EMU NL — Interim / Quarterly Report 2008

May 29, 2008

==> picture [235 x 97] intentionally omitted <==

==> picture [24 x 12] intentionally omitted <==

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

NL
----- End of picture text -----

ABN 50 127 291 927

---

HALF-YEAR FINANCIAL REPORT

29 FEBRUARY 2008

---

• Page 1 -

EMU NICKEL NL ABN 50 127 291 927

CONTENTS

HALF-YEAR FINANCIAL REPORT

	Page No.
Directors’ Report	3
Auditor’s Independence Declaration	6
Condensed Income Statement	7
Condensed Balance Sheet	8
Condensed Statement of Changes in Equity	9
Condensed Statement of Cashflows	10
Notes to and forming part of the Financial Statements	11
Directors' Declaration	14
Independent Review Report	15

• Page 2 -

EMU NICKEL NL

DIRECTORS’ REPORT

Your directors submit the financial report of the company for the half-year ended 29 February 2008 being the first six months from its incorporation on 29 August 2007.

DIRECTORS

The following persons were directors of Emu Nickel NL (“Emu Nickel”) during the whole of the halfyear and up to the date of this report:

Mr Peter Thomas Mr Roger Thomson Mr George Sakalidis

REVIEW OF OPERATIONS

The company was first incorporated on 29 August 2007. The Corporations Act 2001 requires a reporting entity to prepare six monthly financial statements and as a consequence, requires that this report be prepared in respect of the six month period commencing on the date of incorporation and ending six months thereafter, namely 29 February 2008.

The loss for the half-year ended 29 February 2008 was $2,397. The company’s activities during the six month period are summarised as follows:

INITIAL PUBLIC OFFERING

Emu Nickel’s initial public offering raised $10 million following which the Company was admitted to the Official List of ASX on 25 February 2008 with quotation of the Company’s securities commencing on 27 February 2008.

The listing triggered a joint venture with Image Resources NL under which Emu may earn an 80% interest in Image’s interest in a 2,500sq km package of tenements in Western Australia. In the event that Emu earns an 80% interest in the tenements, it may elect to earn the remaining 20% of Image’s interest, with Image returning a 1% gross royalty interest. The location of the projects is shown in Figure 1.

• Page 3 -

EMU NICKEL NL

DIRECTORS’ REPORT

==> picture [426 x 550] intentionally omitted <==

==> picture [75 x 24] intentionally omitted <==

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

Figure 1
Location Map
----- End of picture text -----

• Page 4 -

EMU NICKEL NL

DIRECTORS’ REPORT

INDEPENDENCE DECLARATION BY AUDITOR

The lead auditor’s independence declaration under section 307C of the Corporations Act 2001 is set out on page 6 for the half-year ended 29 February 2008.

This report has been signed in accordance with a resolution of directors.

For and on behalf of the Directors

G Sakalidis

Managing Director Date: 28 May 2008

• Page 5 -

EMU NICKEL NL

AUDITOR INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF EMU NICKEL NL

==> picture [95 x 109] intentionally omitted <==

Auditor’s Independence Declaration to the Directors of Emu Nickel NL

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Emu Nickel NL.

As audit partner for the review of the financial statements Emu Nickel NL for the period ended 29 February 2008, I declare that to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

(ii) any applicable code of professional conduct in relation to the review.

SOMES and COOKE

==> picture [118 x 60] intentionally omitted <==

K. C. Somes Partner 1304 Hay Street West Perth WA 6005

Date: 28 May 2008

• Page 6 -

EMU NICKEL NL

CONDENSED INCOME STATEMENT FOR THE HALF-YEAR ENDED 29 FEBRUARY 2008

Notes Revenue from ordinary activities Profit on sale of investments Depreciation expense Exploration and tenement expenses written off Other expenses from ordinary activities Share based payments Profit/(Loss) from ordinary activities before income tax expense Income tax expense relating to ordinary activities Profit/(Loss) from ordinary activities after related income tax expense Profit/(Loss) from ordinary activities after related income tax expense attributable to members of Emu Nickel NL Basic profit/(loss) per share (cents per share) Diluted profit/(loss) per share (cents per share) The accompanying notes form part of these financial statements.	($) 3,418 - - - (5,815) -
	(2,397) -
	(2,397)
	(2,397)
	(0.0119) (0.0119)

• Page 7 -

EMU NICKEL NL

CONDENSED BALANCE SHEET AS AT 29 FEBRUARY 2008

Notes Current Assets Cash assets Receivables Prepayments Total Current Assets Non-Current Assets Plant and equipment Tenement costs Other financial assets 2 Total Non-Current Assets TOTAL ASSETS Current Liabilities Payables Total Current Liabilities TOTAL LIABILITIES NET ASSETS Equity Contributed equity 3 Reserves Accumulated losses TOTAL EQUITY	($) 9,330,132 95,567 5,820
	9,431,519
	80,816 413 10,000
	91,229
	9,522,748
	(738,940)
	(738,940)
	(738,940)
	8,783,808
	8,786,205 - (2,397)
	8,783,808

The accompanying notes form part of these financial statements.

• Page 8 -

EMU NICKEL NL

CONDENSED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 29 FEBRUARY 2008

	Share Capital ($)	Accumulated Losses ($)	Total ($)
Shares issued duringtheperiod	10,003,476		10,003,476
Capital raisingcosts	(1,217,271)		(1,217,271)
Loss forperiod		(2,397)	(2,397)
Balance at 29.2.2008	8,786,205	(2,397)	8,783,808

The accompanying notes form part of these financial statements.

• Page 9 -

EMU NICKEL NL

CONDENSED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 29 FEBRUARY 2008

CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and contractors Interest and dividends received Net cash provided by / (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of plant and equipment Purchase of investments Net cash provided by / (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from new issues of shares Capital raising costs Net cash provided by financing activities Net (decrease) / increase in cash held Cash at the beginning of the financial period Cash at the end of the financial period	($) (89,229) 3,419
	(85,810)
	(309) (10,000)
	(10,309)
	10,003,476 (577,225)
	9,426,251
	9,330,132 -
	9,330,132

The accompanying notes form part of these financial statements.

• Page 10 -

EMU NICKEL NL

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 29 FEBRUARY 2008

NOTE 1 BASIS OF PREPARATION

The half-year condensed financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standard AASB 134: Interim Financial Reporting, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board.

It is recommended that this financial report be read in conjunction with any public announcements made by Emu Nickel NL during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001.

The half-year report does not include full disclosures of the type normally included in an annual financial report.

Reporting Basis and Conventions

The half-year report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

NOTE 2 OTHER FINANCIAL ASSETS

NOTE 2 OTHER FINANCIAL ASSETS Available for sale assets Purchases – at cost Sales at carrying value Increase/(Decrease) in fair value Balance 29 February 2008	Half Year Ended 29 Feb 2008 ($) 10,000 - -
	10,000

• Page 11 -

EMU NICKEL NL

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 29 FEBRUARY 2008

NOTE 3 CONTRIBUTED EQUITY Ordinary Fully Paid Shares Issued during the period Total Ordinary Fully Paid Shares Issued at 29 February 2008 Share issue expenses Total Net Equity Other Unlisted Options to acquire Ordinary Fully Paid Shares Issued to directors and consultants – exercisable on or before 29 February 2013 at $0.50 each Total Options to acquire Ordinary Fully Paid Shares at 29 February 2008	Number 59,828,940 59,828,940 10,000,000 10,000,000
		$
		10,003,476
		10,003,476
		(1,217,271)
		8,786,205
		-
		-

NOTE 4 TENEMENT EXPENDITURE COMMITMENTS

The Company has entered into certain obligations to perform minimum exploration work on tenements held or joint ventured into. These obligations vary from time to time in accordance with contracts signed. Tenement rentals and minimum expenditure obligations which may be varied or deferred on application are expected to be met in the normal course of business. The minimum statutory expenditure requirements on the granted tenements for the next twelve months amounts to $987,000.

NOTE 5 SEGMENT INFORMATION

The Company operates only in one business, being the exploration for and development of minerals. Geographically, the company's activities are conducted mainly within Western Australia.

NOTE 6 EVENTS SUBSEQUENT TO REPORTING DATE

There have been no matters or circumstances that have arisen since 29 February 2008 that has significantly affected or may significantly affect:

• (a) the Company’s operations in future years; or

• (b) the results of those operations in future years; or

• (c) the Company’s state of affairs in future years.

NOTE 7 CONTINGENT LIABILITIES

Native Title

The Company’s activities in Australia are subject to the Native Title Act and its interpretation.

The Native Title Act legally recognises the title rights of indigenous Australians over areas where those rights have not been lawfully extinguished. State and Commonwealth native title legislation regulates the recognition, application and protection of native title. Native title may affect the status, renewal and conversion of existing tenements and the granting of new tenements. Indigenous land use agreements, including terms of compensation, heritage survey and protection agreements or other agreement types may need to be negotiated with affected parties.

The Native Title Act prescribes procedures applicable to the grant of tenements which apply even in the case of, for instance, a granted exploration licence being “converted” to, say, a mining lease.

• Page 12 -

EMU NICKEL NL

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 29 FEBRUARY 2008

Compensation may become payable in respect of any impact which the grant of any tenements or other activities have on native title. A tenement holder may be liable for the payment of compensation for the affect of mining and exploration activities on any native title rights and interests that exist in the area covered by a tenement. Compensation may be payable in forms other than money, including the transfer of property and the provision of goods and services.

It is not currently possible to assess whether compensation will be payable by the Company to native title holders in relation to any of the tenements but such compensation could be significant.

There may be sites and objects of significance to indigenous Australians located on the land relating to the Company’s tenements. State and Commonwealth Aboriginal heritage legislation aims to preserve and protect these sites and objects from use in a manner inconsistent with Aboriginal tradition. The Company proposes carrying out ‘clearance surveys’ before conducting any exploration work that would disturb the surface of the land. The Company’s tenements may contain some such sites of significance, which would need to be avoided or cause delays. It is possible that areas containing mineralisation or an economic resource may also contain sacred sites, in which case they may remain unexploited. Access agreements will need to be negotiated with affected parties.

Native title, Aboriginal heritage or other indigenous matters are matters of substantial risk (giving rise to the threat that certain tenements may not be granted, access to certain tenements may be denied or delayed in addition to potentially significant cost exposure in respect of things such as negotiations, surveys, incentive payments and compensation to name but a few) as the legislative frame works provide torturous and frequently uncertain routes to the endeavour by both stakeholders (that is explorers/miners and indigenous peoples) to attain certainty.

It is not possible to quantify the financial or other impact native title and Aboriginal heritage will have upon the Company as, amongst other things, the processes involved with:

• (a) identifying all and only the indigenous peoples with a relevant interest; (b) registering an indigenous land use agreement;

• (c) obtaining access to land without infringing the provisions of the Aboriginal Heritage Act; are open ended, can involve substantial delay and cost and there can be no certainty as to the outcome with it being possible for projects to be entirely frustrated.

This could be the case, for instance, even in circumstances where:

• (a) a native title party consents to the grant of an exploration licence and assists the exploration endeavour thereon (and the discovery of an otherwise economic deposit);

• (b) the Company, in order to exploit that discovery, applies for a mining lease (or other required approval, consent, authority etc.) but such grant, approval, consent or authority is not forthcoming by reason of an objection by the same or another native title party.

Freehold Access

The interests of holders of freehold land encroached by the tenements are given special recognition by the Mining Act (WA). As a general proposition, a tenement holder must obtain the consent of the owner of freehold before conducting operations on the freehold land. There can be no assurance that the Company will secure rights to access those portions of the tenements encroaching freehold land, either at all or for all purposes, but, importantly, the grant of freehold extinguished native title so wherever the tenements encroach freehold the Company is in the position of not having to abide by the Native Title Act albeit aboriginal heritage matters will still be of concern.

• Page 13 -

EMU NICKEL NL

DIRECTORS' DECLARATION

The directors of the company declare that:

1. the accompanying financial statements and notes:

2. (a) comply with Accounting Standard AASB 134 : Interim Financial Reporting and the Corporations Regulations 2001; and

3. (b) give a true and fair view of the financial position of the company as at 29 February 2008 and its performance for the half-year ended on that date.

4. 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:

Signed at Perth: George Sakalidis Managing Director

Dated this 28[th] day of May 2008.

• Page 14 -

==> picture [95 x 110] intentionally omitted <==

Independent review report to the members of EMU NICKEL NL Scope

We have reviewed the accompanying half-year financial report of Emu Nickel NL (the Company), which comprises the condensed balance sheet as at 29 February 2008, and the condensed income statement, condensed statement of changes in equity and condensed cash flow statement for the half-year ended on that date, a statement or description of accounting policies, other selected explanatory notes and the directors’ declaration.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the Company are responsible for the preparation and fair presentation of the half-year financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes designing, implementing and, maintaining internal control relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor‘s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor’ of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Company‘s financial position as at 29 February 2008 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of the Company, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

Liability Limited by a scheme approved under Professional Standards Legislation

• Page 15 -

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

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, provided to the directors of the Company on 16 March 2007, would be in the same terms if provided to the directors as at the date of this auditor’s review report.

Conclusion

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

• (a) giving a true and fair view of the Company’s financial position as at 29 February 2008 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

==> picture [171 x 54] intentionally omitted <==

Somes & Cooke Chartered Accountants Kevin Clarence Somes Partner Perth

Date: 28 May 2008

Liability Limited by a scheme approved under Professional Standards Legislation

• Page 16 -