GATEWAY MINING LIMITED — Annual Report 2011

Sep 29, 2011

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 2011.

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 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.

Mark J. Lynch (Non-Executive Director) FAICD

Appointed Board member on 29 November 2010. Mark has been actively involved in gold exploration and mining for over 28 years with extensive experience in mine operation and management.

He is a Fellow of the Australian Institute of Company Directors and held the position of Director of Queensland Resources Council for 6 years. He is currently the managing Director and CEO of Citigold Corporation Limited, a public listed resource company on the Australian Stock Exchange.

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

Board member since 2001. Brian Thornton is a graduate in Economics from the Australian National University and a Fellow of the Financial Services Institute of Australia. He has worked as an advisor to the resources sector for almost 20 years and consults to a number of listed gold base metals and bulk commodity companies. He is a director and Chairman of Xanadu Mines Ltd. Brian Thornton resigned as a director on 29 November 2010. The Board wishes to thank him for his past contributions to the company.

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:

options ofthe companywere:
_Directors: _	_Ordinary shares: _	_Options over ordinary shares: _
B.Gomez	363,750	350,000
R.A.Creelman	393,000	350,000
MJ. Lynch –Indirect	56,744,321	-
B.F. Thornton	10,643,625	350,000
_Specified Executives: _	Ordinary shares:	Options over ordinary shares:
S.Lian	1,486,978	450,000

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GATEWAY MINING LIMITED ABN: 31 008 402 391

DIRECTORS’ REPORT (continued)

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.

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.

RESULTS AND DIVIDENDS

The loss after tax for the year was $396,689 (2010 loss - $494,780). No dividends have been declared or paid during the year.

REVIEW OF OPERATIONS

Activities by the company were concentrated on the Gidgee Project in Western Australia, where a number of geophysical surveys were undertaken and a review of all previous exploration data was completed.

A review of exploration data highlighted the prospectivity of a number of areas for VMS style mineralization, with this including the previously drilled “The Cup” prospect, at which significant copper had been intersected in previous RC drilling. As well broadly spaced EM surveying and some limited RAB drilling at the “Gossans Galore” area highlighted the potential of this area for VMS mineralization.

To accelerate exploration activities Gateway entered into two farm-in agreements with Avenue Resources Limited, a new IPO on the ASX which listed on September 15, 2010. The details of the farm-ins were released to the market on June 29, 2010.

Work carried out by Avenue Resources on the JV tenements included EM surveying and drilling on both gold and copper targets within JV tenements. This work has reinforced the prospectivity of the “Gossans Galore” area to host VMS style base metal mineralization, with infill EM surveying defining three strong anomalies, and aircore drilling defining geochemical and geological anomalies with characteristics similar to those of VMS systems. Further work, including drilling is planned for these zones, with these considered as priority targets.

Drilling at the Rosie Northeast gold prospect intersected 120m @0.41 g/t Au, similar in tenor to adjacent historical drillhole. This prospect is still open to the north, south and at depth, with further work planned.

Work by Gateway on adjacent tenements not included within the joint venture has also reinforced the potential for this style of mineralization, with a number prospects outlined. These include the “Gravel Pit” prospects to the east of “Gossans Galore”.

During the year Gateway acquired the “Bungarra” tenements from Legend Mining, with these being originally tested for Cu-Ni-PGE style mineralization by Legend. Preliminary reconnaissance work by Gateway has resulted in a number of interesting geochemical and geological features being outlined, with further work planned.

Work on the Cowra Project in NSW by JV partners Minotaur Exploration and Mitsubishi Corporation/ Mitsubishi Materials Corporation included ground checking a number of geophysical features however this did not result in any significant or geochemical anomalism. The JV partners advised Gateway of their wish to withdraw from the project on June 10, 2011, and the joint venture was subsequently terminated.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

DIRECTORS’ REPORT (continued)

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS AND FINANCIAL POSITION

On the 10[th] September 2010, the company raised $495,000 by issuing 15,000,000 fully paid ordinary shares at 3.3 cents per share with 7,500,000 options attached at an exercise price of 4 cents per share expiring on 1[st] September 2012.

A further sum of $122,500 was raised through the issue of 3,500,000 fully paid ordinary shares at 3.5 cents per share on 5[th] April 2011 with 7,000,000 options attached at an exercise price of 3.8 cents per share expiring on 15 April 2014.

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.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

Minotaur Exploration and Mitsubishi Corporation withdrew from the Cowra joint venture and the leases reverted back to the company.

The company relinquished its Surprise project Mining Leases (MLs) in North Queensland. The areas covered by these MLs now fall into the EPM that surrounds them.

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.

SHARE OPTIONS

At the date of this report, there were 25,500,000 options (2010 – 24,750,000).

No of options 4,000,000 7,000,000 7,500,000 7,000,000	Exercise price 30 cents 10 cents 4 cents 3.8 cents	Expiring on or before
		30 November 2011 07 October 2011 1 September 2012 15 April 2014

6,250,000 options with an exercise price of 15 cents expired on 30[th] June 2011.

EMPLOYEES

There were 2 employees as at 30 June 2011 (2010 - 2)

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GATEWAY MINING LIMITED ABN: 31 008 402 391

DIRECTORS’ REPORT (continued)

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
	$	$		$			$	$	$
B Gomez	25,000	-		-			-	-	25,000
R A. Creelman	28,600	-		593			-	-	29,193
M J. Lynch	10,000	-		-			-	-	10,000
B F. Thornton	8,333	-		-			-	-	8,333
	71,933	-		593			-	-	72,526
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	-	-		9,000		10,800	-	139,800
Alan Pellegrini (Exploration Consultant)	-	111,447	-		5,920		-	-	117,367
Mark Gordon (Exploration Consultant)	-	29,953	-		-		-	-	29,953
	120,000	141,400	-		14,920		10,800	-	287,120

No termination benefits were paid during the financial year. No options were issued as share based payments 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.

DIRECTORS’ MEETINGS

During the financial year, 5 meetings of directors (including committees) were held. Attendances were:

Attendances were:
	Meetings eligible to	Meetings attended
	attend
B Gomez	5	5
R A Creelman	5	5
M J Lynch	4	4
B F Thornton	1	1

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

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.

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.

NON-AUDIT SERVICES

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

AUDITOR INDEPENDENCE DECLARATION

The auditor independence declaration for the year ended 30 June 2011 has been received and can be found on page 6 of this financial report.

INDEMNIFYING OFFICERS OR AUDITOR

The company has paid a premium to insure the directors and officers of the company. The insurance premiums relate to:

• Costs and expenses incurred by the relevant officers in defending proceedings, whether civil or criminal and whatever their outcome; and

• Other liabilities that may arise from their position, with the exception of conduct involving a willful breach of duty or improper use of information or position to gain a personal advantage.

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

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Brian Gomez Director

Dated this 26[th] day of September 2011 Sydney

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GATEWAY MINING LIMITED ABN: 31 008 402 391 [Priestley] &Morris

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

Chartered Accountants

I declare that, to the best of my knowledge and belief, during the year ended 30 June 2011 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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M A Nevill Partner

Dated this 26[th] day of September 2011

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

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2011

Earnings per share NOTE Revenue 2 Depreciation and amortisation expense 3 Employee benefit expenses Professional services rendered Office expenses Compliance fees Share registry fees Travel and entertainment expenses Other expenses Loss before income tax 3 Income tax expense 4 Loss for the year 14 Other comprehensive income: Net (loss) / gain on revaluation of financial assets (applicable income tax $nil) Other comprehensive income for the year, net of tax Total comprehensive loss for the year attributable to members of the company Basic earnings per share 6 Diluted earnings per share 6	2011$
	53,834 (2,117) (180,880) (104,933) (51,108) (19,201) (18,183) (32,224) (41,877)
	(396,689) -
	(396,689)

The accompanying notes form part of these financial statements

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GATEWAY MINING LIMITED ABN: 31 008 402 391

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011

NOTE CURRENT ASSETS Cash and cash equivalents 16b 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 TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 12 Reserves 14 Accumulated losses 13 TOTAL EQUITY	2011 $		2010$
	199,197 80,625		35,640 79,244
	279,822		114,884
	12,608 573,941 5,076 8,880,254		12,608 935,348 6,041 8,485,445
	9,471,879		9,439,442
	9,751,701		9,554,326
	94,104		84,513
	94,104		84,513
	94,104		84,513
	9,657,597		9,469,813
	22,478,060 306,939 (13,127,402)		21,892,160 308,366 (12,730,713)
	9,657,597		9,469,813

The accompanying notes form part of these financial statements

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GATEWAY MINING LIMITED ABN: 31 008 402 391

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2011

NOTE CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Interest and other income received NET CASH USED IN OPERATING ACTIVITIES 16a CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of non-current 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 Placement fees NET CASH PROVIDED BY FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH HELD Add opening cash brought forward CLOSING CASH CARRIED FORWARD 16b	2011$		2010 $
	(435,180) 4,456		(461,025) 3,996
	(430,724)		(457,029)
	532,157 (1,152) (110,534) (17,281) (394,809)		- - (72,125) (6,334) (549,822)
	8,381		(628,281)
	617,500 (31,600)		1,060,000 (65,600)
	585,900		994,400
	163,557		(90,910)
	35,640		126,550
	199,197		35,640

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 2011

Balance at 1.7.2009 Share issued during the year Transaction costs Total other comprehensive income for the year Loss at attributable to members of the company Balance at30.06.2010 Shares issued during the year Transaction costs Total other comprehensive loss for the year Loss attributable to members of the company Balance at 30.06.2011	Issued **capital **	Accumulated losses	Financial asset revaluation reserve	Share Based payments reserve	**Total **
	$ 20,897,760 1,060,000 (65,600) - -	$ (12,235,933) - - - (494,780)	$ - - 175,366 -	$ 133,000 - - -	8,794,827 1,060,000 (65,600) 175,366 (494,780)
	21,892,160	(12,730,713)	175,366	133,000	9,469,813
	617,500 (31,600) - -	- - - (396,689)	- - (1,427) -	- - - -	617,500 (31,600) (1,427) (396,689)
	22,478,060	(13,127,402)	173,939	133,000	9,657,597

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 2011

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

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

The financial statements are general-purpose financial statements that have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001.

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

The financial statements have been prepared on an accruals basis and are 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

The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income).

Current income tax expense charged to the profit or loss is the tax payable on taxable income. Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses.

Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to items that are recognised outside profit or loss.

Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability.

Deferred tax assets relating to temporary differences and unused tax losses are recognised 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.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

a. Income Tax (continued)

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

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 (ATO).

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to, the ATO are presented as operating cash flows included in receipts from customers or payments to suppliers.

c. Plant and Equipment

Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated impairment. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and impairment losses are recognised either in profit or loss or as a revaluation decrease if the impairment losses relate to a revalued asset. A formal assessment of recoverable amount is made when impairment indicators are present (refer to Note 1(n) for details of impairment).

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 asset’s 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 assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

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 statement of comprehensive income. When revalued assets are sold, amounts included in the revaluation reserves relating to that asset are transferred to retained earnings.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

d. Financial instruments

Initial recognition and initial measurement

Financial assets and financial liabilities are recognised when the company becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified ‘at fair value through profit or loss’, in which case transaction costs are expensed to profit or loss immediately.

Classification and subsequent measurement

Financial instruments are subsequently measured at fair value, amortised cost using the effective interest rate method or cost.

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.

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 of financial assets due to their nature. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.

They are subsequently measured at fair value with changes in such fair value (i.e. gains or losses) recognised in other comprehensive income (except for impairment losses and foreign exchange gains and losses). When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or loss.

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 profit or loss. Also, any cumulative decline in fair value previously recognised in other comprehensive income is reclassified to profit or loss at this point.

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 company no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired.

e. Exploration and Development Expenditure

Exploration, evaluation and development expenditure incurred are capitialised in respect of each identifiable area of interest. These costs are only capitalised to the extent that they are expected to be recovered through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

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.

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 continuing to capitalise costs in relation to that area of interest.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

e. Exploration and Development Expenditure (continued)

Costs of site restoration are provided over the life of the project from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis.

Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.

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

f. Cash and cash equivalents

Cash and cash equivalents include cash on hand and deposits held at call with banks.

g. Comparative figures

Where required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. Provision for annual leave is classified under Trade and Other Payables instead of Provisions as in prior years.

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 the end of the reporting period. Employee benefits expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. 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.

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.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 of assets

At the end of each reporting period, the company assesses whether there is any indication that an asset may be impaired. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, to the asset's carrying amount. Any excess of the asset's carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance with another Standard (e.g. in accordance with the revaluation model in AASB 116). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that other Standard.

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 the end of each reporting period by evaluating conditions specific to the company that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions.

Plant and equipment, deferred exploration and evaluation expenditure and financial assets have been reviewed by the company. No impairment losses were taken up for the financial year ended 30 June 2011.

Key judgments – Exploration and Evaluation Expenditure

The company capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. While there are certain areas of interest from which no reserves have been extracted, the directors are of the continued belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded. Such capitalised expenditure is carried at reporting date at $8,880,254.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTE NOTE 2: REVENUE Non-operating activities Interest received 2a Miscellaneous income Gain on disposal of non-current investments 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 Rental expense on operating leases: - minimum lease payments b. Significant expenses	2011$
	4,456 5,016 44,362
	53,834
	4,456
	4,456

There are no significant expenses in the financial year.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

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% (2010 – 30%) Add tax effect of permanent differences - share based payments - write off investment - impairment loss 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	2011 $		2010$
	(119,006) - - -		(148,434) - - -
	(119,006) - 119,006		(148,434) - 148,434
	-		-

As at balance date, the company has carry-forward tax losses. The potential net future tax benefits have not been brought into account.

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 2011

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 Loss 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	2011$	2011$	2010$
	18,000		21,200
	(396,689) -		(494,780) -
	(396,689)		(494,780)
	No of shares		No of shares
	122,988,715		120,905,839
	25,500,000		17,250,000
	148,488,715		138,155,839

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 7: TRADE AND OTHER RECEIVABLES CURRENT Security deposits Goods & services tax receivable 7a NON-CURRENT Security deposits 7a	2011$		2010$
	69,741 10,884		65,575 13,669
	80,625		79,244
	12,608		12,608
	12,608		12,608

Current security deposits are mining bonds and have a floating interest rate, which has averaged 6.3% for the year (2010 – 4.5%). Non-current security deposits are non-interest bearing.

• a. Financial Assets classified as trade and other receivables (Refer Note 17 )

NOTE 8: FINANCIAL ASSETS NON-CURRENT Available for sale financial assets: Shares in listed corporations - at fair value Shares in unlisted corporation – at cost	543,114 30,827 573,941
	543,114 30,827	921,802 13,546
	573,941	935,348

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 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. No intention to dispose of any unlisted available-for-sale financial assets existed at balance date.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

	2011$	2010$
NOTE 9: PLANT AND EQUIPMENT
Plant and Equipment
At cost	99,069	97,917
Accumulated depreciation	(93,993)	(91,876)
Total Plant and Equipment	5,076	6,041
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:	6,041	8,734
Additions	1,152	-
Depreciation expense	(2,117)	(2,693)
Carrying amount at the end of the financial year	5,076	6,041
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	8,485,445	7,935,623
Additions	394,809	549,822
	8,880,254	8,485,445

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

NOTE 11: TRADE AND OTHER PAYABLES

CURRENT Note Unsecured liabilities Sundry payables and accrued expenses 11a Accrued employee annual leave entitlements	67,072 27,032 **94,104 **
	67,072 27,032	66,274 18,239
	**94,104 **	84,513

a. Financial liabilities at amortised cost classified as trade and other payables (refer Note 17 ).

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTE 12: ISSUED CAPITAL a. Ordinary shares fully paid Balance at beginning of year Issued shares Transaction costs 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	2011$		2010$
	21,892,160 617,500 (31,600)		20,897,760 1,060,000 (65,600)
	22,478,060		21,892,160
	No.		No.
	123,372,962 18,500,000		110,122,962 13,250,000
	141,872,962		123,372,962

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 2011, the details of options issued are as follows:

Number of options Exercise price per option Expiring on or before

4,000,000 30 cents 30 November 2011 7,000,000 10 cents 7 October 2011 7,500,000 4 cents 1 September 2012 7,000,000 3.8 cents 15 April 2014

6,250,000 options with an exercise price of 15 cents expired on 30[th] June 2011.

e. Capital Management

The directors control the capital of the company in order to ensure that adequate cash flows are generated to fund its operations and continue as a going concern.

The company's capital includes ordinary share capital, supported by financial assets. There are no externally imposed capital requirements.

The directors effectively manage the company's capital by assessing the company's financial risks and responding to changes in these risks. These responses include share issues.

There have been no changes in the strategy adopted by management since the prior year.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTE 13: ACCUMULATED LOSSES Balance at the beginning of the financial year Loss attributed to the members of the company Balance at end of the financial year NOTE 14: RESERVES Financial Asset Revaluation Reserve The financial asset reserve records revaluation of financial assets. Share Based Payments Reserve Balance at the beginning and end of the financial year	2011$
	(12,730,713) (396,689)
	(13,127,402)
	173,939 133,000
	306,939

The share based payments reserve comprises the value of options granted calculated at grant date using a Black-Scholes model. No options were granted in the 2011 financial year.

NOTE 15: EXPENDITURE COMMITMENTS

Lease expenditure commitments

Non-cancellable operating leases contracted for but not capitalised in the financial statements:

Payable - not later than 12 months - between 12 months and 5 years - greater than 5 years	50,256 106,624 - 156,880
	50,256 106,624 -	48,323 156,880 -
	156,880	205,203

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.

22

GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTE 16: 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 - Net gain on disposal of financial assets Changes in assets and liabilities: - Decrease/(increase) in receivables and other assets - 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 statement of financial position as follows: - Cash and cash equivalents	2011$
	(396,689) 2,117 (44,362) (1,381) 9,591
	(430,724)
	199,197

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTE 17: 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 totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements are as follows:

Note Financial Assets Cash and cash equivalents16b Trade and other receivables7a Available for sale financial assets8 Financial Liabilities Trade and other payables11a	2011 $	2010 $
	199,197 93,233 573,941	35,640 91,852 935,348
	866,371	1,062,840
	67,072	66,274
	67,072	66,274

Financial Risk Management Policies

The Board's overall risk management strategy seeks to assist the company in meeting its financial targets, whilst minimising potential adverse effects on financial performance. Risk management policies are approved and reviewed by the finance committee on a regular basis. These include credit risk policies and future cash flow requirements.

Financial Risk Exposures and Management

The main risks the company is exposed to through its financial instruments are interest rate risk, liquidity risk and credit risk.

Interest Rate Risk

Exposure to interest rate risk arises on financial assets and financial liabilities recognised at reporting date whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments.

The company does not have fixed rate financial instruments at balance date. It only manages floating rate financial instruments.

Liquidity risk

Liquidity risk arises from the possibility that the company might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities and exploration expenditure. The company manages liquidity risk by monitoring forecast cash flows and ensuring that adequate funds are maintained During the 2011 year, the company raised funds through private share placements by issuing ordinary shares.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTE 17: FINANCIAL RISK MANAGEMENT (continued)

Financial liability and financial asset maturity analysis

The tables below reflect an undiscounted contractual maturity analysis for financial instruments.

Cash flows realised from financial assets reflect management's expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed. The timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates

Financial Assets: Cash Receivables & others Security deposits Available for sale financial assets Total anticipated inflows Financial Liabilities: Sundry payables and accruals Total expected outflows Net inflow on financial instruments	Maturing with 1 Year 2011 $ 2010 $	Maturing 1 to 5 Years 2011 $ 2010 $	Total 2011 $ 2010 $
	199,197 35,640 10,884 13,669 69,741 65,575 573,941 935,348	- - - - 12,608 12,608 - -	199,197 35,640 10,884 13,669 82,349 78,183 573,941 935,348
	853,763 1,050,232	12,608 12,608	866,371 1,062,840
	67,072 66,274	- -	67,072 66,274
	67,072 66,274	- -	67,072 66,274
	786,691 983,958	12,608 12,608	799,299 996,566

Credit Risk

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 statement of financial position 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.

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.

Sensitivity Analysis

The effect on the company’s results and equity at 30 June 2011 from exposure to interest rates risk at balance date would not be material.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

NOTE 18: 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.

NOTE 19: SEGMENT INFORMATION

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

NOTE 20: EVENTS AFTER THE REPORTING PERIOD

Minotaur Exploration and Mitsubishi Corporation withdrew from the Cowra joint venture and the leases reverted back to the company.

The company relinquished its Surprise project Mining Leases (MLs) in North Queensland. The areas covered by these MLs now fall into the EPM that surrounds them.

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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, as set out on pages 7 to 26, are in accordance with the Corporations Act 2001 and:

(i) comply with Accounting Standards, which, as stated on accounting policy Note 1 to the financial statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS); and

(ii) give a true and fair view of the company’s financial position as at 30 June 2011 and of the performance for the year ended on that date of the company;

b. the directors have been given the declarations by the Chief Executive Officer for the financial year ended 30 June 2011 as 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.

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

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Brian Gomez Director

Dated this 26[th] day of September 2011 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

Report on the Financial Report

We have audited the accompanying financial report of Gateway Mining Limited which comprises the statement of financial position as at 30 June 2011, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended on that date, notes comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration for Gateway Mining Limited at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard 101: Presentation of Financial Statements that the financial statements comply with International Financial Reporting Standards (IFRS).

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. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's 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 company's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

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

Independence

In conducting our audit, we have complied with the independence requirements of the Corporation Act 2001. We confirm that the independence declaration required by the Corporation Act 2001, provided to the directors of Gateway Mining Limited on 26[th] September 2011, would be in the same terms if provided to the directors as at the date of this auditor’s report.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

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

Auditor’s 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 2011 and of its performance for the year ended on that date;

3. ii. complying with Accounting Standards in Australia and Corporations Regulations 2001;

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

Report on the Remuneration Report

We have audited the Remuneration Report included on page 4 of the report of the directors for the year ended 30 June 2011. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with s 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s Opinion

In our opinion the Remuneration Report of Gateway Mining Limited for the year ended 30 June 2011, complies with s300A of the Corporations Act 2001.

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Priestley & Morris Chartered Accountants

==> picture [82 x 24] intentionally omitted <==

M A Nevill Partner

Dated this 26[th] day of September 2011

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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