GENESIS RESOURCES LIMITED — Annual Report 2009

Oct 22, 2009

Genesis Resources Limited ABN 22 114 787 469

Annual Financial Report

30 June 2009

30 June 2009

Contents

	Page
Financial statements
Directors' report
Lead auditor's independence declaration	6
Balance sheet	7
Income statement	8
Statement of changes in equity	-9
Cash flow statement.	$\overline{10}$
Notes to the financial statements	Ħ
Directors' declaration.	34

1. Directors

The directors of the Company at any time during or since the end of the financial year are:

Name and qualifications	Age	Experience, special responsibilities and other directorships
Mr Peter G Hepburn-Brown BSc Non-Executive Director	52	Peter has over 26 years mining industry experience having previously worked for Sibena Mining Corporation. Harmony Gold (Australia), Great Central Mines and with mining operations for Niugini Mining and Western Mining Corporation. Peter is currently an Executive Director of Kasbah Resources Limited and Alloy Resources Limited
		Appointed 15 August 2006
Mr Pedro Kastellorizos BSc Managing Director	36	Pedro has over 11 years exploration experience specialising in the Northern Territory. Pedro was most recently Exploration Director for Batavia Mining, an ASX-listed company. Prior to joining Batavia, he was Exploration Manager for Thor Mining plc, an AIM-listed company focused on molybdenum, tungsten and uranium exploration in the Northern Territory
		Pedro gained significant exploration experience in the Northern Territory with Tennant Creek Gold, Burnside Operations, Northern Gold, the Northern Territory Geological Survey and Afmeco Mining & Exploration
		Appointed 27 March 2006
Dr Ahmet K Sener BSc, MSc Non-Executive Director	33	Kerim has over 9 years of exploration experience, having worked for Independence Gold Mining Pvt. Ltd. (a subsidiary of LSE-listed Lonmin plc) in Zimbabwe and ASX-listed Northern Gold in the Northern Territory. While undertaking his PhD, he completed a number of consulting projects for clients in Western Australia, including the exploration for manganese mineralisation with Consolidated Minerals.
		Kerim is currently Managing Director of Ariana Resources plc. an AIM-listed exploration company focused on precious metals in Turkey.
		Appointed 27 March 2006
Mr Eddie Lung Yiu Pang BSc (Hons) Non-Executive Chairman	52	Mr Pang holds a Bachelor of Science in Chemistry. Mr Pang operates a trading business based in Shanghai which is in the business of: supplying the Chinese market with Australian wool and wine, Chilean iron ore, cathode copper and timber; marketing and exportation of Chinese building materials to Vietnam and the United Arab of Emirates; and supplying Chinese chemicals including antibiotic precursors to pharmaceutical facilities in Canada and the United Arab of Emirates.

1. Directors continued

	Mr Pang is also involved in a joint venture in food flavours manufacturing facility in Wisconsin, USA and has an established distribution network of food flavours and additives in China, supplying the major dairy processors and beverages producers
	Mr Pang has private business interests in Australia, including vineyards and timber plantation investments. Mr Pang has an extensive network of business associates in several large corporations in China (both national and private) and the Middle East
	Appointed 6 March 2009
Mr Anthony S Veitch BCom, 41 MBA	Tony previously worked with the ASX, as a Manager of Corporate Finance for the London Stock Exchange plc and as
Non-Executive Director/ Public Officer	a consultant to listed and private companies.
	Tony is currently an Executive Director of Citadel Capital Pty Ltd. an investment and advisory business based in Perth.
	Resigned 14 November 2008.

2. Company secretary

Mr Anthony Veitch acted as company secretary until his resignation on 14 November 2008. Mr Veitch's qualifications and experience are outlined above.

Mr Pedro Kastellorizos was appointed to the position of company secretary in November 2008. Mr Kastellorizos' qualifications and experience are outlined above.

3. Principal activities

The principal activities of the entity during the year were exploration for and evaluation of gold, manganese and base metals. There was no significant change in the nature of the Company's activities during the year

$4.1$ Results

The loss of the Company for the financial year was \$129,924 (2008. loss \$141,275). The loss was mainly due to consulting costs and an impairment of and loss on sale of shares in a listed corporation.

5. Directors' meetings

The number of directors' meetings and number of meetings attended by each of the directors of the Company during the financial year were:

Director	Directors Meetings
	А	В
Mr P G Hepburn-Brown
Mr P Kastellorizos	7
Dr A K Sener	7	7
Mr E L Y Pang		7
Mr A S Veitch		Δ

$A -$ Number of meetings attended

B – Number of meetings held during the time the director held office during the year.

6. State of affairs

There were no significant changes in the state of affairs of the Company during the financial year.

7. Likely developments

The Company will continue exploration and development activities and will also assess new joint venture and commercial opportunities that the directors believe can create value for shareholders, including the acquisition of interests in additional projects should they arise. Because of the unpredictable nature of these opportunities, developments could occur at short notice.

8. Environmental regulations

As the Company is only conducting preliminary exploration activities there are no environmental issues that will impact the operating performance of the Company. When the Company commences full exploration and development activities the Company will ensure all activities are conducted in accordance with environmental regulations under both Commonwealth and State legislation.

The Board is not aware of any significant breaches of environmental regulations during the period covered by this report.

9. Events subsequent to reporting date

In August 2009, the Company issued a prospectus to raise \$3 million through the issue of 15 million fully paid ordinary shares at \$0.20 each with a provision to accept oversubscriptions of up to a further 5 million shares at \$0.20 each to raise up to a further \$1 million. Currently, shares in the Company have been oversubscribed

The Company plans to list on the Australian Stock Exchange on 26 October 2009. Listing is probable and will occur upon satisfaction of various conditions imposed by the Australian Stock Exchange

Directors' report

30 June 2009

9. Events subsequent to reporting date continued

Other than the matter discussed above, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Company, the results of those operations or the state of affairs of the Company, in future financial years.

10. Dividends

The Company has not declared or paid any dividends to members since the end of the previous financial vear.

11. Directors' interests

The relevant interest of each director in the share capital of the Company, as notified by the directors, at the date of this report is as follows. $\sim$ $\mu$

	Ordinary Shares
Mr P G Hepburn-Brown	1,620,750
Mr P Kastellorizos	9,250,002
Dr A K Sener	4,250,000
Mr E L Y Pang	1,000,000

12. Share options

Unissued shares under option:

	At the date of this report unissued ordinary shares of the Company under option are
Expiry date	Exercise price	Number of shares
20/12/2010	റ 20-	500,000

These options do not entitle the holder to participate in any share issue of the Company

13. Lead auditor's independence declaration

The lead auditor's independence declaration is set out on page 6 and forms part of the directors' report for the year ended 30 June 2009.

14. Indemnification and insurance of officers and auditors

Indemnification

Since the end of the previous financial year, the Company has not indemnified or made any relevant agreement for indemnifying against a liability any person who is or has been an officer or auditor of the Company

14. Indemnification and insurance of officers and auditors continued

Insurance premiums

Since the end of the previous financial year, the Company has paid no insurance premiums in respect of directors' and officers' liability and legal expenses' insurance contracts.

Signed in accordance with a resolution of directors:

F. Partit .
....................................

Mr P Kastellorizos Director

Dated at

this $13^{45}$

$day$ of $C$ c to her

2009

Lead auditor's independence declaration under Section 307C of the Corporations Act 2001

Balance sheet

As at 30 June 2009

		2009	2008
	Note	S	$\mathbb{S}$
Assets
Cash and cash equivalents	5	212,250	24,211
Trade and other receivables	7	69,654	3,673
Other financial assets	$8\,$	60,859	57,568
Total current assets		342,763	85,452
Other financial assets	8	466,808
Exploration and evaluation assets	10	157,832	155,997
Total non-current assets		624,640	155,997
Total assets		967,403	241,449
Liabilities
Borrowings	$\mathbf{1}$	5,649	3,445
Trade and other payables	12	207,977	20,580
Total current liabilities		213,626	24,025
Total liabilities		213,626	24,025
Net assets		753,777	217,424
Equity
Issued capital	13	1,024,289	358,012
Accumulated losses		(270, 512)	(140, 588)
Total equity		753,777	217,424

The notes of pages 11 to 33 are an integral part of these financial statements.

Income statement

For the year ended 30 June 2009

		2009	2008
	Note	S	S
Other income	14	747,042
Other expenses	15	(884, 176)	(158,046)
Results from operating activities		(137, 134)	(158, 046)
Finance income	16	7,676	3,849
Finance expense	16	(466)	(257)
Net finance income		7,210	3,592
Loss before income tax		(129, 924)	(154, 454)
Income tax benefit	17		13,179
Loss for the period		(129, 924)	(141, 275)
Earnings per share
Basic loss per share (cents per share)	21	0.53	0.85
Diluted loss per share (cents per share)	21	0.53	0.85

Genesis Resources Limited Statement of changes in equity For the year ended 30 June 2009

2009

Balance at 1 July 2008 Net loss for the period	Issued capital S 358,012	Accumulated losses S (140, 588) (129, 924)	Total equity S 217,424 (129, 924)
Total recognised income and expense		(129, 924)	(129, 924)
Issue of ordinary shares	631,000		631,000
Cancellation of Class A Performance Shares	(250)		(250)
Equity settled transactions, net of tax	241,153		241,153
Transaction costs of share issues	(205, 626)		(205, 626)
Balance at 30 June 2009	1,024,289	(270, 512)	753,777

2008

	Issued capital S	Accumulated losses S	Total equity S
Balance at 1 July 2007	184,952	687	185,639
Net loss for the period		(141, 275)	(141, 275)
Total recognised income and expense		(141, 275)	(141, 275)
Issue of ordinary shares	127,300		127,300
Equity settled transactions, net of tax	50,000		50,000
Transaction costs of share issues	(4,240)		(4,240)
Balance at 30 June 2008	358,012	(140,588)	217,424

Cash flow statement

For the year ended 30 June 2009

	Note	2009 S	2008 S
Cash flows from operating activities Cash paid to suppliers and employees		(230, 869)	(99, 457)
Cash generated from operations		(230, 869)	(99.457)
Interest received		4,384	3,044
Net cash used in operating activities	6	(226, 485)	(96, 413)
Cash flows from investing activities
Payments of exploration and evaluation expenditure	10	(75, 588)	(80, 181)
Loans to related parties			(56, 763)
Proceeds from sale of investments		63,250
Net cash used in investing activities		(12, 338)	(136.944)
Cash flows from financing activities
Proceeds from issue of shares		630,750	127,300
Share issue costs		(205, 626)	(4,240)
Loans from associates		1,738	(102)
Net cash from financing activities		426,862	122,958
Net increase/(decrease) in cash and cash equivalents		188,039	(110.399)
Cash and cash equivalents at 1 July		24,211	134,610
Cash and cash equivalents at 30 June	5	212,250	24,211

The notes of pages 11 to 33 are an integral part of these financial statements.

Notes to the financial statements

$\mathbf{I}$ Reporting entity

Genesis Resources Limited (the "Company") is a Company domiciled in Australia The address of the Company's registered office is Unit 8, 52 Marina Boulevard, Cullen Bay, Darwin NT 0820. The Company primarily is involved in gold, manganese and base metal exploration and development activities.

$2¹$ Basis of preparation

$(a)$ Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The financial report of the Company complies with International Financial Reporting Standards (IFRSs) and interpretations adopted by the International Accounting Standards Board (IASB).

The financial statements were approved by the Board of Directors on 13 October 2009.

$(b)$ Basis of measurement

The financial report has been prepared on an accrual 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

$(c)$ Functional and presentation currency

These financial statements are presented in Australian dollars, which is the Company's functional currency All financial information has been rounded to the nearest dollar, unless otherwise stated.

$(d)$ Use of estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets. liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

In particular, information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are as follows:

Exploration and evaluation - The Company's policy for exploration and evaluation is discussed in Note 3(c). If, after having capitalised exploration and evaluation expenditure, management concludes that the capitalised expenditure is unlikely to be recovered by future sale or exploitation, then the relevant capitalised amount will be written off through the income statement. At the date of this report the Company has sufficient reason to believe:

Notes to the financial statements

$\overline{2}$ Basis of preparation continued

$(d)$ Use of estimates and judgements continued

• rights to explore in specific areas, once expired, will be renewed;
• substantive expenditure on further exploration for the evaluation of mineral resources in specific area has been budgeted;
• exploration in specific areas is on going and has lead to the discovery of viable quantities of mineral resources and the Company has not decided to discontinue such activity; and
• sufficient data exists to indicate that, although a development in a specific area is likely to proceed, the carrying amount of the exploration and evaluation assets are likely to be recovered in full from successful development or sale.

Significant accounting policies $\overline{3}$

The accounting policies set out below have been applied consistently to all periods presented in these financial statements

Certain comparative amounts have been reclassified to conform with the current year's presentation.

$(a)$ Foreign currency

$(i)$ Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Company entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the foreign exchange rate at that date. The foreign currency gam or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in profit or loss.

Notes to the financial statements

$\overline{3}$ Significant accounting policies continued

$(b)$ Financial instruments

Non-derivative financial instruments $\ddot{\Omega}$

Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below

Cash and cash equivalents comprise cash balances and call deposits.

Accounting for finance income and expense is discussed in note 3(e)

Available-for-sale financial assets

The Company's investments in equity securities and certain debt securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses, and foreign currency differences on available-for-sale monetary items, are recognised directly in a separate component of equity. When an investment is derecognised, the cumulative gain or loss in equity is transferred to profit or loss

Other

Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

$(ii)$ Share capital

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.

Notes to the financial statements

$\overline{\mathbf{3}}$ Significant accounting policies continued

Exploration and evaluation assets $(c)$

Exploration and evaluation costs, including the costs of acquiring licences, are capitalised as exploration and evaluation assets on an area of interest basis. Costs incurred before the Company has obtained the legal rights to explore an area are recognised in profit or loss.

Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either

• (1) the expenditures are expected to be recouped through successful development and exploitation of the area of interest: or
• (ii) activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation assets are assessed for impairment if:

• (i) sufficient data exists to determine technical feasibility and commercial viability; and
• (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount (see impairment accounting policy (d)). For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the exploration activity relates The cash generating unit shall not be larger than the area of interest

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified from exploration and evaluation assets to mining property and development assets within property, plant and equipment.

Impairment $(d)$

Financial assets $(i)$

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset

In the case of available-for-sale financial instruments, a significant and prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its fair value.

Notes to the financial statements

$\overline{3}$ Significant accounting policies continued

$(d)$ Impairment continued

$\mathbf{d}$ Financial assets contued

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an available-for-sale financial asset recognised previously in equity is transferred to profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognised directly in equity.

Non-financial assets $(ii)$

The carrying amounts of the Company's non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset's recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit").

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Notes to the financial statements

Significant accounting policies continued $\mathbf{3}$

$(e)$ Finance income and expenses

Finance income comprises interest income on funds invested and foreign currency gains Interest income is recognised as it accrues in profit or loss, using the effective interest method.

Finance expenses comprise interest expense on borrowings. All borrowing costs are recognised in profit or loss using the effective interest method.

Foreign currency gains and losses are reported on a net basis

$(6)$ Income tax

Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

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

Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and habilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Notes to the financial statements

$3¹$ Significant accounting policies continued

Goods and services tax $\left( \mathbf{q} \right)$

Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST). except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the balance sheet.

Cash flows are included in the cash flow statement on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

$(h)$ Segment information

A segment is a distinguishable component of the Company that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and returns that are different from those of other segments.

The company operates in one business segment and one geographical segment, namely gold manganese and base metals exploration in Australia. The revenues and results of this segment are those of the Company as a whole and are set out in the income statement.

$(i)$ New standards and interpretations not yet adopted

The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application. They are available for early adoption at 30 June 2009, but have not been applied in preparing this financial report:

• AASB 8 Operating Segments introduces the "management approach" to segment reporting. AASB 8, which becomes mandatory for the Company's 30 June 2010 financial statements, will required a change in the presentation on and disclosure of segment information based on the internal reports regularly reviewed by the Company's Chief Operating Decision Maker in order to assess each segment's performance and to allocate resources to them. Currently the Company presents segment information in respect of its business and geographical segments
• Revised AASB 101 Presentation of Financial Statements (2007) introduces the term total comprehensive income, which represents changes in equity during a period other than those changes resulting from transactions with owners in their capacity as owners. Total comprehensive income may be presented in either a single statement of comprehensive income (effectively combining both the income statement and all non-owner changes in equity in a single statement) or, in a income statement and a separate statement of comprehensive income. Revised AASB 101 becomes mandatory for the Company's 30 June 2010 financial statements.

Notes to the financial statements

$\mathbf{3}$ Significant accounting policies continued

$(i)$ New standards and interpretations not yet adopted continued

• AASB 2008-5 Amendments to Australian Accounting Standards arising from the Annual Improvements Process and 2008-6 Further Amendments to Australian Accounting Standards arising from The Annual Improvements Process affect various AASBs resulting in minor changes for presentation, disclosure, recognition and measurement purposes. The amendments, which become mandatory for the Company's 30 June 2010 financial statements, are not expected to have any impact on the financial statements.
• Revised AASB 123 Borrowing Costs removes the option to expense borrowing costs and requires $\bullet$ that an entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The revised AASB 123 will become mandatory for the Company's 30 June 2010 financial statements. In accordance with the transitional provisions the Company will apply the revised AASB 123 to qualifying assets for which capitalisation of borrowing costs commences on or after the effective date. Therefore there will be no impact on prior periods in the Company's 1 January 2009 financial statements.
• AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8 makes amendments to AASB 5 Non-current Assets Held for Sale and Discontinued Operations, AASB 6 Exploration for and Evaluation of Mineral Resources, AASB 102 Inventories, AASB 107 Cash Flow Statements AASB 119, Employee Benefits, AASB 127 Consolidated and Separate Financial Statements, AASB 134 Interim Financial Reporting, AASB 136 Impairment Assets, AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts. AASB 2007-3 is applicable for annual reporting periods beginning on or after 1 January 2009 and must be adopted in conjunction with AASB 8 Operating Segments. This standard is only expected to impact disclosures within the financial report
• AASB 2007-6 Amendments to Australian Accounting Standards arising from AASB 123 makes amendments to AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards, AASB 101 Presentation of Financial Statements, AASB 107 Cash Flow Statements, AASB 111 Construction Contracts, AASB 116 Property, Plant and Equipment, AASB 138 Intangible Assets, Interpretation 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities and Interpretation 12 Service Concession Arrangements AASB 2007-6 is applicable for annual reporting periods beginning on or after 1 January 2009 and must be applied at the same time as AASB 123 Borrowing Costs. This standard principally removes the references to expensing borrowing costs on qualifying assets.
• AASB 2007-8 Amendments to Australian Accounting Standards arising from AASB 101 $\bullet$ consequently amends a number of AASB's as a result of the reissue of AASB 101 so as to better align with IFRS Terminology. The standard is applicable to entities with a reporting period commencing 1 January 2009
• AASB 2007-10 Further Amendments to Australian Accounting Standards arising from AASB 101. AASB 2007-10 makes a number of consequential amendments to a number of accounting standards arising from the revision of AASB 101 in September 2007. The changes are largely to terminology for example, changing the term 'general purpose financial report' to 'general purpose financial statements' and the term 'financial report' to 'financial statements', where relevant, in Australian Accounting Standards (including Interpretations) to better align with IFRS. As the changes do not affect recognition or measurement criteria, the changes are not expected to have any impact on the entity's reported financial position and performance.

Notes to the financial statements

3 Significant accounting policies continued

New standards and interpretations not yet adopted continued $(i)$

• AASB 2008-1 Amendments to Australian Accounting Standard Share-Based Payments: Vesting Conditions and Cancellations. AASB 2008-1 was issued after changes were made to AASB 2 Share Based Payments including clarifying that vesting conditions are service conditions and performance conditions only, and that other features of a share-based payment are not vesting conditions. The standard is applicable to entities with a reporting period commencing 1 July 2009
• AASB 2009-4 Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 2, AASB 138 and AASB Interpretation 9 & 16]. AASB 2009-4 makes various amendments to a number of standards and interpretations in line with the IASB annual improvements project. The standard is applicable to entities with a reporting period commencing 1 January 2009.
• AASB 2009-05 Further amendments to Australian Accounting Standards arising from the Annual Improvements Project JAASB 5, 8, 101, 107, 118, 136, 1391. AASB 2009-05 makes various amendments to a number of standards and interpretations in line with the IASB annual improvements project. The standard is applicable to entities with a reporting period commencing 1 January 2010.

Determination of fair values $\boldsymbol{\Lambda}$

A number of the Company's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and / or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability

$(a)$ Trade and other receivables

The fair value of trade and other receivables, is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date

Non-derivative financial liabilities $(b)$

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.

$\left( c\right)$ Share-based payment transactions

The fair value of equity-settled share-based payment transactions is measured at the fair value of the goods and services received, unless that fair value cannot be estimated reliably. Where the Company cannot estimate reliably the fair value of the goods or services received, the fair value is measured by reference to the fair value of the equity instruments granted, using the expected listing price of the Company's shares.

Notes to the financial statements

4 Determination of fair values continued

$(d)$ Investments in equity and debt securities

The fair value of investments in equity securities classified as available-for-sale financial assets are determined by reference to their quoted closing bid price at the reporting date. The fair value of investments in debt securities classified as available-for-sale financial assets are determined by reference to their face value.

5 Cash and cash equivalents

	2009	2008
		-5
Bank balances - Business cheque account	4.977	1.819
Bank balances - Share issue account	207,273	-22.392
Cash and cash equivalents in the cash flow statement	212,250	24.211

The Company's exposure to interest rate risk and sensitivity analysis for financial assets and habilities are disclosed in note 18.

6 Reconciliation of cash flows from operating activities

		2009 S	2008 S
Cash flows from operating activities
Loss for the period		(129, 924)	(141, 275)
Net finance expense	16	(7,210)	(3,592)
Shares issued for no consideration		241,153	50,000
Impairment loss		171,148
Gain on sale of tenement		(741, 792)
Loss on sale of shares		114,340
Income tax expense			(13, 179)
Operating loss before changes in working capital and provisions		(352, 285)	(108,046)
Change in trade and other receivables		(65,981)	(2,652)
Change in trade payables and other payables		187,397	11,241
Cash used in operations		(230, 869)	(99, 457)
Interest received		4,384	3,044
Net cash used in operating activities		(226, 485)	(96, 413)

Notes to the financial statements

Reconciliation of cash flows from operating activities continued 6

Non-cash financing activities

Share issues:

• 4,000,000 Shares were issued in consideration for consulting services rendered. The share issue was based on the fair value of the goods and services received, being \$157,820.
• 416,665 Class A performance shares were issued in consideration for consulting services rendered. The share issue was based on the fair value of the equity investments granted, using the expected listing price of the Company's shares

7 Trade and other receivables

	2009	2008
	S	S
Prepayments	31,805	$\omega$
GST receivable	37,849	3,673
	69,654 -------------------------------------- small caboo in	3.673.

The Company's exposure to credit risk and impairment losses related to trade and other receivables are disclosed in note 18.

Other financial assets 8

Current investments

	2009	2008
Available-for-sale financial assets	К
$Loan - Plavica project$	60.859	-57.568
	60.859	57.568

During the financial year ended 30 June 2009, the Company signed an agreement with RIK SILEKS AD KRATOVO to explore the Plavica tenements in Macedonia. In accordance with the agreement, the Company has provided a loan to SILEKS, the recoverability of which is dependant on the concessions for the Plavica tenements not being granted. In the event the concessions are renewed or issued, the loan shall become qualifying expenditure for the equity account of the Company under the agreement.

The loan is unsecured and no interest is payable and has therefore been classified as an available-for-sale investment.

Non-current investments

	2009	2008
Available-for-sale financial assets:	S	S
Shares in listed corporation	622,411
Impairment	(155, 603)	۰
	466,808

$21$

Notes to the financial statements

$\mathbf{R}$ Other financial assets continued

Non-current investments continued

The movement in the allowance for impairment during the year was as follows:	2009	2008
Balance at 1 July
Impairment loss recognised	155,603
Balance at 30 June	155.603

During the year the Company entered into a Heads of Agreement with Western Desert Resources Limited ("WDR"), an ASX-listed company, to enter into a farm-in agreement over the Company's Gladstone and MeArthur River manganese projects.

Under the terms of the agreement, WDR issued 5 million fully paid ordinary shares to the Company and also agreed to spend \$500,000 on the tenements within two years to earn a 45% interest in the Gladstone and McArthur River tenements.

The carrying value of shares in WDR were written down during the 30 June 2009 financial year as the investment was deemed to be impaired. An unpairment loss of \$155,603 was recognised based on a decline in the quoted market price of the shares.

The Company's exposure to credit and interest rate risks related to investments is disclosed in note 18.

$\ddot{Q}$ Tax assets and liabilities

Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following items.

	2009	2008
	S
Deductible temporary differences	68.919	12.240
Taxable temporary differences	(62,789)	(47,041)
Tax losses	63.233	68.228
	69.363 A 111 Martin 1988 and a shown shift to severe company of a state way of A 12	33.427

The tax losses do not expire under current tax legislation Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Company can utilise the benefits therefrom

Notes to the financial statements

10 Exploration and evaluation assets

	Exploration and evaluation assets ${\mathbb S}$
Balance at 1 July 2007	75,816
Capitalised expenditure during the vear	80,181
Balance at 30 June 2008	155,997
Balance at 1 July 2008	155,997
Capitalised expenditure during the year	75,588
Disposals	(58,208)
Impairment loss	(15, 545)
Balance at 30 June 2009	157,832

The recoverability of carrying amounts of exploration and evaluation assets is dependent on the successful development and commercial exploitation or sale of the respective area of interest. This is assessed at balance date on an annual basis.

During the year, the Company recognised an impairment loss of \$15,545 with respect to costs capitalised on the Mt Drummond area, as exploration for and evaluation of mineral resources in the specific area has not led to the discovery of commercially viable quantities of mineral resources and the Company has decided to discontinue such activities in the specific area.

11 Borrowings

This note provides information about the contractual terms of the Company's interest-bearing loans and borrowings, which are measured at amortised cost. For more information about the Company 's exposure to interest rate and liquidity risk, see note 18.

Unsecured liabilities:	2009	2008
Loans from associates	5.649 ---------	3.445 _________

The loan is repayable at call to the lender and accrues interest at 9% per annum.

Notes to the financial statements

12 Trade and other payables

2009 2008
-50
207.977 -20.580
	and the contract of the problems are also as a contract of the contract of the contract of the contract of the

The Company's exposure to liquidity risk related to trade and other payables is disclosed in note 18

13 Capital and reserves

30,580,752 (2008:20,918,252) fully paid ordinary shares	1,024,289	358,012
---------------------------------------------------------	-----------	---------

Reconciliation of movement in capital and reserves

The movements in ordinary shares during the year are as follows.

	2008		2009
	Number of		Number of
	Shares	S	Shares	S
At the beginning of the year	14,815,002	184,952	20,918,252	358,012
Shares issued during the year:
Ordinary shares issued at 5 cents per share on 3 July 2007	60,500	3.025
Ordinary shares issued at 10 cents per share on 3 July
2007	30,250	3,025
Equity settled transactions - 20 December 2007	2,000,000	50,000
Issue of Class A Performance Shares - 20 December 2007	2,500,000	250
Ordinary shares issued at 8 cents per share on 12 February 2008	1,512,500	121,000
Ordinary shares issued at 8 cents per share on 26 September 2008			12,500	1,000
Ordinary shares issued at 5 cents per share on 21 October 2008			2,000,000	100,000
Equity settled transactions - 11 November 2008			4,000,000	157,820
Ordinary shares issued at 5 cents per share on 10 January 2009			700,000	35,000
Ordinary shares issued at 5 cents per share on 23 February 2009			1,000,000	50.000

Notes to the financial statements

13 Capital and reserves continued

Reconciliation of movement in capital and reserves continued

Balance at the end of the year	20,918,252	358,012	-30.580.752	1.024.289
Less share issue costs		(4.240)		(205, 626)
Equity settled transactions- Services up to 30 June 2009				83.333
Cancellation of Class A Performance Shares - 12 June 2009		$\omega_{\rm c}$	(2.500,000)	(250)
Ordinary shares issued at 10 cents per share on 13 March 2009			4.450.000	445,000

The Company does not have authorised capital or par value in respect of its issued shares.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to vote per share at meetings of the Company.

The Company has also issued share options.

On 20 December 2007 the directors resolved to issue 500,000 options exercisable at 20 cents each on or before three years from the date of listing of the Company on the Australian Stock Exchange (ASX). Unissued ordinary shares of the Company under option at year end are:

Issue date	Expiry date	Exercise price	Options on issue at year end 2009	Options on issue at year end 2008
-20/12/2007	20/12/2010	0.20	166,667	166,667
20/12/2007	20/12/2010	0.20	166,667	166.667
-20/12/2007	20/12/2010	0.20	166.666	166,667

Capital Management

The Company's objective when managing capital is to maintain a good debt to equity ratio and safeguard its ability to continue as a going concern, so that it can provide a return to shareholders, benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital

The Company's debt and capital includes ordinary share capital and financial liabilities supported by financial assets.

There are no externally imposed capital requirements.

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

There have been no changes in the strategy adopted by management to control the capital of the Company since the prior year.

Notes to the financial statements

14 Other income

	2009	2008
	$\mathbf S$	$\mathsf{S}$
Sundry income	5,250
Gain on sale of tenements	741,792
	747,042
Other expenses 15
	2009	2008
Accounting fees	S 38,670	$\mathbb{S}$ 21,615
Audit fees	17,093	8,120
Bank charges	224	175
Brokerage fees	440
Conference costs	2,054
Consulting and professional fees	481,513	88,426
Entertainment	195	106
Filing fees	1,400	1,130
Fines and penalties	810
Impairment loss	171,148
Loss on sale of shares	114,340
Postage	3,052	379
Other miscellaneous costs	14,419
Telephone and fax		1,086
Travel - domestic and overseas	38,818	37,009
	884,176	158,046

16 Finance income and expense

	2009 S	2008 S
Interest income on bank deposits	4,384	3,044
Gain on exchange differences	3,292	805
Finance income	7,676	3,849
Interest expense - loans to associates	466	-257
Finance expense	466	257
Net finance income	7.210	3,592

Notes to the financial statements

17 Income tax expense

	2009 S	2008 S
Deferred tax expense Origination and reversal of temporary differences	$\cdot$	(13, 179)
Total income tax expense/(benefit)		13.179) the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract o

Numerical reconciliation between tax expense and pre-tax accounting profit

	2009 S	2008 S
Loss for the period	(129, 924)	(141, 275)
Total income tax benefit		(13, 179)
Loss excluding income tax	(129, 924)	(154, 454)
Income tax using the Company's domestic corporation tax rate of 30% (2007). $30\%$	(38,977)	(46.336)
Non-deductible expenses	301
Effect of tax losses not recognised	38,676	33,157
Income tax expense on pre-tax net loss		(13.179)

18 Financial risk management and financial instruments

$(a)$ Overview

The Company has exposure to the following risks from its use of financial instruments:

• $\bullet$ credit risk
• liquidity risk $\bullet$
• $\rm market$ risk $\bullet$

This note presents information about the Company's exposure to each of the above risks, its objectives and policies and processes for measuring and managing risk. Further quantitative disclosures are included throughout this financial report.

The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and manages the financial risks relating to the operations of the Company through regular reviews.

Notes to the financial statements

18 Financial risk management and financial instruments continued

$(b)$ Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company's debt securities

Exposure to credit risk

The carrying amount of the Company's financial assets represents the maximum credit exposure. The Company's maximum exposure to credit risk at reporting date was:

	2009 S	2008 S
Available-for-sale financial assets	527,667	57,568
Cash and cash equivalents	212,250	24.211
	739.917 ________	81.779

(c) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation

Typically, the Company ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. The company does not maintain any lines of credit.

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

30 June 2009

	Carrying amount	Contract- ual cash flows	6 mths or less
Non-derivative financial liabilities	S	S	S
Liabilities at amortised cost:
Trade and other payables			207,977 (207,977) (207,977)
Borrowings	5.649	(5,649)	(5,649)
	213.626	(213.626)	(213.626)

Notes to the financial statements

18 Financial risk management and financial instruments continued

$(c)$ Liquidity risk continued

30 June 2008

	Contract-
	Carrying amount	ual cash flows	6 mths or less
Non-derivative financial liabilities	S	S	S
Liabilities at amortised cost:
Trade and other payables	20.580	(20.580)	(20.580)
Borrowings	3,445	(3.445)	(3, 445)
	24,025	(24.025)	(24.025)

$(d)$ Market risk

Market risk is the risk that changes in market prices, such as interest rates will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Interest rate risk

Profile

At balance date the Company had minimal exposure to interest rate risk, through its cash and cash equivalents held within financial institutions.

At the reporting date the interest rate profile of the Company's interest-bearing financial instruments was.

	2009 S	2008 S
Variable rate instruments
Cash and cash equivalents	212,250 _____	24.211

Fair value sensitivity analysis for fixed rate instruments

The company does not account for any fixed rate financial assets through profit and loss. Therefore a change in interest rates at reporting date would not affect profit or loss.

Notes to the financial statements

18 Financial risk management and financial instruments continued

Market risk continued $(d)$

Fair value sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown below. The analysis assumes that all other variables remain constant. The analysis is performed on the same basis for 2008.

	Profit or loss
	100bp increase	100bp decrease
30 June 2009
Variable rate instruments	(2,123) _________	2.123 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
30 June 2008
Variable rate instruments	(242) the commission states of them is work. An interest in the first pro-	242 A A BOOK CONVERSION IS IN LINE

Fair values $(e)$

Fair values of financial assets and liabilities approximate their carrying values.

19 Related parties

The following were key management personnel of the Company at any time during the reporting period and unless otherwise indicated were key management personnel for the entire period:

Non-executive directors

Mr P G Hepburn-Brown Mr P Kastellorizos Dr A K Sener Mr E L Y Pang (appointed 6 March 2009) Mr A S Veitch (resigned 14 November 2008)

Transactions with key management personnel

Key management personnel hold positions in other entities that result in them having control or significant influence over the financial operating policies of those entities.

These entities transacted with the Company in the reporting period. The terms and conditions of those transactions were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to unrelated entities on an arm's length basis.

Notes to the financial statements

19 Related parties continued

The aggregate amounts recognised as expenses during the year relating to key management personnel and their personally-related entities were \$428,783 (2008: \$6,000). Details of the transactions are as follows:

		2009 S	2008 S
Director/Transaction
- Mr Pedro Kastellorizos - Executive and geological services	(1)	388,883	6.000
- Dr Ahmet Kerim Sener - Geological services	(11)	20,400	$\tilde{\phantom{a}}$
- Mr Peter Gordon Hepburn-Brown - Geological services	ĦГ	19,500

• $i)$ Provision of geological consulting and tenement management services as well as general company management services at normal commercial rates.
• $\mathbf{ii}$ Provision of geological consulting services at normal commercial rates.

Other related party transactions

Mr Pedro Kastellorizos has loaned funds to the Company through payment of expenses from time to time. The balance of the loan at 30 June 2009 is \$5,649 (2008: \$3,445). Interest is charged on this loan at 9% per annum.

20 Auditors' remuneration

Audit Services
Auditors of the Company	2009	2008
	S	S
Grant Thornton
- Audit and review of the financial reports	15,000	7,500
	15,000	7,500
Other Services
Auditors of the Company
Grant Thornton
- Other assurance services	11,625

11,625

Notes to the financial statements

21 Earnings per share

Basic and diluted earnings per share

The calculation of basic and diluted earnings per share at 30 June 2009 was based on the loss attributable to ordinary shareholders of \$129,924 (2008: \$141,275) and a weighted average number of ordinary shares outstanding of 24,344,862 (2008: 16,528,910), calculated as follows:

Weighted average number of ordinary shares
	2009	2008
Issued ordinary shares at 1 July (excluding Class A Performance Shares)	18,418,252	14,815,002
Effect of shares issued July 2007		90,004
Effect of shares issued December 2007	$\blacksquare$	1,052,055
Effect of shares issued February 2008		571,849
Effect of shares issued September 2008	9,486
Effect of shares issued October 2008	1,380,822	۰
Effect of shares issued November 2008	2,531,507
Effect of shares issued January 2009	327,945
Effect of shares issued February 2009	347,945
Effect of shares issued March 2009	1,328,905
Weighted average number of ordinary shares at 30 June	24,344,862	16,258,910

22 Commitments

In order to maintain current rights of tenure to exploration permits, the Company is required to perform minimum exploration work to meet minimum expenditure requirements. These obligations may vary over time, depending on the Company's exploration program and priorities.

These obligations are not provided for in the financial report and are payable as follows.

	2009	2008
	S	S
Within one year.	253,693	343,693
One to five years	578,946	1,083,117
Later than five years	$\bullet$	46,530
	832,639	1.473.340.

Notes to the financial statements

23 Subsequent events

In August 2009, the Company issued a prospectus to raise \$3 million through the issue of 15 million fully paid ordinary shares at \$0.20 each with a provision to accept oversubscriptions of up to a further 5 million shares at \$0.20 each to raise up to a further \$1 million. Currently, shares in the Company have been oversubscribed.

The Company plans to list on the Australian Stock Exchange on 26 October 2009. Listing is probable and will occur upon satisfaction of various conditions imposed by the Australian Stock Exchange.

Other than the matter discussed above, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Company, the results of those operations or the state of affairs of the Company, in future financial years.

Directors' declaration

• In the opinion of the directors of Genesis Resources Limited, ("the Company"): $\mathbf{I}$
• (a) the financial statements and notes, set out on pages 7 to 33, are in accordance with the Corporations Act 2001, including:
  • giving a true and fair view of the Company's financial position as at 30 June 2009 and of its $(i)$ performance for the financial year ended on that date, and
  • $(ii)$ complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
• (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the directors

• 1. D

Director

Perth, Western Australia 13 October 2009

Independent Auditor's Report To the Members of Genesis Resources Limited

Report on the Financial Report

10 Kings Park Road West Perth WA 6005 PO BOX 570 West Perth WA 6872

T +61 8 9480 2000 F +61 8 9322 7787 E admin@gtwa.com.au W www.grantthornton.com.au

We have audited the accompanying financial report of Genesis Resources Limited, which comprises the balance sheet as at 30 June 2009, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors' declaration.

Directors' Responsibility for the Financial Report

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

Auditor's Responsibility

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

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

considers internal control relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting

Grant Thornton (WA) Partnership ABN 17 735 344 518, a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389.

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

Liability limited by a scheme approved under Professional Standards Legislation.

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 opinions.

Independence

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

Auditor's opinion

In our opinion:

$\overline{a}$

• the financial report of Genesis Resources Limited is in accordance with the Corporations Act 2001, including:
• $\mathbf{i}$ giving a true and fair view of the company's financial position as at 30 June 2009 and of its performance for the year ended on that date; and
• $\ddot{\mathbf{u}}$ complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
• $\mathbf b$ the financial report also complies with International Financial Reporting Standards as disclosed in Note 2.

Grant Thomton (WA) Partomby

GRANT THORNTON (WA) PARTNERSHIP Chartered Accountants

I W VIBERT Partner

Perth, 13 October 2009

Grant Thornton (WA) Partnership ABN 17 735 344 518, a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389.

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

Liability limited by a scheme approved under Professional Standards Legislation.