EVOLUTION MINING LIMITED — Annual Report 2003

Sep 29, 2003

30 September 2003

The Manager Company Announcements Platform Australian Stock Exchange Limited Level 10, 20 Bond Street SYDNEY NSW 2000

Dear Sir

FINANCIAL REPORT

Westonia Mines Limited presents herewith its Financial Report for the year ended 30 June 2003.

For and on behalf of the Board of Directors of Westonia Mines Limited

John Hannaford"

John Hannaford Company Secretary

Enquiries should be directed to the writer and readers are encouraged to register on the Company's website (www.westoniamines.com.au) for automatic receipt of information.

FINANCIAL REPORT

FOR THE YEAR ENDED 30 JUNE 2003

CONTENTS

PAGE

Directors' Report
Corporate Governance Statement
Statement of Financial Performance
Statement of Financial Position
Statement of Cashflows
Notes to the Financial Statements
Directors' Declaration
Auditors' Report
Additional Information

CORPORATE DIRECTORY

DIRECTORS

Pieter W Greeff - Chairman Andrew J Drummond - Managing Director Murray G Pollock - Non Executive Director Christopher P Melloy - Non Executive Director
David M Macoboy - Non Executive Director

SECRETARY

John A Hannaford

REGISTERED OFFICE

First Floor 9 Havelock Street West Perth WA 6005 Telephone: (618) 9321 3088 Facsimile: (618) 9321 8804 Email: manager@westoniamines.com.au Website: www.westoniamines.com.au

AUDITORS

Ord Partners Level 2, 42 Colin Street West Perth WA 6005

SHARE REGISTRY

Security Transfer Registrars 770 Canning Highway Applecross WA 6153

AUSTRALIAN STOCK EXCHANGE Code: WEZ, WEZO

The Directors have pleasure in presenting their report together with the consolidated financial statements of Westonia Mines Limited ("Westonia" or "the Company") for the year ended 30 June 2003.

DIRECTORS

The names of the Directors of the Company in office at any time during or since the end of the year are:

Pieter W Greeff (58) - Non Executive Chairman

Mr Greeff is a mining engineer with 35 years experience in Australia and overseas based with major international mining companies, in the gold, base metal and coal sectors. Mr Greeff was appointed as Director on 27 February 2001.

Andrew J Drummond (52) - Managing Director

Mr Drummond is a geologist with 31 years experience in the exploration, mining and mineral consultancy industries. This has included directorships and managing directorships of several listed and non-listed public companies. Mr Drummond was appointed as Director on 8 October 1998.

Murray G Pollock (55) - Non Executive Director

Mr Pollock is a businessman with over 30 years experience in the mineral services industry, principally in drilling. He is an investor and consultant to several companies on drilling and mine management services. Mr Pollock was appointed as Director on 21 October 2000.

Christopher P Melloy (48) - Non Executive Director

Mr Melloy is an Executive Director of the management company responsible for the operation of Lion Selection Group. He has 25 years experience in the mining industry in both operations and finance, including mine planning, operating and senior mine management roles, as well as mining analysis and research in the stock broking industry. Mr Melloy was appointed as Director on 2 April 2002.

David M Macoboy (54) - Non Executive Director

Mr Macoboy is currently a Director of Consolidated Minerals Ltd. Monarch Resources Ltd and ANZOIL NL. He has previously held senior management positions or Directorships with Portman Mining Ltd. Australian Capital Equity, Merrill Lynch and Challenge Bank.

Mr Macoboy was appointed as Director on 1 August 2003.

Douglas M Young (49) - Non Executive Director

Mr Young was appointed as Director on 25 September 2002, and resigned on 11 March 2003.

PRINCIPAL ACTIVITIES

The principal activities of the economic entity during the financial period were

• mineral exploration including the commissioning of a feasibility study into re-development of mining operations at Westonia:
• acquisition of mining tenements in the extended Westonia area; and
• acting as trustee of the Westonia Mines Unit Trust.

There were no significant changes in the nature of the economic entity's principal activities during the financial period.

REVIEW OF OPERATIONS

The Company's principal objective is to re-commence mining operations at its Westonia Gold Project in Western Australia. In pursuit of this objective the Company achieved the following significant milestones during the financial vear ended 30 June 2003:

ASX Listing

On 14 August 2002 the Company was admitted to the Official List of ASX. This followed the issue of 25,000,000 shares at 20 cents each to raise \$5,000,000 pursuant to a Prospectus dated 12 June 2002. Funds raised from the issue enabled the Company to commission the Bankable Feasibility Study into the re-development of mining operations and progress exploration activities at its wholly owned Westonia Gold Project in Western Australia.

Westonia Gold Project

The economic entity has commissioned a feasibility study into the re-development of mining operations at the Westonia project. Depending on the results of the study, the economic entity plans to commence construction and development of a mine during the current year.

On 19 November 2002, the Company announced results of the first stage of the feasibility study showing JORC compliant mineable resources within an optimal pit shell of 8.5 million tonnes at 1.8 g/t for a contained 500,000 ounces. calculated at a 0.5 a/t cutoff. The first stage feasibility study indicated that the project was economically sound at a gold price of A\$575 per ounce.

In May 2003, the Company announced that the final feasibility study would conclude a lower reserve estimate due to incomplete drilling data at various areas in the proposed open cut pit. As a result the Company is completing an infill drilling program aimed to provide additional geological data for input to the Bankable Feasibility Study. The study is estimated to be completed during the second quarter of the coming financial year.

Nickel Discoverv

During the development drilling around the current open pit at Westonia, two significant nickel intersections were recorded in the ultramafic rocks that abut the ore bearing structure, the Edna May Gneiss. This prompted the Company to investigate the occurrences of nickel in other ultramafic occurrences in the Westonia region. The Company subsequently entered into agreements with several parties to acquire interests in mining tenements and applications in the Westonia region covering $785 \text{ km}^2$ with a further 446 km² subject to a first right of refusal.

In August 2003 the Company announced the results of a follow up drilling program around the initial nickel discovery holes resulting showing encouraging results.

The Company plans to increase its exploration activities for both nickel and gold at its expanded portfolio of tenements during the coming year.

Westonia Deeps Initiative

During the year the Company re-evaluated a large portion of the drilling data inherited from the previous operator of the Westonia mine, in particular in relation to deeper drilling programs. Following encouraging results the Company launched the "Westonia Deeps Initiative" designed to evaluate the potential for a long term underground mining operation at Westonia.

The Company has completed a five hole drilling program subsequent to the end of the year returning encouraging results as announced to ASX on 6 August 2003. The Company will use data form this recent program to design and plan future drilling activities in conjunction with a resource model necessary to support underground mining, utilising the existing decline that exists to a vertical depth of 264 metres.

Financial

Following the Company's successful capital raising and listing on ASX, the Company issued a total of 27,782.234 bonus options to shareholders through a pro rata issue to all shareholders on 21 October 2002, on a one-for-three basis. Options are exercisable at 20 cents each on or before 20 August 2006.

The Company raised a total of \$4,464,000 from the issue of 12.4 million shares at 36 cents pursuant to a Prospectus dated 29 May 2003.

The Company had a total of \$6.649,595 in cash reserves on hand at 30 June 2003.

CHANGES TO STATE OF AFFAIRS

There have been no changes to the state of affairs of the Company other than as noted in "Review of Operations" and as a consequence of the Company's listing on the ASX.

RESULT OF OPERATIONS

The operating loss after income tax for the year ended 30 June 2003 was \$567,551 (2002: loss \$40,662).

LIKELY DEVELOPMENTS

The Company anticipates completion of the Bankable Feasibility Study into the re-commencement of mining operations at Westonia, during the first half of the coming year. A decision as to whether to proceed with the construction of a plant and the commencement of mining will be dependent upon results of the feasibility study, the then Australian dollar gold price, the availability of equity and debt finance and other factors

DIVIDENDS

In respect of the financial year ended 30 June 2003, the Directors have not recommended the payment of a dividend.

ENVIRONMENTAL REGULATION

The consolidated entity is committed to achieving a high standard of environmental performance. The Board is responsible for regular monitoring of environmental exposures and compliance with environmental regulations. The consolidated entity complied with its environmental performance obligations at all times during the period.

AUDIT COMMITTEE

The Company's operations have in the past not been of a level to require the constitution of an Audit Committee outside the Board of Directors. As such the Board has also met as an Audit Committee, whose business was, at all times during the period, conducted in accordance with the principles set out in the Corporate Governance Statement.

The Board has established an Audit Committee subsequent to the end of the financial year.

EVENTS SUBSEQUENT TO BALANCE DATE

Subsequent to the end of the financial year the Company paid a total of \$97,000 to secure an option to acquire a gold processing plant.

At the date of this report, apart from the foregoing, the Directors are not aware of any other matter or circumstance not otherwise dealt with in this report or the financial statements, that has significantly affected, or may significantly affect, the operations of the Company, the results of those operations or the state of affairs of the Company in subsequent financial years other than the following:

INDEMNIFICATION OF OFFICERS AND AUDITORS

The consolidated entity has not, during or since the financial period, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred by such an officer or auditor, excluding the effect of the Company's Directors & Officers insurance policy.

OPTIONS

During the financial period and up to the date of this report, the Company issued no options to Directors.

At the date of this report the Company had the following options on issue:

Expiry Date	Exercise Price AUD	No. Options
20 August 2006	20 cents	27,775.568
31 May 2005	30 cents	800.000
31 May 2006	40 cents	700.000
14 September 2004	30 cents	500.000
30 May 2006	36 cents	120.000
30 May 2006	43 cents	120.000
30 May 2006	50 cents	120.000

DIRECTORS' INTERESTS

The following table sets out the Directors' relevant interests in shares, options and warrants in the Company or a related body corporate as at the date of this report.

Director's Shareholdings	Fully Paid	Listed Options	Unlisted
Director	Ordinary Shares		Options
Pieter W Greeff	100,000	33.333	750,000
Andrew J Drummond *	2.884,740	958.211	750.000
Murray G Pollock	11,263,023	3,747,144	$\tilde{\phantom{a}}$
Christopher P Melloy	70.000	23.333	w
David M Macoboy		$\overline{\phantom{a}}$	$\omega$
	14.317.763	4,762,021	1.500,000

A further 8.2 million shares and 2.7 million listed options are held by adult members of Mr Drummond's family.

DIRECTORS MEETINGS

Of the 10 Directors' meetings held during the year ended 30 June 2003 the details of Directors attending were as follows:

Director	No. of Meetings Held	No. of Meetings Attended
Pieter W Greeff	11	11
Andrew J Drummond	11	11
Murray G Pollock	11	11
Christopher P Melloy	11	11
David M Macoboy (appointed 1 August 2003)	$\blacksquare$	÷
Douglas M Young (appointed 25 September 2002; resigned 11 March 2003)	4	4

In addition 8 circular resolutions were passed during the period.

DIRECTORS AND EXECUTIVES REMUNERATION

The Directors and Executives are remunerated based on the provision of services provided to the Company for executive management and for their services as Directors and Executive Officers. Remuneration levels are set with reference to industry and market conditions having regard to the size, nature and volume of operations and overall market capitalisation of the Company.

Non Executive Directors fees are determined by the Company in general meeting, and other consulting services are set, as described in the Corporate Governance Statement.

Details of remuneration provided to Directors and Executives during the financial period are as follows:

	Consulting Services / Salaries	Superannuation	Other	Directors Fees	Total
	\$	\$	\$	\$	\$
Directors
Andrew J Drummond	165,830	13,125	4,716 $(3)$	$\blacksquare$	183.671
Pieter W Greeff	u.	2,250	$\blacksquare$	25,000	27,250
Murray G Pollock	w	1.800	$\omega$	20,000	21.800
Christopher P Melloy		a.	w	$20,000^{(2)}$	20.000
Douglas M Young		h,		$8,888$ (1)	8,888
Executives
lan Kerr	61.825	5.564	$226^{(3)}$	$\blacksquare$	67.615

(1) Directors fees in respect of Mr Young were paid to a company with which he is associated, though does not maintain a beneficial interest.

Directors fees in respect of Mr Melloy were paid to a company with which he has a beneficial interest. $(2)$

$(3)$ The Company provided a motor vehicle each for both Mr Drummond and Mr Kerr during part of the year. The expenditure incurred by the company in providing the motor vehicles has been included in "Other".

Signed in accordance with a resolution of the Directors made pursuant to Section 298(2) of the Corporations Act 2001.

On behalf of the Directors.

Andrew J Drummond Director Dated at Perth on this 26^th day of September, 2003

CORPORATE GOVERNANCE STATEMENT

This statement outlines the main Corporate Governance practices that were in place throughout the financial year unless otherwise stated

Board of Directors

The Board's primary role is the protection and enhancement of long-term shareholder value. To fulfil this role, the Board is responsible for the overall corporate governance of the Company, including its strategic direction, establishing goals for management and monitoring the achievement of these goals.

The Board has established a framework for the management of the Company including a system of internal control and the establishment of appropriate ethical standards.

The full Board currently holds several meetings each period, as may be necessary to address any specific significant matters that may arise.

The Board is continually reviewing its processes to ensure that it is able to carry out its functions in the most effective manner.

Each Director has the right to seek independent professional advice on matters relating to his position as a Director at the Company's expense, subject to prior approval of the Chairman, which shall not be unreasonably withheld. The Company recognises the need for Directors and employees to observe the highest standards of behaviour and business ethics in conducting its business, and intends to maintain a reputation of integrity.

Composition of the Board

The board is comprised of a Chairman, a Managing Director and three Non-Executive Directors.

The Board is currently reviewing its composition for the purposes of the Australian Stock Exchange - Corporate Governance Council "Principles of Good Corporate Governance and Best Practice Recommendations". The current board does not include a majority of independent Directors under the strict definition of "independent Director" contained in the ASX recommendations, however the board is of the opinion that its current composition is adequate and appropriate for the Company's size and operations.

With the exception of an Audit Committee, most matters which may be capable of delegation to a committee, are dealt with by the full Board. From time to time the Board may constitute a committee to investigate a particular matter as the case may require. During the year the board constituted a Continuous Disclosure Committee to review the Company's compliance with ASX continuous disclosure requirements in relation to a specific issue.

In addition to formal Board meetings, the Board regularly meets informally to retain full and effective control over the consolidated entity and monitor the executive management. The Board has established a framework for the management of the consolidated entity including a system of internal control and the establishment of appropriate ethical standards.

The Company's Constitution and the Listing Rules of Australian Stock Exchange Limited govern the procedures for election and retirement of Directors.

Audit and Audit Committee

During the financial year the board met once as an Audit Committee. Subsequent to the end of the financial year Company formed an Audit Committee with an established Charter. The Audit Committee comprises David Macoboy (Non Executive Director) and Murray Pollock (Non Executive Director). The Audit Committee has met once since its establishment with all members in attendance. The Company's auditors and financial controller attend only upon invitation.

The Company in general meeting is responsible for the appointment of the external auditors of the Company, and the Board from time to time will review the scope, performance and fees of those external auditors.

Ord Partners have been appointed as auditors of the Company since 2001.

CORPORATE GOVERNANCE STATEMENT

Internal Control Framework

The Board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost effective internal control system will preclude all errors and irregularities. To assist in discharging this responsibility the Board relies on several internal controls:

• There is a comprehensive monthly management reporting system. Management reports detailing expenditure are prepared and presented to Board members monthly.
• Procedures are in place to ensure that price sensitive information is reported to the ASX in accordance with the Continuous Disclosure Requirements.
• The consolidated entity conducts a review of the ability and experience of potential senior employees prior to appointment.
• The Managing Director is in regular contact with all senior personnel on an informal basis.

Ethical Standards

Westonia Mines is committed to the highest standards of ethical business conduct. As part of that commitment, Westonia Mines established policies covering Employee and Community Relations, Environment, Saftey and Health to guide executives, management and staff in carrying out their duties and responsibilities. The policies are subject to ongoing review to ensure that Westonia Mines' standards of behaviour and corporate culture reflect best practice in corporate governance.

In addition, the Board has quidelines dealing with disclosure of interests by Directors in participating and voting at Board meetings where any such interests are discussed. In accordance with the Corporations Act, any Director with a material personal interest in a matter being considered by the Board must not be present when the matter is being considered, and may not vote on the matter.

Director Dealings in Company Shares

The Constitution permits Directors to acquire shares in the Company. Company policy prohibits Directors from dealing in Company shares whilst in possession of price sensitive information.

Continuous Disclosure

The Board has developed appropriate policies to ensure the Company complies with its continuous disclosure obligations once listed on ASX. The aims of this policy are to:

• assess new information and co-ordinate any disclosure or releases to ASX, or any advice required in relation to that information, in a timely manner;
• provide an audit trail of the decisions regarding disclosure to substantiate compliance with the Company's continuous disclosure obligations:
• report to the Board on continuous disclosure matters; and
• ensure that employees, consultants, associated entities and advisers of the Company understand the obligations to bring material information to the attention of the Managing Director.

This policy is to be reviewed each year by the Board.

CORPORATE GOVERNANCE STATEMENT

Trading in Securities

The Company follows a policy that imposes certain restrictions on Directors and employees trading in the securities of the Company. The restrictions are imposed to prevent trading in contravention of the insider trading provisions of the Corporations Act.

The key aspects of the policy are summarised as follows:

• all Directors are to formally notify the Company Secretary of their beneficial shareholdings in the Company and any changes to this within 2 days of such change occurring. The Company Secretary will maintain a register of interests in the Company held by Directors;
• no Director or any entities controlled by them is allowed to trade in the securities of Westonia without notifying the Managing Director:
• no Director or any entities controlled by them is allowed to engage in the business of active dealing in the Company's securities; and
• a Director, employee or any entities controlled by them must not trade at any time when he or she is in possession of information which if generally available would materially affect the price or value of the Company's securities or at any time for a period of 2 days following a public announcement in relation to the matter.

STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2003

		Consolidated			Company
	Note	Year ended 30 June 2003 \$	Year ended 30 June 2002 ŝ	Year ended 30 June 2003 \$	Year ended 30 June 2002 \$
Revenue from ordinary activities	2	179,236	8,064	176,850
Corporate expenses		120.988	28.549	120,239	28,098
Occupancy costs		111,038	3816	111,038	3,816
Employee and consultants costs		358,341	8,832	358,341	8,832
Travel and accommodation		48,971		48,971
Exploration expenditure written off		29.559		29,559
Other		77,890	7,529	73,305	3,847
Loss from ordinary activities before income tax expense	3	(567, 551)	(40, 662)	(564, 603)	(44, 593)
Income tax expense relating or ordinary activities	4
Net loss attributable to members of the parent entity		(567, 551)	(40, 662)	(564, 603)	(44, 593)
Total revenues, expenses and valuation adjustments attributable to members of the parent entity and recognised directly in equity		(567, 551)	(40, 662)	(564, 603)	(44, 593)
Total changes in equity other than those resulting from transactions with owners as owners		(567, 551)	(40, 662)	(564, 603)	(44, 593)
Basic (loss) per share (cents per share)	5	(7.7)	(0.1)
Diluted (loss) per share (cents per share)	5	(6.0)	(0.1)

The Statement of Financial Performance is to be read in conjunction with the Notes to the Financial Statements set out on pages 12 to 24.

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2003

		Consolidated		Company
	Note	Year ended 30 June 2003 \$	Year ended 30 June 2002 \$	Year ended 30 June 2003 \$	Year ended 30 June 2002 \$
CURRENT ASSETS
Cash assets	7	6,649,595	367,355	6,610,429	1
Receivables	8	149,025	246,500	3,115,434	1,934,714
Other	9	10,000	2,045	13,244	15,287
TOTAL CURRENT ASSETS		6,808,620	615,900	9,739,107	1,950,002
NON-CURRENT ASSETS
Property, plant and equipment	10	123,902	5,269	76,652
Mineral properties Intangible assets	11 12	3,437,559 26,608	1,308,692 29,936	588,646
TOTAL NON-CURRENT ASSETS		3,588,069	1,343,897	665,298
TOTAL ASSETS		10,396,689	1,959,797	10,404,405	1,950,002
CURRENT LIABILITIES Payables	13	220,680	90,914	220,680	76,351
TOTAL CURRENT LIABILITIES		220,680	90,914	220,680	76,351
TOTAL LIABILITIES		220,680	90,914	220,680	76,351
NET ASSETS		10,176,009	1,868,883	10, 183, 725	1,873,651
EQUITY Contributed equity	14	10,795,029	1,920,352	10,795,029	1,920,352
Accumulated losses	15	(619, 020)	(51, 469)	(611, 304)	(46, 701)
TOTAL EQUITY		10,176,009	1,868,883	10,183,725	1,873,651

The Statement of Financial Position is to be read in conjunction with the Notes to the Financial Statements set out on pages 12 to 24.

STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 30 JUNE 2003

			Consolidated		Company
	NOTE	Year ended 30 June 2003 s	Year ended 30 June 2002 \$	Year ended 30 June 2003 s.	Year ended 30 June 2002 \$
CASHFLOW FROM OPERATING ACTIVITIES Payments to suppliers and employees Interest received		(688,946) 163,396	(55, 727) 8,064	(711.528) 161.010	(27,940)
Net cash provided by (used in) operating activities	16(b)	(525, 550)	(47, 663)	(550, 518)	(27, 940)
CASHFLOW FROM INVESTING ACTIVITIES Payments for property, plant and equipment Payments to acquire exploration projects Payments for exploration activities Payments for bonds		(130, 511) (423, 582) (1,602,139) (20.000)	(723, 335)	(88, 146) (407, 570)
Net cash provided by (used in) investing activities		(2, 176, 232)	(723, 335)	(495, 716)
CASHFLOW FROM FINANCING ACTIVITIES Issue of shares Costs associated with capital raisings Outflow from loans to subsidiary		9.465,334 (481, 312)	1,140.000 (144, 343)	9,465,334 (481, 315) (1,327,357)	1.140.000 (144, 343) (967, 717)
Net cash provided by (used in) financing activities		8,984,022	995.657	7,656,662	27,940
Net increase (decrease) in cash held		6,282,240	224,659	6,610,428
Cash at beginning of year		367,355	142,696
Cash at end of year	16(a)	6,649,595	367,355	6,610,429	1

The Statement of Cashflows is to be read in conjunction with the Notes to the Financial Statements set out on pages 12 to 24.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

$\blacksquare$ STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

This financial report is a general purpose financial report that has been prepared in accordance with Accounting Standards. Urgent Issues Group Consensus Views and other authoritative pronouncements of the Australian Accounting Standards Board.

The financial report covers the economic entity of Westonia Mines Limited and controlled entities, and Westonia Mines Limited as an individual parent entity. Westonia Mines Limited is a company limited by shares, incorporated and domiciled in Australia

The financial report has been prepared on an accrual basis and is based on historical costs and does not take into account changing money values or, except where stated, current valuations of non-current assets. Costs are based on the fair values of the consideration given in exchange for assets.

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

(a) Principles of Consolidation

A controlled entity is any entity controlled by Westonia Mines Limited. Control exists where Westonia Mines Limited has the capacity to dominate the decision making in relation to the financial and operating policies of another entity so that the other entity operates with Westonia Mines Limited to achieve the objectives of Westonia Mines Limited. A list of controlled entities is contained in Note 23 to the Financial Statements.

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

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

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

(b) Income Tax

The economic entity adopts the liability method of tax effect accounting whereby the income tax expense is based on the profit from ordinary activities adjusted for any permanent differences.

Timing differences, which arise due to the different accounting periods in which items of revenue and expense are included in the determination of accounting profit and taxable income, are brought to account as either a provision for deferred income tax or as a future income tax benefit at the rate of income tax applicable to the period in which the benefit will be received or the liability will become payable.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond any reasonable doubt. Future income tax benefits in relation to tax losses are not brought to account unless there is virtual certainty of realisation of the benefit.

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

(c) Comparatives

As the financial statements of the controlled entities were not previously audited, and accounts were not previously consolidated, the presentation of comparatives may be misleading.

(d) Plant and Equipment

Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation.

Plant and equipment

Plant and equipment are measured on the cost basis.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

$\blacksquare$ STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(e) Depreciation and amortisation

The depreciable amount of all fixed assets including building and capitalised lease assets, but excluding freehold land. is depreciated / amortised over their useful lives to the economic entity. Plant and equipment are depreciated on a diminishing value basis over their useful economic lives. Intangible assets are amortised on a straight line basis.

The depreciation and amortisation rates used for each class of assets are:

Class of Asset	Depreciation/Amortisation Rate
Plant and equipment	10%
Office equipment	10%
Goodwill	10%

Depreciation and amortisation rates are reviewed annually for appropriateness.

(f) Going Concern

The ability of the economic entity to continue operations and to meet its financial obligations, as and when incurred. is dependent upon the economic entity generating sufficient funds through its normal operations and/or in the successful conclusion of negotiations with financiers or equity investors for additional working capital.

The Directors are of the opinion that, in view of their knowledge of the state of affairs of the economic entity and after taking into consideration the above, the accounts have been appropriately prepared on the concept of "a going concern basis".

(g) Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of goods and services (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included

The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position.

Cash flows are included in the Statement of Cash Flows on a gross basis. The GST component of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

(h) Exploration, evaluation and development expenditure

Exploration, evaluation and development costs are accumulated in respect of each separate area of interest.

Exploration and evaluation costs are carried forward where right of tenure of the area of interest is current and thev are expected to be recouped through sale or successful development and exploitation of the area of interest, or, where exploration and evaluation activities in the area of interest have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

Development costs related to an area of interest are carried forward to the extent that they are expected to be recouped either through sale or successful exploitation of the area of interest.

When an area of interest is abandoned or the Directors decide that it is not commercial, any accumulated costs in respect of that area are written off in the financial period the decision is made.

(i) Goodwill

Goodwill represents the excess of the purchase consideration plus incidental costs over the fair value of the identifiable net assets acquired.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(i) Recoverable amount of non-current assets valued on cost basis

The carrying amounts of non-current assets valued on the costs basis, other than exploration and evaluation expenditure carried forward (refer Note 1(h)) are reviewed to determine whether they are in excess of their recoverable amount at balance date. If the carrying amount of a non-current asset exceeds its recoverable
amount, the asset is written down to the lower amount. The write-down is expensed in the reporting period in which it occurs.

In assessing recoverable amounts of non-current assets, the relevant cash flows have not been discounted to their present value, except where specifically stated.

		Consolidated		Company
		Year ended 30 June 2003 \$	Year ended 30 June 2002 \$	Year ended 30 June 2003 \$	Year ended 30 June 2002 \$
2.	REVENUE
	Operating activities Interest	179,236	8.064	176,850
3.	LOSS FROM ORDINARY ACTIVITIES
	Net loss from ordinary activities before income tax has been arrived at after charging the following items: Depreciation Amortisation	9.057 3,326	587 3,326	8,463
4.	INCOME TAX EXPENSE
	The prima facie tax payable on profit from ordinary activities before income tax is reconciled to the income tax expense as follows:
	Prima facie tax payable on profit from ordinary activities before income tax at 30%	(170, 265)	(12, 198)	(169, 381)	(13, 378)
	Increase (decrease) in income tax/(tax benefit) due to non assessable/non tax deductible items:
	Legal fees ÷. Amortisation of goodwill	6,952 998		6,952
	Future income tax benefit not brought to account	162,315	12,198	162,429	13,378
	Income tax expense attributable to profit from ordinary activities

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

INCOME TAX EXPENSE (Cont'd) 4.

The potential future income tax benefit arising from tax losses and timing differences has not been recognised as an asset because the recoverability of tax losses is not virtually certain and recovery of timing differences is not assured bevond reasonable doubt.

The benefit of future income tax benefit not brought to account will only be obtained if:

• (a) the Company and consolidated entity derive future assessable income of a nature and an amount sufficient to enable the benefit from the deductions for the losses to be realised;
• (b) the Company and consolidated entity continue to comply with the conditions for deductibility imposed by tax law; and
• (c) no changes in tax legislation adversely affect the Company and consolidated entity realising the benefit from the deductions for the losses.

	Consolidated
EARNINGS PER SHARE	2003	2002
	Cents per share	Cents per share
Basic earnings (loss) per share Diluted earnings (loss) per share	(0.77) (0.60)	(0.1) (0.1)

Basic earnings per share:

The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

----------------	2003	2002
Loss(a)	$($ \$567,551)	(40,662)
Weighted average number of ordinary shares (b)	No. 73.905.949	No. 40,523,326

Earnings used in the calculation of basic earnings per share reconciles to net profit in the statement of financial $(a)$ performance as follows:

	2003	2002
Net loss	(\$567.551)	(\$40.662)
Loss used in the calculation of basic EPS	( \$567, 551)	( \$40, 662)

The options are considered to be potential ordinary shares and are therefore excluded from the weighted $(b)$ average number of ordinary shares used in the calculation of basic earnings per share. Where dilutive, potential ordinary shares are included in the calculation of diluted earnings per share (refer below).

Diluted earnings per Share

The earnings and weighted average number of ordinary and potential ordinary shares used in the calculation of diluted earnings per share are as follows:

	2003	2002
Loss(a)	$($ \$567.551)	(S40.662)
Weighted average number of ordinary shares and potential ordinary shares (b)	No. 95.261,903	No. 40,769.902

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

5. EARNINGS PER SHARE (Cont'd)

Earnings used in the calculation of diluted earnings per share reconciles to net profit in the statement of $(a)$ financial performance as follows:

	2003	2002
Net profit (loss)	(\$567.551)	(40.662)
Earnings used in the calculation of diluted EPS	(\$567.551)	(40.662)

Weighted average number of ordinary shares used in the calculation of diluted earnings per share $(b)$ reconciles to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows: 2003 2002

	No.	No.
Weighted average number of ordinary shares used in the
calculation of basic EPS	73.905.949	40,523,326
Options	21.355.954	246.574
Weighted average number of ordinary shares and potential
ordinary shares used in the calculation of diluted EPS	95.261.903	40.769.900

		Consolidated			Company
		Year ended 30 June 2003 \$	Year ended 30 June 2002 \$	Year ended 30 June 2003 \$	Year ended 30 June 2002 \$
6.	REMUNERATION OF AUDITORS Amounts received or due and receivable by auditors for:
	Audit services Other services	14,055	3,525 12,070	14,055	3,525 12,070
		14,055	15,595	14,055	15,595
7.	CASH ASSETS Cash on hand	500	3	500	1.
	Cash at bank Commercial Bills receivable	672,575 5,976,520	367,352	633.409 5,976.520
		6,649,595	367,355	6,610.429	1.
8.	RECEIVABLES
	GST receivable Prepaid capital raising costs Westonia Mines Unit Trust Prepayments	113,965 8.698	42,459 204,041	22,415 ш. 3,058,030 8,698	204,041 1,730,673
	Other	26,362		26,291
		149,025	246,500	3,115,434	1,934,714

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

		Consolidated		Company
		Year ended 30 June 2003 \$	Year ended 30 June 2002 \$	Year ended 30 June 2003 \$	Year ended 30 June 2002 \$
9.	OTHER ASSETS
	Investments Formation Expenses		2,045	13,244	13,242 2,045
	Deposits receivable	10,000
		10,000	2.045	13,244	15,287
10.	PLANT AND EQUIPMENT
	Office Furniture & Equipment
	Office Furniture & Equipment - at cost	43,827	3,000	40,827
	Less accumulated depreciation	(7, 173)	(1, 853)	(5,205)
	Computer software	36,654	1,147	35,622	$\blacksquare$
	Computer software - at cost	5,706		5,706
	Less accumulated depreciation	(750)	w	(750)	۰.
		4,956	$\omega$	4,956	$\blacksquare$
	Motor Vehicles Motor vehicles - at cost			37,728
	Less accumulated depreciation	37,728 (1,654)	w.	(1,654)
		36,074	$\omega$	36,074	$\blacksquare$
	Mine Machinery & Equipment
	Mine Machinery & Equipment - at cost Less Accumulated depreciation	52,997	10,422
		(6, 779) 46,218	(6, 300) 4,122
	Total Plant and Equipment	123,902	5,269	76,652
	Office furniture and equipment
	Carrying amount at beginning of year	1,147
	Additions	40,827	3,000	44,502
	Disposals Depreciation	(5,320)	(1,853)	(3,675) (5,205)
	Carrying amount at end of year	36,654	1,147	35,622	ш.
	Computer software Carrying amount at beginning of year			0
	Additions	5,706		5,706
	Depreciation	(750)		(750)
	Carrying amount at end of year	4,956	w.	4,956
	Motor vehicles
	Carrying amount at beginning of year
	Additions	37,728		37,728
	Depreciation	(1,654) 36,074		(1,654) 36,074
	Carrying amount at end of year
	Mine machinery & equipment
	Carrying amount at beginning of year	4,122		0
	Additions	42,575	10,422
	Depreciation Carrying amount at end of year	(479) 46,218	(6,300) 4,122	$\blacksquare$	u.
	Total carrying amount at end of year	123,902	5,269	76,652

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

		Consolidated		Company
		Year ended 30 June 2003	Year ended 30 June 2002	Year ended 30 June 2003	Year ended 30 June 2002
11.	MINERAL PROPERTIES
(a)	Exploration and evaluation expenditure at cost:
	Carried forward from previous period	1,308,692
	Incurred during the period	2.158.426	1.308.692	618,205
	Written off during the period	(29.559)		(29.559)
	Exploration expenditure carried forward to subsequent periods (b)	3.437.559	1.308.692	588.646

$(b)$ The recovery of the costs of expenditure carried forward is dependent upon the discovery of commercially viable mineral and other natural resource deposits and their development and exploitation or alternatively their sale.

The Company's title to certain mining tenements is subject to Ministerial approval and may be subject to successful outcomes of Native Title issues. (Refer Note 20)

			Consolidated	Company
		Year ended 30 June 2003 \$	Year ended 30 June 2002 \$	Year ended 30 June 2003 \$	Year ended 30 June 2002 \$
12.	INTANGIBLE ASSETS Goodwill on acquisition Less accumulated amortisation	33.262 (6, 654)	33,262 (3,326)
		26,608	29,936
13.	PAYABLES Trade creditors Other creditors and accruals	117,581 103,099	90,914	117,581 103,099	76,351
		220,680	90,914	220,680	76,351
14.	CONTRIBUTED EQUITY Issued and paid up capital 95,853,785 (2002: 58,347,119) ordinary shares fully paid	10.795.029	1.920.352	10.795.029	1,920,352
	Movements in share capital: Balance at the beginning of the year: Issue of 8,347,020 shares at \$0.05 Issue of 10,000,000 shares at \$0.10 a. Issue of 25,000,000 shares at \$0.20 pursuant to IPO Issue of 6,666 shares on exercise of options ۰. Costs of IPO issue ×. Issue of 100,000 shares on acquisition of ×.	1,920,352 5,000.000 1,333 (402, 456)	503,001 417.351 1,000,000	1,920,352 5.000.000 1.333 (402, 456)	503.001 417,351 1,000,000
	mining tenement Issue of 12,400,000 shares at \$0.36 each ×. pursuant to Prospectus Cost of Prospectus issue	35,000 4,464.000 (223.200)		35,000 4,464,000 (223, 200)
		10,795,029	1.920,352	10,795,029	1,920.352

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

		2003		2002
		No.	\$	No.	\$
14.	CONTRIBUTED EQUITY (Continued)
	Balance at the beginning of the year	58,347,119	1,920,352	40,000,099	503,001
	Issue pursuant to private placement at \$0.05			2,800,000	140,000
	Issue pursuant to private placement at \$0.10		w	10,000,000	1,000,000
	Conversion of loans outstanding at \$0.05			5,547,020	277,351
	Issue pursuant to Prospectus at \$0.20	25,000,000	5,000,000
	Costs of issue pursuant to Prospectus		(402, 457)
	Issue for acquisition of mining tenement at \$0.35	100,000	35,000
	Issue on conversion of Options at \$0.20	6,666	1,333
	Issue pursuant to Prospectus at \$0.36	12,400.000	4.464,000
	Costs of issue pursuant to Prospectus		(223, 200)
		95,853,785	10,795,028	58,347,119	1,920,352

Options

The Company had on issue the following options as at 30 June 2003, issued to Directors, Employees and Contractors of the Company pursuant to the "Westonia Mines Limited Employees and Contractors Option Plan ("ECOP").

Number	Exercise Price	Expiry Date
800,000	0.30	31 May 2005
700,000	0.40	31 May 2006
120,000	0.36	30 May 2006
120,000	0.43	30 May 2006
120,000	0.50	30 May 2006

The Company had on issue the following options at 30 June 2003 issued independently of the ECOP:

Number	Туре	Exercise Price	Expiry Date
27,775.568	Listed Bonus Options	\$0.20	20 August 2006
500.000	Corporate Adviser Options	\$0.30	14 September 2004

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

$14.$

CONTRIBUTED EQUITY (Continued)
The movement in the Company's options on issue during the year is set out below:

Exercise Price	Expiry Date	Opening Balance	Options Issued	Options Exercised	Options outstanding at the end of the year
\$0.20	20 August 2006	۰	27.782.234	(6,666)	27.775.568
\$0.30	14 September 2004	$\blacksquare$	500.000	w	500.000
\$0.30	30 May 2005	800.000		$\tilde{\phantom{a}}$	800.000
\$0.36	30 May 2006	$\blacksquare$	120.000	w	120.000
\$0.40	30 May 2006	700.000	$\overline{\phantom{a}}$	$\tilde{\phantom{a}}$	700.000
\$0.43	30 May 2006	$\blacksquare$	120.000	$\omega$	120.000
\$0.50	30 May 2006	۰	120,000	w	120,000
		1,500,000	28.642.234	(6.666)	30,135,568

		Consolidated		Company
		2003	2002	2003	2002
15.	ACCUMULATED LOSSES Accumulated losses at the beginning of the financial
	vear	(51, 469)	(10.807)	(46.701)	(2, 108)
	Net loss attributable to members of the parent entity	(567, 551)	(40.662)	(564,603)	(44,593)
	Accumulated losses at the end of the financial year	(619,020)	(51, 469)	(611, 304)	(46, 701)

CASHFLOW INFORMATION 16.

(a)	Reconciliation of Cash Cash at end of the financial year as shown in the Statements of Cashflows is reconciled to the related items in the Statement of Financial Position as follows: Cash	6,649,595	367.354	6.610.429
(b)	Reconciliation of cashflow from operations with profit from ordinary activities after income fax
	Loss from ordinary activities after income tax Non-cashflows in profit from ordinary activities	(567, 551)	(40, 662)	(564, 603)	(44, 593)
	Depreciation	9.057	587	8.463
	Amortisation	3.326	3.326
	Write off formation expenses Loss on sale of property, plant and	2.045		2.045
	equipment	2.821		2,821
	Write off exploration expenditure	29,559		29,559
	Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries
	(Increase) in receivables	(16, 656)	(101, 266)	(58, 167)	(59,698)
	(Decrease) in payables	11,849	90.352	29.364	76,351
	Cashflows from operations	(525,550)	(47, 663)	(550.518)	(27, 940)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

				Consolidated	Company
			Year ended 30 June 2003 \$	Year ended 30 June 2002 \$	Year ended 30 June 2003 \$	Year ended 30 June 2002 \$
17.		REMUNERATION AND RETIREMENT BENEFITS
		The names of parent entity Directors who have held office during the financial period: Andrew J Drummond Pieter G Greeff Murray G Pollock Christopher P Melloy Douglas M Young
	(a)	Remuneration of Directors
		Remuneration received or receivable by all Directors of the Company:
		from the Company or any related part in connection with the management of the Company	261,609	120,000	261,609	120.000
		Number of Directors whose income from the Company or any related parties was within the following bands: \$0 \$9,999 $\tilde{\phantom{a}}$ \$20,000 - \$29,999 $$120,000 -$ \$129,999	1 3	3 1	1 3	3 1
		$$180,000 -$ \$189,999	1		1
	(b)	Retirement Benefits
		Amounts paid to a superannuation plan for the provision of retirement benefits by:
		the Company or any related party for Directors of the Company	17,175	Nil	17,175	Nil

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

18. FINANCIAL INSTRUMENTS

Other

2003	Floating interest rate	Fixed interest	Non-interest bearing	30.6.03 Total
	s	s	s	\$
Financial Assets
Cash on Hand	662,575	5,986,520	500	6,649,595
Receivables			149,025	149,025
Other		10.000		10,000
	662,575	5,996.520	149,525	6,808,620
Weighted average interest rate	4.68%
Financial Liabilities
Accounts Payable	u.	$\overline{\phantom{a}}$	220,680	220,680
	u.		220,680	220,680
Net financial assets	662,575	5,996,520	(71, 155)	6,587,940
2002	Floating interest rate	Fixed interest	Non-interest bearing	30.6.02 Total
	S	\$	S	\$
Financial Assets
Cash on Hand	367,355		246.500	367,355
Receivables			2,045	246,500

367,355 Ţ Weighted average interest rate 3.30% Financial Liabilities

Accounts Payable	w	$\overline{a}$	90.914	90.914
			90.914	90.914
Net financial assets	367.355	$\overline{a}$	157.631	524.986

$\overline{a}$

248,545

Reconciliation of net financial assets to net assets

	30.6.03	30.6.02
Net financial assets as above	6.587,940	524.986
Non financial assets and liabilities
Plant and equipment	123,902	5.269
Other assets	3,437,559	1,308,692
Intangible assets	26,608	29,936
Net assets per balance sheet	10.176.009	1,868,883

$2,045$

615,900

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

COMPANY DETAILS 19.

The registered office of the Company moved, on 6 June 2002 to: Suite 4, 6 Richardson Street, West Perth WA 6005. On 19 September 2002 the Company moved its registered and business office to: Ground Floor, 9 Havelock Street, West Perth WA 6005. On 1 October 2003 the Company will relocate to First Floor. 9 Havelock Street, West Perth WA 6005.

20. CONTINGENT LIABILITIES

In June 1992 the High Court of Australia held in the Mabo case that the common law of Australia recognises a form of Native Title. The full impact that the Mabo decision may have on tenements held by the Company is not yet known. The Company is aware of Native Title claims that have been lodged with the National Native Title Tribunal ("the Tribunal") over several areas in Western Australia in which the Company holds interests. The Native Title claims have been accepted by the Tribunal for determination under section 63(1) of the Native Title Act 1993 (Commonwealth).

Notwithstanding the above, those of the Company's tenements which are the subject of the current feasibility study, were granted prior to Native Title legislation. Any compensation payable in relation to the effect of the grant of any of the tenements upon Native Title rights will be payable by the State of Western Australia.

$21.$ COMMITMENTS FOR EXPENDITURE

All of the Company's tenements are situated in the state of Western Australia.

In order to maintain an interest in the mining and exploration tenements in which the Company is involved the Company is committed to meet the conditions under which the tenements were granted and the obligations of any joint venture agreements. The timing and amount of exploration expenditure commitments and obligations of the Company are subject to the minimum expenditure commitments required as per the Mining Act, as amended, and may vary significantly from the forecast based upon the results of the work performed which will determine the prospectivity of the relevant area of interest.

(a) Exploration Work

The Company has certain obligations to perform minimum exploration work and to expend minimum amounts of money on its mining tenements. The obligations for the next 12 months are expected to amount to \$391,580 (2002; \$85,527). No estimate has been given of expenditure commitments beyond 12 months as this is dependent on the Directors ongoing assessment of operations and in certain instances Native Title negotiations.

22. SUBSEQUENT EVENTS

Subsequent to the end of the financial period, the Company paid a total of \$97,000 to acquire an option to purchase a gold processing plant.

Apart from the foregoing, there has not arisen any transaction or event of a material nature likely, in the opinion of Directors, to significantly affect the nature of the operations of the Company subsequent to the end of the financial period.

CONTROLLED ENTITIES 23.

Controlled entities and their contribution to consolidated profit:

	Country of Incorporation	Percentage Owned (%)
Parent Entity: Westonia Mines Limited	Australia	$\omega$
Subsidiaries of Westonia Mines Limited:
Westonia Mines Minerals Pty Ltd	Australia	100
Westonia Mines Unit Trust	Australia	100

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

$24.$ SEGMENT REPORTING

The Company and consolidated entity operate predominantly in one business and one geographical segment, being mineral exploration activities within Australia. Substantially, all of the consolidated entity's assets are deployed for this purpose.

25. RELATED PARTY TRANSACTIONS

During the financial year, Andrew Drummond & Associates Pty Ltd, a company associated with Managing Director Mr Andrew Drummond, charged consultancy fees totalling \$20,000. These services were charged at normal commercial rates and have been disclosed in Note 6 "Remuneration and Retirement Benefits".

During the financial year the Company paid a total of \$30,000 to Carmichael First Capital Pty Ltd, an entity of which Mr Douglas Young was a Director, for underwriting fees in respect of a prospectus dated 12 June 2002. Mr Young was later appointed as a Director of the Company subsequent to the end of the financial year under review. These services were charged at normal commercial rates.

DIRECTORS' DECLARATION

The Directors of Westonia Mines Limited hereby declare that:

• the financial statements and notes set out on pages 9 to 24 are in accordance with the Corporations Act 2001, $(a)$ including:
• giving a true and fair view of the financial position of the Company as at 30 June 2003 and of its $(i)$ performance, as represented by the results of its operations and its cash flows, for the year ended on that date: and
• $(ii)$ complying with Accounting Standards and the Corporations Regulations; and
• there are reasonable grounds that the Company will be able to pay its debts when they become due and payable. $(c)$

Dated at Perth this 26^th day of September, 2003

Signed in accordance with a Resolution of the Directors made pursuant to Section 295(2) of the Corporations Act 2001.

On behalf of the Directors:

ANDREW J DRUMMOND Director

INDEPENDENT AUDIT REPORT

To the members of Westonia Mines Limited

Scane

We have audited the financial report of Westonia Mines Limited and controlled entities for the financial vear ended 30 June 2003 as set out on pages 9 to 25.

The financial report includes the consolidated financial statements 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. The company's directors are responsible for the financial report. We have conducted an independent audit of this financial report in order to express an opinion on it to the members of the company.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the financial report is free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion whether, in all material respects, the financial report is presented fairly in accordance with Accounting Standards and other mandatory professional reporting requirements and statutory requirements so as to present a view which is consistent with our understanding of the company's and the consolidated entity's financial position, and performance as represented by the results of their operations and their cash flows.

The audit opinion expressed in this report has been formed on the above basis.

Audit Opinion

In our opinion, the financial report of Westonia Mines Limited is in accordance with:

• (a) the Corporations Act 2001, including:
• giving a true and fair view of the company's and consolidated entity's $(i)$ financial position as at 30 June 2003 and of their performance for the vear ended on that date: and
• (ii) complying with Accounting Standards and the Corporations Regulations; and
• (b) other mandatory professional reporting requirements.

ORD PARTNERS

I K Macpherson Partner

Dated this 30^th day of September, 2003. Perth, Western Australia

Member of Nexia International - A Worldwide Network of Independent Accounting and Consulting Firms

PARTNERS CHARTERED ACCOLINTANTS

Ian K Macpherson $CA$

Robert W Parker $CA$

Craig A Vivian CA

,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

Level 2, 47 Colin Street West Perth WA 6005

PO Box 359 West Perth WA 6872

雷+61893213514 $\equiv$ +61 8 9321 3523

ord@ordgroup.com.a www.ordgroup.com.au

	Schedule of Mineral Properties
Tenement No. and Type	Project	Area	Holder/ Applicant	Shares Held	Status	Expiry Date	Registered Encumbrances
M77/88	WESTONIA MINE	235.4ha	WML	100%	Granted	27/01/08	None
M77/110	WESTONIA MINE	404.3ha	WML.	100%	Granted	13/05/08	None
M77/124	WESTONIA MINE	128.0ha	WML	100%	Granted	20/07/08	None
L77/18	WESTONIA MINE	6.4ha	WML	100%	Granted		None
		Ø.
ELA77/1165	BODALLIN	36sb	WML.	100%	Pending		None
M77/637	WEST WESTONIA	241.4ha	PRUMM	Option 100%	Granted	23/05/15	None
P77/3001	WEST WESTONIA	121.4ha	WML	100%	P Granted. MLA pending	24/03/97	None
E77/898	DICKS REWARD	24sb	BUCKNELL	Option 100%	Pending		None
E77/516	WESTONIA	46sb	SOG	100%	Granted	16/11/03	None
E77/990	WESTONIA	70sb	SOG	100%	Granted	30/10/05	None
ELA77/1069	WESTONIA	29sb	SOG	100%	Pending		None
P77/3300	WESTONIA	9.6 ha	SOG	100%	Granted	19/09/04	None
P77/3350	WESTONIA	78.0ha	SOG	100%	Granted	23/04/05	None
P77/3351	WESTONIA	77.0ha	SOG	100%	Granted	23/04/05	None
E77/965	WESTONIA	16sb	SOG	100%	Granted	23/07/05	None
ELA77/572	JILBADGIE	26sb	IMAGE	100%			None
ELA77/1059	JILBADGIE	31sb	IMAGE	100%	Pending Pending		None
ELA77/1132	JILBADGIE	23 sb	IMAGE	100%	Pending		None

Key to Parties:

ADDITIONAL ASX INFORMATION

Key to Tenement Type:

E	- Exploration Licence	WML	- Westonia Mines Limited group
ELA	- Exploration Licence Application	Prumm	- Prumm Corporation Pty Ltd
L.	- Miscellaneous Licence	Caughey	- Mr Lyndsay Caughey
P	- Prospecting Licence	Bucknell	- Mr Walter Bucknell
PLA	- Prospecting Licence Application	sog	- Sons of Gwalia Ltd
MLA	- Mining Lease Application	Image	- Image Resources NL

ADDITIONAL INFORMATION

Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere in this report. The information was prepared based on share registry information processed up to 11 September 2003.

	Fully Paid Ordinary Shares	Listed Options
Number of holders	432	304
Holders of less than a marketable parcel	4	Nil
Percentage holdings by twenty largest holders	89.90%	91.44%

Number of holders in the following distribution categories:

			Fully Paid Ordinary Shares	Listed Options
	$\blacksquare$	1.000	1.995	2.052
1.001	$\blacksquare$	5,000	257.909	556,516
5.001		10,000	1,521,302	408.480
10.001	w	100,000	6.188.138	1.692.721
100.001	and over		87.894.440	25.105.800
			95.863.784	27.765.569

Twenty Largest Shareholders - Fully Paid Shares

The names of the twenty largest shareholders are as follows:

	No. of Ord Shares	%
Lion Selection Group Ltd	34.546,500	36.04%
Goldrich Holdings Pty Ltd	10,000,033	10.43%
Shay Margaret Drummond	8.000.033	8.35%
Readco Management Pty Ltd	5,151,532	5.37%
Pacific Inland Investment Pty Ltd	4,848,501	5.06%
Australia RBC Global Services	3.295,058	3.44%
Andrew Drummond & Associates Pty Ltd	2.814,640	2.94%
John Edmund Read	2.438,235	2.54%
ANZ Nominees Limited	2.335,090	2.44%
Australian RBC Global Services	2.185.054	2.28%
Commonwealth Custodial Services	1,750,000	1.83%
Investment Queensland	1,646,823	1.72%
Australian Permanent Trust	1,543,816	1.61%
Jayleaf Holdings Pty Ltd	1,262,990	1.32%
Zero Nominees Pty Ltd	1.140.000	1.19%
John Edmund Read	822,745	.86%
National Nominees Limited	810,000	.84%
Westpac Custodian Nominees	755,600	.79%
Gregory Vincent Beirne	408,790	.43%
Inmont Pty Ltd	400.000	.42%
	86,155,440	89.90%

Twenty Largest Optionholders - Quoted Options

The names of the twenty largest shareholders are as follows:

	No. of Quoted Options	%
Lion Selection Group Ltd	11.515,499	41.48%
Goldrich Holdings Pty Ltd	3.333,344	12.01%
Shay Margaret Drummond	2.666,677	9.61%
Readco Management Pty Ltd	1,717,177	6.19%
Pacific Inland Investment Pty Ltd	1,616,167	5.82%
Andrew Drummond & Associates Pty Ltd	938,213	3.38%
John Edmund Read	812,745	2.93%
Commonwealth Custodial Services	416,666	1.50%
Jayleaf Holdings Pty Ltd	413,800	1.49%
Clodene Pty Ltd	372,732	1.34%
Tierra Rist Pty Ltd	300,000	1.08%
John Edmund Read	274.248	.99%
Westpac Custodian Nominees	206,866	.75%
Yandal Investments Pty Ltd	200,000	.72%
James Vincent Chester	183.333	.66%
Inmont Pty Ltd	133,333	.48%
Mint Asset Management Pty Ltd	100,000	.36%
Bellmar Holdings Pty Ltd	70,000	.25%
Tan Keng Tat	60,000	.22%
Zedcon Pty Ltd	50,000	.18%
	25,380,000	91.44%

Substantial Shareholders

In accordance with Section 709(1) of the Corporations Act 2001, the Company had been notified of the following substantial shareholders:

• Lion Selection Group has a relevant interest in 34,546,500 ordinary shares which represent 36.04% of the $(a)$ issued ordinary shares.
• Mr Murray Pollock together with Goldrich Holdings has a relevant interest in 11,263,023 ordinary shares $(b)$ which represent 11.8% of the issued ordinary shares.
• $(c)$ Mrs Shay Drummond has a relevant interest in 10,914,673 ordinary shares which represent 11.39% of the issued ordinary shares.
• Mr John Read has a relevant interest in 8,412,512 ordinary shares which represent 8.78% of the issued $(d)$ ordinary shares.
• Mrs Barbara Read and Pacific Inland Investment Pty Ltd have a relevant interest in 4,848,501 ordinary $(e)$ shares which represent 5.06% of the issued ordinary shares.

Details with Respect to Directors' Shareholdings as at 11 September 2003

The interest as at 11 September 2003 of the Directors in the shares and options of the Company are as follows:

Director	Fully Paid Ordinary Shares	Listed Options	Unlisted Options
Pieter W Greeff	100,000	33,333	750,000
Andrew J Drummond	2.884.740	958.211	750,000
Murray G Pollock	11.263.023	3.747.144	$\tilde{\phantom{a}}$
Christopher P Melloy	70.000	23.333	$\tilde{\phantom{a}}$
David Macoboy	٠	$\bullet$	$\omega$
	14.317.763	4.762.021	1.500.000

Restricted Securities

34,160,364 shares and 11,386.786 listed options are under escrow until 20 August 2004.

Voting Rights

Ordinary Shares

On a show of hands every member present in person or by proxy or attorney or being a corporation by its authorised representative who is present in person or by proxy, shall have one vote for every fully paid ordinary share of which he is a holder.

Unlisted Options

During the financial period 860,000 unlisted options were issued. During the same period no options were converted into ordinary fully paid shares.

Listed Options

During the financial period 27,782,234 listed options were issued. During the same period 16,665 options were converted into ordinary fully paid shares.

Options have no voting rights until such options are exercised as fully paid ordinary shares.