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FORMERLY TRADING AS
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2008 ANNUAL REPORT

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CORPORATE DIRECTORY

SHARE REGISTRY

DIRECTORS

Security Transfer Registrars Pty Ltd 770 Canning Highway Applecross WA 6153 Telephone (618) 9315 2333 Facsimile (618) 9315 2233 Email [email protected]

John Rowe Non-Executive Chairman Bruce McFadzean Managing Director Christopher Melloy Non-Executive Director Barry Sullivan Non-Executive Director Murray Pollock Non-Executive Director Nigel Johnson Non-Executive Director

AUDITORS

Ord Partners Level 2, 47 Colin Street West Perth WA 6005

COMPANY SECRETARY

Graham Anderson Leonard Math

STOCK EXCHANGE LISTING

SENIOR MANAGEMENT

Securities in Catalpa Resources Limited are listed on:

Erik Palmbachs Chief Financial Officer (CFO) Nick Winnall Exploration Manager Dennis McDeed Registered Resident Manager

Australian Stock Exchange Limited Home Branch – Perth

ASX Code – CAH, CAHO

REGISTERED & PRINCIPAL

WEBSITE

OFFICE

www.catalparesources.com.au

Level 1, 9 Havelock Street West Perth WA 6005 Telephone (618) 9321 3088 Facsimile (618) 9321 8804 Email [email protected]

Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Chairman’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Review of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Auditor’s Independence Declaration. . . . . . . . . . . . . . . . . . . . 26 Corporate Governance Statement . . . . . . . . . . . . . . . . . . . . . 27 Income Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Statements of Changes in Equity . . . . . . . . . . . . . . . . . . . . . 35 Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . 36 Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . 37 Directors’ Declaration. . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Independent Audit Report . . . . . . . . . . . . . . . . . . . . . . . . . 76 ASX Additional Information . . . . . . . . . . . . . . . . . . . . . . . . 78 Tenement Holding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

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programs which have occurred both above and below
the planned open pit at Edna May, which significantly
reduces the risk of Catalpa’s current project.
Catalpa has an experienced and Located in the highly
prospective Westonia
Greenstone Belt in
innovative Board and management
Western Australia
team that is committed to moving
the Edna May Gold Project PERth
towards production utilising the
open pit Resources.
The Company’s priority is to finalise the 2008 Feasibility
Study for Board review in the December quarter 2008. In
addition to this review, the Board will consider funding
and financing alternatives available to provide the
necessary capital to commence production of the Edna
May Resources.
In preparation for planned production at Edna May, the
Company relocated its 2.8mtpa Big Bell mill to site in
2007. The mill is being maintained ‘ready for construction’ EDNA MAY GOLD PROJECT
adjacent to the proposed plant construction site. PERth Westonia Kalgoorlie
Catalpa is pursuing parallel growth with a renewed Southern Cross
exploration programme underway of its 880km² of under-
explored Westonia Greenstone Belt, and is reviewing
other regional opportunities for acquisition and/or joint
venture. In particular, Catalpa seeks to identify and Albany
develop new projects and/or acquisitions on its extensive
land holding or within the region, which is prospective for gold, nickel and base metals.
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ChAIRMAN’S REPORt

Dear Shareholders

While the renaming of Westonia Mines Limited only took place after the end of the financial year under review, it is a pleasure to write my first annual report as the Chairman of the new entity, Catalpa Resources Limited that was launched in September 2008.

At the outset, I’d like to express my appreciation to Mark Fitzpatrick, my predecessor who retired from the Westonia Mines Limited Board at the end of February this year, for his valuable contribution to the Company. In addition, I would like to thank the previous Managing Director David Hatch for his contribution.

We started out at the beginning of the 2008 financial period against a challenging backdrop for the gold mining industry in general, with lower gold prices and an environment of inflating costs.

While the Edna May open pit project was, and still is a viable venture, your Board recognised that a decision to progress the project was largely dependent on either a sufficient increase in the gold price and/or the discovery of further gold reserves. Having no control over the gold price, we started the financial year with the prudent strategy to maintain a focus on exploration until such time as the economics were more conducive to advancing the Edna May open pit from project to production.

We developed a two-pronged approach to our exploration strategy. Firstly, to discover sufficient additional reserves within the vicinity of the Edna May open pit either from surface resources or from beneath the pit itself to commence mining; and secondly, to explore for additional Resources on the Westonia Greenstone Belt elsewhere within our tenement which we continue to regard as an area of under-explored potential.

As the majority of our tenements are over freehold land, much of which is currently farmed, it is incumbent upon us to reach appropriate access agreements with all of the relevant landholders before we commence exploration activities. We value the goodwill offered to us by the Westonia community and we spent some time making sure that acceptable access arrangements were in place.

I am pleased to report significant progress in our exploration programme. During the year we completed a rotary-air-blast (RAB) drill programme to undertake preliminary testing of ten regional targets on the Westonia Greenstone Belt and an auger drill programme to assist with planning towards further brownfields drill programmes. A secondary drill programme to further deliniate potential targets has been planned and is scheduled to commence in the first half of 2009.

We also completed a review of previous diamond drill testing of high grade arcuate reef structures beneath the proposed Edna May open pit. This review was positive with a recommendation for additional drilling that commenced in August 2008. As I write, two of eleven holes in the current programme have been completed with significant occurrences of visible gold in both the first and the second drill cores some 450m below surface and 510m below surface respectively. The early assay results are encouraging.

In February 2008 the gold price breached the US$1000 mark, necessitating a shift in direction from our sole exploration focus to a serious reconsideration of the financial viability of production at Edna May.

Accordingly, the latter part of the financial period saw significant attention devoted to reviewing the earlier Edna May feasibility study in light of both the market changes and our exploration progress. The updated feasibility study is on schedule to be finalised and reviewed by the Board in the December quarter 2008.

With the project start-up once again in our sights, we recognised the need to augment the Company’s existing management and Board capacity and set about to attract appropriate talent. I am extremely pleased at the calibre of recent appointments that resulted from this process.

In June 2008 we were fortunate to secure the appointment of Mr Bruce McFadzean as our new Managing Director and Chief Executive Officer. Mr McFadzean is a mining engineer with more than three decades of management, mining, processing and project start-up experience. With four successful large-mine start-ups to his name, your Board shares my confidence that Mr McFadzean has the right blend of experience and skills to move the Edna May project towards production, whilst simultaneously pursuing his mandate to identify and evaluate additional sources of growth.

In June 2008, our Board capacity was significantly strengthened by the appointment of Mr Barry Sullivan as a Non-Executive Director. Mr Sullivan is an experienced and successful mining engineer with a career spanning 40 years in the mining industry, and his insights and extensive experience are much respected and appreciated.

Since the close of the financial period, we have also welcomed Mr Nigel Johnson to the Board. Mr Johnson joined us in August and brings a wealth of experience in financial management, equity and debt raisings, treasury and financial risk management and strategic and business planning. These skills are already proving extremely valuable.

In addition, we have recently appointed Mr Erik Palmbachs as Chief Financial Officer. Mr Palmbachs has a strong background in resource industry finance, gold price protection strategies and corporate finance. We are looking forward to Mr Palmbachs contribution in the coming year.

Further executive appointments are in the pipeline toward the second and third quarters of the new financial period, to ensure that we are optimally skilled for the transition from explorer to producer that we envisage ahead.

We are poised on the brink of a new phase in our Company’s growth, with an experienced and committed Board and management team, a sound Resource base at Edna May coupled with significant scope to grow Resources and Reserves, and, not least, a buoyant outlook on the Australian gold price going forward.

So, as we close the chapter on Westonia Mines with due respect for its 100-years of successful mining history at Westonia, we look forward with confidence to the future of Catalpa Resources as a new emerging resources icon with a successful history of its own still to be written.

I’d like to express my gratitude to our Board of Directors for their diligence and their commitment. And, on behalf of the Board, our sincere thanks to Mr McFadzean and each of his small but growing team for their exemplary contributions during the past year.

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John Rowe Chairman

REVIEW OF OPERAtIONS

EXPLORAtION

At the start of the 2007 financial year, the gold price was not conducive to pursuing development of the Edna May Gold Project, and the Company turned its focus to exploration to find and delineate new Resources that would make the project more economically viable, and/or to identify new stand-alone projects elsewhere within or adjacent to its under-explored tenements.

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A multi-phase programme was planned, implemented and was accelerated during the latter half of the year. The results are promising and are contributing significantly to the understanding of the potential of Catalpa’s tenements that cover a large area of some 880km[2] .

In addition to focussing on identified near-mine (Edna May) targets, the programme also encompassed the identification and exploration of additional anomalies within the wider Westonia Greenstone Belt. An extensive first pass geochemical auger sampling programme was conducted, virtually covering the previously untested areas of Catalpa’s tenements. A number of localised programmes aimed at confirming and expanding the results of previous exploration activities were also conducted.

Stakeholder Consultation

The majority of Catalpa’s tenements cover freehold farmland, necessitating extended landholder consultation in order to reach access agreements for sample collection. Our ongoing effort to engage with local (Westonia) stakeholders is aimed at promoting goodwill in the community to support the sustainability of our planned operations.

Near Mine and Regional RAB Drill Programme

Following receipt of the necessary statutory approvals, a rotary-air-blast (RAB) programme was undertaken in the last quarter of 2007. The RAB drill programme consisted of 97 holes for 4,297 metres, and was completed to undertake preliminary testing of ten targets, including both pre-existing near mine targets as well as additional prospective areas identified along the length of the Westonia Greenstone Belt within Catalpa’s tenements.

Nine of the targets were seeking gold mineralization. Assay results for the gold targets produced a best value of 3m @ 0.6 g/t Au from 42m in CWR004 at the Colossus historical workings. Colossus was one of the most substantial historical workings along the belt and, significantly, it is untested. Followup drilling is planned at three of the nine gold targets in the 2009 calendar year.

The tenth, a nickel target at Jilbadgie, did not yield any significant nickel values.

Auger Sampling Programme

In tandem with the RAB programme, a wide area first pass geochemical auger sampling programme was carried out over a large extent of Catalpa’s tenements including many of which were previously not sampled.

This programme, consisting of the collection of 782 soil samples, was based largely on the detailed aerial magnetic survey completed in 2007 that indicated the potential for extensions of the greenstone belt through these areas.

The results of the programme are encouraging, with the identification of six targets for follow up infill sampling, all within a 12km radius of the Edna May open pit.

The targets are widespread and cohesive gold-in-calcrete/soil anomalies, with anomalous values up to 21.6 ppb gold on a background of 9 ppb gold. Although of a low order, the anomalies are cohesive in nature and of a large lateral extent, measuring up to 2.0km x 2.5km.

Follow up work is planned during the current financial year.

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EXPLORAtION (continued)

Begley Tenement

A reassessment of the previously targeted Begley tenement was undertaken during the year, with 70 soil and 11 maglag samples collected to complete the first pass geochemical sampling programme over the entire tenement.

The assay results are promising, and indicate a widespread, open ended anomaly with a peak value of 15 ppb gold on a background of 3 ppb and extending 2.5km x 0.5km, open to the east.

Subsequent auger sampling in the adjacent tenement produced anomalous values to 14.3 ppb gold.

Follow up sampling is planned during the current 2009 calendar year.

Edna May Underground

During the past year, an extensive geological and structural review was undertaken of the database for the prospective, deeper, high-grade, arcuate reef structures beneath the Edna May open pit. The collation of historical and recent exploration data into a cohesive model of the Edna May reef structure presents a fresh perspective of the potential target and suggests that there is significant upside from further definition by diamond drilling.

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RC drilling campaign at the
western end of the pit in 2005/06
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The detailed geological review enabled the planning of a diamond drill programme that was approved during the financial year and was commenced shortly after its close. Eleven diamond core holes are planned to be drilled as infill and extensions to previous intersections which are interpreted to be down-dip extensions of the Edna May high-grade reef structure beyond 300 metres below surface.

Two of the planned holes had been drilled at the time of writing. Notably, two occurrences of visible gold were encountered in the first hole; and four occurrences of visible gold in the second. Initial drill results from the first hole were reported in September 2008. Drill hole WDD144A yielded eight significant intercepts; four of which can be considered as potential stockwork or small-vein related intercepts, and four high-grade assays from zones of silicification and/or narrow (<10cm) mineralised quartz veins within the Edna May Gneiss and immediate footwall rocks.

The Edna May Gneiss was intersected from 440m to 556m.

Eight significant intercepts in hole WDD144A including;

1.56m @ 49.42g/t Au including 0.44m @ 160g/t Au from 536.88m
0.62m @ 99.1g/t Au from 542.38m
0.87m @ 140g/t Au from 568.30m
1.09m @ 62.7g/t Au from 577.17m

The table below is based on a 5g/t Au cut off and lists the assay data relating to the first drill hole WDD144A.

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Drill Hole Metres Gold g/t From (m) To (m)
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Drill Hole	Metres	Gold g/t	From (m)	To (m
WD144A	0.82	6.04	500.55	501.37
WD144A	0.27	129.00	513.00	513.27
WD144A	1.00	6.68	522.69	523.69
WD144A	1.56	49.42	536.88	538.44
including	0.44	160.00	538.00	538.44
WD144A	0.62	99.10	542.38	543.00
WD144A	0.34	85.70	547.86	548.20
WD144A	0.87	140.00	568.30	569.17
WD144A	1.09	62.70	577.17	578.26

The geology as logged supports the model for the continuation of the high-grade arcuate reef structures at depth.

There have been two previous successful periods of underground mining, which further reduces the risk to the Edna May project. The Edna May underground ore body yielded 360,000 recovered ounces from two previous mining events commencing in 1911 and 1940. During these two periods of underground mining, 575,000 tonnes were produced at a recovered grade of 19.5g/t from depths of up to approximately 250 metres from surface.

The current diamond drilling is aimed at confirming and expanding previous diamond drilling conducted by the former operators, Australian Consolidated Minerals (ACM) in the 1980’s from surface, which indicated the presence of Edna May reef-like intercepts to a vertical depth of 700 metres below surface. Following the surface drill programme ACM developed an exploration decline to a vertical depth of 270 metres and undertook additional diamond drilling as well as limited level development. A number of pegmatite intrusions that interrupted and stoped out the high-grade reefs were encountered towards the base of the decline development and ACM terminated the underground programme in 1990.

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Core inspection and
logging in August 2008
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EXPLORAtION (continued)

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Two additional phases of surface diamond drilling directed at underground targets were completed in the 1990’s and early 2000’s, providing several additional significant intercepts of high-grade reef-like mineralisation.

The recent review, together with structural interpretation of the historical data and existing drilling, indicate that the Edna May arcuate reef may continue uninterrupted below the zone of pegmatite intrusion.

The following table lists the most significant intercepts from diamond drill holes that intercepted the Edna May reef-like structures at depth.

Significant intercepts interpreted to be from the Edna May reef

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Hole ID Down hole Interval and Gold Grade
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Hole ID	Down hole Interval and Gold Grade
WDD041	3.0m @ 15.0g/t Au
WDD052A	3.0m @ 4.58g/t Au
WDD054	18.1m @ 7.63g/t Au
WD054A	9.1m @ 7.32g/t Au
WDD055	17m @ 5.2g/t and 16.6m @ 6.8g/t Au
WDD055A	[email protected]/t Au Possibly2 intercepts as in WDD055

In addition to the primary target, the Edna May reef, previous deep drilling has intercepted several other reefs. Some of these reefs were worked as part of the historical underground mining activities in the early to mid 1900’s. The table below lists the most significant intercepts of these reefs which the current drill programme may intercept.

Other reef intercepts of significance within targeted drill zone

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Hole ID Down hole Interval and Gold Grade
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WDD043	3.0m @	35.2g/t Au	Footwall to Interpreted Edna May Reef
WDD064	8.8m @	5.9g/t Au	Footwall to Interpreted Edna May Reef
WDD064A	7.0m @	4.1g/t Au	Footwall to Interpreted Edna May Reef
WDD097	5.8m@	21.6g/t Au	150m North of Interpreted Edna MayReef

All of the drill holes in the current programme will be drilled from surface and will involve approximately 6,600 metres of diamond drilling, targeting the previously identified zone below the pegmatite intrusions.

The holes have been divided into three classifications;

Infill – infilling existing high-grade intercepts;
Expansion – scoping the gold mineralised zones; and
Exploration – testing for further extension at depth.

The current programme is expected to continue into the 2009 calendar year.

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Sulphides in quartz core sample September 2008
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EXPLORAtION (continued)

Greenfinch

The Greenfinch deposit contains an Inferred and Indicated Resource of 1.83Mt @ 1.43g/t Au for 84,000oz gold. (0.7g/t Au cut off). A programme of 50 holes for 5,000 metres is planned during the current financial year, to further test the Greenfinch gold deposit.

The programme will comprise of infill drilling to assist in geological interpretation, and to upgrade Resource categories; and step-out drilling to test for extensions to the Resource.

The drilling is targeting an Inferred Resource that sits between the Measured Indicated (MI) and the Measured Indicated and Inferred (MII) optimised shells.

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Golden Point

During the year, a programme of 10 reverse circulation (RC) holes was designed, with a view to scoping the Golden Point Gneiss at depth and to attempt to determine its relationship with the adjacent Edna May Gneiss.

The programme allows for 1,700 metres of drilling that will be carried out in the 2009 calendar year.

Edna May West

Reverse circulation (RC) drilling is planned to focus on the structurally complex area between the Greenfinch and Edna May deposits where there is potential to upgrade the existing Resource, specifically at the western edge of the Edna May pit.

The mineralisation being targeted is within two zones. The first is within 50 metres of surface and may impact on the planned mine schedule and mine sequencing. The second zone is approximately 100 metres below the surface and has the potential to extend the optimised pit outline on the western end.

It is planned to undertake the programme in the 2009 calendar year.

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Reviewing regional
exploration opportunities
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FEASIBILItY StUDY

Based on the present buoyant outlook for gold, together with the significant amount of mining history, modelling, test work, drilling and planning on the Edna May open pit Resource, the Board believes that the project is poised to move towards commencing production in the 2009/10 financial year at an annualised rate of more than 100,000 ounces.

At the time of writing, a revised Edna May Gold Project Feasibility Study is at an advanced stage, having received considerable management attention during the past six months, and is on schedule to be reviewed by the Board in the December quarter 2008.

Preliminary Feasibility Study outcomes indicate significant improvements to the Edna May Processing Plant (ex Big Bell) capacity, to 2.8mtpa. Further process capacity upgrades to 3.2mtpa are possible providing a positive impact on costs and economies of scale. In addition, the study indicates the ability to provide higher grade feed for the initial two years of production.

The plant is currently maintained in a state of readiness for construction, and the project timeframe from approval to commissioning would be in the order of twelve months.

RESOURCES

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Edna May 2007 Resource Estimate to 300m Depth
Measured Indicated Inferred Total
Cut Off Million Gold Ounces Million Gold Ounces Million Gold Ounces Million Gold Ounces
Grade tonnes g/t ‘000 tonnes g/t ‘000 tonnes g/t ‘000 tonnes g/t ‘000
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0.50	16.6	1.15	612	13.3	1.13	484	8.4	1.0	269	38.2	1.11	1,365
0.60	14.2	1.26	574	11.1	1.25	446	6.4	1.1	227	31.7	1.22	1,248
0.70	12.1	1.36	529	9.2	1.37	403	5.0	1.3	209	26.3	1.35	1,141
0.80	0.2	1.48	484	7.6	1.50	365	4.0	1.4	178	21.7	1.47	1,027
0.90	8.5	1.60	439	6.3	1.64	330	3.2	1.5	152	18.0	1.60	922
1.00	7.1	1.72	394	5.2	1.78	299	2.6	1.7	139	14.9	1.74	832
1.10	6.0	1.85	356	4.4	1.92	270	2.1	1.8	120	12.4	1.87	746
1.20	5.0	1.99	323	3.7	2.06	245	1.7	2.0	110	10.4	2.02	677

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Greenfinch 2007 Resource Estimate
Measured Indicated Inferred Total
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Cut Off Million Gold Ounces Million Gold Ounces Million Gold Ounces Million Gold Ounces
Grade tonnes g/t ‘000 tonnes g/t ‘000 tonnes g/t ‘000 tonnes g/t ‘000
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0.50	2.2	1.14	81	0.6	1.1	22	2.9	1.13	104
0.60	1.8	1.29	73	0.5	1.3	20	2.3	1.28	93
0.70	1.4	1.44	67	0.4	1.4	18	1.8	1.44	84
0.80	1.2	1.58	60	0.3	1.6	16	1.5	1.58	77
0.90	1.0	1.71	55	0.3	1.7	15	1.3	1.71	70
1.00	0.9	1.83	51	0.2	1.9	14	1.1	1.84	64
1.10	0.8	1.95	47	0.2	2.0	13	0.9	1.96	60
1.20	0.7	2.07	44	0.2	2.1	12	0.8	2.07	55

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Total 2007 Resource Estimate
Measured Indicated Inferred Total
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0.50	16.6	1.15	612	15.5	1.13	565	9.0	1.0	291	41.1	1.11	1,469
0.60	14.2	1.26	574	12.9	1.26	520	6.9	1.1	247	34.0	1.23	1,341
0.70	12.1	1.36	529	10.6	1.38	470	5.4	1.3	227	28.1	1.36	1,226
0.80	10.2	1.48	484	8.8	1.51	425	4.3	1.4	194	23.2	1.48	1,103
0.90	8.5	1.60	439	7.3	1.65	386	3.4	1.5	167	19.2	1.60	992
1.00	7.1	1.72	394	6.1	1.79	350	2.8	1.7	153	16.0	1.74	897
1.10	6.0	1.85	356	5.1	1.92	317	2.3	1.8	133	13.4	1.87	806
1.20	5.0	1.99	323	4.3	2.06	288	1.9	2.0	122	11.3	2.02	732

Note - Rounding of numbers may marginally alter calculated values

FEASIBILItY StUDY (continued)

Tenement Holdings

As at 30 June 2008, Catalpa had 10 granted tenements encompassing 880km[2] , with 13 tenements under application. The Company’s tenement interests are listed on page 80.

Sustainability

Catalpa Resources aims to implement best practices in safety, health and environmental management, and is also committed to fostering sustainable relationships with all stakeholders in its local communities.

Safety and Health

The Company is committed to protecting the safety and health of its employees, contractors, visitors and the local community. Catalpa Resources has a zero harm policy. No lost time injuries were reported during the year under review.

Environment and Statutory Reporting

Catalpa is committed to minimising its impact on the natural environment within which it operates. Catalpa completed and submitted an Annual Environmental Report (AER) in July 2008. The Mining Proposal (MP) for the construction and operation of the mine was in draft at the time of writing.

Community

The Company aims to foster mutually beneficial relationships with its local communities, and in turn is broadly supported by local residents and landholders.

Wherever possible, labour and services are sourced locally, and Catalpa is also supportive of development and fundraising initiatives in and around the Westonia town.

Excellent relationships are maintained with local authorities and decision makers.

Competent Person Statement

The exploration data have been supplied according to the JORC Code for the reporting of Mineral Resources and Ore Reserves by Nick Winnall (Exploration Manager), a full-time employee of Catalpa Resources Limited. Mr. Winnall is a Member of the Australasian Institute of Mining and Metallurgy (AUSIMM) and has sufficient experience which is 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 December 2004 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (JORC Code). Mr. Winnall consents to the inclusion in the report of the matters based upon his information in the form and context in which it appears.

Competent Person Statement

The information in this report that relates to mineral resources is based on work completed by Mr Nicolas Johnson, who is a Member of the Australian Institute of Geoscientists. Mr Johnson is a full time employee of Hellman and Schofield Pty Ltd and has sufficient experience which is 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’. Mr Johnson consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

CAtALPA’S MOSt VALUABLE ASSEt

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Murray Pollock Non-Executive Director

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Nigel Johnson Non-Executive Director

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Barry Sullivan Non-Executive Director

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Christopher Melloy Non-Executive Director

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John Rowe Non-Executive Chairman

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Catalpa has an
experienced
and innovative
Board and
management
team that is
committed to
moving the
Edna May
Gold Project
towards
production.
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Leonard Math Company Secretary

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Bruce McFadzean Managing Director

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Erik Palmbachs Chief Financial Officer

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Nick Winnall Exploration Manager

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Dennis McDeed Registered Manager

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Rebecca Haines Administration Officer

Graham Anderson 14 Company Secretary

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2008 FINANCIAL REPORT

DIRECtOR’S REPORt

the Board of Directors

John Rowe BSc (Hons) ARSM, MAusIMM Non-Executive Chairman

Mr John Rowe, a geologist, brings a wealth of geological and business development skills to the Company. Mr Rowe has 38 years experience within the nickel and gold industries of Western Australia. He has held a variety of positions in mine management, exploration and business development and was previously employed as an executive of Lion Ore in Australia.

Mr Rowe is also a Non-Executive Director of Panoramic Resources Limited (PAN).

Bruce McFadzean Dip Mining Managing Director

Mr Bruce McFadzean, a mining engineer, brings over 30 years of management, mining, processing and project “start up” experience to the organisation, half of which was gained in the employ of global resources brands, Rio Tinto and BHP Billiton. Mr McFadzean has broad commodity experience in gold, iron ore, diamonds and nickel/cobalt and in a wide range of roles including corporate, managerial, technical and operational.

Mr McFadzean is a Non-Executive Director of Venture Minerals Limited.

Barry Sullivan BSc(Hons), ARSM, FAusIMM, MAICD

Non-Executive Director

Mr Barry Sullivan, is a mining engineer with a career spanning 40 years. His initial mining experience was gained in the South African gold mining industry, followed by more than 20 years with Mount Isa Mines. In the final 5 years of his tenure with MIM, Mr Sullivan was Executive General Manager responsible for the extensive Mount Isa and Hilton operations. More recently, Mr Sullivan has been working with a number of smaller exploration and mining companies.

Mr Sullivan is a Non-Executive Director and Chairman of Exco Resources, and a Non-Executive Director of Sedimentary Holdings.

Murray Pollock MAICD Non-Executive Director

Mr Murray Pollock is a businessman with 40 years experience within the mineral resource sector, principally in drilling. Mr Pollock is a drilling and mine management services consultant for several companies.

Christopher Melloy BE (Hons), MEngSc, F Fin (Sec Inst), MAusIMM, ASIA Non-Executive Director

Mr Christopher Melloy, a mining engineer has 29 years of extensive experience within the resource sector, ranging from mine planning and mine operations to mining analysis, research and executive roles. Mr Melloy is an Executive Director of Lion Manager Pty Ltd and a Director of a number of other companies.

Nigel Johnson CA, CFTP(Snr), MAICD Non-Executive Director

Mr Nigel Johnson, a Charted Accountant with strong finance and management experience attained over a period of 36 years in both publicly listed and private companies and within a number of industries.

Mr Johnson has significant expertise in financial management, equity and debt raisings, treasury and financial risk management and strategic and business planning. Most recently, Mr. Johnson was Chief Financial Officer for Straits Resource Limited, responsible for the financial, commercial and treasury activities of the Straits Group.

Mr Johnson is also a Non-Executive Director of Matrix Composites and Engineering Limited.

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Mark Fitzpatrick

Mr Mark Fitzpatrick was Non-Executive Chairman/Director from 3 August 2005 to 27 February 2008.

David Hatch

Mr David Hatch was Managing Director from 31 March 2005 to 28 September 2007.

Company Secretary

Graham Anderson, BBus, CA

Mr Graham Anderson is 44 years of age, has a Bachelor of Business Degree and is a member of the Institute of Chartered Accountants. Mr Anderson commenced his career in 1983 with Ernst & Young before later moving to the national chartered accounting firms of Duesburys and Horwath as a Partner with particular responsibilities for providing a range of audit and related corporate services.

Mr Anderson has extensive experience and knowledge of the ASX Listing Rules and Corporations Act and has acted as Director and Company Secretary to a number of ASX listed entities. He has also been significantly involved in the IPO stage including due diligence process for Australis Aquaculture Ltd, Dynasty Metals Australia Ltd, Echo Resources Ltd, Pegasus Metals Ltd, Mamba Minerals Ltd and Iron Road Ltd in the past 3 years.

Mr Anderson is currently the Chairman and Company Secretary of APA Financial Services Ltd, Director and Company Secretary of Dynasty Metals Australia Ltd, Echo Resources Ltd, Pegasus Metals Ltd and Company Secretary of Apex Minerals NL, Mamba Minerals Ltd, Tectonic Resources NL and Iron Road Ltd.

Leonard Math, BBus, CA

Mr Leonard Math graduated from Edith Cowan University, majoring in Accounting and Information Systems, in 2003 and is a member of the Institute of Chartered Accountants. In 2005 Mr Math worked as an Auditor at Deloitte before joining GDA Corporate as a Senior Accountant.

Mr Math public Company responsibilities include corporate compliance roles, including extensive liaison with ASX and ASIC, control and implementation of corporate governance, completion of annual financial reports and auditor liaison, and shareholder relations with registry and shareholders both retail and institutional.

Messers Graham Anderson and Leonard Math were appointed joint Company Secretaries on 2 August 2007.

John Fitzgerald was Company Secretary from 6 March 2007 to 31 July 2007.

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Interests in the shares and options of the Company and related bodies corporate

As at the date of this report, the interests of the Directors in the shares and options of Catalpa Resources Limited were:

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Options over
Ordinary Shares Ordinary Shares
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John Rowe	-	-
Bruce McFadzean	345,000	-
Murray Pollock	15,725,802	935,748
Chris Melloy	1,504,688	167,188
Barry Sullivan	-	-
Nigel Johnson	-	-

NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES

The principal activities of the group are development of and exploration for mineral resources. The details of the operations of the Group are set out in the Review of Operations of this report.

DIVIDENDS

No dividends were paid or declared during the financial year. No recommendation for payment of dividends has been made.

OPERATING AND FINANCIAL REVIEW

Operating Results for the Year

The operating loss after income tax of the Group for the year ended 30 June 2008 was $2,291,738 (2007: $9,730,197).

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2008
Revenues Results
$ $
Geographic segments
Australia 594,509 (2,291,738)
Consolidated entity revenues and loss from ordinary activities before 594,509 (2,291,738)
income tax expense
Shareholder Returns
2008 2007
Basic and diluted loss per share (cents) 0.67 3.5
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Risk Management

The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that activities are aligned with the risks and opportunities identified by the Board.

The Group believes that it is crucial for all Board members to be a part of this process, and as such the Board has not established a separate risk management committee.

The Board has a number of mechanisms in place to ensure that management’s objectives and activities are aligned with the risks identified by the Board. These include the following:

Strategic planning, which encompasses strategy statements designed to meet stakeholders needs and manage business risk.
Implementation of Board approved operating plans and budgets and Board monitoring of progress against these budgets.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

The Company’s name was changed from Westonia Mines Limited to Catalpa Resources Limited on the 29 August 2008 after shareholders’ approval at a General Meeting on the 27 August 2008.

Apart from the above or as noted elsewhere in this report no significant changes in the state of affairs of the Group occurred during the financial year.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

No matters or circumstances, besides those disclosed at note 24, have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

Likely developments in the operations of the Group and the expected results of those operations in future financial years have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the Group.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Group is subject to significant environmental regulation in respect to its exploration activities.

The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in compliance with all environmental legislation. The Directors of the Group are not aware of any breach of environmental legislation for the year under review.

REMUNERATION REPORT

The remuneration report is set out under the following main headings:

A Principles used to determine the nature and amount of remuneration
B Details of remuneration
C Service agreements
D Share-based compensation
E Additional information

The information provided under headings A-D includes remuneration disclosures that are required under Accounting Standard AASB 124 Related Party Disclosures. These disclosures have been transferred from the financial report and have been audited. The disclosures in Section E are additional disclosures required by the Corporations Act 2001 and the Corporations Regulations 2001 which have not been audited.

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A Principles used to determine the nature and amount of remuneration (audited)

Remuneration Policy

The remuneration policy of Catalpa Resources Limited has been designed to align Director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long term incentives based on key performance areas affecting the Group’s financial results. The Board of Catalpa Resources Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain high calibre executives and Directors to run and manage the Group.

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

The remuneration policy, setting the terms and conditions for the executive Directors and other senior executives, was developed by the Board. All executives receive a base salary (which is based on factors such as length of service and experience) and superannuation. The Board reviews executive packages annually by reference to the Group’s performance, executive performance and comparable information from industry sectors and other listed companies in similar industries.

The Board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract and retain the highest calibre of executives and reward them for performance that results in long term growth in shareholder wealth.

Executives are also entitled to participate in the employee share and option arrangements.

The executive Directors and executives receive a superannuation guarantee contribution required by the government, which is currently 9%, and do not receive any other retirement benefits. Some individuals, however, may choose to sacrifice part of their salary to increase payments towards superannuation.

The Board policy is to remunerate non executive Directors at market rates for comparable companies for time, commitment and responsibilities. The Board determines payments to the non executive Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non executive Directors is subject to approval by shareholders at the Annual General Meeting (currently $200,000). Fees for non executive Directors are not linked to the performance of the Group. However, to align Directors’ interests with shareholder interests, the Directors are encouraged to hold shares in the Company and are able to participate in employee option plans.

Performance based remuneration

The remuneration policy has been tailored to increase goal congruence between shareholders and Directors and executives. Currently, this is facilitated through the issue of options to executives to encourage the alignment of personal and shareholder interests. The Company believes this policy will be effective in increasing shareholder wealth. For details of Directors and executives interests in options at year end, refer note 18.

Company performance, shareholder wealth and Directors’ and executives’ remuneration

The remuneration policy has been tailored to increase the direct positive relationship between shareholders investment objectives and Directors and executives’ performance. Currently, this is facilitated through the issue of options to executives to encourage the alignment of personal and shareholder interests. The Company believes this policy will be effective in increasing shareholder wealth.

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B Details of remuneration (audited)

Details of the remuneration of the Directors and the key management personnel (as defined in AASB 124 Related Party Disclosures) of Catalpa Resources Limited and the Catalpa Group are set out in the following table.

The key management personnel of Catalpa Resources Limited and the Group include the Directors and Company Secretary as per page 16 above and the following executive officer have the authority and responsibility for planning, directing and controlling the activities of the Group:

Rowan Johnston (Resigned on 14 September 2007)

Key management personnel and other executives of Catalpa Resources Limited and the Group

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PRIMARY POST EMPLOYMENT SHARE BASED PAYMENTS TOTAL
Salary, Non- Superannuation Retirement Other Options Remuneration
Fees Monetary Benefits services consisting
options
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DIRECTORS	DIRECTORS
John	Rowe(Non-Executive Chairman)
2008	56,666	-	5,100	-	103,344	-	-	165,110
2007	28,356	-	-	-	-	-	-	28,356
Bruce McFadzean(Managing Director -appointed 6 June 2008)
2008	23,492	-	2,114	-	-	-	-	25,606
2007	-	-	-	-	-	-	-	-
Murray Pollock(Non-Executive Director)
2008	40,000	-	3,600	-	-	-	-	43,600
2007	38,000	-	3,420	-	-	-	-	41,420
Chris	Melloy* (Non-Executive Director)
2008	40,000	-	-	-	-	-	-	40,000
2007	38,000	-	-	-	-	-	-	38,000
Barry	Sullivan(Non-Executive Director -		appointed 16 June 2008)
2008	1,667	-	150	-	-	-	-	1,817
2007	-	-	-	-	-	-	-	-
Mark	Fitzpatrick(Non-Executive Chairman -resigned 27 February 2008)
2008	50,000	-	4,500	-	85,250	-	-	139,750
2007	76,000	-	6,840	-	-	-	-	82,840
David Hatch(Managing Director -resigned 28 September				2007)
2008	82,073	-	7,387	110,000	-	-	-	199,460
2007	220,000	20,663	19,800	-	-	28,807	9.95%	289,270
OTHER KEY MANAGEMENT PERSONNEL
Graham Andersonand		Leonard Math^ (Company Secretary -appointed 2 August 2007)
2008	56,500	-	-	-	-	-	-	56,500
2007	-	-	-	-	-	-	-	-
John	Fitzgerald(Company Secretary - appointed 6 March			2007,resigned 31 July 2007)
2008	16,000	-	1,440	-	-	-	-	17,440
2007	59,280	-	5,335	-	-	13,600	17.39%	78,215
Rowan Johnston(Resident Manager -resigned on 14 September 2007)
2008		-	5,169	50,000	-	-	-	113,163
	57,994
2007	200,000	22,596	18,000	-	-	-	-	240,596
Total	key management	personnel compensation
2008	424,392	-	29,460	160,000	188,594	-	-	802,446
2007	659,636	43,259	53,395	-	-	42,407	5.31%	798,697

These payments are to Lion Manager, the management Company responsible for the operation of Lion Selection Group, for the services of Mr Chris Melloy as a Non-Executive Director. Refer note 22. ^ These payments are to GDA Corporate, a Company in which Graham Anderson is a Director and Leonard Math is an employee. The fees include accounting services provided to Catalpa Resources Limited. Refer note 22.

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C Service agreements (audited)

The details of service agreements of the key management personnel of Catalpa Resources Limited and the Group are as follows:

Bruce McFadzean, Managing Director

• Term of agreement – 6 months notice of termination is required

• Base salary, exclusive of statutory superannuation, of $370,000 to be reviewed annually by the Board.

The Company will fully maintain Mr McFadzean’s motor vehicle. Fringe Benefits Tax associated with this vehicle will be at the Company’s expense.

• Payment of termination benefit on early termination by the employer, other than for gross misconduct, includes any accrued long service leave and annual entitlements, superannuation, retiring allowance, superannuation gratuity to the value of which does not exceed the maximum amount ascertained in accordance with the formula set out in section 200G of the Corporations Act 2001.

D Share-based compensation (audited)

There were no options issued to Directors, executives or key management personnel during the year and no shares issued on exercise of options by Directors, executives and key management personnel.

3,850,000 of options issued to Directors, executives and key management personnel in prior year lapsed during the year due to cease employment with the Group. No options issued in prior years were exercised.

E Additional information – unaudited

Performance income as a proportion of total compensation

No performance based bonuses have been paid to key management personnel during the financial year.

Share based compensation – options

There were no options issued to Directors, executives or key management personnel during the year as a share based compensation.

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DIRECTORS’ MEETINGS

During the year the Company held ten meetings of Directors. The attendance of Directors at meetings of the Board were:

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Directors’ Meetings Audit Committee
A B A B
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John Rowe	10	10	-	-
Bruce McFadzean* (Appointed – 9 June 2008)	1	1	-	-
Murray Pollock	10	10	-	-
Chris Melloy	9	10	-	-
Barry Sullivan (Appointed – 16 June 2008)	1	1	-	-
Mark Fitzpatrick (Resigned – 27 February 2008)	7	7	-	-
David Hatch* (Resigned – 28 September 2007)	3	3	-	-

Notes

A Number of meetings attended.

B Number of meetings held during the time the Director held office during the year.

- Not a member of the Audit Committee.

SHARES UNDER OPTION

At the date of this report there are 38,675,250 unissued ordinary shares in respect of which options are outstanding.

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Number of options
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	Number of options
Balance at the beginning of the year Movements of share options during the year Lapsed (11 cents, 2 October 2007, unlisted) Lapsed (11 cents, 2 October 2007, unlisted) Lapsed (11 cents, 2 October 2007, unlisted) Lapsed (20 cents, 2 October 2007, unlisted) Lapsed (20 cents, 2 October 2007, unlisted) Exercised at 10 cents (28 November 2007, listed) Issued, exercisable at 8 cents, on or before 29 April 2011 (unlisted) Total number of options outstanding at the date of this report	42,475,256 (200,000) (200,000) (500,000) (2,000,000) (1,000,000) (6) 100,000
	38,675,250

Number of options

Balance at the beginning of the year
Movements of share options during the year
Lapsed (11 cents, 2 October 2007, unlisted)
Lapsed (11 cents, 2 October 2007, unlisted)
Lapsed (11 cents, 2 October 2007, unlisted)
Lapsed (20 cents, 2 October 2007, unlisted)
Lapsed (20 cents, 2 October 2007, unlisted)
Exercised at 10 cents (28 November 2007, listed)
Issued, exercisable at 8 cents, on or before 29 April 2011 (unlisted)
Total number of options outstanding at the date of this report

42,475,256
(200,000)
(200,000)
(500,000)
(2,000,000)
(1,000,000)
(6)
100,000

38,675,250

The balance is comprised of the following:

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Expiry date Exercise price (cents) Number of options
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Expiry date Exercise price (cents)	Number of options
30 June 2010 10 22 Nov 2010 11 29 April 2011 8 Total number of options outstanding at the date of this report	38,375,250 200,000 100,000
	38,675,250

No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any share issue of any other body corporate.

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INSURANCE OF DIRECTORS AND OFFICERS

During or since the financial year, the Company has paid premiums insuring all the Directors of Catalpa Resources Limited against costs incurred in defending proceedings for conduct involving:

(a) a wilful breach of duty; or
(b) a contravention of sections 182 or 183 of the Corporations Act 2001,

as permitted by section 199B of the Corporations Act 2001.

The total amount of insurance contract premiums paid is confidential under the terms of the insurance policy.

The Company has entered into a Deed of Indemnity, Insurance and Access with each Director. In summary the Deed provides for:

Access to corporate records for each Director for a period after ceasing to hold office in the Company,
The provision of Directors and Officers Liability Insurance, and
Indemnity for legal costs incurred by Directors in carrying out the business affairs of the Company.

NON AUDIT SERVICES

The following non audit services were provided by the Group’s auditor, Ord Partners or associated entities. The Directors are satisfied that the provision of non audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act. The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

− All non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor;

− None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, including reviewing or auditing the auditor’s own work, acting in a management or a decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risk and rewards.

Ord Partners received or are due to receive the following amounts for the provision of non audit services:

	2008 $	2007 $
Department of Industry & Resources tenement audits	-	2,500

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AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 26.

ROUNDING OF AMOUNTS

The amounts contained in this report and in the financial statements have been rounded to the nearest $1 (where rounding is applicable) under the option available to the Company under ASIC Class Order 98/100. The Company is an entity to which the Class Order applies.

Signed in accordance with a resolution of the Directors.

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Bruce McFadzean Managing Director Perth, 30 September 2008

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Corporate GoverNaNCe StatemeNt

This statement outlines the main corporate governance practices in place for the financial year ended 30 June 2008 which comply with the ASX Corporate Governance Council principles of Good Corporate Governance and Best Practice Recommendations, unless otherwise stated.

The Board of Directors

The Company’s constitution provides that the number of Directors shall not be less than three and not more than nine. There is no requirement for any share holding qualification.

As and if the Company’s activities increase in size, nature and scope the size of the Board will be reviewed periodically and the optimum number of Directors required to supervise adequately the Company’s constitution determined within the limitations imposed by the constitution and as circumstances demand.

The membership of the Board, its activities and composition, is subject to periodic review. The criteria for determining the identification and appointment of a suitable candidate for the Board shall include quality of the individual, background of experience and achievement, compatibility with other Board members, credibility within the Company’s scope of activities, intellectual ability to contribute and the physical ability to undertake a Director’s duties and responsibilities.

Directors are initially appointed by the full Board subject to election by shareholders at the next General Meeting. Under the Company’s constitution the tenure of a Director (other than managing Director, and only one managing Director where the position is jointly held) is subject to reappointment by shareholders not later than the third anniversary following his or her last appointment. Subject to the requirements of the Corporations Act 2001, the Board does not subscribe to the principle of retirement age and there is no maximum period of service as a Director. A managing Director may be appointed for any period and on any terms the Directors think fit and, subject to the terms of any agreement entered into, the Directors may revoke any appointment.

The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the formation of separate or special committees at this time. The Board as a whole is able to address the governance aspects of the full scope of the Company’s activities and to ensure that it adheres to appropriate ethical standards.

Role of the Board

The Board’s primary role is the protection and enhancement of long-term shareholder value.

To fulfil this role, the Board is responsible for oversight of management and the overall corporate governance of the Company including its strategic direction, establishing goals for management and monitoring the achievement of these goals.

Appointments to Other Boards

Directors are required to take into consideration any potential conflicts of interest when accepting appointments to other Boards.

Independent Professional Advice

The Board has determined that individual Directors have the right in connection with their duties and responsibilities as Directors, to seek independent professional advice at the Company’s expense. With the exception of expenses for legal advice in relation to Director’s rights and duties, the engagement of an outside adviser is subject to prior approval of the Chairman and this will not be withheld unreasonably.

Corporate GoverNaNCe StatemeNt CoNtiNUeD

Continuous Review of Corporate Governance

Directors consider, on an ongoing basis, how management information is presented to them and whether such information is sufficient to enable them to discharge their duties as Directors of the Company. Such information must be sufficient to enable the Directors to determine appropriate operating and financial strategies from time to time in light of changing circumstances and economic conditions. The Directors recognise that mineral exploration is an inherently risky business and that operational strategies adopted should, notwithstanding, be directed towards improving or maintaining the net worth of the Company.

ASX Principles of Good Corporate Governance

The Board has reviewed its current practices in light of the ASX Principles of Good Corporate Governance and Best Practice Guidelines with a view to making amendments where applicable after considering the Company’s size and the resources it has available.

As the Company’s activities develop in size, nature and scope, the size of the Board and the implementation of any additional formal corporate governance committees will be given further consideration.

The following table sets out the recommendations and the Company’s response during the financial period and the reasons for non-compliance.

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ASX Principle Reference/comment
Principle 1: Lay solid foundations for management and oversight
1.1 Formalise and disclose the The Company has not adopted this recommendation
functions reserved to the to formalise and disclose the functions reserved to
Board and those delegated to the Board and those delegated to management. The
management Company has a small Board, comprising six Directors,
five of whom are non executive (including the chairman).
The full Board currently meets every month. In addition,
strategy meetings and any extraordinary meetings are
held at such other times as may be necessary to address
any specific significant matters that may arise.
The Board believes the alignment of the interests of
Directors with those of shareholders as being the most
efficient way to ensure shareholders interests are
protected.
Principle 2: Structure the Board to add value
2.1 A majority of Board members Given the Company’s background, the nature and
should be independent Directors size of its business and the current stage of its
development, the Board comprises six Directors, five
of whom are non-executive (including the independent
chairman). Of the Non-Executive Directors, three of
them are independent. The Board believes that this is
both appropriate and acceptable at this stage of the
Company’s development.
The Company considers the expense of sourcing
additional Directors at this stage of its development
is unwarranted. The roles and functions within the
Company must remain flexible in order for it to best
function within its level of available resources.
The Board believes the alignment of the interests of
Directors with those of shareholders as being the most
efficient way to ensure shareholders interests are
protected.
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Corporate GoverNaNCe StatemeNt CoNtiNUeD

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2.2 The chairperson should be an The chairperson is a non executive independent
independent Director chairman.
2.2 The roles of chairperson and chief The chairperson is a non executive independent
executive officer should not be chairman.
exercised by the same individual
2.3 The roles of chairperson and chief The positions of chairman and managing Director are
executive officer should not be held by separate persons.
exercised by the same individual
2.4 The Board should establish a The Board has no formal nomination committee. Acting
nomination committee in its ordinary capacity from time to time as required, the
Board carries out the process of determining the need
for, screening and appointing new Directors. In view of
the size and resources available to the Company, it is not
considered that a separate nomination committee would
add any substance to this process.
2.5 Provide the information indicated The skills and experience of Directors are set out in the
in guide to reporting on principle Company’s annual report and on its website.
2
Principle 3: Promote ethical and responsible decision making
3.1 Establish a code of conduct to The Company has formulated a code of conduct which
guide the Directors, the chief can be viewed on the Company’s website.
executive officer (or equivalent),
the chief financial officer (or
equivalent) and any other key
executives as to:
3.1.1 The practices necessary
to maintain confidence in the
Company’s integrity
3.1.2 The responsibility and
accountability of individuals for
reporting or investigating reports
of unethical practices
3.2 Disclose the policy concerning The Company has formulated a securities trading policy
trading in Company securities by which can be viewed on its website.
Directors, officers and employees
3.3 Provide the information indicated Not applicable – see above.
in guide to reporting on principle 3
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Corporate GoverNaNCe StatemeNt CoNtiNUeD

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Principle 4: Safeguard integrity in financial reporting
4.1 Require the chief executive officer The Managing Director and Chief Financial Officer are
(or equivalent) and the chief required to sign a declaration addressing the integrity
financial officer (or equivalent) of the financial statements and maintenance of financial
to state in writing to the Board records in accordance with s286 of the corporation act.
that the Company’s financial
reports present a true and fair
view, in all material respects, of
the Company’s financial condition
and operational results and are
in accordance with relevant
accounting standards
4.2 The Board should establish an The Company has established an audit committee which
audit committee comprises five non executive Directors. The charter for
this committee is disclosed on the Company’s website.
4.3 Structure the audit committee so See above
that it consists of:
- Only non executive Directors
- A majority of independent
Directors
- An independent chairperson
who is not the chairperson of the
Board
- At least three members
4.4 The audit committee should have See above
a formal charter
4.5 Provide the information indicated Not applicable – see above.
in guide to reporting on Principle 4
Principle 5: Make timely and balanced disclosure
5.1 Establish written policies and The Company has instigated internal procedures
procedures designed to ensure designed to provide reasonable assurance as to the
compliance with ASX listing rule effectiveness and efficiency of operations, the reliability
disclosure requirements and of financial reporting and compliance with relevant
to ensure accountability at a laws and regulations. The Board is acutely aware of the
senior management level for that continuous disclosure regime and there are systems in
compliance place to ensure compliance, underpinned by experience.
5.2 Provide the information indicated See above
in guide to reporting on principle
5
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Corporate GoverNaNCe StatemeNt CoNtiNUeD

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Principle 6: Respect the rights of shareholders
6.1 Design and disclose a In line with adherence to continuous disclosure
communications strategy to requirements of ASX all shareholders are kept informed
promote effective communication of major developments affecting the Company.
with shareholders and encourage This disclosure is through regular shareholder
effective participation at general communications including the Annual Report, Quarterly
meetings Reports, the Company website and the distribution of
specific releases covering major transactions or events.
6.2 Request the external auditor to It is the Group policy that the Auditor attends the AGM
attend the annual general meeting and part of the Agenda is the tabling of the accounts and
and be available to answer inviting shareholders to ask the Directors of the Auditor
shareholder questions about the any questions about the report including the Audit
audit and the preparation and Report.
content of the auditor’s report
Principle 7: Recognise and manage risk
7.1 The Board or appropriate Board While the Company does not have formalised policies on
committee should establish risk management the Board recognises its responsibility
policies on risk oversight and for identifying areas of significant business risk and for
management ensuring that arrangements are in place for adequately
managing these risks. This issue is regularly reviewed
at Board meetings and risk management culture is
encouraged amongst employees and contractors.
7.2 The chief executive officer (or The Managing Director and Chief Financial Officer are
equivalent) and the chief financial required to sign a declaration addressing the integrity
officer (or equivalent) should state of the financial statements and maintenance of financial
to the Board in writing that: records in accordance with s286 of the Corporations Act.
7.2.1 the statement given in
accordance with best practice
recommendation 4.1 (the
integrity of financial statements)
is founded on a sound system
of risk management and internal
compliance and control which
implements the polices adopted
by the Board
7.2.2 the Company’s risk
management and internal
compliance and control system
is operating efficiently and
effectively in all material respects
7.3 Provide information indicated in Not applicable – See above.
guide to reporting on principle 7
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Corporate GoverNaNCe StatemeNt CoNtiNUeD

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Principle 8: Encourage enhanced Performance
8.1 Disclose the process for The Company does not consider it appropriate to have
performance evaluation of a sub committee of the Board to consider remuneration
the Board, its committees and matters.
individual Directors, and key The remuneration of executive and non executive
executives Directors is reviewed by the Board with the exclusion
of the Director concerned. The remuneration of
management and employees is reviewed by the Board
and approved by the Chairman.
Acting in its ordinary capacity, the Board from
time to time carries out the process of considering
and determining performance issues including the
identification of matters that may have a material effect
on the price of the Company’s securities. Whenever
relevant, any such matters are reported to ASX.
Principle 9: Remunerate fairly and responsibly
9.1 Provide disclosure in relation The Company discloses remuneration related information
to the Company’s remuneration in its annual report to shareholders in accordance with
policies and benefits to these the Corporations Act 2001.
policies and (ii) the link between Remuneration levels are determined by the Board on
remuneration paid to Directors an individual basis, the size of the Company making
and key executives and corporate individual assessment more appropriate than formal
performance. remuneration policies. In doing so, the Board seeks to
retain professional services as it requires, at reasonable
market rates, and seeks external advice and market
comparisons where necessary.
9.2 The Board should establish a The Company does not consider it appropriate to have
remuneration committee a sub-committee of the Board to consider remuneration
matters as this function is carried out by the full Board.
9.3 Clearly distinguish the structure See above.
of non executive Directors
remuneration from that of
executives
9.4 Ensure that payment of equity See above.
based executive remuneration All equity issues to Directors will need to be approved by
is made in accordance with shareholders.
thresholds set in plans approved
by shareholders
9.5 Provide information indicated Not applicable – see above.
in ASX guide to reporting on
principle 9
Principle 10: Recognise legitimate interests of stakeholders
10.1 Establish and disclose a code of The Company’s code of conduct is set out in the
conduct to guide compliance with Company’s website.
legal and other obligations to The Board continues to review existing procedures over
legitimate stakeholders time to ensure adequate processes are in place.
All Directors, employees and contractors are expected
to act with the utmost integrity and objectivity in their
dealings with other parties, striving at all times to
enhance the reputation and performance of the Company.
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iNCome StatemeNtS

Year Ended 30 June 2008

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Notes Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
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594,905 387,038 (142,533) (122,030) (439,655) (321,650) (203,183) (231,071) (621,649) (899,649) (34,919) (72,668) (1,360,403) (1,625,016) - (6,888,164) (84,301) - - (65,529)	594,905 (142,533) (439,655) (203,183) (621,649) (34,919) (1,360,403) - (84,301) -	387,038 (122,030) (321,650) (231,071) (899,649) (72,668) (1,625,016) (6,888,164) - (65,529)
(2,291,738) (9,838,739) - 108,542	(2,291,738) -	(9,838,739) 108,542
(2,291,738) (9,730,197)	(2,291,738)	(9,730,197)
0.67 3.5

The above Income Statements should be read in conjunction with the Notes to the Financial Statements.

balaNCe SheetS

At 30 June 2008

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Notes Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
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2,799,198 78,004 37,884	1,075,686 294,577 1,902,872	2,799,198 78,004 27,884	1,075,686 294,575 1,892,872
2,915,086	3,273,135	2,905,086	3,263,133
386,194 3,593,990 -	1,500 3,600,080 -	396,196 3,593,990 -	11,502 3,600,080 -
3,980,184	3,601,580	3,980,184	3,611,582
6,895,270	6,874,715	6,895,270	6,874,715
158,066 462,208	392,618 805,578	158,068 462,208	392,618 805,578
620,274	1,198,196	620,274	1,198,196
620,274	1,198,196	620,274	1,198,196
6,274,996	5,676,519	6,274,996	5,676,519
32,976,344 500,633 (27,201,981)	30,088,089 498,673 (24,910,243)	32,976,344 500,633 (27,201,981)	30,088,089 498,673 (24,910,243)
6,274,996	5,676,519	6,274,996	5,676,519

The above Income Statements should be read in conjunction with the Notes to the Financial Statements.

StatemeNtS of ChaNGeS iN eqUity

Consolidated and Parent Entity

Year Ended 30 June 2008

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Notes Share Capital Accumulated Reserves Total
Ordinary Losses
$ $ $ $
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22,591,978	(15,180,046)	456,266	7,868,198
- (108,542)	(9,730,197) -	- -	(9,730,197) (108,542)
(108,542)	(9,730,197)	-	(9,838,739)
7,604,653 -	- -	- 42,407	7,604,653 42,407
7,604,653	-	42,407	7,647,060
30,088,089	(24,910,243)	498,673	5,676,519
30,088,089	(24,910,243)	498,673	5,676,519
- -	(2,291,738) (2,291,738)	- -	(2,291,738) (2,291,738)
2,888,255 -	- -	- 1,960	2,888,255 1,960
2,888,255 32,976,344	- (27,201,981)	1,960 500,633	2,890,215 6,274,996

The above Statements of Changes in Equity should be read in conjunction with the Notes to the Financial Statements.

StatemeNtS of CaSh flowS

Year Ended 30 June 2008

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Notes Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
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CASH FLOWS FROM OPERATING ACTIVITIES Research and development grant received Receipts from other debtors Payments to suppliers and employees Interest received NET CASH OUTFLOW FROM OPERATING ACTIVITIES 25(a) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Payments for exploration activities Payment for project development Proceeds from release of tenement bonds Payment to purchase mining equipment NET CASH OUTFLOW FROM INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issues of ordinary shares Payment of share issue costs NET CASH INFLOW FROM FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at the beginning of the fnancial year CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 7	320,885 - 320,885 - 35,904 - 35,904 - (1,358,236) (1,536,833) (1,358,236) (1,536,833) 264,790 472,798 264,790 472,798
	(736,657) (1,064,035) (736,657) (1,064,035)
	(137,743) (461,202) (137,743) (461,202) (1,765,343) (1,612,080) (1,765,343) (1,612,080) - (6,634,664) - (6,634,664) 1,500,000 - 1,500,000 - (25,000) - (25,000) -
	(428,086) (8,707,946) (428,086) (8,707,946)
	3,070,021 6,150,818 3,070,021 6,150,818 (181,766) (317,565) (181,766) (317,565) (2,888,255) (5,833,253) (2,888,255) (5,833,253)
	1,723,512 (3,938,728) 1,723,512 (3,938,728) 1,075,686 1,075,686 1,075,686 1,075,686
	2,799,198 1,075,686 2,799,198 1,075,686

The above Statements of Cash Flows should be read in conjunction with the Notes to the Financial Statements.

NoteS to the fiNaNCial StatemeNtS

30 June 2008

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report includes separate financial statements for Catalpa Resources Limited as an individual entity and the consolidated entity consisting of Catalpa Resources Limited and its subsidiaries.

(a) Basis of preparation

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

Going concern basis of accounting used in financial report

This report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. The consolidated entity has incurred a net loss after tax for the year ended 30 June 2008 of $2,291,738 (2007: $9,730,197) and experienced net cash outflows from operating activities of $736,657 (2007: $1,064,035). As at 30 June 2008, the consolidated entity had net current assets of $2,294,812 (30 June 2007: $2,074,939). As at 30 June 2008, the consolidated entity had a net asset position of $6,274,996 (2007: $5,676,519).

The Directors believe that there are sufficient funds to meet the Company and consolidated entity’s working capital requirements. Furthermore, the Directors have appropriate strategies and plans to raise additional funds, as and when required (either through raising additional capital or the sale of surplus assets), and/or to contain certain operating and exploration expenditures should appropriate funding be unavailable.

During the year, the Company successfully raised additional capital of $3,070,020 (prior to transaction costs) through a placement of 38,375,256 ordinary shares at $0.08 on 16 July 2007. Should the Company and the consolidated entity be unable to continue as going concerns, they may be required to realise their assets and extinguish their liabilities other than in the normal course of business and at amounts different from those 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 and the consolidated entity be unable to continue as going concerns

Compliance with IFRS

Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the consolidated financial statements and notes and the parent entity financial statements and notes of Catalpa Resources Limited comply with International Financial Reporting Standards (IFRS).

Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss and certain classes of property, plant and equipment.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(b) Principles of consolidation

Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Catalpa Resources Limited (“Company” or “parent entity”) as at 30 June 2008 and the results of all subsidiaries for the year then ended. Catalpa Resources Limited and its subsidiaries together are referred to in this financial report as the Group or consolidated entity.
Subsidiaries are all of those entities (including special purpose entities) over which the Group 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 Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.
The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group. Disposals to minority interests result in gains and losses for the Group that are recorded in the income statement. Purchases from minority interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of identifiable net assets of the subsidiary.
InterCompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Minority interests in the results and equity of subsidiaries are shown separately in the consolidated income statement and balance sheet respectively.
Investments in subsidiaries are accounted for at cost in the individual financial statements of Catalpa Resources Limited.

(c) Segment reporting

A business segment is identified for a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. A geographical segment is identified when products or services are provided within a particular economic environment subject to risks and returns that are different from those of segments operating in other economic environments.

(d) Revenue recognition

Interest revenue is recognised when receivable.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(e) Income tax

The income tax expense or revenue for the period is the tax payable on the current period’s taxable
income based on the national income tax rate for each jurisdiction adjusted by changes in deferred
tax assets and liabilities attributable to temporary differences and to unused tax losses.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the
carrying amount and tax bases of investments in controlled entities where the parent entity is able
to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation
authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

(f) Leases

Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease term.
Leases where a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases (note 21). Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straightline basis over the period of the lease.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(g) Business combinations
The purchase method of accounting is used to account for all business combinations, including business combinations involving entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the
date of exchange plus costs directly attributable to the acquisition. Where equity instruments
are issued in an acquisition, the fair value of the instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the Group’s share of the fair value of the identifiable net assets of
the subsidiary acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the
entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

(h) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

(i) Cash and cash equivalents

For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value, and bank overdrafts.

(j) Trade and other receivables

Receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written-off as incurred.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(k) Investments and other financial assets

Classification

The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date.

(i) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless they are designated as hedges. Assets in this category are classified as current assets.

(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. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables are included in trade and other receivables in the balance sheet.

(iii) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available-for-sale. Held-to-maturity financial assets are included in non-current assets, except for those with maturities less than 12 months from the reporting date, which are classified as current assets.

(iv) Available-for-sale financial assets

Available-for-sale financial assets, comprising principally marketable equity securities, are nonderivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

Recognition and derecognition

Regular purchases and sales of financial assets are recognised on trade-date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss is initially recognised at fair value and transaction costs are expensed to the income statement. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in the income statement as gains and losses from investment securities.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Subsequent measurement

Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method.
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the income statement within other income or other expenses in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the income statement as part of revenue from continuing operations when the Group’s right to receive payments is established.
Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in equity. Changes in the fair value of other monetary and non-monetary securities classified as available-for-sale are recognised in equity.

Fair value

The fair values of quoted investments are based on last trade prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models making maximum use of market inputs and relying as little as possible on entity-specific inputs.

Impairment

The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments classified as available-for-sale are not reversed through the income statement.

(l) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives,
and trading and available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the last trade price.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(m) Property, plant and equipment
Land is carried at historical cost. All plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
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 economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount
of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the reporting period in which they are incurred.
Land is not depreciated. Depreciation of plant and equipment is calculated using the straight line method to allocate their cost, net of their residual values, over their estimated useful lives. The rates vary between 10% and 33% per annum.
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 (note 1(h)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement. When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of those assets to retained earnings.

(n) Exploration, evaluation and development expenditure

The Group has changed its previous policy of capitalising exploration expenditure (with subsequent impairment reviews). The Group has adopted the policy of expensing all exploration and evaluation expenditure in relation to its mineral tenements as incurred. The Directors are of the opinion that expensing such expenditure provides more relevant and reliable information as the likelihood of overstatement of assets is minimised. The Group comparatives have been restated to reflect this policy. As all prior year capitalised expenditure had been fully impaired, there is no effect on brought forward accumulated losses or loss per share calculations. Furthermore, there is no change to Balance Sheet amounts. Where the Directors decide to progress the development in an area of interest all further expenditure incurred relating to the area will be capitalised. Projects are advanced to development status and classified as mining properties when it is expected that further expenditure can be recouped through sale or successful development and exploitation of the area of interest. Such expenditure is carried forward up to commencement of production at which time it is amortised over the life of the economically recoverable reserves. All projects are subject to detailed review on an annual basis and accumulated costs written off to the extent that they will not be recoverable in the future.

(o) Site restoration

In accordance with the consolidated entity’s published environmental policy and applicable legal
requirements, a provision for site restoration in respect of contaminated land is recognised when the land is contaminated.
The provision is the best estimate of the present value of the expenditure required to settle the
restoration obligation at the reporting date, based on current legal requirements and technology.
Future restoration costs are reviewed annually and any changes are reflected in the present value of the restoration provision at the end of the reporting period.
The amount of the provision for future restoration costs is capitalised and is depreciated in accordance with the policy set out in note 1(m). The unwinding of the effect of discounting on the provision is recognised as a finance cost.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(p) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. The amounts are unsecured and are paid on normal commercial terms.

(q) Employee benefits

(i) Wages and salaries, annual leave and other employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries, annual leave, and long service leave.
Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled. All other employee benefit liabilities are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date. In determining the present value of future cash outflows, the market yield as at the reporting date on national government bonds, which have terms to maturity approximating the terms of the related liability, are used.

(ii) Share-based payments

The consolidated entity has an ‘Employee and Contractor Option Plan’ (“ECOP”) for employees, contractors and executives (including executive Directors) of the Company.
The plan permits the Company, at the discretion of the Directors, to grant options over unissued ordinary shares of the Company to eligible Directors, members of staff and contractors as specified in the plan rules.
The options, issued for nil consideration, are granted in accordance with performance guidelines established by the Directors of the Company.
The options are issued for a specified period and each option is convertible into one ordinary share. The exercise price of the options, determined in accordance with the rules of the plan, is based on the market price of a share on invitation date, grant date, or another specified date after grant close.
All options expire on the earlier of their expiry date or termination of the employee’s employment. Options do not vest until a specified period after granting and their exercise is conditional on the consolidated entity achieving certain performance hurdles.
There are no voting or dividend rights attached to the options. Voting rights will attach to the ordinary shares when the options have been exercised. The options cannot be transferred and will not be quoted on the ASX.

(r) Issued capital

Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(s) Earnings per share

(i) Basic earnings per share

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

(ii) 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.

(t) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flow.

(u) Share based payments

Equity-settled share-based payments are measured at fair value at the date of grant. Fair value is measured by use of the Black & Scholes option pricing model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of nontransferability, exercise restrictions, and behavioural considerations.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the consolidated entity’s estimate of shares that will eventually vest.
For cash-settled share based payments, a liability equal to the portion of the goods or services received is recognised at the current fair value determined at each reporting date.

(v) Rounding of amounts

The Company is a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the “rounding off” of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class Order to the nearest $1.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(w) New accounting standards and interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2008 reporting periods. The Group’s and the parent entity’s assessment of the impact of these new standards and interpretations is set out below.

(i) AASB 8 Operating Segments and AASB 2007 3 Amendments to Australian Accounting Standards arising from AASB 8

AASB 8 and AASB 2007 3 are effective for annual reporting periods commencing on or after 1 January 2009. AASB 8 will result in a significant change in the approach to segment reporting, as it requires adoption of a ‘management approach’ to reporting on the financial performance. The information being reported will be based on what the key decision makers use internally for evaluating segment performance and deciding how to allocate resources to operating segments. The Group has not yet decided when to adopt AASB 8. Application of AASB 8 may result in different segments, segment results and different type of information being reported in the segment note of the financial report. However, at this stage, it is not expected to affect any of the amounts recognised in the financial statements.

(ii) Revised AASB 123 Borrowing Costs and AASB 2007 6 Amendments to Australian Accounting Standards arising from AASB 123 [AASB 1, AASB 101, AASB 107, AASB 111, AASB 116 & AASB 138 and Interpretations 1 & 12]

The revised AASB 123 is applicable to annual reporting periods commencing on or after 1 January 2009. It has removed the option to expense all borrowing costs and when adopted will require the capitalisation of all borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset. There will be no impact on the financial report of the Group, as the Group does already capitalise borrowing costs relating to qualifying assets.

(iii) AASB I 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

AASB I 14 will be effective for annual reporting periods commencing 1 January 2008. It provides guidance on the maximum amount that may be recognised as an asset in relation to a defined benefit plan and the impact of minimum funding requirements on such an asset. None of the Group’s defined benefit plans are subject to minimum funding requirements and none of them is in a surplus position. The Group will apply AASB I 14 from , but it is not expected to have any impact on the Group’s financial statements.

(iv) Revised AASB 101 Presentation of Financial Statements and AASB 2007 8 Amendments to Australian Accounting Standards arising from AASB 101

A revised AASB 101 was issued in September 2007 is applicable for annual reporting periods beginning on or after 1 January 2009. It requires the presentation of a statement of comprehensive income and makes changes to the statement of changes in equity, but will not affect any of the amounts recognised in the financial statements. If an entity has made a prior period adjustment or has reclassified items in the financial statements, it will need to disclose a third balance sheet (statement of financial position), this one being as at the beginning of the comparative period. The Group intends to apply the revised standard from 1 January 2009.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(x) Critical accounting judgements, estimates and assumptions

The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are:

Share based payment transactions

The Group measures the cost of equity-settled transactions with employees 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 internal valuation using a Black-Scholes option pricing model, using the assumptions detailed in note 27.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

2. FINANCIAL RISK MANAGEMENT

(a) Financial risk management objectives

The consolidated entity’s financial control function provides services to the business, co-ordinates access to domestic and international financial markets, and manages the financial risks relating to the operations of the consolidated entity.

(b) Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 1 to the financial statements.

The Group and the parent entity hold the following financial instruments

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Consolidated Parent
2008 2007 2008 2007
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Financial assets Cash and cash equivalents Other receivables Other assets Other fnancial assets Financial liabilities Trade and other payables	2,799,198 1,075,686 2,799,198 1,075,686 78,004 294,577 78,004 294,575 37,884 1,902,872 27,884 1,892,872 386,194 1,500 396,196 11,502
	3,301,280 3,274,635 3,301,282 3,274,635
	158,066 392,618 158,068 392,618
	158,066 392,618 158,068 392,618

(c) Market risk

(i) Foreign exchange risk

The Group and the parent entity operate in Australia only and are not exposed to foreign exchange risk. (ii) Price risk

The Group and the parent entity are not exposed to equity securities price risk. There are no investments held by the Group that are classified on the balance sheet either as available-for-sale or at fair value through profit and loss. Neither the Group not the parent entity are exposed to commodity price risk.

(iii) Cash flow and fair value interest rate risk

The Group and the parent entity do not have any borrowings and therefore do not have any exposure to cash flow and fair value interest rate risk in terms of borrowings. The Group and the parent entity’s only exposure to cash flow and fair value interest rate risk are on the interest rates on the term deposits.

Sensitivity analysis

If the interest rates had weakened/strengthen by 1% at 30 June 2008, there would be no material impact on the income statement. There would be no effect on the equity reserves other that those directly related to income statement movements.

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30 June 2008

THE FOLLOWING TABLE DETAILS THE GROUP’S EXPOSURE TO INTEREST RATE RISK AT 30 JUNE 2008:

2008		Fixed interest rate maturing in:	Fixed interest rate maturing in:	Fixed interest rate maturing in:	Fixed interest rate maturing in:
	Floating interest rate	1 year or less	1 to 5 years	More than 5 years	Non interest bearing	Total carrying amount as per the balance sheet	Weighted average effective interest rate
Financial instrument	$	$	$	$	$	$	%
Financial assets Cash & cash equivalents Other receivables Term and bond deposits Total fnancial assets Financial liabilities Trade creditors Other creditors & accruals Total fnancial liabilities	2,799,198 -	- -	- -	- -	- 78,004	2,799,198 7.12 78,004 - 424,078 6.16 3,301,280 105,363 - 52,703 - 158,066
	-	421,194	-	-	2,884	424,078
	2,799,198	421,194	-	-	80,888
	- -	- -	- -	- -	105,363 52,703
	-	-	-	-	158,066

THE FOLLOWING TABLE DETAILS THE GROUP’S EXPOSURE TO INTEREST RATE RISK AT 30 JUNE 2007:

2007		Fixed interest rate maturing in:	Fixed interest rate maturing in:	Fixed interest rate maturing in:	Fixed interest rate maturing in:
	Floating interest rate	1 year or less	1 to 5 years	More than 5 years	Non interest bearing	Total carrying amount as per the balance sheet	Weighted average effective interest rate
Financial instrument	$	$	$	$	$	$	%
Financial assets Cash & cash equivalents Other receivables Term and bond deposits Total fnancial assets Financial liabilities Trade creditors Other creditors & accruals Total fnancial liabilities	1,075,686 - -	- - - - 1,895,356 -		- - -	- 294,577 -	1,075,686 5.7 294,577 - 1,895,356 5.7 3,265,619 (298,751) - (93,867) - (392,618)
	1,075,686	1,895,356 -		-	294,577
	- -	- - - -		- -	(298,751) (93,867)
	-	- -		-	(392,618)

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

2. FINANCIAL RISK MANAGEMENT (CONT’D)

(d) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in a financial loss to the Company or the Group. The Group’s potential concentration of credit risk consists mainly of cash deposits with banks. The Group’s short term cash surpluses are placed with banks that have investment grade ratings. The maximum credit risk exposure relating to the financial assets is represented by the carrying value as at the balance sheet date. The Company and the Group considers the credit standing of counterparties when making deposits to manage the credit risk. Considering the nature of the business at current, the Group believes that the credit risk is not material to the Company’s operations.

(e) Liquidity risk management

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

Maturities of financial liabilities

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

	Consolidated	Parent Entity
	2008 2007	2008 2007
	$ $	$ $
*Trade and other payables* Within one month One to three months Greater three months Total	158,066 392,168 158,068 392,168 - - - - - - - -
	158,066 392,168 158,068 392,168

(f) Capital risk management
The Group and the parent entity’s objectives when managing capital are to safeguard the Group and the parent entity’s ability to continue as a going concern in order to provide future returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The management of the Group and the parent entity’s capital is performed by the Board.
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital, which the consolidated entity defines as net operating income divided by total shareholders’ equity.
There were no changes in the consolidated entity’s approach to capital management during the year.
The Group and the parent entity operate primarily in Australia. None of the Group’s entity is subject to externally imposed capital requirements.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

FINANCIAL RISK MANAGEMENT (CONT’D)
(g) Fair value
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which revenues and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 1 to the financial statements.
The carrying amount of financial assets and financial liabilities recorded in the financial statements represents their respective net fair values, determined in accordance with the accounting policies disclosed in note 1 to the financial statements.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

3. SEGMENT INFORMATION

Description of segments

The Group’s operations are in the mining industry in Australia.

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Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
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4. REVENUE From continuing operations Other revenue Interest Income Research & development grant rebate received Other income 5. EXPENSES Loss before income tax includes the following specifc expenses: Depreciation Motor vehicles Offce furniture and equipment Computer equipment Mining machinery and equipment Total depreciation Rental of premises under operating lease Consulting fees Employee benefts Salary and Wages Share based payments Superannuation	263,321 386,788 263,321 386,788 320,885 - 320,885 - 10,699 250 10,699 250
	594,905 387,038 594,905 387,038
	10,360 10,442 10,360 10,442 18,692 14,262 18,692 14,262 3,942 3,612 3,942 3,612 109,539 93,714 109,539 93,714
	142,533 122,030 142,533 122,030
	203,183 231,071 203,183 231,071 151,970 252,562 151,970 252,562 198,590 241,831 198,590 241,831 1,960 42,407 1,960 42,407 47,582 79,082 47,582 79,082

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

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Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
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	$	$	$	$
6. INCOME TAX (a) Income tax expense/(beneft) Deferred tax beneft on origination and reversal of temporary differences Total income tax beneft per income statement (b) Numerical reconciliation of income tax beneft to prima facie tax payable Loss from continuing operations before income tax beneft Prima facie tax beneft at the Australian tax rate of 30% (2007: 30%) Add tax effect of: Non-deductible expenses Effect of current year tax losses not recognised Effect of reversal of previously recognised prior year tax losses Effect of reversal of temporary differences Less tax effect of: (Over) provision for prior year Tax deductible equity raising costs Non assessable income Income tax (beneft) (c) Amounts recognised directly in equity Relating to equity raising costs Deferred tax expense/(beneft) attributable to entity recognised in equity	-	(108,542)	-	(108,542)
	-	(108,542)	-	(108,542)
	(2,291,738) (687,521) 27,552 348,209 - 375,216	(9,838,739) (2,951,622) 15,891 1,323,199 - 1,586,035	(2,291,738) (687,521) 27,552 348,209 - 375,216	(9,838,739) (2,951,622) 15,891 1,323,199 - 1,586,035
	63,456 - (63,456) -	2,925,125 (4,198) (77,847) -	63,456 - (63,456) -	2,925,125 (4,198) (77,847) -
	(63,456)	(82,045)	(63,456)	(82,045)
	-	(108,542)	-	(108,542)
	(267,102)	(108,542)	54,530	(108,542)
	(267,102)	(108,542)	54,530	(108,542)

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

6. INCOME TAX (CONT’D)

(d) Recognised deferred tax assets & liabilities Consolidated & Parent Entity

	Assets	Liabilities	Net
	2008 2007	2008 2007	2008 2007
	$ $	$ $	$ $
Accruals & provisions 5,655 3,699 - - 5,655 3,699 Other items - - (5,655) (3,699) (5,655) (3,699) 5,655 3,699 (5,655) (3,699) - -

(e) Movement in temporary differences recognised during the year

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Balance at Recognised in Recognised in Balance at
1 July 2007 income equity 30 June 2008
$ $ $ $
-
Accruals & provisions 3,699 1,956 5,655
Other items (3,699) (1,956) - (5,655)
- - - -
Net tax assets/(liabilities)
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	Balance at 1 July 2006	Recognised in income	Recognised in equity	Balance at 30 June 2007
	$	$	$	$
	3,632 (3,632) - - 1,087,492 (1,087,492) - - (1,223,499) 1,223,499 - - 108,542 - (108,542) - 19,355 (15,656) - 3,699 301 (301) - - 4,177 (7,867) - (3,699)

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

6. INCOME TAX (CONT’D)

(f) Unrecognised deferred tax assets

	Consolidated	Parent Entity
	2008 2007	2008 2007
	$ $	$ $
Deferred tax assets at 30% have not been recognised in respect of the following: Deductible temporary differences Tax losses Capital losses	300,055 2,036,636 300,055 2,036,636 5,488,692 5,216,267 5,488,692 5,216,267 53,831 32,812 53,831 32,812
	5,842,578 7,285,715 5,842,578 7,285,715

No income tax is payable by the consolidated entity. The Directors have considered it prudent not to bring to account the future income tax benefit of income tax losses and exploration deductions until there is virtual certainty of deriving assessable income of a nature and amount to enable such benefit to be realised.

This future income tax benefit will only be obtained if:

(a) future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised;

(b) the conditions for deductibility imposed by tax legislation continue to be complied with; and

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30 June 2008

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Notes Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
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7. CURRENT ASSETS - CASH AND CASH EQUIVALENTS Cash and cash equivalents as shown in the balance sheets and the statements of cash fows 2,799,198 1,075,686 8. CURRENT ASSETS - OTHER RECEIVABLES Government taxes receivable 56,468 265,421 Other receivables 21,536 29,156 78,004 294,577 9. CURRENT ASSETS – OTHER ASSETS Prepayments - 9,017 Term deposits 37,884 1,893,855 37,884 1,902,872 10. NON-CURRENT ASSETS - OTHER FINANCIAL ASSETS Shares in unlisted controlled entity – at cost 23 - - Loan to controlled entity - - Term deposits on tenements and performance bonds 386,194 1,500 386,194 1,500 11. NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT Freehold land Fair value 11(a) 390,000 391,301 Motor vehicles Cost 51,789 51,789 Accumulated depreciation (45,115) (34,755) 11(a) 6,674 17,034 Offce furniture and equipment Cost 110,675 106,714 Accumulated depreciation (89,726) (71,034) 11(a) 20,949 35,680	1,075,686	2,799,198	1,075,686
56,468 21,536	265,421 29,156	56,468 21,536	265,421 29,154
78,004	294,577	78,004	294,575
- 37,884	9,017 1,893,855	- 27,884	9,017 1,883,855
37,884	1,902,872	27,884	1,892,872
	- - 1,500	2 10,000 386,194	2 10,000 1,500
386,194	1,500	396,196	11,502
		390,000	391,301
51,789 51,789 (45,115) (34,755)		51,789 (45,155)	51,789 (34,755)
6,674 17,034		6,674	17,034
110,675 106,714 (89,726) (71,034)		110,675 (89,726)	106,714 (71,034)
20,949 35,680		20,949	35,680

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

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Notes Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
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11. NON-CURRENT ASSETS – PROPERTY, PLANT AND	11. NON-CURRENT ASSETS – PROPERTY, PLANT AND	EQUIPMENT	(CONT’D)
Computer equipment
Cost		19,237	16,354	19,237	16,354
Accumulated depreciation		(14,490)	(10,548)	(14,490)	(10,548)
	11(a)	4,747	5,806	4,747	5,806
Mining machinery and equipment
Cost		8,073,880	7,942,980	8,073,880	7,942,980
Accumulated depreciation		(302,260)	(192,721)	(302,260)	(192,721)
Provision for impairment		(4,600,000)	(4,600,000)	(4,600,000)	(4,600,000)
	11(a)	3,171,620	3,150,259	3,171,620	3,150,259
Total property, plant and equipment at cost		8,562,581	8,509,138	8,562,581	8,509,138
Accumulated depreciation		(451,591)	(309,058)	(451,591)	(309,058)
Provision for impairment		(4,600,000)	(4,600,000)	(4,600,000)	(4,600,000)
Net book amount		3,510,990	3,600,080	3,510,990	3,600,080
(a) Reconciliations Of The Carrying Amounts	Of Plant And Equipment
Freehold land	(i)
Opening net book amount		391,301	-	391,301	-
Additions		-	391,301	-	391,301
Increase in provision for rehabilitation
to the land		83,000	-	83,000	-
Impairment loss		(84,301)	-	(84,301)	-
Closing net book amount		390,000	391,301	390,000	391,301

(i) During the year the Company carried out a valuation of the land. Based on an independent appraisal, concluded that the fair value for the land was $390,000, causing an impairment expense of $84,301 for the year after an additional $83,000 required to be provided to rehabilitate the land.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

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Notes Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
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(a) Reconciliations Of The Carrying Amounts Of Plant And Equipment (Cont’d)	(a) Reconciliations Of The Carrying Amounts Of Plant And Equipment (Cont’d)	(a) Reconciliations Of The Carrying Amounts Of Plant And Equipment (Cont’d)	(a) Reconciliations Of The Carrying Amounts Of Plant And Equipment (Cont’d)	(a) Reconciliations Of The Carrying Amounts Of Plant And Equipment (Cont’d)
Motor vehicles
Opening net book amount		17,034		27,476		17,034		27,476
Depreciation charge		(10,360)		(10,442)		(10,360)		(10,442)
Closing net book amount		6,674		17,034		6,674		17,034
Offce furniture and equipment
Opening net book amount		35,680		36,352		35,680		36,352
Additions		3,961		13,590		3,961		13,590
Depreciation charge		(18,692)		(14,262)		(18,692)		(14,262)
Closing net book amount		20,949		35,680		20,949		35,680
Computer equipment
Opening net book amount		5,806		3,107		5,806		3,107
Additions		2,883		6,311		2,883		6,311
Depreciation charge		(3,942)		(3,612)		(3,942)		(3,612)
Closing net book amount		4,747		5,806		4,747		5,806
Mine machinery and equipment	(ii)
Opening net book amount		3,150,259	3,193,973		3,150,259		3,193,973
Additions		130,900		50,000		130,900		50,000
Depreciation charge		(109,539)		(93,714)		(109,539)		(93,714)
Closing net book amount		3,171,620	3,150,259		3,171,620		3,150,259

(ii) Mine machinery includes the Big Bell Mill which had a carrying value at the beginning of the year of $2,850,000. During the current year the Company carried out an impairment assessment of the Big Bell Mill. Based on an independent appraisal, the carrying value of the Big Bell Mill of $2,850,000 was appropriate.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

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Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
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12. NON-CURRENT ASSETS – MINING PROPERTIES	12. NON-CURRENT ASSETS – MINING PROPERTIES
Exploration and evaluation costs carried forward in
respect of mining areas of interest
Opening net book amount	-	3,915,850	-	3,315,850
Incurred during the year	-	-	-	-
Transferred to Development	-	-	-	-
Provision for impairment	-	(3,915,850)	-	(3,915,850)
Closing net book amount	-	-	-	-
Development costs carried forward in respect of
mining areas of interest
Opening net book amount	-	787,651	-	787,651
Incurred during the year	-	2,184,664	-	2,184,664
Transferred from Exploration	-	-	-	-
Provision for rehabilitation costs	-	-	-	-
Provision for impairment	-	(2,972,315)	-	(2,972,315)
Closing net book amount	-	-	-	-
Total expenditure carried forward in respect of
mining properties	-	-	-	-
13. CURRENT LIABILITIES - TRADE AND OTHER PAYABLES
Trade payables	105.363	298,751	105.363	298,751
Other payables and accruals	52,703	93,867	52,703	93,867
	158,066	392,618	158,066	392,618
14. CURRENT LIABILITIES - PROVISIONS
Employee benefts	55,208	81,578	55,208	81,578
Site restoration	407,000	724,000	407,000	724,000
	462,208	805,578	462,208	805,578

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

14. CURRENT LIABILITIES - PROVISIONS (CONT’D)

Movements in provisions Consolidated & Parent Entity 2008

	Employee entitlements	Site restoration	Total
	$	$	$
Current Carrying amount at start of year Provisions made during the year Provisions used during the year Carrying amount at end of year	81,578 724,000 805,578 27,164 83,000 110,164 (53,534) (400,000) (453,534)
	55,208 407,000 462,208

Site restoration

The provision of $400,000 in relation to an obligation to complete the site restoration as required under the agreement between the Company and Harmony Gold Mines, vendor of Big Bell Mill have been completed during the year. The remaining provision of $407,000 relates to the rehabilitation of the evaporative ponds at the Westonia Mine Site. Under certain conditions, Newmont Mining Corporation Ltd is responsible for some rehabilitation of M77/88 and M77/110.

15. ISSUED CAPITAL

(a) Share capital

		2008	2007
	Notes	Number of shares $	Number of shares $
Ordinary shares fully paid 15(b) 15(d) Total contributed equity		345,377,313 32,976,344 307,002,051 30,088,089
		345,377,313 32,976,344 307,002,051 30,088,089

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

(b) Movements in ordinary share capital

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

2008 2007
Number of $ Number of $
shares shares
----- End of picture text -----

Beginning of the fnancial year Issued during the year: Placement of shares to raise additional capital at 8 cents per share Placement of shares to raise additional capital at 17 cents per share Issued on exercise of options Renounceable rights issue at 10 cents per share Issued as consideration for sub-underwriting fees in relation to the renounceable rights issue Less items taken direct to equity Less transaction costs End of the fnancial year	307,002,051 30,088,089 234,157,498 22,591,978 38,375,256 3,070,020 - - 10,420,000 1,771,400 6 1 155,550 31,110 - - 61,197,083 6,119,708 - - 1,071,920 107,192 - - - (108,542) - (181,766) - (424,757)
	345,377,313 32,976,344 307,002,051 30,088,089

Beginning of the fnancial year
Issued during the year:
Placement of shares to raise additional capital at 8
cents per share
Placement of shares to raise additional capital at 17
cents per share
Issued on exercise of options
Renounceable rights issue at 10 cents per share
Issued as consideration for sub-underwriting fees
in relation to the renounceable rights issue
Less items taken direct to equity
Less transaction costs
End of the fnancial year

307,002,051
30,088,089
234,157,498
22,591,978
38,375,256
3,070,020
-
-
10,420,000
1,771,400
6
1
155,550
31,110
-
-
61,197,083
6,119,708
-
-
1,071,920
107,192
-
-
-
(108,542)
-
(181,766)
-
(424,757)

345,377,313
32,976,344
307,002,051
30,088,089

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

15. ISSUED CAPITAL (CONT’D)

(c) Movements in options on issue

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

Number of options
2008 2007
----- End of picture text -----

	2008 2007
Beginning of the fnancial year Issued/(lapsed) during the year: Exercisable at 10 cents, on or before 30 June 2010 Exercisable at 8 cents, on or before 29 April 2011 Exercisable at 11 cents, on or before 22 Nov 2008 Exercisable at 11 cents, on or before 22 Nov 2009 Exercisable at 11 cents, on or before 22 Nov 2010 Exercisable at 20 cents, on or before 22 Nov 2010 Exercisable at 20 cents, on or before 27 April 2010 Exercisable at 20 cents, on or before 20 August 2006 Exercisable at 20 cents, on or before 27 April 2010 Exercisable at 36 cents, on or before 27 April 2007 Exercisable at 42 cents, on or before 27 April 2007 Options exercised during the year: Exercisable at 10 cents, on or before 30 June 2010 Exercisable at 20 cents, on or before 20 August 2006 End of the fnancial year	4,100,000 30,564,669 38,375,256 - 100,000 - (200,000) - (200,000) - (500,000) - (2,000,000) - (1,000,000) - - (27,249,119) - (1,000,000) - (30,000) - (30,000) (6) - - (155,550)
	38,675,250 4,100,000

2008
2007

Beginning of the fnancial year
Issued/(lapsed) during the year:
Exercisable at 10 cents, on or before 30 June 2010
Exercisable at 8 cents, on or before 29 April 2011
Exercisable at 11 cents, on or before 22 Nov 2008
Exercisable at 11 cents, on or before 22 Nov 2009
Exercisable at 11 cents, on or before 22 Nov 2010
Exercisable at 20 cents, on or before 22 Nov 2010
Exercisable at 20 cents, on or before 27 April 2010
Exercisable at 20 cents, on or before 20 August 2006
Exercisable at 20 cents, on or before 27 April 2010
Exercisable at 36 cents, on or before 27 April 2007
Exercisable at 42 cents, on or before 27 April 2007
Options exercised during the year:
Exercisable at 10 cents, on or before 30 June 2010
Exercisable at 20 cents, on or before 20 August 2006
End of the fnancial year

4,100,000
30,564,669
38,375,256
-
100,000
-
(200,000)
-
(200,000)
-
(500,000)
-
(2,000,000)
-
(1,000,000)
-
-
(27,249,119)
-
(1,000,000)
-
(30,000)
-
(30,000)
(6)
-
-
(155,550)

38,675,250
4,100,000

(d) Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the 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.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

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Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
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16. RESERVES AND ACCUMULATED LOSSES
(a) Reserves
Share-based payments reserve
Balance at beginning of year	498,673	456,266	498,673	456,266
Employee share options	1,960	42,407	1,960	42,407
Balance at end of year	500,633	498,673	500,633	498,673
(b) Accumulated losses
Balance at beginning of year	(24,910,243)	(15,180,046)	(24,910,243)	(15,180,046)
Net loss for the year	(2,291,738)	(9,730,197)	(2,291,738)	(9,730,197)
Balance at end of year	(27,201,981)	(24,910,243)	(27,201,981)	(24,910,243)

(c) Nature and purpose of reserves

Share-based payments reserve

The share-based payments reserve is used to recognise the fair value of options issued.

17. DIVIDENDS

No dividends were paid during the financial year. No recommendation for payment of dividends has been made.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

18. KEY MANAGEMENT PERSONNEL DISCLOSURES

(a) Details of key management personnel

(i) Directors

The following persons were Directors of Catalpa Resources Limited during the financial year:

John Rowe Non-Executive Chairman Bruce McFadzean Managing Director appointed 9 June 2008 Murray Pollock Non-Executive Director Chris Melloy Non-Executive Director Barry Sullivan Non-Executive Director appointed 16 June 2008 David Hatch Managing Director resigned 28 September 2007 Mark Fitzpatrick Non-Executive Chairman resigned 27 February 2008

(ii) Other Key Management Personnel

The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, during the financial year:

Graham Anderson Company Secretary appointed 2 August 2007 Leonard Math Company Secretary appointed 2 August 2007 John Fitzgerald Company Secretary resigned 31 July 2007 Rowan Johnston Resident Manager resigned 14 September 2007

(b) Key management personnel compensation

	Consolidated	Parent Entity
	2008 $ 2007 $	2008 $ 2007 $
Short-term benefts Post employment benefts Termination benefts Share-based payments	612,986 797,771 612,986 797,771 29,460 53,395 29,460 53,395 160,000 - 160,000 - - 42,407 - 42,407
	802,446 893,573 802,446 893,573

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. The relevant information can be found in sections A-C of the remuneration report on pages 19 to 22.

(c) Equity instrument disclosures relating to key management personnel (i) Options provided as remuneration and shares issued on exercise of such options

There were no options issued to Directors, executives or key management personnel during the year and no shares issued on exercise of options by key management personnel.
3,850,000 of options issued to Directors, executives and key management personnel in prior year lapsed during the year due to cessation employment with the Group.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

18. KEY MANAGEMENT PERSONNEL DISCLOSURES (CONT’D)

(ii) Option holdings

The numbers of options over ordinary shares in the Company held during the financial year by each Director of Catalpa Resources Limited and other key management personnel of the Group, including their personally related parties, are set out below:

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2008 Balance Granted Rights Lapsed Balance at Balance Vested Un-
start of as Issue resignation at end of and vested
the year compen- date the year exercis-
sation able
----- End of picture text -----

*Directors of Catalpa*
*Resources Limited*
Bruce McFadzean
(appointed 9 June 2008)	-	-	-	-	-	-	-	-
Barry Sullivan
(appointed 16 June 2008)	-	-	-	-	-	-	-	-
Mark Fitzpatrick
(resigned 27 Feb 2008)	-	-	-	-	-	-	-	-
David Hatch
(resigned 28 Sep 2007)	2,600,000	-	69,897	-	(2,669,897)	-	-	-
Murray Pollock	-	-	935,748	-	-	935,748	935,748	-
Chris Melloy	-	-	167,188	-	-	167,188	167,188	-
John Rowe	-	-	-	-	-	-	-	-
*Other key management*
*personnel of the Group*
Graham Anderson
(appointed 2 Aug 2008)	-	-	-	-	-	-	-	-
Leonard Math
(appointed 2 Aug 2008)	-	-	-	-	-	-	-	-
John Fitzgerald
(resigned 31 July 2007)	1,000,000	-	-	-	(1,000,000)	-	-	-
Rowan Johnston
(resigned 14 Sep 2007)	250,000	-	-	-	(250,000)	-	-	-

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

18. KEY MANAGEMENT PERSONNEL DISCLOSURES (CONT’D) (ii) Option holdings

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

2007 Balance Granted Rights Lapsed Balance Balance at Vested Un-
start of as Issue at resig- end of the and vested
the year compen- nation year exercis-
sation date able
----- End of picture text -----

*Directors of Catalpa*
*Resources Limited*
Mark Fitzpatrick	-	-	-	-	-	-	-	-
David Hatch	2,600,000	-	-	-	-	2,600,000	2,400,000	200,000
Murray Pollock	3,750,477	-	-	(3,750,477)	-	-	-	-
Chris Melloy	23,333	-	-	(23,333)	-	-	-	-
John Rowe	-	-	-	-	-	-	-	-
Other key management
personnel of the Group
John Fitzgerald	-	1,000,000	-	-	-	1,000,000	200,000	800,000
John Hannaford
(resigned 27 Mar 2007)	-	-	-	-	-	-	-	-
Rowan Johnston	250,000	-	-	-	-	250,000	-	250,000

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

18. KEY MANAGEMENT PERSONNEL DISCLOSURES (CONT’D)

(iii) Share holdings

The numbers of shares in the Company held during the financial year by each Director of Catalpa Resources Limited and other key management personnel of the Group, including their personally related parties, are set out below. There were no shares granted during the reporting period as compensation.

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

2008 Balance Received Other Balance at Balance
start of during the changes resignation at end of
the year year on the during date the year
exercise of the year
options
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*Directors of Catalpa*
*Resources Limited*
Ordinary shares
Bruce McFadzean
(appointed 9 June 2008)	-	-	345,000	-	345,000
Barry Sullivan
(appointed 16 June 2008)	-	-	-	-	-
Mark Fitzpatrick
(resigned 27 Feb 2008)	812,500	-	-	(812,500)	-
David Hatch
(resigned 28 Sep 2007)	559,168	-	69,897	(629,065)	-
Murray Pollock	14,790,054	-	935,748	-	15,725,802
Chris Melloy	1,337,500	-	167,188	-	1,504,688
John Rowe	-	-	-	-	-
*Other key management*
*personnel of the Group*
Ordinary shares
Graham Anderson
(appointed 2 Aug 2008)	-	-	-	-	-
Leonard Math
(appointed 2 Aug 2008	-	-	-	-	-
John Fitzgerald
(resigned 31 July 2007)	-	-	-	-	-
Rowan Johnston
(resigned 14 Sep 2007)	-	-	-	-

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

KEY MANAGEMENT PERSONNEL DISCLOSURES (CONT’D) (iii) Share holdings (cont’d)

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

2007 Balance Received Other Balance at Balance
start of during the changes resignation at end of
the year year on the during date the year
exercise of the year
options
----- End of picture text -----

*Directors of Catalpa*
*Resources Limited*
Ordinary shares
Mark Fitzpatrick	650,000	-	162,500	-	812,500
David Hatch	367,334	-	191,834	-	559,168
Murray Pollock	13,854,000	-	936,054	-	14,790,054
Chris Melloy	1,070,000	-	267,500	-	1,337,500
John Rowe	-	-	-	-	-
*Other key management*
*personnel of the Group*
Ordinary shares
John Fitzgerald	-	-	-	-	-
John Hannaford
(resigned 27 Mar 2007)	-	-	-	-	-
Rowan Johnston	-	-	-	-	-

(d) Loans to key management personnel There were no loans to key management personnel during the year.

(e) Other transactions with key management personnel Refer to note 22 for other transactions and balances with key management personnel.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

19. REMUNERATION OF AUDITORS

During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms:

	Consolidated	Parent Entity
	2008 $ 2007 $	2008 $ 2007 $
Audit services Ord Partners -audit and review of fnancial reports Department of Industry & Resources tenement audits	31,000 27,500 31,000 27,500 - 2,500 - 2,500
	31,000 30,000 31,000 30,000

20. CONTINGENCIES

Apart from the above there are no material contingent liabilities or contingent assets of the Group at balance date.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

21. COMMITMENTS

(a) Exploration commitments

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. These obligations are not provided for in the financial report and are payable.
• Outstanding exploration commitments are as follows (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 circumstances, Native Title negotiations):

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Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
----- End of picture text -----

Within one year (b) Lease commitments: Group as lessee Operating leases (non cancellable): Minimum lease payments Within one year later than one year not later than fve years Greater than fve years Aggregate lease expenditure contracted for at reporting date but not recognised as liabilities	579,200 541,122 579,200 541,122
	88,000 103,860 88,000 103,860 113,520 26,260 113,520 26,260 - - - -
	201,520 130,120 201,520 130,120

The property lease is a non-cancellable lease with a two-year term expiring on 30 September 2010, with rent payable monthly in advance. Contingent rental provisions within the lease agreement require the minimum lease payments to be increased by fixed amounts on the annual anniversary dates. The lease allows for subletting of all lease areas.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

22. RELATED PARTY TRANSACTIONS

(a) Parent entity

The ultimate parent entity within the Group is Catalpa Resources Limited.

(b) Subsidiaries

Interests in subsidiaries are set out in note 23.

(c) Key management personnel

Apart from the details disclosed in this note, note 18 and the remuneration report, no Director has entered into a material contract with the Company since the end of the previous financial year and there were no material contracts involving Directors’ interests existing at year end except as disclosed below.

Lion Manager

The Company paid $40,000 (2007: $38,000) in lieu of Directors fees, and expense reimbursements totalling $12,952, to Lion Manager, the management Company responsible for the operation of Lion Selection Group Ltd, for the services of Mr Chris Melloy as a Non-Executive Director. Mr Melloy is an Executive Director of Lion Manager. Lion Selection Group Ltd is a substantial shareholder in Catalpa Resources Limited. An amount of $10,000 (2007: $10,000) was owing to Lion Manager at 30 June 2008, included in trade and other payables.

Payments were made at commercial rates.

GDA Corporate

GDA Corporate, a Company of which Mr Graham Anderson is a Director and Leonard Math is an employee, provided Company secretarial, accounting and other corporate services to Catalpa Resources Limited during the year. The amount paid for the year was $56,500 (2007:$0).

John Rowe and Associates

John Rowe and Associates, a Company of which Mr John Rowe is a Director, provided external consultant services to Catalpa Resources Limited during the year based on commercial rates and on an arm’s length basis. Total consultant fees paid to John Rowe and Associates is $103,344 (2007:$0). An amount of $10,227 (2007: $0) was owing to John Rowe and Associates at 30 June 2008, included in trade and other payables.

Holmesdale Holdings Pty Ltd

Holmesdale Holdings Pty Ltd, a Company of which Mr Mark Fitzpatrick is a Director, provided external consultant services to Catalpa Resources Limited during the year based on commercial rates and on an arm’s length basis. Total consultant fees paid to Holmesdale Holdings Pty Ltd is $85,250 (2007:$0).

23. SUBSIDIARIES

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiary in accordance with the accounting policy described in note 1(b):

Name	Country of Incorporation	Class of Shares	Equity Holding*
			2008 2007
			% %
Westonia Mines Minerals Pty Ltd Australia Ordinary 100 100

*The proportion of ownership interest is equal to the proportion of voting power held.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

24. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

On the 27 August 2008, shareholders approved to change the Company name from Westonia Mines Limited to Catalpa Resources Limited. The change of name was effective on the 29 August 2008.

No other matter or circumstance has arisen since 30 June 2008, which has significantly affected, or may significantly affect the operations of the Group, the result of those operations, or the state of affairs of the Group in subsequent financial years.

25. CASH FLOW STATEMENT

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

Consolidated Parent Entity
2008 2007 2008 2007
$ $ $ $
----- End of picture text -----

(a) Reconciliation of net loss after income tax
to net cash outfow from operating activities
Net loss for the year
Non Cash Items
Depreciation of non current assets
Share based payments
Exploration expenditure written off
Impairment loss on assets
Impairment of exploration expenditure
Impairment of development expenditure
Income tax beneft
Change in operating assets and liabilities, net of
effects from purchase of controlled entities
(Increase)/decrease in other receivables
(Increase)/decrease in prepayments
(Increase)/decrease in value of assets
(Decrease)/increase in trade & other payables
(Decrease)/increase in provisions
Net cash outfow from operating activities

(2,291,738)
(9,730,197)
(2,291,738)
(9,730,197)
142,533
122,030
142,533
122,030
1,960
42,407
1,960
42,407
1,360,403
-
1,360,403
-
84,301
-
84,301
-
-
5,540,866
-
5,540,866
-
2,972,315
-
2,972,315
-
(108,542)
-
(108,542)
216,572
(152,772)
216,572
(152,772)
9,017
74,412
9,017
74,412
(83,000)
-
(83,000)
-
(233,335)
143,411
(233,335)
143,411
56,630
32,035
56,630
32,035

(736,657)
(1,064,035)
(736,657)
(1,064,035)

(b) Non-cash investing and financing activities

There were no non-cash investing and financing activities during the financial year.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

26. LOSS PER SHARE

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

Consolidated
2008 2007
$ $
(a) Reconciliation of earnings used in calculating
loss per share
Loss attributable to the ordinary equity holders of the Company
used in calculating basic and diluted loss per share 2,291,738 9,730,197
----- End of picture text -----

Number of shares Number of shares (b) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic and diluted loss per share 343,699,704 278,207,244

(c) Information on the classification of options

As the Group has made a loss for the year ended 30 June 2008, all options on issue are considered antidilutive and have not been included in the calculation of diluted loss per share. These options could potentially dilute basic loss per share in the future.

27. SHARE-BASED PAYMENTS

Employees and Contractors Option Plan (“ECOP”)

An Employees and Contractors Option Plan (“ECOP”) has been established, approved by the Board on 18 April 2002 and at the Annual General Meeting on 5 June 2002. The plan permits
the Company, at the discretion of the Directors, to grant options over unissued ordinary shares of the Company to eligible Directors, members of staff and contractors as specified in the plan rules.
The options, issued for nil consideration, are granted in accordance with performance guidelines established by the Directors of the Company. In exercising their discretion under the rules, the Directors will take into account matters such as the position of the eligible person, the role they play in the Company group, the nature or terms of their employment or contract and the contribution they make to the Company group as a whole.
The options are issued for a specified period and each option is convertible into one ordinary share. The exercise price of the options, determined in accordance with the rules of the plan, is based on the market price of a share on invitation date, grant date, or another specified date after grant close. All options expire on the earlier of their expiry date or termination of the employee’s employment.
Options do not vest until a specified period after granting and their exercise is conditional on the achievement of certain performance hurdles.
There are no voting or dividend rights attached to the options. Voting rights will attach to the ordinary shares when the options have been exercised. The options cannot be transferred and will not be quoted on the ASX.

NoteS to the fiNaNCial StatemeNtS CoNtiNUeD

30 June 2008

27. SHARE-BASED PAYMENTS (CONT’D)

Set out below are summaries of the options granted:

	Consolidated and Parent Entity	Consolidated and Parent Entity
	2008	2007
	Number of options Weighted average exercise price cents	Number of options Weighted average exercise price cents
Outstanding at the beginning of the year Granted Lapsed Expired Outstanding at year-end Exercisable at year-end	4,100,000 17.6 3,160,000 17.2 100,000 8.0 1,000,000 20.0 (3,900,000) 17.6 - - - - (60,000) 39.0
	300,000 10.01 4,100,000 17.6
	- 10.01 3,100,000 17.4

The weighted average remaining contractual life of share options outstanding at the end of the financial year was 2.7 years (2007: 3.1 years), with exercise prices ranging from 8 to 11 cents.

The weighted average fair value of the options granted during the year was 3.34 cents (2007: 6.8 cents). The price was calculated by using the Black-Scholes European Option Pricing Model applying the following inputs:

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

2008 2007
----- End of picture text -----

Weighted average exercise price (cents)	8.0	20.0
Weighted average life of the option (years)	3.00	3.00
Weighted average underlying share price (cents)	6.5	11.8
Expected share price volatility	80%	106%
Risk free interest rate	7.25%	6.25%

Historical volatility has been used as the basis for determining expected share price volatility as it assumed that this is indicative of future trends, which may not eventuate.

Total expenses arising from share-based payment transactions recognised during the year were as follows:

	Consolidated	Parent Entity
	2008 $ 2007 $	2008 $ 2007 $
Options issued to employees and contractors as part of: Employee and consultant expense 1,960 42,407 1,960 42,407

DireCtorS’ DeClaratioN

In the Directors’ opinion:

(a) The financial statements and notes set out on pages 33 to 72 are in accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements; and
(ii) giving a true and fair view of the Company’s and the consolidated entity’s financial position as
- at 30 June 2008 and of their performance for the financial year ended on that date; and
(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 audited remuneration disclosures set out on pages 19 to 22 of the Directors’ report comply
with Accounting Standards AASB 124 Related Party Disclosures and the Corporations Regulations 2001.

The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001.

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

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Bruce McFadzean Managing Director Perth, September 2008

iNDepeNDeNt aUDit report

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iNDepeNDeNt aUDit report CoNtiNUeD

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aSX aDDitioNal iNformatioN

Additional information required by Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 30 August 2008.

(a) Distribution of equity securities

Analysis of numbers of equity security holders by size of holding:

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Ordinary shares
Number of holders Number of shares
----- End of picture text -----

	Number of holders	Number of shares
1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - and over The number of shareholders holding less than a marketable parcel of shares are:	32 185 320 1247 328	8,730 675,542 2,732,117 50,668,417 291,292,507
	2112	345,377,313
	348	1,563,271

The number of shareholders holding less than a marketable parcel of shares are:

(b) Twenty largest shareholders

The names of the twenty largest holders of quoted ordinary shares are:

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

Listed ordinary shares
Number of shares % ordinary shares
----- End of picture text -----

1 Lion Selection Group Ltd 2 Goldrich Holdings PL 3 Zero Nom PL 4 HSBC Custody Nom Australia Ltd 5 Charlemagne Inv PL 6 Drummond Shay Margaret 7 UBS Wealth Management Aust Nom 8 ANZ Nom Ltd 9 Burg Brian 10 Pretorius Leon Eugene 11 Exwere Inv PL 12 Readco Management PL 13 Inmont PL <Galante S/F No 2 A 14 R O Stone PL 15 Blackrock Inv Management 16 Calliton PL 17 Auselect Ltd 18 Jayleaf Holdings PL 19 Kwort Joseph & Fokas K A 20 Tentomas John & Vicky	152,096,301 44.04% 14,000,000 4.05% 8,859,375 2.57% 7,000,000 2.03% 4,045,345 1.17% 4,022,792 1.16% 3,465,679 1.00% 2,693,782 0.78% 2,200,000 0.64% 2,000,000 0.58% 1,954,688 0.57% 1,581,205 0.46% 1,525,125 0.44% 1,500,000 0.43% 1,404,320 0.41% 1,340,000 0.39% 1,312,500 0.38% 1,300,000 0.38% 1,200,000 0.35% 1,020,000 0.30%
	214,521,112 62.13%

1
Lion Selection Group Ltd
2
Goldrich Holdings PL
3
Zero Nom PL
4
HSBC Custody Nom Australia Ltd
5
Charlemagne Inv PL
6
Drummond Shay Margaret
7
UBS Wealth Management Aust Nom
8
ANZ Nom Ltd
9
Burg Brian
10
Pretorius Leon Eugene
11
Exwere Inv PL
12
Readco Management PL
13
Inmont PL <Galante S/F No 2 A
14
R O Stone PL
15
Blackrock Inv Management
16
Calliton PL
17
Auselect Ltd
18
Jayleaf Holdings PL
19
Kwort Joseph & Fokas K A
20
Tentomas John & Vicky

152,096,301
44.04%
14,000,000
4.05%
8,859,375
2.57%
7,000,000
2.03%
4,045,345
1.17%
4,022,792
1.16%
3,465,679
1.00%
2,693,782
0.78%
2,200,000
0.64%
2,000,000
0.58%
1,954,688
0.57%
1,581,205
0.46%
1,525,125
0.44%
1,500,000
0.43%
1,404,320
0.41%
1,340,000
0.39%
1,312,500
0.38%
1,300,000
0.38%
1,200,000
0.35%
1,020,000
0.30%

214,521,112
62.13%

All ordinary shares (whether fully paid or not) carry one vote per share without restriction.

Voting rights

aSX aDDitioNal iNformatioN CoNtiNUeD

(c) Substantial shareholders

The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are:

	Number of shares
Lion Selection Group Ltd	152,096,301

(d) Distribution of equity securities (listed options)

Analysis of numbers of equity security holders by size of holding:

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Listed Options
Number of holders Number of options
----- End of picture text -----

	Listed Options Number of holders Number of options
1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - and over	42 26,189 145 409,723 89 676,182 186 5,784,010 34 31,479,144
	496 38,375.248

(e) Twenty largest option holders

The names of the twenty largest holders of quoted options are:

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

Listed options
Number of options % Quoted options
----- End of picture text -----

1
Lion Selection Group Ltd
2
Rubiton PL
3
Robert MacFadyen PL
4
HSBC Custody Nom Australia Ltd
5
Fortis Clearing Nom PL
6
Zero Nom PL
7
Goldrich Holdings PL
8
Goffacan PL
9
Lawrence Crowe Cons PL < LCC S/F A/C>
10
David E Perks & Associates PL < S/F A/C>
11
Bosch Katrina Alison
12
Thorne Thomas S & CM
13
Geijera PL
14
Cohen Seymour Bentley
15
Maverick Expl PL
16
Treacy Joseph
17
Magnim PL
18
Exwere Inv PL
19
Resnik Mark
20
Kwort Joseph & Fokas KA

16,899,589
44.04%
3,256,000
8.48%
1,100,000
2.87%
1,031,250
2.69%
1,016,348
2.65%
984,375
2.57%
879,648
2.29%
702,662
1.83%
693,776
1.81%
400,000
1.04%
350,000
0.91%
330,114
0.86%
290,000
0.76%
268,250
0.70%
254,084
0.66%
252,521
0.66%
249,999
0.65%
217,188
0.57%
200,000
0.52%
200,000
0.52%

29,575,804
77.08%

teNemeNt holDiNG

for the period ending 06 August 2008

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

Location Tenement Status Percentage
----- End of picture text -----

BODALLIN
Bodallin SW	E 77/1165	Granted	100%
BODALLIN SOUTH
Kent Road	E 77/1452	Application	100%
JILBADJIE
Jilbadgie East	E 77/1132	Granted	Earnings 65%
MINE
Paddock	M 77/110	Granted	100%
Golden Point East	M 77/124	Granted	100%
Mine	M 77/88	Granted	100%
SANDFORD ROCKS
Sandford Rocks	E 77/1494	Application	100%
WESTONIA
Begley	E 77/1069	Granted	100%
Westonia N.E	E 77/1324	Granted	100%
Westonia Belt	E 77/516	Granted	100%
Westonia West	E 77/990	Granted	100%
Westonia	L 77/18	Granted	100%
Le Trois	M 77/827	Application	100%
Great Battler	M 77/841	Application	100%
Le Trois East	M 77/842	Application	100%
Westonia NW	P 77/3712	Application	100%
West Westonia	P 77/3713	Application	100%
Westonia NE	P 77/3714	Application	100%
Bodallin	P 77/3875	Application	100%
Corsini Road	P 77/3876	Application	100%
Hitchings Road	P 77/3877	Application	100%
Stoneman Road	P 77/3878	Application	100%
Kaolin Street	P 77/3879	Application	100%

www.catalparesources.com.au

Level 1, 9 Havelock Street West Perth WA 6005 Tel: (618) 9321 3088 Fax: (618) 9321 8804 Email: [email protected]

AI assistant

EVOLUTION MINING LIMITED — Annual Report 2008

64885_rns_2008-10-30_540778bf-875f-4e38-8123-650b7039853b.pdf

CORPORATE DIRECTORY

SHARE REGISTRY

DIRECTORS

AUDITORS

COMPANY SECRETARY

STOCK EXCHANGE LISTING

SENIOR MANAGEMENT

REGISTERED & PRINCIPAL

WEBSITE

OFFICE

CONTENTS

ChAIRMAN’S REPORt

REVIEW OF OPERAtIONS

EXPLORAtION

Stakeholder Consultation

Near Mine and Regional RAB Drill Programme

Auger Sampling Programme

EXPLORAtION (continued)

Begley Tenement

Edna May Underground

Other reef intercepts of significance within targeted drill zone

EXPLORAtION (continued)

Greenfinch

Golden Point

Edna May West

FEASIBILItY StUDY

RESOURCES

FEASIBILItY StUDY (continued)

Tenement Holdings

Sustainability

Safety and Health

Environment and Statutory Reporting

Community

Competent Person Statement

Competent Person Statement

CAtALPA’S MOSt VALUABLE ASSEt

DIRECtOR’S REPORt

the Board of Directors

John Rowe BSc (Hons) ARSM, MAusIMM Non-Executive Chairman

Bruce McFadzean Dip Mining Managing Director

Barry Sullivan BSc(Hons), ARSM, FAusIMM, MAICD

Non-Executive Director

Murray Pollock MAICD Non-Executive Director

Christopher Melloy BE (Hons), MEngSc, F Fin (Sec Inst), MAusIMM, ASIA Non-Executive Director

Nigel Johnson CA, CFTP(Snr), MAICD Non-Executive Director

DireCtorS’ report CoNtiNUeD

Mark Fitzpatrick

David Hatch

Company Secretary

Graham Anderson, BBus, CA

Leonard Math, BBus, CA

DireCtorS’ report CoNtiNUeD

NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES

DIVIDENDS

OPERATING AND FINANCIAL REVIEW

DireCtorS’ report CoNtiNUeD

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

REMUNERATION REPORT

DireCtorS’ report CoNtiNUeD

Remuneration Policy

Performance based remuneration

Company performance, shareholder wealth and Directors’ and executives’ remuneration

DireCtorS’ report CoNtiNUeD

DireCtorS’ report CoNtiNUeD

Performance income as a proportion of total compensation

DireCtorS’ report CoNtiNUeD

DIRECTORS’ MEETINGS

Notes

SHARES UNDER OPTION

DireCtorS’ report CoNtiNUeD

INSURANCE OF DIRECTORS AND OFFICERS

NON AUDIT SERVICES

DireCtorS’ report CoNtiNUeD

ROUNDING OF AMOUNTS

DireCtorS’ report CoNtiNUeD

Corporate GoverNaNCe StatemeNt

The Board of Directors

EVOLUTION MINING LIMITED Annual Report 2008