FIRSTWAVE CLOUD TECHNOLOGY LIMITED - Annual Report 2011

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TELLUS RESOURCES LTD

ABN 35 144 733 595

FINANCIAL REPORT FOR THE PERIOD ENDED 30 JUNE 2011

FINANCIAL STATEMENTS 30 JUNE 2011

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CORPORATE DIRECTORY

Directors

Anthony Wehby Non-Executive Chairman David Ward Executive Technical Director Richard Willson Non-Executive Director

Company Secretary

Anne Adaley

Registered Office and Principal Place of Business

Level 3, Suite 301 66 Hunter Street SYDNEY NSW 2000 T: (02) 6361 4700 F: (02) 6361 4711 E: [email protected]

Share Register

Boardroom Limited Level 7 207 Kent Street Sydney NSW 2000 T: (02) 9290 9600 F: (02) 9279 0664

Stock Exchange Listing

Australian Securities Exchange ASX Code: TLU

Auditor

Grant Thornton Audit Pty Ltd Level 17 383 Kent Street SYDNEY NSW 2000 T: (02) 8297 2400 F: (02) 9299 4445 www.grantthornton.com.au

Solicitor

Steinpreis Paganin Lawyers and Consultants Level 4, The Read Buildings 16 Milligan Street Perth WA 6000 T: (08) 9321 4000 F: (08) 9321 4333 www.steinpag.com.au

FINANCIAL STATEMENTS 30 JUNE 2011

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INDEX PAGE CORPORATE DIRECTORY ........................................................................................2 DIRECTORS’ REPORT ...............................................................................................4 REMUNERATION REPORT........................................................................................8 AUDITORS’ INDEPENDENCE DECLARATION.......................................................12 CORPORATE GOVERNANCE STATEMENT...........................................................13 STATEMENT OF COMPREHENSIVE INCOME........................................................17 STATEMENT OF FINANCIAL POSITION.................................................................18 STATEMENT OF CHANGES IN EQUITY..................................................................19 STATEMENT OF CASH FLOWS ..............................................................................20 NOTES TO THE FINANCIAL STATEMENTS ...........................................................21 DIRECTORS’ DECLARATION ..................................................................................43 INDEPENDENT AUDIT REPORT..............................................................................44 SUPPLEMENTARY INFORMATION.........................................................................47

FINANCIAL STATEMENTS 30 JUNE 2011

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DIRECTORS’ REPORT

FOR THE PERIOD ENDED 30 JUNE 2011

The Directors of Tellus Resources Ltd (“Tellus Resources” and/or “the Company”) present their Report together with the financial report of the Company for the period from 21 June 2010, the Company’s date of incorporation, to 30 June 2011.

Directors

The following persons held office as Directors of Tellus Resources Ltd during or since the end of the reporting period and up to the date of this report:

Anthony Wehby

Non-Executive Chairman - Appointed 21 June 2010

Anthony Wehby is a Fellow of the Institute of Chartered Accountants in Australia with more than 35 years professional experience. He was a partner with PwC for 19 years until 2000 and since that time has been a consultant providing advice on mergers and acquisitions, IPO’s, funding and valuations.

Anthony has been Vice Chairman of ASX-listed YTC Resources since before its listing in 2007, is a non executive director of Moss Capital Funds Management Limited and was previously a director of Harmony Gold (Australia) Pty Ltd.

David Ward

Executive Technical Director – Appointed 12 November 2010

David Ward is a geologist with over 15 years experience in the exploration and mining industry in New South Wales. David completed his Bachelor of Science part-time through the University of New England whilst working in the industry. He has gained considerable experience in mineral exploration with a number of companies as a contract geologist and most recently as Senior Exploration Geologist with Clancy Exploration Limited since listing in 2007.

David spent five years with Newcrest Mining Limited as a Mine Geologist in the Cadia Hill Open Cut and Ridgeway Underground Operations as well as a Resource Definition Geologist on the massive Cadia East Deposit.

David was a founding member of Centaurus Resources Limited and is a member of the Australian Institute of Mining and Metallurgy.

Richard Willson

Non-Executive Director – Appointed 12 November 2010

Richard Willson has a Bachelor of Accounting from the University of South Australia, is a member of CPA Australia, and is a member, and graduate, of the Institute of Company Directors Graduate Diploma Program.

He has worked in public practice and in various financial management and company secretarial roles within the resources and agricultural sectors for both publicly listed and private companies over the past fifteen years. Richard’s current role is Chief Financial Officer and Company Secretary with YTC Resources Ltd.

Richard was previously Chief Financial Officer and Company Secretary of ASX listed companies Flinders Mines Ltd, Maximus Resources Ltd and ERO Mines Ltd. He was heavily involved with the listing of Eromanga Uranium Ltd which later became ERO Mines Ltd and has overseen many capital raisings including share placements, share purchase plans and rights issues.

The following persons held office as Directors of Tellus Resources when the Company was in the process of being established:-

Marc Flory - Executive Director (21 June 2010 to 23 August 2010) Stephen Woodham - Non-Executive Director (23 August 2010 to 9 September 2010) William Hayden - Non-Executive Director (9 September 2010 to 12 November 2010) Tully Richards - Executive Director (21 June 2010 to 12 November 2010)

FINANCIAL STATEMENTS 30 JUNE 2011

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DIRECTORS’ REPORT

FOR THE PERIOD ENDED 30 JUNE 2011

Company Secretary

Anne Adaley

Anne Adaley has extensive experience in the resources sector, having held senior management roles with a number of listed public Australian exploration and mining companies over the last 25 years. This included eleven years as Company Secretary.

Anne is a Fellow of the Institute of Public Accountants and principal of Australian Mining Corporate and Administrative Services Pty Ltd which provides a full range of services including accounting, financial management and company secretarial.

Anne has served as Chief Financial Officer and Company Secretary to Monaro Mining NL (2007 to 2009), Finance and Administration Manager to Climax Mining Limited (2005 to 2006) and Company Secretary and Group Financial Controller to Gympie Gold Limited (1997 to 2004).

Principal Activities

The principal activities of the Company are: exploration for minerals including gold deposits; and the acquisition and development of mineral tenements.

Operating Results

The Company incurred a loss after tax for the reporting period of $486,992.

Review of Operations

Since the incorporation of Tellus Resources on 21 June 2010, the Company has been granted projects located in the southern New England Orogen and the south-eastern corner of the Lachlan Orogen in New South Wales, highly prospective areas for Intrusive Related Gold Deposits.

The Company was granted two exploration licences in the New England region of New South Wales: EL 7699 the “Glen Morrison” project and EL 7698 the “Cobark” project; and four exploration tenements covering around 753 square kilometres in the south-eastern Lachlan Fold Belt in the south-eastern corner of New South Wales around the towns of Eden, Bega and Merimbula. The tenements are:

Cobargo: EL7721 – 145.5 km² – Centred on the village of Cobargo 17.5km west-north-west of Bermagui
Brogo: EL7723 – 246.4km² – Centred on the town of Bega
Yurammie: EL7722 – 125.3km² – 20km west of the town of Merimbula
Yambulla: EL7720 – 235.7km² – 30km south west of Eden

At the same time preparations for an Initial Public Offering (IPO) were commenced and in December 2010 the Company completed a share placement raising seed capital of $385,000 after costs. Funds from the placement were principally used for the IPO including the commissioning of consultants to prepare independent tenement, geological and accounting reports for inclusion in the prospectus.

The Company successfully completed the IPO raising $4.25 million and commenced trading on the Australian Securities Exchange (ASX) on 11 May, 2011 with shares quoted under the code TLU.

Changes in the State of Affairs

There were no significant changes in the state of affairs of the Company during the reporting period ended 30 June 2011 other than as referred to in this report and the Financial Statements or notes thereto.

FINANCIAL STATEMENTS 30 JUNE 2011

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DIRECTORS’ REPORT

FOR THE PERIOD ENDED 30 JUNE 2011

Dividends

The Directors recommend that no dividend be paid for reporting period ended 30 June 2011 nor have any amounts been paid or declared by way of dividend during the reporting period.

Events Subsequent To Reporting Date

Directors are not aware of any other matters or circumstances at the date of this report that have significantly affected or may significantly affect the operations, the results of the operations or the state of affairs of the Company in subsequent financial years.

Likely Future Developments

No other likely developments of the Company are included in this report as the Directors believe, on reasonable grounds, that inclusion of such information would be likely to result in unreasonable prejudice to the Company.

Directors’ meetings

The number of meetings of directors held during the year and the number of meetings attended by each director were as follows:

	BOARD	MEETINGS
	NUMBER ELIGIBLE	NUMBER
DIRECTOR	TO ATTEND	ATTENDED
A Wehby	7	7
D Ward	3	3
R Willson	3	3
Former Directors
M Flory	2	2
S Woodham	1	1
T Richards	3	3
W Hayden	1	1

Based on the fact that the Company is in its early stages of development and given the current size and structure of the Board, the Board does not have separately established committees dealing with audit, nomination, remuneration and risk management. The full Board carried out this role in accordance with the principles as set out in the Company’s Corporate Governance Plan.

Directors’ interests

The relevant interest of each director in the share capital of the Company, as notified by the directors to the Australian Securities Exchange in accordance with Section 205G (1) of the Corporations Act 2001, at the date of this Report, is as follows:

DIRECTOR	ORDINARYSHARES	OPTIONS
A Wehby	660,000	500,000
D Ward	400,000	500,000
R Willson	400,000	500,000

The relevant interest of former directors is disclosed on Note 22 to the financial statements.

FINANCIAL STATEMENTS 30 JUNE 2011

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DIRECTORS’ REPORT

FOR THE PERIOD ENDED 30 JUNE 2011

Share options

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

DATE OPTIONS	NUMBER OF SHARES	CLASS OF	EXERCISE PRICE OF	EXPIRY DATE OF
GRANTED	UNDEROPTION	SHARES	OPTION	OPTIONS
29 July 2010	3,700,000	Ordinary	$0.30	31 Mar 2014
02 Dec 2010	1,100,000	Ordinary	$0.30	31 Mar 2014
30 Apr 2011	1,200,000	Ordinary	$0.30	30 Apr 2014
Total	6,000,000

No options have been exercised as at the date of this report.

Environmental Issues

The Company is subject to environmental regulations under the laws of the Commonwealth and State. The Company has a policy of complying with its environmental performance obligations and at the date of this report is not aware of any breach of such regulations.

Indemnities given and insurance premiums paid to auditors and officers

During the reporting period, the Company paid an insurance premium to insure the Directors and Officers of the Company. The Officers of the Company covered by the insurance policy include all Directors and the Company Secretary. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Company, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a willful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else to cause detriment to the Company. Details of the amount of the premium paid in respect of the insurance policies are not disclosed as such disclosure is prohibited under the terms of the contract.

The Company has entered into an agreement with the Directors and Officers to indemnify them against any claim and related expenses, which arise as a result of work completed in their respective capabilities.

The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnity any current or former officer or auditor of the Company against a liability incurred as such by an officer or auditor.

Non Audit Services

During the reporting period, the Company’s auditor assisted the Company in the preparation of the Prospectus by preparing the Investigating Accountants Report.

The Board has considered the non-audit services provided during the year by the auditor and is satisfied that the provision of those non-audit services during the year is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:

• All non-audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by the Board to ensure they do not impact upon the impartiality and objectivity of the auditor; and

• The non-audit services do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.

Details of the amounts paid to the auditors of the Company, Grant Thornton, and its related practices for audit and non-audit services provided during the year are set out in Note 23 to the Financial Statements.

A copy of the auditor’s independence declaration as required under s307C of the Corporations Act 2001 is included on page 12 of this financial report and forms part of this Directors report.

FINANCIAL STATEMENTS 30 JUNE 2011

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DIRECTORS’ REPORT

FOR THE PERIOD ENDED 30 JUNE 2011

Remuneration report (Audited)

The Directors of Tellus Resources present the Remuneration Report prepared in accordance with the Corporations Act 2001 and the Corporations Regulations 2001.

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

Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based remuneration
Other information

Principles used to determine the nature and amount of remuneration

The following report determines the principle used to determine the nature and amount of remuneration. The Board is responsible for determining and reviewing compensation arrangements for the Directors and Key Management Personnel. The role also includes responsibility for share options incentives, superannuation entitlements, retirement and termination entitlements, fringe benefits policies, liability insurance policies and other terms of employment.

The Board will review the arrangements having regard to performance, relevant comparative information and at its discretion may obtain independent expert advice on the appropriateness of remuneration packages or fees paid to Key Management Personnel. No remuneration consultant was used during the period. Remuneration packages are set at levels intended to attract and retain Key Management Personnel capable of managing the Company’s activities. Where Key Management Personnel positions are held by consultants, fees are based on normal commercial terms and conditions.

The remuneration of an Executive Director will be decided by the Board, without the affected Executive Director participating in that decision-making process.

The total maximum remuneration of Non-Executive Directors is the subject of a Shareholder resolution in accordance with the Company’s Constitution, the Corporations Act and the ASX Listing Rules, as applicable. The determination of NonExecutive Directors’ remuneration within that maximum will be made by the Board having regard to the inputs and value to the Company of the respective contributions by each Non-Executive Director. The current limit, which may only be varied by Shareholders in general meeting, is an aggregate amount of $250,000 per annum.

The Board may award additional remuneration to Non-Executive Directors called upon to perform extra services or make special exertions on behalf of the Company.

The executive pay and reward framework has three components:

base pay and benefits;
long-term incentives through share schemes; and
other remuneration such as superannuation.

The combination of these comprises the Key Management Personnel total remuneration.

FINANCIAL STATEMENTS 30 JUNE 2011

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DIRECTORS’ REPORT

FOR THE PERIOD ENDED 30 JUNE 2011

Remuneration report (Audited Continued)

Details of remuneration

Details of the nature and amount of each element of the emoluments of each of the key management personnel of the Company for the period from 21 June 2010 to 30 June 2011 are set out in the following table:

		POST-
	SHORT-TERM	EMPLOYMENT
	BENEFITS	BENFITS	EQUITY
	SALARY	SUPER-
	AND FEES	ANNUATION	OPTIONS9		TOTAL
NAME	$	$	$		$
DIRECTORS
A Wehby1	7,592	683		-	8,275
D Ward2	21,965	-		-	21,965
R Willson3	6,073	547		-	6,620
EXECUTIVE
A Adaley4	72,766	-		-	72,766
FORMER DIRECTORS
T Richards5	10,200	-		-	10,200
M Flory6	-	-		-	-
S Woodham7	-	-		-	-
W Hayden8	-	-		-	-
Total	118,596	1,230		-	119,826

A Wehby: Total remuneration paid or payable to A Wehby reflects the period from the 6 May 2011 being the date that the Company was admitted to the Official list of the ASX to 30 June 2011. Mr. Wehby’s agreement stipulates remuneration of $50,000 per annum plus statutory superannuation. Mr. Wehby commenced his role as Non-Executive Chairman on 21 June 2010.
D Ward: Total remuneration of $21,965 reflects consulting fees paid to Rathwood Resources Pty Ltd during the period 1 May 2011 to 30 June 2011, a company in which Mr. Ward has an interest, for providing consulting, geological and management services to Tellus Resources. This arrangement is based on normal commercial terms and conditions.
R Willson: Total remuneration paid or payable to R Willson reflects the period from the 6 May 2011 being the date that the Company was admitted to the Official list of the ASX to 30 June 2011. Mr. Willson’s agreement stipulates remuneration of $40,000 per annum plus statutory superannuation. Mr Willson commenced his role as Non-Executive Director on 12 November 2010.
A Adaley: Total remuneration of $72,766 reflects consulting fees paid to Australian Mining Corporate Services Pty Ltd during the period 1 July 2010 to 30 June 2011, a company in which Mrs. Adaley has an interest, for providing accounting and company secretarial services to Tellus Resources. This arrangement is based on normal commercial terms and conditions.
T Richards: Total remuneration of $10,200 reflects consulting fees paid to Central West Scientific Pty Ltd during the period 14 September 2010 to 12 November 2010, a company in which Mr. Richards has an interest, for providing consulting, geological and management services to Tellus Resources.

FINANCIAL STATEMENTS 30 JUNE 2011

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DIRECTORS’ REPORT

FOR THE PERIOD ENDED 30 JUNE 2011

Remuneration report (Audited Continued)

M Flory resigned as Director on 23 August 2010. Mr. Flory was not paid directors’ fees during the reporting period.
S Woodham resigned as Director on 9 September 2010. Mr. Woodham was not paid directors’ fees during the reporting period.
B Hayden resigned as Director on 12 November 2010. Mr. Hayden was not paid directors’ fees during the reporting period.
Options were issued to promoters and founders at the start up of the Company. These options were assessed as having a value of nil. The number of these options on issue are detailed in Notes 20 and 22 to the financial statements.

Service Agreements

Contracts for services of key management personnel written contracts in place during the reporting period between key management personnel and the Company are as follows:

Anthony Wehby

Non-Executive Chairman

Letter of Agreement with Anthony Wehby stipulates remuneration of $50,000 per annum plus superannuation.

Richard Willson

Non-Executive Diretor

Letter of Agreement with Richard Willson stipulates remuneration of $40,000 per annum plus superannuation.

David Ward

Executive Technical Director

The Company has entered into a consultancy agreement with Rathwood Resources Pty Ltd (Rathwood) and David Ward (Ward) dated 10 February 2011 (Ward Consultancy Agreement). Under the Ward Consultancy Agreement Rathwood has agreed to provide the services of Mr David Ward as an Executive Technical Director of the Company from the date the Company is admitted on the ASX and terminate on the expiration of any notice period given by Tellus or Rathwood given under the Ward Consultancy Agreement.

Pursuant to the terms of the agreement, the Company will pay Rathwood an amount of $800 plus GST per day, or as varied

by the Board from time to time.

Under the Ward Consultancy Agreement the Company shall reimburse all reasonable expenses incurred by Ward in providing the abovementioned services as a result of him carrying out his duties under the Ward Consultancy Agreement.

Ward must procure and maintain throughout the duration of the Ward Consultancy Agreement all necessary worker’s compensation insurance covering liability to Ward and any other person engaged or employed in carrying out duties under the Ward Consultancy Agreement and public liability insurance for a limit of liability for not less than $5,000,000.

The Ward Consultancy Agreement may be terminated by either party without cause on three (3) months notice. In the event of a default by Ward or Rathwood, the Company can terminate the Ward Consultancy Agreement immediately by giving written notice.

FINANCIAL STATEMENTS 30 JUNE 2011

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DIRECTORS’ REPORT

FOR THE PERIOD ENDED 30 JUNE 2011

Remuneration report (Audited Continued)

Anne Adaley

Company Secretary and Chief Financial Officer

The Company has entered into a consultancy agreement with Australian Mining Corporate and Administrative Services Pty Ltd (AMCAS) and Anne Adaley (Adaley) dated 16 February 2011 (Adaley Consultancy Agreement). Under the Adaley Consultancy Agreement AMCAS has agreed to provide the services of Anne Adaley to the Company as Company Secretary and Chief Financial Officer (Services) from the date the Company is admitted on the ASX and terminate on the expiration of any notice period given by Tellus or AMCAS.

Pursuant to the terms of the Adaley Consultancy Agreement, the Company will pay AMCAS an amount of $125 per hour plus GST which may be increased by written agreement from time to time (subject to Board Approval).

The Company shall reimburse all reasonable expenses incurred by Adaley in providing the abovementioned services in consequence of her carrying out her duties as Company Secretary and Chief Financial Officer of the Company.

The agreement may be terminated by the Company without cause by providing three (3) months notice. The agreement may be terminated by the consultant without cause by providing one (1) months notice. In the event of a default by Adaley or AMCAS, the Company can terminate the Adaley Consultancy Agreement immediately by giving written notice.

Proceedings on Behalf of Company

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

Signed in accordance with a resolution of the Directors

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Anthony Wehby

CHAIRMAN

21 September 2011

SYDNEY

FINANCIAL STATEMENTS 30 JUNE 2011

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Grant Thornton Audit Pty Ltd ACN 130 913 594

Level 17, 383 Kent Street Sydney NSW 2000 Locked Bag Q800 QVB Post Office Sydney NSW 1230

T +61 2 8297 2400 F +61 2 9299 4445 E [email protected] W www.grantthornton.com.au

Auditor’s Independence Declaration To the Directors of Tellus Resources Limited

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

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

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

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A J Archer Director - Audit & Assurance

Sydney, 21 September 2011

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

Liability limited by a scheme approved under Professional Standards Legislation

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CORPORATE GOVERNANCE STATEMENT

FOR THE PERIOD ENDED 30 JUNE 2011

The Board is committed to achieving and demonstrating the highest standards of corporate governance. The Directors monitor the business affairs of the Company on behalf of Shareholders and have formally adopted a corporate governance policy which is designed to encourage Directors to focus their attention on accountability, risk management and ethical conduct.

The Company has followed the Australian Securities Exchange Corporate Governance Council’s Corporate Governance Principles and Recommendations 2nd Edition (‘the ASX Principles’) to the extent appropriate for the current size and structure of the Board and at this early stage of development of the Company. The Directors note that the Australian Securities Exchange (ASX) Corporate Governance Council has released its revised Corporate Governance Principles and Recommendations, which makes changes to the diversity, remuneration, trading policies and briefings requirements of the existing principles and applies for the financial year commencing 1 July 2011. The directors have revised their Corporate Governance Statement effective 1 July 2011 to address any changes where appropriate.

This statement incorporates the disclosures required by the ASX Principles under the headings of the eight core principles and discloses the extent to which the Company has followed the ASX Principles in the reporting period and where the ASX Principles have not been followed, reasons for not following them. It should be noted that the Company’s policies as included in the Company’s Corporate Governance Plan were implemented progressively from the incorporation of the Company through to the end of the reporting period. The Company’s Corporate Governance Plan was formally implemented by the Board on 14 February 2011.

Further information on the Company’s corporate governance policies and practices can be found on Tellus Resources’s website at www.tellusresources.com.au.

Principle 1: Lay solid foundations for management and oversight

Functions of the Board and Management

The Board of Directors is responsible for the corporate governance of the Company and operates in accordance with the principles set out in its Charter, which is available in the corporate governance section of the Company’s website. To ensure that the Board is well equipped to discharge its responsibilities it has established guidelines for the nomination and selection of directors and for the operation of the Board. These responsibilities include:

Setting the strategy for the Company, including operational and financial objectives and ensuring that there are sufficient resources for this strategy to be achieved.
Appointing and, where appropriate, removing the Executive Director and Chief Executive Officer (if appointed), approving other key executive appointments and planning for executive succession.
Overseeing and evaluating the performance of the Executive Director and Chief Executive Officer (if appointed) and the executive team through a formal performance appraisal process having regard to the Company’s business strategies and objectives.
Monitoring compliance with legal, regulatory and occupational health and safety requirements and standards.
Overseeing the identification of key risks faced by the Company and the implementation of an appropriate internal control framework to ensure those risks are managed to an acceptable level.
Approving the Company’s budgets, including operational and capital budgets, and the approval of significant acquisitions, expenditures or divestitures.

FINANCIAL STATEMENTS 30 JUNE 2011

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CORPORATE GOVERNANCE STATEMENT FOR THE PERIOD ENDED 30 JUNE 2011

Approval of the annual and half-yearly financial reports.
Ensuring the market and shareholders are fully informed of material developments.

The responsibility for the operation and administration of the Company is delegated by the Board to the Executive Director and the Chief Executive Officer (if appointed). The Board ensures that both the Executive Director and executive team are appropriately qualified and experienced to discharge their responsibilities and, as discussed above, has in place procedures to monitor and assess their performance.

Senior Executive performance evaluation

The Board monitors the performance of senior management, including measuring actual performance against planned performance. The Board follows the performance evaluation principles outlined in its Corporate Governance Plan.

Principle 2: Structure the Board to add value

Board composition

A majority of the Directors are currently independent. The names of the members of the Board as at the date of this report are as follows:

Mr Anthony Wehby (Chairman) - Independent Non-Executive Director
Mr David Ward - Executive Technical Director
Mr Richard Willson - Independent Non-Executive Director

The Board seeks to ensure that the appropriate mix of skills and expertise is present on the Board to facilitate successful strategic direction. The Company’s Corporate Governance Plan outlines that there will be at least three non-executive directors and where practical, at least fifty percent of the Board will be independent, however due to the size of the Company, this is currently not the case.

The Board Charter specifies that an independent Director is one who is independent of management and free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with the exercise of independent judgment. Independent Directors should also meet the definition of independence as set out in the ASX Corporate Governance Council Principles.

Principles and Recommendations

The independence of Directors will be regularly assessed by the Board in light of their interests, all of which must be disclosed.

Role of the Chairman

The Chair is currently Anthony Wehby, who is an independent Director. The Company’s Corporate Governance Plan outlines ceases to be an independent Director, the Board will consider appointing a lead Independent Director. that the Chair should be a non-executive Director and that if a Chairman

David Ward is the Technical Executive Director and undertakes the role of Chief Executive Officer and Anthony Wehby is the Non-Executive Chair, thus not being the same individual. The Company’s Corporate Governance Plan also outlines that in the future the Chief Executive Officer should not be the Chairman of the Company during his term as Chief Executive Officer or in the future.

Nomination and Remuneration Committee

Based on the fact that the Company is in its early stages of development, and given the current size and structure of the Board, the Board has not yet formed a separate Nomination Committee which is a departure from the ASX Principles. Currently matters typically dealt with by such a committee are dealt with by the Board, however, the Board has formal terms of reference for the establishment of a Nomination Committee. A copy of the Nomination Committee’s Charter is available from the corporate governance section of the Company’s website.

FINANCIAL STATEMENTS 30 JUNE 2011

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CORPORATE GOVERNANCE STATEMENT FOR THE PERIOD ENDED 30 JUNE 2011

Directors’ Performance Evaluation

The Board undertakes an assessment of its collective performance, the performance of the Board committees and the Chairman on an annual basis.

In order to ensure the Board continues to discharge its responsibilities in an appropriate manner, a review of the performance over the previous 12 months of the Board and individual Directors will be arranged by the Board in accordance with the terms of the Nomination Committee Charter, until such time as a Nomination Committee is established.

Independent professional advice and access to information

Each Director has the right of access to all relevant information in the Company in addition to access to the Company’s executives. Each Director also has the right to seek independent professional advice subject to prior consultation with, and approval from, the Chairman. This advice will be provided at the Company’s expense and will be made available to all members of the Board.

Insurance

The Company has in place a Directors and Officers liability insurance policy providing a specified level of cover for current and former Directors and executive Officers of the Company against liabilities incurred whilst acting in their respective capacity.

Principle 3: Promote ethical and responsible decision making

Code of Conduct

The Company recognises the importance of establishing and maintaining high ethical standards and decision making in conducting its business and is committed to increasing shareholder value in conjunction with fulfilling its responsibilities as a good corporate citizen. All Directors, managers and employees are expected to act with the utmost integrity, honesty and objectivity, striving at all times to enhance the reputation and performance of the Company.

The Company’s Corporate Governance Plan includes a Corporate Code of Conduct, which provides a framework for decisions and actions in relation to ethical conduct in employment.

A copy of the code of conduct is available from the corporate governance section of the Company’s website.

Securities Trading Policy

The Company has established a share trading policy which governs the trading in the Group’s shares and applies to all Directors and employees of the Company. A copy of this policy is available on the Company’s website.

Under this share trading policy, an executive, employee or director must not trade in any securities of the Company at any time when they are in possession of unpublished, price sensitive information in relation to those securities.

Before commencing to trade, an executive or employee must first obtain the permission of the Company Secretary to do so, and a director must obtain the permission of the Chairman. The trading windows are four weeks after the release of the half year results, full year results and the holding of the Annual General Meeting. Trading of securities outside the trading windows can only occur in exceptional circumstances and with the approval of the Company Secretary.

As required by the ASX listing rules, the Company notifies the ASX of any transaction conducted by Directors in the securities of the Group.

Principle 4: Safeguard integrity in financial reporting

Audit and Risk Committee

The Company does not comply with ASX recommendations 4.1 and 4.2 in that there is no separate audit committee, and it is not comprised only of non-executive Directors. Given that the Company is in its early stages of development, and given the current size and structure of the Board, the Board has not yet formed a separate audit committee.

However, the Board has established a formal terms of reference for an Audit and Risk Committee.

The Board does not consider that at this stage any efficiencies or other benefits would be gained from establishing a separate committee. Accordingly, until the Audit and Risk Committee is established, the Board will carry out the duties of the Audit and Risk Committee in accordance with the terms of reference that have been adopted.

FINANCIAL STATEMENTS 30 JUNE 2011

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CORPORATE GOVERNANCE STATEMENT FOR THE PERIOD ENDED 30 JUNE 2011

Principle 5: Make timely and balanced disclosure

Tellus Resources Ltd has established policies and procedures to ensure timely and balanced disclosure of all material matters concerning the Company, and ensure that all investors have access to information on the Company’s financial performance. This ensures that the Group is compliant with the information disclosure requirements under the ASX Listing Rules.

The Company has a continuous disclosure program in place designed to ensure the factual presentation of the Company’s financial position. The Board has designated the Company Secretary as the person responsible for overseeing and coordinating disclosure of information to the ASX and shareholders, as well as providing guidance to Directors and employees on disclosure requirements and procedures.

A copy of the Disclosure Policy is available from the Corporate Governance section of the Company’s website.

Principle 6: Respect the rights of shareholders

Tellus Resources has established a Shareholder Communication Policy which aims to ensure that the shareholders of the Company are informed of all major developments affecting the Company’s state of affairs.

A full copy of the shareholder communication policy is available from the corporate governance section of the Company’s website.

The external auditor will attend the Annual General Meeting to answer any questions concerning the audit of the Company and the contents of the auditor’s report.

Principle 7: Recognise and manage risk

Risk management framework

The Board determines the Company’s “risk profile” and is responsible for overseeing and approving risk management strategy and policies, internal compliance and internal control. The Company’s Corporate Governance Plan establishes formal terms of reference for disclosure of risk management review procedure and internal compliance and control. In the event that an audit committee is established, the Board will delegate to the Audit and Risk Committee responsibility for implementing the risk management system. However, based on the fact that the Company is it its early stages of development, and given the current size and structure of the Board, the Board has not yet established the Audit and Risk Committee. Until such a committee is established, the Board will carry out these duties with the terms of reference that have been adopted.

Corporate reporting

The Board has received the relevant declarations from the Executive Technical Director and Chief Financial Officer in accordance with s295A of the Corporations Act 2001 and the relevant assurances required under Recommendation 7.3 of the ASX Corporate Governance Principles.

Principle 8: Remunerate fairly and responsibly

Remuneration Committee

The Company does not comply with ASX recommendation 8.1 in that it has not established a separate remuneration committee.

Based on the fact that the Company is it its early stages of development, and given the current size and structure of the Board, the Board has not yet formed a separate remuneration committee.

However, the Board has established formal terms of reference for a remuneration committee. The Board does not consider that any efficiencies or other benefits would be gained from establishing a separate committee. Accordingly, until the Remuneration Committee is established, the Board will carry out the duties of the Remuneration Committee in accordance with the terms of reference that have been adopted.

A copy of the Remuneration Committee Charter is available from the Corporate Governance section of the Company’s website.

FINANCIAL STATEMENTS 30 JUNE 2011

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STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 30 JUNE 2011

		21 JUNE 2010 TO 30 JUNE 2011 $
	NOTE
		26,155
Revenue from continuing operations	4

		(513,147)
Expenses from continuing operations	5

		(486,992)
Loss before income tax

		-
Income tax expense relating to the ordinary activities	6

		(486,992)
Net loss for the year




		-
Other comprehensive income, net of tax

		(486,992)
Total comprehensive loss

EARNINGS/LOSS PER SHARE:
		(4.9)
Basic earnings/(loss) per share (cents per share)	15

		(4.9)
Diluted earnings/(loss) per share (cents per share)

This statement should be read in conjunction with the notes to the financial statements.

FINANCIAL STATEMENTS 30 JUNE 2011

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STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2011

	NOTE	2011 $

CURRENT ASSETS


Cash and cash equivalents	18(a)	3,704,471


Trade and other receivables	7	35,383


Prepayments	8	15,876


TOTAL CURRENT ASSETS		3,755,730





NON-CURRENT ASSETS


Property, plant and equipment	9	2,106


Intangibles	10	16,798


Mineral properties	11	118,260


TOTAL NON-CURRENT ASSETS		137,164


TOTAL ASSETS		3,892,894





CURRENT LIABILITIES


Trade and other payables	12	46,810


TOTAL CURRENT LIABILITES		46,810


TOTAL LIABILITIES		46,810





NET ASSETS		3,846,084





EQUITY


Share capital	13	4,141,076


Reserves	14	192,000


Accumulated losses		(486,992)


TOTAL EQUITY		3,846,084

This statement should be read in conjunction with the notes to the financial statements.

FINANCIAL STATEMENTS 30 JUNE 2011

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STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 30 JUNE 2011

	ISSUED CAPITAL $ SHARE OPTION RESERVE $ ACCUMULATED LOSSES $ TOTAL $


Balance as at 21 June 2010	100 - - 100 - - (486,992) (486,992) 4,709,400 - - 4,709,400 - 192,000 - 192,000 (568,424) - - (568,424)
Total loss and comprehensive income for the period
Shares issued during the period
Options granted
Share issue costs
Balance as at 30 June 2011	4,141,076 192,000 (486,992) 3,846,084

The financial statements should be read in conjunction with the accompanying notes.

FINANCIAL STATEMENTS 30 JUNE 2011

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STATEMENT OF CASH FLOWS

FOR THE PERIOD ENDED 30 JUNE 2011

NOTE	2011 $
CASH FLOWS FROM OPERATING ACTIVITIES
Cash payments in the course of operations	(507,139)
Interest received	15,881
Net cash used in operating activities 18(b)	(491,258)

CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration expenditure	(42,902)
Payment for applications and security bonds	(75,358)
Payments for property, plant and equipment	(2,117)
Payments for intangibles	(16,970)
Net cash by used in investing activities	(137,347)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares	4,709,500
Payments for share issue costs	(376,424)
Net cash provided by financing activities	4,333,076

Net increase in cash held and cash equivalents	3,704,471
Cash and cash equivalents at the beginning of the period	-
Cash and cash equivalents at the end of the period 18(a)	3,704,471

The financial statements should be read in conjunction with the accompanying notes.

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

Note	1	General information
Note	2	Significant accounting policies
Note	3	Segment information
Note	4	Revenue
Note	5	Loss for the year
Note	6	Income taxes
Note	7	Trade and other receivables
Note	8	Other assets
Note	9	Property, plant and equipment
Note	10	Intangibles assets
Note	11	Mineral properties
Note	12	Trade and other payables
Note	13	Issued capital
Note	14	Reserves
Note	15	Earnings per share
Note	16	Commitments for expenditure
Note	17	Contingent liabilities and contingent assets
Note	18	Notes to the cash flow statement
Note	19	Financial instruments
Note	20	Share-based payments
Note	21	Key management personnel disclosures
Note	22	Related party disclosures
Note	23	Remuneration of auditors
Note	24	Subsequent events

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

1. General information

Tellus Resources Ltd (“Tellus Resources” and/or the “Company”) is a listed public company limited by shares incorporated and domiciled in Australia. Tellus Resources was incorporated on 21 June 2010, so therefore the financial statements are for the period from that date and there are no comparatives.

The registered and principal place of business is Suite 301, Level 3, 66 Hunter Street, Sydney NSW 2000. Tellus Resource’s shares are listed on the ASX.

2. Significant accounting policies

a) Basis of preparation

Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board. International Financial Reporting Standards (“IFRS”) form the basis of Australian Accounting Standards adopted by the Australian Accounting Standards Board, being Australian equivalents to IFRS (“AIFRS”). The financial reports of the Company also comply with IFRS and interpretations adopted by the International Accounting Standards Board adopted in their entirety. The financial statements were approved and authorised for issue by the board of Directors on 21 September 2011.

Historical Cost Convention

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

Functional and presentation currency

Both the functional and presentation currency of the Company is in Australian dollars.

Critical accounting estimates and judgements

The preparation of a financial report in conformity with Australian Accounting Standards requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. 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.

Judgments made by management in the application of Australian Accounting Standards that have significant effect on the financial report and estimates with a significant risk of material adjustment in the next year are discussed in Note 2 (r) below.

b) Cash and Cash Equivalents

For the purpose of presentation in the statement of cash flows, 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 six months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

2. Significant accounting policies (continued)

c) Property, plant and equipment

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

Depreciation is calculated on the diminishing balance method as follows:

Computer equipment	40%
Computer software	40%
Field Equipment	30%

The estimated useful lives, residual values and depreciation method is reviewed at the end of each annual reporting period and adjusted if appropriate.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of comprehensive income.

d) Intangibles

Amortization is calculated on the diminishing balance method as follows:

Computer software 40%

e) Mineral Properties (Exploration and Evaluation Expenditure)

Pre-licence costs are recognised in the Statement of Comprehensive Income as incurred.

Exploration and evaluation expenditure, including the costs of acquiring licences, are capitalised on a project by project basis. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves.

Expenditure deemed to be unsuccessful is recognised in the Statement of Comprehensive Income immediately.

Exploration for evaluation assets is assessed for impairment if facts and circumstances suggest that the carrying amount exceeds the recoverable amount.

f) Impairment

At each reporting date, the Company reviews the carrying value of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the assets, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the income statement.

g) Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (“GST”), except where the amount of GST incurred is not recoverable from the Australian Tax Office (“ATO”). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount of GST included.

h) Income Tax

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the statement of comprehensive income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the Statement of Financial Position date, and any adjustment to tax payable in respect of previous years.

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

2. Significant accounting policies (continued)

Deferred tax is provided using the Statement of Financial Position liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. No temporary differences are recognised on the initial recognition of goodwill

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the Statement of Financial Position date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

i) Trade and Other Payables

Trade and other payables are stated at cost and are recognised when the Company becomes obliged to make future payments resulting from the purchase of goods and services. The amounts are unsecured and usually paid within 30 days of recognition.

j) Trade and Other Receivables

Trade and other receivables are stated at their cost less impairment losses.

k) Revenue

Interest revenue is recognised on a receivable basis. Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.

l) Operating expenses

Operating expenses are recognised in profit and loss upon utilisation of the service or at date of their origin.

m) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors.

n) Share based payments

Equity-settled share-based payments granted are measured at fair value at the date of grant. Fair value is calculated using the Black Scholes methodology. The fair value determined at the grant date of the equity-settled share-based payments is recognised over the vesting period.

o) Contributed equity

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

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

2. Significant accounting policies (continued)

p) Earnings per share
(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

the profit attributable to owners of the company, excluding any costs of servicing equity other than ordinary shares; and
by the weighted average number of ordinary shares outstanding during the financial 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 additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.
q) New accounting standards and interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2011 reporting periods. The Company's assessment of the impact of these new standards and interpretations is set out below.

AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (effective from 1 January 2013).

AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities. The standard is not applicable until 1 January 2013 but is available for early adoption. When adopted, the standard will affect in particular the Company’s accounting for its available-for-sale financial assets, since AASB 9 only permits the recognition of fair value gains and losses in other comprehensive income if they relate to equity investments that are not held for trading. Fair value gains and losses on available-for-sale debt investments, for example, will therefore have to be recognised directly in profit or loss. In the current reporting period, the company did not record any such gains in other comprehensive income.

There will be no impact on the Company’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Company does not have any such liabilities. The derecognition rules have been transferred from AASB 139 Financial Instruments: Recognition and Measurement and have not been changed. The Company has not yet decided when to adopt AASB 9.

Revised AASB 124 Related Party Disclosures and AASB 2009-12 Amendments to Australian Accounting Standards (effective from 1 January 2011).

In December 2009 the AASB issued a revised AASB 124 Related Party Disclosures. It is effective for accounting periods beginning on or after 1 January 2011 and must be applied retrospectively. The amendment clarifies and simplifies the definition of a related party and removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities. The Company will apply the amended standard from 1 July 2011. Since the Company is not a government related entity, there are not expected to be any changes arising from this standard.

AASB 2009-14 Prepayments of a Minimum Funding Requirement (Amendments to Interpretation 14) (applicable for annual reporting periods commencing on or after 1 January 2011).

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

2. Significant accounting policies (continued)

This Standard amends Interpretation 14 addresses unintended consequences that can arise from the previous accounting requirements when an entity prepays future contributions into a defined benefit pension plan.

As the Company does not have a defined benefit pension plan this amendment to Interpretation 14 is not expected to have any impact on the entity’s financial report.

AASB 2010-2 Amendments to Australian Accounting Standards arising from reduced disclosure requirements This Standard makes amendments to Australian Accounting Standards and Interpretations to give effect to the Reduced Disclosure Requirements for Tier 2 entities.

AASB 2010-2 sets out the relevant disclosures that will not be required to be made if it is a Tier 2 entity that nominates to comply.

AASB 1053 provides further information regarding the differential reporting framework and the two tiers of reporting requirements for preparing general purpose financial statements.

AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1, AASB 7, AASB 101, AASB 134 and Interpretation 13] (applicable for annual reporting periods commencing on or after 1 January 2011).

This Standard details numerous changing to the Accounting Standards arising from the IASB’s annual improvements project. Key changes include:

- Emphasises the interaction between quantitative and qualitative AASB 7 disclosures and the nature and extent of risks associated with financial instruments.
Clarifies that an entity will present an analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the notes to the financial statements.
Provides guidance to illustrate how to apply disclosure principles in AASB 134 for significant events and transactions.
Clarify that when the fair value of award credits is measured based on the value of the awards for which they could be redeemed, the amount of discounts or incentives otherwise granted to customers not participating in the award credit scheme, is to be taken in account
AASB 1053 Application of Tiers of Australian Accounting Standards

This Standard establishes a differential financial reporting framework consisting of two Tiers of reporting requirements for preparing general purpose financial statements:

Tier 1: Australian Accounting Standards; and
Tier 2: Australian Accounting Standards - Reduced Disclosure Requirements.
Tier 2 comprises the recognition, measurement and presentation requirements of Tier 1, but contains substantially fewer disclosures requirements.
The following entities apply Tier 1 requirements in preparing general purpose financial statements:
for-profit entities in the private sector that have public accountability (as defined in this Standard); and
the Australian Government and State, Territory and Local Governments.

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

2. Significant accounting policies (continued)

Since the Company is a for-profit private sector entity that has public accountability, it does not qualify for the reduced disclosure requirements for Tier 2 entities.

AASB 2010-05 Amendments to Australian Accounting Standards [AASB 1, 3, 4, 5, 101, 107, 112, 118, 119, 121, 132, 133, 134, 137, 139, 140, 1023 & 1038 and Interpretations 112, 115, 127, 132 & 1042] (applicable for annual reporting periods commencing on or after 1 January 2011).

The Standard makes numerous editorial amendments to a range of Australian Accounting Standards and Interpretations, including amendments to reflect changes made to the text of International Financial Reporting Standards by the International Accounting Standards Board. However, these editorial amendments have no major impact on the requirements of the respective amended pronouncements.

AASB 2010-6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets (effective for annual reporting periods beginning on or after 1 July 2011).

Amendments made to AASB 7 Financial Instruments: Disclosures in November 2010 introduce additional disclosures in respect of risk exposures arising from transferred financial assets. The amendments will affect particularly entities that sell, factor, securitise, lend or otherwise transfer financial assets to other parties. They are not expected to have any significant impact on the Company's disclosures. The Company intends to apply the amendment from 1 July 2011.

AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023, & 1038 and interpretations 2, 5, 10, 12, 19 & 127] (effective for annual reporting periods beginning on or after 1 January 2013).

This Standard makes amendments to a range of Australian Accounting Standards and Interpretations as a consequence of the issuance of AASB 9: Financial Instruments in December 2010. Accordingly, these amendments will only apply when the entity adopts AASB 9.

AASB 2010-8 Amendments to Australian Accounting Standards –Deferred Tax: Recovery of Underlying Assets [AASB 112] (effective for annual reporting periods beginning on or after 1 January 2013).

This Standard makes amendments to AASB 112: Income Taxes.

The amendments brought in by this Standard introduce a more practical approach for measuring deferred tax liabilities and deferred tax assets when investment property is measured using the fair value model under AASB 140: Investment Property.

Under the current AASB 112, the measurement of deferred tax liabilities and deferred tax assets depends on whether an entity expects to recover an asset by using it or by selling it. The amendments introduce a presumption that an investment property is recovered entirely through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale.

The amendments are not expected to impact the Company.

r) Key judgement estimates

In the application of the Company’s accounting policies, 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.

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

2. Significant accounting policies (continued)

Critical judgements in applying the entity’s accounting policies

The following are the critical judgements including those involving estimations, that management has made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements:

i) Share-based payments

The Company is required to use assumptions in respect of the fair value model, and the variable element in the model, used in determining the share based payments.

ii) Impairment of capitalised exploration and evaluation expenditure

The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Company decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale.

Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, which could impact the cost of mining, future legal changes (including changes to the environmental restoration obligations) and changes to commodity prices.

Given the stage of exploration of the Company, it is not possible to reliably estimate future cash flows. The carrying value of mineral properties is reviewed and assessed with reference to comparative transactions, the status of existing joint venture arrangements, market volatility and the significant changes in valuations for all mineral assets as a result of the recent significant discounting of equity markets. To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future, profits and net assets will be reduced in the period in which this determination is made.

iii) Carbon tax

On 10 July 2011, the Commonwealth Government announced the “Securing a Clean Energy Future – the Australian Government’s Climate Change Plan”. Whilst the announcement provides further details of the framework for a carbon pricing mechanism, uncertainties continue to exist on the impact of any carbon pricing mechanism on the Comapny as legislation must be voted on and passed by both houses of Parliament. In addition, as the Company will not fall within the “Top 500 Australian Polluters’, the impact of the Carbon Scheme will be through indirect effects of increased prices on many production inputs and general business expenses as suppliers subject to the carbon pricing mechanism are likely to pass on their carbon price burden to their customers in the form of increased prices. Directors expect that this will not have a significant impact upon the operation costs within the business, and therefore will not have an impact upon the valuation of assets and/or going concern of the business.

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

3. Segment information

During the year the Company was in start-up and accordingly undertook limited activities. It operated predominantly in one operating segment, being mineral exploration. Segment accounting policies are the same as the Company’s policies described in Note 2.

described in Note 2.
		2011 $
REVENUE Interest income Total segment revenue RESULTS Operating loss before tax Net loss Included within segment results: Depreciation and amortisation of segment assets Segment assets Segment liabilities
		26,155
		26,155

		(486,992)
		(486,992)

		183
		3,892,894
		46,810

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

4. Revenue

4. Revenue
Revenue Interest income – bank deposits		2011 $

		26,155
		26,155

5. Loss for the year

Loss before income tax includes the following specific expenses:

Administrative and corporate costs Corporate advisory fees Initial Public Offering Costs expensed: - Advisory fees - Independent Expert Fees - ASIC Fees - Share Registry Fees - Listing Fees - Printing design and Postage Total Initial Public Offering Costs expensed: Depreciation and amortisation: Depreciation of non-current assets Amortisation of intangible assets Directors benefit expense: Post employment benefits: - Defined contribution plans			2011 $
			219,091 150,000 42,000 29,998 2,068 8,676 31,303 16,410








			130,455
			11 172



			183
			1,230


			1,230

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

6. Income taxes

a) Income tax expense

Current tax expense/(income) Deferred tax (income) Total tax (income) The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense in the financial statements as follows: Loss before income tax expense Prima facie tax payable on profit/(loss) Tax effect of non-temporary differences Tax effect of equity raising costs debited to equity Tax effect of tax losses and temporary differences not recognised Total income tax expense			2011 $
			- -

			-
			(486,992) (146,098) 33 (34,105) 180,170





			-

b) Income tax recognised directly in equity

There is no amount of tax benefit recognised in equity as the tax effect of temporary differences has not been booked.

c) Tax Losses

Unused tax losses for which no tax loss has been booked as a deferred tax Potential benefit at 30%	assets		2011 $
			559,590
			167,877

d) Unrecognised (non-booked) temporary tax differences

Non deductible amounts as temporary differences Accelerated deductions for book compared to tax Total unrecognised temporary differences (excluding losses) Potential effect on future tax expense at 30% Net deferred tax asset		2011 $
		149,509 (108,534)

		40,975 12,293

		180,170

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

7. Trade and other receivables

GST receivable Other receivables Total		2011 $
		24,992 10,391

		35,383

There were no past due amounts at 30 June 2011 and no provision has been recorded.

8. Other assets

Prepayments 9. Property, plant and equipment		2011 $
		15,876

	COMPUTER HARDWARE $ FIELD EQUIPMENT $	TOTAL $
Gross Carrying Amount Balance at 21 June 2010 Additions Balance at 30 June 2011 Accumulated depreciation /amortisation and impairment Balance at 21 June 2010 Depreciation expense Balance at 30 June 2011 Net Book Value 30 June 2011
	- -	-
	1,291 826	2,117
	1,291 826	2,117


	- -	-
	10 1	11
	10 1	11


	1,281 825	2,106

Aggregate depreciation allocated, whether recognised as an expense, or capitalised as part of the carrying amount of other assets during the year.

Plant and equipment

2011 $ 11

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FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

10. Intangible assets

	SOFTWARE $	TOTAL $
Gross Carrying Amount Balance at 21 June 2010 Additions Balance at 30 June 2011 Accumulated amortisation and impairment Balance at 21 June 2010 Amortisation expense Balance at 30 June 2011 Net Book Value 30 June 2011	- 16,970
		-
		16,970
	16,970	16,970
	- 172

		-
		172
	172	172
	16,798

		16,798

11. Mineral properties

Non-producing properties Exploration and evaluation expenditure: Intangibles Balance at 21 June 2010 Additions Balance at 30 June 2011		2011 $
		- 118,260


		118,260

All interests in mineral properties are held100% by the Company. The ultimate recoupment of balances carried forward in relation to areas of interest still in the exploration or valuation phase is dependent on successful development, and commercial exploitation, or alternatively sale of the respective areas. The Company shall conduct impairment testing on an annual basis unless indicators of impairment are present at the reporting date.

12. Trade and other payables

Current Trade payables Accruals		2011 $ 11,415 35,395



		46,810

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

13. Issued capital

26,150,000 fully paid ordinary shares Share issue expenses		2011 $
		4,709,500 (568,424)

		4,141,076

Each ordinary share carries the right to one vote at shareholders’ meetings and is entitled to participate in any dividends or other distributions of the Company.

Fully paid ordinary shares Balance at 21 June 2010 Shares issued during the period and fully paid Share issue costs Ordinary fully paid shares at end of year		2011 NUMBER 2011 $
		100 1 26,149,900 4,709,499 - (568,424)


		26,150,000 4,141,076

a) The following equity securities were issued during the reporting period:
i) On 29 July 2010, the Company allotted 5,599,900 fully paid ordinary shares at an issue price of $0.01 per share raising $55,999 and granted 4,800,000 unlisted options over ordinary shares at an exercise price of $0.30 each, expiring on 31 March 2014.
ii) On 31 August 2010, the Company allotted 350,000 fully paid ordinary shares at an issue price of $0.01 raising $3,500.
iii) On 2 December 2010, the Company allotted 3,200,000 fully paid ordinary shares at an issue price of $0.125 raising $400,000 before costs of $15,000 and granted 1,200,000 unlisted options over ordinary shares at an exercise price of $0.30 each, expiring on 31 March 2014.
iv) On 5 May 2011, the Company allotted 17,000,000 fully paid ordinary shares at an issue price of $0.25 per share raising $4,250,000 before costs of $534,460.
b) At reporting date the Company had the following options on issue:
i) 4,800,000 options over ordinary shares with an exercise price of $0.30 each, exercisable on or before 31 March 2014.
ii) 1,200,000 options over ordinary shares with an exercise price of $0.30 each, exercisable on or before 30 April 2014.

c) Capital Management

Management controls the capital of the Company in order to maximise the return to shareholders and ensure that the Company can fund its operations and continue as a going concern.

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

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

14. Reserves

4. Reserves
Option reserve Opening balance Fair value of options issued to the lead manager for IPO services. Balance at end of year		2011 $
		- 192,000

		192,000

The following unlisted options were issued during the reporting period:

On 30 April 2011, the Company granted 1,200,000 options over ordinary shares with an exercise price of $0.30 each to the lead manager for IPO services. The options expire on 30 April 2014. These options have been valued at $192,000 using the Black-Scholes methodology (refer to note 20).

15. Earnings per share

Basic earnings/(loss) per share Diluted earnings/(loss) per share	2011
	CENTS PER SHARE
	(4.9) (4.9)

The following reflects the income and share data used in the calculations of the basic and diluted earnings per share:

Earnings reconciliation Net loss for the period Earnings used in calculating basic and diluted earnings per share Weighted average number of ordinary shares used as the denominator in calculating basic and dilutive earnings per share		2011 $

		(486,992)
		(486,992


		9,894,939

The following potential ordinary shares are not dilutive and are therefore excluded from the weighted average number of ordinary shares and potential ordinary shares in the calculation of diluted earnings per share:

$0.30 29 July 2010 unlisted options $0.30 30 April 2011 unlisted options	2011 NUMBER
	4,800,000 1,200,000

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

16. Commitments for expenditure

The Company has minimum expenditure commitments to meet the conditions under which the properties are granted. These minimum expenditure commitments total $861,000 (annual minimum expenditure on mineral properties from grant date of the licence to the renewal date is $307,000). These minimum commitments may vary from time to time, subject to approval by the grantor of titles or by variation of contractual agreements. The expenditure represents potential expenditure which may be reduced by entering into sale, joint venture or relinquishment of the interests and may vary depending upon the results of exploration. Should expenditure not reach the required level in respect of each area of interest, the Company’s interest could be either reduced or forfeited.

17. Contingent liabilities and contingent assets

Tellus Resources has been joined as a party in two proceedings in the New South Wales Court of Appeal by Mr Albert Gilbert Martin. Mr Martin has alleged that the Company was granted certain exploration licences as a result of the alleged misuse of confidential information by the Department of Industry and Investment and others, information which Mr Martin alleges he supplied.

Tellus Resources is the Sixth Respondent in proceeding 2011/84040 in the Court of Appeal and the Fifth Respondent in proceeding 2011/185491 in that court. The proceedings are appeals brought by Mr Anthony Gilbert Martin against various decisions of the New South Wales Land and Environment Court. Tellus Resources was not a party in either of the proceedings in the Land and Environment Court, to which the appeals relate, although Mr Martin unsuccessfully sought to join the company to the Court of Appeal proceedings 2011/185491.

On 14 September 2011, the Court of Appeal delivered judgement in the two Court of Appeal proceedings. In proceeding CA2011/185491, the appeal was struck out as incompetent, leave to appeal was refused and Mr Martin was ordered to pay costs of the Respondents, including Tellus Resources. In proceeding CA2011/84040, the Court of Appeal granted leave to appeal on limited grounds, being grounds relating to an order for security of costs. Otherwise leave to appeal was refused.

On 19 September, 2011 the Court of Appeal delivered a further judgment in proceedings 2011/84040 in which orders were made striking out certain orders in the Notice of Appeal, including the orders relating to Tellus Resources Limited, and for costs in favour of the Company.

Therefore, there is now no Notice of Appeal which relates to Tellus Resources Limited.

However, Mr Martin has filed a Notice of Motion in the Court of Appeal proceedings to which Tellus Resources Limited is a party, wherein Mr Martin seeks orders against Tellus Resources and other parties for alleged contempt of Court. This Notice of Motion is listed before the Court of Appeal for hearing on 27 September, 2011.

Tellus Resources has received legal advice that given the known facts and circumstances there is no reasonable basis for a claim that it misused confidential information belonging to Mr Martin in obtaining exploration licences, or that that there is any reasonable prospect of any order being made against it pursuant to the Notice of Motion filed in the Court of Appeal. Accordingly the directors consider that any liability to Tellus Resources Limited is remote and accordingly no liabilities in relation to these matters have been brought to account.

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

18. Notes to the statement of cash flows

a) Reconciliation of cash and cash equivalents

Cash and cash equivalents at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows:

elated items in the statement of financial position as follows:	:
2011 $ Cash and cash equivalents 3,704,471 b) Reconciliation of loss for the period after income tax to cash flows used in operating activities Loss for the period (486,992) Depreciation and amortisation of non-current assets 183 (Increase)/decrease in assets: Current receivables (35,266) Prepayments (15,993) Increase/(decrease) in liabilities: Current and non-current payables 46,810 Net cash from operating activities (491,258)		2011 $
		3,704,471







		(491,258)

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

19. Financial instruments

Financial Risk Exposures and Management

The main risks the Company is exposed to through its financial instruments are interest rate risk, liquidity and credit risk. Due to the size of the company, a separate finance committee does not exist. The Board is responsible for the financial risk management and considers future cash flow requirements as required.

Interest rate risk

Interest rate risk is managed by investing cash with major financial institutions in both cash on deposit and term deposit accounts.

Liquidity risk

The Company manages liquidity risk by monitoring forecast cash flows. The Company’s operations require it to raise capital on an on-going basis to fund its planned exploration program and to commercialise its tenement assets. If the Company does not raise capital in the short term, it can continue as a going concern by reducing planned but not committed exploration expenditure until funding is available and/or entering into joint venture arrangements where exploration is funded by the joint venture partner.

Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company as well as through deposits with financial institutions. The Company has adopted a policy of only dealing with credit worthy counterparties obtaining sufficient collateral or other security where appropriate as means of mitigating the risk of financial loss from defaults and only banks and financial institutions with an ‘A’ rating are utilised. The Company measures risk on a fair value basis.

The maximum exposure to credit risk at reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements.

Price risk

The Company does not derive revenue from sale of products therefore, the effect on profit and equity as a result of changes in the price risk is not considered material. The fair value of the mineral projects will be impacted by commodity price changes and could impact future revenues once operational. However, management monitors current and projected commodity prices.

The Company is mainly exposed to mining services price risk. Management constantly monitors price movements and seeks ways to minimise the cost on operating activities.

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

Financial instruments

The Company has exposure to interest rate risk, which is the risk that a financial instruments’s value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on those financial assets and the financial liabilities.

The Company’s exposure to interest rate risk and effective weighted average interest rate for financial assets and liabilities is set out below.

2011 WEIGHTED AVERAGE EFFECTIVE INTEREST RATE %	FIXED MATURITY DATES VARIABLE INTEREST RATE $ LESS THAN 1 YEAR $ 1-2 YEARS $ 2-3 YEARS $ NON INTEREST BEARING $ TOTAL $
Financial assets Cash and cash equivalents 5.52 Trade and other receivables Financial liabilities Trade and other payables	1,704,741 2,000,000 - - - 3,704,741 - - - - 35,383 35,383
	1,704,741 2,000,000 - - 35,383 3,740,124
	46,810 46,810
	- - - - 46,810 46,810

Net fair values

The Directors consider that the carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their fair values.

Sensitivity analysis

Interest Rate Risk and Price Risk

The Company has performed sensitivity analysis relating to its exposure to interest rate risk and price risk at reporting date. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these risks.

Interest Rate Sensitivity Analysis

At 30 June 2011, the effect on loss and equity as a result of fluctuations in the interest rate, with all other variables remaining constant has been considered. For the purpose of this exercise, a 1% increase in the interest results in a decrease in loss by $4,870 and an increase in equity by $4,870. These changes are considered to be reasonably possible based on observation of current market conditions.

Price Risk Sensitivity Analysis

As the company does not derive revenue from sale of products, the effect on profit and equity as a result of changes in the price risk is not considered material. The fair value of the exploration projects will be impacted by commodity price changes and could impact future revenues once operational. However, management monitors current and projected commodity prices.

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

20. Share based payments

Employee share option plan

There were no employee options during the reporting period.

Other share-based payment options on issue

The following reconciles other outstanding share-based payment options on issue at the beginning and at the end of the reporting period:

eporting period:
Balance at beginning of the reporting period Granted during the financial year Expired during the financial year Balance at end of the reporting period		2011 NUMBEROF OPTIONS
		- 6,000,000 -


		6,000,000

The following share-based payment arrangements were in existence during the reporting period:

OPTIONS SERIES	NUMBER	GRANT DATE	EXPIRY DATE	EXERCISE PRICE	FAIR VALUE AT GRANT DATE*
Issued 29 July 2010	3,700,000	29 July 2011	31 March 2014	$0.30	Nil
Issued 2 December 2010	1,100,000	2 December 2010	31 March 2014	$0.30	Nil
Issued 30 April 2011	1,200,000	30 April 2011	30 April 2014	$0.30	$192,000

*The fair value at grant date has been calculated using the Black Scholes methodology. Volatility has been calculated with reference to comparable entities

INPUTS INTO THE MODEL	OPTION SERIES	OPTION SERIES	OPTION SERIES
Grant date	29 July 2010	2 December 2010	30 April 2011
Exercise price	$0.30	$0.30	$0.30
Expected volatility	70%	70%	103.6%
Option life	3 years	3 years	3 years
Risk-free interest rate	4.79%	5.33%	5.16%

21. Key management personnel compensation

The key management personnel of the Company during the reporting period were:

a) Key Management Personnel

Directors Position A Wehby Non-Executive Chairman (appointed 21 June 2010) D Ward Executive Technical Director (appointed 12 November 2010) R Willson Non-Executive Director (appointed 12 November 2010) Executive A Adaley Company Secretary and Chief Financial Officer Former Directors M Flory Executive Director (21 June 2010 to 23 August 2010) S Woodham Non-Executive Director (23 August 2010 to 9 September 2010) W Hayden Non-Executive Director (9 September 2010 to 12 November 2010) T Richards Executive Director (21 June 2010 to 12 November 2010)

Key management personnel remuneration has been included in the Remuneration Report section of the Directors’ Report.

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

21. Key management personnel compensation (continued)

b) Key Management Personnel Compensation

The aggregate compensation of the key management personnel of the Company is set out below:

Short-term key management personnel benefits Post employment benefits Share-based payment Total		2011 $
		118,596
		1,230
		-
		119,826

22. Related party disclosures

a) Equity interests in related parties

Equity interests in associates and joint ventures

Nil.

b) Key management personnel shareholdings

Fully Paid Ordinary Shares

	BALANCE			BALANCE AT	BALANCE	BALANCE
	21 JUNE	PURCHASES	NET OTHER	DATE OF	30 JUNE	HELD
2011	2010	/(SALES)	CHANGE	CESSATION*	2011	NOMINALLY
Directors
A Wehby	-	660,000	-	-	660,000	60,000
D Ward	-	400,000	-	-	400,000	-
R Willson	-	400,000	-	-	400,000	-
Executives
A Adaley	-	100,000	-	-	100,000	-
Former Directors
M Flory	100	300,000	-	300,000	-	-
T Richards	-	200,000	-	200,000	-	-
S Woodham	-	1,150,000	-	1,150,000	-	-
W Hayden	-	-	-	-	-	-
Total	100	3,210,000	-	1,650,000	1,560,000	60,000

Balance at date of cessation represents the number of shares held by each director on the date of their resignation as a director of the Company.

FINANCIAL STATEMENTS 30 JUNE 2011

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2011

22. Related party disclosures (continued)

c) Key management personnel equity holdings

Share Options

										TOTAL
	BALANCE				NET	BALANCE	TOTAL		TOTAL	UN-
	21 June		OPTIONS	OPTIONS	CHANGE	30 JUNE	VESTED 30		EXERCISABLE	EXERCISABLE
2011	2010		GRANTED*	EXERCISED	OTHER	2011	JUNE 2011		30 JUNE 2011	30 JUNE 2011
Directors
A Wehby		-	500,000	-	-	500,000		-	-	500,000
D Ward		-	500,000	-	-	500,000		-	-	500,000
R Willson		-	500,000	-	-	500,000		-	-	500,000
Executives
A Adaley		-	100,000	-	-	100,000		-	-	100,000
Former
Directors
M Flory		-	-	-	-	-		-	-	-
T Richards		-	200,000	-	-	200,000		-	-	200,000
S Woodham		-	-	-	-	-		-	-	-
W Hayden		-	-	-	-	-		-	-	-
Total		-	1,800,000	-	-	1,800,000		-	-	1,800,000

*Options granted represent options issued to shareholders, officers and directors when the Company was in the process if being established.

Executive Share Options

Details of executive share options have been disclosed at note 14 to the financial statements .

d) Transactions with other related parties

Nil.

23. Remuneration of auditors

Remuneration of the auditor for the Company for: Audit or review of the financial report Remuneration of the auditor for other services: Preparation of Investigating Accountants Report for the IPO Total		2011 $

		29,754
		21,000


		50,754

The auditor of the Company is Grant Thornton Audit Pty Ltd

24. Subsequent events

The Directors are not aware of any other matters or circumstances at the date of this report that have significantly affected or may significantly affect the operations, the results of the operations or the state of affairs of the Company in subsequent financial years.

FINANCIAL STATEMENTS 30 JUNE 2011

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DIRECTORS’ DECLARATION

In the opinion of the directors of Tellus Resources Ltd:
a the financial statements and notes of Tellus Resources Ltd are in accordance with the Corporations Act 2001, including
i. giving a true and fair view of its financial position as at 30 June 2011 and of its performance for the financial year ended on that date; and
ii. complying with Australian Accounting Standards including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
b there are reasonable grounds to believe that Tellus Resources Ltd will be able to pay its debts as and when they become due and payable.
The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Executive Technical Director and Chief Financial Officer for the financial year ended 30 June 2011.
The financial statements comply with International Financial Reporting Standards.

Signed in accordance with a resolution of the directors:

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Anthony Wehby

Chairman

Sydney, 21 September 2011

FINANCIAL STATEMENTS 30 JUNE 2011

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Grant Thornton Audit Pty Ltd ACN 130 913 594

Level 17, 383 Kent Street Sydney NSW 2000 Locked Bag Q800 QVB Post Office Sydney NSW 1230

T +61 2 8297 2400 F +61 2 9299 4445 E [email protected] W www.grantthornton.com.au

Independent Auditor’s Report To the Members of Tellus Resources Limited

Report on the financial report

We have audited the accompanying financial report of Tellus Resources Limited (the “Company”), which comprises the statement of financial position as at 30 June 2011, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date, a summary of significant accounting policies, other explanatory notes to the financial report and the directors’ declaration of the company.

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 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 are free from material misstatement, whether due to fraud or error. The Directors also state, in the notes to the financial report, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.

Auditor’s responsibility

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

Liability limited by a scheme approved under Professional Standards Legislation

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

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

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

Independence

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

Auditor’s opinion

In our opinion:

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

Report on the remuneration report

We have audited the remuneration report included in pages 8 to 11 of the directors’ report for the year ended 30 June 2011. The Directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

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Auditor’s opinion on the remuneration report

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

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

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A J Archer Director - Audit & Assurance

Sydney, 21 September 2011

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SUPPLEMENTARY INFORMATION

Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is as follows:

In accordance with ASX listing rule 4.10.19 the Company confirms that it has used the cash and assets in a form readily convertible to cash that it had at the time of admission to the ASX in a way consistent with its business objectives.

Number of holders of equity securities

Ordinary shares

As at 12 September 2011, the issued capital comprised of 26,150,000 ordinary fully paid shares (ASX code: TLU) held by 439 holders.

Options

At 12 September 2011, the Company had the following options available to be exercised:
4,800,000 options over ordinary shares with an exercise price of 30 cents each, exercisable on or before 31 March 2014.
1,200,000 options over ordinary shares with an exercise price of 30 cents each, exercisable on or before 30 April 2014.

Each option converts to one ordinary share.

Distribution of holders equity security

FULLY PAID ORDINARY SHARES
HOLDING	NUMBER OF HOLDERS
1 - 1,000	-
1,001 - 5,000	7
5,001 - 10,000	91
10,001 - 100,000	296
100,001 and over	45
Total number of holders	439
Holding less than a marketable parcel	-

Voting rights

The voting rights attaching to each class of equity securities are set out below:

a) Ordinary Shares – on a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.
b) Options – No voting rights.

FINANCIAL STATEMENTS 30 JUNE 2011

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SUPPLEMENTARY INFORMATION

Top twenty shareholders

	ORDINARY SHARES
SHAREHOLDERS	NUMBER HELD PERCENTAGE
ISCS Holdings Pty Ltd Locksley Holdings Pty Ltd Westoria Resource Investments Ltd Mr Anthony Samuel Wehby Westoria Resource Investments Limited Perpetual Trustee Company Limited Red Dog#! Pty Ltd Mr Anthony Mark Doyle & Mrs Lucia Helen Moretti John Wardman & Associates Pty Ltd Tempo Capital Pty Ltd Mr David Ward Bond Street Custodians Limited Mr Jonathan Edgar Bond Street Custodians limited – Marc Christiaan Flory Mr Stephen Woodham & Mrs Elizabeth Woodham Spring Creek Equities Pty Ltd Geba Pty Ltd MGL Corp Pty Ltd Mr. Craig David Whiteman & Mr Andrew John Donald Whiteman TOTAL	1,700,000 6.50 850,000 3.25 840,000 3.21 600,000 2.29 450,000 1.72 400,000 1.53 400,000 1.53 400,000 1.53 400,000 1.53 400,000 1.53 400,000 1.53 350,000 1.34 312,000 1.19 311,000 1.19 300,000 1.15 300,000 1.15 300,000 1.15 290,000 1.11 228,000 0.87 220,000 0.84
	9,451,000 36.14

Substantial shareholder

Substantial shareholder
	ORDINARY	SHARES
SHAREHOLDER
	NUMBER HELD	PERCENTAGE
ISCS Holdings Pty Ltd	1,700,000	6.50

Interest in Mineral Properties

Current interest in tenements held by Tellus Resources Ltd as at 12 September 2011 are listed below:

All tenements are located in New South Wales, Australia

PROJECT	EL NUMBER	INTEREST	PROJECT	EL NUMBER	INTEREST
Cobark	EL 7698	100%	Cobargo	EL 7721	100%
Glen Morrison	EL 7699	100%	Yurammie	EL 7722	100%
Yambulla	EL 7720	100%	Brogo	EL 7723	100%

FINANCIAL STATEMENTS 30 JUNE 2011

AI assistant

FIRSTWAVE CLOUD TECHNOLOGY LIMITED — Annual Report 2011

64905_rns_2011-09-20_cf7e535c-ccde-4905-b852-be4107b7ed90.pdf

TELLUS RESOURCES LTD

CORPORATE DIRECTORY

Directors

Company Secretary

Registered Office and Principal Place of Business

Share Register

Stock Exchange Listing

Auditor

Solicitor

DIRECTORS’ REPORT

Directors

Anthony Wehby

David Ward

Richard Willson

DIRECTORS’ REPORT

Company Secretary

Anne Adaley

Principal Activities

Operating Results

Review of Operations

Changes in the State of Affairs

DIRECTORS’ REPORT

Dividends

Events Subsequent To Reporting Date

Likely Future Developments

Directors’ meetings

Directors’ interests

DIRECTORS’ REPORT

FOR THE PERIOD ENDED 30 JUNE 2011

Share options

Environmental Issues

Indemnities given and insurance premiums paid to auditors and officers

Non Audit Services

DIRECTORS’ REPORT

Remuneration report (Audited)

Principles used to determine the nature and amount of remuneration

DIRECTORS’ REPORT

Remuneration report (Audited Continued)

Details of remuneration

DIRECTORS’ REPORT

FOR THE PERIOD ENDED 30 JUNE 2011

Remuneration report (Audited Continued)

Service Agreements

Anthony Wehby

Non-Executive Chairman

Richard Willson

Non-Executive Diretor

David Ward

Executive Technical Director

DIRECTORS’ REPORT

Remuneration report (Audited Continued)

Anne Adaley

Company Secretary and Chief Financial Officer

Proceedings on Behalf of Company

Auditor’s Independence Declaration To the Directors of Tellus Resources Limited

CORPORATE GOVERNANCE STATEMENT

Principle 1: Lay solid foundations for management and oversight

Functions of the Board and Management

CORPORATE GOVERNANCE STATEMENT FOR THE PERIOD ENDED 30 JUNE 2011

Senior Executive performance evaluation

Principle 2: Structure the Board to add value

Board composition

Principles and Recommendations

Role of the Chairman

Nomination and Remuneration Committee

CORPORATE GOVERNANCE STATEMENT FOR THE PERIOD ENDED 30 JUNE 2011

Directors’ Performance Evaluation

Independent professional advice and access to information

Insurance

Principle 3: Promote ethical and responsible decision making

Code of Conduct

Securities Trading Policy

Principle 4: Safeguard integrity in financial reporting

Audit and Risk Committee

CORPORATE GOVERNANCE STATEMENT FOR THE PERIOD ENDED 30 JUNE 2011

Principle 5: Make timely and balanced disclosure

Principle 6: Respect the rights of shareholders

FIRSTWAVE CLOUD TECHNOLOGY LIMITED Annual Report 2011