EVOLUTION MINING LIMITED - Annual Report 2008

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CATALPA RESOURCES LIMITED

(formerly Westonia Mines Limited)

ABN 74 084 669 036

Annual Financial Report

for the year ended 30 June 2008

Catalpa Resources Limited - Annual Report

Corporate Information

ABN 74 084 669 036

Directors

John Rowe (Chairman) Bruce McFadzean (Managing Director) Murray Pollock (Non Executive Director) Chris Melloy (Non Executive Director) Barry Sullivan (Non Executive Director) Nigel Johnson (Non Executive Director)

Company Secretary

Graham Anderson and Leonard Math (Joint Company Secretaries)

Registered Office

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

Share Register

Security Transfer Registrars Pty Ltd 770 Canning Highway APPLECROSS WA 6153 Tel: (618) 9315 2333 Fax: (618) 9315 2233 Email: [email protected]

Auditors

Ord Partners Level 2, 47 Colin Street WEST PERTH WA 6005 Tel: (618) 9321 3514 Fax: (618) 9321 3523

Internet Address

www.catalparesouces.com.au

Stock Exchange Listing

Catalpa Resources Limited (CAH) shares are listed on the Australian Securities Exchange.

Catalpa Resources Limited – Annual Report

Review of Operations	3
Directors' Report	11
Auditor’s Independence Declaration	20
Corporate Governance Statement	21
Income Statements	26
Balance Sheets	27
Statements of Changes in Equity	28
Statements of Cash Flows	29
Notes to the Financial Statements	30
Directors' Declaration	57
Independent Audit Report	58
ASX Additional Information	60

Catalpa Resources Limited – Annual Report

Review of Operations

EXPLORATION

At the start of the 2007 financial year, the economic outlook 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 its underexplored tenements.

A multi-phase programme was planned and 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 880 km[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, virtually covering the previously untested areas of Catalpa’s tenements; and 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 from 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 3 metres @ 0.6 g/t Au from 42 metres in CWR004 at the Colossus historical workings. Colossus was one of the most substantial historical workings along the belt and, significantly, it is untested. Follow-up 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.

Catalpa Resources Limited – Annual Report

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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 Au 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 is planned during the current financial 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.

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 300m 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;

Catalpa Resources Limited – Annual Report

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

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

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 250m 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.

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

Hole ID	Down hole Interval and Gold Grade
WDD041	3.0m @ 15.0 g/t
WDD052A	3.0m @ 4.58 g/t
WDD054	18.1m @ 7.63 g/t
WD054A	9.1m @ 7.32 g/t
WDD055	17m @ 5.2g/t and 16.6m @ 6.8g/t
WDD055A	32.9m @ 7.8 g/t Possibly 2 Intercepts as in WDD055

Catalpa Resources Limited – Annual Report

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

WDD043	3.0m @	35.2g/t	Footwall to Interpreted Edna May Reef
WDD064	8.8m @	5.9g/t	Footwall to Interpreted Edna May Reef
WDD064A	7.0m @	4.1g/t	Footwall to Interpreted Edna May Reef
WDD097	5.8m @	21.6g/t	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.

Proposed diamond drill programme collar locations and drill hole design details.

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Catalpa Resources Limited – Annual Report

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. Additionally, the planned drilling may facilitate upgrading existing Resource categories.

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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

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 around 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.

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 production of more than 100,000 ounces per annum commencing in the 2009 financial year.

Catalpa Resources Limited – Annual Report

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 finalised and tabled to the Board in the December 2008 quarter.

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. The study also 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

Edna May Resources

		*Edna May 2007 Resource Estimate to 300m Depth*	*Edna May 2007 Resource Estimate to 300m Depth*
Cut Off Grade 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20	Measured Million tonnes Gold g/t Ounces ‘000 16.6 1.15 612 14.2 1.26 574 12.1 1.36 529 0.2 1.48 484 8.5 1.60 439 7.1 1.72 394 6.0 1.85 356 5.0 1.99 323	Indicated Million tonnes Gold g/t Ounces ‘000 13.3 1.13 484 11.1 1.25 446 9.2 1.37 403 7.6 1.50 365 6.3 1.64 330 5.2 1.78 299 4.4 1.92 270 3.7 2.06 245	Inferred Million tonnes Gold g/t Ounces ‘000 8.4 1.0 269 6.4 1.1 227 5.0 1.3 209 4.0 1.4 178 3.2 1.5 152 2.6 1.7 139 2.1 1.8 120 1.7 2.0 110	Total Million tonnes Gold g/t Ounces ‘000 38.2 1.1 1,365 31.7 1.2 1,248 26.3 1.4 1,141 21.7 1.5 1,027 18.0 1.6 922 14.9 1.7 832 12.4 1.9 746 10.4 2.0 677

Greenfinch Resources

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

Total Resources

		*Total 2007 Resource Estimate*	*Total 2007 Resource Estimate*
Cut Off Grade 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20	Measured Million tonnes Gold g/t Ounces ‘000 16.6 1.15 612 14.2 1.26 574 12.1 1.36 529 10.2 1.48 484 8.5 1.60 439 7.1 1.72 394 6.0 1.85 356 5.0 1.99 323	Indicated Million tonnes Gold g/t Ounces ‘000 15.5 1.13 565 12.9 1.26 520 10.6 1.38 470 8.8 1.51 425 7.3 1.65 386 6.1 1.79 350 5.1 1.92 317 4.3 2.06 288	Inferred Million tonnes Gold g/t Ounces ‘000 9.0 1.0 291 6.9 1.1 247 5.4 1.3 227 4.3 1.4 194 3.4 1.5 167 2.8 1.7 153 2.3 1.8 133 1.9 2.0 122	Total Million tonnes Gold g/t Ounces ‘000 41.1 1.1 1,469 34.0 1.2 1,341 28.1 1.4 1,226 23.2 1.5 1,103 19.2 1.6 992 16.0 1.7 897 13.4 1.9 806 11.3 2.0 732

Tenement Holdings

As at 30 June 2008, Catalpa had 10 granted tenements encompassing 880km2, with 13 tenements under application. The Company’s tenement interests are listed on page 61.

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.

Catalpa Resources Limited – Annual Report

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.

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Catalpa Resources Limited – Annual Report

Competent Person Statement

The exploration data have been supplied according to the JORC Code for the reporting of Mineral Resources and Ore Reserves by Mr 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 Resources Limited – Annual Report

Directors’ Report

Your directors submit their report on the consolidated entity (referred to hereafter as the Group) consisting of Catalpa Resources Limited (formerly known as Westonia Mines Limited) and the entities it controlled at the end of, or during, the year ended 30 June 2008.

The change of name from Westonia Mines Limited to Catalpa Resources Limited was completed on the 29 August 2008 after shareholders approval at a General Meeting on the 27 August 2008.

DIRECTORS

The names and details of the company’s directors in office during the financial year and until the date of this report are as follows. Where applicable, all current and former directorships held in listed public companies over the last three years have been detailed below. Directors were in office for this entire period unless otherwise stated.

Names, qualifications, experience and special responsibilities

John Rowe (59) , BSc (Hons) ARSM, MAusIMM (Non Executive Chairman)

John Rowe brings a wealth of geological and business development skills to the company. Mr Rowe has 36 years experience within the Nickel and Gold industry 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 was previously a director of Perseverance Corporation Limited.

Mr Rowe was appointed as Non Executive Director on 12 October 2006 and Non Executive Chairman on 28 January 2008. Mr Rowe is also a director of Panoramic Resources Limited (since 2006) and was a Non Executive Director of Perseverance Corporation Limited from 19 September 2007 to 18 February 2008. Mr Rowe has not held other listed company directorships within the last 3 years.

Bruce McFadzean (51), Dip Mining (Managing Director) – appointed on the 9 June 2008

Mr McFadzean, 51, 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. Mr McFadzean was Executive Director of Territory Resources Limited from March 2007 to 17 April 2008. Mr McFadzean has not held other listed company directorships within the last 3 years.

Murray Pollock (60) , MAICD (Non Executive Director)

Mr Pollock is a businessman with over 40 years experience in the mineral services industry, principally in drilling. He is a consultant to several companies on drilling and mine management services. Mr Pollock has not held other listed company directorships within the last 3 years.

Chris Melloy (53), BE (Hons), MEngSc, GDipAppFin (Sec Inst), MAusIMM, ASIA (Non Executive Director)

Mr Melloy is an Executive Director of Lion Manager, the management company responsible for the operation of Lion Selection Group as well as a non Executive Director of Austindo Resources Corporation NL (since 2001). Within the last 3 years Mr Melloy has been a former director of Exco Resources Limited.

He has 30 years experience in the mining industry in both operations and finance, including mine planning, operating and senior mine management roles, as well as mining analysis and research in the stock broking industry. Mr Melloy has not held other listed company directorships within the last 3 years.

Barry Sullivan (61) , Bsc(Min), ARSM, F AusIMM, MICD (Non Executive Director) – appointed on the 16 June 2008

Mr. Sullivan is an experienced and successful mining engineer with a career spanning 40 years in the mining industry. 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. Presently Mr Sullivan is a non-executive Director and Chairman of Exco Resources Ltd, and a non-executive Director of Sedimentary Holdings Ltd.

Mr Sullivan was previously a non-executive director of Allegiance Mining Ltd. Mr Sullivan has not held other listed company directorships within the last 3 years.

Nigel Johnson (55) , CA, CFTP (Snr), MAICD (Non Executive Director) – appointed on the 20 August 2008

Mr. Johnson is a Chartered Accountant with strong finance and management experience attained over a period of 36 years. This experience was gained from working in a number of countries for both publicly listed and private companies 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 Resources Limited, responsible for the financial, commercial and treasury activities of the Straits Group. Mr Johnson was a non-executive director of Tritton Resources Limited. Mr Johnson is also a non-executive director of Matrix Composites and Engineering Limited. Mr Johnson has not held other listed company directorships within the last 3 years.

Catalpa Resources Limited – Annual Report

Directors’ Report continued

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

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

COMPANY SECRETARY

Graham Anderson , BBus, CA

Graham Anderson is 44 years of age, has a Bachelor of Business Degree and is a member of the Institute of Chartered Accountants. Graham 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.

Graham 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.

He 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

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 Leonard worked as an Auditor at Deloitte before joining GDA Corporate as a Senior Accountant.

His 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.

Graham Anderson and Leonard Math were appointed joint Company Secretaries on 31 July 2007.

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

Catalpa Resources Limited - Annual Report

Directors' Report continued

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:

	Ordinary Shares	Options over Ordinary Shares
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).

	2008 Revenues $ Results $
Geographic segments Australia Consolidated entity revenues and loss from ordinary activities after income tax expense Shareholder Returns	594,905 (2,291,738)
	594,905 (2,291,738)
	2008 2007
Basic and diluted loss per share (cents)	0.67 3.5

Catalpa Resources Limited - Annual Report

Directors' Report continued

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.

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.

Catalpa Resources Limited - Annual Report

Directors' Report continued

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.

Catalpa Resources Limited - Annual Report

Directors' Report continued

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 10 above and the following executive officer have the authority and responsibility for planning, directing and controlling the activities of the Group:

h Rowan Johnston (Resigned on 14 September 2007)

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

									SHARE	BASED
	PRIMARY			POST EMPLOYMENT					PAYMENTS		TOTAL
	Salary, Fees Non- Monetary			Superannuation		Retirement Benefits		Other services	Options	Remuneration consisting options
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 Anderson and	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	57,994		-		5,169	50,000		-	-	-	113,163
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.

Catalpa Resources Limited - Annual Report

Directors' Report continued

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.

Catalpa Resources Limited - Annual Report

Directors' Report continued

DIRECTORS’ MEETINGS

During the year the company held ten meetings of directors. The attendance of directors at meetings of the board were:

	Directors’	Meetings	Audit	Committee
	A	B	A	B
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.

	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:

The balance is comprised of the following:
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.

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.

Catalpa Resources Limited - Annual Report

Directors' Report continued

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

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 20.

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.

==> picture [67 x 32] intentionally omitted <==

Bruce McFadzean

Managing Director Perth, 30 September 2008

Catalpa Resources Limited - Annual Report

Directors' Report continued

==> picture [451 x 650] intentionally omitted <==

Catalpa Resources Limited - Annual Report

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.

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 noncompliance.

Catalpa Resources Limited - Annual Report

Corporate Governance Statement continued

ASX Principle	ASX Principle	Reference/comment

Principle 1:	Lay solid foundations for management and oversight
1.1 Formalise and disclose the functions		The company has not adopted this recommendation to formalise and disclose the
reserved to the board and those delegated to management		functions reserved to the board and those delegated to management. The 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 should		Given the company’s background, the nature and size of its business and the
be independent directors		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.

2.2	The chairperson should be an The chairperson is a non executive independent Chairman.
	independent director

2.3	The roles of chairperson and chief The positions of chairman and managing director are held by separate persons.
	executive officer should not be exercised by the same individual

2.4 The board should establish a		The board has no formal nomination committee. Acting in its ordinary capacity
nomination committee		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 in	The skills and experience of directors are set out in the company’s annual report
	guide to reporting on principle 2	and on its website.

Principle 3:	Promote ethical and responsible decision making
3.1	Establish a code of conduct to guide
	the directors, the chief executive The company has formulated a code of conduct which can be viewed on the
	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 company’s website.

Catalpa Resources Limited - Annual Report

Corporate Governance Statement continued

	reporting or investigating reports of unethical practices	reporting or investigating reports of unethical practices

3.2	Disclose the policy concerning The company has formulated a securities trading policy which can be viewed on
	trading in company securities by its website.
	directors, officers and employees

3.3	Provide the information indicated in Not applicable – see above.
	guide to reporting on principle 3

Principle 4:	Safeguard integrity in financial reporting
4.1	Require the chief executive officer The Managing Director and Chief Financial Officer are required to sign a
	(or equivalent) and the chief financial declaration addressing the integrity of the financial statements and maintenance of
	officer (or equivalent) to state in financial records in accordance with s286 of the Corporation Act.
	writing to the board 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 audit		The company has established an audit committee which comprises five non
committee		executive directors. The charter for this committee is disclosed on the company’s
		website.

4.3	Structure the audit committee so that See above
	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 a See above
	formal charter

4.5	Provide the information indicated in Not applicable – see above.
	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 designed to provide reasonable
	procedures designed to ensure assurance as to the effectiveness and efficiency of operations, the reliability of
	compliance with ASX listing rule financial reporting and compliance with relevant laws and regulations. The board
	disclosure requirements and to is acutely aware of the continuous disclosure regime and there are systems in place
	ensure accountability at a senior to ensure compliance, underpinned by experience.
	management level for that compliance

5.2	Provide the information indicated in See above
	guide to reporting on principle 5

Principle 6:	Respect the rights of shareholders
6.1	Design and disclose a	In line with adherence to continuous disclosure requirements of ASX all
	communications strategy to promote	shareholders are kept informed of major developments affecting the company.
	effective communication with	This disclosure is through regular shareholder communications including the
	shareholders and encourage effective	Annual Report, Quarterly Reports, the company website and the distribution of
	participation at general meetings	specific releases covering major transactions or events.

6.2	Request the external auditor to attend It is the Group policy that the Auditor attends the AGM and part of the Agenda is
	the annual general meeting and be the tabling of the accounts and inviting shareholders to ask the Directors of the
	available to answer shareholder Auditor any questions about the report including the Audit Report.
	questions about the audit and the preparation and content of the auditor’s report

Catalpa Resources Limited - Annual Report

Corporate Governance Statement continued

Principle 7:	Recognise and manage risk
7.1 The board or appropriate board		While the company does not have formalised policies on risk management the
committee should establish policies on risk oversight and management		board recognises its responsibility for identifying areas of significant business risk
		and for 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 required to sign a
	equivalent) and the chief financial declaration addressing the integrity of the financial statements and maintenance of
	officer (or equivalent) should state to the board in writing that: 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 financial records in accordance with s286 of the Corporations Act.

7.3	Provide information indicated in Not applicable – See above.
	guide to reporting on principle 7

Principle 8:	Encourage enhanced Performance
8.1 Disclose the process for performance		The company does not consider it appropriate to have a sub committee of the
evaluation of the board, its committees and individual directors, and key executives		board to consider remuneration matters.
		The remuneration of executive and non executive 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 to the		The company discloses remuneration related information in its annual report to
company’s remuneration policies and benefits to these policies and (ii) the link between remuneration paid to directors and key executives and corporate performance.		shareholders in accordance with the Corporations Act 2001.
		Remuneration levels are determined by the board on an individual basis, the size
		of the company making individual assessment more appropriate than formal
		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 a sub-committee of the
remuneration committee		board to consider remuneration matters as this function is carried out by the full
		board.

9.3	Clearly distinguish the structure of See above.
	non executive directors remuneration from that of executives

9.4	Ensure that payment of equity based See above.
	executive remuneration is made in All equity issues to Directors will need to be approved by shareholders.
	accordance with thresholds set in plans approved by shareholders

Catalpa Resources Limited - Annual Report

Corporate Governance Statement continued

9.5	Provide information indicated in Not applicable – see above.	Provide information indicated in Not applicable – see above.
	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 company’s website.
conduct to guide compliance with legal and other obligations to legitimate stakeholders		The board continues to review existing procedures over 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.

Catalpa Resources Limited - Annual Report

Income Statements

Income Statements
YEAR ENDED 30 JUNE 2008 Notes	Consolidated Parent Entity 2008 2007 2008 2007 $ $ $ $
REVENUE FROM CONTINUING OPERATIONS 4 EXPENDITURE Depreciation expense 5 Corporate expenses Occupancy expenses 5 Employee and consultant expenses Travel and accommodation expenses Exploration, evaluation and development expenditure Impairment of exploration and development expenditure Impairment loss on assets Other expenses LOSS BEFORE INCOME TAX INCOME TAX BENEFIT 6 NET LOSS ATTRIBUTABLE TO EQUITY HOLDERS OF CATALPA RESOURCES LIMITED Basic and diluted loss per share for loss attributable to the ordinary equity holders of the company (cents per share) 26	594,905 387,038 594,905 387,038 (142,533) (122,030) (142,533) (122,030) (439,655) (321,650) (439,655) (321,650) (203,183) (231,071) (203,183) (231,071) (621,649) (899,649) (621,649) (899,649) (34,919) (72,668) (34,919) (72,668) (1,360,403) (1,625,016) (1,360,403) (1,625,016) - (6,888,164) - (6,888,164) (84,301) - (84,301) - - (65,529) - (65,529)
	(2,291,738) (9,838,739) (2,291,738) (9,838,739) - 108,542 - 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.

Catalpa Resources Limited - Annual Report

Balance Sheets

Balance Sheets
AT 30 JUNE 2008 Notes	Consolidated Parent Entity 2008 2007 2008 2007 $ $ $ $
CURRENT ASSETS Cash and cash equivalents 7 Other receivables 8 Other assets 9 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other financial assets 10 Property, plant and equipment 11 Mining properties 12 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 13 Provisions 14 TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 15 Reserves 16(a) Accumulated losses 16(b) TOTAL EQUITY	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
	2,915,086 3,273,135 2,905,086 3,263,133
	386,194 1,500 396,196 11,502 3,593,990 3,600,080 3,593,990 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
	158,066 392,618 158,068 392,618 462,208 805,578 462,208 805,578
	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 30,088,089 32,976,344 30,088,089 500,633 498,673 500,633 498,673 (27,201,981) (24,910,243) (27,201,981) (24,910,243)
	6,274,996 5,676,519 6,274,996 5,676,519

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

Catalpa Resources Limited - Annual Report

Statements of Changes in Equity

Statements of Changes in Equity
CONSOLIDATED AND PARENT ENTITY YEAR ENDED 30 JUNE 2008	Share Capital Ordinary Accumulated Losses Reserves Total $ $ $ $
BALANCE AT 1 JULY 2006 Loss for the year Income tax on items taken directly to equity TOTAL RECOGNISED INCOME AND EXPENSE FOR THE YEAR ATTRIBUTABLE TO MEMBERS OF CATALPA RESOURCES LIMITED Contributions to equity net of transactions costs Share based payments TRANSACTIONS WITH EQUITY HOLDERS IN THEIR CAPACITY AS EQUITY HOLDERS BALANCE AT 30 JUNE 2007 BALANCE AT 1 JULY 2007 Loss for the year 16(b) TOTAL RECOGNISED INCOME AND EXPENSE FOR THE YEAR ATTRIBUTABLE TO MEMBERS OF CATALPA RESOURCES LIMITED Contributions to equity net of transactions costs 15 Share based payments 16(a) TRANSACTIONS WITH EQUITY HOLDERS IN THEIR CAPACITY AS EQUITY HOLDERS BALANCE AT 30 JUNE 2008	22,591,978 (15,180,046) 456,266 7,868,198
	- (9,730,197) - (9,730,197) (108,542) - - (108,542)
	(108,542) (9,730,197) - (9,838,739)
	7,604,653 - - 7,604,653 - - 42,407 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 - - 2,888,255 - - 1,960 1,960
	2,888,255 - 1,960 2,890,215
	32,976,344 (27,201,981) 500,633 6,274,996

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

Catalpa Resources Limited - Annual Report

Statements of Cash Flows

Statements of Cash Flows
YEAR ENDED 30 JUNE 2008 Notes	Consolidated Parent Entity 2008 2007 2008 2007 $ $ $ $
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 received from release of tenement bonds Payment for option 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 financial 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 5,014,414 1,075,686 5,014,414
	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.

Catalpa Resources Limited - Annual Report

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.

(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.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(d) Revenue recognition

Interest revenue is recognised when receivable.

(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 shortterm 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 straight-line basis over the period of the lease.

(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.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(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.

(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 non-derivatives 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.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008

1. 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.

(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.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(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.

(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.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(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.

(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 non-transferability, 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.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008

1. 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.

(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.

Catalpa Resources Limited - Annual Report

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

Financial assets Cash and cash equivalents Other receivables Other assets Other financial assets Financial liabilities Trade and other payables	Consolidated Parent 2008 2007 2008 2007 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.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008

The following table details the Group’s exposure to interest rate risk at 30 June 2008:

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

The following table details the Group’s exposure to interest rate risk at 30 June 2007:

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

Catalpa Resources Limited - Annual Report

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.

(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.

3. SEGMENT INFORMATION

Description of segments

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

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008

	Consolidated Parent Entity 2008 2007 2008 2007 $ $ $ $
4. REVENUE From continuing operations Other revenue Interest income Research and development grant rebate received Other income 5. EXPENSES Loss before income tax includes the following specific expenses: Depreciation Motor vehicles Office furniture and equipment Computer equipment Mining machinery and equipment Total depreciation Rental of premises under operating lease Consulting fees Employee benefits Salary and Wages Share based payments Superannuation 6. INCOME TAX (a) Income tax expense/(benefit) Deferred tax benefit on origination and reversal of temporary differences Total income tax benefit per income statement	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 - (108,542) - (108,542)
	- (108,542) - (108,542)

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008


30 JUNE 2008		Consolidated Parent Entity 2008 2007 2008 2007 $ $ $ $
6. INCOME TAX (cont’d) (b) Numerical reconciliation of income tax benefit to prima facie tax payable Loss from continuing operations before income tax benefit Prima facie tax benefit 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 (benefit) (c) Amounts recognised directly in equity Relating to equity raising costs Deferred tax expense/(benefit) attributable to entity recognised in equity (d) Recognised deferred tax assets & liabilities Consolidated & Parent Entity Assets 2008 2007 $ $		(2,291,738) (9,838,739) (2,291,738) (9,838,739) (687,521) (2,951,622) (687,521) (2,951,622) 27,552 15,891 27,552 15,891 348,209 1,323,199 348,209 1,323,199 - - - - 375,216 1,586,035 375,216 1,586,035
		63,456 2,925,125 63,456 2,925,125 - (4,198) - (4,198) (63,456) (77,847) (63,456) (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)
		Liabilities Net 2008 2007 2008 2007 $ $ $ $
Accruals & provisions Other items	5,655 3,699 - -	- - 5,655 3,699 (5,655) (3,699) (5,655) (3,699)
	5,655 3,699	(5,655) (3,699) - -

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008

INCOME TAX (cont’d)

(e) Movement in temporary differences recognised

during the year

(e) Movement in temporary differences recognised during the year
	Balance at 1 July 2007 Recognised in income Recognised in equity Balance at 30 June 2008 $ $ $ $
Accruals & provisions Other items Net tax assets/(liabilities)	3,699 1,956 - 5,655 (3,699) (1,956) - (5,655)
	- - - -
	Balance at 1 July 2006 Recognised in income Recognised in equity Balance at 30 June 2007 $ $ $ $
Plant and equipment Big Bell asset & provision Exploration & mine properties Equity raising Accruals & provisions Prior year expensed blackhole costs Other items Net tax assets/(liabilities)	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 (7,876) - (3,699)
	- 108,542 (108,542) -

(f) Unrecognised deferred tax assets

	Consolidated	Consolidated	Parent	Entity
	2008	2007	2008	2007
	$	$	$	$
Deferred tax assets at 30% have not been recognised	in respect of the following:
Deductible temporary differences	300,055	2,036,636	300,055	2,036,636
Tax losses	5,488,692	5,216,267	5,488,692	5,216,267
Capital losses	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
(c) no changes in tax legislation adversely affect the consolidated entity in realising the benefit.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008 Notes	Consolidated Parent Entity 2008 2007 2008 2007 $ $ $ $
7. CURRENT ASSETS - CASH AND CASH EQUIVALENTS Cash and cash equivalents as shown in the balance sheets and the statements of cash flows 2,799,198 1,075,686 2,799,198 1,075,686 8. CURRENT ASSETS - OTHER RECEIVABLES Government taxes receivable 56,468 265,421 56,468 265,421 Other receivables 21,536 29,156 21,536 29,154 78,004 294,577 78,004 294,575 9. CURRENT ASSETS – OTHER ASSETS Prepayments - 9,017 - 9,017 Term deposits 37,884 1,893,855 27,884 1,883,855 37,884 1,902,872 27,884 1,892,872 10. NON-CURRENT ASSETS - OTHER FINANCIAL ASSETS Shares in unlisted controlled entity – at cost 23 - - 2 2 Loan to controlled entity - - 10,000 10,000 Term deposits on tenements and performance bonds 386,194 1,500 386,194 1,500 386,194 1,500 396,196 11,502 11. NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT Freehold land Fair value 11(a) 390,000 391,301 390,000 391,301 Motor vehicles Cost 51,789 51,789 51,789 51,789 Accumulated depreciation (45,115) (34,755) (45,155) (34,755) 11(a) 6,674 17,034 6,674 17,034 Office furniture and equipment Cost 110,675 106,714 110,675 106,714 Accumulated depreciation (89,726) (71,034) (89,726) (71,034) 11(a) 20,949 35,680 20,949 35,680 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	2,799,198 1,075,686 2,799,198 1,075,686
	56,468 265,421 56,468 265,421 21,536 29,156 21,536 29,154
	78,004 294,577 78,004 294,575
	- 9,017 - 9,017 37,884 1,893,855 27,884 1,883,855
	37,884 1,902,872 27,884 1,892,872
	- - 2 2 - - 10,000 10,000 386,194 1,500 386,194 1,500
	386,194 1,500 396,196 11,502
	51,789 51,789 51,789 51,789 (45,115) (34,755) (45,155) (34,755)
	6,674 17,034 6,674 17,034
	110,675 106,714 110,675 106,714 (89,726) (71,034) (89,726) (71,034)
	20,949 35,680 20,949 35,680
	19,237 16,354 19,237 16,354 (14,490) (10,548) (14,490) (10,548)
	4,747 5,806 4,747 5,806
	8,073,880 7,942,980 8,073,880 7,942,980 (302,260) (192,721) (302,260) (192,721) (4,600,000) (4,600,000) (4,600,000) (4,600,000)
	3,171,620 3,150,259 3,171,620 3,150,259
	8,562,581 8,509,138 8,562,581 8,509,138 (451,591) (309,058) (451,591) (309,058) (4,600,000) (4,600,000) (4,600,000) (4,600,000)
	3,510,990 3,600,080 3,510,990 3,600,080

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008 Notes	Consolidated Parent Entity 2008 2007 2008 2007 $ $ $ $
11. NON-CURRENT ASSETS - PLANT AND EQUIPMENT (cont’d) (a) Reconciliations of the carrying amounts of plant and equipment Freehold land (i) Opening net book amount Additions Increase in provision for rehabilitation to the land Impairment loss Closing net book amount	391,301 - 391,301 - - 391,301 - 391,301 83,000 - 83,000 - (84,301) - (84,301) -
	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.

Motor vehicles Opening net book amount Depreciation charge Closing net book amount Office furniture and equipment Opening net book amount Additions Depreciation charge Closing net book amount Computer equipment Opening net book amount Additions Depreciation charge Closing net book amount Mine machinery and equipment (ii) Opening net book amount Additions Depreciation charge Closing net book amount	17,034 27,476 17,034 27,476 (10,360) (10,442) (10,360) (10,442)
	6,674 17,034 6,674 17,034
	35,680 36,352 35,680 36,352 3,961 13,590 3,961 13,590 (18,692) (14,262) (18,692) (14,262)
	20,949 35,680 20,949 35,680
	5,806 3,107 5,806 3,107 2,883 6,311 2,883 6,311 (3,942) (3,612) (3,942) (3,612)
	4,747 5,806 4,747 5,806
	3,150,259 3,193,973 3,150,259 3,193,973 130,900 50,000 130,900 50,000 (109,539) (93,714) (109,539) (93,714)
	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.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008	Consolidated Parent Entity 2008 2007 2008 2007 $ $ $ $
12. NON-CURRENT ASSETS – MINING PROPERTIES Exploration and evaluation costs carried forward in respect of mining areas of interest Opening net book amount Incurred during the year Transferred to Development Provision for impairment Closing net book amount Development costs carried forward in respect of mining areas of interest Opening net book amount Incurred during the year Transferred from Exploration Provision for rehabilitation costs Provision for impairment Closing net book amount Total expenditure carried forward in respect of mining properties 13. CURRENT LIABILITIES - TRADE AND OTHER PAYABLES Trade payables Other payables and accruals 14. CURRENT LIABILITIES - PROVISIONS Employee benefits Site restoration	- 3,915,850 - 3,915,850 - - - - - - - - - (3,915,850) - (3,915,850)
	- - - -
	- 787,651 - 787,651 - 2,184,664 - 2,184,664 - - - - - - - - - (2,972,315) - (2,972,315)
	- - - -
	- - - -
	105,363 298,751 105,363 298,751 52,703 93,867 52,705 93,867
	158,066 392,618 158,068 392,618
	55,208 81,578 55,208 81,578 407,000 724,000 407,000 724,000
	462,208 805,578 462,208 805,578

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008

14. CURRENT LIABILITIES – PROVISIONS (cont’d)

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

(a) Share capital
Notes	2008 2007 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

(b) Movements in ordinary share capital

(b) Movements in ordinary share capital
	2008 2007 Number of shares $ Number of shares $
Beginning of the financial 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 financial 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

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008

15. ISSUED CAPITAL (cont’d)

(c) Movements in options on issue	Number of options 2008 2007
Beginning of the financial 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 financial 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

(c) Movements in options on issue

Number of options
2008
2007

Beginning of the financial 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 financial 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.

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

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

17. DIVIDENDS

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

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

(b) Key management personnel compensation
	Consolidated Parent Entity 2008 2007 2008 2007 $ $ $ $
Short-term benefits Post employment benefits Termination benefits 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 13 to 16.

(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.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008

18. KEY MANAGEMENT PERSONNEL (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:

2008	Balance at				Balance at	Balance at
	start of the	Granted as			resignation	end of the	Vested and
	year	compensation	Rights Issue	Lapsed	date	year	exercisable	Unvested
*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)	-	-	-
2007	Balance at				Balance at	Balance at
	start of the	Granted as			resignation	end of the	Vested and
	year	compensation	Rights Issue	Lapsed	date	year	exercisable	Unvested
*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 March 2007)	-	-	-	-	-	-	-	-
Rowan Johnston	250,000	-	-	-	-	250,000	-	250,000

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008

18. KEY MANAGEMENT PERSONNEL (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.

2008		Received
		during the	Other	Balance at
	Balance at	year on the	changes	resignation	Balance at
	start of the	exercise of	during the	date	end of the
	year	options	year		year
*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 February 2008)_	812,500	-	-	(812,500)	-
David Hatch_(resigned 28 September 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 August 2007)_	-	-	-	-	-
Leonard Math_(appointed 2 August 2007)_	-	-	-	-	-
John Fitzgerald_(resigned 31 July 2007)_	-	-	-	-	-
Rowan Johnston (resigned 14 Sep 2007)	-	-	-	-	-

2007		Received
		during the	Other	Balance at
	Balance at	year on the	changes	resignation	Balance at
	start of the	exercise of	during the	date	end of the
	year	options	year		year
*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 March 2007)_	-	-	-	-	-
Rowan Johnston	-	-	-	-	-

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008

18. KEY MANAGEMENT PERSONNEL (cont’d)

(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.

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

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30	JUNE	2008	Consolidated	Consolidated	Parent	Entity
			2008	2007	2008	2007
			$	$	$	$

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):

Within one year (b) Lease commitments: Group as lessee Operating leases (non-cancellable): Minimum lease payments within one year later than one year but not later than five years Greater than five 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.

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 (2006: $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).

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008

22. RELATED PARTY TRANSACTIONS

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).

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.

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.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008

25. CASH FLOW STATEMENT

	Consolidated Parent Entity 2008 2007 2008 2007 $ $ $ $
(a) Reconciliation of net loss after income tax to net cash outflow 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 benefit 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 and other payables (Decrease)/increase in provisions Net cash outflow 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)

Consolidated
Parent Entity
2008
2007
2008
2007
$ $ $ $

(a) Reconciliation of net loss after income tax to net
cash outflow 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 benefit
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 and other payables
(Decrease)/increase in provisions
Net cash outflow 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.

26. LOSS PER SHARE

	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
	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.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008

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.

Options do not vest until a specified period after granting and their exercise is conditional on the achievement of certain performance hurdles.

Set out below are summaries of the options granted:

	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.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2008

27. SHARE-BASED PAYMENTS (cont’d)

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:

	2008	2007
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

Catalpa Resources Limited - Annual Report

Directors' Declaration

In the directors’ opinion:

(a) the financial statements and notes set out on pages 26 to 56 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 14 to 17 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, 30 September 2008

Independent Auditor’s Report

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Catalpa Resources Limited - Annual Report

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:

	Ordinary shares 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 8,730 185 675,542 320 2,732,117 1247 50,668,417 328 291,292,507
	2112 345,377,313
	348 1,563,271

(b) Twenty largest shareholders

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

(b) Twenty largest shareholders The names of the twenty largest holders of quoted ordinary shares are:
	Listed ordinary shares Number of shares Percentage of ordinary shares
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%

Voting rights

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

Catalpa Resources Limited - Annual Report

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:

Lion Selection Group Ltd

Number of Shares 152,096,301

(d) Distribution of equity securities (listed options)

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

(d) Distribution of equity securities (listed options) Analysis of numbers of equity security holders by size of holding:
	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:

The names of the twenty largest holders of quoted options are:
	Listed Options Number of options Percentage of ordinary shares
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%

Catalpa Resources Limited - Annual Report

ASX Additional Information continued

(f) Schedule of interests in mining tenements
Location	Tenement	Percentage held / earning
WESTERN AUSTRALIA
BODALIN SOUTH
Kent Road	E77/1452	Application 100%
JILBADGIE
Jilbadgie East	E77/1132	Earning 65%
MINE
Paddock	M77/110	Granted 100%
Golden Point East	M77/124	Granted 100%
Mine	M77/88	Granted 100%
SANDFORD ROCKS
Sandford Rocks	M77/1494	Application 100%
WESTONIA
Begley	E77/1069	Granted 100%
Westonia N.E.	E77/1324	Granted 100%
Westonia Belt	E77/516	Granted 100%
Westonia West	E77/990	Granted 100%
Westonia	L77/18	Granted 100%
Le Trois	M77/827	Application 100%
Great Battler	M77/841	Application 100%
Le Trois East	M77/842	Application 100%
Westonia NW	P77/3712	Application 100%
West Westonia	P77/3713	Application 100%
Westonia NE	P77/3714	Application 100%
Bodalin	P77/3875	Application 100%
Corsini Road	P77/3876	Application 100%
Hitching Road	P77/3877	Application 100%
Stoneman Road	P77/3878	Application 100%
Kaolin Street	P77/3879	Application 100%

AI assistant

EVOLUTION MINING LIMITED — Annual Report 2008

64885_rns_2008-09-30_6738c56a-7312-42a2-89a7-6a0cece00bd8.pdf

CATALPA RESOURCES LIMITED

Annual Financial Report

Corporate Information

ABN 74 084 669 036

Directors

Company Secretary

Registered Office

Share Register

Auditors

Internet Address

Stock Exchange Listing

Contents

Review of Operations

EXPLORATION

Stakeholder Consultation

Near Mine and Regional RAB Drill Programme

Auger Sampling Programme

Begley Tenement

Edna May Underground

Significant Intercepts interpreted to be from the Edna May reef

Catalpa Resources Limited – Annual Report

Proposed diamond drill programme collar locations and drill hole design details.

Greenfinch

Golden Point

Edna May West

FEASIBILITY STUDY

Catalpa Resources Limited – Annual Report

RESOURCES

Greenfinch Resources

Total Resources

Tenement Holdings

Sustainability

Safety and Health

Environment and Statutory Reporting

Community

Catalpa Resources Limited – Annual Report

Competent Person Statement

Competent Person Statement

Directors’ Report

DIRECTORS

Names, qualifications, experience and special responsibilities

John Rowe (59) , BSc (Hons) ARSM, MAusIMM (Non Executive Chairman)

Bruce McFadzean (51), Dip Mining (Managing Director) – appointed on the 9 June 2008

Murray Pollock (60) , MAICD (Non Executive Director)

Directors’ Report continued

COMPANY SECRETARY

Graham Anderson , BBus, CA

Leonard Math , BBus, CA

Directors' Report continued

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

NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES

DIVIDENDS

OPERATING AND FINANCIAL REVIEW

Operating Results for the Year

Directors' Report continued

Risk Management

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

ENVIRONMENTAL REGULATION AND PERFORMANCE

REMUNERATION REPORT

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

Remuneration Policy

Directors' Report continued

Performance based remuneration

Company performance, shareholder wealth and directors' and executives' remuneration

Directors' Report continued

B Details of remuneration (audited)

Directors' Report continued

C Service agreements (audited)

D Share-based compensation (audited)

E Additional information – unaudited

Performance income as a proportion of total compensation

Directors' Report continued

DIRECTORS’ MEETINGS

Notes

SHARES UNDER OPTION

EVOLUTION MINING LIMITED Annual Report 2008