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ANNUAL REPORT 2011

For Victory West Metals Limited And Controlled Entities ABN 66 009 144 503

Contents

Contents Page
Corporate Directory .......................................................................................................................... 3
Letter to Shareholders ..................................................................................................................... 4
Review of Operations ....................................................................................................................... 5
Directors‟ Report ............................................................................................................................ 18
Auditor‟s Independence Declaration .............................................................................................. 25
Independent Audit Report .............................................................................................................. 26
Directors' Declaration ..................................................................................................................... 29
Statement of Comprehensive Income – For the Year Ended 30 June 2011 ................................. 30
Statement of Financial Position - As at 30 June 2011 .................................................................. 31
Statement of Changes in Equity - For the Year Ended 30 June 2011 ........................................... 32
Statement of Cash Flows - For the Year Ended 30 June 2011 ...................................................... 33
Notes to and Forming Part of the Accounts ................................................................................... 34
Addition Information for Listed Companies .................................................................................... 86

Corporate Information

Corporate Directory

VICTORY WEST METALS LIMITED

ABN 66 009 144 503 (Incorporated in Western Australia)

WEBSITE

www.victorywest.com.au

REGISTERED OFFICE

311 Hay Street Subiaco Western Australia 6008 Ph: +618 9381 5819

DIRECTORS & SECRETARY

Mr Steven Pynt – Non-executive Chairman Mr Michael Scivolo - Non-executive Director Mr Wayne Knight - Non-executive Director Mr Luke Martino – Company Secretary

AUDITORS

Grant Thornton Audit Pty Ltd Level 1 10 Kings Park Road West Perth Western Australia 6005

SHARE REGISTRY

Computershare Investor Services Pty Ltd Level 2, 45 St. George‟s Terrace Perth WA 6000 Ph: 1300 557 010 (within Australia) Ph: +61 8 9323 2033 www.computershare.com.au

STOCK EXCHANGE LISTING

ASX Limited ASX Code – VWM & VWMOA

Victory West Metals Limited – Annual Report 2011

Letter to Shareholders

Dear Shareholders,

On behalf of the Board of Directors I present the 2011 annual report for Victory West Metals Limited. It has been a very active year in evaluation and project assessment amongst great turbulence in global financial markets

As it stands today the Company has repositioned itself to take part in:-

1). the rapidly growing Indonesian Coal Sector; continuing the focus on high valuable resource projects in the region. As announced, subject to due diligence this transaction will be put before shareholders at a forthcoming General Meeting for approval;

2). Advancing the highly prospective Malala Molybdenum project in Sulawesi, Indonesia with the China Guangshou Group.

In parallel, the Company evaluated and explored other complementary projects as announced to the market including, Nickel projects in South Sulawesi, copper / gold projects and other resources opportunities in accordance with the diversification and strategic decision to evaluate and acquire valuable resource projects.

The strategy of facilitating and funding world class resource projects and introducing major partners remains the focus of the Board.

We welcome the South East Asia Energy Resources (Singapore) Group (SEAE) led by Mr. Gary Williams. The SEAE team will combine with the VWM management and consultant team going forward to build significant JORC certifiable resources and production. It is proposed that at the completion of the transaction Mr. Gary Williams will become the Chief Executive Officer of VWM and we look forward to this positive appointment and his team‟s contribution to the growth of the assets owned by VWM.

I would like to thank the Board, staff and consultants both in Australia and overseas, in particular Indonesia and the Province of Toli Toli for their contribution during the year and for their ongoing commitment. Importantly we value our long term relationship with the Bupati of Toli Toli and the Governor of Sulawesi and we look forward to another productive year of working with them.

I draw your attention to the Operational Report included herewith which discusses our project in detail and I also encourage you to regularly visit our website at www.victorywest.com.au for all of our ASX announcements, project updates and information.

We look forward to meeting our shareholders at the upcoming Annual General Meeting.

On behalf of the Board of Directors

Steven Pynt LLB MBA Chairman

30 September 2011

Victory West Metals Limited – Annual Report 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.victorywest.com.au

Throughout the 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 9 September 2011, has begun expanding its focus through securing the rights to acquire a 85% interest the in the highly prospective BEK Coal Project in East Kalimantan, subject to due diligence and shareholder and regulatory approvals if required.

On the 14 March 2011, the Company adopted its new name of Victory West Metals Limited reflecting its resources diversification strategy.

Key Highlights

Notable achievements during the twelve month period include:

On 3 September 2010, the Company entered into a MOU with China Guangshou Group Corp (CGGC), whereby CGGC is to acquire a 65% interest in the Malala Molybdenum Project in consideration for committing to sole fund 100% of all funding required to take the Malala Project into large scale commercial production by 2016.
In late October 2010, the Company executed a more formal MOA with CGGC in Xiamen, China followed by a signing ceremony in Perth with a number of Government Officials.
In December 2010, the Company finalised the acquisition of the remaining 25% interest in Victory West Pty Ltd (“VW P/L”) taking the Company‟s interest in the Malala Project from 71.25% to 95% (prior to the proposed CGGC transaction).
On 23 February 2011, the Company received the first $500,000 tranche Commitment Fee from CGGC for the Malala Project.
The successful raising of $4.15million during November to December 2011;
$2.5million placement at ($0.12) to clients of Convergence Capital Corporation
$1,580,000 through the issue of Convertible Loans during November and December 2010.
In February 2011, the Company secured the right (subject to due diligence) to acquire via way of equity earn-in a 75% equity interest in the highly prospective Sasak Copper/Gold project located in the Toraja province, South Sulawesi. The Company continues to work with the Vendors to progress this forward.
On the 14 March 2011, the Company adopted its new name of Victory West Metals Limited
In April 2011, the Company undertook negotiations with the Indonesian vendors of the USSU nickel project, which subsequently resulted in the reaching of settlement on the 10 June with the repayment of all loans by the Indonesian vendors.

Victory West Metals Limited – Annual Report 2011

Review of Operations

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, VWM 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 VWM‟s exploration target of 105-115Mt @ 660-900ppm Mo[1] . In FY2009, VWM began the task of proving up this initial resource target, with this work continuing throughout FY2011. 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 during the financial year.

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

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 VWM.

Victory West Metals Limited – Annual Report 2011

Review of Operations

During the year, the Company continued to undertake 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

China Guangshou Group Corp

On 3 September 2010 the Company announced that it had entered into a Memorandum of Understanding (“MOU”) with China Guangshou Group Corp (“CGGC”) that, subject to due diligence, CGGC is to acquire a 65% interest in the Malala Molybdenum Project in consideration for committing to sole fund 100% of all funding required to take the Malala Molybdenum Project into large scale commercial production by 2016.

Under the terms of the agreement, the Company and the Company‟s local BUMD (Regency owned enterprise) partner are to be free carried to large scale production (as defined below). As a result, the Company (through its group structure) and BUMD will hold a direct or indirect interest of 27.5% and 5% respectively. A further 2.5% interest will be acquired by local Indonesian Chinese interests.

In late October 2010, the Company executed a more formal MOA in Xiamen, China followed by a signing ceremony in Perth, whereby CGGC is to acquire a 65% interest in the Malala Molybdenum Project.

During the sole funding period, GGGC have undertaken to meet certain milestones, including but not limited to the following;

Victory West Metals Limited – Annual Report 2011

Review of Operations

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On 23 February 2011, the Company received the first $500,000 tranche Commitment Fee from CGGC for the Malala Molybdenum Project.

The Company completed a variation and extension agreement with CGGC as announced to the market.

The Company continues to work with CGGC and key Indonesian Government groups to secure the required administration letters that are required to move the joint venture to the next stage.

Granting of Production & Operational Licenses & Extension of Exploration Licenses

On 20 September 2010, the Company announced the successful grant of Production and Operational (Exploitation) IUP licenses for Inti Cemerlang and Promistis the two most strategic concessions that form the core of the Malala Molybdenum Project. The Production and Operation IUP allows for the commercial extraction of Molybdenum from the concession areas for a period of 20 years (renewable for a further 10 – 20 years).

In addition, 3 year exploration IUP license extensions were granted for PT Era Moreco, PT Indo Surya Moreco and PT Sembilan Sumber Mas concessions.

The conversion of PT Inti Cemerlang, PT Promistis, PT Era Moreco, PT Semilan Sumber Mas and Pt Indo Surya into Indonesia foreign investment companies (“PMA Companies”) is now underway. It is expected that PT Inti Cemerlang will be the first company converted to a PMA company.

Acquisition of the remaining 25% Interest in Victory West Pty Ltd

In December 2010, the Company finalised the acquisition of the remaining 25% interest in Victory West Pty Ltd (“VW P/L”) taking the Company‟s interest in the Malala Molybdenum project from 71.25% to 95% (prior to the proposed CGGC transaction).

Victory West Metals Limited – Annual Report 2011

Review of Operations

Noviendiono Copper/Gold Project

On 27 January 2011 the Company announced that it had, subject to due diligence secured the rights to acquire via way of equity earn-in a 75% equity interest in a highly prospective copper/gold project located in Toraja province, South Sulawesi.

The Project is located in a known porphyry province and the geological setting is favorable for the exploration of both porphyry Copper-Gold style mineralization and more discrete zones of higher grade gold mineralization.

Previous exploration at the project area include numerous Dutch exploration Adits, which were excavated early in the 1900‟s exploiting copper, gold and lead from high grade quartz veins.

The project has three key areas considered to be highly prospective;

Gold mineralisation (from Dutch exploration adits)
Porphyry/ Diatreme Breccia (prospective for copper/gold)
Numerous additional previously unexplored targets

Significant previous exploration results including:

34.20m (141.80-176.00 m) @ 3.05 g/t Au, including: 4.00 m (143.80-147-80 metres) @ 14.70 g/t Au, and 4.00 metres (164.00-168.00) @ 9.14 g/t Au.
Copper intersections of 4.00m @ 0.48% Cu and 22.00m @ 0.18% commencing at 120.00m depth.
Dutch workings in the area indicate high gold or copper grades in hydrothermal veins

During the fourth quarter of FY 2011, the Company undertook an intensive 40 day field work program under the supervision of the Company‟s consulting geologist Mr Brett Gunter B.app.Sc (Geol) MAusIMM (GMT Indonesia). In addition 6 senior geologists from the Malala project were also mobilised for the work program.

The team surveyed approximately 5,000 hectares of the Concession and collated data on in-situ rock outcrop formations, previous historical drilling and 12 Dutch Adits. Additionally, a number of samples were collected from prospective zones encountered during mapping that will allow for assessment of the potential and distribution of mineralisation within the mapped concession areas

The Company continues to work with the vendors to advance the project forward if legal and technical due diligence requirements are satisfied.

USSU Nickel Project

On the 27 August 2010, the Company announced that it had entered into agreements to acquire a 70% equity interest in PT. Primara Utama that owns a highly prospective direct shipping ore (DSO) nickel project in South Sulawesi, Indonesia known as the USSU Nickel Project.

The Company undertook significant due diligence and exploration work on the USSU Nickel Project. During the March 2011 quarter, the Company announced a reassessment of the project based on the technical review demonstrating a need to further expand on exploration activities to build a certified resource, which would be required prior to raising a significant level of equity funding.

To that end the Company adopted a prudent course of action in the best interests of all parties to renegotiate the terms of the agreement. Subsequently on 10 June 2011, Victory West announced that a settlement had been reached with the Indonesian Vendors of the USSU Nickel Project and all loans advanced to the vendors in relation to the project were repaid.

Victory West Metals Limited – Annual Report 2011

Review of Operations

Subsequent Events

On the 9th September 2011 the Company announced that it had signed a Heads of Agreement to acquire 100% of South East Asia Energy Resources Pte Ltd (SEAE), a special purpose company registered in Singapore that has the rights to an 85% interest in the BEK coal project in East Kalimantan, Indonesia. In addition the SEAE group brings a pipeline of 9 coking and thermal Coal concessions in East Kalimantan and initial off take agreements for 200,000 tonnes per month with major global parties.

Importantly, subject to due diligence and if approved by shareholders and regulatory authorities, the SEAE team will combine with the VWM management and consulting team to create an experienced and extensive team in Indonesia mining operations and engineering that will target significant JORC certifiable resources and production.

On 21 September 2011, Dempsey Resource Pty Ltd and the Company agreed to extend the Convertible Note until 15 November 2011.

Subsequent to the end of the financial year, the company has repaid $25,000 of convertible loans.

On 29 September 2011, the company received a letter alleging an amount due of US$250,000 in relation to Oceantide Investments Pty Ltd transaction. The Company is currently reviewing this claim and as at the date of this report is unable to ascertain the likely financial impact this claim may have on the Company.

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. Victory West Metals 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 report 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 inclusion in the report of the Exploration Results and/or Mineral Resource and/or Reserve in the form and context in which they appear.

Victory West Metals Limited – Annual Report 2011

Corporate Governance Statement

In recognising the need for the highest standards of corporate behaviour and accountability, the directors of Victory West Metals Limited (“Victory West” or “the Company”) support the Corporate Governance Principles and Recommendations (“Principles and Recommendations”) as issued by the Australian Stock Exchange Corporate Governance Council (CGC).

The Board of directors of Victory West is responsible for the corporate governance of the entity and endorses the need for high standards of corporate governance. The Board guides and monitors the business and affairs of Victory West on behalf of the shareholders by whom they are elected and to whom they are accountable.

The Board has formalised its corporate governance framework which it considers suitable given the size, history and strategy of the Company. The Board will keep its corporate governance practices under review and will ensure that the necessary policies are adopted as required by the Company.

In accordance with ASX Listing Rule 4.10.3, Victory West is required to disclose the extent to which it has followed the Principles of Best Practice Recommendations during the financial year. Where Victory West has not followed a recommendation, this has been identified and an explanation for the departure has been given in compliance with the “if not, why not” regime.

The table below summarises the Company‟s compliance with the CGC‟s recommendations.

	Compliance CGC recommendations	If not, why not disclosure
Recommendation 1.1	
Recommendation 1.2	
Recommendation 2.1	
Recommendation 2.2	
Recommendation 2.3	
Recommendation 2.4		
Recommendation 2.5		
Recommendation 3.1	
Recommendation 3.2		
Recommendation 3.3		
Recommendation 3.4		
Recommendation 4.1		
Recommendation 4.2		
Recommendation 4.3		
Recommendation 5.1	
Recommendation 6.1	
Recommendation 7.1	
Recommendation 7.2	
Recommendation 7.3	
Recommendation 8.1		
Recommendation 8.2		
Recommendation 8.3	

Victory West Metals Limited – Annual Report 2011

Corporate Governance Statement

PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

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

This recommendation is satisfied.

The Company's Board Charter together with updated financial statements will be given to any new Director, all of which will set out details in respect of:

The Company's financial, strategic and operational position;
Each Director's rights, duties and responsibilities;
The role of the Board and Management.

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

This recommendation is satisfied.

Given the size of the Company, there are relatively few executives employed by the Company, however each will be subject to an annual performance evaluation. The performance target for each executive is currently aligned to the business targets of the Company in accordance with the position of the relevant executive.

The Board seeks to identify the expectations of the shareholders, as well as other regulatory and ethical expectations and obligations. In addition, the Board is responsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately manage those risks.

To ensure that the Board is well equipped to discharge its responsibilities it has established guidelines for the nomination and selection of directors and for the operation of the Board. The responsibility for the operation and administration of the Company is delegated, by the Board, to the executive management team. The Board ensures that this team is appropriately qualified and experienced to discharge their responsibilities and has in place procedures to assess the performance of the executive management team.

PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE

Recommendation 2.1: A majority of the board should be independent directors.

This recommendation is satisfied.

Recommendation 2.2: The chair should be an independent director.

This recommendation is satisfied.

Recommendation 2.3: The roles of chair and chief executive officer (CEO) should not be exercised by the same individual.

This recommendation is satisfied.

Recommendation 2.4: The board should establish a nomination committee.

This recommendation is not satisfied.

Given the size of the Company and its Board, the Directors consider that any efficiency achieved by the establishment of a nomination committee would be minimal, thereby not making establishment cost effective. For this reason the Board performs the role of the nomination committee.

Victory West Metals Limited – Annual Report 2011

Corporate Governance Statement

Recommendation 2.5: Companies should disclose the process for evaluating the performance of the board, its committees and individual directors.

This recommendation is not satisfied.

The Directors of the Company otherwise consider that due to the size of the Company and its Board a formal review procedure is not appropriate at this point in time and has instead adopted a self-evaluation process to measure its own performance. A system to fairly review and actively encourage enhanced Board and management effectiveness is being considered.

The need for access to supporting equity and skills as required, and a flexible cost structure are greater imperatives for the Company as an exploration company, than the largely mutually exclusive concept of independence, which is much more relevant to larger corporations with substantial workforces.

However, as the Company moves to become a minerals producer the concept of independence will become more relevant. Whilst the Company will progressively increase the independence of its Directors over time, compliance with the best practice in this area is not considered a current imperative, due to the additional direct cost of employing such Directors, the view that there would not be an increase in Board skills (only independence), and the risk that inefficiency will occur in the Board decision making process whilst the independent Directors become familiar with the Company‟s business.

All assessments as to whether a Director is independent are to be made by the Board in such manner as it determines from time to time. The Company has adapted the definition of independence developed by Investment and Financial Services Association Limited (“IFSA”) in its Corporate Governance, A Guide for Fund Managers and Corporations – Blue Book.

The Chairman of the Board is responsible for the leadership of the Board, ensuring that Board activities are organised and efficiently conducted and for setting the agenda for Board meetings. Under the Company‟s constitution, the maximum term for a director before they must be re-elected by the members is three years.

The Board has not established separate committees for Audit and Risk Management, Remuneration and Nomination. The Company is not of a sufficient size is not of a size, nor is the affairs of a complexity sufficient to warrant the existence of separate committees. All matters which could be delegated to such committees are dealt with by the full Board.

PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING

Recommendation 3.1: Companies should establish a code of conduct and disclose the code or a summary of the code as to:

the practices necessary to maintain confidence in the company‟s integrity
the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders
the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

This recommendation is satisfied.

Recommendation 3.2: Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the board to establish measurable objectives for achieving gender diversity for the board to assess annually both the objectives and progress in achieving them.

This recommendation is not satisfied .

Victory West Metals Limited – Annual Report 2011

Corporate Governance Statement

Diversity includes, but is not limited to gender, age, ethnicity and cultural background. The Company is committed to diversity and recognises the benefits arising from employee and board diversity and the importance of benefiting from all available talent.

However, given the size of the Company and its Board, the Company‟s Corporate Governance Plan at 30 June 2011 does not include a policy specifically addressing diversity. The Board does not consider it necessary to have a diversity policy but will consider implementing one in the future.

Recommendation 3.3: Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress towards achieving them.

This recommendation is not satisfied.

Refer to recommendation 3.2.

Recommendation 3.4: Companies should disclose in each annual report the proportion of women employees in the whole organization, women in senior executive positions and women on the board.

This recommendation is not satisfied.

Refer to recommendation 3.2.

PRINCIPLE 4 – SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

Recommendation 4.1: The board should establish an audit committee.

This recommendation is not satisfied.

Given the size of the Company and its Board, it is not of a size to require an audit committee and the duties normally performed by an audit committee are undertaken by the Board as whole. The Company‟s Auditors attend the Annual general Meeting, at which time they are available to answer shareholder questions in relation to their audit.

Recommendation 4.2: The audit committee should be structured so that it:

consists only of non-executive directors
consists of a majority of independent directors
is chaired by an independent chair, who is not chair of the board
has at least three members.

This recommendation is not satisfied.

Refer to recommendation 4.1.

Recommendation 4.3: The audit committee should have a formal charter.

This recommendation is not satisfied.

Refer to recommendation 4.1.

The integrity of the Company‟s financial reporting is a critical aspect of Victory West Metal‟s corporate governance and structures have been implemented during the reporting period to verify and safeguard the integrity of the Company‟s financial reporting.

It is the policy of the Board that the Company‟s financial statements be reviewed or Audited, at a minimum, each half year. The Company does not have a formalised audit committee; instead all Directors are responsible for the financial statements.

Victory West Metals Limited – Annual Report 2011

Corporate Governance Statement

PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE

Recommendation 5.1: Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.

This recommendation is satisfied.

The Company has a comprehensive disclosure policy to comply with the ASX Listing Rules regarding the public disclosure of material information. The aim of this policy is to ensure that the Company release pricesensitive information in a timely manner.

The Company will immediately notify the market by announcement to the ASX of any information concerning the business of the Company that a reasonable person would expect to have a material effect on the price or value of the Company‟s securities.

Information about the Company is regarded as material if it would, or would be likely to, influence persons who commonly invest in securities in deciding whether or not to buy or sell the Company‟s securities.

Officers and employees are encouraged not to rely on their judgement and to consult the Company Secretary on whether particular information is considered to be material.

PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS

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

This recommendation is satisfied.

The Board respects the rights of all shareholders and, to facilitate the effective exercise of those rights, the Company is committed to effective communication with shareholders. This occurs by electronic ASX releases to the market and via a subscription facility on the Company‟s website.

PRINCIPLE 7 – RECOGNISE AND MANAGE RISK

Recommendation 7.1: Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.

This recommendation is satisfied.

Recommendation 7.2: The board should require management to design and implement the risk management and internal control system to manage the company‟s material business risks and report to it on whether those risks are being managed effectively. The board should disclose that management has reported to it as to the effectiveness of the company‟s management of its material business risks.

This recommendation is satisfied.

Recommendation 7.3: The board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.

This recommendation is satisfied.

In all its activities the Company will adopt a structured and consistent approach to risk management.

Victory West Metals Limited – Annual Report 2011

Corporate Governance Statement

Risks will be assessed and managed through an overriding policy of identification, assessment, mitigation, monitoring and communication of risks associated with its activities. The overriding policy will be based on the Australian Standard for risk management (AS4360) and will be reviewed regularly against best practice standards and the changing activities of the Company.

The level of risk management will be consistent with the Company‟s overall business objectives and risk appetite and tolerance.

Risk management and control will be incorporated into property protection, health, safety and environmental audits using either self assessment or outside auditors as the Company deems appropriate.

The Chairman of the Board and the CEO are responsible for the identification and management of business risks. The Board has obtained a written confirmation from the Chairman of the Board and the CEO that the statement in relation to principle 4 above is founded on a sound system of risk management and internal compliance and control.

The Board has obtained a statement confirming that the systems are operating efficiently and effectively in all material respects.

PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY

Recommendation 8.1: The board should establish a remuneration committee.

This recommendation is not satisfied.

Given its size and stage in development, the Board has decided not to establish or to delegate specific authority to a remuneration committee. Responsibilities which would normally be delegated to such committees are performed by the Board as a whole. The remuneration report of the Victory West Metals which includes all directors is included within the Directors‟ Report. All Directors are remunerated by way of fees and the granting of options. However they do not receive bonus payments or retirement benefits. Upon retirement, there is no contractual right to further benefits other than statutory superannuation.

The Board fulfils its responsibilities to shareholders which include:

Ensuring that remuneration policies are appropriate;
Determining the basis for any incentive schemes for the Company;
Reviewing as required, the compensation arrangements for directors.

Recommendation 8.2: The remuneration committee should be structured so that it:

consists of a majority of independent directors
is chaired by an independent chair
has at least three members

This recommendation is not satisfied.

Refer to recommendation 8.1.

Recommendation 8.3: Companies should clearly distinguish the structure of non-executive directors‟ remuneration from that of executive directors and senior executives.

This recommendation is satisfied.

The Board, within the pre-approved shareholder limits, determines fees payable to individual non-executive directors.

Victory West Metals Limited – Annual Report 2011

Corporate Governance Statement

The remuneration levels of Executive Director‟s are determined by the Chairman after taking into consideration those that apply to similar positions in comparable companies in Australia and Directors‟ possible participation in any equity based remuneration scheme. The Chairman uses industry-wide data gathered by independent remuneration experts annually as his point of reference.

Options or shares issued to Directors pursuant to any equity-based remuneration scheme require approval by shareholders prior to their issue.

The remuneration levels of senior executives and other employees are determined by the Board of Directors after taking into consideration those levels that apply to similar positions in comparable companies in Australia and employees‟ possible participation in any equity based remuneration scheme. The Directors will consult recruitment and remuneration experts and will, where such expenditure is not already in an approved Budget seek Board approval prior to finalising the appointment.

Options or shares issued to senior executives and other employees who are not Directors would be proposed by the Chairman and issued only after approval by the Board.

The policy will be implemented by reviewing, not less than annually, all aspects of the remuneration paid to all employees and executives to ensure that it motivates the pursuit of long-term success, a safe working environment and a culture consistent with the Company‟s Corporate Governance Policy and is clearly linked to individual and group performance.

Victory West Metals Limited – Annual Report 2011

Directors‟ Report

The Directors‟ present their report together with the financial report of Victory West Metals Limited and its controlled entities (“the Company” or “consolidated entity”) for the year ended 30 June 2011 and the independent audit report thereon.

The Directors of the Company at any time during or since the end of financial year were:

Mr. Steven Pynt LLB MBA

Chairman and Non-Executive Director

Appointed 2 February 1995

After completing his law degree in 1980, Mr. Pynt worked with a law firm for two and a half years before joining a major accounting firm where he worked as a tax consultant. Subsequently, he established his own legal firm that later merged with a medium size Perth firm. Mr. Pynt is the Chief Executive Officer of Muzz Buzz Franchise Pty Ltd.

Currently Mr. Pynt is a non-executive chairman of Richfield International Limited for the last 5.5 years, a director of Gondwana Resources Ltd since the year 2000 and director of Global Health Ltd (formerly Working Systems Solutions Ltd) since the year 2000 and chairman for the past 5 years. All of these companies are listed on the ASX.

Mr. Michael Scivolo

Non-Executive Director

Appointed 5 February 2007

Mr. Scivolo completed a Bachelor of Commerce degree in 1971 and worked with various accounting firms as a tax consultant gaining CPA status in 1972. He became a partner in a medium size Perth practice in 1977 and has extensive experience in accounting and taxation work with corporate and non-corporate entities.

Mr. Scivolo is also a director of Sabre Resources Ltd from 3 October 2006, Blaze International Limited from 21 October 2010, Prime Minerals Limited from 21 October 2010 and Power Resources Limited from 21 October 2010.

Mr. Wayne Knight

Non-Executive Director

Appointed 3 December 2007

Mr Knight has worked in the financial services industry since 1989 and has a Diploma in Financial Planning 1, 2, 3, 4. He is an Authorised Representative of Tandem Financial Advice Limited and offers services in the areas of personal superannuation planning, managed investments, risk management, rollover and redundancy planning, wealth creation and insurances. He has held no Directorships in other listed companies in the last three years.

COMPANY SECRETARY

Mr Luke Martino

Company secretary

Appointed 30 November 2007

Mr Martino is a Fellow of the Institute of Chartered Accountants in Australia and a member of the Institute of Company Directors.

His area of expertise includes corporate finance and business growth consulting advice to the mining and resources sector and a wide range of other industries.

Mr Martino is also a Director of Indian Ocean Advisory Group, Director of WestZone Enterprises Pty Ltd, Director and the Company Secretary for Pan Asia Corporation Ltd as well as Company Secretary of Blackgold International Holdings Ltd.

Victory West Metals Limited – Annual Report 2011

Directors‟ Report

PRINCIPAL ACTIVITIES

Victory West Metals Limited is a diversified resource company seeking to create shareholder value by acquiring and operating highly valuable resource projects in Indonesia. The Company‟s current primary project is its rights to exploration and exploitation of the Malala Molybdenum deposit in Sulawesi, Indonesia. Please see the Review of Operations for further details of this project.

OPERATING RESULTS AND FINANCIAL REVIEW

The loss attributable to members of the parent entity after providing for income tax amounted to $3,692,694 (2010: $2,007,619).

REVIEW OF OPERATIONS

Please see “Review of Operations” section of this report.

FUTURE DEVELOPMENTS

The Company will continue to explore and evaluate its Malala Molybdenum project and subject to due diligence, a pipeline of coal projects in Indonesia.

It is not possible to estimate the future results at this stage.

DIVIDENDS

No dividends were paid or declared during the financial year ended 30 June 2011.

MATTERS SUBSEQUENT TO REPORTING DATE

On the 9th September 2011 the Company announced that it had signed a Heads of Agreement to acquire 100% of South East Asia Energy Resources Pte Ltd ( SEAE), a special purpose company registered in Singapore that has the rights to an 85% interest in the BEK coal project in East Kalimantan. In addition the SEAE group brings a pipeline of 9 coking and thermal Coal concessions in East Kalimantan and initial off take agreements for 200,000 tonnes per month with major global parties.

Importantly, if approved by shareholders and regulatory authorities, the SEAE team will combine with the VWM management and consulting team to create an experienced and extensive team in Indonesia mining operations and engineering that will target significant JORC certifiable resources and production.

On 21 September 2011, Dempsey Resource Pty Ltd and the Company agreed to extend the Convertible Note until 15 November 2011.

Subsequent to the end of the financial year, the company has repaid $25,000 of convertible loans.

Victory West Metals Limited – Annual Report 2011

Directors‟ Report

DIRECTORS‟ INTERESTS

The relevant interest of each director in the shares, interests in registered schemes and rights or options over such instruments issued by the companies within the consolidated entity and other related bodies corporate, as notified by the directors to the Australian Stock Exchange in accordance with S205G (1) of the Corporations Act 2001, at the date of this report is as follows:

	2011 2010

Mr. S Pynt Mr. M Scivolo Mr W Knight	Ordinary Shares Number of Options over Ordinary Shares1 Ordinary Shares Number of Options over Ordinary Shares 107,150 333,333 107,150 - - 333,333 - - 175,000 333,334 175,000 -

1 These options are convertible on the achievement of milestones. Refer to Note 22 (a) for further details

MEETINGS OF DIRECTORS

The number of directors' meetings and the number of meetings attended by each of the directors of the Company during the financial year are:

Director	Number of meetings eligible	Number of meetings attended
	to attend	during the year
Mr. S Pynt	14	14
Mr. M Scivolo	14	11
Mr W Knight	14	14

In addition there were twenty one (21) Circular Resolutions signed by the directors who were eligible to vote.

SHARE OPTIONS

At the date of this report, there were 84,137,984 listed options and 27,000,000 unlisted options (total 111,137,984) over the unissued ordinary shares of the Company. Please note that 4,250,000 unlisted performance options have lapsed and as such are not capable of being exercised. Please refer to Note 22(a) for details on these options.

Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company.

INDEMNIFICATION AND INSURANCE OF OFFICERS

During the financial year, the Company paid a premium in respect of a contract insuring the Directors of the Company (as named above), the company secretary, and all executive officers of the Company and of any related body corporate against a liability incurred as such a Director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

The Company has not otherwise, during or since the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor. There have also been no legal proceedings during the year and no application for leave has been made in respect of the Company for proceedings on behalf of the Company.

Victory West Metals Limited – Annual Report 2011

Directors‟ Report

REMUNERATION REPORT (AUDITED)

This remuneration report, which forms part of the directors‟ report, sets out information about the remuneration of the Company‟s directors and key management personnel for the financial year ended 30 June 2011. The key management personnel of the Company include the Directors and other officers of the Company. For the purposes of this report “key management personnel” are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company.

The Directors‟ fees are approved by the Board within the aggregate approved by the shareholders at a general meeting. The fee pool currently stands at $200,000 as approved at the Company‟s AGM in November 2000. The Company does not provide retirement benefits, however directors may salary sacrifice an element of their total remuneration to superannuation. In addition, the Board seeks shareholder approval for any options that may be issued to directors.

The amount of aggregate remuneration and the manner in which it is apportioned amongst directors is reviewed annually. Shareholder approval is sought where there is a proposed change in the total remuneration paid to non-executive directors. The Board considers the Company‟s particular circumstances as well as the fees paid to non-executive directors of comparable companies when undertaking the annual review process.

Details of the remuneration of each Director and other Key Management Personnel are set out below.

	Short-term
	employment	Post-employment
	benefits	benefits	Share- based
					Value of
	Cash salary &	Superannuation			options as %
2011	fees	benefits	Options	Total	remuneration
	$	$	$	$
Directors‟ Fees
Steven Pynt (Chairman)	36,000	-	3,975	39,975	10%
Michael Scivolo	-	24,000	3,975	27,975	14%
Wayne Knight	-	24,000	3,975	27,975	14%
Company Secretary Fees
Luke Martino	60,0001	-	53,925	113,925	47%
Chief Executive Officer
Rob Hyndes (resigned 21	120,000	-	60,0002	180,000	33%
June 2011)
Total	216,000	48,000	125,850	389,850

1 These fees were paid to a related entity of Mr L Martino for Company Secretary services

2 Mr Rob Hyndes was issued with 4,000,000 performance options as detailed below in the remuneration report however, as these performance options have lapsed during the period as a result of Mr Rob Hyndes resignation as CEO in June 2011, no value has been ascribed to these options as they are not capable of being exercised. The value of $60,000 represents the listed options issued.

Victory West Metals Limited – Annual Report 2011

Directors‟ Report

Remuneration Report (Continued)

	Short-term
	employment	Post-employment
	benefits	benefits	Share- based
						Value of
	Cash salary &	Superannuation				options as %
2010	fees	benefits	Options		Total	remuneration
	$	$	$		$
Directors‟ Fees
Steven Pynt (Chairman)	36,000	-		-	36,000	0%
Michael Scivolo	-	24,000		-	24,000	0%
Wayne Knight	-	24,000		-	24,000	0%
Company Secretary Fees
Luke Martino	60,0001	-		-	60,000	0%
Chief Executive Officer
Rob Hyndes	57,597	-		-	57,597	0%
Total	153,597	48,000		-	201,597

1 These fees were paid to a related entity of Mr L Martino for Company Secretary services

Relationship between the remuneration policy and company performance

The performance of the Company largely depends upon the quality of its directors and executives. To prosper, the Company must attract, motivate and retain highly skilled directors (both executive and nonexecutive) and executives. The Board of the Company believes that in order to retain quality directors and executives, some incentive to maintain their future services, involvement, commitment and loyalty to the Company, is required on certain occasions over and above nominal Directors‟ and executive fees and salaries.

The Company did not pay any cash incentives or bonuses to its directors or senior management during the financial year ended 30 June 2011.

In the financial year ended 30 June 2011, the Company received shareholder approval to issue directors and key management personnel with performance options. The exercisability of these options is dependent on the Company‟s performance and the individuals continued employment, which are linked to the company‟s overall performance.

Each of these milestone steps is of importance in its own right as well as being on the critical path to full commercial production of its projects. Accordingly each milestone has been set as a hurdle as the Company builds momentum to achieve production of its projects and in parallel an anticipated increasing share price and shareholder value.

As approved by shareholders at the Company‟s General Meeting held on 13 August 2010, during the financial year ending 30 June 2011, the Company issued a total of 9.4 million options to directors and key management personnel, of which 6 million options are subject to performance milestone conditions. No amounts were paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. During the year 4 million of these performance options lapsed as a results of the employees resignation. No value has been ascribed to these options as they are not capable of being exercised.

The table below sets out the number of options issued to directors and key management personnel during the year with respect to services:

Victory West Metals Limited – Annual Report 2011

Directors‟ Report

Remuneration Report (Continued)

	Listed	Options1	Performance Options2	Performance Options2	Performance Options2
		Grant date			Grant date
2011	No.	fair value	Milestone A	Milestone B	fair value	Total
	#	$	#	#	$	#
Directors
Steven Pynt (Chairman)	-		166,666	166,667	0.012	333,333
Michael Scivolo	-		166,667	166,666	0.012	333,333
Wayne Knight	-		166,667	166,667	0.012	333,334
Company Secretary
Luke Martino	1,400,000	0.03	500,000	500,000	0.012	2,400,000
Chief Executive Officer
Rob Hyndes	2,000,000	0.03	2,000,0003	2,000,0003	0.012	6,000,000
Total	3,400,000	0.03	3,000,000	3,000,000	0.012	9,400,000

These options are listed option and have an exercise price of $0.20 and expire on 24 February 2012.
The Performance Options are unlisted and have an exercise price of $0.25 and expire on 31 August 2014.

The Performance Options will lapse if for any reason the Optionholder ends its employment, relationship or engagement with the Company. Also, the conversion of each Performance Option is subject to the completion of the following milestones:

(i) the Company announcing to the ASX (or other recognised stock exchange) a JORC compliant resource of at least 120,000 tonnes (265 million pounds) of contained Molybdenum at a minimum grade of at least 600ppm either within one of the permits or total across all of the permits held at that time by the Company ( “Milestone A” ).

This target is effectively twice the current target resource.

(ii) The company having a market capitalisation of $80,000,000 Australian Dollars for 5 consecutive trading days (“Milestone B”).

At the time of seeking shareholder approval, this target was approximately 9 times the company‟s market cap at this time of ~A$9m (as at 6 July 2010).

Mr Robert Hyndes resigned as CEO in June 2011. Accordingly, these options have lapsed pursuant to the terms mentioned above and are not capable of being exercised.

In order for all Performance Options to be converted both Milestone A and Milestone B must be met by the Company. If only one Milestone is met prior to the expiry date then only those performance options subject to the milestone which is being met are able to be converted.

During the year, no options were exercised by the directors or key management personnel that were granted to them as part of their compensation.

Victory West Metals Limited – Annual Report 2011

Directors‟ Report

Remuneration Report (Continued)

The table below sets out summary information about the Consolidated Entity‟s earnings and movements in shareholder wealth for the five years to 30 June 2011.

	30 Jun 07	30 Jun 08	30 Jun 09	30 Jun 10	30 Jun 11
Revenue	40,913	32,699	46,581	126,850	96,555
Net profit / (loss) before tax	(179,053)	(455,124)	(1,183,732)	(2,015,939)	(3,693,641)
Net profit / (loss) after tax	(179,053)	(455,124)	(1,183,732)	(2,015,939)	(3,693,641)
Share price at the start of the year (cents)	0.003	0.006	0.043	0.17	0.092
Share price at the end of the year (cents)	0.006	0.043	0.17	0.092	0.078
Dividends	-	-	-	-	-
Basic earnings per share	(0.0004)	(0.0159)	(0.02)	(2.18)	(2.60)
Diluted earnings per share	(0.0004)	(0.0106)	(0.02)	(2.18)	(2.60)

Please note that on 26 November 2008, shareholders resolved to consolidate the share capital of the Company on a 1 for 20 basis.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Company‟s operations are not regulated by any significant environmental regulation under the Law of the Commonwealth or of a State or Territory of Australia. However, the group‟s operations in Indonesia are subject to environmental regulations under Indonesian laws. The group has a policy of complying with its environmental performance obligations and at the date of this report, it is not aware of any breach of such regulations.

NON-AUDIT SERVICES

During the year, Grant Thornton Audit Pty Ltd, the Company‟s auditor, has not provided any non-audit services.

A copy of the lead auditors‟ independence declaration for the year ended 30 June 2011 has been received and can be found on page 25 of the Annual Report.

Grant Thornton Audit Pty Ltd continues in office in accordance with Section 327 of the Corporations Act 2001.

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

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Mr Steven Pynt

Director

30 September 2011

Victory West Metals Limited – Annual Report 2011

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Grant Thornton Audit Pty Ltd ABN 94 269 609 023

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

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

Auditor’s Independence Declaration To the Directors of Victory West Metals Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Victory West Metals Limited for the year ended 30 June 2011, I declare that, to the best of my knowledge and belief, there have been:

a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b no contraventions of any applicable code of professional conduct in relation to the audit.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

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J W Vibert Director - Audit & Assurance

Perth, 30 September 2011

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

Liability limited by a scheme approved under Professional Standards Legislation

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Grant Thornton Audit Pty Ltd ABN 94 269 609 023

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

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

Independent Auditor’s Report To the Members of Victory West Metals Limited

Report on the financial report

We have audited the accompanying financial report of Victory West Metals Limited (the “Company”), which comprises the consolidated statement of financial position as at 30 June 2011, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the consolidated entity comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report

The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view of the financial report in accordance with Australian Accounting Standards and the Corporations Act 2001. This responsibility includes such internal controls as the Directors determine are necessary to enable the preparation of the financial report to be free from material misstatement, whether due to fraud or error. The Directors also state, in the notes to the financial report, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards which require us to comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

Liability limited by a scheme approved under Professional Standards Legislation

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An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Auditor’s opinion

In our opinion:

a the financial report of Victory West Metals Limited is in accordance with the Corporations Act 2001, including:
i giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of its performance for the year ended on that date; and
ii complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b the financial report also complies with International Financial Reporting Standards as disclosed in the notes to the financial statements.

Material uncertainty regarding continuation as a going concern

Without qualifying our opinion, we draw attention to Note 1(r) in the financial report which indicates that the consolidated entity incurred a net loss of $3,693,641 and net operating cash outflows of $1,425,324 during the year ended 30 June 2011 and, as of that date, the consolidated entity’s current liabilities exceeded its current assets by $1,510,773. These conditions, along with other matters as set forth in Note 1(r), 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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Report on the remuneration report

We have audited the remuneration report included in pages 21 to 24 of the directors’ report for the year ended 30 June 2011. The Directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s opinion on the remuneration report

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

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

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J W Vibert Director - Audit & Assurance

Perth, 30 September 2011

Directors' Declaration

In accordance with a resolution of the directors of Victory West Metals Limited, I declare that:

In the opinion of the Directors:
a. the financial statements and notes set out on pages 30 to 85 and the remuneration disclosures that are contained in pages 21 to 24 in the Remuneration Report contained in the Directors Report are in accordance with the Corporations Act 2001, including:
- i. giving a true and fair view of the consolidated entity‟s financial position as at 30 June 2011 and of their performance for the year ended on that date; and
- ii. complying with Accounting Standards and Corporation Regulations 2001; and
- iii. complying with International Financial Reporting Standards as disclosed in Note 1
b. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and
c. the remuneration disclosures that are contained in pages 21 to 24 of the Remuneration Report in the Directors Report comply with Accounting Standard AASB 124 Related Party Disclosures
This declaration has been made after receiving the declarations required to be made to the Directors in accordance with Section 295A of the Corporations Act 2001 for the financial period ending 30 June 2011.

On behalf of the Board

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Mr. Steven Pynt

Director

30 September 2011

Victory West Metals Limited – Annual Report 2011

Statement of Comprehensive Income For the Year Ended 30 June 2011

Statement of Comprehensive Income – For the Year Ended 30 June 2011


Note	Consolidated Entity

2011 $ 2010 $ Revenue 4 96,555 126,850 Depreciation and amortisation expense (4,945) (3,425) Project Evaluation & Exploration costs not capitalised (776,802) - Listing Fees (124,454) (91,447) Personnel, suppliers and consulting expenses 5 (1,499,150) (1,225,912) Insurance (17,463) (11,154) Legal fees (100,778) (91,657) Professional services fees (163,262) (159,170) Travel costs & accommodation (311,160) (149,297) Finance Costs (287,897) (292,658) Net foreign exchange losses (unrealised) (241,071) - Doubtful debts (51,084) - Impairment of financial assets (832) - Other expenses (211,298) (118,069) Loss before income tax expense (3,693,641) (2,015,939) Income tax expense 6 - - Loss for the year (3,693,641) (2,015,939) Loss attributable to: Non controlling Interest (947) (8,320) Members of the parent entity (3,692,694) (2,007,619) (3,693,641) (2,015,939) Other comprehensive income: Reversal of impairment loss previously recognised 22(c) (8,492) 8,492 Exchange differences on translating controlled entities 22(b) (1,439,432) (112,629) Total other comprehensive income for the year (1,447,924) (104,137) Total Comprehensive Income for the year (5,141,565) (2,120,076) Total Comprehensive loss attributable to: Non controlling Interest (947) (8,320) Members of the parent entity (5,140,618) (2,111,756) (5,141,565) (2,120,076) Earnings per share for loss attributable to the ordinary equity holders of the Company: Cents Cents Basic earnings per share (loss) 9 (2.60) (2.18) Diluted earnings per share (loss) 9 (2.60) (2.18)	2011 $ 2010 $ 96,555 126,850 (4,945) (3,425) (776,802) - (124,454) (91,447) (1,499,150) (1,225,912) (17,463) (11,154) (100,778) (91,657) (163,262) (159,170) (311,160) (149,297) (287,897) (292,658) (241,071) - (51,084) - (832) - (211,298) (118,069)
	(3,693,641) (2,015,939) - -
	(3,693,641) (2,015,939)
	(947) (8,320) (3,692,694) (2,007,619)
	(3,693,641) (2,015,939) (8,492) 8,492 (1,439,432) (112,629)
	(1,447,924) (104,137)
	(5,141,565) (2,120,076) (947) (8,320) (5,140,618) (2,111,756)

The accompanying notes form part of these financial statements.

Victory West Metals Limited – Annual Report 2011

Statement of Financial Position As at 30 June 2011

Statement of Financial Position - As at 30 June 2011

Note	Consolidated entity
Current Assets Cash & cash equivalents 10 Trade & other receivables 11 Prepayments Total Current Assets Non Current Assets Receivables 12 Property, plant & equipment 14 Exploration & evaluation expenditure 13 Other financial assets 15 Total Non Current Assets Total Assets Current Liabilities Trade & other payables 17 Short term provisions 18 Borrowings 19 Other current liabilities 20 Total Current Liabilities Non -Current Liabilities Borrowings 19 Total non current liabilities Total Liabilities Net Assets Equity Issued capital 21(a)(b) Reserves 22(a)(b)(c)(d) Accumulated losses 23 Parent entity interest Minority equity interest Total Equity	2011 $ 2010 $ 2,026,863 411,526 586,559 800,648 93,642 107,314
	2,707,064 1,319,488
	49,244 58,270 11,649 8,131 15,435,723 15,692,457 8,392 17,716
	15,505,008 15,776,574
	18,212,072 17,096,062
	1,132,471 755,218 13,337 9,508 2,580,000 - 492,029 -
	4,217,837 764,726
	- 2,000,000
	- 2,000,000
	4,217,837 2,764,726
	13,994,235 14,331,336
	21,191,223 13,260,223 82,586 4,657,160 (7,247,254) (3,554,560)
	14,026,555 14,362,823 (32,320) (31,487)
	13,994,235 14,331,336

The accompanying notes form part of these financial statements.

Victory West Metals Limited – Annual Report 2011

Statement of Changes in Equity For the Year Ended 30 June 2011

Statement of Changes in Equity - For the Year Ended 30 June 2011

Note	Note		Foreign	Foreign	Foreign	Foreign	Foreign	Foreign	Foreign
			Currency		Outside Equity	Acquisition	Financial	Accumulated
	Note		Translation	Option Reserve	Interest	Reserve	Assets Reserve	Losses	Total
CONSOLIDATED ENTITY			$	$	$	$	$	$	$
Balance at 1 July 2009 Loss attributable to members of parent entity 23 Other comprehensive losses Sub-total Contributions of equity, net of transaction costs Recognition of outside equity interest Balance at 30 June 2010 Balance at 1 July 2010 Loss attributable to members of parent entity 23 Other comprehensive losses Sub-total Options issued during the period Acquisition of subsidiary minority interest 24 Contributions of equity, net of transaction costs Recognition of outside equity interest Balance at 30 June 2011
		11,752,989 (315,813) 4,952,561 104,756 - 8,492 (3,554,560) 12,948,425 1,507,234 - 11,920 - - - - 1,519,154 - - - (136,243) - - - (136,243)
		13,260,223 (315,813) 4,964,481 (31,487) - 8,492 (3,554,560) 14,331,336
		13,260,223 (315,813) 4,964,481 (31,487) - 8,492 (3,554,560) 14,331,336 - - - - - - (3,692,694) (3,692,694) - (1,439,432) - - - (8,492) - (1,447,924)
		13,260,223 (1,755,245) 4,964,481 (31,487) - - (7,247,254) 9,190,718 - - 223,350 - - - - 223,350 - - - - (3,350,000) - - (3,350,000) 7,931,000 - - - - - - 7,931,000 - - - (833) - - - (833)
		21,191,223 (1,755,245) 5,187,831 (32,320) (3,350,000) - (7,247,254) 13,994,235

The accompanying notes form part of these financial statements

Victory West Metals Limited – Annual Report 2011

Statement of Cash Flows For the Year Ended 30 June 2011

Statement of Cash Flows - For the Year Ended 30 June 2011


Note	Consolidated entity
Cash Flows from Operating Activities Receipts from customers Payments to suppliers and employees Interest received Payments of deposits Net cash (used in) operating activities 27 Cash Flows from Investing Activities Payments for exploration and evaluation Purchase of property plant and equipment Loans to shareholders Loans from shareholders Loans to other entities Repayment of loans to other entities Other Net cash (used in) investing activities Cash Flows from Financing Activities Proceeds from issue of options Proceeds from issue of shares Proceeds from borrowings Interest paid Repayment of borrowings Share issue transaction costs Net cash provided by financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Effect of exchange rates on cash holdings in foreign currencies Cash and cash equivalents at the end of the financial year 10	2011 $ 2010 $ 52,167 66,036 (1,422,646) (2,405,837) 2,633 10,880 (57,478) (147,195)
	(1,425,324) (2,476,116)
	(1,824,084) (1,575,746) (10,591) (6,164) (1,491) - 51,549 - (1,815,273) (1,307,828) 1,916,195 800,000 (1,108) -
	(1,684,803) (2,089,738)
	- 11,920 3,750,000 1,500,000 1,578,000 2,000,000 (250,495) (192,658) (100,000) - (192,000) (142,766)
	4,785,505 3,176,496
	1,675,378 (1,389,358) 411,526 1,807,232 (60,041) (6,348)
	2,026,863 411,526

The accompanying notes form part of these financial statements.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

1. Statement of Significant Accounting Policies

The financial report covers the consolidated entity of Victory West Metals Limited and controlled entities (the “Group”). Victory West Metals Limited is a listed public company, incorporated and domiciled in Australia. The financial report was authorised for issue by a resolution of the Board of Directors on 30 September 2011.

Basis of Preparation

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

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below. They have been consistently applied unless otherwise stated.

Reporting Basis and Conventions

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

New Accounting Standards and Interpretations

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

Victory West Metals Limited – Annual Report 2011

For the Year Ended 30 June 2011

Notes to and Forming Part of the Accounts

					Related pronouncement which must be early adopted if this standard is early adopted
				Example disclosure of impact of new standard on the financial report (if standard is not adopted early)
			Effective date (i.e. annual reporting periods ending on or after)
New/revised pronouncement	Superseded pronouncement
		Explanation of amendments				Likely impact



AASB 9 Financial Instruments AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9	AASB 139 Financial Instruments: Recognition and Measurement (part)	AASB 9 introduces new requirements for the classification and measurement of financial assets and liabilities. AASB 9 uses a single approach to determine whether a financial asset is measured at amortised cost or fair value, replacing the many different rules in AASB 139 and removes the impairment requirement for financial assets held at fair value. In addition, the majority of requirements from AASB 139 for the classification and measurement of financial liabilities has been carried forward unchanged, except in relation to own credit risk where an entity takes the option to measure financial liabilities at fair value. AASB 9 requires the amount of the change in fair value due to changes in the entity‟s own credit risk to be presented in other comprehensive income (OCI), unless there is an accounting mismatch in the profit or loss, in which case all gains or losses are to be presented in the profit or loss. The requirements from AASB 139 related to the derecognition of financial assets and liabilities have been incorporated unchanged into AASB 9.	31 December 2013	AASB 9 amends the classification and measurement of financial assets; the effect on the entity will be that more assets are held at fair value and the need for impairment testing has been limited to assets held at amortised cost only. Minimal changes have been made in relation to the classification and measurement of financial liabilities, except „own credit risk‟ instruments. The effect on the entity will be that the volatility in the profit or loss will be moved to the OCI, unless there is an accounting mismatch.	AASB 2009-11 AASB 2010-7	Depending on assets held, there may be significant movement of assets between fair value and cost categories and ceasing of impairment testing on available for sale assets. If the entity holds any „own credit risk‟ financial liabilities, the fair value gain or loss will be incorporated in the OCI, rather than profit or loss, unless accounting mismatch.

Victory West Metals Limited – Annual Report 2011

For the Year Ended 30 June 2011

Notes to and Forming Part of the Accounts

					Related pronouncement which must be early adopted if this standard is early adopted
				Example disclosure of impact of new standard on the financial report (if standard is not adopted early)
			Effective date (i.e. annual reporting periods ending on or after)
New/revised pronouncement	Superseded pronouncement
		Explanation of amendments				Likely impact



AASB 124 Related Party Disclosures AASB 2009-12 Amendments to Australian Accounting Standards arising from AASB 124.	AASB 124 Related Party Disclosures	This revision amends the disclosure requirements for government related entities and the definition of a related party.	31 December 2011	Since the entity is not a government related entity; there is not expected to be any changes arising from this standard.	AASB 2009-12	Unlikely to have significant impact in Australia.
AASB 2009-14 Prepayments of a Minimum Funding Requirement (Amendments to Interpretation 14)	Interpretation 14	This amendment to Interpretation 14 addresses the unintended consequences that can arise from the previous requirements when an entity prepays future contributions into a defined benefit pension plan.	31 December 2011	As the entity does not have a defined benefit pension plan this amendment to Interpretation 14 is not expected to have any impact on the entity‟s financial report.	None	Possibly significant if the entity has a defined benefit

Victory West Metals Limited – Annual Report 2011

For the Year Ended 30 June 2011

Notes to and Forming Part of the Accounts

					Related pronouncement which must be early adopted if this standard is early adopted
				Example disclosure of impact of new standard on the financial report (if standard is not adopted early)
			Effective date (i.e. annual reporting periods ending on or after)
New/revised pronouncement	Superseded pronouncement
		Explanation of amendments				Likely impact



AASB 2010-2 Amendments to Australian Accounting Standards arising from reduced disclosure requirements	None	This Standard gives effect to Australian Accounting Standards - Reduced Disclosure Requirements. AASB 1053 provides further information regarding the differential reporting framework and the two tiers of reporting requirements for preparing general purpose financial statements.	30 June 2014	AASB 2010-2 sets out the relevant disclosures that will not be required to be made if it is a Tier 2 entity that nominates to comply.	AASB 1053	Reduced note disclosures in the following main areas: AASB 7 Financial Instruments; Disclosures AASB 101 Presentation of Financial Statements AASB 108 Accounting Policies AASB 123 Borrowing Costs AASB 124 Related Party Disclosures AASB 128 Accounting for Associates

Victory West Metals Limited – Annual Report 2011

For the Year Ended 30 June 2011

Notes to and Forming Part of the Accounts

					Related pronouncement which must be early adopted if this standard is early adopted
				Example disclosure of impact of new standard on the financial report (if standard is not adopted early)
			Effective date (i.e. annual reporting periods ending on or after)
New/revised pronouncement	Superseded pronouncement
		Explanation of amendments				Likely impact



AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1, AASB 7, AASB 101, AASB 134 and Interpretation 13]	None	Emphasises the interaction between quantitative and qualitative AASB 7 disclosures and the nature and extent of risks associated with financial instruments. Clarifies that an entity will present an analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the notes to the financial statements. Provides guidance to illustrate how to apply disclosure principles in AASB 134 for significant events and transactions. Clarify that when the fair value of award credits is measured based on the value of the awards for which they could be redeemed, the amount of discounts or incentives otherwise granted to customers not participating in the award credit scheme, is to be taken in account.	31 December 2011	Given the number of standards amended by AASB 2010-4, an example disclosure is not included. Entities assess the impact of each of the amendments on their organisation.	None	Varies depending on relevance; however impact is unlikely to be significant.

Victory West Metals Limited – Annual Report 2011

For the Year Ended 30 June 2011

Notes to and Forming Part of the Accounts

					Related pronouncement which must be early adopted if this standard is early adopted
				Example disclosure of impact of new standard on the financial report (if standard is not adopted early)
			Effective date (i.e. annual reporting periods ending on or after)
New/revised pronouncement	Superseded pronouncement
		Explanation of amendments				Likely impact



AASB 1053 Application of Tiers of Australian Accounting Standards	None	This Standard establishes a differential financial reporting framework consisting of two Tiers of reporting requirements for preparing general purpose financial statements: 1. Tier 1: Australian Accounting Standards; and 2. Tier 2: Australian Accounting Standards - Reduced Disclosure Requirements. Tier 2 comprises the recognition, measurement and presentation requirements of Tier 1 and substantially reduced disclosures corresponding to those requirements. 1 The following entities apply Tier 1 requirements in preparing general purpose financial statements: a) for-profit entities in the private sector that have public accountability (as defined in this Standard); and b) the Australian Government and State, Territory and Local Governments The following entities apply either Tier 2 or Tier 1 requirements in preparing general purpose financial statements: a) for-profit private sector entities that do not have public accountability; b) all not-for-profit private sector entities; and c) public sector entities other than the Australian Government and State, Territory & Local Governments	30 June 2014	This depends on the classification of the entity as a Tier 1 or 2. For Tier 1 entities or Tier 2 that prepare special purpose financial reports, there will be no impact on the financial statements as the reduced disclosure will not be available to apply. Tier 2 entities that prepare general purpose financial reports will be able to apply the reduced disclosures within the financial instruments, related parties, accounting policies, borrowing costs, and financial statement disclosures	AASB 1053	Reduced disclosures. Refer to comments in AASB 2010-2 above.

Victory West Metals Limited – Annual Report 2011

For the Year Ended 30 June 2011

Notes to and Forming Part of the Accounts

					Related pronouncement which must be early adopted if this standard is early adopted
				Example disclosure of impact of new standard on the financial report (if standard is not adopted early)
			Effective date (i.e. annual reporting periods ending on or after)
New/revised pronouncement	Superseded pronouncement
		Explanation of amendments				Likely impact



AASB 1054 Australian Additional Disclosures	None	This standard is as a consequence of phase 1 of the joint Trans-Tasman Convergence project of the AASB and FRSB. This standard relocates all Australian specific disclosures from other standards to one place and revises disclosures in the following areas: a) Compliance with Australian Accounting Standards b) The statutory basis or reporting framework for financial statements c) Whether the financial statements are general purpose or special purpose d) Audit fees e) Imputation credits f) reconciliation of net operating cash flow to profit (loss)	30 June 2012	This Standard sets out the Australian-specific disclosures for entities that have adopted Australian Accounting Standards. This Standard contains disclosure requirements that are additional to IFRSs.	AASB 2011-01	Not expected to have significant impact, as only relocating Australian specific disclosures from existing standards to this new standard.
AASB 2010-05 Amendments to Australian Accounting Standards [AASB 1, 3, 4, 5, 101, 107, 112, 118, 119, 121, 132, 133, 134, 137, 139, 140, 1023 & 1038 and Interpretations 112, 115, 127, 132 & 1042]	None	The Standard makes numerous editorial amendments to a range of Australian Accounting Standards and Interpretations, including amendments to reflect changes made to the text of International Financial Reporting Standards by the International Accounting Standards Board.	31 December 2011	These amendments have no major impact on the requirements of the amended pronouncements	AASB 2010-5	No major impact

Victory West Metals Limited – Annual Report 2011

For the Year Ended 30 June 2011

Notes to and Forming Part of the Accounts

					Related pronouncement which must be early adopted if this standard is early adopted
				Example disclosure of impact of new standard on the financial report (if standard is not adopted early)
			Effective date (i.e. annual reporting periods ending on or after)
New/revised pronouncement	Superseded pronouncement
		Explanation of amendments				Likely impact



AASB 2010-6 Amendments to Australian Accounting Standards - Disclosures on Transfers of Financial Assets (AASB 1 & AASB 7)	None	The Standard amends the disclosures required, to help users of financial statements evaluate the risk exposures relating to more complex transfers of financial assets (e.g. securitisations) and the effect of those risks on an entity‟s financial position.	30 June 2012	The Amendments will introduce more extensive and onerous quantitative and qualitative disclosure requirements for de- recognition of financial assets.	AASB 7	More extensive and onerous quantitative and qualitative disclosure requirements for de- recognition of financial assets.
AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023, & 1038 and interpretations 2, 5, 10, 12, 19 & 127]	None	The requirements for classifying and measuring financial liabilities were added to AASB 9. The existing requirements for the classification of financial liabilities and the ability to use the fair value option have been retained. However, where the fair value option is used for financial liabilities the change in fair value is accounted for as follows: a) The change attributable to changes in credit risk are presented in other comprehensive income (OCI) b) The remaining change is presented in profit or loss If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk are also presented in profit or loss.	31 December 2013	This Standard makes amendments to a range of Australian Accounting Standards and Interpretations as a consequence of the issuance of AASB 9: Financial Instruments in December 2010. Accordingly, these amendments will only apply when the entity adopts AASB 9.	AASB 9 AASB 2009-11	Unlikely to have significant impact in Australia.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts

For the Year Ended 30 June 2011

					Related pronouncement which must be early adopted if this standard is early adopted
				Example disclosure of impact of new standard on the financial report (if standard is not adopted early)
			Effective date (i.e. annual reporting periods ending on or after)
New/revised pronouncement	Superseded pronouncement
		Explanation of amendments				Likely impact



AASB 2010-8 Amendments to Australian Accounting Standards - Deferred Tax: Recovery of Underlying Assets [AASB 112]	None	These amendments address the determination of deferred tax on investment property measured at fair value and introduce a rebuttable presumption that deferred tax on investment property measured at fair value should be determined on the basis that the carrying amount will be recoverable through sale. The amendments also incorporate SIC-21 Income Taxes - Recovery of Revalued Non- Depreciable Assets into AASB 112.	31 December 2012	The amendments brought in by this Standard introduce a more practical approach for measuring deferred tax liabilities and deferred tax assets when investment property is measured using the fair value model under AASB 140: Investment Property. Under the current AASB 112, the measurement of deferred tax liabilities and deferred tax assets depends on whether an entity expects to recover an asset by using it or by selling it. The amendments introduce a presumption that an investment property is recovered entirely through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale.	None	Unlikely to have significant impact in Australia

Victory West Metals Limited – Annual Report 2011

For the Year Ended 30 June 2011

Notes to and Forming Part of the Accounts

					Related pronouncement which must be early adopted if this standard is early adopted
				Example disclosure of impact of new standard on the financial report (if standard is not adopted early)
			Effective date (i.e. annual reporting periods ending on or after)
New/revised pronouncement	Superseded pronouncement
		Explanation of amendments				Likely impact



AASB 2011-1 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence project [AASB 1, AASB 5, AASB 101, AASB 107, AASB 108, AASB 121, AASB 128, AASB 132, AASB 134, Interpretation 2, Interpretation 112, Interpretation 113]	None	This Standard amendments many Australian Accounting Standards, removing the disclosures which have been relocated to AASB 1054.	30 June 2012	This Standard makes amendments to a range of Australian Accounting Standards and Interpretations for the purpose of closer alignment to IFRSs and harmonisation between Australian and New Zealand Standards.	AASB 1054	Refer to comments above under

Victory West Metals Limited – Annual Report 2011

For the Year Ended 30 June 2011

Notes to and Forming Part of the Accounts

					Related pronouncement which must be early adopted if this standard is early adopted
				Example disclosure of impact of new standard on the financial report (if standard is not adopted early)
			Effective date (i.e. annual reporting periods ending on or after)
New/revised pronouncement	Superseded pronouncement
		Explanation of amendments				Likely impact



AASB 2011-2 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence project - Reduced disclosure regime [AASB 101, AASB 1054]	None	This Standard makes amendments to the application of the revised disclosures to Tier 2 entities, that are applying AASB 1053.	30 June 2014	This Standard makes amendments to the following Australian Accounting Standards: 1. AASB 101 Presentation of Financial Statements 2. AASB 1054 Australian Additional Disclosures, to establish reduced disclosure requirements for entities preparing general purpose financial statements under Australian Accounting Standards - Reduced Disclosure Requirements in relation to the Australian additional disclosures arising from the Trans-Tasman Convergence Project.	AASB 1053 AASB 1054 AASB 2011-1	Not expected to have significant impact, as only relocating Australian specific disclosures from existing standards to this new standard

Victory West Metals Limited – Annual Report 2011

For the Year Ended 30 June 2011

Notes to and Forming Part of the Accounts

					Related pronouncement which must be early adopted if this standard is early adopted
				Example disclosure of impact of new standard on the financial report (if standard is not adopted early)
			Effective date (i.e. annual reporting periods ending on or after)
New/revised pronouncement	Superseded pronouncement
		Explanation of amendments				Likely impact



Consolidated Financial Statements	IAS 27	IFRS 10 establishes a new control model that applies to all entities. It replaces parts of IAS 27 Consolidated and Separate Financial Statements dealing with the accounting for consolidated financial statements and SIC-12 Consolidation - Special Purpose Entities. The new control model broadens the situations when an entity is considered to be controlled by another entity and includes new guidance for applying the model to specific situations, including when acting as a manager may give control, the impact of potential voting rights and when holding less than a majority voting rights may give control. This is likely to lead to more entities being consolidated into the group.	31 December 2013	It introduces a new, principle- based definition of control which will apply to all investees to determine the scope of consolidation. Traditional control assessments based on majority ownership of voting rights will very rarely be affected. However, 'borderline' consolidation decisions will need to be reviewed and some will need to be changed taking into consideration potential voting rights and substantive rights.	IFRS 11 IFRS 12 IAS 27 IAS 28 IAS 31	Entities most likely to be impacted are those that: - have significant, but not a majority equity interests in other entities; - hold potential voting rights over investments , such as options

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts

For the Year Ended 30 June 2011

					Related pronouncement which must be early adopted if this standard is early adopted
				Example disclosure of impact of new standard on the financial report (if standard is not adopted early)
			Effective date (i.e. annual reporting periods ending on or after)
New/revised pronouncement	Superseded pronouncement
		Explanation of amendments				Likely impact



Joint Arrangements1	IAS 31 SIC 13	IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly- controlled Entities - Non- monetary Contributions by Ventures. IFRS 11 uses the principle of control in IFRS 10 to define joint control, and therefore the determination of whether joint control exists may change. In addition IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, accounting for a joint arrangement is dependent on the nature of the rights and obligations arising from the arrangement. Joint operations that give the venturers a right to the underlying assets and obligations themselves is accounted for by recognising the share of those assets and obligations. Joint ventures that give the venturers a right to the net assets is accounted for using the equity method. This may result in a change in the accounting for the joint arrangements held by the group.	31 December 2013	Entities with existing joint arrangements or that plan to enter into new joint arrangements will be affected by the new standard. These entities will need to assess their arrangements to determine whether they have invested in a joint operation or a joint venture upon adoption of the new standard or upon entering into the arrangement. Entities that have been accounting for their interest in a joint venture using proportionate consolidation will no longer be allowed to use this method; instead they will account for the joint venture using the equity method. In addition, there may be some entities that previously equity-accounted for investments that may need to account for their share of assets and liabilities now that there is less focus on the structure of the arrangement.	IFRS 10 IFRS 12 IAS 27 IAS 28 IAS 31	For entities, that have joint ventures that have been previously accounted using proportionate consolidation, they will need to change to equity accounting.

Victory West Metals Limited – Annual Report 2011

For the Year Ended 30 June 2011

Notes to and Forming Part of the Accounts

					Related pronouncement which must be early adopted if this standard is early adopted
				Example disclosure of impact of new standard on the financial report (if standard is not adopted early)
			Effective date (i.e. annual reporting periods ending on or after)
New/revised pronouncement	Superseded pronouncement
		Explanation of amendments				Likely impact



Disclosure of Interests in Other Entities1	IAS 27 IAS 28 IAS 31	IFRS 12 includes all disclosures relating to an entity‟s interests in subsidiaries, joint arrangements, associates and structures entities. New disclosures have been introduced about the judgements made by management to determine whether control exists, and to require summarised information about joint arrangements, associates and structured entities and subsidiaries with non- controlling interests.	31 December 2013	IFRS 12 combines the disclosure requirements for subsidiaries, joint arrangements, associates and structured entities within a comprehensive disclosure standard. It aims to provide more transparency on 'borderline' consolidation decisions and enhance disclosures about unconsolidated structured entities in which an investor or sponsor has involvement.	None	There are some additional enhanced disclosures centred around significant judgements and assumptions made around determining control, joint control and significant

Victory West Metals Limited – Annual Report 2011

For the Year Ended 30 June 2011

Notes to and Forming Part of the Accounts

					Related pronouncement which must be early adopted if this standard is early adopted
				Example disclosure of impact of new standard on the financial report (if standard is not adopted early)
			Effective date (i.e. annual reporting periods ending on or after)
New/revised pronouncement	Superseded pronouncement
		Explanation of amendments				Likely impact



Fair Value Measurement2	None	IFRS 13 establishes a single source of guidance under IFRS for determining the fair value of assets and liabilities. IFRS 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value under IFRS when fair value is required or permitted by IFRS. Application of this definition may result in different fair values being determined for the relevant assets. IFRS 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes information about the assumptions made and the qualitative impact of those assumptions on the fair value determined.	31 December 2013	IFRS 13 has been created to: - establish a single source of guidance for all fair value measurements; - clarify the definition of fair value and related guidance; and - enhance disclosures about fair value measurements (new disclosures increase transparency about fair value measurements, including the valuation techniques and inputs used to measure fair value)	None	For financial assets, IFRS 13's guidance is broadly consistent with existing practice. It will however also apply to the measurement of fair value for non- financial assets and will make a significant change to existing guidance in the applicable
Carbon Tax Scheme On 10 July 2011, the Commonwealth Government announced the “Securing a Clean Energy Future – the Australian Government‟s Climate Change Plan”. Whilst the announcement provides further details of the framework for a carbon pricing mechanism, uncertainties continue to exist on the impact of any carbon pricing mechanism on the Group as legislation must be voted on and passed by both houses of parliament. In addition, as the Group will not fall within the “Top 500 Australian Polluters”, the impact of the Carbon Scheme will be through indirect effects of increased prices on many production inputs and general business expenses as suppliers subject to the carbon pricing mechanism are likely to pass on their carbon price burden to their customers in the form of increased prices. The board expects that this will not have a significant impact upon the operational costs within the business,and therefore will not have an impact upon the valuation of assets and/orgoingconcern of the business.

2 The AASB has not issued this standard, which was finalised by the IASB in May 2011.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

a. Principles of Consolidation

The consolidated financial statements incorporate the assets and liabilities of all controlled entities of Victory West Metals Limited (“company” or “parent entity”) as at 30 June 2011 and the results of all controlled entities for the year then ended. Victory West Metals Limited and its controlled entities together are referred to in this financial report as the “consolidated entity” or “group”.

Subsidiaries are all those entities over which the Company has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries.

Investments in subsidiaries are accounted for at cost in the individual financial statements of the Company.

All inter-Company balances and transactions between entities in the consolidated entity, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.

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

Minority equity interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial report.

b. Business Combinations

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

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

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

The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form the cost of the investment in the separate financial statements. Consideration may comprise the sum of the assets transferred by the

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

acquirer, liabilities incurred by the acquirer to the former owners of the acquiree and the equity interests issued by the acquirer.

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

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

All transaction costs incurred in relation to the business combination are expensed to the statement of comprehensive income.

c. Income Tax

The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income).

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

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

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

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

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

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

Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.

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

d. Property, Plant & Equipment

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Plant & Equipment

The cost of fixed assets constructed within the consolidated entity includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

Subsequent costs are included in the asset‟s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future consolidated benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred.

Depreciation

The depreciable amount of all fixed assets including building and capitalised lease assets, but excluding freehold land, is depreciated on a straight-line basis over their useful lives to the consolidated 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 assets are:

Class of Fixed Asset	Depreciation Rate
Office Furniture	6% - 40%
Office Equipment	12.5% - 40%

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

An asset‟s carrying amount is written down immediately to its recoverable amount if the asset‟s carrying amount is greater than its estimated 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. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

e. Leases

A distinction is made between finance leases which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased non-current assets, and operating leases under which the lessor effectively retains substantially all such risks and benefits.

Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term.

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.

f. Financial Instruments

Recognition and Initial Measurement

Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention.

Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value through profit and loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below.

Derecognition

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

i. Financial assets at fair value through profit and loss

Financial assets are classified at fair value through profit and loss when they are held for trading for the purpose of short term profit taking, where they are derivatives not held for hedging purposes, or designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Realised and unrealised gains and losses arising from changes in fair value are included in the statement of comprehensive income in the period in which they arise.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

ii. Loans and receivables

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

iii. Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the group‟s intention to hold these investments to maturity. They are subsequently measured at amortised cost using the effective interest rate method.

iv. Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated as such or that are not classified in any of the other categories. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.

v. Impairment

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

vi. Financial liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest rate method.

g. Impairment of Non-Financial Assets

At each reporting date, the group 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 statement of comprehensive income.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

h. Intangibles

Goodwill

Goodwill and goodwill on consolidation are initially recorded at the amount by which the purchase price for a business or for an ownership interest in a controlled entity exceeds the fair value attributed to its net assets at date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Exploration and evaluation

Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied:

i. the rights to tenure of the area of interest are current; and
ii. at least one of the following conditions is also met:
a. the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale; or
b. exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortised of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest.

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years.

During the year there was no impairment of Exploration and Evaluation.

Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to development.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

i. 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 consolidated 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. Non-monetary 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 statement of comprehensive income, 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 statement of comprehensive income.

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;

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 statement of financial position. These differences are recognised in the statement of comprehensive income in the period in which the operation is disposed.

j. Employee Entitlements

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 one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

k. Cash

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of one month or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

l. Revenue

Revenue from the sale of goods is recognised upon the delivery of goods to customers.

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

Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.

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

m. Borrowing Costs

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

All other borrowing costs are expensed in the period in which they are incurred.

n. Trade and Other Creditors

These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

o. Contributed Equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

p. Earnings Per Share

Basic earnings per share: Basic earnings per share is determined by dividing the net loss attributable to equity holders of the Company, by the weighted average number of ordinary shares outstanding 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.

q. Goods and Services Tax (GST)

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

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

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

r. Going Concern

The financial statements for the 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 this to be appropriate.

During the year the consolidated entity incurred a loss after tax of $3,693,641, net cash outflows from operating activities were $1,425,324, net cash inflows during the period were $1,675,378 and at 30 June 2011 had a net current asset deficiency of $1,510,773. Included in this net current asset deficiency are the convertible loans and notes of $2.58 million. Subsequent to balance date, the parties have agreed to extend the convertible note to 15 November 2011 (refer note 28). 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 maximize the potential of its current asset portfolio and the newly announced coal portfolio (subject to due diligence) 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 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. In addition, subject to successful due diligence and shareholder and regulatory approvals, if required, the potential short term development opportunities of the PT BEK Coal Project (part of the SEAE acquisition) to generate cash inflows, supported by off-take agreements, in the later part of the coming financial year should help to strengthen the groups capital management program. The development of the PT BEK Coal Project is subject to completion of technical and legal due diligence, shareholder approval of the SEAE acquisition and regulatory approvals, if required, and the provision of sufficient capital for development.

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 realize 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.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

s. Comparative Figures

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

t. Critical Accounting Estimates and Judgements

The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical knowledge and experience, best available information and other factors that are considered to be relevant. Actual results may differ from these estimates.

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

Exploration and Evaluation Expenditure

The Group capitalises expenditure relating to exploration and evaluation where it is considered likely to be recovered or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. While there are certain areas of interest from which no reserves have been extracted, the directors are of the continued belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded. Such capitalised expenditure is carried at reporting date at $15.4m.

Share-based payment transactions:

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

The Group measures the cost of cash-settled share-based payments at fair value at the grant date using the Black and Scholes formula taking into account the terms and conditions upon which the instruments were granted.

u. Equity-settled compensation

Share-based payments to employees are measured at the fair value of the instruments issueds. Sharebased payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the option reserve. The fair value of options is determined using the Black-Scholes pricing model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services received as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

2. Financial Risk Management Policies

The group‟s principal financial instruments comprise mainly of deposits with banks, receivables, payables and available for sale investments.

The Group manages its exposure to key financial risks, including interest rate and currency risk in accordance with the Group's financial risk management policy. The objective of the policy is to support the delivery of the Group's financial targets whilst protecting future financial security.

Primary responsibility for identification and control of financial risks rests with the Board. The Board reviews and agrees policies for managing each of the risks identified below.

a. Treasury Risk Management

Due to the size of the group, responsibility for identification and control of financial risks rests with the Board of Directors. This includes the use of hedging derivative instruments, credit risk policies and future cash flow requirements. The level of activity during the financial year did not warrant using derivative financial instruments such as foreign exchange contracts and interest rate swaps to hedge certain risk exposures.

b. Financial Risk Exposures and Management

The group‟s activities expose it to financial risks, market risk (including currency risk, fair value interest rate risk), credit risk, liquidity risk and cash flow interest rate risk. The level of activity during the financial year did not warrant using derivative financial instruments such as foreign exchange contracts and interest rate swaps to hedge certain risk exposures. Where relevant and appropriate, the Company will avail itself of appropriate hedging instruments in future financial years.

c. Foreign Exchange Risk

Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity‟s functional currency.

As a result of significant operations in Indonesia a large purchase of services in United States Dollars (a number of Indonesian contractors use United States Dollars), the Group‟s balance sheet can be affected significantly by movements in the US$/A$ exchange rates. The Group also has transaction currency exposure. Such exposure arises from purchases by an operating entity in currencies other than the functional currency.

At 30 June 2011, the Group had the following exposure to US$ foreign currency:

	Consolidated entity

Financial Assets Cash and cash equivalents Loans and receivables Financial Liabilities Trade and other payables Net exposure	2011 $ 2010 $ 48,649 117,321 49,924 60,607
	98,573 177,928 (51,454) -
	47,119 177,928

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

The Parent has a loan with a related entity denominated US currency. This loan is not expected to be repaid as the entity has formed part of the consolidated group.

The following sensitivity is based on the foreign currency risk exposures in existence at the balance sheet date:

At 30 June 2011, had the Australian Dollar moved, as illustrated in the table below, with all other variables held constant, post tax profit and equity would have been affected as follows:

	Post Tax	Profit	Equity
Judgements of reasonably possible movements:	Higher/(Lower)		Higher/(Lower)
	2011	2010	2011	2010
	$	$	$	$
Consolidated
AUD/USD +10%	4,865	11,732	4,992	6,061
AUD/USD - 5%	(2,432)	(5,866)	(2,496)	(3,030)

Management believe the balance date risk exposures are representative of the risk exposure inherent in the financial instruments. The movements are reasonable with reference to the historical exchange rate fluctuations.

a. Fair Value Interest Rate Risk

Refer to (d) below.

b. Credit Risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the balance sheet and notes to the financial statements. The group did not have any material credit risk exposure to any single debtor or group of debtors at balance date.

c. Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash to fund the group‟s activities. The directors regularly monitor the Company‟s cash position and on an on-going basis consider a number of strategic initiatives to ensure that adequate funding continues to be available.

The table below reflects all contractually fixed pay-offs and receivables for settlement, repayments and interest resulting from recognised financial assets and liabilities. The undiscounted cash flows for the respective upcoming fiscal years are presented. Cash flows for financial assets and liabilities without fixed amount or timing are based on the conditions existing at 30 June 2011.

Maturity analysis of financial assets and liability based on management’s expectation.

The risk implied from the values shown in the table below, reflects a balanced view of cash inflows and outflows. Trade payables and other financial liabilities mainly originate from the financing of the day to day operations of the group. These assets are considered in the group‟s overall liquidity risk.

Victory West Metals Limited – Annual Report 2011

For the Year Ended 30 June 2011

Notes to and Forming Part of the Accounts

Liquidity Risk (Continued)

Liquidity Risk (Continued)
	≤ 6 months $ 6-12 months $ 1-5 years $ > 5 years $ Total $ 2,026,863 - - - 2,026,863 96,316 490,244 49,244 - 635,804 - 8,392 - - 8,392
Year ended 30 June 2011

Consolidated financial assets Cash and cash equivalents Loans and receivables Available for sale financial assets Consolidated financial liabilities Trade and other payables Borrowings
	2,123,179 498,636 49,244 - 2,671,059
	936,129 515,168 173,203 - 1,624,500 2,580,000 - - - 2.580,000
	3,516,129 515,168 173,203 - 4,204,500
	≤ 6 months $ 6-12 months $ 1-5 years $ > 5 years $ Total $ 411,526 - - - 411,526 792,546 60,607 5,765 - 858,918 - 17,716 - - 17,716

Year ended 30 June 2010

Consolidated financial assets Cash and cash equivalents Trade and other receivables Available for sale financial assets Consolidated financial liabilities Trade and other payables Borrowings
	1,204,072 78,323 5,765 - 1,288,160
	633,469 121,749 - - 755,218 - 2,000,000 - - 2,000,000
	633,469 2,121,749 - - 2,755,218

d. Cash Flow and Fair Value Interest Rate Risk

Due to the Company‟s significant holding of cash and cash equivalents, the group‟s income and operating cash flows are materially exposed to changes in market interest rates.

At balance date, the group had the following mix of financial assets and liabilities exposed to Australian variable interest rate risk that are not designated in cash flow hedges:


	Consolidated entity
Financial Assets Cash and cash equivalents Net exposure	2011 $ 2010 $ 2,026,863 411,526
	2,026,863 411,526

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

The following sensitivity analysis is based on the interest rate risk exposures in existence at the balance sheet date

At 30 June 2011, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post tax profit and equity would have been affected as follows:

	Post Tax Profit		Equity
Judgements of reasonably possible movements:	Higher/(Lower)		Higher/(Lower)
	2011	2010	2011	2010
	$	$	$	$
Consolidated
AUD/USD + 1% (100 basis points)	20,269	11,094	-	-
AUD/USD - .5% (50 basis points)	(10,134)	(5,547)	-	-

The movements in profit are due to higher/lower interest costs from variable rate cash balances. The movements are reasonable with reference to the historical interest rate fluctuations.

e. Price Risk

The Group's exposure to commodity and equity securities price risk is minimal at present.

Equity securities price risk arises from investments in equity securities. The Company has one investment in a listed equity which is publicly traded.

The price risk for both listed and unlisted securities is immaterial in terms of a possible impact on profit and loss or total equity and as such a sensitivity analysis has not been completed.

f. Net Fair Values

The net fair values of:

Term receivables, government and fixed interest securities and bonds are determined by discounting the cash flows, at the market interest rates of similar securities, to their present value
Listed investments have been valued at the quoted market bid price at balance date, adjusted for transaction costs expected to be incurred. For unlisted investments where there is no organised financial market, the net fair value has been based on a reasonable estimation of the underlying net assets or discounted cash flows of the investment
Other loans and amounts due are determined by discounting the cash flows, at market interest rates of similar borrowings, to their present value
Other assets and other liabilities approximate their carrying value.

No financial assets and financial liabilities are readily traded on organised markets in standardised form other than listed investments.

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

Aggregate net fair values and carrying amounts of financial assets and financial liabilities at balance date.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

Assets and liabilities where the carrying amount is a reasonable approximation of fair value, for example, for financial instruments such as short-term trade receivables and payables, have not been adjusted to fair value.


	2011 2010
Financial Assets Cash and cash equivalents Trade and other receivables Available-for-sale financial assets – listed investments Financial Liabilities at Amortised Cost Other payables and amounts due Borrowings	Carrying amount $ Net fair value $ Carrying amount $ Net fair value $ 2,026,863 2,026,863 411,526 411,526 586,559 586,559 800,648 800,648 8,392 8,392 17,716 17,716
	2,621,814 2,621,814 1,229,890 1,229,890
	1,624,500 1,624,500 755,218 755,218 2,580,000 2,580,000 2,000,000 2,000,000
	4,204,500 4,204,500 2,755,218 2,755,218
	Level 1 $ Level 2 $ Level 3 $ Total $ 8,392 - - 8,392

2011
Financial Assets Available-for-sale financial assets 2010 Financial Assets Available-for-sale financial assets
	8,392 - - 8,392
	Level 1 $ Level 2 $ Level 3 $ Total $ 17,716 - - 17,716
	17,716 - - 17,716

Included within Level 1 of the hierarchy are listed investments. The fair values of these financial assets have been based on the closing quoted bid prices at reporting date, excluding transaction costs.

In valuing unlisted investments, included in Level 2 of the hierarchy, valuation techniques such as those using comparisons to similar investments for which market observable prices are available have been adopted to determine the fair values of these investments.

Derivative instruments are included in Level 2 of the hierarchy with the fair values being determined using valuation techniques incorporating observable market data relevant to the hedged position.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

3. Segment Information

Description of segments

The following table presents revenue and profit information and certain asset and liability information regarding the relevant segments for the year ended 30 June 2011 for the group.

The chief operating decision-maker has been identified as the Board of Victory West Metals 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.

Segment performance


Year ended 30 June 2011	Australia Indonesia	Total
Segment result 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 Segment assets and liabilities Segment assets Unallocated Assets Total assets Segment liabilities Unallocated Liabilities Total Liabilities	$ $ 44,388 - 52,167 -	$ 44,388 52,167
	96,555 - - -	96,555 - -
	96,555 -	96,555
	(3,674,704) (18,937) Australia Indonesia $ $ 2,593,723 15,610,402	(3,693,641) -
		(3,693,641)
		Total $ 18,204,125 7,947
	(4,166,383) (51,454)
		18,212,072
		(4,217,837) -

		(4,217,837)

Victory West Metals Limited – Annual Report 2011

For the Year Ended 30 June 2011

Notes to and Forming Part of the Accounts

Other segment information Depreciation and amortisation expense Doubtful debts Impairment of financial assets Share-based payments	Australia Indonesia Total $ $ $ (4,945) - (4,945) (51,084) - (51,084) (9,324) - (9,324) (223,350) - (223,350)
	(288,703) - (288,703)

Year ended 30 June 2010	Australia Indonesia	Total
Segment result Other revenue Total Segment Revenue Segment net loss before tax Reconciliation of segment result to Group loss Unallocated items Net loss before income tax Segment assets and liabilities Segment assets Unallocated Assets Total assets Segment liabilities Unallocated Liabilities Total Liabilities Other segment information Depreciation and amortisation expense	$ $ 126,850 -	$ 126,850
	126,850 -	126,850
	(1,990,885) (25,054)	(2,015,939) -
	Australia Indonesia $ $ 1,594,539 15,501,523
		(2,015,939)
		Total $ 17,096,062 -
	(2,764,726) -
		17,096,062
		(2,764,726) -
	(1,773) (1,652)
		(2,764,726) (3,425)

4. Revenue

	Consolidated entity
Interest received Sundry Income Foreign currency gains Total revenue	2011 $ 2010 $ 44,388 41,455 52,167 84,029 - 1,366
	96,555 126,850

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

5. Personnel, Suppliers and Consulting Expenses

	Consolidated entity
Salary and wages Employee share/ options performance Consultancy fees Directors‟ fees Increase in annual leave provision Total revenue	2011 $ 2010 $ 443,432 201,782 223,350 - 735,031 940,130 84,000 84,000 13,337 -
	1,499,150 1,225,912

6. Income Tax Expense

Reconciliation of income tax expense to prima facie tax payable


	Consolidated entity
2011 $ 2010 $ Loss from ordinary activities before income tax expense (3,693,641) (2,015,939) Prima facie tax benefit on loss from ordinary activities before income tax at 30% (2010: 30%) (1,108,092) (604,782) Tax effect of amounts which are taxable (deductible) in calculating taxable income: - accrued interest receivable 133 (9,173) - impairment expenses 2,797 - - transaction costs on equity issue (32,901) 8,499 - capitalised legal fees 30,233 27,379 - capitalised consulting fees - 18,000 - Movement in accruals (48,907) 98,831 (1,156,737) (461,246) Deferred tax assets not recognised 1,156,737 461,246 Income tax expense - - Unused tax losses for which no deferred tax asset has been recognised 8,514,096 5,032,378 Potential Tax Benefit at 30% 2,554,229 1,509,713	2011 $ 2010 $ (3,693,641) (2,015,939)
	(1,156,737) (461,246) 1,156,737 461,246
	- -
	8,514,096 5,032,378
	2,554,229 1,509,713

Income tax benefit due to timing differences not brought to account. Deferred tax liability is reduced to nil by benefits attributable to tax losses not brought to account.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

The potential tax benefit will only be obtained if:

i. The consolidated entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised;
ii. The consolidated entity continues to comply with the conditions for deductibility imposed by tax legislation; and
iii. No changes in tax legislation adversely affect the consolidated entity in realising the benefit from the deductions for the losses.

7. Key Management Personnel Disclosures

Names and positions of consolidated and parent entity key management personnel in office at any time during the financial year are:

Key Management Person

Mr Steven Pynt Chairman, Non-executive Director Mr Michael Scivolo Non-executive Director Mr Wayne Knight Non-executive Director Mr Luke Martino Company Secretary Mr Rob Hyndes Chief Executive Officer (resigned 21 June 2011)


	Consolidated entity
a) Compensation Short term employee benefits Post Employment Benefits* Share based payments – options	2011 $ 2010 $ 216,000 153,597 48,000 48,000 125,850 -
	389,850 201,597

*The directors have elected to salary sacrifice their fees to superannuation

The Company has taken advantage of the relief provided by Corporations Regulation 2M.6.04 and has transferred the detailed remuneration disclosures to the Directors’ Report.

Company Secretarial fees are paid to a related party of Mr Luke Martino.

During the financial year, Mr Rob Hyndes was issued with 4,000,000 performance options however, as these performance options have lapsed during the period as a result of Mr Rob Hyndes resignation as CEO in June 2011, no value has been ascribed to these options as they are not capable of being exercised.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

b) Option holdings

Number of options held by Key Management Personnel

		Lapsed during the year Balance 30 Jun 11 Vested and Exercisable - 333,333 - - 333,333 - - 333,334 - - 3,216,667 2,216,667 (4,000,000) 2,200,000 2,200,000	Vested During the Year - - - 1,816,667 2,000,000
	Balance 1 Jul 10 Received as Compensation Net Change Other - 333,333 - - 333,333 - - 333,334 - 400,000 2,400,000 416,6671 200,000 6,000,000 -

Mr S Pynt Mr M Scivolo Mr W Knight Mr L Martino Mr R Hyndes
Total	600,000 9,400,000 416,667	(4,000,000) 6,416,667 4,416,667	3,816,667


	Balance 1 Jul 09 Received as Compensation Net Change Other Balance 30 Jun 10 Vested and Exercisable Vested During the Year - - - - - - - - - - - - - - - - - - 400,000 - - 400,000 400,000 400,000 - - 200,000 200,000 200,000 200,000

Mr S Pynt Mr M Scivolo Mr W Knight Mr L Martino Mr R Hyndes Total
	400,000 - 200,000 600,000 600,000 600,000

These options are presently held via LJM Capital Corporation Pty Ltd and whilst these are held directly by a related entity of Mr Luke Martino, he has no beneficial interest in the same.

As approved by shareholders at the Company‟s General Meeting held on 13 August 2010, during the financial year ended 30 June 2011, the Company issued a total of 9.4 million options to directors and key management personnel, of which 6 million options are subject to performance milestone conditions. No amounts were paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights.

Please refer to the Remuneration Report (Directors‟ Report) and Note 22(a) for details of the performance options issued to Key Management Personnel. These Performance Options will lapse if for any reason the optionholder ends its employment, relationship or engagement with the Company and the conversion of each Performance Option is subject to the satisfaction of certain performance milestones.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

c) Shareholdings

Number of Shares held by Key Management Personnel

	Balance 1 Jul 10 107,150 - 175,000 632,609 170,000	Received as Compensation Net Change Other Balance 30 Jun 11 - - 107,150 - - - - - 175,000 - 581,6671 1,214,276 - - 170,000

Mr S Pynt Mr M Scivolo Mr W Knight Mr L Martino Mr R Hyndes Total
	1,084,759	- 581,667 1,666,426
	Balance 1 Jul 09 12,150 - 175,000 232,609 -	Received as Compensation Net Change Other Balance 30 Jun 10 - 95,000 107,150 - - - - - 175,000 - 400,000 632,609 - 170,000 170,000


Mr S Pynt Mr M Scivolo Mr W Knight Mr L Martino Mr R Hyndes Total
	419,759	- 665,000 1,084,759

Of these shares, 416,667 are presently held via LJM Capital Corporation Pty Ltd and whilst these are held directly by a related entity of Mr Luke Martino, he has no beneficial interest in the same.

8. Auditors‟ Remuneration

	Consolidated	entity
	2011	2010
Remuneration of Grant Thornton Audit Pty Ltd of the parent entity for:	$	$
- Auditing or reviewing of financial reports	36,259	37,974
Remuneration of other auditors of subsidiaries for:
Remuneration of the auditor of the subsidiary entity for:
- Auditing or reviewing of financial reports	4,040	12,556

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

9. Earnings per share


	Consolidated entity
Loss attributable to ordinary equity holders Earnings used to calculate basic and diluted EPS Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS Weighted average number of options outstanding Weighted average number of ordinary shares outstanding during the year used in calculating diluted EPS	2011 $ 2010 $ (3,692,694) (2,007,619)
	(3,692,694) (2,007,619)
	No. No. 142,206,859 92,244,344 - -
	142,206,859 92,244,344

Anti-dilutive options and performance shares have not been used in the EPS calculation. As at 30 June 2011 there were 111,387,984 options outstanding and 10,000,000 performance shares.

10. Cash and Cash Equivalents

	Consolidated entity
2011 $ 2010 $ Cash at bank and in hand 2,026,863 411,526 Cash at bank is comprised of “at-call” funds attracting a floating rate of interest of between 0.01% and 5.1%. Reconciliation of Cash	2011 $ 2010 $ 2,026,863 411,526

Cash at the end of the financial year as per statements of cash flows is reconciled to items in the balance sheet as follows:

Cash and at bank and in hand 2,026,863 411,526

11. Trade and other Receivables


		Consolidated entity
Trade receivables Other receivables Loan to XS Platinum Ltd Total	2011 $ 2010 $ 73,670 60,073 22,645 40,575 490,244 700,000
	586,559 800,648

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

The loan to XS Platinum Ltd was made on 24[th] of 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 significant concentration of credit risk with respect to any single counter party or group of counter party other than those receivables specifically provided for and mentioned in Note 10. The class of assets described as Trade and Other Receivables is considered to be the main source of credit risk related to the Group.

On a geographical basis, the Group has significant credit risk exposures in Australia, Singapore and Indonesia given the substantial operations in those regions. The Group‟s exposure to credit risk for receivables at reporting date in those regions is as follows:


		Consolidated entity
Australia Indonesia Singapore		2011 $ 2010 $ 554,079 792,546 8,253 8,102 24,227 -
		586,559 800,648

12. Non current Trade and Other Receivables


	Consolidated entity
Other receivables	2011 $ 2010 $ 49,244 58,270
	49,244 58,270

Other receivables include deposits on Indonesian Molybdenum Mining Concessions (IUP‟s) and a security deposit for Victory West Metals (Singapore) Pte Ltd.

13. Deferred Exploration And Evaluation Expenditure


	Consolidated entity
Opening balance Increase for expenditure incurred Adjustment for foreign exchange differences on expenditure Balance at end of the year	2011 $ 2010 $ 15,692,457 12,952,885 1,125,837 2,849,957 (1,382,571) (110,385)
	15,435,723 15,692,457

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

The Directors‟ assessment of the carrying amount was after consideration of prevailing market conditions; previous expenditure carried out on the tenements, and the potential mineralization based on both the entity‟s‟ and independent geological reports. The ultimate value of these assets is dependent upon recoupment by successful commercial development or the sale of the whole, or part, of the Group‟s interests in those areas for an amount at least equal to the carrying value. There may exist, on the Group‟s exploration properties, areas subject to environmental regulations and laws. The Group has a policy of complying with its environmental performance obligations and at the date of this report, it is not aware of any breach of such regulations.

14. Property Plant & Equipment


		Consolidated entity
Office Equipment at cost Less accumulated depreciation Computing equipment and software Less accumulated depreciation		2011 $ 2010 $ 14,323 10,424 (8,098) (3,690)
		6,225 6,734
		7,862 2,581 (2,438) (1,184)
		5,424 1,397

		11,649 8,131
		Computing Equipment Total

	Office
	Equipment	and Software
Balance at 1 July 2009 Additions Allocation to exploration & evaluation expenditure Depreciation expense Balance at 30 June 2010 Additions Allocation to exploration & evaluation expenditure Disposals Depreciation expense Adjustment for foreign exchange movements Balance at 30 June 2011	$ 6,577 3,583 (1,185) (2,241)	$ $ - 6,577 2,581 6,164 - (1,185) (1,184) (3,425)
	6,734	1,397 8,131
	4,778 - - (3,959) (1,328)	5,813 10,591 - - - - (986) (4,945) (800) (2,128)
	6,225	5,424 11,649

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

15. Other Financial Assets

(a) Available-for-sale financial assets comprise


	Consolidated entity
(i) Listed Investments, at fair value - Shares in Australian listed corporations Total available-for-sale financial assets	2011 $ 2010 $ 8,392 17,716
	8,392 17,716

The fair value of listed investments are determined in whole by reference to the quoted market bid price at balance date. In the 2011 year an impairment loss of $8,492 was recognised in other comprehensive income. (2010: $8,492 was recognised in the statement of comprehensive income).

16. Controlled Entities

The Consolidated Entity incorporates the assets, liabilities and results of the following companies:

	Country of
	Incorporation	Class of Shares	Percentage	Interest
			2011	2010
			%	%
Victory West Metals Limited (Parent Entity)	Australia	Ordinary
Eastern Prime Corporation Pte Ltd	Singapore	Ordinary	-	100
Advanz International Pte Ltd*	Singapore	Ordinary	100	100
Victory West Moly (Singapore) Pte Ltd	Singapore	Ordinary	100	-
Victory West Pty Ltd	Australia	Ordinary	100	75
PT Sulawesi Molybdenum Management#	Indonesian	Ordinary	95	71.25
PT Inti Cemerlang1#	Indonesian	N/A1	95	71.25
PT Era Moreco1#	Indonesian	N/A1	95	71.25
PT Indo Surya Moreco1#	Indonesian	N/A1	95	71.25
PT Sembilan Sumber Mas1#	Indonesian	N/A1	95	71.25
PT Satria Mas1*	Indonesian	N/A1	95	71.25
PT Promistis1#	Indonesian	N/A1	95	71.25

Through a number of agreements, Victory West Pty Ltd has a 95% interest in the operations and assets of these companies and has the power to govern the financial and operating policies of these companies.
Note that this company is dormant and is in the process of being wound up

These companies hold mining tenements in Indonesia

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts

For the Year Ended 30 June 2011

17. Trade and Other Payables


	Consolidated Entity
Unsecured liabilities Trade payables Sundry payables and accrued expenses Deferred consideration owing to Victory West Pty Ltd Vendors (Note 24) Other payables	2011 $ 2010 $ 382,876 270,146 304,716 347,926 250,000 - 194,879 137,146
	1,132,471 755,218

Payables are unsecured.

All other unsecured liabilities are interest free and for an open period.

18. Short Term provisions

Opening balance 1 July 2010 Movement in provisions Closing balance 30 June 2011 This provision is for unused annual leave. 19. Borrowings Current borrowings Convertible note – secured (a) Convertible loans – unsecured (b) Non-current borrowings Convertible note – secured (a)	9,508 - 3,829 9,508
	13,337 9,508
	2,000,000 - 580,000 -
	2,580,000 -
	- 2,000,000
	- 2,000,000

(a) The convertible note bears interest at 12% per annum, and has a maturity date of 15 November 2011 (refer note 28). The note is convertible at the higher of 30 cents or the 5-day average market share price. The Company has the option to repay the note within 90 days upon receipt of a conversion notice. The convertible note is secured by a fixed and floating charge over all the assets of the Company and Victory West Pty Ltd.
(b) These convertible loans bears interest at 10% per annum, and have a maturity date of 30 September 2011. The loans are convertible at the lower of $0.12 or the value of the company‟s most recent capital raising. The loans are unsecured.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

20. Other current liabilities


	Consolidated Entity
Commitment fee from CGGC	2011 $ 2010 $ 492,029 -
	492,029 -

The Company had entered into a Memorandum of Understanding (“MOU”) with China Guangshou Group Corp (“CGGC”) that, subject to due diligence, CGGC is to acquire a 65% interest in the Malala Molybdenum Project in consideration for committing to sole fund 100% of all funding required to take the Malala Molybdenum Project into large scale commercial production by 2016

During the year CGGC remitted the first US$500,000 commitment fee per the abovementioned agreement. This amount is treated as current liability in the accounts of the Company while the transaction is being completed. The parties have agreed to extend the date for obtaining the required letters and recommendations to 31 October 2011 by which date CGGC will remit the second tranche payment (of US$500,000) or the Company will repay the initial tranche along with a US$150,000 fee. The completion date is scheduled for 31 December 2011.

21. Contributed equity

167,277,677 (2010: 101,044,344) fully paid ordinary shares 10,000,000 (2010: nil) performance shares
	Consolidated entity
	2011 $ 2010 $ 20,591,223 13,260,223 600,000 -
	21,191,223 13,260,223

Victory West Metals Limited – Annual Report 2011

For the Year Ended 30 June 2011

Notes to and Forming Part of the Accounts

Contributed Entity (Continued)


	Consolidated Entity
a) Ordinary Shares At the beginning of the reporting period Share placement (i), (ii), (v) Issue of shares(iii) Transaction costs Convertible note conversions (iv), (vi), (vii), (ix), (x) Acquisition of subsidiary (vii) At reporting date At the beginning of reporting period Share placement (iii) Share placement (i), (ii) Share placement (v) Convertible note conversions (iv), (vi) (vii), (ix), (x) Acquisition of subsidiary (vii) At reporting date b) Performance Shares At the beginning of the reporting period Issue of shares(vii) Transaction costs At reporting date At the beginning of reporting period Issue of shares(vii) At reporting date	2011 $ 2010 $ 13,260,223 11,752,989 2,875,000 150,000 1,250,000 1,500,000 (192,000) (142,766) 898,000 - 2,500,000 -
	20,591,223 13,260,223
	No. Shares No. Shares 101,044,344 90,044,344 10,416,666 10,000,000 2,500,000 1,000,000 20,833,333 - 7,483,334 - 25,000,000 -
	167,277,677 101,044,344
	2011 $ 2010 $ - - 600,000 - - -
	600,000 -
	No. Shares No. Shares - - 10,000,000 -
	10,000,000 -

i. 11 August 2010, the Company issued 2,000,000 ordinary shares at a deemed value of $0.15 per share as payment for consultancy services.
ii. 27 August 2010, the Company issued 500,000 ordinary shares at a deemed value of $0.15 per share as payment for consultancy services.
iii. 6 September 2010, the Company raised $1,250,000 (gross) through the issue of 10,416,666 ordinary shares at $0.12 per share through a placement to sophisticated investors.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

iv. 10 November 2010 the Company issued 1,666,667 ordinary shares at $0.12 per share via the conversion of debt to equity.
v. 12 November 2010, the Company raised $2,500,000 (gross) through the issue of 20,833,333 ordinary shares at $0.12 per share through a placement to sophisticated investors.
vi. 26 November 2010 the Company issued 416,667 ordinary shares at $0.12 per share via the conversion of debt to equity.
vii. 9 December 2010 the Company issued 25,000,000 ordinary shares at a deemed value of $0.10 per share for the acquisition of the remaining 25% in Victory West Pty Ltd. The Company also issued 10,000,000 performance shares at a deemed value of $0.06 per share on 24 February 2011 as part consideration for this transaction.

The performance shares are convertible to ordinary shares upon the completion of a 10,000m drilling programme for the Malala Molybdenum Project within 4 years of issue of the Performance Shares.

viii. 18 January 2011 the Company issued 833,333 ordinary shares at $0.12 per share via the conversion of debt to equity.
ix. 28 January 2011 the Company issued 1,966,667 ordinary shares at $0.12 per share via the conversion of debt to equity.
x. 15 February 2011 the Company issued 2,600,000 ordinary shares at $0.12 per share via the conversion of debt to equity.

Ordinary shares have no par value and participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

Performance shares do not entitle the holder to any dividends and shall participate in the proceeds of surplus profits or assets on winding up of the parent entity only to the extent of $0.0001 per performance share. Performance shares do not entitle the holder to vote on any resolutions proposed at a general meeting of shareholders.

c) Capital management

Management controls the capital of the group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and ensure that the group can fund its operations and continue as a going concern.

The group‟s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets.

There are no externally imposed capital requirements.

Management effectively manages the group‟s capital by assessing the group‟s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts

For the Year Ended 30 June 2011

Capital Management (Continued)


	Consolidated entity
Total borrowings Less cash and cash equivalents Net debt Total equity Total capital	2011 $ 2010 $ 4,204,500 2,755,218 (2,026,863) (411,526)
	2,177,637 2,343,692 21,191,223 13,260,223
	23,368,860 15,603,915

22. Reserves

Option Reserve

This reserve is used to record the value of options issued over ordinary shares.

Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange difference arising from the translation of the financial statements of foreign controlled entities.

Acquisition reserve

On 21 October 2010, Victory West Metals Ltd entered into a Share Acquisition Agreement with the shareholders of Victory West Pty Ltd to formalise its agreement to acquire the remaining 25% of their shares in Victory West Pty Ltd.

The acquisition reserve details the difference between the carrying value of the non-controlling interest in Victory West Pty Ltd as at the date of acquisition of $nil and the consideration paid is recognised in equity attributable to the parent. Accordingly, a debit to Acquisition Reserve of $3,350,000 is reflected in the statement of changes in equity.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts

For the Year Ended 30 June 2011

a) Share Option Reserve


	Consolidated entity
At the beginning of the reporting period Issue of options during the year (i) Issue of options during the year (ii) (iii) Issue of options during the year (iv) At reporting date At the beginning of reporting period Issued during the year (i) Issued during the year (ii), (iii) Issued during the year (iv) Lapsed during the year (v) At reporting date	2011 $ 2010 $ 4,964,481 4,952,561 - - 223,350 11,920 - -
	5,187,831 4,964,481
	No. Options No. Options 90,004,650 78,084,650 5,000,000 11,920,000 12,900,000 - 7,483,334 - (4,000,000) -
	111,387,984 90,004,650

(i) 24 August 2010, the Company issued 5,000,000 listed options for nil consideration. These options were free attaching to the $1.5million capital raising completed on 21 April 2010.
(ii) 1 September 2010 the Company issued 6,650,000 listed options at a deemed value of $0.03 per option, 750,000 unlisted milestone A options and 500,000 unlisted milestone B options at a deemed value of $0.012 per option to directors, officers and consultants.
(iii) 6 September 2010 the Company issued 2,500,000 unlisted milestone A options and 2,500,000 unlisted milestone B options at a deemed value of $0.012 per option to directors, officers and consultants.
(iv) The company issued 7,483,334 listed options for nil consideration during the course of the year. These options were granted when convertible loan holders converted their loans into equity in the Company.
(v) Mr Rob Hyndes was issued with 4,000,000 performance options during the tear (see iii) however, as a result of his resignation as CEO in June 2011 these options have lapsed and are not capable of being exercised

At 30 June 2011, the Company had the following options on issue:

84,137,984 listed options (ASX Code “VWMOA”) which have an exercise price of 20 cents and expiry date of 24 February 2012; and
25,000,000 unlisted options which have an exercise price of 20 cents and expiry date of 31 December 2011.
1,250,000 unlisted milestone A performance options with an exercise price of $0.25 and an expiry date of 31 August 2014. As a result of employee‟s resignations, since the end of the financial year 250,000 milestone A performance options have lapsed and are not capable of being exercised. Please see below for a summary of these performance options milestones and terms.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

1,000,000 unlisted milestone B performance options with an exercise price of $0.25 and an expiry date of 31 August 2014. Please see below for a summary of these performance options milestones and terms.

Performance Options

The performance options will lapse if for any reason the Optionholder ends its employment, relationship or engagement with the Company. Also, the conversion of each Performance Option is subject to the completion of the following milestones:

(i) the Company announcing to the ASX (or other recognised stock exchange) a JORC compliant resource of at least 120,000 tonnes (265 million pounds) of contained Molybdenum at a minimum grade of at least 600ppm either within one of the permits or total across all of the permits held at that time by the Company ( “Milestone A” ).
(ii) The company having a market capitalisation of $80,000,000 Australian Dollars for 5 consecutive trading days (“Milestone B”).

In order for all Performance Options to be converted both Milestone A and Milestone B must be met by the Company. If only one Milestone is met prior to the expiry date then only those Performance options subject to the milestone which is being met are able to be converted.

The fair value of these performance options have been determined based on binomial and black-scholes valuation models at grant date is set out in the table below:

	Milestone A	Milestone B
	Performance	Performance
	Option	Option
Dividend yield (%)	-	-
Expected volatility (%)	82%	82%
Risk-free interest rate (%)	4.655%	4.655%
Expected life of option (years)	4 years	4 years
Option exercise price ($)	$0.25	$0.25
Share price at grant date ($)	$0.115	$0.115
Hurdle discount (%)	75%	75%

The fair value of the listed options at grant date issued to employees is based on the last quoted price of these options.

As approved by Shareholders on 13 August 2010, on 1 and 6 September 2010, the Company issued the following options to employees & officers of the Company:

4,650,000 listed options (ASX Code “VWMOA”) which have an exercise price of 20 cents and expiry date of 24 February 2012; and
3,250,000 unlisted milestone A performance options with an exercise price of $0.25 and an expiry date of 31 August 2014. As a result of employee‟s resignations 2,000,000 milestone A performance options have lapsed during the financial year and a further 250,000 have lapsed since the end of the financial year.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

3,000,000 unlisted milestone B performance options with an exercise price of $0.25 and an expiry date of 31 August 2014. As a result of employee‟s resignations during the period, 2,000,000 milestone B performance options have lapsed.

These options hold no voting or dividend rights. As mentioned above, the milestone A and B performance options lapse if for any reason the optionholder ends its employment, relationship or engagement with the Company and are subject to the satisfaction of performance milestones.

A summary of the movement of all company options issues is as follows:


	2011 2010
At the beginning of reporting period Issued Exercised Expired Lapsed At reporting date	No. Options Weighted Average Exercise Price No. Options Weighted Average Exercise Price 90,004,650 0.20 78,084,650 0.20 25,383,334 0.21 11,920,000 0.20 - - - -- - - - - (4,000,000) 0.25 - -
	111,387,984 0.20 90,004,650 0.20

Due to employee‟s resignations, 250,000 performance options have lapsed since 30 June 2011.

The weighted average remaining contractual life of options outstanding at year end was 0.67 years.


	Consolidated entity
b) Foreign Currency Translation Reserve Balance at the beginning of the financial year Adjustment arising from the translation of the financial statements of foreign controlled entities Balance at the end of the financial year c) Financial Assets Reserve Balance at the beginning of the financial year Adjustment arising from the revaluation of investments in listed entities Balance at the end of the financial year	2011 $ 2010 $ (1,755,245) (315,813)
	(315,813) (203,184) (1,439,432) (112,629)
	(1,755,245) (315,813)
	2011 $ 2010 $ - 8,492
	8,492 - (8,492) 8,492
	- 8,492

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts

For the Year Ended 30 June 2011


	Consolidated Entity
d) Acquisition Reserve Balance at the beginning of the financial year Investment in subsidiary (see note 24) Balance at the end of the financial year	2011 $ 2010 $ (3,350,000) -
	- - (3,350,000)
	(3,350,000) -

23. Accumulated Losses


	Consolidated Entity
Accumulated losses at the beginning of the financial year. Loss attributable to members of the parent entity Accumulated losses at the end of the financial year	2011 $ 2010 $ (3,554,560) (1,546,941) (3,692,694) (2,007,619)
	(7,247,254) (3,554,560)

24. Acquisition of Minority Interests in Subsidiary

On 21[st] October 2010, Victory West Metals Ltd entered into a Share Acquisition Agreement with the shareholders of Victory West Pty Ltd to acquire the remaining 25% of their shares in Victory West Pty Ltd.

The consideration transferred was $3,350,000 and was comprised of an issue of equity instruments and a deferred consideration component. The Company issued 25,000,000 ordinary shares with a fair value of $0.10 each, based on the quoted price of shares of Victory West Metals Ltd (VWM) at the date of exchange.

The Company also issued 10,000,000[1] performance shares on 24[th] February 2011 as part of the purchase consideration. The fair value of the performance shares was deemed to be 50% less than the quoted price of VWM at the date of issue ($0.10 per share).

The deferred consideration is $250,000 to be converted, at the election of VWM, to shares at VWM‟s next capital raising. At 30 June 2011 the deferred consideration is recognised as a liability in the accounts of the company (refer note 17).

The difference between the carrying value of the non-controlling interest as at the date of acquisition of $nil and the consideration paid is recognised in equity attributable to the parent. Accordingly, a debit to Acquisition Reserve of $3,350,000 is reflected in the statement of changes in equity. (Also refer note 22(d)).

1 The 10,000,000 Performance Shares are convertible to 10,000,000 Shares upon completion of a 10,000 metre drilling exploration program on the Malala Molybdenum Project by the Company (or a third party on behalf of the Company) before February 2015.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

25. Related Party Transactions

Directors and key management personnel

Disclosures relating to directors and key management personnel are set out in Directors‟ Report and in note 7.

Other Income

Receipts of $52,167 (2010: $71,759) were received from Pan Asia Corporation Ltd, an entity related to Mr. Luke Martino for the provision executive financial consulting services. There were no outstanding amounts as at 30 June 2011.

Purchases

Payments of $232,026 (2010: $479,464) were made to Indian Ocean Advisory Services 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 $4,889 outstanding as at 30 June 2011.

Payments of $161,880 (2010: nil) were made to Indian Ocean Corporate Pty Ltd, an entity which Mr. Luke Martino is a director of for the provision of corporate services. These services were provided on normal commercial terms and conditions and at market rates. There were no outstanding amounts as at 30 June 2011.

Payments of $150,000 (2010: $57,596) were made to Splendour Investments Pty Ltd and Atlas Partners Pty Ltd, entities related to Mr. Rob Hyndes for the provision of executive consulting and administrative services, including rent. These services were provided on normal commercial terms and conditions and at market rates. At 30 June 2011 there was $22,000 outstanding. A receivable of $15,000 from Splendour Investments Pty Ltd and a receivable of $50,000 from Atlas Partners Pty Ltd for amounts overpaid were due to the Company at 30 June 2011.

Payments of $108,285 (2010: $10,182 ) were made to Pan Asia Corporation Ltd, an entity which Mr. Luke Martino is a non-executive director of for the provision of a serviced office in Jakarta and for technical executive consulting services. These services were provided on normal commercial terms and conditions and at market rates. There were no outstanding amounts as at 30 June 2011.

26. Contingent Assets & Liabilities

As mentioned in Note 20, the Company had entered into a Memorandum of Understanding (“MOU”) with China Guangshou Group Corp (“CGGC”) that, subject to due diligence, CGGC is to acquire a 65% interest in the Malala Molybdenum Project in consideration for committing to sole fund 100% of all funding required to take the Malala Molybdenum Project into large scale commercial production by 2016

The parties have agreed to extend the date for obtaining the required letters and recommendations to 31 October 2011 by which date CGGC will remit the second tranche payment (of US$500,000) or the Company will repay the initial tranche along with a US$150,000 fee. The completion date is scheduled for 31 December 2011.

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

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

27. Cash Flow Information

Reconciliation of Loss after Income Tax to Net Cash Outflow from Operating Activities


	Consolidated entity
Loss after income tax Outside Equity Interest Interest receivable Depreciation Doubtful debts Share based payments Impairment of financial assets Interest expense on convertible note Changes in operating assets and liabilities (Increase)/decrease in: Trade and other receivables Increase/(decrease) in: Trade payables and accruals Net cash outflow from operating activities Total convertible loans issued during the year Less converted to equity Less repaid Outstanding convertible loans as 30 June 2011	2011 $ 2010 $ (3,693,641) (2,007,619) - (136,243) (40,133) - 4,945 - 51,084 3,425 223,350 - 9,324 250,495 192,658 1,414,529 (936,672) 354,723 408,335
	(1,425,324) (2,476,116)
	1,578,000 (898,000) (100,000) 580,000

28. Events After the Balance Sheet Date

On the 9th September 2011 the Company announced that it had signed a Heads of Agreement to acquire 100% of South East Asia Energy Resources Pte Ltd (SEAE), a special purpose company registered in Singapore that has the rights to an 85% interest in the BEK coal project in East Kalimantan. In addition the SEAE group brings a pipeline of 9 coking and thermal Coal concessions in East Kalimantan and initial off take agreements for 200,000 tonnes per month with major global parties.

On 21 September 2011, Dempsey Resource Pty Ltd and the Company agreed to extend the Convertible Note until 15 November 2011.

Subsequent to the end of the financial year, the company has repaid $25,000 of convertible loans.

Victory West Metals Limited – Annual Report 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

29. Parent Entity Disclosures


	2011 $ 2010 $ 2,551,056 1,104,734 15,423,046 15,822,999
Parent Entity
Assets Current assets Non current assets Total Assets Liabilities Current liabilities Non current liabilities Total Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Total Equity Financial Performance Profit for the year Other comprehensive income Total comprehensive Income
	17,974,102 16,927,733
	3,979,867 596,397 - 2,000,000
	3,979,867 2,596,397
	13,994,235 14,331,336
	21,191,223 13,260,223 5,187,831 4,972,973 (12,384,819) (3,901,860)
	13,994,235 14,331,336
	(8,482,959) (2,479,500) (8,492) 8,492
	(8,491,451) (2,471,008)

Contingent Liabilities

Refer to Note 26.

Contractual Commitments

As at 30 June 2011 and 30 June 2010 the Parent Company had no contractual commitments.

Victory West Metals Limited – Annual Report 2011

Additional Information for Listed Companies

Addition Information for Listed Companies

Equity Holder Information

a. Distribution of Shareholders (as at 22 September 2011)

Category (size of holding)	Category (size of holding)	No. of shareholders	No. of shares	%
1	– 1,000	552	227,716	0.1
1,001 – 5,000		296	879,735	0.5
5,001 – 10,000		166	1,306,504	0.8
10,001 – 100,000		440	18,345,521	11.0
100,001 – and over		236	146,518,201	87.6
TOTAL		1,690	167,277,677	100.0

The number of shareholders holding less than a marketable parcel of 8,334 shares ($0.06 on 22 September 2011) is 946 and they hold a total of 1,750,587 shares.

b. Twenty Largest Shareholders (as at 22 September 2011)

The names of shareholders that are recorded in the Register of Shareholders (as at 22 September 2011) are as follows:

Name	No. of shares	%
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED	26,740,378	15.99
JP MORGAN NOMINEES AUSTRALIA LIMITED	7,045,733	4.21
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD	4,438,787	2.65
CINTRA HOLDINGS PTY LTD	3,085,614	1.84
ROGUE INVESTMENTS PTY LTD	3,000,000	1.79
YELLOWROCK PTY LTD	2,485,673	1.49
UOB KAY HIAN (HONG KONG) LIMITED	2,443,052	1.46
JUNEDAY PTY LTD	2,340,500	1.40
MR VASILIOS VOTSARIS	2,078,700	1.24
MR HARUN ABIDIN	2,000,000	1.20
BWS PTY LTD	2,000,000	1.20
MR ADRIAN STEPHEN PAUL & MRS NOELENE FAY PAUL	2,000,000	1.20
JAXONBRIDGE PTY LTD	1,855,186	1.11
MCNEIL NOMINEES PTY LTD	1,800,000	1.08
TEXPOINT PTY LTD	1,791,667	1.07
UNION PACIFIC INVESTMENTS PTY LIMITED	1,513,586	0.90
PPA SERVICES PTY LTD	1,500,000	0.90
EASTERN INVESTMENT LIMITED	1,342,500	0.80
MISS TAN YEN YEN	1,342,500	0.80
BOAMBEE BAY PTY LTD	1,320,709	0.79

Victory West Metals Limited – Annual Report 2011

Additional Information for Listed Companies

c. Details of Substantial Shareholders (as at 22 September 2011)

Name	Name		No. of shares	%
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED			26,740,378	15.99
d. Distribution of Listed Optionholders (as at 22 September 2011)
Category (size of holding)		No. of option holders	No. of options	%
1	– 1,000	1	802	0.0
1,001 – 5,000		0	0	0.0
5,001 – 10,000		1	8,150	0.0
10,001 – 100,000		45	2,908,896	3.5
100,001 – and over		90	81,220,136	96.5
TOTAL		137	84,137,984	100.0

e. Twenty Largest Optionholders of Listed Options (as at 22 September 2011)

The names of optionholders that are recorded in the Register of listed Optionholders (as at 22 September 2011) are as follows:

Name	No. of Options	% Of Units
DEMPSEY RESOURCES PTY LTD	10,000,000	11.89
STEELFLOW PTY LTD	7,000,000	8.32
MR STEVEN JOHN BODEY	5,229,521	6.22
IMPACT NOMINEES PTY LTD	5,000,000	5.94
MRS REBECCA LEANNE NEWTON	5,000,000	5.94
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED	2,500,000	2.97
MR BERND NEUMANN	2,150,000	2.56
LIGHTHOUSE PROPERTY GROUP PTY LTD	2,000,000	2.38
LJM CAPITAL CORPORATION PTY LTD	1,800,000	2.14
JAXONBRIDGE PTY LTD	1,706,667	2.03
SPLENDOUR INVESTMENTS PTY LTD	1,600,000	1.90
MRS MARGARET MILES	1,534,650	1.82
MERRYWEST INVESTMENTS PTY LTD	1,500,000	1.78
MR GRANT ROBERT NEWTON	1,171,157	1.39
VASSAGO PTY LTD	1,159,687	1.38
JP MORGAN NOMINEES AUSTRALIA LIMITED	1,000,001	1.19
MR SHAYNE PETER KNIGHT	1,000,000	1.19
MR COREY MICHAEL MCKERROW	1,000,000	1.19
REAL GOLD PTY LTD	1,000,000	1.19
MR ANTHONY WILLIAM PAUL SAGE	1,000,000	1.19

Victory West Metals Limited – Annual Report 2011

Additional Information for Listed Companies

f. Distribution of Unlisted Performance Shares (as at 22 September 2011)

			No. of
			Performance
Category (size of holding)		No. of option holders	Shares	%
1	– 1,000	0	0	0.0
1,001 – 5,000		0	0	0.0
5,001 – 10,000		0	0	0.0
10,001 – 100,000		0	0	0.0
100,001 – and over		2	10,000,000	100.0
TOTAL		2	10,000,000	100.0

These performance shares are convertible to ordinary shares upon the completion of a 10,000m drilling program for the Malala Molybdenum Project before 24 February 2015. Each performance share is converted into one ordinary share on achievement of this milestone. If the milestone is not achieved before 24 February 2015, then all of the performance shares will be automatically redeemed for the sum of $0.000001 per performance share.

g. Distribution of Unlisted Optionholders (as at 22 September 2011)

The distribution schedule of the unlisted options with an exercise price of $0.20 and expire on 31 December 2011 are detailed below (as at 22 September 2011)

Category (size of holding)	Category (size of holding)	No. of option holders	No. of options	%
1	– 1,000	0	0	0.0
1,001 – 5,000		0	0	0.0
5,001 – 10,000		0	0	0.0
10,001 – 100,000		2	200,000	0.8
100,001 – and over		8	24,800,000	99.2
TOTAL		10	25,000,000	100.0

The distribution schedule of the unlisted performance options (milestone A & B) with an exercise price of $0.25 and expire on 31 August 2014 are detailed below (as at 22 September 2011)

Category (size of holding)	Category (size of holding)	No. of option holders	No. of options	%
1	– 1,000	0	0	0.0
1,001 – 5,000		0	0	0.0
5,001 – 10,000		0	0	0.0
10,001 – 100,000		0	0	0.0
100,001 – and over		4	2,000,000	100.0
TOTAL		4	2,000,000	100.0

Victory West Metals Limited – Annual Report 2011

Additional Information for Listed Companies

h. Largest holders of unquoted equity securities with a holding of 20% or more (as at 22 September 2011) Performance Shares:

	No. of Performance
Name	Shares
MR HARUN ABIDIN	4,000,000
IMPACT NOMINEES PTY LTD	6,000,000
Options with an exercise price of $0.20 and expire on 31 December 2011:
Name	No. of Options
DOMENAL ENTERPRISES LIMITED	5,000,000
IMPACT NOMINEES PTY LTD	5,000,000
MCNEIL NOMINEES PTY LTD	5,000,000
MR KIM JOHN PARHAM	5,000,000

i. Voting Rights

Ordinary shares

Subject to any rights or restrictions for the time being attached to any class or classes (at present there are none) at general meetings of shareholders or classes of shareholders:

Each shareholder entitled to vote, may vote in person or by proxy, attorney or representative

On a show of hands, every person present who is a shareholder or a proxy, attorney or representative of a shareholder has one vote

On a poll, every person present who is a shareholder or a proxy, attorney or representative of a shareholder shall, in respect of each Fully Paid Share held, or in respect of which he/she has appointed a proxy, attorney or representative, have one vote for the share, but in respect of partly paid Shares shall have a fraction of a vote equivalent to the proportion which the amount paid up bears to the total issue price for the Share.

Options

Options do not carry a right to vote.

Performance Shares

Performance Shares do not carry a right to vote.

j. Share Buy-Backs

There is no current on-market buy-back scheme.

k. Registered Office

The address of the registered office in Australia is:

311 Hay Street SUBIACO WA 6008 Ph: +61 8 9381 5819

Victory West Metals Limited – Annual Report 2011

Additional Information for Listed Companies

l. Securities Register

Registers of Securities are held at the following addresses:

Computershare Investor Services Level 2, 45 St George‟s Terrace PERTH WA 6000 Ph: 1300 557 010 (within Australia) Ph: +61 8 9323 2033

m. Stock Exchange Listing

The Company‟s securities are quoted on the Australian Stock Exchange Limited (VWM) and the Frankfurt Stock Exchange.

n. Interest in Mining Tenements

Holder	Exploration IUP	Location	% interest
PT INTI CEMERLANG	188.45/2447/DISPESDAM	Indonesia	95%
PT ERA MORECO	188.45/2448/DISPESDAM	Indonesia	95%
PT INDO SURYA MORECO	188.45/2536/Bag. Ekon	Indonesia	95%
PT SEMBILAN SUMBER MAS	188.45/2446/DISPESDAM	Indonesia	95%
PT PROMISTIS	188.45/2444/DISPESDAM	Indonesia	95%

Victory West Metals Limited – Annual Report 2011

AI assistant

EV RESOURCES LTD — Annual Report 2011

64887_rns_2011-09-29_53c01b36-4399-4e98-adf7-0e8211f554e7.pdf

ANNUAL REPORT 2011

Corporate Directory

VICTORY WEST METALS LIMITED

WEBSITE

REGISTERED OFFICE

DIRECTORS & SECRETARY

AUDITORS

SHARE REGISTRY

STOCK EXCHANGE LISTING

Letter to Shareholders

Review of Operations

Key Highlights

Malala Molybdenum Project, Sulawesi, Indonesia

China Guangshou Group Corp

Granting of Production & Operational Licenses & Extension of Exploration Licenses

Acquisition of the remaining 25% Interest in Victory West Pty Ltd

Noviendiono Copper/Gold Project

USSU Nickel Project

Subsequent Events

JORC Exploration Targets

Competent Persons Statement

Corporate Governance Statement

PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE

PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING

PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE

PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS

PRINCIPLE 7 – RECOGNISE AND MANAGE RISK

PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY

Directors‟ Report

Mr. Steven Pynt LLB MBA

Mr. Michael Scivolo

Mr. Wayne Knight

COMPANY SECRETARY

Mr Luke Martino

PRINCIPAL ACTIVITIES

OPERATING RESULTS AND FINANCIAL REVIEW

REVIEW OF OPERATIONS

FUTURE DEVELOPMENTS

DIVIDENDS

MATTERS SUBSEQUENT TO REPORTING DATE

DIRECTORS‟ INTERESTS

MEETINGS OF DIRECTORS

SHARE OPTIONS

INDEMNIFICATION AND INSURANCE OF OFFICERS

REMUNERATION REPORT (AUDITED)

Remuneration Report (Continued)

Relationship between the remuneration policy and company performance

Remuneration Report (Continued)

Remuneration Report (Continued)

ENVIRONMENTAL REGULATION AND PERFORMANCE

NON-AUDIT SERVICES

Director

Auditor’s Independence Declaration To the Directors of Victory West Metals Limited

Independent Auditor’s Report To the Members of Victory West Metals Limited

Report on the financial report

Directors’ responsibility for the financial report

Auditor’s responsibility

Independence

Auditor’s opinion

Material uncertainty regarding continuation as a going concern

Report on the remuneration report

Auditor’s opinion on the remuneration report

Directors' Declaration

Statement of Comprehensive Income – For the Year Ended 30 June 2011

Statement of Financial Position - As at 30 June 2011

Statement of Changes in Equity - For the Year Ended 30 June 2011

Statement of Cash Flows - For the Year Ended 30 June 2011

Notes to and Forming Part of the Accounts For the Year Ended 30 June 2011

1. Statement of Significant Accounting Policies

Basis of Preparation

Reporting Basis and Conventions

New Accounting Standards and Interpretations

Notes to and Forming Part of the Accounts

Notes to and Forming Part of the Accounts

Notes to and Forming Part of the Accounts

Notes to and Forming Part of the Accounts

EV RESOURCES LTD Annual Report 2011