)
(1,034,873)
(1,638,034)
(706,423)
111,064
118,406
57,042
100,693
56,275
90,900
56,275
90,900
11,858
-
11,858
-
(553,193)
(14,608)
23,431
(26,684)
(49,901)
(5,971)
3,143
(8,488)
368,209
(100,156)
117,180
74,092

(2,185,569)
(946,302)
(1,369,105)
(475,910)

Non-cash Financing and Investing Activities

Share Issue

During the financial year, 500,000 ordinary shares were issued to Mr D Magang, non-executive director, at a value of $0.32 per share, being market price at the close of trading on the day of the AGM, in accordance with a shareholder resolution at the parent entity's Annual General Meeting, for professional services rendered.

NOTE 19: 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.

Controlled Entities

The parent entity's shareholding in the controlled entities is detailed in note 12.

Finance provided to the controlled entities is detailed in note 9, and interest income in note 2.

Guarantees issued by the parent entity in respect of controlled entities are detailed in note 25.

Key management personnel transactions with the economic entity

Key management personnel compensation and equity interests are detailed in Note 5.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements

for the year ended 30 June 2007

8 tatements une 2007
Economic	Entity	Parent	Entity
2007	2006	2007	2006
$	$	$	$

NOTE 19: RELATED PARTY TRANSACTIONS (continued)

During the year, the parent entity paid Cambridge Business & Corporate Services, an entity controlled by Mr Paul Crawford, a director of the company, professional fees of $160,766 (2006: $128,450) for accounting, company secretarial, financial management and other services provided to the entity. The amount owing by the company at 30 June is $44,400 (2006: $18,600).

During the year, the parent entity paid Mr David Magang for professional services rendered to the entity, by the issue of 500,000 fully paid ordinary shares with a value of $160,000.

During the year, the parent entity paid Duncan Geological Services, an entity controlled by Mr Don Duncan, a director of the company, professional fees of $15,961 (2006: $50,919) for consulting geological and field services provided to the entity. No amount was owed by the company at 30 June (2006: nil).

The company was party to a tenancy agreement with ActivEX Limited, a company of which Mr Paul Crawford, a director of the company, is also a director. The amount owing to the company at 30 June is $20,000 (2006: $20,000).

NOTE 20: COMMITMENTS

(a) Operating Lease Commitments

Non-cancellable operating leases contracted for but not capitalised in the financial statements, payable:

Not later than 1 year Later than 1 year but not later than 5 years Total commitment	86,339 82,500 86,339 82,500 320,585 - 320,585 -
	406,924 82,500 406,924 82,500

The property lease is a non-cancellable lease with a five-year term, with rent payable monthly in advance. Contingent rental provisions within the lease agreement require the minimum lease payments shall be increased by the greater of CPI or 4.5% per annum.

(b) Exploration Commitments

The economic entity must meet minimum expenditure commitments in relation to granted exploration tenements to maintain those tenements in good standing.

The following commitments exist at balance date but have not been brought to account. If the relevant mineral tenement is relinquished the expenditure commitment also ceases.

Not later than 1 year Later than 1 year but not later than 5 years Total commitment	698,113 855,744 568,240 698,468 1,525,420 1,808,584 1,525,420 1,638,680
	2,223,533 2,664,328 2,093,661 2,337,148

(c) Capital expenditure commitments

During the year the economic entity took the decision to proceed with development of the Leralla Diamond Mine in Botswana. The total estimated cost of the mine is approximately $28 million. At 30 June 2007 the economic entity had incurred $6.3 million of this amount, and had contracted for a further $12.6 million. The balance will be expended in the 2008 financial year.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements

for the year ended 30 June 2007

8 tatements une 2007
Economic	Entity	Parent	Entity
2007	2006	2007	2006
$	$	$	$

NOTE 21: EVENTS AFTER BALANCE SHEET DATE

(a) Shareholder matters

On 16 July 2007 shareholders ratified the issue (in April 2007) of 12,835,161 shares in the parent entity.

(b) Lerala Mine development

(c) Listing matters

(d) Financial report

This financial report was authorised for issue on 3 September 2007 by the Board of Directors.

NOTE 22: COMPANY DETAILS

The registered office and principal place of business is:

Diamonex Limited Level 1 349 Coronation Drive Milton Qld 4064

DIAMONEX LIMITED AND CONTROLLED ENTITIES ABN 26 091 951 978

Notes to the Financial Statements for the financial year ended 30 June 2007

NOTE 23: SEGMENT REPORTING

The economic entity operates both domestically and internationally, in the mineral exploration industry. The exploration focus is exclusively on diamonds. At balance date the economic entity undertakes exploration activity in Australia and Botswana through the parent entity, and mine development and exploration in Botswana, through the controlled entity.

Primary Reporting: Geographical Segments

REVENUE Revenue Total revenue from ordinary activities RESULT Loss from ordinary activities before income tax expense Income tax expense Loss from ordinary activities after income tax expense ASSETS Segment assets LIABILITIES Segment liabilities OTHER Acquisitions of non-current Segment assets Depreciation & amortisation of Segment assets Other non-cash Segment expenses	2007 2006 2007 2006 2007 2006 $ $ $ $ $ $ 71,266 28,758 51,904 17,845 123,170 46,603 Australia Botswana Economic Entity
	71,266 28,758 51,904 17,845 123,170 46,603
	(2,059,827) (918,379) (15,500) (116,494) (2,075,327) (1,034,873) (54,554) - - - (54,554) -
	(2,114,381) (918,379) (15,500) (116,494) (2,129,881) (1,034,873)
	882,483 3,216,111 12,706,789 4,965,188 13,589,272 8,181,299
	493,684 2,475,784 455,170 26,909 948,854 2,502,693
	45,885 - 7,728,059 1,580,600 7,773,944 1,580,600 57,042 100,693 54,022 17,713 111,064 118,406 68,133 90,900 - - 68,133 90,900

There were no transfers between segments reflected in the revenues, expenses or result above. The pricing of any intersegment transactions is based on market values.

Secondary Reporting: Business Segments

	Segment Revenues from	Segment Revenues from	Carrying Amount of	Acquisition	of Non-
	External	Customers	Segment Assets	Current Segment Assets
	2007	2006	2007 2006	2007	2006
Business Segments	$	$	$ $	$	$
Mineral Exploration	123,170	46,603	13,589,272 8,181,299	7,773,944	1,580,600

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements

for the financial year ended 30 June 2007

NOTE 24: FINANCIAL INSTRUMENTS

(a) Financial Risk Management

The economic entity financial instruments consist mainly of deposits with banks, accounts receivable and payable.

The main purpose of non-derivative financial instruments is to provide finance for group operations.

Treasury Risk

A finance committee consisting of key management of the economic entity meet on a regular basis to analyse exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts.

Financial Risks

The main risks the economic entity is exposed to through its financial instruments are interest rate risk, foreign currency risk and liquidity risk. These risks are managed through monitoring of forecast cashflows, interest rates, economic conditions and ensuring adequate funds are available.

(b) Interest Rate Risk

The economic entity's exposure to interest rate risk, which is the risk that a financial instrument's value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on classes of financial assets and financial liabilities, is as follows:

Weighted Average Effective Interest Rate	Weighted Average Effective Interest Rate	Floating Interest Rate	Floating Interest Rate	Non-Interest Bearing	Non-Interest Bearing	Total	Total
2007 %	2006 %	2007 $	2006 $	2007 $	2006 $	2007 $	2006 $
6.20% - -	5.20% - -	725,820 -	3,079,960 -	155,070 355,026	1,856 81,440	880,890 355,026	3,081,816 81,440
		725,820	3,079,960	510,096	83,296	1,235,916	3,163,256
		-	-	948,854	2,502,693	948,854	2,502,693
		-	-	948,854	2,502,693	948,854	2,502,693

(c) Net Fair Values

No financial assets or liabilities are readily traded on organised markets in a standardised form.

Financial assets where the carrying amount exceeds net fair values have not been written down, as the economic entity intends to hold these assets to maturity.

The aggregate net fair values and carrying amounts of financial assets and liabilities are disclosed in the balance sheet and notes to the financial statements. Fair values are materially in line with carrying values.

NOTE 25: CONTINGENT LIABILITIES

The parent entity has guaranteed the performance of the obligations of Diamonex (Botswana) Limited under its mining licence issued by the government of Botswana. Under the guarantee, the parent entity also undertakes to indemnify the government against any losses which may arise under any failure by Diamonex (Botswana) Limited to meet its obligations.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements

for the financial year ended 30 June 2007

NOTE 26: SHARE BASED PAYMENTS

On 30 November 2006, 2,000,000 share options were granted to executive directors of the parent entity to take up ordinary shares at an exercise price of $0.35 each. The options are exerciseable on or before 30 November 2011. The options hold no voting or dividend rights.

On 31 December 2006, 500,000 ordinary shares were issued to Mr D Magang, non-executive director, at a value of $0.32 per share, being market price at the close of trading on the day of the AGM, in accordance with a shareholder resolution at the parent entity's Annual General Meeting. The shares have voting and dividend rights.

All options granted to executive directors are over ordinary shares in DiamonEx Limited, which confer a right of one ordinary share per option.

Outstanding at the beginning of the year Granted Forfeited Exercised Expired Outstanding at year-end Exerciseable at year-end	Consolidated Group Parent Entity 2007 2006 2007 2006 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price - - - - - - - - 2,000,000 0.35 $ - - 2,000,000 0.35 $ - - - - - - - - - - - - - - - - - - - - - - - - - -
	2,000,000 0.35 $ - - 2,000,000 0.35 $ - -
	2,000,000 0.35 $ - - 2,000,000 0.35 $ - -

Outstanding at the
beginning of the year
Granted
Forfeited
Exercised
Expired
Outstanding at year-end
Exerciseable at year-end

Consolidated Group
Parent Entity
2007
2006
2007
2006
Number of
Options
Weighted
Average
Exercise
Price
Number of
Options
Weighted
Average
Exercise
Price
Number of
Options
Weighted
Average
Exercise
Price
Number of
Options
Weighted
Average
Exercise
Price
-
-
-
-
-
-
-
-
2,000,000
0.35
$ -
-
2,000,000
0.35
$ -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

2,000,000
0.35
$ -
-
2,000,000
0.35
$ -
-

The options outstanding at 30 June 2007 had a weighted average exercise price of $0.35 and a weighted average remaining contractual life of 4.42 years. Refer note 16 regarding assessment of fair vaue of options granted.

Included under employee benefits expense in the income statement is $11,858 (2006: nil), and relates, in full, to equitysettled share-based payment transactions.

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements for the financial year ended 30 June 2007

Note 27: CHANGE IN ACCOUNTING POLICY

The following Australian Accounting Standards have been issued or amended and are applicable to the company and the economic entity but are not yet effective. They have not been adopted in preparation of the financial statements at reporting date.

AASB	Affected standards	Outline of Amendment	Application	Application date
2005-10	AASB 1 First-time Adoption of AIFRS;	The disclosure requirements of	1 Jan 2007	1 July 2007
Amendment	AASB 101 Presentation of Financial	AASB 132 Financial
to Australian	Statements;	Instruments: Disclosure &
Accounting	AASB 114 Segment Reporting;	Presentation has been replaced
Standards	AASB 117 Leases;	due to the issue of AASB 7:
	AASB 133 Earnings per Share.	Financial Instruments:
	AASB 139 Financial Instruments:	Disclosures in August 2005.
	Recognition and Measurement;	These amendments involve
		changes to financial instrument
		disclosures within the financial
		report. However there will be
		no direct impact on amounts
		included in the financial report
		as it is a disclosure standard.
AASB 7	AASB 132 Financial Instruments:	As above.	1 Jan 2007	1 July 2007
	Disclosures and Presentation
AASB 123	AASB 123 Borrowing Costs	Under this amendment only the	1 Jan 2009	1 July 2009
		capitalisation treatment is
		permitted in relation to
		borrowing costs directly
		attributable to the acquisition,
		construction or production of a
		qualifying asset.

DIAMONEX LIMITED AND CONTROLLED ENTITIES ABN 26 091 951 978

DIRECTORS’ DECLARATION

The directors of the company declare that:

The attached financial statements and notes are in accordance with the Corporations Act 2001 and:
(a) comply with Accounting Standards and the Corporations Regulations 2001; and
(b) give a true and fair view of the financial position as at 30 June 2007 and of the performance of the company and economic entity for the year ended on that date;
The Chief Executive Officer and Chief Finance Officer have each declared that:
(a) the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001;
(b) the financial statements and notes for the financial year comply with the Accounting Standards; and
(c) the financial statements and notes for the financial year 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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G M King Chairman

D C O’Neill

Managing Director

Dated this: 3rd day of September 2007

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AI assistant

ELEVRA LITHIUM LIMITED — Annual Report 2007

64838_rns_2007-09-04_2ff8377c-4aa0-41c8-b979-ae9b0bec187c.pdf

DiamonEx Limited ABN 26 091 951 978

AUDITED FINANCIAL REPORT 2007

Paul Crawford Company Secretary

DIAMONEX LIMITED AND CONTROLLED ENTITIES

DIRECTORS’ REPORT

Directors

Company Secretary

Principal Activities

DIRECTORS’ REPORT

Review of Operations

Financial Position

Dividends

Significant Changes in State of Affairs

DIRECTORS’ REPORT

Information on Directors

DIRECTORS’ REPORT

Resignation of Directors

Future Developments, Prospects and Business Strategies

Remuneration Report

DIAMONEX LIMITED AND CONTROLLED ENTITIES ABN 26 091 951 978

DIRECTORS’ REPORT

Options granted as remuneration

DIRECTORS’ REPORT

Subsequent Events

(a) Shareholder matters

(b) Lerala Mine development

(c) Listing matters

Environmental Regulations

Options

DIRECTORS’ REPORT

Indemnifying Directors’ and Auditors’

Proceedings on Behalf of the Company

Corporate Governance

Non-audit Services

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

DIRECTORS’ REPORT

Auditor’s Independence Declaration

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

INCOME STATEMENT

for the year ended 30 June 2007

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

BALANCE SHEET

As at 30 June 2007

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

STATEMENT OF CHANGES IN EQUITY

for the year ended 30 June 2007

DIAMONEX LIMITED AND CONTROLLED ENTITIES

CASH FLOW STATEMENT

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements for the financial year ended 30 June 2007

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

Income Tax

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements

for the financial year ended 30 June 2007

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Leases

Property, Plant and Equipment

Exploration and Evaluation Assets

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements for the financial year ended 30 June 2007

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Mine Development Asset

Restoration Costs

Impairment of Assets

Advances to Controlled Entities

DIAMONEX LIMITED AND CONTROLLED ENTITIES

ABN 26 091 951 978

Notes to the Financial Statements for the financial year ended 30 June 2007

ELEVRA LITHIUM LIMITED Annual Report 2007