GOLDARC RESOURCES LIMITED — Annual Report 2012

Mar 29, 2012

Torian Resources NL ABN 72 002 261 565

Financial Report for the Financial Year Ended 31 December 2011

TABLE OF CONTENTS

1.	Corporate Governance Statement	Page 1
2.	Director's Report…………………………………………………	Page 5
3.	Auditor's Independence Declaration	Page 15
4.	Consolidated Statement of Comprehensive Income	Page 16
5.	Consolidated Statement of Financial Position	Page 17
6.	Consolidated Statement of Changes in Equity	Page 18
7.	Consolidated Statement of Cash Flows	Page 19
8.	Notes to the Financial Statements	Page 20
9.	Directors Declaration	Page 42
10.	Independent Auditor's Report	Page 43
11.	Substantial Shareholders…	Page 45

ABN 72 002 261 565

CORPORATE GOVERNANCE STATEMENT

The Board of Directors of Torian Resources NL ("Company") is committed to maintaining high standards of Corporate Governance. This statement outlines the main Corporate Governance practices that where adopted or in place throughout the financial year, which comply with the ASX Corporate Governance Council recommendations, unless otherwise stated.

Roles of the Board and Management

Torian Resources has established the functions reserved to the Board as detailed in the Board Charter which is published on the Company's website.

The Board's key objectives are to:

• create an environment for employees, other contributors and stakeholders which engenders trust, confidence, faith, loyalty and dedication to the interests and affairs of the Company;
• increase shareholder value within an appropriate framework which safeguards the rights and interests of the Company's shareholders; and
• ensure the Company is properly managed and operated with integrity.

The Board is also governed by the Company's constitution. The day to day management of the Company's affairs and implementation of corporate strategies and policy initiatives are formally delegated by the Board to the Executive Chairman.

The Board reviews the performance of all staff periodically and at least annually. The Executive Chairman meets one-on-one with each staff member for the purpose of reviewing and evaluating their performance in meeting key responsibilities and achieving objectives.

The evaluation of the performance of all members of staff took place throughout the year.

Board Structure

The Board is comprised of three directors, one of whom is a non-executive and none of whom are independent. Given the Company's background, the nature and size of its business and the current stage of its development, the Board believes that this is both appropriate and acceptable at this time. The skills, experience and period in office for each director are set out in this Annual Report in the Directors' Report and on the website.

The Board reviews its composition periodically and has the intention to appoint appropriate independent directors as required.

The Chairperson, Mr Peter Ashcroft is not independent but, due to his experience and expertise in areas the Company operates in, the Board considers he is suitably skilled to perform the role.

The positions of Chairman and Chief Executive Officer are held by the same person. The Board believes this conserves cash resources by utilising the skills of Mr Peter Ashcroft.

Nomination Committee

The Company will establish a nomination committee charter; however it has not established a nomination committee at this time due to the company's background, nature and size of its business and the current stage of its development.

ABN 72 002 261 565

CORPORATE GOVERNANCE STATEMENT (CONT.)

The Board reviews its composition periodically and at least annually to ensure that it has the appropriate mix of expertise and experience. When a vacancy exists, for whatever reasons, or where it is considered that the Board would benefit from the services of a new Director with particular skills, the Board will select appropriate candidates with relevant qualifications, skills and experience. External advisors may be used to assist in such a process. The Board will then appoint the most suitable candidate who must stand for election at the next annual general meeting of shareholders.

For Directors retiring by rotation, the Board assesses that director before recommending re-election.

Board Performance

The Board has established a Board Performance Evaluation Policy which is published on the Company's website.

The Company believes it is important that the Board review its own performance and those of its Committees (if any) with a view to achieving and maintaining a high level of performance. It will meet periodically for the purpose of reviewing and evaluating its performance in meeting its key responsibilities and achieving its objectives. As part of this review, the performance of the Board as a whole, each Director and the Chairman will be assessed.

A review was not conducted in 2011 due to the number of changes in the composition of the Board and the direction of the Company. The Board chose to defer the review until there has been a period of consistency.

Access to External Resources

The Directors have access to external resources including independent professional advice, as required to fully discharge their obligations as Directors of the Company as detailed in the Board Charter, published on the Company's website. The use of this resource is co-ordinated through the Chairman of the Board.

Code of Conduct

The Company is committed to its Directors and employees maintaining high standards of integrity, and ensuring that activities are in compliance with the letter and spirit of both the law and Company policies.

It has established a Code of Conduct which is available of the Company's website. Each staff member is to be issued with the Company's Code of Conduct at the beginning of their employment with the Company.

Diversity Policy

The Company is actively managing diversity as a means of enhancing the Company's performance by recognising and utilising the contributions of diverse skills and talent from its employees. It has established a diversity policy which is published on the Company's website.

The Company believes that the promotion of diversity on boards, in senior management and within the organisation generally broadens the pool for recruitment of high quality directors and employees; is likely to support employee retention; through the inclusion of different perspectives, is likely to encourage greater innovation; and is socially and economically responsible governance practice.

ABN 72 002 261 565

CORPORATE GOVERNANCE STATEMENT (CONT.)

The Board of Directors is responsible for adopting and monitoring the Company's Diversity Policy. The policy sets out the beliefs and goals and strategies of the Company with respect to diversity within the Company. Diversity within the Company means all the things that make individuals different to one another including gender, ethnicity, religion, culture, language, sexual orientation, disability and age. It involves a commitment to equality and to treating one another with respect.

The Company employs three women out of a total of eight employees for the whole organisation. This includes the Office Manager and Company Secretary.

The Board is small, comprising three members, which the Director's feel is appropriate given the Company's background, the nature and size of its business and the current stage of its development. There are currently no women on the Board.

Audit Committee

The Board has not established an audit committee. All Directors are responsible for the integrity of the Company's financial reporting and, given the size of the current Board, the Directors feel that there would be no efficiencies gained from a formal committee structure.

The Company will establish an Audit Committee Charter and publish the same on its website when it is of the appropriate size and stage of development to warrant a separate Audit Committee.

Continuous Disclosure

The Company has a formal Continuous Disclosure Policy which is published on the Company's website. The policy requires all executives and Directors to inform the Executive Chairman or, in his absence, the Company Secretary of any potentially material information as soon as practical after they become aware of that information.

Information is material if it is likely that the information would influence investors who commonly acquire securities on the ASX in deciding whether to buy, sell or hold the Company's securities.

Information need not be disclosed only if the ASX listing rules provide for non-disclosure.

The Executive Chairman is responsible for interpreting and monitoring the Company's disclosure policy and where necessary informing the Board. The Company Secretary is responsible for all communications with ASX.

Communication with Shareholders

The Company recognises the importance of regular and proactive interaction with the market in order to ensure the Company's investors remain fully informed about its activities.

The Company has established a formal Shareholder Communications Policy which is published on the Company's website.

ABN 72 002 261 565

CORPORATE GOVERNANCE STATEMENT (CONT.)

Risk Management

The Board is responsible for the oversight of the Company's risk management and control framework. Responsibility for control and risk management is delegated to the appropriate level of management within the Company, with the Executive Chairman, having ultimate responsibility to the Board for the risk management and control framework.

The Company's Risk Management Policy is published on the Company's website.

Remuneration Committee

The Company has a charter for a remuneration committee however; a committee has not been established at this time. Given the small size of the Board, the entire Board performs the functions of the remuneration committee.

The Company outlines the structure of remuneration of non-executive Directors and executives of the Company in the Remuneration report in the Annual Report.

The Company does not provide any schemes for retirement benefits, other than superannuation, for nonexecutive Directors. It prohibits employees and Directors from entering into transactions in associated products which limit the economic risk of participating in unvested entitlements under any equity-based remuneration schemes.

ABN 72 002 261 565

DIRECTORS' REPORT

In respect of the financial year ended 31 December 2011, the Directors of Torian Resources NL present their report together with the Financial Report of the Company and the Consolidated Financial Report of the Consolidated Group (the "Group"), being the Company and its controlled entities, and the Auditor's Report thereon.

DIRECTORS

The following persons held office as Directors of Torian Resources NL at anytime during or since the end of the financial year:

Mr Peter Ashcroft Mr Ian Johns Mr Mark Cashmore (Appointed 15 December 2011) Mr Scott Enderby (Resigned 29 August 2011) Mr Cameron Young (Appointed 1 July 2011, Resigned 16 December 2011)

Unless otherwise stated all Directors have been in office for the whole of the period.

Company Secretary

Mr Scott Enderby was held the role of Company Secretary from the beginning of the financial until his formal resignation on 27 October 2011.

Ms Elissa Hansen was appointed as Company Secretary on 27 October 2011.

Information on Directors

Peter Ashcroft LLB Executive Chairman Appointed: 9 December 2008 Age: 59 years

Peter Ashcroft is a commercial law specialist with over 30 years' experience. He is the owner and principal of Ashlaw Legal Services, which is a specialised commercial legal practice focusing upon the provision of advice to natural resource companies, both in production and exploration stages, and logistic and transport businesses. Peter is familiar with mining and resource developments throughout Australia and has advised on joint ventures in Indonesia, New Zealand, Philippines, India, USA, Sweden, Ghana and Canada.

Peter is a Non-executive Director of A1Investment and Resources Limited (ASX: AYI) and a director of number of other private companies.

Ian Johns Executive Director Appointed: 9 December 2008 Age: 41 years

Ian Johns brings 20 years of operational business experience to the Torian Board. He consults in the manufacturing industry as well as a business developer and contract negotiator. Ian was a founding director of Royalco Resources; a successful royalty income based mineral exploration company.

ABN 72 002 261 565

DIRECTORS' REPORT (CONT.)

Ian is a director of a number of private companies.

Mark Cashmore Non-Executive Director Appointed: 15 December 2011 Age: 41 years

Mark Cashmore has a broad range of business development and consulting experience, including project management, risk management, occupational workplace health and safety expertise and marketing. He currently consults to utility companies and government bodies on risk mitigation with a particular focus on occupational workplace health and safety (OWHS).

Mark is a director of a number of private companies.

Scott Enderby Executive Director Resigned 29 August 2011 Age: 44

Since joining the Board in 1996, Scott Enderby applied his extensive marketing experience to Torian's many and varied projects.

Cameron Young BBus; Grad Dip Applied Finance and Investment Non-Executive Director Appointed: 21 June 2011, Resigned 16 December 2011 Age: 38

Cameron Young has eight years' experience as a private client advisor. Cameron completed a Bachelor of Business majoring in Finance, and went on to complete the Graduate Diploma in Applied Finance and Investment with the Securities Institute of Australia.

Cameron is an executive director of BRR Media Pty Ltd.

Information on the Company Secretary

Scott Enderby Company Secretary Appointed: 3 October 2003, Resigned 27 October 2011 Age: 44 years

Elissa Hansen B.Comm; Gad Dip ACG; GAICD Company Secretary Appointed: 27 October 2011 Age: 39 years

Elissa Hansen is a Chartered Secretary with over 15 years' experience advising management and boards of ASX listed companies on investor relations, governance, compliance and other corporate issues.

DIRECTORS' REPORT (CONT.)

Principal Activities

The principal activities of the Group during the course of the financial year were the exploration and evaluation of mineral interests. There were no other significant changes in the nature of those activities during the financial year.

Results of Operations

The consolidated loss for the Group for the financial year ended 31 December 2011 is \$4,490,027 (2010: \$685,086).

Dividends

No dividends were paid or declared by the Group since the end of the previous financial year and the Directors do not recommend dividends be paid for the year ended 31 December 2011.

Review of operations

During the year, the Group has focused on developing its Madagascar Joint Venture with Varun Madagascar, a division of Mumbai-listed company Varun Industries. This is a production sharing joint venture to mine both gold and gemstones from two highly prospective adjacent exploitation (production) licences in Vatovorona, Madagascar.

With respect to these particular tenements, the joint venture allows Torian a 35% share of profits from production upon earning this ongoing interest through the initial expenditure of 75% of the first US\$3.4 million (being US\$2.55 million), to be invested in the ground.

Highlights of the Vatovorona gold project:

• 35% of the gold production to Torian;
• Exploitation licences issued for 20 years;
• Gold currently being produced from the licences;
• Gold quartz vein 1.5 metres wide and exposed at the surface, and open in all directions;
• Good topography for ease of access and development;
• Stage 1 trenching designed to produce gold in the first 6 months;
• No modern investigation has ever taken place;
• Torian contribution is 75% of the first US\$3.4 million (being US\$2.55 million) to be invested in the ground;
• No upfront fees payable or share issues required to enter into the JV;
• All pre-JV costs to be recovered by Varun from its 65% share of production

At the date of this report, the venture company has completed a trial mining pit as well as the drilling of over 2,000 metres of RAB holes in the tenements. Assay results from samples gathered to date has also shown promising results indicative of high grade gold mineralisation along the trial zones.

ABN 72 002 261 565

DIRECTORS' REPORT (CONT.)

Significant changes in the state of affairs

During the year the Group raised \$1,419,410 from share issues net of costs of capital and the exercising of options (2010: \$1,009,879). This has enabled the continuation of the exploration and evaluation of mineral interests.

In 2011, the Group changed its strategic direction from developing its diamond exploration projects in New South Wales towards the exploration and production of gold and gemstones in Madagascar. This is being undertaken as a joint venture with Varun Madagascar as Varun Torian International Limited.

The Group has also rationalised its corporate structure by winding up several of its unused subsidiaries and applying for their deregistration with ASIC. These companies held no tenements and have no other assets or legal liabilities.

During the year, the Group completed the sale of its office and warehouse premises in Inverell, NSW at a value of \$310,000. Having extensively reviewed the Group's operations within Australia, as well as the cost of maintaining permanent facilities in Inverell, the Directors have decided that the Group will utilise contract services for all exploration and trial mining activities in the future.

The Company has entered into a funding agreement with La Jolla Cove Investors Inc to issue two tranches of funding in return for proceeds of USD\$3 million, with an option by the Company to secure a further USD\$1.5 million.

After reviewing the capitalised exploration assets of the Group at 31 December 2011, the Directors have decided to recognise an impairment expense of \$883,888 against the Egerton gold prospects following a shift in focus towards the Madagascan joint venture.

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

Likely Developments and Expected Results of Operations

Further information about likely developments in the operations of the Company and the expected results of those operations in future financial years has not been included in this report because disclosure of the information would be likely to result in unreasonable prejudice to the Company.

Matters Subsequent to Year End

At the date of this report the following events have arisen since 31 December 2011 and will significantly affect the operations of the Group:

• Post balance date, the Company has received additional USD\$450,000 of convertible note proceeds under its agreement with LJC;
• Further conversions by LJC under the convertible note agreement amounted to USD\$490,556;
• By February 2012, the joint venture company, Varun Torian International, had completed the drilling of 139 15 meter RAB holes as part of its drilling program in Madagascar. To date, over 2,000 metres of RAB holes have been drilled and samples taken from these holes are stored on site prior to freighting to South Africa for assaying;
• Varun Torian International has also established an onsite sample preparation lab in Vatovorona, enabling the JV to expedite the drying, crushing, pulverising, homogenising and labelling of samples for shipment to assay labs.

DIRECTORS' REPORT (CONT.)

In the Directors opinion, no other subsequent events have arisen that significantly affect the operations of the Group,

Meetings of Directors

The number of meetings of the Company's Board of Directors and of each board committee held during the financial year ended 31 December 2011 and the number of meetings attended by each Director were:

	Directors Meetings
Director	Held whilst in office	Attended
Peter Ashcroft	11	11
Ian Johns	11	11
Scott Enderby	8	8
Cameron Young	4	4
Mark Cashmore	-	-

Directors' Interests

The Directors' and their associates' interests in shares and options of the Company at 31 December 2011 were:

	Peter Ashcroft	Ian Johns	Mark Cashmore
Ordinary shares	176,775,834	259,977,382	6,400,000
Unlisted options
\$0.004 exercise, expiring 31 Dec 2012	9,950,000	10,000,000	-
\$0.010 exercise, expiring 31 Dec 2012	10,000,000	10,000,000	-
\$0.010 exercise, expiring 31 Dec 2012	47,000,000	51,000,000	-
\$0.011 exercise, expiring 31 Dec 2013	47,000,000	51,000,000	-
\$0.012 exercise, expiring 31 Dec 2014	47,000,000	50,000,000	-
\$0.013 exercise, expiring 31 Dec 2015	47,000,000	50,000,000	-
\$0.0023 exercise, expiring 31 Dec 2015	100,000,000	100,000,000	-

DIRECTORS' REPORT (CONT.)

REMUNERATION REPORT

This report outlines the remuneration arrangements in place for Directors and executives of Torian Resources NL.

Directors and Key Management Personnel

The full Board of Directors sets remuneration policies and practices generally and makes specific recommendations on remuneration packages and other terms of employment for Executive Directors, other Senior Executives and Non-Executive Directors.

Executive remuneration and other terms of employment are reviewed annually having regard to performance against goals set at the start of the year, relevant comparative information and independent expert advice. As well as basic salary, remuneration packages include superannuation. Directors and executives are also able to participate in an Employee Share Scheme.

Remuneration packages are set at levels that are intended to attract and retain executives capable of managing Group's operations.

Remuneration of Non-Executive Directors is determined by the Board within the maximum amount approved by shareholders from time to time.

The Board undertakes an annual review of its performance and the performance of the Board Committees against goals set at the start of the year.

Details of the nature and amount of each element of the emoluments of each Director of Torian Resources NL are set out below.

Directors

Names and positions held of key management personnel in office at any time during the financial year are:

Mr Peter Ashcroft Mr Ian Johns Mr Mark Cashmore (Appointed 15 December 2011) Mr Scott Enderby (Resigned 29 August 2011) Mr Cameron Young (Appointed 21 June 2011, Resigned 16 December 2011)

ABN 72 002 261 565

DIRECTORS' REPORT (CONT.)

Key Management Personnel Compensation

	Salary, wages and directors fees	Bonus	Non-monetary benefits	Other employee entitlements	Total
	\$	\$	\$	\$	\$
2011
Peter Ashcroft	78,510	-	1,142,000	-	1,220,510
Ian Johns	27,871	-	1,197,700	-	1,225,571
Scott Enderby	92,326	-	56,000	-	148,326
Cameron Young	15,000	-	-	-	15,000
Total Compensation	213,707	-	2,395,700	-	2,609,407
2010
Peter Ashcroft	-	-	85,000		85,000
Ian Johns	-	-	85,000		85,000
Scott Enderby	99,541	-	10,000	3,598	113,139
Peter Kennewell	97,611	-	-	24,230	121,841
Total Compensation	197,152	-	180,000	27,828	404,980

Shares Held by Key Management Personnel and Their Associates

	Balance 1 Jan 2011	Granted as Compensation	Purchases	Disposals	Balance 31 Dec 2011
Peter Ashcroft	50,059,167	116,666,667	10,050,000	-	176,775,834
Ian Johns	159,977,382	100,000,000	-	-	259,977,382
Mark Cashmore	6,400,000	-	-	-	6,400,000
Total	216,436,549	216,666,667	10,050,000	-	443,153,216

Options Held by Key Management Personnel and Their Associates

	Balance 1 Jan 2011	Granted as Compensation	Purchases	Disposals	Balance 31 Dec 2011
Peter Ashcroft	87,152,500	304,666,667	-	(83,869,167)	307,950,000
Ian Johns	101,434,007	302,000,000	-	(81,434,007)	322,000,000
Mark Cashmore	-	-	-	-	-
Total	188,586,507	606,666,667	-	(165,303,174)	629,950,000

ABN 72 002 261 565

DIRECTORS' REPORT (CONT.)

Consultancy Deeds

Peter Ashcroft

Executive Chairman

• Deeds ratified by shareholders on 16 December 2012;
• Consultancy fee of \$15,000 per month;
• Deed is set for a term of five (5) years;
• The Consultant is entitled to receive a performance payment comprising the issue of shares in the Company on the satisfaction of certain performance targets (see ASX announcement on 16 Dec 2012 for details of targets);
• No amount is payable by the Consultant upon satisfaction of the set performance targets for the issue of shares.

Ian Johns

Non-Executive Director

• Deeds ratified by shareholders on 16 December 2012;
• Consultancy fee of \$8,000 per month;
• Deed is set for a term of five (5) years;
• The Consultant is entitled to receive a performance payment comprising the issue of shares in the Company on the satisfaction of certain performance targets (see ASX announcement on 16 Dec 2012 for details of targets);
• No amount is payable by the Consultant upon satisfaction of the set performance targets for the issue of shares.

Loans to Directors and Key Management Personnel

There were no loans made to directors or key management personnel of the Company and the Group during the period commencing at the beginning of the financial year and up to the date of this report.

DIRECTORS' REPORT (CONT.)

Shares Under Option

Unissued ordinary shares of Torian Resources NL under option at the date of this report are as follows:

Number	Class
3,000,000	Unlisted \$0.0033 Employee Options expiring 14 October 2013
19,950,000	Unlisted \$0.004 Options expiring 31 December 2012
25,000,000	Unlisted \$0.01 Options expiring 31 December 2012
14,000,000	Unlisted \$0.005 Options expiring 31 December 2012
101,500,000	Unlisted \$0.01 Options expiring 31 December 2014
101,500,000	Unlisted \$0.011 Options expiring 31 December 2014
100,500,000	Unlisted \$0.012 Options expiring 31 December 2015
100,500,000	Unlisted \$0.013 Options expiring 31 December 2015
200,000,000	Unlisted \$0.0023 Options expiring 29 December 2015
73,724,328	20c ordinary shares partly paid to 18c
1	Convertible Note expiring 31 August 2015

No option holder has any right under the options to participate in any other share issue of the Company or of any other entity.

Shares Issued on the Exercise of Options

There were 34,719,557 ordinary shares of Torian Resources NL issued during the financial year ended 31 December 2011 on the exercise of options. No amounts are unpaid on any of the shares. None have been issued since the end of the financial year.

Shares Issued on the Partial Conversion of Convertible Note

There were 208,987,422 ordinary shares of Torian Resources NL issued during the financial year ended 31 December 2011 on the partial conversion of Convertible Note. No amounts were unpaid on any of the shares. 263,638,650 shares have been issued since the end of the financial year.

Environmental Regulations

The Group's operations are subject to normal Government Environmental Regulations. There were no breaches of these regulations during the financial year and up to the date of this report.

Indemnification

During or since the end of the financial year the Company has not been indemnified or made a relevant agreement to indemnify an officer of the Company or any related entity against liability incurred as such an officer or auditor. In addition, the Company has not paid, or agreed to pay, a premium in respect of a contract insuring against a liability incurred by an officer.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR YEAR ENDED 31 DECEMBER 2011

	Note	2011	2010
		\$	\$
Sales revenue		-	1,736
Cost of sales		-	(20,370)
Gross profit		-	(18,634)
Other revenue	2	245,718	242,593
Bad debts expense		-	-
Depreciation and amortisation expense	3	(11,946)	(59,942)
Impairment expense		(883,888)	-
Employee benefits expense	5	(231,536)	(237,674)
Equity based employee benefits		(2,450,200)	(187,644)
Due diligence and professional services		(502,797)	(294,396)
Finance costs		(14,756)	(19,681)
Exploration expenditure		(112,334)	(73,968)
Share of joint venture's loss	10	(211,594)	-
Other expenses		(316,694)	(218,940)
Loss from ordinary activities before income tax expenses		(4,490,027)	(868,286)
Income tax expense relating to ordinary activities	4	-	-
Loss attributable to members of the parent entity		(4,490,027)	(868,286)
Other comprehensive income		-	183,200
Total comprehensive income for the period		(4,490,027)	(685,086)
Basic earnings per share	7	(0.0018)	(0.0004)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2011

	Note	2011	2010
		\$	\$
ASSETS
CURRENT ASSETS
Cash and cash equivalents	8	362,445	210,478
Inventories		80,084	80,084
Trade and other receivables	9	318,707	20,217
TOTAL CURRENT ASSETS		761,236	310,779
NON-CURRENT ASSETS
Trade and other receivables	9	349,960	237,733
Property, plant and equipment	12	38,628	202,450
Investment in joint ventures	10	278,124	-
Capitalised exploration assets	13	10,787,754	11,563,121
TOTAL NON-CURRENT ASSETS		11,454,466	12,003,304
TOTAL ASSETS		12,215,702	12,314,083
CURRENT LIABILITIES
Trade and other payables	14	216,443	101,088
Short term provisions	15	78,091	84,550
TOTAL CURRENT LIABILITIES		294,534	185,638
NON-CURRENT LIABILITIES
Financial liabilities	16	423,140	-
TOTAL NON-CURRENT LIABILITIES		423,140	-
TOTAL LIABILITIES		717,674	185,638
NET ASSETS		11,498,028	12,128,445
EQUITY
Issued capital Reserves Accumulated losses TOTAL EQUITY	17 18	54,020,419 2,130,200 (44,652,591) 11,498,028	52,201,009 183,200 (40,255,764) 12,128,445

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED 31 DECEMBER 2011

		Share Capital
	Note	Shares on Issue	Accumulated Losses	Options Reserve	Total
		\$	\$	\$	\$
Balance at 1 January 2010		51,191,130	(39,767,478)	380,000	11,803,652
Loss for the period		-	(868,286)	-	(868,286)
Other comprehensive income for the period		-	-	-	-
Total comprehensive income for the period		-	(868,286)	-	(868,286)
Shares issued during the period		1,029,852	-	-	1,029,852
Cost of capital raising		(19,973)	-	-	(19,973)
Options issued, net of expirations		-	380,000	(196,800)	183,200
Balance at 31 December 2010	17	52,201,009	(40,255,764)	183,200	12,128,445
Balance at 1 January 2011		52,201,009	(40,255,764)	183,200	12,128,445
Loss for the period		-	(4,490,027)	-	(4,490,027)
Other comprehensive income for the period		-	-	-	-
Total comprehensive income for the period		-	(4,490,027)	-	(4,490,027)
Shares issued during the period		1,870,060	-	-	1,870,060
Cost of capital raising		(50,650)	-	-	(50,650)
Options issued, net of expirations		-	93,200	1,947,000	2,040,200
Balance at 31 December 2011	17	54,020,419	(44,652,591)	2,130,200	11,498,028

CONSOLIDATED STATEMENT OF CASH FLOWS FOR YEAR ENDED 31 DECEMBER 2011

	Note	2011	2010
		\$	\$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers		464	6,805
Payments to suppliers and employees		(950,808)	(892,027)
Financial charges		(11,031)	(19,681)
Payments for exploration		(112,334)	(75,340)
Interest received		14,513	25,368
Net cash used in operating activities	19	(1,059,196)	(954,875)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of sale of property, plant and equipment		215,628	588,906
Purchase of property, plant and equipment		(48,064)	(26,923)
Payments for exploration		(108,520)	(632,642)
Payments for rehabilitation		(6,460)	-
Deposits paid to government bodies		(116,153)	-
Investment in joint venture		(562,101)	-
Net cash used in investing activities		(625,670)	(70,659)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares		841,542	1,026,177
Costs of raising share equity Proceeds from issue of convertible notes		(50,650) 1,057,826	(19,973) -
Repayment of third party loan		-	(330,000)
Net cash provided by financing activities		1,848,718	676,204
Net increase/(decrease) in cash held		163,852	(349,330)
Adjustment for reclassification of cash assets to
non-current receivables		-	(214,568)
Adjustment for foreign exchange translation		(11,885)	-
Cash and cash equivalents at beginning of financial year		210,478	774,376
Cash and cash equivalents at end of financial year		362,445	210,478

ABN 72 002 261 565

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The financial report includes the consolidated financial statements and notes of Torian Resources NL and controlled entities ('Consolidated Group' or 'Group'), and the separate financial statements and notes of Torian Resources NL as an individual parent entity ('Company')

Basis of Preparation

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

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

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

Accounting Policies

a. Principles of Consolidation

A controlled entity is any entity Torian Resources NL has the power to control the financial and operating policies of so as to obtain benefits from its activities.

A list of controlled entities is contained in Note 11 to the financial statements. All controlled entities have a 31 December 2011 financial year-end for this current year.

As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial statements as well as their results for the year ended. Where controlled entities have entered (left) the Group during the year, their operating results have been included (excluded) from the date control was obtained (ceased).

All inter-company balances and transactions between entities in the Group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the Company.

Where controlled entities have entered or left the Group during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased.

Minority interests, being that portion of the profit or loss and net assets of subsidiaries attributable to equity interests held by persons outside the Group, are shown separately within the Equity section of the Consolidated Statement of Financial Position and in the Consolidated Statement of Comprehensive Income.

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

b. Income Tax

The charge for current income tax expense is based on the results for the year adjusted for any nonassessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance date.

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

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

Torian Resources NL formed an income tax consolidated group under the tax consolidation regime with its domestic subsidiaries listed under Note 11.

c. Plant and Equipment

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

Depreciation

The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful lives to the Group 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
Office equipment and furniture	25%
Plant and equipment	25%
Motor vehicles	25%
Buildings and improvements	2%

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the Statement of Comprehensive Income.

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

d. Exploration and Evaluation Expenditure

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

Currently the practice is to capitalise all expenses that have been incurred and are in direct relation to the exploration of resources.

Indirect costs such as administrative and general operational costs will be expensed on the basis that they are necessarily incurred.

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 carry forward costs in relation to that area of interest.

f. Impairment of Assets

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

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

g. Investments in joint ventures

Investments in joint venture companies are recognised in the financial statements by applying the equity method of accounting. The equity method of accounting recognised the Group's share of post-acquisition reserves of joint ventures.

i. Employee Benefits

Provision is made for the Company's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are 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 flows to be made for those benefits. Those cash flows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of the cash flows.

ABN 72 002 261 565

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

j. Equity-settled Compensation

There has been no equity based compensation with the exception of that described at Note 21. The capital subscribed to as per this note was acquired at fair value at the time of purchase.

Options issues have their fair value determined with reference to an approved valuation methodology, such as the Black-Scholes valuation method. On issue, the fair value of an option is taken to the Income Statements equity settled compensation, with a corresponding credit to the options reserve. This is then disclosed as other comprehensive income in the Statement of Comprehensive Income to show other net profit position of the Group from a third party perspective.

Shares have their value determined using the direct method of share price at date of issue multiplied by the number of shares issued.

k. Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.

l. Revenue and Other Income

Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. Any consideration deferred is treated as the provision of finance and is discounted at a rate of interest that is generally accepted in the market for similar arrangements. The difference between the amount initially recognised and the amount ultimately received is interest revenue.

Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods.

Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument. Dividend revenue is recognised when the right to receive a dividend has been established

Dividends received from associates and joint venture entities are accounted for in accordance with the equity method of accounting.

m. Finance

Finance costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other finance costs are recognised in income in the period in which they are incurred.

ABN 72 002 261 565

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

n. Goods and Services Tax (GST)

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

Cash flows are presented in the Statement of Cash Flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. There is provision made in the Statement of Cash Flows to disclose the applicable GST refunds/payments that have been remitted to the ATO to accurately show the cash position of Torian Resources NL.

o. Comparative Figures

Comparative figures have been derived from the audited financial statements for Torian Resources NL for the year ended 31 December 2010, and changes in presentation are made where necessary to comply with accounting standards.

p. 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 current trends and economic data, obtained both externally and within the Group.

Key Estimates — Impairment

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

Key Judgments — Doubtful Debts Provision

As a result of no trading throughout the period, Torian Resources NL has no questionable receivables.

Key Judgments — Recoverability of Capitalised Exploration Assets

To date, Torian Resources NL has achieved results which have been verified through independent reporting and testing. The capitalised exploration assets are therefore concluded to be fully recoverable at balance date.

In the current year, the Group has adopted all of the new and revised current standards and interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period. The adoption of these new and revised standards and interpretations' has not resulted in changes to the groups accounting policies.

ABN 72 002 261 565

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

At the date of authorisation of the financial report the following Australian Accounting Standards have been issued or amended and are applicable to the Company and Consolidated Group but are not yet effective. They have not been adopted in preparation of the financial statements at reporting date and the Directors do not expect that these changes will have a material impact on the financial performance or position in future periods.

q. Adoption of new and revised accounting standards

At the date of authorisation of the financial report, new accounting standards have been issued but are not yet effective. Directors do not expect that these changes will have a material effect on the financial report in future periods.

r. Going concern

The Directors have prepared the financial report on a going concern basis, which contemplates the continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.

For the financial year ended 31 December 2011, the Group incurred a net loss after tax of \$4,490,027 (2010: loss \$685,086). The Group generated negative cash flows from operating activities for the year of \$1,059,196 (2010: negative \$954,875). The Group's net current asset position at 31 December 2011 was \$466,702 (Company: \$305,234) and its cash balance amounted to \$362,445 (Company: \$204,379) at that date.

The Directors' cash flow forecasts project that the Company and the Group will continue to be able to meet their liabilities and obligations as and when they fall due for a period of at least 12 months from the date of signing of this financial report. The cash flow forecasts are dependent upon the generation of sufficient cash flows from operating activities, or the receipt of additional debt or equity funds, to meet working capital requirements and the ability of the Group to manage discretionary spending.

The Directors are of the opinion that the use of the going concern basis of accounting is appropriate as they are satisfied as to the ability of the Company and the Group to implement the above.

The Directors continue to assess the financing and capital requirements of the Group, which may include the need to raise additional funds to meet future obligations and expansion. However, the Directors believe that the ability of the Company and the Group to continue to pay their liabilities and obligations as and when they fall due and to meet their contractual commitments is not dependent upon the raising of additional funds.

The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company and the Group not continue as a going concern.

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 2: REVENUE

	2011	2010
	\$	\$
Other revenue
— Interest received	14,513	25,368
— Profit on disposal of non-current assets	225,689	211,121
— Gain on revaluation of inventory	-	1,034
— Other revenue	5,516	5,070
Total other income	245,718	242,593
NOTE 3: RESULTS FOR THE YEAR
Expenses:
Impairment of pre-development expenditure	-	-
Depreciation of plant and Equipment	11,496	59,942
NOTE 4: INCOME TAX EXPENSE
The components of tax expense comprise:
Current tax	-	-
Deferred tax	-	-
Total	-	-
Prima facie tax benefit on loss from ordinary activities before income tax at 30%:	(1,347,008)	(260,486)
Add tax effect of:
— Other non allowable items	1,063,705	56,705
Subtotal		(203,781)
Less tax effect of:
— Items deductible for taxation but not accounting	(36,136)	(268,451)
Deferred tax assets not brought to account:	319,439	472,232
Income tax expense	-	-

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 4: INCOME TAX EXPENSE (CONT.)

The Group has carry forward tax losses, calculated according to Australian income tax legislation of \$30,358,169 (2010: \$29,293,372), which will be deductible from future assessable income provided that income is derived, and:

• a) The Company and its controlled entities carry on prescribed mining operations as defined in the income Tax Assessment Act, as appropriate; or
• b) The Company and its controlled entities carry on a business of, or a business that includes exploration or prospecting in Australia, for the purpose of discovering or extracting minerals, as appropriate; and
• c) No change in tax legislation adversely affects the Company and its controlled entities in realising the benefit from the deduction for the losses.

The benefit of these losses will only be recognised where it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

NOTE 5: EMPLOYEE BENEFITS EXPENSE

	2011	2010
	\$	\$
Employee benefits incurred during the year:
— Salaries and wages	208,288	197,687
— Superannuation	18,701	35,644
— Other employee benefits	4,547	4,343
Total:	231,536	237,674

NOTE 6: AUDITOR REMUNERATION

Remuneration of the auditor of the Group for:

— auditing or reviewing the financial report	20,000	20,000
Total:	20,000	20,000

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 7: EARNINGS PER SHARE

		2011	2010
		\$	\$
a.	Reconciliation of earnings:
	Loss	(4,490,027)	(868,286)
		No.	No.
b.	Weighted average number of ordinary shares outstanding during the year used in
	calculating EPS	2,562,891,719	2,289,329,624
		\$	\$
c.	Basic EPS	(0.0018)	(0.0004)
d.	Diluted EPS	(0.0018)	(0.0004)
	NOTE 8: CASH AND CASH EQUIVALENTS
	Cash at bank and in hand	362,445	210,478
Total		362,445	210,478
	NOTE 9: TRADE AND OTHER RECEIVABLES
	CURRENT

Trade and other receivables from third parties:

— Trade receivables	284,409	2,026
— Other receivables	34,298	18,191
Total current assets	318,707	20,217

ABN 72 002 261 565

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 9: TRADE AND OTHER RECEIVABLES (CONT.)

	2011	2010
	\$	\$
NON-CURRENT
Trade and other receivables from third parties:
— Bonds on deposit	19,239	23,165
— Deposits with government bodies	330,721	214,568
Total non-current assets	349,960	237,733

There is no expectation of the Director's that any of the above amounts are required to be impaired as all amounts are anticipated to be fully recoverable. Whilst the above amounts are unsecured, there is no question as to the creditworthiness of the Group's debtors.

Allowance for impairment loss

Trade receivables and other receivables are non-interest bearing and are generally on 30-60 day terms. A provision for impairment loss is recognised when there is objective evidence that an individual receivable is impaired. No impairment has been recognised by the Group and Company in the current year. No receivable is past due.

Fair value and credit risk

Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value. The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor is it the Group's policy to transfer on-sell receivables to special purpose entities.

Interest rate risk

Detail regarding interest rate risk exposure is disclosed in Note 23.

NOTE 10: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Interests in joint ventures

a. Varun Torian (International) SARL

Investment at cost	489,718	-
Equity accounted share of loss for the year	(211,594)	-
Allowance for impairment	-	-
Closing balance	278,124	-

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 10: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONT.)

Investments in joint venture companies are valued at fair value at year end, which is calculated as follows:

• fair value of the investment at the beginning of the year (or, for acquisitions during the year, the fair value of the investment on acquisition);
• less equity accounted share of losses during the year;
• less impairment losses during the year.

Any impairment losses during the year are calculated as the difference between:

• the fair value of the investment at the beginning of the year (or, for acquisitions during the year, the fair value of the investment on acquisition) less equity accounted share of losses during the year; and
• the fair value of the investment calculated at year end using the last quoted bid price plus the value of any options held, calculated using the assumptions set out below.

NOTE 11: CONTROLLED ENTITIES.

Controlled Entities Consolidated

	Country of Incorporation	Percentage Owned (%)*
		2011
PARENT ENTITY:
Torian Resources NL	Australia
SUBSIDIARIES OF TORIAN RESOURCES NL:
NSW Tin Pty Ltd	Australia	100
Cluff Mining Pty Limited	Australia	-
Cluff Open Cut Mining Pty Limited	Australia	-
Cluff Minerals (Australia) Pty Limited	Australia	100
NSW Gold NL	Australia	100
Torian Exploration Pty Ltd	Australia	100
Egerton Gold Pty Limited	Australia	100
Elephant Metals Pty Limited	Australia	100

* Percentage of voting power is in proportion to ownership

During the 2011 year, the Group rationalised its corporate structure by winding up its unused subsidiaries, Cluff Mining Pty Limited and Cluff Open Cut Mining Pty Limited, and applying for their deregistration with ASIC. These companies held no tenements and have no other assets or legal liabilities.

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 12: PLANT AND EQUIPMENT

	2011	2010
	\$	\$
OFFICE EQUIPMENT
At cost	31,038	83,381
Accumulated depreciation	(3,855)	(74,622)
Total office equipment	27,183	8,759
PLANT AND EQUIPMENT
At cost	11,899	1,034,950
Accumulated depreciation	(454)	(967,904)
Total property, plant and equipment	11,445	67,046
MOTOR VEHICLES
At cost	-	107,802
Accumulated depreciation	-	(107,802)
Total motor vehicles	-	-
LAND & BUILDINGS
At cost	-	138,900
Accumulated depreciation	-	(12,255)
Total land and buildings	-	126,645
Total	38,628	202,450

Movements in Carrying Amounts

	Office Equipment	Plant and Equipment	Motor Vehicles	Land and Buildings	Total
	\$	\$	\$	\$	\$
Balance at 1 January 2010	14,604	109,074	6,080	483,496	613,254
Additions	1,913	25,010	-	-	26,923
Disposals	(3,488)	(12,983)	(4,463)	(356,851)	(377,785)
Depreciation expense	(4,270)	(54,055)	(1,617)	-	(59,942)
Balance at 31 December 2010	8,759	67,046	-	126,645	202,450
Additions	25,333	11,899	-	-	37,232
Disposals	(4,370)	(58,093)	-	(126,645)	(189,108)
Depreciation expense	(2,539)	(9,407)	-	-	(11,946)
Balance at 31 December 2011	27,183	11,445	-	-	38,628

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 12: PLANT AND EQUIPMENT (CONT.)

During the year, two properties in Inverell, NSW were disposed of for a total of \$310,000. One of these, a parcel of land, has been sold subject to receiving development approval from Inverell Council. At the date of this report the Company expects the approval to be granted and sale of land of \$110,000 to be finalised.

Other asset sales of general property, property plant and equipment were made through trade sales and auctions to recover funds and rationalise the Group's asset base.

NOTE 13: CAPITALISED EXPLORATION ASSET

	2011	2010
	\$	\$
Exploration expenditure capitalised	13,687,080	13,578,559
Provision for impairment	(2,899,326)	(2,015,438)
Total	10,787,754	11,563,121
Balance at beginning of financial year	11,563,121	10,930,019
Additions	108,521	633,102
Impairment recognised during the financial year	(883,888)	-
Balance at end of financial year	10,787,754	11,563,121

Intangibles will be amortised once their useful life has been determined when the exploration and development phase has concluded, and production begins.

Impairment expense in the current year of \$883,888 (2010: \$0) relates to capitalised expenditure in the Company's Egerton Gold prospects. The Directors' have decided to recognise impairment against the Egerton Gold prospects following a shift in focus towards the Madagascan joint venture.

NOTE 14: TRADE AND OTHER PAYABLES
CURRENT
Accounts payable	163,120	32,523
Employee benefits payable	39,598	32,937
Share applications	-	770
Other payables	13,725	34,858
Total	216,443	101,088

NOTE 15: SHORT TERM PROVISIONS CURRENT

Provision for rehabilitation	78,091	84,550
Total	78,091	84,550

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 16: FINANCIAL LIABILITIES

	2011
	\$	\$
NON-CURRENT
Convertible note on issue	423,140	-
Total	423,140	-

During the year, the Company entered into a funding agreement with La Jolla Cove Investors Inc to issue two tranches of funding in return for proceeds of USD\$3 million, with an option by the Company to secure a further USD\$1.5 million.

The term of the agreement is 3 years, starting with an initial payment of \$450,000 and \$200,000 per month thereafter until total proceeds of \$3,000,000 has been received. Interest accrues on the convertible notes at 4.5% p.a. and the Group has the option to settle any interest accrued by way of equity issue. Where the convertible notes have not yet been converted to ordinary shares by 2 years and 9 months from the date of issue, the Group is entitled to compel La Jolla to convert the unconverted notes.

The conversion price of the convertible notes is the lesser of \$0.04 or 85% of the three lowest volume weighted average prices (VWAP) during the twenty-one trading days prior to the election to convert. Assuming a share price of \$0.002, the remaining balance of the convertible note will be convertible to 248,905,882 fully paid ordinary shares in the Company.

The first convertible note was issued on 2 September 2011 and total proceeds of USD\$1.05 million have been received to 31 December 2011. By 31 December 2011, USD\$539,066 of the convertible note balance had been converted to 208,987,422 fully paid shares in Torian (at an average conversion price of \$0.0029) and a repayment of USD\$77,069 has been made by the Company to LJC.

NOTE 17: ISSUED CAPITAL

	2011		2010
	No of Shares	\$	No of Shares	\$
Ordinary shares
Fully Paid
At the beginning of reporting period	2,294,125,078	52,101,009	2,067,606,680	51,091,130
Shares issued during the year	635,220,447	1,870,060	226,518,398	1,029,852
Costs of raising share capital	N/A	(50,650)	N/A	(19,973)
At reporting date	2,929,345,525	53,920,419	2,294,125,078	52,101,009
Partially Paid
At the beginning of reporting period	73,724,328	100,000	73,724,328	100,000
Shares issued during the year	-	-	-	-
At reporting date	73,724,328	100,000	73,724,328	100,000

The Company has authorised share capital amounting to 2,803,069,853 ordinary shares of no par value.

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 17: ISSUED CAPITAL (CONT.)

Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. At the shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

Capital Management

Management controls the capital of the Group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and ensure that the group can fund its operations and continue as a going concern.

The Group's capital includes ordinary share capital, shares and financial liabilities, supported by financial assets. There are no externally imposed capital requirements.

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

NOTE 18: RESERVES

	2011	2010
	\$	\$
Options reserve	2,130,200	183,200
Total reserves	2,130,200	183,200

The options reserve records the fair value of options on issue.

NOTE 19: CASH FLOW INFORMATION

Reconciliation of Cash Flow from Operations with Profit after Income Tax

Loss after income tax	(4,490,027)	(868,286)
Non-cash flows in profit:
Depreciation	11,946	59,942
Impairment expense	883,888	-
Profit on disposal of investments	(225,689)	(211,121)
Equity based payments	2,450,200	187,644
Share of joint venture's loss	211,594	-
Gain on foreign exchange	(5,053)	-
Changes in current assets and liabilities:
(Increase)/decrease in trade and term receivables	(14,779)	(20,606)
(Increase)/decrease in inventories	-	19,335
Increase/(decrease) in accounts payable and accruals	118,724	(121,783)
Net cash used in operating activities	(1,059,196)	(954,875)

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 20: RELATED PARTY DISCLOSURES

		2011	2010
		\$	\$
	Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.
	Transactions with related parties:
—	Ashlaw Legal Services	65,432	108,740
—	Penna (S&I) Pty Ltd	60,328	-
—	Johns Corporation Pty Ltd ATF Johns Family Trust	27,871	-
—	Terradoodle Pty Ltd	92,326	45,607

Mr Peter Ashcroft is the principal of Ashlaw Legal Services and director of Penna (S&I) Pty Ltd, which throughout the year have provided legal advisory and consultancy services to the Group. All fees tendered have been on an arm's length basis.

Mr Ian Johns is a director of Johns Corporation Pty Ltd, which throughout the year has provided consultancy and corporate management services to the Group. All fees tendered have been on an arm's length basis.

Mr Scott Enderby is a director of Terradoodle Pty Ltd, which the throughout the year has provided company secretarial and other consultancy services to the Group. All fees tendered have been on an arm's length basis.

Key Management Personnel

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:

Peter Ashcroft	Chairman
Ian Johns	Director
Scott Enderby	Director, Company Secretary (Resigned 29 August 2011)
Cameron Young	Director (Appointed 21 June 2011, Resigned 15 December 2011)
Mark Cashmore	Director (Appointed 15 December 2011)

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 20: RELATED PARTY DISCLOSURES (CONT.)

Shares Held by Key Management Personnel and Their Associates

	Balance	Granted as	Purchases	Disposals	Balance
	1 Jan 2011	Compensation			31 Dec 2011
Peter Ashcroft	50,059,167	116,666,667	10,050,000	-	176,775,834
Ian Johns	159,977,382	100,000,000	-	-	259,977,382
Mark Cashmore	6,400,000	-	-	-	6,400,000
Total	216,436,549	216,666,667	10,050,000	-	443,153,216

Options Held by Key Management Personnel and Their Associates

	Balance 1 Jan 2011	Granted as Compensation	Purchases	Disposals	Balance 31 Dec 2011
Peter Ashcroft	87,152,500	304,666,667	-	(83,869,167)	307,950,000
Ian Johns	101,434,007	302,000,000	-	(81,434,007)	322,000,000
Mark Cashmore	-	-	-	-	-
Total	188,586,507	606,666,667	-	(165,303,174)	629,950,000

Directors' and Executive Officers' Remuneration

The Board sets all remuneration packages. The broad remuneration policy is to ensure that each senior staff member's remuneration package properly reflects the person's duties and responsibilities. Current market conditions are also taken into account in determining the appropriate remuneration package.

	Salary, wages and directors fees	Bonus	Non-monetary benefits	Other employee entitlements	Total
	\$	\$	\$	\$	\$
2011
Peter Ashcroft	78,510	-	1,142,000	-	1,220,510
Ian Johns	27,871	-	1,197,700	-	1,225,571
Scott Enderby	92,326	-	56,000	-	148,326
Cameron Young	15,000	-	-	-	15,000
Total Compensation	213,707	-	2,395,700	-	2,609,407
2010
Peter Ashcroft	-	-	85,000		85,000
Ian Johns	-	-	85,000		85,000
Scott Enderby	99,541	-	10,000	3,598	113,139
Peter Kennewell	97,611	-	-	24,230	121,841
Total Compensation	197,152	-	180,000	27,828	404,980

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 21: SHARE BASED PAYMENTS

The Company established the Torian Executive Incentive Plan in June 2011 as a long term incentive scheme to recognise talent and motivate executives to strive for group performance. Under the plan, eligible executives are to be granted milestone rights upon the satisfaction of criteria as set out under the rules of the plan. The general terms and conditions of the options can be found under the Company' s announcements on the ASX website.

A summary of the movements of all Company options issued is as follows:

	Number of Options	Weighted Average Exercise Price
Options Outstanding as at 31 December 2010	734,216,921	0.0088
Granted	654,166,667	0.0138
Forfeited	-	-
Exercised	(34,719,577)	0.0071
Expired	(687,714,011)	0.0091
Options Outstanding as at 31 December 2011	665,950,000	0.0115
Options Exercisable as at 31 December 2011	665,950,000	0.0115

Value of options issued during the year were calculated using the Black-Scholes option pricing model applying the following inputs:

		Options Issued on:
	3 Jun 2011	3 Jun 2011	3 Jun 2011	3 Jun 2011	25 Aug 2011	25 Aug 2011	16 Dec 2011
Share price	\$0.006	\$0.006	\$0.006	\$0.006	\$0.007	\$0.007	\$0.0020
Exercise price	\$0.010	\$0.011	\$0.012	\$0.013	\$0.005	\$0.010	\$0.0023
Days to expiry	1,307	1,307	1,672	1,672	494	494	1,474
Interest rate	4.76%	4.76%	4.89%	4.89%	3.81%	3.81%	3.23%
Volatility	110%	110%	110%	110%	156%	156%	194%

A basket of comparable companies has been used as a proxy for the volatility of the Company's shares.

Shares granted to directors are part of their remuneration were as follows:

Grant Date	Number
16 Dec 2011	200,000,000

The value of those fair value equity instruments, determined by reference to market price, was \$0.0020.

Shares granted to employees are part of their remuneration were as follows:

Grant Date	Number
25 Aug 2011	2,428,571

ABN 72 002 261 565

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 21: SHARE BASED PAYMENTS (CONT.)

The value of those fair value equity instruments, determined by reference to market price, was \$0.0068.

Included under equity based employee benefits in the Statement of Comprehensive Income is \$2,450,200 which relates to equity-settled share based payment transactions. \$2,395,700 of this relates to options as issued to the Directors. The balance of \$54,500 was a mixture of shares and options directed to key employees.

NOTE 22: EVENTS AFTER THE BALANCE SHEET DATE

At the date of this report the following events have arisen since 31 December 2011 and will significantly affect the operations of the Group:

• Post balance date, the Company has received additional USD\$450,000 of convertible note proceeds under its agreement with LJC;
• Further conversions by LJC under the convertible note agreement amounted to USD\$490,556;
• By February 2012, the joint venture company, Varun Torian International, had completed the drilling of 139 15 meter RAB holes as part of its drilling program in Madagascar. To date, over 2,000 metres of RAB holes have been drilled and samples taken from these holes are stored on site prior to freighting to South Africa for assaying;
• Varun Torian International has also established an onsite sample preparation lab in Vatovorona, enabling the JV to expedite the drying, crushing, pulverising, homogenising and labelling of samples for shipment to assay labs.

In the Directors opinion, no other subsequent events have arisen that significantly affect the operations of the Group.

NOTE 23: FINANCIAL INSTRUMENTS

General Objectives, Policies and Processes

The Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

There have been no substantive changes in the Groups' exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.

The Board has overall responsibility for the determination of the Group's risk management objectives and policies. The Group's risk management policies and objectives are therefore designed to minimise the potential impacts of these risks on the results of objectives where such impacts may be material. The Board periodically reviews the effectiveness of the process put in place and the appropriateness of the objectives and policies it sets.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible. Further details regarding these policies are set out below:

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 23: FINANCIAL INSTRUMENTS (CONT.)

Credit Risk

Credit risk is the risk that the other party to a financial instrument will fail to discharge their obligation resulting in the Group incurring a financial loss. This usually occurs when debtors or counterparties to derivative contracts fail to settle their obligations owing to the Group. The Group does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the Group.

The maximum exposure to credit risk at balance date is as follows:

	2011	2010
	\$	\$
Trade receivables	318,707	20,217
Security bonds	19,238	23,165
Deposits with government bodies	330,721	214,568

Liquidity Risk

Liquidity risk is the risk that the Group may encounter difficulties raising funds to meet commitments associated with financial instruments due to creditors. The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised borrowing facilities are maintained. The Group's operations require it to raise capital on an on-going basis to fund its planned exploration program and to commercialise its tenement assets.

Maturity Analysis of Financial Liabilities

	Carrying Amount	Contractual Cash Flows
	\$	\$	< 6 Months \$
2011
CURRENT LIABILITIES
Accounts payable	163,120	163,120	163,120
Employee benefits payable	39,598	39,598	39,598
Other payables	13,725	13,725	13,725
2010
CURRENT LIABILITIES
Accounts payable	32,523	32,523	32,523
Employee benefits payable	32,937	32,937	6,805
Other payables	34,858	34,858	34,858

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 23: FINANCIAL INSTRUMENTS (CONT.)

Interest Rate Risk

The Group is constantly monitoring its exposure to trends and fluctuations in interest rates in order to manage interest rate risk.

The following tables demonstrate the sensitivity to a reasonably possible change in interest rates, with all other variables held constant.

	2011	2010
	\$	\$
Change in Cash and Cash Equivalents
Increase in interest rate by 1%	3,624	2,105
Decrease in interest rate by 1%	(3,624)	(2,105)

NOTE 24: PARENT ENTITY DISCLOSURES

Financial position
Assets
Total current assets	546,677	105,647
Total non-current assets	10,932,891	11,019,365
Total assets	11,479,568	11,125,012
Liabilities
Total current liabilities	241,443	90,633
Total non-current liabilities	423,140	-
Total liabilities	664,583	90,633
Equity
Contributed equity	54,020,419	52,201,009
Reserves	2,130,200	183,200
Accumulated losses	(45,335,634)	(41,349,830)
Total equity	10,814,985	11,034,379
Financial performance
Loss for the year	(4,079,003)	(828,149)
Other comprehensive income	-	183,200
Total comprehensive loss	(4,079,003)	(644,949)

NOTES TO THE FINANCIAL STATEMENTS (CONT.)

NOTE 25: COMPANY DETAILS

Torian Resources NL

The registered office of the Company is::

Torian Resources NL Suite 11 Level 10 15 - 17 Young Street Sydney NSW 2000

The principal place of business is:

Torian Resources NL Suite 11 Level 10 15 - 17 Young Street Sydney NSW 2000

SHAREHOLDER INFORMATION

Spread of Shareholders

At 28 March 2012, there were 7,746 holders of shares. The shareholders were entitles to one vote for each share held.

Spread of Holdings	No of Holders	No of Units	% of Total Issued Capital
1 – 1,000	174	102,341	0.003
1,001 – 5,000	763	2,399,708	0.074
5,001 – 10,000	755	6,252,807	0.192
10,001 – 100,000	3,502	150,770,387	4.625
100,001 and over	2,552	3,100,025,699	95.106
Total	7,746	3,259,550,942	100

There were 6,747 shareholders holding less than a marketable parcel of 500,000 shares as at 28 March 2012.

Substantial Shareholders

The Company's register of substantial shareholders recorded the information as at 28 March 2012.

Top 20 Holdings as at 28 March 2012

Holder Name	Balance at 28 March 2012	%
JOHNS CORPORATION PTY LTD	153,372,167	4.705
LA JOLLA COVE INVESTORS INC	152,178,465	4.669
PENNA (S & I) PTY LIMITED	100,000,000	3.068
CACHE MANAGEMENT CONSULTING PTY LIMITED	100,000,000	3.068
MR JOHN HABIB	45,000,000	1.381
MR JOHN RICHARD HABIB & JDR JANE FRANCIS HABIB <mungo superFUND A/C>	43,000,000	1.319
PARKVIEW SERVICES (AUSTRALIA) PTY LTD	40,666,667	1.248
MR PETER JOHN FALKENSTEIN	30,000,000	0.920
PARKVIEW SERVICES (AUSTRALIA) PTY LTD	26,716,667	0.820
MR RODNEY KENNETH DAVISON	25,843,623	0.793
MRS WENDY CHERIE EDWARDS	23,959,345	0.735
JONENDERBEE INVESTMENTS PTY LTD	23,480,000	0.720
MR PETER ANDREW THOMPSON & MRS JENNIFER ROBYN THOMPSON	23,000,000	0.706
LINREY PTY LTD	20,000,000	0.614
STEVE MACDONALD PTY LTD	20,000,000	0.614
MRS MARIA ANGELA MAVICA-GARAFFA	16,428,080	0.504
MR PAUL KALDAWI	15,637,761	0.480
MRS MARIA SUSAN GRECH & MR MARIO ROMEO GRECH <adrian &="" audreyGRECH A/C>	15,000,000	0.460
MR WILLIAM ANTHONY SCHOLTZ & MRS SHIRLEY JUNE SCHOLTZ	15,000,000	0.450
BRIDGELINK PTY LTD	15,000,000	0.460
TOTAL	904,282,775	27.743

Torian Resources NL ABN 72 002 261 565

SHAREHOLDER INFORMATION (CONT.)

Spread of Option holders

At 28 March 2012, there were 4 holders of unlisted options. Options holders are not entitled to voting rights.

Spread of Holdings	No of Holders	No of Units	% of Total Issued Capital
100,001 and over	4	665,950,000	100
Total	4	665,950,000	100

Substantial Option Holders

The Company's register of substantial option holders recorded the information as at 28 March 2012.

Top 20 Holdings as at 28 March 2012
Holder Name	Balance at 28 March 2012	%
JOHNS CORPORATION PTY LTD	322,000,000	48.352
PARKVIEW SERVICES (AUSTRALIA) PTY LTD	307,950,000	46.242
MR SCOTT MONRO ENDERBY	31,000,000	4.655
MR RHYS BEVAN	5,000,000	0.751
TOTAL	665,950,000	100