EVOLUTION MINING LIMITED - Annual Report 2009

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24 September 2009

Australian Securities Exchange Companies Announcements Office

ANNUAL FINANCIAL REPORT

Please find the Catalpa Resources Limited Annual Financial Report attached.

Yours faithfully CATALPA RESOURCES LIMITED

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Graham Anderson Company Secretary

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CATALPA RESOURCES LIMITED

ABN 74 084 669 036

Annual Financial Report

for the year ended 30 June 2009

Formerly trading as Westonia Mines Limited

Catalpa Resources Limited - Annual Report

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Corporate Information

ABN 74 084 669 036

Directors

John Rowe (Chairman) Bruce McFadzean (Managing Director) Murray Pollock (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

PKF Chartered Accountants and Business Advisors Level 7, BGC Centre 28 The Esplanade PERTH WA 6000 Tel: (618) 9278 2222 Fax: (618) 9278 2200

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

Directors' Report	1
Auditor’s Independence Declaration	11
Income Statement	12
Balance Sheet	13
Statement of Changes in Equity	14
Cash Flow Statement	15
Notes to the Financial Statements	16
Directors' Declaration	50
Independent Audit Report	51

Catalpa Resources Limited – Annual Report

Directors’ Report

The directors of Catalpa Resources Limited submit herewith the annual report of the company for the financial year ended 30 June 2009. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows:

INFORMATION ABOUT THE DIRECTORS AND SENIOR MANAGEMENT

The names and particulars of the directors of the company during or since the end of the financial year are:

Name Particulars John Rowe John Rowe brings a wealth of geological and business development skills to the company. Mr Rowe has 37 years BSc (Hons) ARSM, MAusIMM experience within the Nickel and Gold industry of Western Australia. He has held a variety of positions in mine (Non Executive Chairman) 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 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 any other listed company directorships within the last 3 years.

Bruce McFadzean Mr McFadzean, a mining engineer, brings over 30 years of management, mining, processing and project "start up" Dip Mining experience to the organisation, half of which was gained in the employ of global resources brands, Rio Tinto and (Managing Director) 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 any other listed company directorships within the last 3 years. Murray Pollock Mr Pollock is a businessman with over 40 years experience in the mineral services industry, principally in drilling. He MAICD is a consultant to several companies on drilling and mine management services. (Non Executive Director) Mr Pollock has not held any other listed company directorships within the last 3 years. Barry Sullivan Mr. Sullivan is an experienced and successful mining engineer with a career spanning 40 years in the mining BSc(Min), ARSM, F AusIMM, industry. His initial mining experience was gained in the South African gold mining industry, followed by more than 20 MAICD years with Mount Isa Mines. In the final 5 years of his tenure with MIM, Mr Sullivan was Executive General Manager (Non Executive Director) 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 Lion Mining Ltd and Lion Selection Ltd (appointed 7 November 2008). Mr Sullivan was previously a non-executive director of Allegiance Mining Ltd. Mr Sullivan has not held any other listed company directorships within the last 3 years. Nigel Johnson Mr. Johnson is a Chartered Accountant with strong finance and management experience attained over a period of 36 CA, CFTP (Snr), MAICD years. This experience was gained from working in a number of countries for both publicly listed and private (Non Executive Director) companies within a number of industries. Appointed 20 August 2008 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 any other listed company directorships within the last 3 years.

Chris Melloy

(BE (Hons), MEngSc, GDipAppFin (Sec Inst), MAusIMM, ASIA (Non Executive Director) Resigned 12 December 2008

Mr Melloy 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.

He 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. Mr Melloy has not held other listed company directorships within the last 3 years.

Catalpa Resources Limited – Annual Report

Directors’ shareholdings

The following table sets out each director’s relevant interest in shares or options in shares of the Company as at the date of this report.

	Fully Paid Ordinary	Share
	Shares	Options
John Rowe	1,000,000	2,000,000
Bruce McFadzean	1,017,500	10,172,500
Murray Pollock	18,271,162	4,252,802
Barry Sullivan	-	1,000,000
Nigel Johnson	1,500,000	1,000,000

Remuneration of directors and senior management

Information about remuneration of the directors and senior management is set out in the remuneration report of this directors’ report, on pages 5 to 10.

Share options granted to directors and senior management

Information about share options granted to directors and senior management during or since the end of the financial year is set out in the remuneration report of this directors’ report, on pages 5 to 10.

Company secretaries

Name Particulars

Graham Anderson Graham Anderson has a Bachelor of Business Degree and is a member of the Institute of Chartered Accountants. BBus, CA 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 Leonard Math graduated from Edith Cowan University, majoring in Accounting and Information Systems, in 2003 and BBus, CA 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.

Catalpa Resources Limited – Annual Report

PRINCIPAL ACTIVITIES

The Group’s principal activities during the course of the financial year were the development of the Edna May Gold Project near Westonia in Western Australia and exploration within the wider Westonia Greenstone Belt.

REVIEW OF OPERATIONS

During the year the Group has raised $106 million in debt and equity to advance its Edna May (open pit) operation at Westonia in Western Australia, with production expected to commence by second quarter 2010. As part of the debt funding Catalpa has entered into physical gold delivery contracts for 352,317 ounces of gold at a price of $1,557.50 per ounce.

Catalpa announced in June 2009 a proposed merger with Lion Selection to bring together Lion Selection’s 30% interest in the Cracow gold mine in Queensland with Catalpa’s existing gold mining operations. This merger is subject to shareholder approval and is not expected to be completed before late November 2009.

The Group recognised a loss after tax for the year of $6.814 million [2008: $2.292 million].

CHANGES IN THE STATE OF AFFAIRS

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

SUBSEQUENT EVENTS

No matters or circumstances, besides those disclosed at note 30, 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.

FUTURE DEVELOPMENTS

Over the next 12 months the Group will be focused on the development of the Edna May Gold Project with gold production expected to commence mid 2010. Other 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. Accordingly this information has not been disclosed in this report.

DIVIDENDS

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

ENVIRONMENTAL REGULATIONS

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.

SHARES UNDER OPTION

Details of unissued shares or interests under option as at the date of this report are:

Issuing entity	Number of shares under	Class of shares	Exercise price of option	Expiry date of
	option			options
Catalpa Resources Limited	172,723,065	Ordinary	10 cents	31 Oct 2011
Catalpa Resources Limited	38,302,294	Ordinary	10 cents	30 Jun 2010
Catalpa Resources Limited	200,000	Ordinary	11 cents	22 Nov 2010
Catalpa Resources Limited	100,000	Ordinary	8 cents	29 April 2011
Catalpa Resources Limited	625,000	Ordinary	6 cents	23 Dec 2013
Catalpa Resources Limited	4,375,000	Ordinary	8 cents	23 Dec 2013
Catalpa Resources Limited	4,375,000	Ordinary	10 cents	23 Dec 2013
Catalpa Resources Limited	4,375,000	Ordinary	12 cents	23 Dec 2013
Catalpa Resources Limited	3,750,000	Ordinary	14 cents	23 Dec 2013
Catalpa Resources Limited	1,250,000	Ordinary	6 cents	11 Mar 2014
Catalpa Resources Limited	1,250,000	Ordinary	8 cents	11 Mar 2014
Catalpa Resources Limited	1,250,000	Ordinary	10 cents	11 Mar 2014
Catalpa Resources Limited	1,250,000	Ordinary	12 cents	11 Mar 2014
Catalpa Resources Limited	66,666,666	Ordinary	7.5 cents	25 May 2014

The holders of these options do not have the right, by virtue of the option, to participate in any share issue or interest issue of the Company. No options have been issued subsequent to the year end. No shares have been issued during or since the end of the financial year as a result of exercise of an option.

Catalpa Resources Limited – Annual Report

IMDEMNIFICATION OF OFFICERS AND AUDITORS

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

The Company has 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.

Except for the above the Company has not otherwise, during or since the financial year, except to the amount permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor.

DIRECTORS’ MEETINGS

The following table sets out the number of directors’ meetings and committee meetings held during the financial year and the number of meetings attended by each director (while they were a director or committee member). During the financial period 22 board meetings and 2 audit committee meetings were held.


Directors	Held	Attended	Held	Attended
John Rowe	22	22	2	2
Bruce McFadzean	22	22	-	-
Murray Pollock	22	22	2	2
Barry Sullivan	21	18	2	2
Nigel Johnson	21	20	2	2
Chris Melloy	8	6	-	-

NON-AUDIT SERVICES

Details of amounts paid or payable to the auditor for non-audit services provided during the period by the auditor are outlined in note 28 to the financial statements.

The directors are satisfied that the provision of non-audit services during the period by the auditor is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

The directors are of the opinion that the services disclosed in note 28 to the financial statements do not compromise the external auditor’s independence, based on advice received from the Audit Committee, for the following reasons:

All non-audit services have been reviewed to ensure they do not impact the integrity and objectivity of the auditor; and
None of the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.

AUDITOR’S INDEPENDENCE DECLARATION

The Auditor’s Independence Declaration is included on page 11 of the financial report.

Catalpa Resources Limited – Annual Report

REMUNERATION REPORT (audited)

This remuneration report, which forms part of the directors’ report, sets out information about the remuneration of Catalpa Resources’ directors and senior management for the financial year ended 30 June 2009. The prescribed details for each person covered by this report are detailed below under the following headings:

director and senior management details
remuneration policy
relationship between the remuneration policy and Company performance
remuneration of directors and senior management
key terms of employment contracts

Director and senior management details

The following persons acted as directors or senior management during or since the end of the financial year:

John Rowe non-executive chairman Bruce McFadzean managing director Murray Pollock non-executive director Barry Sullivan non-executive director Nigel Johnson non-executive director (appointed 20 August 2008) Chris Melloy non-executive director (resigned 12 December 2008)

The term “senior management” is used in this remuneration report to refer to the following persons. These persons include the five members of senior management who received the highest remuneration during the year. Except as noted the named persons held their current positions for the whole of the financial year and since the end of the financial year:

Erik Palmbachs Chief financial officer (appointed 20 October 2008) Stuart Pether General manager – operations (appointed 12 January 2009) Graham Anderson Joint company secretary Leonard Math Joint company secretary

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

The board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract and retain the highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth. Executives are also entitled to participate in the employee share and option arrangements.

Executive directors and senior management 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 $350,000). 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.

Catalpa Resources Limited – Annual Report

Relationship between the remuneration policy and company performance

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 directors and employees under the employees and contractors option plan to encourage the alignment of personal and shareholder interests. Under this plan the options generally vest over a five year period and vesting is subject to persons remaining in employment with the Group. The company believes this policy will be effective in increasing shareholder wealth. For details of directors and senior management interests in options at year end, refer note 26.

No component of director or senior management salary is dependent on company performance. The Group did not have a formal cash incentive or bonus scheme for the years ending 30 June 2008 or 30 June 2009.

Remuneration of directors and senior management

The directors and the Company executives and group executives received the following amounts as compensation for their services as directors and executives of the Company and/or the Group during the period:

Year ended 30 June 2009

Name
Directors
John Rowe
Bruce McFadzean
Murray Pollock
Barry Sullivan
Nigel Johnson (i)
Chris Melloy (ii) (v)
Executives
Erik Palmbachs (iii)
Stuart Pether (iv)
Graham Anderson and
Leonard Math (vi)
TOTAL

Short-term employee benefits
Post-
employment
benefits
Cash salary
and fees
Other
services
Non-
monetary
Super-
annuation
Equity settled
share-based
payments
Total
% consisting
of options
$
$
$
$
$
$
$
80,000
30,250
-
7,200
23,228
139,174
16%
370,000
-
7,346
33,300
116,142
519,266
21%
40,000
-
-
3,600
11,614
54,462
20%
41,667
-
-
3,750
11,614
56,279
19%
34,564
11,375
-
3,111
11,614
59,912
18%
17,934
-
-
-
-
17,934
-
148,077
5,383
13,327
36,586
189,291
12%
123,106
38,077
4,039
11,080
40,425
242,091
27%
66,000
-
-
-
-
66,000
-
921,348
79,702
16,768
75,368
251,223
1,344,409

(i) appointed 20 August 2008

(ii) resigned 12 December 2008 (iii) appointed 20 October 2008

(iv) appointed 12 January 2009

(v) These payments were made 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.

(vi) 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.

Catalpa Resources Limited – Annual Report

Year ended 30 June 2008

Name
Directors
John Rowe
Bruce McFadzean (i)
Murray Pollock
Barry Sullivan (ii)
Chris Melloy (viii)
Mark Fitzpatrick (iii)
David Hatch (iv)
Executives
Graham Anderson and
Leonard Math (v) (ix)
John Fitzgerald (vi)
Rowan Johnston (vii)
TOTAL

Short-term employee
benefits
Post- employment
benefits
Cash salary
and fees
Other
services
Super-
annuation
Retirement
benefits
Share-based
payment -
options
Total
% consisting
of options
$
$
$
$
$
$
$
56,666
103,344
5,100
-
-
165,110
-
23,492
-
2,114
-
-
25,660
-
40,000
-
3,600
-
-
43,600
-
1,667
-
150
-
-
1,817
-
40,000
-
-
-
-
40,000
-
50,000
85,250
4,500
-
-
139,750
-
82,073
-
7,387
110,000
-
199,460
-
56,500
-
-
-
-
56,500
-
16,000
-
1,440
-
-
17,440
-
57,994
-
5,169
50,000
-
113,163
-
424,392
188,594
29,460
160,000
-
802,446
-

(i) appointed 6 June 2008

(ii) appointed 16 June 2008

(iii) resigned 27 February 2008

(iv) resigned 28 September 2007

(v) appointed 2 August 2007

(vi) resigned 31 July 2007

(vii) resigned 14 September 2007

(viii) These payments were made 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.

(ix) 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.

No director or member of senior management appointed during the period received a payment as part of consideration for agreeing to hold the position.

Catalpa Resources Limited – Annual Report

Share-based payments granted as compensation in the current financial year

Employee share option plan

The Group has an ownership-based compensation scheme for executives and senior employees of the Group. Each employee share option converts to one ordinary share of Catalpa Resources Limited on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of expiry. Refer to “Relationship between the remuneration policy and company performance” above for details of the basis for granting options and vesting criteria.

During the financial year the following share-based payment arrangements were in existence:

Option series	Grant date	Expiry Date	Weighted average fair	Vesting date
			value at grant date
			$
Nov 05 at 11 cents	22 Nov 2005	22 Nov 2010	0.02	Vested at date of grant
Apr 08 at 8 cents	29 April 2008	29 April 2011	0.02	50% vested at date of grant
				50% vest on completion of care and
				maintenance program
Dec 08 at 6 cents	23 Dec 2008	23 Dec 2013	0.02	Vests at date of grant
Dec 08 at 8 cents	23 Dec 2008	23 Dec 2013	0.02	3.75m vest at date of grant.
				0.625m vest on completion of board
				endorsed finance and funding
				package to commence construction
				of the Edna May process plant.
Dec 08 at 10 cents	23 Dec 2008	23 Dec 2013	0.02	3.25m exercisable upon completion
				of an update of the feasibility study
				for the Edna May open pit project.
				0.5m exercisable upon achievement
				of a balanced board composition.
				0.625m exercisable upon the
				successful employment of the finance
				and accounting team and
				implementation of project
				construction and operating cost
				managing system.
Dec 08 at 12 cents	23 Dec 2008	23 Dec 2013	0.02	3.75m exercisable upon the
				completion of financing (both debt
				and equity) for the Edna May open
				project.
				0.625m exercisable upon the
				successful commissioning of Edna
				May's open pit project and the key
				parameters have been achieved.
Dec 08 at 14 cents	23 Dec 2008	23 Dec 2013	0.02	Exercisable upon the successful
				commissioning of Edna May's open
				pit project and the key parameters
				have been achieved.
March 09 at 6 cents	11 Mar 2009	11 Mar 2014	0.04	Vests at date of grant
March 09 at 8 cents	11 Mar 2009	11 Mar 2014	0.03	Vest on completion of board
				endorsed finance and funding
				package to commence construction
				of the Edna May process plant.
March 09 at 10 cents	11 Mar 2009	11 Mar 2014	0.03	Exercisable upon the successful
				employment of the site operating
				team and implementation of project
				construction, production and cost
				management system.
March 09 at 12 cents	11 Mar 2009	11 Mar 2014	0.03	Exercisable upon the successful
				commissioning of Edna May Gold
				Project.

Further details of the employee share option plan are contained in note 25 to the financial statements.

Catalpa Resources Limited – Annual Report

The following grants of share-based payment compensation to directors and senior management relate to the current financial year. No options issued during the year were exercised or lapsed during the period .

Name	Option series	Number	Number vested	% of grant	% of grant
		granted		vested	forfeited
John Rowe
	Dec 08 at 8 cents	500,000	500,000	100	-
	Dec 08 at 10 cents	500,000	500,000	100	-
	Dec 08 at 12 cents	500,000	500,000	100	-
	Dec 08 at 14 cents	500,000	-	-	-
Bruce McFadzean
	Dec 08 at 8 cents	2,500,000	2,500,000	100	-
	Dec 08 at 10 cents	2,500,000	2,500,000	100	-
	Dec 08 at 12 cents	2,500,000	2,500,000	100	-
	Dec 08 at 14 cents	2,500,000	-	-	-
Murray Pollock
	Dec 08 at 8 cents	250,000	250,000	100	-
	Dec 08 at 10 cents	250,000	250,000	100	-
	Dec 08 at 12 cents	250,000	250,000	100	-
	Dec 08 at 14 cents	250,000	-	-	-
Barry Sullivan
	Dec 08 at 8 cents	250,000	250,000	100	-
	Dec 08 at 10 cents	250,000	250,000	100	-
	Dec 08 at 12 cents	250,000	250,000	100	-
	Dec 08 at 14 cents	250,000	-	-	-
Nigel Johnson
	Dec 08 at 8 cents	250,000	250,000	100	-
	Dec 08 at 10 cents	250,000	250,000	100	-
	Dec 08 at 12 cents	250,000	250,000	100	-
	Dec 08 at 14 cents	250,000	-	-	-
Stuart Pether
	March 09 at 6 cents	1,250,000	1,250,000	100	-
	March 09 at 8 cents	1,250,000	1,250,000	100	-
	March 09 at 10 cents	1,250,000	-	-	-
	March 09 at 12 cents	1,250,000	-	-	-
Erik Palmbachs
	Dec 08 at 6 cents	625,000	625,000	100	-
	Dec 08 at 8 cents	625,000	625,000	100	-
	Dec 08 at 10 cents	625,000	-	-	-
	Dec 08 at 12 cents	625,000	-	-	-
	Value of	options granted	Value of options exercised Value of options lapsed
	at the grant date		at the exercise date at the date of lapse
		$	$		$
John Rowe		21,700	-		-
Bruce McFadzean		108,500	-		-
Murray Pollock		10,850	-		-
Barry Sullivan		10,850	-		-
Nigel Johnson		10,850	-		-
Erik Palmbachs		47,438	-		-
Stuart Pether		60,250	-		-

The value of options granted during the period is recognised in compensation over the vesting period of the grant, in accordance with Australian Accounting Standards.

Catalpa Resources Limited – Annual Report

Performance of Catalpa Resources Limited

The table below sets out summary information about the Consolidated Entity’s earnings and movements in shareholder wealth for the last 5 years.

	30 June 2009	30 June 2008	30 June	2007	30 June	2006	30 June	2005
	$	$	$		$		$
Revenue	364,821	594,905	387,038		427,088		384,031
Net loss before tax	(6,981,448)	(2,291,738)	(9,838,739)		(12,622,627)		(940,644)
Net loss after tax	(6,981,448)	(2,291,738)	(9,730,197)		(12,606,793)		(940,644)
	30 June 2009	30 June 2008	30 June	2007	30 June	2006	30 June	2005
Share price at start of year	0.05	0.07		0.19		0.08		0.20
Share price at end of year	0.10	0.05		0.07		0.19		0.08
Dividends	-	-		-		-		-
Basic and diluted earnings per
share (cents per share)	(1.30)	(0.67)		(3.5)		(5.6)		(0.9)

Key Terms of Employment Contracts

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 .

Erik Palmbachs, Chief Financial Officer

Term of agreement – 3 months notice of termination is required
Base salary, exclusive of statutory superannuation, of $210,000 to be reviewed annually by the board.
The Company provides Mr Palmbachs with a 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.

Stuart Pether, General Manager - Operations

Term of agreement – 3 months notice of termination is required
Base salary, exclusive of statutory superannuation, of $260,000 to be reviewed annually by the board.
The Company provides Mr Pether with a motor vehicle. Fringe Benefits Tax associated with this vehicle will be at the Company’s expense.

Signed in accordance with a resolution of the directors.

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Bruce McFadzean Managing Director Perth, 23 September 2009

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AUDITOR'S INDEPENDENCE DECLARATION

As lead auditor for the audit of Catalpa Resources Limited for the year ended 30 June 2009, I declare that to the best of my knowledge and belief, there have been:

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

This declaration is in respect of Catalpa Resources Limited and the entities it controlled during the year.

PKF Chartered Accountants

Chris Nicoloff Partner

Dated at Perth, Western Australia this 23[rd] day of September 2009.

PKF Perth is a member of the PKF International Limited network of legally independent member firms. PKF Perth is also a member of PKF Australia Limited, a national network of legally independent firms each trading as PKF. PKF Perth does not accept responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

Liability limited by a scheme approved under Professional Standards Legislation.

Catalpa Resources Limited - Annual Report

Income Statement

Income Statement
YEAR ENDED 30 JUNE 2009 Notes	Consolidated Company 2009 2008 2009 2008 $ $ $ $
Revenue 5 Other income 6 Depreciation expense Corporate expenses Occupancy expenses 6 Employee and consultant expenses Travel and accommodation expenses Exploration, evaluation and development expenditure Impairment of non-current assets Finance costs LOSS BEFORE TAX INCOME TAX BENEFIT 7 NET LOSS ATTRIBUTABLE TO EQUITY HOLDERS OF CATALPA RESOURCES LIMITED Basic and diluted loss per share (cents per share) 19	263,929 263,321 263,929 263,321 75,287 10,699 75,287 10,699 (161,982) (142,533) (161,496) (142,533) (1,463,455) (439,655) (1,454,437) (439,655) (231,790) (203,183) (231,790) (203,183) (1,755,310) (621,649) (1,752,215) (621,649) (139,223) (34,919) (139,223) (34,919) (3,316,493) (1,360,403) (3,316,364) (1,360,403) - (84,301) - (84,301) (110,390) - (110,390) -
	(6,839,427) (2,612,623) (6,826,699) (2,612,623) 25,605 320,885 25,605 320,885
	(6,813,822) (2,291,738) (6,801,094) (2,291,738)
	(1.27) (0.67)

Notes to the Financial Statements are included on pages 16 to 49.

Catalpa Resources Limited - Annual Report

Balance Sheet

Balance Sheet
AT 30 JUNE 2009 Notes	Consolidated Company 2009 2008 2009 2008 $ $ $ $
CURRENT ASSETS Cash and cash equivalents 24 Other receivables 8 Other financial assets 9 Prepayments 10 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other financial assets 9 Property, plant and equipment 11 Exploration, evaluation and development expenditure 12 Borrowing costs 13 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 14 Borrowings 15 Provisions 16 TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Borrowings 15 Provisions 16 TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 17 Reserves 18(a) Accumulated losses 18(b) TOTAL EQUITY	32,296,718 2,799,198 32,296,718 2,799,198 838,981 78,004 838,981 78,004 3,532,500 37,884 3,532,500 27,884 9,444 - 2,274 -
	36,677,643 2,915,086 36,670,473 2,905,086
	- 386,194 5,371,391 396,196 7,457,212 3,593,990 3,590,124 3,593,990 1,526,218 - - - 3,662,943 - 3,662,943 -
	12,646,373 3,980,184 12,624,458 3,980,184
	49,324,016 6,895,270 49,294,931 6,895,270
	4,113,291 158,066 4,074,188 158,068 19,534 - 19,534 - 107,578 55,208 104,868 55,208
	4,240,403 213,274 4,198,590 213,274
	65,534 - 65,534 - 407,000 407,000 407,000 407,000
	472,534 407,000 472,534 407,000
	4,712,937 620,274 4,671,124 620,274
	44,611,079 6,274,996 44,623,807 6,274,996
	74,100,908 32,976,344 74,100,908 32,976,344 4,525,974 500,633 4,525,974 500,633 (34,015,803) (27,201,981) (34,003,075) (27,201,981)
	44,611,079 6,274,996 44,623,807 6,274,996

Notes to the Financial Statements are included on pages 16 to 49.

Catalpa Resources Limited - Annual Report

Statement of Changes in Equity

Statement of Changes in Equity
YEAR ENDED 30 JUNE 2009 Consolidated	Issued Capital Reserves Accumulated Losses Total $ $ $ $
AT 1 JULY 2007 Net income recognised directly in equity Loss for the year Total recognised income and expense Issue of shares (net of expenses) Recognition of share based payments AT 30 JUNE 2008 Net income recognised directly in equity Loss for the year 18(b) Total recognised income and expense Issue of shares (net of expenses) 17 Share based payments 18(a) AT 30 JUNE 2009 Company	30,088,089 498,673 (24,910,243) 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
	32,976,344 500,633 (27,201,981) 6,274,996
	- - - - - - (6,813,822) (6,813,822)
	- - (6,813,822) (6,813,822)
	41,124,564 - - 41,124,564 - 4,025,341 - 4,025,341
	74,100,908 4,525,974 (34,015,803) 44,611,079

AT 1 JULY 2007 Net income recognised directly in equity Loss for the year Total recognised income and expense Issue of shares (net of expenses) Recognition of share based payments AT 30 JUNE 2008 Net income recognised directly in equity Loss for the year 18(b) Total recognised income and expense Issue of shares (net of expenses) 17 Share based payments 18(a) AT 30 JUNE 2009	30,088,089 498,673 (24,910,243) 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
	32,976,344 500,633 (27,201,981) 6,274,996
	- - - - - - (6,801,094) (6,801,094)
	- - (6,801,094) (6,801,094)
	41,124,564 - - 41,124,564 - 4,025,341 - 4,025,341
	74,100,908 4,525,974 (34,003,075) 44,623,807

Notes to the Financial Statements are included on pages 16 to 49.

Catalpa Resources Limited - Annual Report

Cash Flow Statement

Cash Flow Statement
YEAR ENDED 30 JUNE 2009 Notes	Consolidated Company 2009 2008 2009 2008 $ $ $ $
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 24(b) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Payment for project development Transfer to term deposits 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 net of expenses Payment of loan to subsidiary Repayment of borrowings 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 24(a)	25,605 320,885 25,605 320,885 - 35,904 - 35,904 (3,327,522) (3,123,579) (3,359,913) (3,123,579) 262,533 264,790 262,523 264,790
	(3,039,384) (2,502,000) (3,071,785) (2,502,000)
	(3,930,128) (137,743) (62,553) (137,743) (1,526,218) - - (3,121,306) - (3,121,306) - - 1,500,000 - 1,500,000 - (25,000) - (25,000)
	(8,577,652) 1,337,257 (3,183,859) 1,337,257
	41,124,564 2,888,255 41,124,564 2,888,255 - - (5,361,391) - (10,008) - (10,008) -
	41,114,556 2,888,255 35,753,164 2,888,255
	29,497,520 1,723,512 29,497,520 1,723,512 2,799,198 1,075,686 2,799,198 1,075,686
	32,296,718 2,799,198 32,296,718 2,799,198

Notes to the Financial Statements are included on pages 16 to 49.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements

30 JUNE 2009

1. General information

Catalpa Resources is a listed public company, incorporated and operating in Australia.

2. Significant accounting policies

Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and complies with other requirements of the law.

The financial report includes the separate financial statements of the company and the consolidated financial statements of the Group. Accounting Standards include Australian equivalents to International Financial Reporting Standards (“AIFRS”). Compliance with AIFRS ensures that the financial statements and notes of the Company and the group comply with International Financial Reporting Standards (IFRS).

The financial statements were authorised for issue by the directors on 23 September 2009.

Basis of preparation

The financial statements have been prepared on the basis of historical cost. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian Dollars unless otherwise noted.

Critical accounting judgements and key sources of estimation uncertainty

In the application of AIFRS management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Refer to Note 3 for a discussion of critical judgements in applying the entity’s accounting policies and key sources of estimation uncertainty.

Adoption of new and revised accounting standards

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2009 reporting periods. The Group’s and the Company’s assessment of these new standards and interpretations is set out below:

Reference	Title	Details	Applicat- ion date of standard	Impact on the Group	Applicati on date for Group
AASB 8 and AASB 2007-3	Operating Segments and consequential amendments to other Australian Accounting Standards	New standard replacing AASB 114 Segment Reporting, which adopts a management reporting approach to segment reporting.	1 January 2009	AASB 8 is a disclosure standard so will have no direct impact on the amounts included in the Group's financial statements, although it may have an impact on the Group’s segment disclosures.	1 July 2009
AASB 123 (revised) and AASB 2007-6	Borrowing Costs and consequential amendments to other Australian Accounting Standards	The amendments to AASB 123 require that all borrowing costs associated with a qualifying asset be capitalised.	1 January 2009	These amendments to AASB 123 require that all borrowing costs associated with a qualifying asset be capitalised. The Group has no borrowing costs associated with qualifying assets and as such the amendments are not expected to have any impact on the Group's financial report.	1 July 2009

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements (continued)

30 JUNE 2009

2. Significant accounting policies (continued)

Adoption of new and revised accounting standards (continued)

AASB 101 (revised) and AASB 2007-8	Presentation of Financial Statements and consequential amendments to other Australian Accounting Standards	Introduces a statement of comprehensive income. Other revisions include impacts on the presentation of items in the statement of changes in equity, new presentation requirements for restatements or reclassifications of items in the financial statements, changes in the presentation requirements for dividends and changes to the titles of the financial statements.	1 January 2009	These amendments are only expected to affect the presentation of the Group’s financial report and will not have a direct impact on the measurement and recognition of amounts disclosed in the financial report. The Group has not determined at this stage whether to present a single statement of comprehensive income or two separate statements.	1 July 2009
AASB 2008-1	Amendments to Australian Accounting Standard – Share- based Payments: Vesting Conditions and Cancellations	The amendments clarify the definition of 'vesting conditions', introducing the term 'non-vesting conditions' for conditions other than vesting conditions as specifically defined and prescribe the accounting treatment of an award that is effectively cancelled because a non- vestingcondition is not satisfied.	1 January 2009	The Group has share-based payment arrangements that may be affected by these amendments. However, the Group has not yet determined the extent of the impact, if any.	1 July 2009
AASB 3 (revised)	Business Combinations	The revised standard introduces a number of changes to the accounting for business combinations, the most significant of which allows entities a choice for each business combination entered into – to measure a non- controlling interest (formerly a minority interest) in the acquiree either at its fair value or at its proportionate interest in the acquiree’s net assets. This choice will effectively result in recognising goodwill relating to 100% of the business (applying the fair value option) or recognising goodwill relating to the percentage interest acquired. The changes apply prospectively.	1 July 2009	The Group has no current plans to enter into any business combinations during the next financial year. The Group has not yet assessed the impact of early adoption, including which accounting policy to adopt.	1 July 2009
AASB 2008 - 5	Amendments to Australian Accounting Standards arising from the Annual Improvements Process	Makes amendments to 25 different Standards and is equivalent to the IASB Standard Improvements to IFRSs issued in May 2008. The IASB’s annual improvements project provides a vehicle for making non-urgent but necessary amendments to Standards. The amendments to some Standards result in accounting changes for presentation, recognition or measurement purposes, while some amendments that relate to terminology and editorial changes are expected to have no or minimal effect on accounting.	1 January 2009	These amendments are not expected to have a material impact on the Group’s financial report.	1 July 2009

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements (continued)

30 JUNE 2009

2. Significant accounting policies (continued)

Adoption of new and revised accounting standards (continued)

AASB 2008-6	Further Amendments to Australian Accounting Standards arising from the Annual Improvements Process	Makes amendments to Australian Accounting Standards AASB 1_First-time_ Adoption of Australian Equivalents to International Financial Reporting Standards_and AASB 5_Non-current Assets Held for Sale and Discontinued Operations. These amendments are additional to those in AASB 2008-5 Amendments to Australian Accounting Standards arising from the Annual Improvements Project.	1 January 2009	These amendments are not expected to have a material impact on the Group’s financial report.	1 July 2009
AASB 2008 - 7	Amendments to Australian Accounting Standards - Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate	This Amending Standard: • amends AASB 127_Consolidated and_ Separate Financial Statements_to remove the definition of the 'cost method' and to require the separate financial statements of a new parent formed as the result of a specific type of reorganisation to measure the cost of its investment in the previous parent at the carrying amount of its share of the equity items of the previous parent at the date of the reorganisation • removes from AASB 118_Revenue the requirement to deduct dividends declared out of pre-acquisition profits from the cost of an investment in a subsidiary, jointly controlled entity or associate. Therefore, all dividends from a subsidiary, jointly controlled entity or associate are recognised by the investor as income • implements consequential amendments to AASB 136 Impairment of Assets, introducing a new indicator of impairment for investments in subsidiaries, jointly controlled entities and associates where a dividend has been recognised • allow first-time adopters to use a deemed cost of either fair value or the carrying amount under previous GAAP to measure the initial cost of investments in subsidiaries, jointly controlled entities and associates in the separate financial statements.	1 January 2009	These amendments are not expected to have a material impact on the Group’s financial report.	1 July 2009

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements (continued)

30 JUNE 2009

2. Significant accounting policies (continued)

Adoption of new and revised accounting standards (continued)

Amendments to International Financial Reporting Standards	Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate	The main amendments of relevance to Australian entities are those made to IAS 27 deleting the ‘cost method’ and requiring all dividends from a subsidiary, jointly controlled entity or associate to be recognised in profit or loss in an entity's separate financial statements (i.e., parent company accounts). The distinction between pre- and post- acquisition profits is no longer required. However, the payment of such dividends requires the entity to consider whether there is an indicator of impairment. AASB 127 has also been amended to effectively allow the cost of an investment in a subsidiary, in limited reorganisations, to be based on the previous carrying amount of the subsidiary (that is, share of equity) rather than its fair value.	1 January 2009	Recognising all dividends received from subsidiaries, jointly controlled entities and associates as income will likely give rise to greater income being recognised by the Company after adoption of these amendments. In addition, if the Group enters into any group reorganisation establishing new parent entities, an assessment will need to be made to determine if the reorganisation meets the conditions imposed to be effectively accounted for on a ‘carry-over basis’ rather than at fair value.	1 July 2009
Amendments to International Financial Reporting Standards	Improvements to IFRSs	The improvements project is an annual project that provides a mechanism for making non- urgent, but necessary, amendments to IFRSs. The IASB has separated the amendments into two parts: Part 1 deals with changes the IASB identified resulting in accounting changes; Part II deals with either terminology or editorial amendments that the IASB believes will have minimal impact.	1 January 2009 except for amend- ments to IFRS 5, which are effective from 1 July 2009.	The Group has not yet determined the extent of the impact of the amendments, if any.	1 July 2009

The following significant accounting policies have been adopted in the preparation and presentation of the financial report:

(a) Principles of consolidation

Subsidiaries

The consolidated financial statements are prepared by combining the financial statements of all the entities that comprise the consolidated entity, being the Company (the parent entity) and its subsidiaries as defined in Accounting Standard AASB 127 ‘Consolidated and Separate Financial Statements’. Catalpa Resources Limited and its subsidiaries together are referred to in this financial report as the Group or consolidated entity.

Consistent accounting policies are employed in the preparation and presentation of the consolidated financial statements. The consolidated financial statements include the information and results of each subsidiary from the date on which the Company obtains control and until such time as the Company ceases to control such entity. In preparing the Consolidated financial statements, all intercompany balances and transactions, and unrealised profits arising within the Consolidated Entity are eliminated in full.

Investments in subsidiaries are accounted for at cost in the individual financial statements of Catalpa Resources Limited.

(b) 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 2009

2. Significant accounting policies (continued)

(c) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefit will flow to the entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised.

Sale of gold

Revenue from sales of gold is recognised when there has been a passing of the significant risks and rewards of ownership, which means the following:

The product is in a form suitable for delivery and no further processing is required by or on behalf of the consolidated entity;
The quantity and quality (grade) of the product can be determined with reasonable accuracy;
The product has been despatched to the customer and is no longer under the physical control of the consolidated entity;
The selling price can be measured reliably;
It is probable that the economic benefits associated with the transaction will flow to the consolidated entity; and
The costs incurred, or expected to be incurred, in respect of the transaction can be measured reliably.

Interest

Revenue is recognised as the interest accrues using the effective interest rate method (which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset).

(d) 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 Company 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.

(e) Leases

Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease term.

Leases where a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases (note 21). Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straightline basis over the period of the lease.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements (continued)

30 JUNE 2009

2. Significant accounting policies (continued)

(f) Impairment of assets

At each reporting date, the Consolidated Entity reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Consolidated Entity estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cashgenerating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately.

(g) 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.

(h) 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.

(i) 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-tomaturity 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

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements (continued)

30 JUNE 2009

2. Significant accounting policies (continued)

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.

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.

(j) 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.

(k) 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.

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 2009

2. Significant accounting policies (continued)

(l) Exploration, evaluation and development expenditure

Exploration and evaluation expenditure in relation to its mineral tenements is expensed as incurred. Where the Directors decide to progress the development in an area of interest all further expenditure incurred relating to the area is 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.

(m) 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(l). The unwinding of the effect of discounting on the provision is recognised as a finance cost.

(n) 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.

(o) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over the period of the borrowings using the effective interest method. Fess paid on the establishment of loan facilities, which are not an incremental cost relating to the actual draw-down of the facility, are recognised as prepayments and amortised on a straight-line basis over the term of the facility.

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of the financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in other income or other expenses.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

(p) Borrowing costs

Borrowing costs incurred for the construction of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements (continued)

30 JUNE 2009

2. Significant accounting policies (continued)

(q) Employee benefits

(i) Wages and salaries, annual leave and other employee benefits

Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries, annual leave, and long service leave.

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

(ii) Share-based payments

The consolidated entity has an ‘Employee and Contractor Option Plan’ (“ECOP”) for employees, contractors and executives (including executive directors) of the company.

The plan permits the company, at the discretion of the directors, to grant options over unissued ordinary shares of the company to eligible directors, members of staff and contractors as specified in the plan rules.

The options, issued for nil consideration, are granted in accordance with performance guidelines established by the directors of the company.

The options are issued for a specified period and each option is convertible into one ordinary share. The exercise price of the options, determined in accordance with the rules of the plan, is based on the market price of a share on invitation date, grant date, or another specified date after grant close. All options expire on the earlier of their expiry date or termination of the employee’s employment.

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

There are no voting or dividend rights attached to the options. Voting rights will attach to the ordinary shares when the options have been exercised. The options cannot be transferred and will not be quoted on the ASX.

(r) Issued capital

Ordinary shares are classified as equity.

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

(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.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements (continued)

30 JUNE 2009

2. Significant accounting policies (continued)

(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 2009

3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Critical judgements in applying the Group’s accounting policies

The following are the critical judgments (apart from those involving estimations which are dealt with below) that management has made in the process of applying the Group’s accounting policies and that have the most significant effects on the amounts recognised in the financial statements.

Determination of mineral resources and ore reserves

The Group estimates its mineral resources and ore reserves in accordance with the Australian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves (the “JORC Code”). The information on mineral resources and ore reserves is prepared by or under the supervision of Competent Persons as defined in the JORC Code. The amounts presented are based on the mineral resources and ore reserves determined under the JORC Code.

There are numerous uncertainties inherent in estimating mineral resources and ore reserves and assumptions that are valid at the time of estimation which may change significantly when new information becomes available.

Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of reserves and may, ultimately, result in the reserves being restated. Such changes in reserves could impact on depreciation and amortisation rates, asset carrying values and provisions for decommissioning and restoration.

Estimation for the provision for rehabilitation and dismantling

Provision for rehabilitation and dismantling property, plant and equipment is estimated taking into consideration facts and circumstances available at the balance sheet date. This estimate is based on the expenditure required to undertake the rehabilitation and dismantling, taking into consideration time value of money.

Key sources of estimation uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year.

Impairment of property, plant and equipment

The Group reviews for impairment of property, plant and equipment, in accordance with its accounting policy. The recoverable amount of these assets has been determined based on higher of the assets’ fair value less costs to sell and value in use. These calculations require the use of estimates and judgements.

Impairment of capitalised mine development expenditure

The future recoverability of capitalised mine development expenditure is dependent on a number of factors, including the level of proved, probable and inferred mineral resources, future technological changes which could impact the cost of mining, future legal changes (including changes to environment restoration obligations) and changes to commodity prices.

To the extent that capitalised mine development expenditure is determined not to be recoverable in the future, this will reduce profits and net assets in the period in which this determination is made.

4. 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 2009

	Consolidated Company 2009 2008 2009 2008 $ $ $ $
5. REVENUE Interest revenue 6. OTHER INCOME AND EXPENSES (a) Other income: - Other income (b) Loss before income tax includes the following specific expenses: Rental of premises under operating lease Consulting fees Employee benefits: - Salary and Wages - Share based payments - Superannuation	263,929 263,321 263,929 263,321
	75,287 10,699 75,287 10,699
	75,287 10,699 75,287 10,699
	231,790 203,183 231,790 203,183 536,373 151,970 536,373 151,970 867,062 198,590 863,965 198,590 252,059 1,960 252,059 1,960 99,767 47,582 99,767 47,582

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements (continued)

30 JUNE 2009

	Consolidated Company 2009 2008 2009 2008 $ $ $ $
7. INCOME TAX (a) Income tax expense/(benefit) Research & design rebate Deferred tax benefit on origination and reversal of temporary differences Total income tax benefit per income statement (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% (2008: 30%) Add tax effect of: Non-deductible expenses Effect of current year tax losses not recognised Effect of reversal of temporary differences Less tax effect of: Tax deductible equity raising costs Research & design rebate 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 & Company	(25,605) (320,885) (25,605) (320,885) - - - -
	(25,605) (320,885) (25,605) (320,885)
	(6,839,427) (2,291,738) (6,826,699) (2,291,738) (2,051,828) (687,521) (2,048,010 ) (687,521) 126,343 27,552 126,343 27,552 1,925,485 348,209 1,921,667 348,209 - 375,216 - 375,216
	- 63,456 - 63,456 - (63,456) - (63,456) (25,605) (320,885) (25,605) (320,885)
	(25,605) (384,341) (25,605) (384,341)
	(25,605) (320,885) (25,605) (320,885)
	- (267,102) - 54,530
	- (267,102) - 54,530

Consolidated & Company
	Assets Liabilities Net 2009 2008 2009 2008 2009 2008 $ $ $ $ $ $
Accruals & provisions Mine properties Depreciation Prior year losses now recognised Other items	203,785 5,655 - - 203,785 5,655 - - (457,805) - (457,805) - - - (979,494) - (979,494) - 1,233,996 - - - 1,233,996 - - - (482) (5,655) (482) (5,655)
	1,437,781 5,655 (1,437,781) (5,655) - -

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

7. 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 2008 Recognised in income Recognised in equity Balance at 30 June 2009 $ $ $ $
Accruals & provisions Mine properties Depreciation Prior year losses now recognised Other items Net tax assets/(liabilities)	5,655 198,130 - 203,785 - (457,805) - (457,805) - (979,494) - (979,494) - 1,233,996 - 1,233,996 (5,655) 5,173 - (482)
	- - - -
	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)
	- - - -

(f) Unrecognised deferred tax assets

(f) Unrecognised deferred tax assets
	Consolidated Company 2009 2008 2009 2008 $ $ $ $
Deferred tax assets at 30% have not been recognised in respect of the following: Deductible temporary differences Tax losses Capital losses	- 300,055 - 300,055 7,222,005 5,488,692 7,222,005 5,488,692 - 53,831 - 53,831
	7,222,005 5,842,578 7,222,005 5,842,578

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

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

	Consolidated Company 2009 2008 2009 2008 $ $ $ $
8. OTHER RECEIVABLES Government taxes receivable Other receivables 9. OTHER FINANCIAL ASSETS Current Term deposits Term deposits on tenements and performance bonds(i) Other deposits Non-current Shares in unlisted controlled entity – at cost Loan to controlled entity Term deposits on tenements and performance bonds (i)The performance bonds will be replaced with a bank guarantee subsequent to the year end and the deposit monies returned to the Group. Up until the date the bank guarantee is put in place the Group cannot access these funds until the related restoration works have been completed. 10. PREPAYMENTS Current Prepaid expenses	719,992 56,468 719,992 56,468 118,989 21,536 118,989 21,536
	838,981 78,004 838,981 78,004
	- 37,884 - 27,884 3,507,500 - 3,507,500 25,000 - 25,000 -
	3,532,500 37,884 3,532,500 27,884
	- - 2 2 - - 5,371,387 10,000 - 386,194 - 386,194
	- 386,194 5,371,389 396,196
	9,444 - 2,274 -

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

11. PROPERTY, PLANT AND EQUIPMENT

Consolidated	Freehold Land Plant and Equipment Total $ $ $
Gross carrying amount Balance at 1 July 2007 Additions Increase in provision for rehabilitation to the land Balance at 30 June 2008 Additions Balance at 30 June 2009 Accumulated depreciation, amortisation and impairment Balance at 1 July 2007 Depreciation charge Impairment loss Balance at 30 June 2008 Depreciation charge Balance at 30 June 2009 Net book value As at 30 June 2008 As at 30 June 2009	391,301 8,117,837 8,509,138 - 137,744 137,744 83,000 - 83,000
	474,301 8,255,581 8,729,882 - 4,025,204 4,025,204
	474,301 12,280,785 12,755,086
	- (4,909,058) (4,909,058) - (142,533) (142,533) (84,301) - (84,301)
	(84,301) (5,051,591) (5,135,892) - (161,982) (161,982)
	(84,301) (5,213,573) (5,297,874)
	390,000 3,203,990 3,593,990
	390,000 7,067,212 7,457,212

(i) During the previous 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.

(ii) Mine machinery includes the Big Bell Mill which had a carrying value at the beginning of the previous year of $2,850,000. During the previous 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. This impairment has not been reversed in the current year, as there is no objective evidence to support that the factors that lead to the impairment have reversed at year end.

(iii) Management have considered the existence of any impairment triggers that would require a review of the carrying value of cash generating units as required by AASB 136. No impairment triggers were noted.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

11. PROPERTY, PLANT AND EQUIPMENT (continued)

Parent

Parent
	Freehold Land Plant and Equipment Total $ $ $ 391,301 8,117,837 8,509,138 - 137,744 137,744 83,000 - 83,000 474,301 8,255,581 8,729,882 - 157,630 157,630 474,301 8,413,211 8,887,512 - (4,909,058) (4,909,058) - (142,533) (142,533) (84,301) - (84,301) (84,301) (5,051,591) (5,135,892) - (161,496) (161,496) (84,301) (5,213,087) (5,297,388) 390,000 3,203,990 3,593,990 390,000 3,200,124 3,590,124 Consolidated Company 2009 2008 2009 2008 $ $ $ $
Gross carrying amount Balance at 1 July 2007 Additions Increase in provision for rehabilitation to the land Balance at 30 June 2008 Additions Balance at 30 June 2009 Accumulated depreciation, amortisation and impairment Balance at 1 July 2007 Depreciation charge Impairment loss Balance at 30 June 2008 Depreciation charge Balance at 30 June 2009 Net book value As at 30 June 2008 As at 30 June 2009
12. EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE Evaluation and development costs carried forward in respect of mining areas of interest Opening net book amount - - - - Incurred during the year 1,526,218 - - - Closing net book amount 1,526,218 - - - 13. BORROWING COSTS Prepaid borrowing costs 3,662,943 - 3,662,943 -
	1,526,218 - - -
	3,662,943 - 3,662,943 -

Prepaid borrowing costs were paid to Macquarie bank Limited as a fee for arranging finance for the Edna May Project. The financing facility was executed after the year end (refer to note 30). In the year ending 30 June 2010, these costs will be reclassified against the loan, following the initial drawn down against this facility. The costs will be amortised over the life of the loan in accordance with the Company’s accounting policies (refer to note 2).

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

	Consolidated Company 2009 2008 2009 2008 $ $ $ $
14. TRADE AND OTHER PAYABLES Trade payables 3,865,176 105,363 3,865,176 105,363 Other payables and accruals 248,115 52,703 209,012 52,705 4,113,291 158,066 4,074,188 158,068 15. BORROWINGS Secured at amortised cost Current Finance lease liabilities 19,534 - 19,534 - Non-current Finance lease liabilities 65,534 - 65,534 - Secured by assets leased. The borrowings are fixed interest rate debt with repayment periods not exceeding 5 years. The current weighted average effective interest rate on the finance lease liabilities is 6.6%. 16. PROVISIONS Current Employee benefits 107,578 55,208 104,868 55,208 Non-current Site restoration 407,000 407,000 407,000 407,000 Movements in provision for site restoration Consolidated Company $ $ Non-current Carrying amount at start of year 407,000 407,000 Provisions made during the year - - Provisions used during the year - - Carrying amount at end of year 407,000 407,000	3,865,176 105,363 3,865,176 105,363 248,115 52,703 209,012 52,705
	4,113,291 158,066 4,074,188 158,068
	19,534 - 19,534 -
	65,534 - 65,534 -
	407,000 407,000 407,000 407,000
	Consolidated Company $ $ 407,000 407,000 - - - - 407,000 407,000
Non-current Carrying amount at start of year Provisions made during the year Provisions used during the year Carrying amount at end of year

Site restoration

The provision includes the rehabilitation of the evaporative ponds at the Westonia Mine Site. Under certain conditions, Newmont Mining Corporation Ltd is responsible for some rehabilitation of mining tenements M77/88 and M77/110.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

17. ISSUED CAPITAL

(a) Share capital

(a) Share capital
	2009 2008 Number of shares $ Number of shares $
Ordinary shares fully paid (b) Movements in ordinary share capital	1,171,777,896 74,100,908 345,377,313 32,976,344
	2009 2008 Number of shares $ Number of shares $
Beginning of the financial year Issued during the year: − Issue of shares for drilling services − First tranche of capital raising − Second tranche of capital raising − Placement of shares − Issued on exercise of options − Issued under share purchase plan Less transaction costs End of the financial year	345,377,313 32,976,344 307,002,051 30,088,089 3,426,014 181,755 - - 74,229,332 4,453,760 - - 450,194,007 27,011,640 - - 172,723,071 3,454,462 38,375,256 3,070,020 72,926 7,293 6 1 125,755,233 7,545,314 - - - (1,529,660) - (181,766)
	1,171,777,896 74,100,908 345,377,313 32,976,344

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.

(c) Options on issue	Number of options 2009 2008
Listed: − Exercisable at 10 cents, on or before 31 October 2011 − Exercisable at 10 cents, on or before 30 June 2010 Unlisted: − Exercisable at 11 cents, on or before 22 Nov 2010 − Exercisable at 8 cents, on or before 29 April 2011 − Exercisable at 8 cents, on or before 23 December 2013 − Exercisable at 10 cents, on or before 23 December 2013 − Exercisable at 6 cents, on or before 23 December 2013 − Exercisable at 12 cents, on or before 23 December 2013 − Exercisable at 14 cents, on or before 23 December 2013 − Exercisable at 6 cents, on or before 11 March 2014 − Exercisable at 8 cents, on or before 11 March 2014 − Exercisable at 10 cents, on or before 11 March 2014 − Exercisable at 12 cents, on or before 11 March 2014 − Exercisable at 7.5 cents, on or before 31 March 2014 Total options on issue at year end	172,723,065 - 38,302,294 38,375,250 200,000 200,000 100,000 100,000 4,375,000 - 4,375,000 - 625,000 - 4,375,000 - 3,750,000 - 1,250,000 - 1,250,000 - 1,250,000 - 1,250,000 - 66,666,666 -
	300,492,025 38,675,250

(c) Options on issue

Number of options
2009
2008

Listed:

− Exercisable at 10 cents, on or before 31 October 2011

− Exercisable at 10 cents, on or before 30 June 2010

Unlisted:
− Exercisable at 11 cents, on or before 22 Nov 2010

− Exercisable at 8 cents, on or before 29 April 2011

− Exercisable at 8 cents, on or before 23 December 2013

− Exercisable at 10 cents, on or before 23 December 2013

− Exercisable at 6 cents, on or before 23 December 2013

− Exercisable at 12 cents, on or before 23 December 2013
− Exercisable at 14 cents, on or before 23 December 2013
− Exercisable at 6 cents, on or before 11 March 2014

− Exercisable at 8 cents, on or before 11 March 2014

− Exercisable at 10 cents, on or before 11 March 2014

− Exercisable at 12 cents, on or before 11 March 2014

− Exercisable at 7.5 cents, on or before 31 March 2014
Total options on issue at year end

172,723,065
-
38,302,294
38,375,250
200,000
200,000
100,000
100,000
4,375,000
-
4,375,000
-
625,000
-
4,375,000
-
3,750,000
-
1,250,000
-
1,250,000
-
1,250,000
-
1,250,000
-
66,666,666
-

300,492,025
38,675,250

Share options carry no rights to dividends and no voting rights. Further details of the employees and contractors share option plan are contained in note 26 to the financial statements

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

	Consolidated Company 2009 2008 2009 2008 $ $ $ $
18. RESERVES AND ACCUMULATED LOSSES (a) Reserves Share-based payments reserve Balance at beginning of year Borrowing costs 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	500,633 498,673 500,633 498,673 3,773,333 - 3,773,333 - 252,008 1,960 252,008 1,960
	4,525,974 500,633 4,525,974 500,633
	(27,201,981) (24,910,243) (27,201,981) (24,910,243) (6,813,822) (2,291,738) (6,801,094) (2,291,738)
	(34,015,803) (27,201,981) (34,003,075) (27,201,981)

(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.

19. LOSS PER SHARE

19. LOSS PER SHARE
	Consolidated 2009 2008 $ $
(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	(6,813,822) (2,291,738)
	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	537,659,736 343,699,704

(c) Information on the classification of options

As the Group has made a loss for the year ended 30 June 2009, 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.

20. DIVIDENDS

No dividends were paid during the financial year.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

	Consolidated Company 2009 2008 2009 2008 $ $ $ $
21. COMMITMENTS (a) Exploration commitments Within one year Longer than 1 year, not longer than 5 years	693,100 579,200 693,100 579,200 - - - -
	693,100 579,200 693,100 579,200

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.

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.

	Consolidated Company 2009 2008 2009 2008 $ $ $ $
(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	136,013 88,000 136,013 88,000 55,527 113,520 55,527 113,520 42,260 - 42,260 -
	233,800 201,520 233,800 201,520

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.

(c) Physical gold delivery commitments

(c) Physical gold delivery commitments
Consolidated Within one year later than one year but not later than five years Greater than five years	Gold for physical delivery Contracted gold sale price Value of committed sales ounces $ $ 19,624 1,557.50 30,564,380 295,453 1,557.50 460,168,048 37,240 1,557.50 58,001,300
	352,317 1,557.50 548,733,728

The counterparty to the physical gold delivery contracts is Macquarie Bank Limited (“MBL”). The contracts are settled on a quarterly basis by physical delivery of gold per MBL’s instructions. The contracts are accounted for as sale contracts with revenue recognised once the gold has been delivered to MBL or its agent. The Chief Financial Officer is responsible for monitoring gold production to assess if the physical delivery commitments will be met in any given quarter and reports the results of his review to the Managing Director on at least a monthly basis.

The physical gold delivery contract is considered a contract to sell a non-financial item, and is therefore out of the scope of AASB 139. As a result, no derivatives are required to be recognised.

The Company has no other gold sale commitments.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

21. COMMITMENTS (continued)

21. COMMITMENTS (continued)
	Consolidated Company 2009 2008 2009 2008 $ $ $ $
(d) Capital expenditure commitments Plant and equipment Within one year Longer than 1 year, not longer than 5 years	52,200,000 - - - - - - -
	52,200,000 - - -

Capital expenditure commitments relate to a contract the Group has entered into for the construction of the Edna May Gold Treatment Plant. The total cost of the project is estimated to be $52.2 million which includes a guaranteed maximum price component of $46 million. Should the actual cost of the guaranteed maximum price component of the project be less, there is an under-run sharing arrangement between the company and the contractor. An arrangement has been entered into to pay the contractor for work completed to date if the contract is terminated prior to completion. This commitment is fully funded by a loan facility with Macquarie Bank Limited (refer to note 30)

22. CONTINGENCIES

There are no material contingent liabilities or contingent assets of the Group at balance date.

23. SUBSIDIARIES
Name	Country of Incorporation	Ownership	Interest
		2009	2008
Westonia Mines Minerals Pty Ltd	Australia	100%	100%
Edna May Operations Pty Ltd	Australia	100%	-
Edna May Operations Pty Ltd was	incorporated on 31 March 2009.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

24. CASH FLOW STATEMENT

24. CASH FLOW STATEMENT
	Consolidated Company 2009 2008 2009 2008 $ $ $ $
(a) Reconciliation of cash and cash equivalents Cash and cash equivalents as shown in the balance sheets and the statements of cash flows (b) Reconciliation of loss for the year to net cash outflow from operating activities Loss for the year Non-Cash Items: Depreciation of non-current assets Share based payments Exploration expenditure written off Impairment loss on assets (Increase)/decrease in assets: (Increase)/decrease in other receivables (Increase)/decrease in prepayments (Increase)/decrease in value of assets Increase/(decrease) in liabilities: (Decrease)/increase in trade and other payables (Decrease)/increase in provisions Net cash outflow from operating activities	32,296,718 2,799,198 32,296,718 2,799,198
	(6,813,822) (2,291,738) (6,801,094) (2,291,738) 161,982 142,533 161,496 142,533 362,449 1,960 362,449 1,960 - - - - - 84,301 - 84,301 (748,093) 216,572 (758,093) 216,572 (9,444) 9,017 (2,274) 9,017 - (83,000) - (83,000) 3,955,175 (638,275) 3,916,072 (638,275) 52,370 56,630 49,660 56,630
	(3,039,383) (2,502,000) (3,071,784) (2,502,000)

(c) Financing facilities There were no financing facilities in place at 30 Jun 2009.

(d) Non-cash investing and financing activities

Except for vehicles acquired under finance lease (refer note 15), there were no non-cash investing and financing activities during the financial year.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

25. FINANCIAL INSTRUMENTS

(a) Financial risk management objectives

The Group and the Parent are exposed to financial risk through the normal course of their business operations. The key risks impacting the Group and the Parent’s financial instruments are considered to be interest rate risk and credit risk. The Group’s financial instruments exposed to these risks are cash and short term deposits, receivables and trade payables.

The consolidated entity’s managing director and chief financial officer monitor the Group’s and the Company’s risks on an ongoing basis and report to the Board.

(b) Categories of financial instruments

The Group and the Company hold the following financial instruments

Financial assets Cash and cash equivalents Other receivables Other financial assets Financial liabilities Trade and other payables Borrowings	Consolidated Parent 2009 2008 2009 2008 32,296,718 2,799,198 32,296,718 2,799,198 838,981 78,004 838,981 78,004 3,532,500 424,078 8,903,891 424,078
	36,668,199 3,301,280 42,039,590 3,301,282
	4,113,291 158,066 4,074,188 158,068 85,068 - 85,068 -
	4,198,359 158,066 4,159,256 158,068

(c) Capital risk management

The Group and the Company’s objectives when managing capital are to safeguard the Group and the Company’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 Company’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 Company operate primarily in Australia. The Group is not subject to any externally imposed capital requirements.

(d) Interest rate risk management

The Group and the Parent are exposed to interest rate risk as entities in the Group deposit funds at both short-term fixed and floating rates of interest and have fixed interest rate borrowings.

The sensitivity analyses below have been determined based on the exposure to interest rates at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period. A 50 basis point increase or decrease represents management’s assessment of the possible change in interest rates.

At reporting date, had interest rates been 50 basis points higher or lower and all other variables were held constant, the Group’s net loss would decrease by $161,484 and reserves increase by $161,484 (2008: nil). This is mainly attributable to the Group’s exposure to interest rates on its variable rate deposits.

The Group’s sensitivity to interest rates has increased during the current period due to the increase in variable rate deposits.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

25. FINANCIAL RISK MANAGEMENT (cont’d)

(e) Liquidity risk management

Prudent liquidity risk management implies maintaining sufficient cash and term deposits, 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 assets and liabilities

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

The tables below have been drawn up based on the undiscounted cash flows (including both interest and principal cash flows expected) using contractual maturities of financial assets and the earliest date on which the Group and the Company can be required to pay financial liabilities. Amounts for financial assets include interest earned on those assets except where it is anticipated the cash flow will occur in a different period.

Consolidated Weighted average effective interest rate % 2009 Financial assets Variable interest rate instruments 5.5 Non-interest bearing - Financial liabilities Fixed interest rate instruments 10.37 Non-interest bearing 2008 Financial assets Variable interest rate instruments 7.12 Fixed interest rate instruments 6.16 Non-interest bearing - Financial liabilities Non-interest bearing -	Less than 1 month 1 to 3 months 3 months to 1 year 1 to 5 years 5+ years $ $ $ $ $ 32,296,718 - 3,507,500 - - 838,981 - 25,000 - -
	33,135,699 - 3,532,500 - -
	1,484 3,047 15,003 65,534 - 4,113,240 - - - -
	4,114,724 3,047 15,003 65,534 -
	2,799,198 - - - - - - 35,000 386,194 - 78,004 - 2,884 - -
	2,877,202 - 37,884 386,194 -
	158,066 - - -
	158,066 - - -

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

25. FINANCIAL RISK MANAGEMENT (cont’d)

Company Weighted average effective interest rate % 2009 Financial assets Variable interest rate instruments 2.9 Non-interest bearing - Financial liabilities Variable interest rate instruments 10.37 Non-interest bearing 2008 Financial assets Variable interest rate instruments 7.12 Fixed interest rate instruments 6.16 Non-interest bearing - Financial liabilities Non-interest bearing -	Less than 1 month 1 to 3 months 3 months to 1 year 1 to 5 years 5+ years $ $ $ $ $ 32,296,718 - 3,507,500 - - 838,981 - 25,000 - -
	33,135,699 - 3,532,500 - -
	1,484 3,047 15,003 65,534 4,074,137 - - - -
	4,075,621 3,047 15,003 65,534 -
	2,799,198 - - - - - - 35,000 386,194 - 78,004 - 2,884 - -
	2,877,202 - 37,884 386,194 -
	158,066 - - - -
	158,066 - - - -

(d) Commodity price risk

The Group’s future revenues are exposed to movements in the gold price. To address this risk the Group has put in place physical gold delivery contracts covering sales of 352,317ozs of gold at a price of $1,577.5 per ounce to be delivered over a period of approximately 6 years (refer to note 21). This represents approximately 24% of the Edna May resource.

(e) Credit risk

Credit risk refers to the risk that a 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 Group’s or Company’s operations.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

(f) 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 2 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 2 to the financial statements.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

26. 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.

Set out below are summaries of the options granted:

Option series	Number	Grant date	Expiry Date	Exercise	Weighted average fair
				Price	value at grant date
				cents	cents
Issued under the ECOP
Mar 06 at 11 cents	200,000	Mar 06	22 Nov 10	11	2
Apr 08 at 8 cents	100,000	Apr 08	29 Apr 11	8	2
Dec 08 at 6 cents	625,000	Dec 08	23 Dec 13	6	2
Dec 08 at 8 cents	625,000	Dec 08	23 Dec 13	8	2
Dec 08 at 10 cents	4,375,000	Dec 08	23 Dec 13	10	2
Dec 08 at 12 cents	4,375,000	Dec 08	23 Dec 13	12	2
Dec 08 at 14 cents	3,750,000	Dec 08	23 Dec 13	14	2
Mar 09 at 6 cents	1,250,000	Jan 09	11 Mar 14	6	4
Mar 09 at 8 cents	1,250,000	Jan 09	11 Mar 14	8	3
Mar 09 at 10 cents	1,250,000	Jan 09	11 Mar 14	10	3
Mar 09 at 12 cents	1,250,000	Jan 09	11 Mar 14	12	3
Issued outside the ECOP
Dec 08 at 8 cents	3,750,000	Dec 08	23 Dec 13	8	2
May 09 at 7.5 cents	66,666,666	May 09	31 Mar 14	7.5	8

The weighted average remaining contractual life of share options issued as share-based payments and outstanding at the end of the financial year was 4.7 years (2008: 2.7 years), with exercise prices ranging from 6 to 14 cents.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

26. SHARE-BASED PAYMENTS (cont’d)

The weighted average fair value of the options granted during the year as share-based payments was 4.9 cents (2008: 3.3 cents). Where relevant, the expected life used in the model has been adjusted based on management’s best estimate for the effects of non-transferability and exercise restrictions. Expected volatility is based on the historical share price volatility of Catalpa Resources Limited. The price was calculated by using the Black-Scholes European Option Pricing Model applying the following inputs:

Inputs into the model
Option series	Mar 06 at	Apr 08 at	Dec 08 at	Dec 08 at	Dec 08 at	Dec 08 at	Dec 08 at
	11 cents	8 cents	6 cents	8 cents	10 cents	12 cents	14 cents
Grant date share price
Exercise price (cents)	11	8	6	8	10	12	14
Expected volatility (%)	80	80	80	80	80	80	80
Option life (years)	5	5	5	5	5	5	5
Dividend yield	-	-	-	-	-	-	-
Risk-free interest rate (%)	4.25	4.25	4.25	4.25	4.25	4.25	4.25
Inputs into the model
Option series	Dec 08 at	Dec 08 at	Dec 08 at	Dec 08 at	May 09 at
	6 cents	8 cents	10 cents	12 cents	7.5 cents
Grant date share price
Exercise price (cents)	6	8	10	12	7.5
Expected volatility (%)	80	80	80	80	80
Option life (years)	5	5	5	5	5
Dividend yield	-	-	-	-	-
Risk-free interest rate (%)	4.25	4.25	4.25	4.25	4.25

The following reconciles the outstanding share options granted under the employee share option plan at the beginning and end of the financial year.

	2009 2008 Number of options Weighted average exercise price cents Number of options Weighted average exercise price cents
Outstanding at the beginning of the year Granted Exercised Lapsed Expired Outstanding at year-end Exercisable at year-end	300,000 10.0 4,100,000 17.6 18,750,000 10.8 100,000 8.0 - 10.0 - - - - (3,900,000) 17.6 - - - -
	19,050,000 10.8 300,000 10.0
	15,167,188 10.8 - 10.0

Options issued as share-based payments outside of the employee share optionplan
Outstanding at the beginning of the year Granted Exercised Lapsed Expired Outstanding at year-end Exercisable at year-end	- - - - 70,416,666 7.5 - - - - - - - - - - - - - -
	70,416,666 7.5 - -
	70,416,666 7.5 - -

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

27. 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 Murray Pollock Non Executive Director Barry Sullivan Non Executive Director Nigel Johnson Non Executive Director (appointed 20 August 2008) Chris Melloy Non Executive Director (resigned 12 December 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:

Erik Palmbachs Chief Financial Officer (appointed 20 October 2008) Stuart Pether General Manager – Operations (appointed 12 January 2009) Graham Anderson Company Secretary Leonard Math Company Secretary

(b) Key management personnel compensation

(b) Key management personnel compensation
	Consolidated Company 2009 2008 2009 2008 $ $ $ $
Short-term benefits Post employment benefits Termination benefits Share-based payments	1,017,818 612,986 1,017,818 612,986 75,368 29,460 75,368 29,460 - 160,000 - 160,000 252,059 - 252,059 -
	1,345,245 802,446 1,345,245 802,446

(c) Equity interests in related parties

Equity interests in subsidiaries

Details of the percentage ownership of subsidiaries are disclosed in note 23 to the financial statements.

(d) Transactions with key management personnel

Key management personnel compensation

Details of key management personnel compensation are provided in the Remuneration Report of the Directors’ Report designated as audited.

Loans to key management personnel.

There were no loans to key management personnel during the period.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

28. RELATED PARTY TRANSACTIONS

(e) Key management personnel equity holdings

(i) Fully paid ordinary shares of Catalpa Resources Limited

	Balance at	Granted as	Received on	Net other	Balance at end
	start of period	compensation	exercise of	change	of period or date
			options		of resignation
	No	No	No	No	No
2009
Directors
John Rowe	-	-	-	1,000,000	1,000,000
Bruce McFadzean	345,000	-	-	672,500	1,017,500
Murray Pollock	15,725,802	-	-	2,545,360	18,271,162
Barry Sullivan	-	-	-	-	-
Nigel Johnson (i)	-	-	-	1,500,000	1,500,000
Chris Melloy (ii)	1,504,688	-	-	-	1,504,688
Executives
Erik Palmbachs (iii)	-	-	-	83,333	83,333
Stuart Pether (iv)	-	-	-	1,666,666	1,666,666
Graham Anderson	-	-	-	-	-
Leonard Math	-	-	-	-	-
2008
Directors
John Rowe	-	-	-	-	-
Bruce McFadzean(v)	-	-	-	345,000	345,000
Murray Pollock	14,790,054	-	-	935,748	15,725,802
Barry Sullivan (vi)	-	-	-	-	-
Chris Melloy	1,337,500	-	-	167,188	1,504,688
Mark Fitzpatrick (vii)	812,500	-	-	-	812,500
David Hatch (viii)	559,168	-	-	69,897	629,065
Executives
Graham Anderson (ix)	-	-	-	-	-
Leonard Math (ix)	-	-	-	-	-
John Fitzgerald (x)	-	-	-	-	-
Rowan Johnston (xi)	-	-	-	-	-

(i) appointed 20 August 2008

(ii) resigned 12 December 2008

(iii) appointed 20 October 2008

(iv) appointed 12 January 2009

(v) appointed 9 June 2008

(vi) appointed 16 June 2008 (vii) resigned 27 February 2008 (viii) resigned 28 September 2007 (ix) appointed 2 August 2008 (x) resigned 31 July 2007

(xi) resigned 14 September 2007

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

28. RELATED PARTY TRANSACTIONS (continued)

(ii) Options

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:

						At end ofperiod	At end ofperiod
	Balance	Granted	Exer-	Net	Balance at	Balance	Vested	Vested	Options
	at start	as	cised	other	year end	vested	but not	and	vested
	of	compen-		change	or		exercise-	exercise-	during
	period	sation			resignation		able	able	period
					date
	No	No	No	No	No	No	No	No	No
2009
Directors
John Rowe	-	2,000,000	-	-	2,000,000	1,500,000	-	1,500,000	1,500,000
Bruce McFadzean	-	10,000,000	-	172,500	10,172,500	7,672,500	-	7,672,500	7,500,000
Murray Pollock	935,748	1,000,000	-	2,317,054	4,252,802	3,067,054	-	3,067,054	750,000
Barry Sullivan	-	1,000,000	-	-	1,000,000	750,000	-	750,000	750,000
Nigel Johnson (i)	-	1,000,000	-	-	1,000,000	750,000	-	750,000	750,000
Chris Melloy (ii)	167,188	-	-	-	167,188	167,188	-	167,188	-
Executives
Erik Palmbachs (iii)	-	2,500,000	-	-	2,500,000	1,250,000	-	1,250,000	1,250,000
Stuart Pether (iv)	-	5,000,000	-	-	5,000,000	2,500,000	-	2,500,000	2,500,000
Graham Anderson	-	-	-	-	-	-	-	-	-
Leonard Math	-	-	-	-	-	-	-	-	-
2008
Directors
John Rowe	-	-	-	-	-	-	-	-	-
Bruce McFadzean (v)	-	-	-	-	-	-	-	-	-
Murray Pollock	-	-	-	935,748	935,748	935,748	-	935,748	935,748
Barry Sullivan (vi)	-	-	-	-	-	-	-	-	-
Chris Melloy	-	-	-	167,188	167,188	167,188	-	167,188	167,188
Mark Fitzpatrick (vii)	-	-	-	-	-	-	-	-	-
David Hatch (viii)	2,600,000	-	-	69,897	2,669,897	n/a	n/a	n/a	n/a
Executives
Graham Anderson (ix)	-	-	-	-	-	-	-	-	-
Leonard Math (ix)	-	-	-	-	-	-	-	-	-
John Fitzgerald (x)	1,000,000	-	-	-	1,000,000	n/a	n/a	n/a	n/a
Rowan Johnston (xi)	250,000	-	-	-	250,000	n/a	n/a	n/a	n/a
(i) appointed 20 August 2008		(v) appointed		9 June 2008		(ix) appointed 2 August 2008
(ii) resigned 12 December 2008		(vi) appointed 16 June 2008				(x) resigned 31 July		2007
(iii) appointed 20 October	2008	(vii)	resigned 27 February 2008			(xi) resigned 14 September 2007
(iv) appointed 12 January	2009	(viii) resigned		28 September	2007

All options issued to key management personnel were made in accordance with the provisions of the employee share option plan. Further details of the employee share option plan and of share options granted during the period are contained in notes 25 and 26.

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

28. RELATED PARTY TRANSACTIONS (continued)

Transactions with other related parties

Lion Manager

The company paid $17,934(2008: $40,000) in lieu of directors fees, and expense reimbursements totalling $nil (2008: $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 $ nil (2008: $10,000) was owing to Lion Manager at year end, 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 $66,000 (2008:$56,500).

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 $30,250 (2008:$103,344). An amount of $11,000 (2008: $10,227) was owing to John Rowe and Associates at year end, 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 previous year based on commercial rates and on an arm’s length basis. Total consultant fees paid to Holmesdale Holdings Pty Ltd is $nil (2008:$85,250).

Glen Lorne Pty Ltd

Glen Lorne Pty Ltd, a company of which Mr Nigel Johnson 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 Glen Lorne Pty Ltd is $11,375 (2008:$nil).

Parent entity

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

	Consolidated Company 2009 2008 2009 2008 $ $ $ $
29. REMUNERATION OF AUDITORS During the year the following fees were paid or payable for services provided by the auditor of the Company, its related practices and non- related audit firms: Audit services Audit or review of financial reports Tax advice and due diligence in relation to the proposed merger with Lion Selection	61,632 31,000 61,632 31,000 142,865 - 142,865 -
	204,497 31,000 204,497 31,000

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2009

30. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

The following significant events have occurred subsequent to year end:

Construction of the Edna May Gold Project has continued and as at the date of this report:
the contract to construct the gold processing plant had been signed and preliminary works commenced;
construction of the mining village had been completed; and
earthworks for the gold processing plant had been completed.
Catalpa Resources Limited (Catalpa) and Lion Selection Limited (Lion) announced on 24 June 2009 the proposed merger of Catalpa and Lion's gold assets. While the processing of the documentation associated with the merger is taking longer than anticipated, both Catalpa and Lion Selection remain committed to the successful conclusion of the merger process in Q4 2009. There is no change in any of the terms of the proposed merger, the demerger of Lion Selection Group, the 10¢ per share cash distribution by Lion or the termination of Lion Manager. The merger has the unanimous support of the directors of both Catalpa and Lion.
In July 2009 Catalpa was successful in obtaining credit approved project finance facility for the Edna May Gold Project with Macquarie Bank. Along with funds raised via equity raisings prior to 30 June 2009 the Edna May Gold Project is fully funded. The facility consists of:
A$55 million secured project loan facility;
up to A$10 million mezzanine facility;
A$3.51 million performance bond facility; and
gold hedging facility.

The merger of Lion Selection with Catalpa will result in a change in control of Catalpa which triggers a review event under the Macquarie Bank facility. Macquarie Bank has agreed to waive the review event subject to, and conditional upon, certain amendments being made to the syndicated facility agreement. The amendments are minor in nature and do not materially change the terms of the facility. As at the date of this financial report, the amendments have been agreed to.

No other matter or circumstance has arisen since 30 June 2009, 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.

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Catalpa Resources Limited - Annual Report

DIRECTORS’ DECLARATION

In the directors’ opinion:

(a) the financial statements and notes set out on pages 12 to 49 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 2009 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 financial report also complies with International Financial Reporting Standards as disclosed in Note 2
(d) the audited remuneration disclosures set out on pages 5 to 10 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, 23 September 2009

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INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF CATALPA RESOURCES LIMITED

Report on the Financial Report

We have audited the accompanying financial report of Catalpa Resources Limited, which comprises the balance sheet as at 30 June 2009, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies and other explanatory notes and the directors’ declaration for both Catalpa Resources Limited and of the consolidated entity. The consolidated entity comprises the entity and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements , that compliance with Australian Accounting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.

Auditor’s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

Liability limited by a scheme approved under Professional Standards Legislation.

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

Independence

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

Auditor’s Opinion

In our opinion:

(a) the financial report of Catalpa Resources Limited is in accordance with the Corporations Act 2001 , including:
(i) giving a true and fair view of the entity’s and consolidated entity’s financial position as at 30 June 2009 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001 ; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 2.

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 5 to 10 of the directors’ report for the year ended 30 June 2009. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s Opinion

In our opinion the Remuneration Report of Catalpa Resources Limited for the year ended 30 June 2009, complies with section 300A of the Corporations Acts 2001 .

PKF

Chartered Accountants

Chris Nicoloff Partner

Dated at Perth, Western Australia this 23[rd] day of September 2009

AI assistant

EVOLUTION MINING LIMITED — Annual Report 2009

64885_rns_2009-09-23_7ed8f712-9874-459f-8f2f-532fea8dbe6f.pdf

ANNUAL FINANCIAL REPORT

CATALPA RESOURCES LIMITED

Annual Financial Report

for the year ended 30 June 2009

Corporate Information

ABN 74 084 669 036

Directors

Company Secretary

Registered Office

Auditors

Internet Address

Stock Exchange Listing

Contents

Directors’ Report

INFORMATION ABOUT THE DIRECTORS AND SENIOR MANAGEMENT

Chris Melloy

Directors’ shareholdings

Remuneration of directors and senior management

Share options granted to directors and senior management

Company secretaries

Name Particulars

PRINCIPAL ACTIVITIES

REVIEW OF OPERATIONS

CHANGES IN THE STATE OF AFFAIRS

SUBSEQUENT EVENTS

FUTURE DEVELOPMENTS

DIVIDENDS

ENVIRONMENTAL REGULATIONS

SHARES UNDER OPTION

IMDEMNIFICATION OF OFFICERS AND AUDITORS

DIRECTORS’ MEETINGS

NON-AUDIT SERVICES

AUDITOR’S INDEPENDENCE DECLARATION

REMUNERATION REPORT (audited)

Director and senior management details

Remuneration policy

Relationship between the remuneration policy and company performance

Remuneration of directors and senior management

Share-based payments granted as compensation in the current financial year

Employee share option plan

Catalpa Resources Limited – Annual Report

Performance of Catalpa Resources Limited

Key Terms of Employment Contracts

AUDITOR'S INDEPENDENCE DECLARATION

Income Statement

Balance Sheet

Statement of Changes in Equity

Cash Flow Statement

Catalpa Resources Limited - Annual Report

Notes to the Financial Statements

30 JUNE 2009

1. General information

2. Significant accounting policies

Statement of compliance

Basis of preparation

Critical accounting judgements and key sources of estimation uncertainty

Adoption of new and revised accounting standards

Notes to the Financial Statements (continued)

30 JUNE 2009

2. Significant accounting policies (continued)

Adoption of new and revised accounting standards (continued)

Notes to the Financial Statements (continued)

30 JUNE 2009

2. Significant accounting policies (continued)

Adoption of new and revised accounting standards (continued)

Notes to the Financial Statements (continued)

30 JUNE 2009

2. Significant accounting policies (continued)

Adoption of new and revised accounting standards (continued)

(a) Principles of consolidation

Subsidiaries

(b) Segment reporting

Notes to the Financial Statements (continued)

30 JUNE 2009

2. Significant accounting policies (continued)

(c) Revenue recognition

Sale of gold

EVOLUTION MINING LIMITED Annual Report 2009