EV RESOURCES LTD — Interim / Quarterly Report 2013

Mar 14, 2013

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Financial Report For The Half Year Ended 31 December 2012

For South East Asia Resources Limited (formerly Victory West Metals Limited) and Controlled Entities

ABN 66 009 144 503

This Half-Year Report should be read in conjunction with the Company’s Annual Report for the year ended 30 June 2012

Contents

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Contents Page
Directors' Report…………………………………………………………………………………………………………………… .............. 4
Directors' Declaration……………………………………………………………………………………………………………….. .........11
Auditors’ Independence Declaration……………………………………………………………………………………………. .......12
Statement of Comprehensive Income – For the Half Year Ended 31 December 2012 ...............................13
Statement of Financial Position – As at 31 December 2012.........................................................................14
Statement of Changes in Equity – For the Half Year Ended 31 December 2012 .........................................15
Statement of Cash Flows – For the Half Year Ended 31 December 2012 ....................................................16
Notes to and forming part of the Interim Financial Report .............................................................................17
Independent Auditor’s Review Report ..............................................................................................................27

Directors’ Report

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Directors’ Report

The Directors’ present their report together with the financial report of South East Asia Resources Limited (ASX: SXI ) (previously known as Victory West Metals Limited) and its controlled entities (“the Company” or “consolidated entity”) for the half year ended 31 December 2012.

The Directors of the Company who held office during or since the end of the half year and until the date of this report were:

Mr. Steven Pynt B.Juris, LLB, MBA.

Chairman and Non-Executive Director

Mr. Michael Scivolo B.Com FCPA Mr. Wayne Knight

Non –Executive Director Non- Executive Director

Operating Results

During the period the Company made a loss of $782,292 ($1,063,298 in 2011).

Review of Operations

The Consolidated entity’s activities are contained in releases to the ASX on a quarterly basis and can be obtained from our website www.southeastasiaresources.com.au .

Throughout the half year, the Company has continued to execute its vision of finding, proving and extracting value from world class resource projects in South East Asia and while the Company continues to focus on its cornerstone asset the Malala Molybdenum Project in Sulawesi, Indonesia, the Company, as announced on 24 December 2012, has begun expanding its focus through acquiring South East Asia Energy Pte Ltd (SEAE), a highly prospective Company with interests in coal projects in East Kalimantan, Indonesia.

On 24 December 2012, the Company adopted its new name of South East Asia Resources Limited, as approved by shareholders on 30 November 2012.

Key Highlights

Notable events during the six month period include:

• During December 2012, completed the placement of 30 million ordinary shares at $0.025 per share to raise $750,000, before costs.

• On 5 December 2012, the Company announced it had entered into an advanced funding / off-take Arrangement Term Sheet with Gouandong Era Eleman Resources Co. Ltd (Gouandong), guaranteed by the Company.

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Directors’ Report

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Gouandong has agreed to provide prepayment finance of USD$3 million (advance) to SEAE in exchange for the rights to a minimum thermal coal off-take of 1 million tonnes high quality thermal coal. For additional details, please refer to the announcement lodged with ASX.

• On December 24 2012, the Company finalized the acquisition of 100% of South East Asia Energy Resources Pte Ltd (SEAE) and issued 110 million Class B Performance Shares and 33 million options (exercisable at $0.30, expiration date 24 December 2015, vesting upon achievement of performance milestones).

Overview / South East Asia Energy Resources Pte Ltd (SEAE)

SEAE is a Singapore company which currently holds, and has the ability to secure further, interests in a number of Indonesian thermal and coking coal projects. It currently has an interest in the Penajam East thermal coal project and has identified a number of additional projects for future review. SEAE is also a party to certain service contracts which will provide the necessary skills to acquire, explore, develop and mine Indonesian coal assets.

The acquisition is consistent with SEAE’s current stated business objectives of acquiring and developing resources projects in South East Asia.

SEAE is highly experienced in the identification of high quality resource assets in both Indonesia and Australia, and have a well-connected team of local based and expatriate engineers and geologists who work with local and regional mine concession owners on a regular basis. Upon completion, SEAE’s team will combine with SEAE’s management team to identify potential mineral, thermal and coking coal assets, review existing assets, and conduct full asset due diligence (legal and technical) with an aim of securing significant JORC Code compliant resources for SEAE.

SEAE has an experienced management team with international mining, engineering, infrastructure and equipment experience which is capable of undertaking solutions from exploration, development to full capabilities in processing, open cut, high wall & underground mining projects. The team has been working together for the last seven years with a focus in Indonesia, Australia and Mongolia. For the past three years they have focused on identifying projects in Indonesia.

SEAE has a mining services agreement with United Asia Energy (UAE) in Singapore. Under the terms of the agreement between PT1 (defined below) and SEAE, UAE may nominate the Indonesian party to conduct mining services with respect to the conduct of mining activities in the concessions.

The acquisition was satisfied by 110 million performance shares and 33 million SEAE options and a cash payment of $750,000, together with a further 220 million fully paid ordinary shares should future performance hurdles be met. Agreed milestones are in place for full payment of consideration as announced by the Company on 24 December 2012.

Penajam East Project

The Penajam East coal project consists of two concessions located in the Penajam Regency of East Kalimantan, Indonesia. The project is within the Kutai Basin and includes a haul road and port facilities. The Penajam East project has been subject to previous mining and exploration which should advance the development process however, this information has not been obtained for review by SEAE.

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Directors’ Report

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Highlights of the Penajam East project include the following:

• Substantial concession areas of 185.13ha, with mining approval over the entire concession areas with granting of Production Operation IUP’s.

• 5 mining pits already open with overburden removed, and available for recommissioning leading to reduced start-up costs and time.

• Coal outcrop/exposed coal only found in ex mining activities. Coal thickness ranges between 0.45m and 1.1m.

• Additional opportunities for further exploration.

• Both concessions share the same haul road and jetty infrastructure.

• Rights to use haul road and jetty/port services granted to PT1, or a party nominated by PT1;

• Short transportation with distance to the jetty only 8 – 10 kms.

• Low progressive entry for entry in imminent mining concessions.

• Availability of third party coal in the immediate region identified for blending.

• Significant growth opportunities with minimal future investment.

• Future growth potential to take-over surrounding concessions.

Certified Sample Analysis	Certified Sample Analysis
(PT Geosciences Laboratory)
	Range
Calorific Value (abd)	5,825 – 5,971 Kcal/kg
Calorific Value (gar)	5,535 - 5,755 Kcal/kg
Ash (adb)	1.8% - 4.5%
Total Sulphur (adb)	1.79% - 2.65%
Inherent Moisture (ar)	16% – 17%
Total Moisture (ar)	20% - 21.5%

Figure 1: Technical Analysis of Coal Samples undertake from 3 locations with previous pits

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Directors’ Report

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Concession 1
Concession 2
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Figure 2 : Location of Penjam East project, showing proximity to Balikpapan Coal Terminal

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Figure 3 : Location of Penjam East project, showing proximity to Jetty

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Directors’ Report

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The development/production strategy is to begin operations in concession 1 in the most recently mined open pit, where the coal seam is exposed. Coal produced from concession is expected to have medium to high sulphur. The Company proposes to blend this coal with appropriate medium grade, low sulphur coal to reduce the project’s sulphur content to produce medium grade coal with less than >1% sulphur suitable for exporting.

Following initial production, stage 2 of production will involve further exploration of the concession, in particular concession 2. Further drilling and exploration will continue throughout both concessions to look for additional mining opportunities.

The concessions are currently owned by cooperatives of local landowners, who have entered into exclusive coal sales contracts with a local special purpose Indonesian PT company ( PT1 ), with rights to reject coal of less than agreed specifications. PT1 has entered into an exclusive coal sales contract with SEAE for the sale of all coal from the concessions.

Management Committees, consisting of representatives of SEAE, PT1 and the respective concession holders, will give directions to the concession holders with respect to exploration and mining of coal, including the party to be appointed to undertake mining activities.

The haul road and jetty to service both concessions is owned by one of the concession holders. PT1 has rights to use the haul road and jetty services, or nominate a third party to use such services.

Malala Molybdenum Project, Sulawesi, Indonesia

The Malala Project is located in the Toli Toli Regency of Central Sulawesi Province, Indonesia, approximately 150km to the north of Palu (Figure 1). The project comprises five IUP concessions: PT Inti Cemerlang, PT Promistis, PT Era Moreco, PT Sembilan Sumber Mas & PT Indo Surya. The total area forming the Malala Project is in excess of 240km2 (Figure 2) spread across the five concessions all of which are located within 15km of the coast.

Since acquisition, SEAE has worked diligently at compiling and reviewing the historical data and re-initiating the exploration process. The majority of work has targeted Anomaly B, the key area of Rio Tinto/Santos exploration efforts in the 1970’s and 1980’s. Rio Tinto had defined a non-JORC compliant resource at Anomaly B which is the basis of SEAE’s exploration target of 105-115Mt @ 660-900ppm Mo[1] . In FY2009, SEAE began the task of proving up this initial exploration target, with this work continuing throughout FY2010. The Company has significantly advanced its understanding of the Anomaly B prospect area, with detailed trenching and geophysical surveying making large contributions to this improved understanding.

1 In accordance with Clause 18 of the JORC Code, it is important to note that no JORC Mineral Resources or Ore Reserves have been established on these tenements and any current assessment remains subject to ongoing exploration work and drilling. The current interpretation remains preliminary and is based on exploration, evaluation and resource definition work performed by Rio Tinto, Santos and SEAE.

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Directors’ Report

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Malala Moly Project
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Figure 1 – Location of Malala Molybdenum Project in northern Sulawesi, Indonesia.

The Company has undertaken a number of exploration programs to evaluate the size and grade of the main target area identified as Anomaly B within the PT Inti Cemerlang concession. In addition to this, a regional exploration programs were undertaken at PT Promistis and the other concessions, which has seen several anomalous geochemical anomalies, which has shown some early promise and requires further investigation.

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Figure 2 – Malala Molybdenum Project area

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Directors’ Report

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JORC Exploration Targets

It is common practice for a company to comment on and discuss its exploration in terms of target size and type. The information in this presentation relating to exploration targets should not be misunderstood or misconstrued as an estimate of Mineral Resources or Ore Reserves. Hence the terms Resource(s) or Reserves(s) have not been used in this context. The potential quantity and grade is conceptual in nature, since there has been insufficient work completed to define them beyond exploration targets and that it is uncertain if further exploration will result in the determination of a Mineral Resource. In accordance with Clause 18 of the JORC Code, it is important to note that no JORC Mineral Resources or Ore Reserves have been established on these tenements and any current assessment remains subject to ongoing exploration work and drilling. The current interpretation remains preliminary and is based on exploration, evaluation and resource definition work performed by previous owners Rio Tinto and Santos. South East Asia Resources Limited have undertaken exploration work including surface mapping, trenching and geochemical surveying (soil, rock and stream sediment geochemistry), geological logging and assaying of diamond drilling and geological modeling within the areas previously defined by Rio Tinto and Santos which is demonstrating results consistent with previous outcomes presented by Rio Tinto and Santos.

Competent Persons Statement

The data in this announcement that relates to Exploration Results, Resources and Reserves is based on information reviewed and evaluated by Mr Brett Gunter who is a member of The Australian Institute of Mining and Metallurgy (MAusIMM) and who has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the “JORC Code”). Mr Gunter is a fulltime employee of GMT Indonesia and he consents to the result as they appear.

Matters subsequent to reporting date

Subsequent to the half year end, there have been a number of key events, including:

• On 20 January 2013, the Company entered into a non-binding Term Sheet recording an ‘in-principle’ understanding of the terms by which, South East Asia Energy Resources (Australia) Pty Ltd (SEA), a wholly-owned subsidiary of the Company, is to be granted an option to acquire Tiger Coal Pty Ltd and Energy Investments Pty Ltd (“Target Companies”), the holders of three coal exploration licences in Tasmania, Australia.

The three exploration licenses, pertaining to the Central Midlands of Tasmania, cover an approximate area of 700 km2 with potential for shallow open cut bituminous coal. The inherent qualities of this type of coal are preferred by cement producers.

The Central Midland project area is serviced by extensive infrastructure including two nearby large regional towns, highway, and rail with direct access through the area and direct 150km to Bell Bay deep-water port. The project area is predominantly low rainfall open grazing country with year round access.

First stage due diligence has been undertaken by SEA which has included discussions both directly and indirectly with Tasrail, Tasports , Mines Department Consultants, contractors and local stakeholders. The project area has previously been the subject of extensive exploration and feasibility works however, the Company has not yet determined any JORC reserves or resources.

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Directors’ Report

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The Term Sheet contemplates the completion of formal legal documentation by March 2013 with completion of the acquisition by 31 July 2013 after detailed (technical and legal) due diligence, including an exploration program with the aim to establish a JORC measured resource of at least 30 million tonnes.

Given under utilisation of infrastructure and resources within Tasmania, including rail, road, ports, transport, construction and civil contractors with highly competent local workforce, the Company sees this project as having the potential to provide a low cost, low capital, and efficient export coal production complementing the Company’s similarly modelled Indonesian coal projects.

• On 25 January 2013, unsecured convertible loan holders applied to convert $255,000 into shares. The holders of the remaining balance of unsecured convertible loans agreed to extend the repayment date to 30 June 2013.

• As at the report date, the Company is progressing with financing the production of the coal projects in Indonesia.

Dividends Paid or Recommended

No dividends were paid or proposed during the half-year ended 31 December 2012.

Auditor’s Independence Declaration

The lead auditor's independence declaration under section 307C of the Corporations Act 2001 is set out on page 12 for the half-year ended 31 December 2012.

This report is signed in accordance with a resolution of the Board of Directors made pursuant to s.306 (3) of the Corporations Act 2001.

_____ Steven Pynt Chairman

Dated this 15[th] day of March 2013

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Directors’ Declaration

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DIRECTORS’ DECLARATION

In accordance with a resolution of the directors of South East Asia Resources Limited (previously known as Victory West Metals Limited), I state that:

In the opinion of the directors:

1. The financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:

2. (a) complying with Accounting Standard AASB 134 “Interim Financial Reporting” and the Corporations Regulations 2001; and

3. (b) give a true and fair view of the economic entity’s financial position as at 31 December 2012 and the performance for the half-year ended on that date.

4. there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

______ Steven Pynt Chairman

Dated this 15[th] day of March 2013

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Grant Thornton Audit Pty Ltd ACN 130 913 594

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

T +61 8 9480 2000 F +61 8 9322 7787 E info.wa@au.gt.com W www.grantthornton.com.au

Auditor’s Independence Declaration To The Directors of South East Asia Resources Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of South East Asia Resources Limited for the half-year ended 31 December 2012, I declare that, to the best of my knowledge and belief, there have been:

• a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• b no contraventions of any applicable code of professional conduct in relation to the review.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

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J W Vibert Partner - Audit & Assurance

Perth, 15 March 2013

Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards Legislation

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Statement of Comprehensive Income

For the Half-Year Ended 31 December 2012

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Statement of Comprehensive Income – For the Half-Year Ended 31 December 2012

Note	Consolidated	Consolidated
Revenue Depreciation and amortization expense Project evaluation costs not capitalised Personnel, suppliers and consulting expenses Listing expenses Finance Costs Insurance Legal Fees Professional Fees Travel costs and accommodation Net foreign exchange losses Changes in fair value of financial assets Other expenses from ordinary activities Loss before income tax Income tax expense Loss after tax Other comprehensive income Items that may be reclassified subsequently to profit or loss: Exchange difference on translation of foreign operations Income tax relating to components of other comprehensive income Other comprehensive(loss) / income for the period, net of tax Total comprehensive loss for the period Loss attributable to: Members of the parent entity Non-controlling interest Total Comprehensive loss for the period attributable to: Members of the parent entity Non-controlling interest Loss per Share Basic loss per share (cents) Diluted loss per share (cents)	31 December 2012 18,288 (918) (32,324) (407,997) (50,858) (189,381) (7,178) (29,763) (42,746) (138) (30) 5,594 (44,841) (782,292) -	31 December 2011 172,959 (3,308) (412,485) (312,814) (40,387) (301,828) (9,726) (12,129) (35,132) (63,910) (3,717) (932) (39,889)
		(1,063,298) -
	(782,292) (128,784) - (128,784) (911,076) (782,292) - (782,292) (911,076) - (911,076) (0.43) (0.43)	(1,063,298)
		352,984 -
		352,984
		(710,314)
		(1,063,171) (127)
		(1,063,298)
		(710,187) (127)
		(710,314)
		(0.64) (0.64)

The consolidated statement of comprehensive income is to be read in conjunction with the notes to and forming part of the consolidated interim financial report.

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Statement of Financial Position

As at 31 December 2012

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Statement of Financial Position – As at 31 December 2012

Note	Consolidated	Consolidated
Current Assets Cash and cash equivalents Trade and other receivables 4 Prepayments Total Current Assets Non-Current Assets Receivables 5 Property, plant and equipment Exploration and evaluation expenditure 6 Other financial assets Total Non-Current Assets Total Assets Current Liabilities Trade & other payables 8 Borrowings Other current liabilities Total Current Liabilities Total Liabilities Net Assets Equity Issued capital 9 Reserves Accumulated losses Parent interest Non-controlling interest Total Equity	31 December 2012 41,970 504,744 87,061 633,775 7,878 3,086 18,466,271 11,189 18,488,424 19,122,199 6,799,051 2,721,138 260,320 9,780,509 9,780,509 9,341,690 27,279,309 (4,567,221) (13,337,841)	30 June 2012 481,060 492,728 102,791
		1,076,579
		748,178 4,272 7,238,387 5,595
		7,996,433
		9,073,012
		1,584,850 2,769,018 535,414
		4,889,282
		4,889,282
		4,183,730
		21,502,323 (4,730,487) (12,555,549)
	9,374,247 (32,557) 9,341,690	4,216,287 (32,557)
		4,183,730

The consolidated statement of financial position is to be read in conjunction with the notes to and forming part of the consolidated interim financial report.

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Statement of Changes in Equity

For the Half-Year Ended 31 December 2012

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Statement of Changes in Equity – For the Half-Year Ended 31 December 2012

		Consolidated
Balance at 1.7.2011 Loss attributable to members of parent entity Other comprehensive income Sub-total Contributions to equity Options expired during the period Recognition of outside equity interest Balance at 31.12.2011 Balance at 1.7.2012 Loss attributable to members of parent entity Other comprehensive income Sub-total Contributions to equity Transaction costs Performance shares and options issued for the acquisition of SEAE Conversion of convertible notes Balance at 31.12.2012	Note	Issued capital Accumulated Losses Option Reserve Foreign currency translation Acquisition Reserve Non- controlling Interest Total $ $ $ $ $ $ $
	7	21,191,223 (7,247,254) 5,187,831 (1,755,245) (3,350,000) (32,320) 13,994,235 - (1,063,171) - - - - (1,063,171) - - - 352,984 - - 352,984
		21,191,223 (8,310,425) 5,187,831 (1,402,261) (3,350,000) (32,320) 113,284,048 61,100 - - - - - 61,100 - 4,418,385 (4,418,385) - - - - - - - - - (188) (188)
		21,252,323 (3,892,040) 769,446 (1,402,261) (3,350,000) (32,508) 13,344,960
		21,502,323 (12,555,549) 23,850 (1,404,337) (3,350,000) (32,557) 4,183,730 - (782,292) - - - - (782,292) - - - (128,784) - - (128,784)
		21,502,323 (13,337,841) 23,850 (1,533,121) (3,350,000) (32,557) 3,272,654 750,000 - - - - - 750,000 (28,000) - - - - - (28,000) 4,950,000 - 292,050 - - - 5,242,050 104,986 - - - - - 104,986
		27,279,309 (13,337,841) 315,900 (1,533,121) (3,350,000) (32,557) 9,341,690

The consolidated statement of changes in equity is to be read in conjunction with the notes to and forming part of the consolidated interim financial report.

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For the Half-Year Ended 31 December 2012

Statement of Cash Flows

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Statement of Cash Flows – For the Half-Year Ended 31 December 2012

Note	Consolidated	Consolidated
Cash Flow from Operating Activities Payments to suppliers and employees Interest received Net cash flows (used in) operating activities Cash Flow from Investing Activities Payment for exploration and evaluation expenditure Purchase of subsidiary under business combination - net of cash acquired (SEAE) 7 Loans to other entities Loans from other entities Loans repaid by other entities Net cash flows (used in) investing activities Cash Flow from Financing Activities Proceeds from issue of shares and options Proceeds from borrowings Interest paid Repayment of borrowings Net cash flows provided/ (used in) by financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the period Net foreign exchange differences Cash and cash equivalents at the end of the period	31 December 2012 (253,491) - (253,491) - 375 (685,000) - - (684,625) 722,000 502,120 - (725,094) 499,026 (439,090) 481,060 - 41,970	31 December 2011 (258,077) 1,859
		(256,218)
		(196,732) - (149,000) 3,726 50,000
		(292,006)
		- - (52,196) (25,000)
		(77,196)
		(625,420) 2,026,863 2,950
		1,404,393

The consolidated statement of cash flows is to be read in conjunction with the notes to and forming part of the consolidated interim financial report.

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Notes to and Forming Part of the Accounts For the Half-Year Ended 31 December 2012

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1. Notes to the consolidated interim financial report.

(a) Reporting Entity

South East Asia Resources Limited (previously known as Victory West Metals Limited) (the Company) is a company domiciled in Australia. The consolidated interim financial statement of the Company as at and for the six months ended 31 December 2012 comprises the Company and its controlled entities (together referred to as the consolidated entity).

(b) Statement of Compliance

The half-year consolidated financial statements are general purpose financial statements prepared in accordance with the requirements of the Corporations Act 2001, applicable accounting standards including AASB 134: Interim Financial Reporting, Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board (‘AASB’). Compliance with AASB 134 ensures compliance with IAS 34 ‘Interim Financial Reporting’.

These half-year financial statements do not include full disclosures of the type normally included in an annual financial report. Therefore, they cannot be expected to provide as full an understanding of the financial performance, financial position and cash flows of the Company as in the full financial report.

It is recommended that these financial statements be read in conjunction with the annual financial report for the year ended 30 June 2012 and any public announcements made by South East Asia Resources Limited (previously known as Victory West Metals Limited) during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001 and the ASX Listing Rules.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim period, except as contained within the following notes.

(c) Reporting Basis and Conventions

The half-year report has been prepared on a historical cost basis. Cost is based on the fair value of the consideration given in exchange for assets. The Company is domiciled in Australia and all amounts are presented in Australian dollars, unless otherwise noted.

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

(d) Adoption of new and revised Accounting Standards

The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to their operations and effective for the current half year. New and revised Standards and amendments thereof and Interpretations effective for the current half-year that are relevant to the Group include:

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Notes to and Forming Part of the Accounts For the Half-Year Ended 31 December 2012

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Amendments to AASB 1, 5, 7, 101, 112, 120, 121, 132, 133 and 134 as a consequence of AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income.

The adoption of all the new and revised Standards and Interpretations has not resulted in any changes to the Group’s accounting policies and has no effect on the amounts reported for the current or prior half-years. However, the application of AASB 2011-9 has resulted in changes to the Group’s presentation of, or disclosure in, its half-year financial statements.

The amendments also require items of other comprehensive income to be grouped into two categories in the other comprehensive income section: (a) items that will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. The amendments have been applied retrospectively and the application of the amendments to AASB 101 do not result in any impact on profit or loss, other comprehensive income and total comprehensive income.

(e) Going Concern

The financial statements for the half-year have been prepared on the basis of going concern, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. Whilst acknowledging the inherent uncertainties of progressing to productive mining operations, the Directors consider the going concern basis to be appropriate.

During the half year the consolidated entity incurred a loss after tax of $782,292, net cash outflows from operating activities were $235,491, net cash outflows during the period were $439,090 and at 31 December 2012 had net current liabilities of $9,146,734. Subsequent to balance date, parties have agreed to convert $255,000 of the unsecured convertible notes to ordinary shares and to extend $400,000 of the unsecured convertible loans to 30 June 2013. The Company is in negotiations with the note holders and is confident that the amounts will be repaid subject to successful capital management initiatives or via the conversion to equity.

The company has engaged consultants to assist it with these capital raising initiatives and is in discussions with potential financiers. The capital raising initiatives may include offtake financing, additional capital raisings in future periods or debt funding.

The Directors are developing a capital management program that will provide funding to maximise the potential of its resource asset portfolio and provide a strong base for increasing shareholder value. Whilst continued growth is dependent on the Company successfully obtaining new funding and refinancing of existing facilities in what are challenging capital markets the Directors are confident that the consolidated entity will be able to continue its operations into the foreseeable future.

Based on the financial forecasts and achieving the future financing, the directors consider the basis of going concern to be appropriate. In particular, given the Company’s history of successful raising of capital to date, the Directors are confident of the Company’s ability to raise additional funds as and when they are required.

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Notes to and Forming Part of the Accounts

For the Half-Year Ended 31 December 2012

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The ability of the consolidated entity to continue as a going concern is also dependent upon the successful exploitation of its mineral tenements and progression of its exploration activities into a successful production stage.

Should the Company be unable to raise the funding referred to above, there is a material uncertainty whether the Company will be able to continue as a going concern, and therefore, whether it will be required to realise its assets and extinguish its liabilities other than in the normal course of business and at amounts different from these stated in the financial report. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern.

2. Segment Information

The following table presents revenue and profit information and certain asset and liability information regarding the relevant segments for the period ended 31 December 2012 for the consolidated entity.

The chief operating decision-maker has been identified as the Board of South East Asia Resources Limited.

The reportable segments have been identified around geographical areas and regulatory environments. Operating segments have been aggregated where segments are considered to have similar economic characteristics. Specifically PT Sulawesi Molybdenum Management is the Indonesian reporting segment.

The Australian reporting segment derives its revenues from its investments in the entities making up the Indonesian reporting segment and from interest on its cash deposit. It is intended that the Indonesian reporting segment will derive revenue from the commercial exploitation of the exploration assets it currently holds.

Transactions between reportable segments are accounted for in the same manner as transactions with external parties.

Six months ended 31 December 2012

Six months ended 31 December 2012
Revenue Interest revenue Total segment revenue Segment net loss before tax Reconciliation of segment result to group net loss before tax Unallocated items Net loss before tax from continuing operations	Australia $ Indonesia $ 18,288 -	Total $ 18,288
	18,288 -	18,288
	(798,552) -	(798,552) 2,028
		(782,292)

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Notes to and Forming Part of the Accounts

For the Half-Year Ended 31 December 2012

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2. Segment Information (Continued)

2. Segment Information (Continued)
Segment assets and liabilities Segment assets Unallocated Assets Total assets Segment liabilities Unallocated Liabilities Total Liabilities Other segment information Depreciation and amortisation expense Movement in fair value of financial assets Six months ended 31 December 2011 Revenue Interest revenue Other revenue Total segment revenue Reconciliation of segment revenue to group revenue Inter-segment elimination Total group revenue Segment net loss before tax Reconciliation of segment result to group net loss before tax Unallocated items Net loss before tax from continuing operations	Australia Indonesia $ $ 1,057,492 18,056,060	Total $ 19,113,552 8,647
	(5,598,935) (4,181,574)
		19,122,199
		(9,780,509) -
	(918) - 5,594 -
		(9,780,509)
		(918) 5,594
	Australia $ Indonesia $ 26,100 - 146,859 -	Total $ 26,100 146,859
	172,959 -	172,959
	- -	-
	172,959 -	172,959
	(1,060,744) (2,554)	(1,063,298) - (1,063,298)

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Notes to and Forming Part of the Accounts

For the Half-Year Ended 31 December 2012

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2. Segment Information (Continued)

Segment assets and liabilities as at 30 June 2012 Segment assets Unallocated Assets Total assets Segment liabilities Unallocated Liabilities Total Liabilities Other segment information (31 December 2011) Depreciation and amortisation expense Impairment of financial assets	Australia Indonesia $ $ 1,726,273 7,337,239	Total $ 9,063,512 9,500
	(4,803,509) (85,773)
		9,073,012
		(4,889,282) -
	(3,308) - (932) -
		(4,889,282)
		(3,308) (932)

3. Contingent Assets and Liabilities

At balance date the Company is not aware of any additional contingent assets or liabilities.

4. Current Trade and Other Receivables

	Consolidated
Other receivables Loan to Alluvia Mining Limited	31 December 2012 $ 30 June 2012 $ 10,213 16,484 494,531 476,244
	504,744 492,728

The loan to Alluvia Mining Limited (formerly XS Platinum Ltd) was made on 24 July 2009 as part of an agreement to merge operations. The agreement was subsequently terminated and repayment of the loan is now due. The Directors are confident that the amount will be recovered in full within the next twelve months.

There are no balances within trade and other receivables that are impaired and are past due. It is expected these balances will be received when due.

The Group has no other significant concentration of credit risk with respect to any single counter party or group of counter parties. The class of assets described as Trade and Other Receivables is considered to be the main source of credit risk related to the Group.

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Notes to and Forming Part of the Accounts

For the Half-Year Ended 31 December 2012

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5. Non-Current Trade and Other Receivables

	Consolidated
Loan to South East Asia Resources Pte Ltd Other receivables	31 December 2012 $ 30 June 2012 $ - 740,451 7,878 7,727
	7,878 748,178

6. Exploration and evaluation expenditure

Consolidated	Consolidated
Note Opening balance at 1 July 2012 Additions during the period Acquisition of tenements from business combination 7 Adjustments for foreign exchange differences on expenditure	31 December 2012 $ 7,238,387 4,313 11,340,238 (116,667)
	18,466,271

7. Acquisition of Controlled Entities

On 24 December 2012, the Company acquired 100% of the issued capital of South East Asia Energy Resources Pte Limited (SEAE), as announced by the Company. The acquisition was a result of the Group’s strategy of increasing its presence in the energy resources industry. The acquisition resulted in South East Asia Resources Limited obtaining control of South East Asia Energy Resources Pte Limited.

Note Purchase consideration: Cash 8 Performance shares (i) 9(b) Options (ii) Allocated as follows (iii): Cash and cash equivalents Other assets Exploration and evaluation assets 6 Trade and other payables	Fair Value $ 750,000 4,950,000 292,050
	5,992,050 375 1,587 11,340,238 (5,350,150)

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Notes to and Forming Part of the Accounts

For the Half-Year Ended 31 December 2012

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• i The consideration paid to acquire SEAE includes 110,000,000 performance shares together with an additional 220,000,000 shares should certain milestones be achieved with 3 years of completion. The fair value of the shares has been determined based on the current market price of the shares at the date of acquisition, taking into consideration certain probability factors.

• ii. The consideration paid to acquire SEAE includes 33,000,000 performance options issued to the vendors of SEAE. Refer to note 10 for the input used in the valuation of these options.

• iii. The Company has allocated the purchase consideration to the fair value of the assets and liabilities acquired on a preliminary basis. Any excess in the purchase consideration above the fair value of the net tangible assets has been accounted for as exploration and evaluation expenditure.

• In accordance with Australian Accounting Standard AASB3: “Business Combinations”, the final accounting for the business combination will be completed within 12 months from the date of acquisition.

8. Current Trade and Other Payables

	Consolidated
Unsecured liabilities Note Trade payables Sundry payables and accrued expenses Deferred consideration owing to Victory West Pty Ltd vendors Amounts owed to vendors for acquisition of SEAE 7 Other payables	31 December 2012 $ 30 June 2012 $ 3,610,348 606,944 1,829,149 542,602 250,000 250,000 750,000 - 359,554 185,304
	6,799,051 1,584,850

Payables are unsecured.

All other unsecured liabilities are interest free and have no fixed term of repayment.

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Notes to and Forming Part of the Accounts

For the Half-Year Ended 31 December 2012

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9. Share Capital

	Consolidated
Note 206,577,277 (30 June 2012: 173,577,677) fully paid ordinary shares (a) 120,000,000 (30 June 2012: 10,000,000) performance shares (b) Movements in: a) Ordinary Shares At 1 July 2012 Issue of shares Transaction costs At 31 December 2012 b) Performance Shares Note At 1 July 2012 Shares issue as consideration for the SEAE acquisition milestone 1 7 Shares issuable for the SEAE acquisition subject to milestones 2 and 3 7 At 31 December 2012	31 December 2012 $ 30 June 2012 $ 21,729,309 20,902,323 5,550,000 600,000
	27,279,309 21,502,323 No. of Shares $ 173,577,677 20,902,323 32,999,600 854,986 - (28,000)
	206,577,277 21,729,309
	No. of Shares $ 10,000,000 600,000 110,000,000 3,300,000 - 1,650,000
	120,000,000 5,550,000

The performance shares will convert to ordinary fully paid shares (on a one for one basis), upon achieving the following milestones:

Milestone 1 – Commercial shipment if 100,000 tonnes coal from any of SEAE’s current coal project.

Milestone 2 – SEAE having one or more projects with mines which collectively have:

• Total annualised production of more than 1.2 Mt (satisfied by 2 consecutive months of production at an annualised rate of 100,000 tonnes per month); and

• Total aggregate JORC inferred resource of more than 25 MT.

Milestone 3 - SEAE having one or more projects with mines which collectively have:

• Total annualised production of more than 2.4 Mt (satisfied by 2 consecutive months of production at an annualised rate of 100,000 tonnes per month); and

• Total aggregate JORC inferred resource of more than 50 MT.

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Notes to and Forming Part of the Accounts

For the Half-Year Ended 31 December 2012

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10. Options

As part of the consideration for the acquisition of SEAE, the Company issued 33,000,000 options on 24 December 2012.

The model inputs for options granted included:

• Options are granted for no consideration;

• Exercise price of $0.30;

• Expiry date of 24 December 2015;

• Expected share price volatility 160.55%; and

• Risk free interest rate 2.72%

Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is indicative of future movements. The company has also used probability factors for each of the milestones that the options are subject to.

11. Events Subsequent to Balance Date

Subsequent to the half year end, there have been a number of key events, including:

• On 20 January 2013, the Company entered into a non-binding Term Sheet recording an ‘in-principle’ understanding of the terms by which, South East Asia Energy Resources (Australia) Pty Ltd (SEAR), a wholly-owned subsidiary of the Company, is to be granted an option to acquire Tiger Coal Pty Ltd and Energy Investments Pty Ltd (“Target Companies”), the holders of three coal exploration licences in Tasmania, Australia.

The three exploration licenses, pertaining to the Central Midlands of Tasmania, cover an approximate area of 700 km2 with potential for shallow open cut bituminous coal. The inherent qualities of this type of coal are preferred by cement producers.

The Central Midland project area is serviced by extensive infrastructure including two nearby large regional towns, highway, and rail with direct access through the area and direct 150km to Bell Bay deepwater port. The project area is predominantly low rainfall open grazing country with year round access.

First stage due diligence has been undertaken by SEA which has included discussions both directly and indirectly with Tasrail, Tasports , Mines Department Consultants, Contractors and local stakeholders. The project area has previously been the subject of extensive exploration and feasibility works however, the Company has not yet determined any JORC reserves or resources.

The Term Sheet contemplates the completion of formal legal documentation by March 2013 with completion of the acquisition by 31 July 2013 after detailed (technical and legal) due diligence, including an exploration program with the aim to establish a JORC measured resource of at least 30 million tonnes.

Given under utilisation of infrastructure and resources within Tasmania, including rail, road, ports, transport, construction and civil contractors with highly competent local workforce, the Company sees this project as having the potential to provide a low cost, low capital, and efficient export coal production complementing the Company’s similarly modelled Indonesian coal projects.

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Notes to and Forming Part of the Accounts

For the Half-Year Ended 31 December 2012

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• On 25 January 2013, unsecured convertible loan holders applied to convert $255,000 into shares. The holders of the remaining balance of unsecured convertible loans agreed to extend the repayment date to 30 June 2013.

• As at the report date, the company secured applications for convertible notes of $870,000, to be used mainly to finance the production of the coal projects in Indonesia.

12. Related Party Transactions

Purchases

Payments of $145,000 (2011: $202,988) were made to Indian Ocean Advisory Group Pty Ltd, an entity which Mr. Luke Martino is a director of for the provision of consulting and administrative services, including rent. These services were provided on normal commercial terms and conditions and at market rates. There was $299,648 outstanding as at 31 December 2012.

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Grant Thornton Audit Pty Ltd ACN 130 913 594

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

T +61 8 9480 2000 F +61 8 9322 7787 E info.wa@au.gt.com W www.grantthornton.com.au

Independent Auditor’s Review Report To the Members of South East Asia Resources Limited

We have reviewed the accompanying half-year financial report of South East Asia Resources Limited (“Company”), which comprises the consolidated financial statements being the statement of financial position as at 31 December 2012, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, notes comprising a statement or description of accounting policies, other explanatory information and the directors’ declaration of the consolidated entity, comprising both the Company and the entities it controlled at the half-year’s end or from time to time during the half-year.

Directors’ responsibility for the half-year financial report

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

Auditor’s responsibility

Our responsibility is to express a conclusion on the consolidated half-year financial report based on our review. We conducted our review in accordance with the Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the South East Asia Resources Limited consolidated entity’s financial position as at 31 December 2012 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 South East Asia Resources Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards Legislation

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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 complied with the independence requirements of the Corporations Act 2001.

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 South East Asia Resources Limited is not in accordance with the Corporations Act 2001, including:

• a giving a true and fair view of the consolidated entity’s financial position as at 31 December 2012 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.

Material uncertainty regarding continuation as a going concern

Without qualifying our conclusion, we draw attention to Note 1(e) in the financial report which indicates that the consolidated entity incurred a net loss of $782,292 during the period ended 31 December 2012 and, as of that date, the consolidated entity’s current liabilities exceeded its total assets by $9,146,734. These conditions, along with other matters as set forth in Note 1(e), indicate the existence of a material uncertainty which may cast significant doubt about the consolidated entity’s ability to continue as a going concern and therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business, and at the amounts stated in the financial report.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

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J W Vibert Partner - Audit & Assurance

Perth, 15 March 2013

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