GATEWAY MINING LIMITED — Annual Report 2007

Sep 27, 2007

GATEWAY MINING LIMITED ABN: 31 008 402 391

DIRECTORS’ REPORT

Your directors present their report on the company for the financial year ended 30 June 2007.

DIRECTORS

The names and details of the directors of the company in office at any time during or since the end of the year are:

Names, Qualifications, Experience and Special Responsibilities

Brian Gomez ( Non-Executive Chairman) B.Sc (Earth Sciences) from Macquarie University

Appointed Chairman in 1995. Board member since 1995. Brian has been analysing and writing about resource projects and issues in Australia and internationally for more than two decades. He has acted in a corporate advisory capacity to a number of listed and unlisted resource companies and delivered papers at International Conferences. Brian is a former Jefferson Fellow at the East West Center in Honolulu and a Fellow of the Institute of Company Directors.

Robert A.Creelman (Non-Executive Director) BA.MSc (Hons), PhD., F.Aust.IMM.CP (Geol)

Board member since 1994. Dr Creelman is a Fellow of the Australian Institute of Mining and Metallurgy, and a Certified Professional (Geology) with the Institute. He has had over 30 years experience in the geosciences and allied engineering disciplines and has been a director of public companies involved in exploration and mining.

He recently accepted an Adjunct Associate Professorship on a part time basis at the University of Western Sydney, and is a Research Fellow at the University of Newcastle in coal combustion and utilisation. He has in the past been in CSIRO involvement in the development of automated mineralogy for the minerals industry. Through his consultancy, he has been involved in exploration for gold, base metals, fuel and platinum resources.

Brian F. Thornton (Non-Executive Director) B.Ec., F.Fin

Board member since 2001. Brian Thornton, a graduate in Economics from the Australian National University and a Fellow of the Financial Services Institute of Australia, has a diverse background covering the public and private sectors. He has worked as an adviser to the resources sector for almost 20 years and consults to a number of listed gold base metals and bulk commodity companies. His expertise covers IPO’s, mergers and acquisitions and capital raisings.

He is also a director of Gel Resources Pty Limited and Chairman of Xanadu Mines Ltd.

Directors and Specified Executives (being key management personnel) Interests`

As at the date of this report, the interests of the directors and specified executives in the shares and options of the company were:

Directors:	Ordinary shares:	Options over ordinary shares:
B.Gomez	301,250	350,000
R.A.Creelman	130,500	350,000
B.F. Thornton	10,215,482	350,000
Specified Executives:	Ordinary shares:	Options over ordinary shares:
S.Lian	380,000	450,000

17,512 options were exercised at 30cents per option on 1[st] March 2007. Total 2,500,000 options at an exercise price of 30 cents per option exercisable at any time up to 30 November 2011 were issued to executives, staff and consultants during the year.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

DIRECTORS’ REPORT (continued)

2.

COMPANY SECRETARY

Mr. Anthony C. de Govrik – Solicitor. Mr. de Govrik also acts as the company solicitor and was appointed company secretary on 8 October 1992.

3. PRINCIPAL ACTIVITIES

The principal activities of the company during the financial year were resource exploration and investment.

There were no significant changes in the nature of the activities of the company that occurred during the year.

4. RESULTS AND DIVIDENDS

The profit after tax for the year was $59,849 (2006 profit - $157,249). No dividends have been declared or paid during the year.

5. REVIEW OF OPERATIONS

The company signed an agreement with WCP Resources Ltd (WCP) on its Airport/Barrelmaker Project in Western Australia. On signing of the agreement, WCP issued 6.25 million shares at 20cents per share as an option to acquire a 70% interest in the Airport/Barrlemaker Project in Western Australia. The company signed two new joint ventures with Minotaur Exploration Limited on its Cowra Project in NSW and its Surprise Project in the Mt Isa District, Queensland. At the Cowra Project, Minotaur is required to spend a total of $2.0 million over 54 months to earn 75% of the Project. At the Surprise Project, Minotaur is required to spend a total of $1.0 million over 54 months to earn 75% of the Project.

The status of the company was changed during the year from No Liability to Limited.

6. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS AND FINANCIAL POSITION

There were no significant changes to the state of affairs of the company except for the issue of 17,512 new shares at 30c per share that raised $5,254 through an exercise of options on 1[st] March 2007. In the financial position, the company held listed securities with a market value at 30 June 2007 of $2,966,232 (2006: $656,853).

7. ENVIRONMENTAL REGULATION

The company’s operations are subject to various environmental regulations under State regulations. The Directors are not aware of any material breaches during the financial year.

8. SIGNIFICANT EVENTS AFTER THE BALANCE DATE

No matters or circumstances have arisen since the end of the financial year that significantly affected or may significantly affect the operations of the company, the results of those operations, or the state of affairs of the company in future periods other than:

On 16 July 2007 the company announced a joint venture with Legend Mining Limited on West Bungarra Project in Western Australia to earn 70% of the project. Under the agreement, Legend will sole fund exploration until a decision to mine.

The company was further granted 1,958,251 ordinary shares in WCP Resources Ltd at 25.5 cents per share as part of an agreement to acquire an interest in Western Australia Gold Projects.

9. FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES

The directors believe, on reasonable grounds, that it would unreasonably prejudice the interests of the company if any further information on likely developments, future prospects and business strategies in the operations of the company and the expected results of these operations, were included herein.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

DIRECTORS’ REPORT (continued)

10. SHARE OPTIONS

At the date of this report, there were 2,500,000 options (2006 -9,692,828). The options are exercisable at 30 cents per option on or before 11th November 2011.

11. EMPLOYEES

There were 2 employees as at 30 June 2007 (2006 - 2)

12. REMUNERATION REPORT

Directors’ and Specified Executives (being key management personnel) Remuneration

The company’s policy for determining the nature and amount of emoluments of board members and executives is as follows:

Company officers and directors are remunerated to a level consistent with the size of the company. The company’s aim is to remunerate at a level that will attract and retain suitably qualified directors and employees.

The remuneration of non-executive directors is determined by the Board within the maximum amount approved by the shareholders of the company from time to time. This remuneration is by way of a fixed fee and supplemented by the issue of incentive options as approved by shareholders in a general meeting of the company.

The remuneration structure for executive officers is based on a number of factors including experience of the individual concerned and their overall performance. The contracts for service between the company and executives are on a continuing basis the terms of which are not expected to change in the immediate future.

No remuneration is linked to the current performance of the company. This may change in time.

Directors’ Remuneration - Audited

	Short-term benefits	Short-term benefits	Short-term benefits	Short-term benefits	Short-term benefits	Post-employment benefits	Post-employment benefits	Share- based payments		Total
Non-executive Directors:	Fees	Non-monetary benefits		Other short- term benefits			Super- Contribution	Options
	$	$			$		$	$		$
B. Gomez	25,000	-			-		-	14,420		39,420
R.A. Creelman	25,300	-			-		-	14,420		39,720
B.F.Thornton	20,000	-			-		1,800	14,420		36,220
	70,300	-			-		1,800	43,260		115,360
Specified Executives Remuneration - Audited
		Short-term benefits					Post- employment benefits	Share- based payments	Total
	Cash Salary	Fees	Non-monetary benefits		Other short-term benefits		Super- Contribution	Options
Name:	$	$	$		$		$	$	$
S. Lian (CEO)	120,000	-	-		17,305		10,800	18,540	166,645
Allan Pellegrini (Exploration Consultant)	-	62,662	-		18,385		-	10,300	91,347
Mark.Gordon (Exploration Consultant)	-	2,269	-		-		-	4,120	6,389
	120,000	64,931	-		35,690		10,800	32,960	264,381

No termination benefits except a long service leave of $12,000 were paid during the financial year. A total of 2,500,000 options at exercisable price of 30 cents per option exercisable at any time up to 30[th] November 2011 were issued to Directors and executives of the company and to its consultants during the year.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

DIRECTORS’ REPORT (continued)

Related Party Transactions

Since the end of previous financial year, other than the remuneration disclosed above, no director has received any benefits.

13. DIRECTORS’ MEETINGS

During the financial year, 6 meetings of directors (including committees) were held. Attendances were:

Attendances were:
	Meetings held	Meetings attended
B. Gomez	6	6
R.A.Creelman	6	6
B.F.Thornton	6	5

The company does not have an Audit Committee as this function is performed by the Board of Directors.

14. CORPORATE GOVERNANCE

In recognising the need for the highest standards of corporate behaviour and accountability, the directors of Gateway Mining Limited support and adhered to the principles of corporate governance. These principles have been formalised by the Board in the corporate governance statement contained in the additional ASX information section of the annual report.

15. PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any 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. The company was not a party to any such proceedings during the year.

16. NON-AUDIT SERVICES

There were no non-audit services performed by the external auditor during the financial year.

17. AUDITOR INDEPENDENCE DECLARATION

The auditor independence declaration for the year ended 30 June 2007 has been received and can be found on page 5 of this financial report.

18. INDEMNIFYING OFFICERS OR AUDITOR

No indemnities have been given or insurance premiums paid, during or since the end of the financial year, for any person who has been an officer or auditor of the company.

Signed in accordance with a resolution of the Board of Directors.

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Brian Gomez Director

Dated this 28[th] day of September 2007 Sydney

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GATEWAY MINING LIMITED ABN: 31 008 402 391

AUDITORS INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF GATEWAY MINING LIMITED

Priestley &Morris

Chartered Accountants

I declare that, to the best of my knowledge and belief, during the year ended 30 June 2007 there have been:

• (1) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

• (2) no contraventions of any applicable code of professional conduct in relation to the audit.

Priestley & Morris Chartered Accountants

P A Cordwell Partner

Dated this 28th day of September 2007

Priestley & Morris - ABN: 51 502 720 047

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Liability limited by a scheme approved under Professional Standards Legislation

Level 7, 3 Horwood Place, Parramatta NSW 2150 PO Box 19, Parramatta NSW 2124 Tel: +61 2 8836 1500 Fax: +61 2 8836 1555 E: email@priestleymorris.com.au W: www.priestleymorris.com.au

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GATEWAY MINING LIMITED ABN: 31 008 402 391

INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

NOTE  Revenue 3  Depreciation and amortisation expense 4  Exploration expenditure written off  Employee benefit expenses  Professional services rendered  Office expenses  Compliance fees  Share registry fees  Travel and entertainment expenses  Other expenses  Profit before income tax expense 4  Income tax expense 5  Profit for the year  Net profit attributable to members of Gateway Mining Limited 15  Basic earnings per share 7  Diluted earnings per share 7	2007 $
	1,316,748 (2,457) (714,031) (244,334) (105,000) (44,927) (19,849) (22,727) (28,225) (75,349)
	59,849 -
	59,849
	59,849

The accompanying notes form part of these financial statements

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GATEWAY MINING LIMITED ABN: 31 008 402 391

BALANCE SHEET AS AT 30 JUNE 2007

NOTE CURRENT ASSETS  Cash and cash equivalents  Trade and other receivables 8 TOTAL CURRENT ASSETS NON-CURRENT ASSETS  Trade and other receivables 8  Financial assets 9  Plant and equipment 10  Deferred exploration and evaluation expenditure 11 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES  Trade and other payables 12  Short-term provisions 13 TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES  Long-term provisions 13 TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY  Issued capital 14  Reserves 16  Accumulated losses 15 TOTAL EQUITY	2007 $		2006 $
	921,100 65,380		1,846,243 68,293
	986,480		1,914,536
	12,608 3,516,232 7,222 6,792,336		12,608 1,206,853 7,840 7,063,234
	10,328,398		8,290,535
	11,314,878		10,205,071
	49,153 9,933		58,660 9,001
	59,086		67,661
	-		12,000
	-		12,000
	59,086		79,661
	11,255,792		10,125,410
	20,155,760 1,297,874 (10,197,842)		20,150,506 232,595 (10,257,691)
	11,255,792		10,125,410

The accompanying notes form part of these financial statements

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GATEWAY MINING LIMITED ABN: 31 008 402 391

CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

NOTE CASH FLOWS FROM OPERATING ACTIVITIES  Payments to suppliers and employees  Interest and other income received NET CASH USED IN OPERATING ACTIVITIES 19a CASH FLOWS FROM INVESTING ACTIVITIES  Proceeds from sale of financial assets  Purchase of plant and equipment  Purchase of listed securities  Expenditure on mining interests NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES  Proceeds from issues of ordinary shares  Placement fees NET CASH PROVIDED BY FINANCING ACTIVITIES NET DECREASE IN CASH HELD Add opening cash brought forward CLOSING CASH CARRIED FORWARD 19b	2007 $		2006 $
	(455,073) 66,748		(402,854) 23,535
	(388,325)		(379,319)
	- (1,839) (97,100) (443,133)		849,206 - (10,555) (593,521)
	(542,072)		245,130
	5,254 -		1,720,000 (86,000)
	5,254		1,634,000
	(925,143)		1,499,811
	1,846,243		346,432
	921,100		1,846,243

The accompanying notes form part of these financial statements.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

STATEMENT OF CHANGES IN EQUITY FOR THE ENDED 30 JUNE 2007

Balance at1.7.2005 Shares issued during the year Revaluation increment on transition to IFRS Cumulative revaluation increment realised on disposal of financial assets Revaluation increment at balance date Profit attributable to members of the company Balance at30.06.2006 Shares issued during the year Share based payments Revaluation increment at balance date Profit attributable to members of the company Balance at30.06.2007	Issued capital	Accumulated losses	Financial asset revaluation and Share Based Payments Reserve	Total
	$ 18,516,506 1,634,000	$ (10,414,940) - 157,249	$ - - 467,566 (303,449) 68,478	$ 8,101,566 1,634,000 467,566 (303,449) 68,478 157,249
	20,150,506	(10,257,691)	232,595	10,125,410
	5,254 - - -	- - - 59,849	- 103,000 962,279 -	5,254 103,000 962,279 59,849
	20,155,760	(10,197,842)	1,297,874	11,255,792

The accompanying notes form part of these financial statements.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The financial report is a general-purpose financial report that has been prepared in accordance with Australian Accounting Standards, Urgent Issues Group Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

The financial report covers the company of Gateway Mining Limited as an individual entity. Gateway Mining Limited is a listed public company, incorporated and domiciled in Australia.

The financial report of Gateway Mining Limited as an individual entity complies with all Australian equivalents to International Financial Reporting Standards (IFRS) in their entirety.

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

Basis of Preparation

Gateway Mining Limited has prepared the financial statements in accordance with the Australian Equivalents to International Financial Reporting Standards (IFRS).

The accounting policies set out below have been consistently applied to all years presented

Reporting Basis and Conventions

The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected financial assets for which the fair value basis of accounting has been applied.

a. Income Tax

The charge for current income tax expenses is based on the profit or loss for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability settled. Deferred tax is credited to the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

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

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

b. Goods and Services tax (GST)

• Revenues, expenses and assets are recognised net of the amount of GST except:

• The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Balance Sheet.

• Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows.

• Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

c. Plant and Equipment

Cost and valuation

Plant and equipment are measured on the cost basis less depreciation and impairment losses.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount of these assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

Depreciation

Depreciation is provided on a reducing balance basis on all plant and equipment over their useful lives to the company commencing from the time the asset is held ready for use.

The depreciation rates used for each class of depreciable assets are:

Class of Fixed Assets: Depreciation rate: Plant and equipment 8% to 40%

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An assets' carrying amount is written down immediately to its recoverable amount if the assets' carrying amount is greater than its estimated recoverable amount.

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

d. Financial instruments

Recognition

Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below:

Available-for-sale financial assets

Available-for-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair values are taken directly to equity.

Impairment

At each reporting date, the company assesses whether there is objective evidence that a financial instrument has been impaired. A prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

e. Exploration and Development Expenditure

Costs carried forward

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. 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 and where there are active and significant operations.

Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

Amortisation

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

A regular review is undertaken of each area of interest to determine the appropriateness of continuity to carry forward costs in relation to that area of interest.

Restoration costs

Restoration costs that are expected to be incurred are provided for as part of the cost of the exploration, evaluation, development, construction or production phases that give rise to the need for restoration. Accordingly, these costs are recognised gradually over the life of the facility as these phases occur. The costs include obligations relating to reclamation, waste site closure, plant closure, platform removal and other costs associated with the restoration of the site. These estimates of the obligations are based on anticipated technology and legal requirements and future costs, which have been discounted to their present value. Any changes in the estimates are adjusted on a prospective basis. In determining the restoration obligations, the company has assumed no significant changes will occur in the relevant Federal and State Legislation in relation to restoration of such mineral mines in the future.

No provision for restoration work has been made at this stage.

f. Cash and cash equivalents

For the purpose of the Cash Flow Statement, cash includes cash on hand and at call deposits with banks or financial institutions, net of bank overdrafts.

g. Comparative Figures

Where required by Accounting Standards, comparative figures have been adjusted to conform with changes in presentation for the current financial year.

h. Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

The following specific recognition criteria must also be met before revenue is recognised: Interest revenue is recognised when the company controls the right to receive interest payments. Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. All revenue is stated net of the amount of goods and services tax (GST).

i. Employee benefits

Provision is made for the company's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows, including on-costs, to be made for those benefits.

Contributions are made by the company to an employee defined contribution superannuation fund and are charged as expenses when incurred.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

j. Leases

Leases are classified at their inception as either operating or financial leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership.

Operating leases

The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased item, are recognised as an expense in the period in which they are incurred.

Finance leases

The company is not a party to any finance leases.

k. Earnings per share

Basic earnings per share is determined by dividing the net profit or loss attributable to members by the weighted average number of ordinary shares outstanding during the financial year.

Diluted earning per share adjusts the figure used in determining earnings per share by taking into account amounts unpaid on ordinary shares and any reduction in earnings per share that will probably arise from the exercise of options outstanding during the financial year.

l. Sundry payables and accruals

Recognition is based upon amounts to be paid in the future for goods and services received, whether or not billed to the company.

m. Contributed equity

Issued and paid up capital is recognised at the fair value of the consideration received by the company. Any transactions costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

n. Impairment

At each reporting date, the company reviews the carrying value of its assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, 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.

Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

o. Critical accounting estimates and judgments

The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on historical trends and economic data, obtained both externally and from within the company.

Key estimates - Impairment

The company assesses impairment at each reporting date by evaluating conditions specific to the company that may lead to impairment of assets. When an impairment trigger exists, the recoverable amount of the asset is determined. Value in use calculations performed in assessing recoverable amounts incorporate a number of key estimates.

Plant and equipment, deferred exploration and evaluation expenditure and financial assets have been reviewed by the company and as there are no indications of any impairment, no impairment losses have been recognised to date.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
NOTE NOTE 3: REVENUE Non-operating activities Interest received 3a Other revenue 3b Gain on disposal of financial assets Cumulative revaluation increment realised on disposal of financial assets Total revenue a. Interest revenue from: - other persons Total interest revenue NOTE 4: PROFIT FOR THE YEAR a. Expenses Depreciation of non-current assets: - plant and equipment Share based payment to directors, employees and consultants Rental expense on operating leases: - minimum lease payments b. Significant revenues and expenses The following significant revenues and expenses are relevant in explaining the financial performance: Net gain on disposal of non-current assets: - Financial assets Option fee received to acquire interest in Barrelmaker and Airport gold exploration tenements Cumulative revaluation increment realised on disposal of financial assets Total significant net revenues Exploration expenditure written off on abandoned tenements	2007 $		2006 $
	58,748 1,258,000 - -		23,535 - 285,593 303,449
	1,316,748		612,577
	58,748		23,535
	58,748		23,535
			8,453
			- 38,467
			285,593
			285,593
	1,250,000		-
	-		303,449
	1,250,000		589,042
	714,031		-

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 5: INCOME TAX EXPENSE The prima facie tax on profit from ordinary activities before income tax is reconciled to the income tax expense as follows: Prima facie tax payable (benefit) on profit (loss) from ordinary activities before income tax at 30% (2006 – 30%) Add tax effect of permanent differences - share based payments Tax effect of capital losses used and carried forward separately Income tax expense (benefit) arising from profit (loss) Utilisation of prior period tax losses Benefit of tax loss not brought to account Income tax expense attributable to profit (loss) from ordinary activities before income tax	2007 $		2006 $
	17,955 30,900 -		47,175 - -
	48,855 (48,855) -		47,175 (47,175) -
	-		-

As at balance date, the Company has estimated carry-forward tax losses of $12,990,634 (2006: $13,586,632), which is an income tax benefit of $3,897,190 (2006: $4,075,990). The Company has net deferred timing differences of $4,667,738 (2006: $7,556,338), which represents a net deferred tax liability of $1,400,321 (2006: $2,266,901).

These potential net future tax benefits have not been brought into account. The taxation authority has not yet confirmed the quantum of the carried forward tax losses.

This future income tax benefit will only be obtained if:

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

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

(c) no change in tax legislation adversely affects the company in realising the benefit.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 6: AUDITORS’ REMUNERATION Remuneration of the auditor of the company for: - auditing or reviewing the financial report NOTE 7: EARNINGS PER SHARE a. Reconciliation of earnings to profit or loss Profit Net profit attributable to outside equity interest Earnings used in calculating basic and dilutive earnings per share b. Weighted average number of ordinary shares on issue used in the calculation of basic earnings per share c. Effect of dilutive securities: Share options Weighted average number of ordinary shares outstanding during the year used in calculation of dilutive earnings per share	2007 $	2007 $	2006 $
	18,000		18,900
	59,849 -		157,249 -
	59,849		157,249
	No of shares		No of shares
	101,111,255		94,076,957
	~~-~~		9,692,828
	101,111,255		103,769,785

d. Conversions, calls, subscription or issues after 30 June 2007

There have been no conversions to, calls of, or subscriptions for ordinary shares or issues of potential ordinary shares since the reporting date and before the completion of this financial report.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
NOTE 8: TRADE AND OTHER RECEIVABLES CURRENT Security deposits Goods & services tax receivable NON-CURRENT Security deposits	2007 $		2006 $
	53,106 12,274		50,424 17,869
	65,380		68,293
	12,608		12,608
	12,608		12,608

Current security deposits are mining bonds and have a floating interest rate, which has averaged 6.07% for the year (2006 – 5.32%). Non-current security deposits are non-interest bearing.

NOTE 9: FINANCIAL ASSETS NON-CURRENT

NOTE 9: FINANCIAL ASSETS NON-CURRENT
Available for sale financial assets: Shares in listed corporations - at fair value Shares in unlisted corporation – at cost	2,966,232 550,000		656,853 650,000
	3,516,232		1,206,853

Available for sale financial assets comprise investments in the ordinary issued capital of various entities. There are no fixed returns or fixed maturity dates attached to these investments.

The company received 6,250,000 WCP Resources Limited shares as consideration for an option to acquire and interest in the company’s Barrelmaker and Airport Central gold projects. The shares have a market value of $843,750 at balance date. These shares are escrowed for 12 months.

The fair value of the unlisted available for sale financial asset cannot be reliably measured as variability in the range of reasonable fair estimates is significant. As a result, the unlisted investment is measured at cost.

NOTE 10: PLANT AND EQUIPMENT

Plant and Equipment At cost Accumulated depreciation Total Plant and Equipment	92,440 (85,218)		90,601 (82,761)
	7,222		7,840

Reconciliations

Reconciliations of the carrying amounts of plant and equipment at the beginning and end of the current and previous financial year:

Plant and Equipment Carrying amount at the beginning of the year: Additions Depreciation expense Carrying amount at the end of the financial year:	7,840 1,839 (2,457) 7,222
	7,840 1,839 (2,457)	16,293 - (8,453)
	7,222	7,840

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 11: DEFERRED EXPLORATION AND EVALUATION EXPENDITURE NON-CURRENT Exploration Expenditure- exploration and evaluation phases Costs carried forward in respect of areas of interest at beginning of the year Additions Expenditure written off	2007 $		2006 $
	7,063,234 443,133 (714,031)		6,469,713 593,521 -
	6,792,336		7,063,234

The recoverability of the above is dependent upon further exploration and exploitation of commercially viable mineral deposits.

NOTE 12: TRADE AND OTHER PAYABLES

CURRENT

Unsecured liabilities

Sundry payables and accrued expenses	49,153		58,660
	49,153		58,660

NOTE 13: PROVISIONS

Closing balance at 30 June 2007 Analysis of total provisions: Current Non-Current	Annual Leave	Long Service leave		Total provisions
	9,933	-		9,933
		2007 $		2006 $
		9,933 -		9,001 12,000
		9,933		21,001

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
NOTE 14: ISSUED CAPITAL a. Ordinary shares fully paid Balance at beginning of year Issued shares Placement fees Balance at end of year b. Movements in ordinary shares on issue At the beginning of the financial year Shares issued At end of the financial year	2007 $		2006 $
	20,150,506 5,254 -		18,516,506 1,720,000 (86,000)
	20,155,760		20,150,506
	No.		No.
	101,105,450 17,512		87,305,450 13,800,000
	101,122,962		101,105,450

c. Terms and conditions of ordinary shares

Ordinary shares have the right to receive dividends as declared and, in event of the winding up the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of shares and amount paid up on the shares held. Ordinary shares entitle their holder to vote, either in person or by proxy, at a meeting of the company.

d. Share options

At 30 June 2007, there were 2,500,000 options issued (30 June 2006: 9,692,828) .The options are exercisable at 30 cents on or before 30[th] November 2011.

NOTE 15: ACCUMULATED LOSSES Balance at the beginning of the financial year Net (profit) attributed to the members of the entity Balance at end of the financial year NOTE 16: RESERVES a. Financial asset revaluation reserve b. Share based payments reserve	2007 $ 10,257,691 (59,849) 10,197,842 1,194,874 103,000 1,297,874	2006 $
		10,414,940 (157,249)
		10,257,691
		232,595 -
		232,595

The financial asset revaluation reserve records the revaluation gains and losses on available for sale financial assets until the financial asset is disposed of, at which time the cumulative gains or losses recognised in this reserve shall be transferred to the income statement. The share based payments reserve comprises the value of options granted in the year calculated at grant date using a Black-Scholes model. The share based payments expense of $103,000 was granted to directors, employees and consultants.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 17: SHARE BASED PAYMENTS

All options granted to key management personnel and consultants are ordinary shares in the company, which confer a right of one ordinary share for every option held.

Options granted during the year – 2,500,000 options with an exercise price of $0.30 each.

The weighted average fair value of the Options granted during the period was $0.0412.

The price was calculated using the Black-Scholes option pricing model applying the following inputs:

Weighted average exercise price $0.3 Weighted average life of the option 5 years Underlying share price $0.18 Expected share price volatility 20% Risk free interest rate 8%

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

The life of the options is based on the historical exercise patterns, which may not eventuate in the future.

Included in employment benefits in the income statement is $63,860, and relates to equity settled share based payment transactions.

NOTE 18: EXPENDITURE COMMITMENTS Lease expenditure commitments Non-cancellable operating leases contracted for but not capitalised in the financial statements: 18a Payable - not later than 12 months - between 12 months and 5 years - greater than 5 years	2007 $		2006 $
	44,672 46,465 -		42,959 91,143 -
	91,143		134,102

• a. The above represents the lease on the office premises, being a non-cancellable operating lease, with payments made quarterly in advance. The lease expires within a five-year period and has an option to renew for a further three years. The rental rate review is calculated annually and fixed at 4%. Upon renewal the terms of the leases are renegotiated. At present these terms do no allow subletting.

Exploration expenditure commitments

In order to maintain current rights of tenure to exploration tenements, the Company is required to comply with the minimum expenditure obligations under the Mining Act. These obligations have been met. The future obligations which are subject to renegotiation when an application for a mining lease is made and at other times are not provided for in the financial statements.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 19: CASH FLOW INFORMATION

a. Reconciliation of cash flows from operations with profit after income tax

Profit after income tax Non-cash flows in profit: - Depreciation - Provision for employee benefits - Net gain on disposal of interest in tenements - Share based payment - Exploration Expenditure written off - Cumulative revaluation increment realised on disposal of financial assets - Net (gain) loss on disposal of financial assets -Option fees equivalent of 6,250,000 share @ 20cts per share of WCP Resources Ltd as settlement to acquire 70% interest in the Airport/Barrelmaker project in Western Australia Changes in assets and liabilities: - Decrease/ (Increase) in receivables - Increase/ (Decrease) in payables and accruals Cash flows from operations b. Reconciliation of cash Cash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the Balance sheet as follows: - cash and cash equivalents	59,849 2,457 9,933 - 103,000 714,031 - - (1,250,000) 2,913 (30,508)
	(388,325)
	921,100
	921,100

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 20: FINANCIAL INSTRUMENTS

The company's financial instruments consist of cash at bank, trade receivables and payables, and available for sale financial assets. The company does not have any derivative instruments at balance date.

a. Interest Rate Risk

The company’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on classes of financial assets and financial liabilities, is as follows:

Weighted Average Effective Interest Rate 2007 2006 Financial Assets: Cash 5.00% 5.00% Receivables- other - - Security deposits 6.07% 5.32% Available for sale financial assets - - Total Financial Assets Financial Liabilities: Sundry payables and accruals - - Total Financial Liabilities	Fixed Interest Rate Floating Interest Rate $ Within Year $ 1 to 5 Years $ 2007 2006 2007 20062007 2006 921,100 1,846,243 - - - - - - - - - - 53,106 50,424 - - - - - - - - - -	Maturing Over 5 Years $ 2007 2006 - - - - - - - -	Non-interest Bearing $ 2007 2006 - - 12,274 17,869 12,608 12,608 3,516,232 1,206,853	Total $ 2007 2006 921,100 1846,243 12,274 17,869 65,714 63,032 3,516,2321,206,853
	974,206 1,896,667 - - - -	- -	3,541,114 1,237,330	4,515,3203,133,997
	- - - - - -	- -	49,153 58,660	49,153 58,660
	- - - - - -	- -	49,153 58,660	49,153 58,660

b. Credit Risk Exposure

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the balance sheet and notes to the financial statements.

The company does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the company.

c. Net Fair Value

The net fair values of listed investments have been valued at the quoted market bid price at balance date, adjusted for transaction costs expected to be incurred. For unlisted investments where there is no organised financial market the net fair value has been based on cost. For all other assets and other liabilities the net fair value approximates their carrying value.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 21: COMPANY DETAILS

The registered & principal office of the company is:

Level 7, 249 Pitt Street, Sydney, NSW 2000.

The company’s domicile is in Australia.

The company is incorporated in Australia.

The company was granted change of corporate status by the Australian Securities and Investment Commission. The status changed from No Liability to Limited..

NOTE 22: SEGMENT INFORMATION

The company operates in Australia predominantly in the mineral exploration industry, mainly gold.

NOTE 23: EVENTS AFTER THE BALANCE SHEET DATE

On the 14 September 2007, WCP Resources Limited exercised the first option to acquire a 70% interest in the Barrelmaker and Airport Central gold projects. WCP issued 1,958,251 shares at an average price of 25.5 cents per share. The exercise price was $500,000.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

DIRECTORS’ DECLARATION

The directors of the company declare that:

• a. the financial statements and notes of the company are in accordance with the Corporations Act 2001: and

• (i) give a true and fair view of the company’s financial position as at 30 June 2007 and of its performance for the year ended on that date; and

• (ii) comply with Accounting Standards and the Corporations Regulations 2001;

• b. the directors have been given the declarations required by s.295A of the Corporations Act 2001, and

c. in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

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

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Brian Gomez Director

Dated this 28[th] day of September 2007

Sydney

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GATEWAY MINING LIMITED ABN: 31 008 402 391

Priestley &Morris

INDEPENDENT AUDIT REPORT TO THE MEMEBERS OF GATEWAY MINING LIMITED

Chartered Accountants

Scope

The financial report and directors’ responsibility

The financial report comprises the income statement, balance sheet, cash flow statement, statement of changes in equity, accompanying notes to the financial statements, and the directors’ declaration for Gateway Mining Limited (the company), for the year ended 30 June 2007.

As permitted by the Corporations Regulations 2001, the company has disclosed information about the remuneration of directors and executives (“remuneration disclosures”), required by Accounting Standard AASB 124 Related Party Disclosures , under the heading “remuneration report” on page 3 of the directors’ report and not in the financial report.

The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the Directors also state, in accordance with Accounting Standard 101: Presentation of Financial Statements, that compliance with Australian equivalents to International Financial Reporting Standards (IFRS) ensures that the financial report, comprising the financial statements and notes, complies with IFRS.

The directors also are responsible for preparation and presentation of the remuneration disclosures contained in the directors’ report in accordance with the Corporations Regulations 2001 .

Audit Approach

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement and that the remuneration disclosures in the directors’ report comply with Accounting Standard AASB 124 . The nature of an audit is influenced by factors such as the use of professional judgment, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected.

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

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 followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001 .

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GATEWAY MINING LIMITED ABN: 31 008 402 391

Audit Opinion

In our opinion:

1. the financial report of Gateway Mining 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 2007 and of it’s performance for the year ended on that date; and ii. complying with Accounting Standards in Australia (including Australian Accounting Interpretations) and Corporations Regulations 2001;

2. the financial report also complies with International Financial Reporting Standards as disclosed in Note 1; and.

3. the remuneration disclosures that are contained on page 3 of the directors’ report comply with Accounting Standard AASB 124 .

Priestley & Morris Chartered Accountants

P A Cordwell

Partner

Dated this 28[th] day of September 2007

Priestley & Morris - ABN: 51 502 720 047

Level 7, 3 Horwood Place, Parramatta NSW 2150 PO Box 19, Parramatta NSW 2124 Tel: +61 2 8836 1500 Fax: +61 2 8836 1555

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Liability limited
by a scheme
approved under
Professional
Standards
Legislation
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E: email@priestleymorris.com.au W: www.priestleymorris.com.au

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