GOLDARC RESOURCES LIMITED — Interim / Quarterly Report 2011

Sep 12, 2011

INTERIM FINANCIAL REPORT FOR THE HALF-YEAR ENDED 30 JUNE 2011

DIRECTORS' REPORT

Your Directors submit the financial report of the Group for the half-year ended 30 June 2011.

Directors

The names of directors who held office during the half-year:

Mr Peter J Ashcroft Mr Scott M Enderby – resigned 29 August 2011 Mr Ian A Johns Mr Cameron Young – appointed 21 June 2011

Consolidated Results

The consolidated loss of the Group after provision of income tax for the half-year was \$1,813,859.

Review of Operations

The Group's exploration activities were primarily focused on the Vatovorona Gold Project in central Madagascar, where a trial mining program has commenced in order to excavate and expose the ore zone for safe mapping and sampling.

The Group also performed reverse circulation (RC) drilling on its tin tenements in central NSW, with the aim of targeting induced polarisation (IP) anomalies in the tenements.

The diamond, gold and sapphire exploration projects in Australia were not the priority whilst efforts were focused on the Madagascan project, and there was little activity on these projects during the half year as a result.

Significant Changes in the State of Affairs

Sale of fixed assets

During the half 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.

Funding

In February 2011, the Group had successfully raised \$476,000 via the placement of 158,666,667 fully paid ordinary shares at \$0.003 per share. Further proceeds of \$72,648 were received during the half year from the conversion of listed and unlisted options to 11,778,350 fully paid ordinary shares.

DIRECTORS' REPORT (CONT.)

Significant Changes in the State of Affairs (Cont.)

Change in Group Structure

In June 2011, the Group's wholly owned subsidiaries Cluff Mining Pty Ltd and Cluff Open Cut Mining Pty Ltd were voluntarily deregistered with the Australian Securities and Investments Commission. These company deregistrations occurred as part of the Group's broader strategy of cost reduction and reorganisation of its operating activities.

At the date of deregistration, these deregistered subsidiaries did not contribute to the Group's operations and they did not hold any investments or tenement interests.

Adoption of Australian Equivalents to IFRS

This interim financial report has been prepared under Australian Equivalents to IFRS.

Matters subsequent to the end of the half year

Funding

Subsequent to 30 June 2011, the Group entered into a funding agreement with La Jolla Cove Investors Inc. Under the agreement, the Group is to issue two convertible notes of US\$1.5 million each in return for proceeds of US\$3 million, with an option to secure a further \$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 will accrue 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 convertibles 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.

Appointment of Executive Chairman

Mr Peter Ashcroft, previously a non-executive director and Chairman of the Company and its subsidiaries, was appointed as Executive Chairman at a meeting of directors held on 29 August 2011.

Resignation of Director

At a meeting of directors held on 29 August 2011, Mr Scott Enderby issued his formal resignation as a director of the Company and all subsidiaries. Mr Enderby will continue his role as Company Secretary in the immediate future.

DIRECTORS' REPORT (CONT.)

Auditor's Declaration

The auditor's independence declaration under section 307C of the Corporations Act 2001 is set out on page 4 of the financial report for the half year ended 30 June 2011.

This report is signed in accordance with a resolution of the Board of Directors

IAN JOHNS Director 13 September 2011

AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF TORIAN RESOURCES NL

I declare that, to the best of my knowledge and belief, during the half-year ended 30 June 2011, there have been:

• no contraventions of the auditor independence requirements as set out in the $(i)$ Corporations Act 2001 in relation to the audit; and
• no contraventions of any applicable code of professional conduct in relation to $(iii)$ the audit.

KS BLACK & CO Chartered Accountants

Stwart H. Camron

STUART H CAMERON Partner

13 September 2011 Sydney

DIRECTORS' DECLARATION

The directors' of the company declare that:

• 1. The financial statements and notes:
• i) comply with Accounting Standard AASB 1029: Interim Financial Reporting and the Corporations Regulations 2001; and
• ii) give a true and fair view of the financial position as at 30 June 2011 and of the performance of the Group for the half-year then ended;
• 1. In the directors' opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

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

IAN JOHNS Director Dated at Sydney on 13 September 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 30 JUNE 2011

		June 2011	June 2010
	Note	\$	\$
Sales revenue		-	1,358
Other Revenue		239,724	173,619
Cost of sales		-	(951)
Gross profit		239,724	174,026
Depreciation and amortisation expense		(8,658)	(28,946)
Employee benefits expense		(1,705,058)	(185,161)
Due diligence and professional services		(165,687)	(35,298)
Finance costs		(5,618)	(16,118)
Exploration expenditure		(32,414)	(50,289)
Other expenses		(136,148)	(164,307)
Loss before income tax expense Income tax expense	2	(1,813,859) -	(306,093) -
Loss after income tax expense		(1,813,859)	(306,093)
Basic earnings per share (cents per share)		(0.07) cents	(0.01) cents
Diluted earnings per share (cents per share)		(0.07) cents	(0.01) cents

The accompanying notes form an integral part of this statement of comprehensive income

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011

	June 2011 \$	June 2010 \$
CURRENT ASSETS
Cash assets	175,143	894,133
Inventories	80,084	98,468
Receivables	235,191	71,702
TOTAL CURRENT ASSETS	490,418	1,064,303
NON-CURRENT ASSETS
Receivables	333,321	214,568
Other financial assets	230,807	-
Property, plant and equipment	17,891	262,355
Exploration, evaluation and pre-development
expenditure	11,609,456	11,300,465
Development properties	-	-
TOTAL NON-CURRENT ASSETS	12,191,475	11,777,388
TOTAL ASSETS	12,681,893	12,841,691
CURRENT LIABILITIES
Payables	129,059	287,921
Provisions	84,550	85,923
TOTAL CURRENT LIABILITIES	213,609	373,844
TOTAL LIABILITIES	213,609	373,844
NET ASSETS	12,468,284	12,467,847
EQUITY
Issued capital	52,739,007	52,161,418
Reserves	1,798,900	380,000
Accumulated losses	(42,069,623)	(40,073,571)
TOTAL EQUITY	12,468,284	12,467,847

The accompanying notes form an integral part of this statement of financial position.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 30 JUNE 2011

Issued	Reserves	Accumulated	Total
\$	\$	\$	\$
51,191,130	380,000	(39,767,478)	11,803,652
970,288	-	-	970,288
-	-	(306,093)	(306,093)
52,161,418	380,000	(40,073,571)	12,467,847
52,201,009	183,200	(40,255,764)	12,128,445
537,998	1,615,700	-	2,153,698
-	-	(1,813,859)	(1,813,859)
52,739,007	1,798,900	(42,069,623)	12,468,284
	Capital		Losses

The accompanying notes form an integral part of this statement of changes in equity.

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 30 JUNE 2011

	June 2011 \$	June 2010 \$
CASH FLOWS FROM
OPERATING ACTIVITIES
Receipts from customers	-	1,432
Payments to suppliers and employees	(372,485)	(270,636)
Interest received	8,528	10,525
Finance costs	(5,618)	(16,118)
Net operating cash flows	(369,575)	(511,745)
CASH FLOWS FROM
INVESTING ACTIVITIES
Exploration and development	(44,188)	(279,191)
Payments for property, plant & equipment	(116,153)	-
Proceeds from sale of plant & equipment	196,861	181,278
Investment in joint venture	(263,221)	-
Net investing cash flows	(226,701)	205,782
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from issue of shares	571,591	-
Cost of raising share equity	(10,650)	-
Director Loans	-	(330,000)
Net financing cash flows	560,941	640,288
Net (decrease) / increase in cash and
cash equivalents	(35,335)	(1,554)
Adjustment for reclassification of cash assets to non-current receivables	-	-
Cash and cash equivalents at beginning
of the year	210,478	417,640
Cash and cash equivalents at end of the period	175,143	894,133

The accompanying notes form an integral part of this statement of cash flows.

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

Note 1: Basis of Preparation

The half-year consolidated financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001. Australian Accounting Standard AASB 134: Interim Financial Reporting, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board.

It is recommended that this financial report be read in conjunction with the annual financial report for the year ended 31 December 2010 and any public announcements made by Torian Resources NL and its controlled entities during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001.

The accounting policies have been consistently applied by the entities in the consolidated group and are consistent with those in the 31 December 2010 financial report.

The half-year report does not include full disclosures of the type normally included in an annual financial report.

Reporting Basis and Conventions

The half-year financial report has been prepared on an accrual basis and is based on historical costs modified by the revaluation of non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

Note 2: Going Concern

The Directors have prepared the half-year financial report on the basis that the Company is a going concern. During the half-year ended 30 June 2011, the Company incurred a net loss of \$1,813,859.

The ability of the Company to continue as a going concern depends upon the generation of future cash inflows, through one or more of the following avenues:

• The inflow of revenue;
• The receipt of additional debt or equity funds;
• The disposal of non-current assets.

Any inability to obtain these additional cash inflows may have a material adverse effect on the Company's ability to continue as a going concern.

Level 6 350 Kent Street Sydney NSW 2000

ABN 57 446 398 808

Level 1, 460 Church Street North Parramatta NSW 2151

PO Box 2210 North Parramatta NSW 1750

INDEPENDENT AUDITORS' REVIEW REPORT

TO THE MEMBERS OF TORIAN RESOURCES NL

Report on the Financial Report

We have reviewed the accompanying interim financial report of Torian Resources NL which comprises the consolidated statement of financial position as at 30 June 2011, statement of comprehensive income, statement of changes in equity and statement of cash flows for the half year ended on that date, accompanying notes and directors' declaration of the consolidated entity comprising the company and the entities it controlled at the half year's end or from time to time during the half year.

Directors' Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the interim financial report in accordance with the Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the interim 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.

Auditors' Responsibility

Our responsibility is to express an opinion on the interim financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of Interim and Other Financial Reports Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the interim financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity's financial position as at 30 June 2011, and its performance for the half year ended on that date; and complying with Australian Standard AASB 134 Interim Financial reporting and Corporations Regulations 2001. As auditor of Torian Resources NL, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of an interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope that an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant mattes that might be identified in an audit. Accordingly, we do not express an audit opinion.

Statement of Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.

Liability limited by a scheme approved under Professional Standards Legislation

Phone 02 8839 3000 Fax 02 8839 3055 www.ksblack.com.au

INDEPENDENT AUDITORS' REVIEW REPORT

TO THE MEMBERS OF TORIAN RESOURCES NL

(continued)

Review Opinion

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the half year financial report of Torian Resources NL does not present fairly, in all material respects the financial position of Torian Resources NL as at 30 June 2011, and of its financial performance and its cash flows for the half year period ended on that date in accordance with Australian Accounting Standard AASB 134 "Interim Financial Reporting" and the Corporations Regulations 2001.

KS Black & Co Chartered Accountants

Stuart H. Cameron

Stuart Cameron Partner

Sydney: $\frac{i}{3}/\frac{i}{4}$ /H