GATEWAY MINING LIMITED — Annual Report 2008

Sep 29, 2008

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 2008.

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), FAICD

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	330,500	350,000
B.F. Thornton	10,215,482	350,000
Specified Executives:	Ordinary shares:	Options over ordinary shares:
S.Lian	380,000	450,000

There were no movements in options held by key management personnel during the year. Total 1,500,000 options at an exercise price of 30 cents per option exercisable at any time up to 30 November 2011 were issued to consultants during the year. With 2,500,000 options issued during the last financial year, a total of 4,000,000 options have been issued at an exercise price of 30 cents per option exercisable at any time up to 30 November 2011.

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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 loss after tax for the year was $178,614 (2007 profit - $59,849). No dividends have been declared or paid during the year.

5. REVIEW OF OPERATIONS

On 14 September 2007 WCP Resources Ltd (WCP) issued a further 1,958,251 ordinary shares fully paid in consideration of a $500,000 option fee, as part of an agreement to exercise 35% interest on the Airport/Barrelmaker Project in Western Australia. The drilling results during the year have confirmed significant copper mineralization at the Cup Intersections and encouraging gold mineralization at Julia’s Fault in Gidgee areas. JV operators have carried out work on the main JV areas Airport Central, with WCP Resources Limited and West Bungarra JV with Legend Mining Limited. A seven holes diamond drill program has been completed on the Cowra Project JV with Minotaur and Mitsubishi at the Balbardie and Kiola Projects. A new copper discovery was made at Surprise project, near Cloncurry in Queensland, by JV partner Minotaur.

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

The company’s net equity has decreased during the year by $1,343,488 from $11,255,792 to $9,912,304. The principal contributing factor for the decrease was the fall in market value of the company’s listed share investments as a result of global share market turmoil. The decrease in market values includes a component of approximately $1.77 million, which is unrealised.

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

The company has raised $400,000 through a private placement of 4,000,000 ordinary shares fully paid at 10cents per share.

Since the end of the financial year, the value of the company’s listed investments has decreased due to current turmoil in the equity markets.

Other than the above, 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.

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 4,000,000 options (2007 - 2,500,000). The options are exercisable at 30 cents per option on or before 30th November 2011.

11. EMPLOYEES

There were 2 employees as at 30 June 2008 (2007 - 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

	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
	$	$		$			$	$		$
~~N~~ B. Gomez	40,000	-		-			-	-		40,000
R.A. Creelman	28,600	-		2,289			-	-		30,889
B.F.Thornton	20,000	-		-			-	-		20,000
	88,600	-		2,289			-	-		90,889
Specified Executives Remuneration
		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		11,547	-	148,852
Allan Pellegrini (Exploration Consultant)	-	83,413	-		7,990		-	15,000	106,403
Mark Gordon (Exploration Consultant)	-	13,098	-		-		-	10,000	23,098
	120,000	96,511	-		25,295		11,547	25,000	278,353

No termination benefits were paid during the financial year. A total of 1,500,000 options at exercisable price of 30 cents per option exercisable at any time up to 30[th] November 2011 were issued to 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, 5 meetings of directors (including committees) were held. Attendances were:

Attendances were:
	Meetings held	Meetings attended
B. Gomez	5	5
R.A.Creelman	5	5
B.F.Thornton	5	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 adhere 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 2008 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 29[th] day of September 2008 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 2008 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.

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Priestley & Morris Chartered Accountants

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P A Cordwell Partner

Dated this 29th day of September 2008

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 E: email@priestleymorris.com.au W: www.priestleymorris.com.au

Liability limited by a scheme approved under Professional Standards Legislation

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GATEWAY MINING LIMITED ABN: 31 008 402 391

INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2008

COME STATEMENT R THE YEAR ENDED 30 JUNE 2008
NOTE Revenue 2 Depreciation and amortisation expense 3 Exploration expenditure written off Employee benefit expenses Professional services rendered Office expenses Compliance fees Share registry fees Travel and entertainment expenses Impairment loss Other expenses (Loss)/Profit before income tax expense 3 Income tax expense 4 (Loss)/Profit for the year Net (Loss)/Profit attributable to members of Gateway Mining Limited 14 Basic earnings per share 6 Diluted earnings per share 6	2008 $
	900,020 (2,054) (727) (180,828) (123,400) (52,997) (20,482) (20,000) (26,538) (577,060) (74,548)
	(178,614) -
	(178,614)
	(178,614)

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 2008

NOTE CURRENT ASSETS Cash and cash equivalents 18b Trade and other receivables 7 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Trade and other receivables 7 Financial assets 8 Plant and equipment 9 Deferred exploration and evaluation expenditure 10 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 11 Short-term provisions 12 TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 13 Reserves 15 Accumulated losses 14 TOTAL EQUITY	2008 $		2007 $
	366,714 68,176		921,100 65,380
	434,890		986,480
	12,608 2,079,284 5,168 7,442,076		12,608 3,516,232 7,222 6,792,336
	9,539,136		10,328,398
	9,974,026		11,314,878
	51,789 9,933		49,153 9,933
	61,722		59,086
	61,722		59,086
	9,912,304		11,255,792
	20,155,760 133,000 (10,376,456)		20,155,760 1,297,874 (10,197,842)
	9,912,304		11,255,792

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 2008

NOTE CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Interest and other income received NET CASH USED IN OPERATING ACTIVITIES 18a CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of financial assets Purchase of plant and equipment Purchase of listed securities Purchase of unlisted securities Expenditure on mining interests NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issues of ordinary shares NET CASH PROVIDED BY FINANCING ACTIVITIES NET DECREASE IN CASH HELD Add opening cash brought forward CLOSING CASH CARRIED FORWARD 18b	2008 $		2007 $
	(468,953) 33,035		(455,073) 66,748
	(435,918)		(388,325)
	873,585 - (334,374) (7,212) (650,467)		- (1,839) (97,100) - (443,133)
	(118,468)		(542,072)
	-		5,254
	-		5,254
	(554,386)		(925,143)
	921,100		1,846,243
	366,714		921,100

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 2008

Balance at1.7.2006 Shares issued during the year Share base payments Revaluation increment at balance date Profit attributable to members of the company Balance at30.06.2007 Share based payments Cumulative revaluation increment realised on disposal of financial assets Revaluation decrement at balance date Loss attributable to members of the company Balance at30.06.2008	Issued capital	Accumulated losses	Financial asset revaluation reserve	Share based payments reserve	Total
	$ 20,150,506 5,254	$ (10,257,691) 59,849	$ 232,595 962,279	$ 103,000	10,125,410 5,254 103,000 962,279 59,849
	20,155,760	(10,197,842)	1,194,874	103,000	11,255,792
		(178,614)	(184,800) (1,010,074)	30,000	30,000 (184,800) (1,010,074) (178,614)
	20,155,760	(10,376,456)	0	133,000	9,912,304

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 2008

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This financial report covers the financial statements and notes of Gateway Mining Limited as an individual entity.

Basis of Preparation

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

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below. They have been consistently applied unless otherwise stated.

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

a. Income Tax

Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. 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 assets relating to temporary differences and unused tax losses are recognized only to the extent that is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

b. Goods and Services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognized as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.

Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

c. Plant and Equipment

Plant and equipment are measured on the cost basis less where applicable, any accumulated 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 Asset: Depreciation rate: Plant and equipment 8 to 40%

The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

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

d. Financial instruments

Recognition and initial measurement

Financial instruments are initially measured at fair value plus transaction costs where the instrument is not classified as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below.

Derecognition.

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognized where the related obligations are either discharged, cancelled or expire.

Classification and subsequent measurement

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets either designated as such or that are not classified in any of the other categories. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.

Fair Value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value of all unlisted securities, including recent arm’s length transactions reference to similar instruments and option pricing models.

Impairment

At each reporting date, the company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments a prolonged decline in the value of the instrument is considered to determine whether 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 2008

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 to 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).

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

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 earnings 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.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 for impairment and an impairment loss has been recognised in respect of financial assets (listed shares).

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008
NOTE NOTE 2: REVENUE Non-operating activities Interest received 2a Other revenue 3b Gain on disposal of financial assets 3b Total revenue a. Interest revenue from: - other persons Total interest revenue NOTE 3: LOSS 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: Revenue: Net gain on disposal of non-current assets: - Financial assets Option fee received to exercise 35% interest in Barrelmaker and Airport gold exploration tenements Expenses: Impairment of financial assets Exploration expenditure written off on abandoned tenements	2008 $
	33,035 500,000 366,985
	900,020
	33,035
	33,035
	727

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008

NOTE 4: 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% (2007 – 30%) Add tax effect of permanent difference: - non deductible share based payments 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	2008 $		2007 $
	(53,584) 9,000		17,995 30,900 -
	(44,584) - (44,584)		48,855 (48,855) -
	-		-

As at balance date, the company has estimated carry-forward tax losses of $13,884,618 (2007: $13,764,668), which is an income tax benefit of $4,165,385 (2007: $4,129,400).

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 2008

NOTE 5: AUDITORS’ REMUNERATION Remuneration of the auditor of the company for: - auditing or reviewing the financial report NOTE 6: EARNINGS PER SHARE a. Reconciliation of earnings to profit or loss (Loss)/Profit (Loss)/Profit attributable to outside equity interest Earnings (loss) 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	2008 $	2008 $	2007 $
	20,000		18,000
	(178,614) -		59,849 -
	(178,614)		59,849
	No of shares		No of shares
	101,122,962		101,111,255
	4,000,000		-
	105,122,962		101,111,255

d. Conversions, calls, subscription or issues after 30 June 2008

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 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008
NOTE 7: TRADE AND OTHER RECEIVABLES CURRENT Security deposits Goods & services tax receivable NON-CURRENT Security deposits	2008 $		2007 $
	57,748 10,428		53,106 12,274
	68,176		65,380
	12,608		12,608
	12,608		12,608

Current security deposits are mining bonds and have a floating interest rate, which has averaged 7.68% for the year (2007 – 6.07%). Non-current security deposits are non-interest bearing.

NOTE 8: FINANCIAL ASSETS NON-CURRENT

NOTE 8: FINANCIAL ASSETS NON-CURRENT
Available for sale financial assets: Shares in listed corporations - at fair value Shares in unlisted corporation – at cost	1,522,072 557,212		2,966,232 550,000
	2,079,284		3,516,232

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 1,958,251 WCP Resources Limited ordinary shares fully paid as consideration of $500,000 option fees to exercise 35% interest in the company’s Barrelmaker and Airport Central gold projects.

The fair value of the unlisted available for sale financial asset cannot be reliably measured as there is no quoted market price in an active market. As a result, the unlisted investment is measured at cost.

NOTE 9: PLANT AND EQUIPMENT

Plant and Equipment

Plant and Equipment
At cost	92,440	92,440
Accumulated depreciation	(87,272)	(85,218)
Total Plant and Equipment	5,168	7,222
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:	7,222	7,840
Additions	-	1,839
Depreciation expense	(2,054)	(2,457)
Carrying amount at the end of the financial year:	5,168	7,222

18

GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008

NOTE 10: 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	2008 $		2007 $
	6,792,336 650,467 (727)		7,063,234 443,133 (714,031)
	7,442,076		6,792,336

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

NOTE 11: TRADE AND OTHER PAYABLES

CURRENT Unsecured liabilities Sundry payables and accrued expenses NOTE 12: PROVISIONS Current Provision for annual leave	51,789 51,789 9,933
		49,153
		49,153
		9,933

19

GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008

NOTE 13: ISSUED CAPITAL a. Ordinary shares fully paid Balance at beginning of year Issued shares 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	2008 $		2007 $
	20,155,760 -		20,150,506 5,254
	20,155,760		20,155,760
	No.		No.
	101,122,962 -		101,105,450 17,512
	101,122,962		101,122,962

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 2008, there were 4,000,000 options issued (30 June 2007: 2,500,000) .The options are exercisable at 30 cents on or before 30[th] November 2011.

NOTE 14: ACCUMULATED LOSSES Balance at the beginning of the financial year (Loss)/profit attributed to the members of the entity Balance at end of the financial year	2008 $ (10,197,842) (178,614) (10,376,456)		2007 $
			(10,257,691) 59,849
			(10,197,842)

NOTE 15: RESERVES

a. Financial Asset Reserve

The financial asset reserve records revaluation of financial assets.

b. Share Based Payments Reserve

The share based payments reserve comprises the value of options granted calculated at grant date using a Black-Scholes model.

20

GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008

NOTE 16: SHARE BASED PAYMENTS

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

Options granted during the year – 1,500,000 options with an exercise price of $0.30 each.

The weighted average fair value of the Options granted during the period was $0.02.

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

Exercise price $0.30 Grant date: 02 January 2008 Expiring date: 30 November 2011 Share price at grant date: $0.18 Expected volatility of the company’s shares:50% Risk free interest rate: 6%

Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is indicative of the future trends, 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 is $30,000 being equity share based payment transactions.

NOTE 17: EXPENDITURE COMMITMENTS Lease expenditure commitments Non-cancellable operating leases contracted for but not capitalised in the financial statements: a Payable - not later than 12 months - between 12 months and 5 years - greater than 5 years	2008 $		2007 $
	46,465 - -		44,672 46,465 -
	46,465		91,143

• 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 not 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.

21

GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008

NOTE 18: CASH FLOW INFORMATION

a. Reconciliation of the loss after tax to net cash flows from operating activities Loss after income tax Non-cash flows in profit: - Depreciation - Share based payment - Exploration Expenditure written off - Impairment loss - Net (gain) loss on disposal of financial assets -Option fees Changes in assets and liabilities: - Decrease/ (Increase) in receivables - Increase/ (Decrease) in payables, accruals and provisions Net cash (outflow) from operating activities 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	2008 $ (178,614) 2,054 30,000 727 577,060 (366,985) (500,000) (2,796) 2,636 (435,918) 366,714 366,714	2007 $
		59,849 2,457 103,000 714,031 - (1,250,000) 2,913 40,441
		(388,325)
		921,100
	366,714	921,100

22

GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008

NOTE 19: FINANCIAL RISK MANAGEMENT

The company's financial instruments consist mainly of deposits at bank, receivables and payables, and available for sale financial assets.

The company does not have any derivative instruments at balance date.

The accounting policies, terms and conditions of these items are normal commercial practice regularly adopted by businesses in Australia. The recent downturn in share prices had some significant impact in the financial report on remaining listed investments. The company had managed to dispose of some listed investments before the downturn and thus minimising some adverse effects on financial performance.

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:

Floating Interest Rate $ 2008 2007 366,714 921,100 - - 57,748 53,106 - -	Fixed Interest Rate Maturing Within Year $ 1 to 5 Years $ Over 5 Years $ Non-interest Bearing $ Total $ 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 - - - - - - - - 366,714 921,100 - - - - - - 10,428 12,274 10,428 12,274 - - - - - - 12,608 12,608 70,356 65,714 - - - - - - 2,079,284 3,516,232 2,079,284 3,516,232	Fixed Interest Rate Maturing Within Year $ 1 to 5 Years $ Over 5 Years $ Non-interest Bearing $ Total $ 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 - - - - - - - - 366,714 921,100 - - - - - - 10,428 12,274 10,428 12,274 - - - - - - 12,608 12,608 70,356 65,714 - - - - - - 2,079,284 3,516,232 2,079,284 3,516,232	Fixed Interest Rate Maturing Within Year $ 1 to 5 Years $ Over 5 Years $ Non-interest Bearing $ Total $ 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 - - - - - - - - 366,714 921,100 - - - - - - 10,428 12,274 10,428 12,274 - - - - - - 12,608 12,608 70,356 65,714 - - - - - - 2,079,284 3,516,232 2,079,284 3,516,232	Fixed Interest Rate Maturing Within Year $ 1 to 5 Years $ Over 5 Years $ Non-interest Bearing $ Total $ 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 - - - - - - - - 366,714 921,100 - - - - - - 10,428 12,274 10,428 12,274 - - - - - - 12,608 12,608 70,356 65,714 - - - - - - 2,079,284 3,516,232 2,079,284 3,516,232
424,462 974,206	- - -	- -	- 2,102,320 3,541,114 2,526,782 4,515,320
- -	- - -	- -	- 51,789	49,153 51,789 49,153
	- - -	- -	- 51,789

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.

d. Sensitivity Analysis

The effect on the company’s results and equity at 30 June 2008 from exposure to interest rates risk at balance date would not be considered material.

23

GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008

NOTE 20: 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 21: SEGMENT INFORMATION

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

NOTE 22: EVENTS AFTER THE BALANCE SHEET DATE

On 5[th] September 2008, the company raised $400,000 through a private placement of 4,000,000 ordinary shares fully paid at 10cents per share. The purpose of the issue is to raise additional working capital.

Since the end of the financial year the value of the company’s listed investments has decreased due to current turmoil in the equity markets.

.

24

GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008

NOTE 23: CHANGE IN ACCOUNTING POLICY

The following Australian Accounting Standards have been issued or amended and are applicable to the company but are not yet effective. They have not been adopted in preparation of the financial statements at reporting date.

				Application Date	Application Date
AASB Amendment	Standards Affected		Outline of Amendment	of Standard	for Group
AASB 2007–3	AASB 6	Exploration for and	The disclosure requirements	1.1.2009	1.7.2009
Amendments to		Evaluation of	of AASB 114: Segment
Australian Accounting		Mineral	Reporting have been
Standards	AASB 107	Cash Flow	replaced due to the issuing of	1.1.2009	1.7.2009
		Statements	AASB 8: Operating
	AASB 119	Employee Benefits	Segments in February 2007. These amendments will
	AASB 107	Cash Flow	involve changes to segment
		Statements	reporting disclosures within
	AASB 134	Interim Financial	the financial report. However,
	AASB 136	Reporting Impairment of Assets	it is anticipated there will be no direct impact on recognition and measurement criteria
			amounts included in the
			financial report
AASB 2007–6	AASB 1	First time adoption	The revised AASB 123:	1.1.2009	1.7.2009
Amendments to		of AIFRS	Borrowing Costs issued in
Australian Accounting			June 2007 has removed the
Standards			option to expense all
	AASB 101	Presentation of	borrowing costs. This
		Financial	amendment will require the
		Statements	capitalisation of all borrowing
	AASB 107	Cash Flow Statements	costs directly attributable to the acquisition, construction or production of a qualifying
	AASB 116	Property, Plant and	asset. However, there will be
		Equipment	no direct impact to the
			amounts included in the
			financial group as they
			already capitalise borrowing
			costs related to qualifying
			assets.
AASB 2007–8	AASB 101	Presentation of	The revised AASB 101:	1.1.2009	1.7.2009
Amendments to		Financial	Presentation of Financial
Australian Accounting		Statements	Statements issued in
Standards			September 2007 requires the
			presentation of a statement
			of comprehensive income.
AASB 101	AASB 101	Presentation of	As above	1.1.2009	1.7.2009
		Financial
		Statements

25

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 2008 and of it’s 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.

==> picture [72 x 40] intentionally omitted <==

Brian Gomez Director

Dated this 29[th] day of September 2008

Sydney

26

Priestley &Morris

GATEWAY MINING LIMITED ABN: 31 008 402 391

INDEPENDENT AUDIT REPORT TO THE MEMEBERS OF GATEWAY MINING LIMITED

Chartered Accountants

Report on the Financial Report

We have audited the accompanying financial report of Gateway Mining Limited which comprises the balance sheet as at 30 June 2008, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies and other explanatory notes and the directors’ declaration.

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.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal 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 .

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement and that the remuneration disclosures in the directors’ report comply with Accounting Standard AASB 124 .

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 judgment, 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 and the remuneration disclosures in the directors’ 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 Corporation Act 2001. We confirm that the independence declaration required by the Corporation Act 2001, was provided to the directors of Gateway Mining Limited on 29[th] September 2008.

27

Priestley &Morris

GATEWAY MINING LIMITED ABN: 31 008 402 391

Chartered Accountants

INDEPENDENT AUDIT REPORT TO THE MEMEBERS OF GATEWAY MINING LIMITED (Continued)

Audit Opinion

In our opinion:

1. the financial report of Gateway Mining Limited is in accordance with the Corporations Act 2001 , including:

2. i. giving a true and fair view of the company’s financial position as at 30 June 2008 and of its performance for the year ended on that date; and

3. ii. complying with Accounting Standards in Australia (including Australian Accounting Interpretations) and Corporations Regulations 2001;

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

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

==> picture [92 x 35] intentionally omitted <==

Priestley & Morris Chartered Accountants

==> picture [101 x 38] intentionally omitted <==

P A Cordwell Partner

Dated this 29[th] day of September 2008

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

==> picture [36 x 54] intentionally omitted <==

Liability limited by a scheme approved under Professional Standards Legislation

28

E: email@priestleymorris.com.au W: www.priestleymorris.com.au