GREENWING RESOURCES LTD — Annual Report 2005

Oct 17, 2005

$ITEN 2.2.3.$

Resource Finance and Investments Limited

المتحصيتين

	Note	Actual 30 June 2005 (Audited)	Pro Forma 30 June 2005 Maximum Subscription (Unaudited)
		\$	\$
Current Assets
Cash Assets	3	517,476	3,758,276
Receivables	4	24,585	62,085
Prepayments	5	851	851
Total Current Assets		542,912	3,821,212
Non-Current Assets
Receivables	4	85,000	85,000
Plant & equipment	6	17,499	17,499
Exploration and evaluation expenditure	7	1,537,116	1,559,616
Total Non-Current Assets		1,639,616	1,662,115
Total Assets		2,182,527	5,483,327
Current Liabilities
Payables	8	70,489	70.489
Total Current Liabilities		70,489	70,489
Total Liabilities		70,489	70,489
Net Assets		2,112,038	5,412,838
Equity
Contributed Equity	9	2,230,256	5,531,056
Option Premium Reserve	10	71,800	71,800
Accumulated Losses	11	(190, 018)	(190, 018)
Total Equity		2,112,038	5,412,838

STATEMENTS OF FINANCIAL POSITION

The above Statements of Financial Position should be read in conjunction with the accompanying notes.

The Actual Statement of Financial Position as at 30 June 2005 has been extracted from the Audited Financial Statements of RFI.

The Pro Forma Statements of Financial Position as at 30 June 2005 have been compiled based on the financial position of RFI as at 30 June 2005 adjusted for the pro forma transactions outlined in Note 2.

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Notes to the Historical and Pro Forma Information

Note 1 - Summary of Accounting Policies

As the Company was registered on 7 July 2004, the Statements of Financial Performance and Cash Flows are for the period from registration to 30 June 2005.

The Historical and Pro Forma Information have been drawn up in accordance with the recognition and measurement (but not all the disclosure) requirements of Applicable Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views and the Corporations Act 2001, unless the information that would be disclosed is not considered material or relevant to potential investors. The presentation of the financial information is consistent with that generally applied in a Prospectus.

The Historical and Pro Forma Information has been prepared on an accruals basis and are based on historical cost and do not take into account changing money values. Cost is based on the fair values of consideration given in exchange for assets.

The following is a summary of the material accounting policies adopted by RFI in the preparation of the Historical and Pro Forma Information.

Income Tax $(a)$

The Company adopts the liability method of tax effect accounting whereby the income tax

expense shown in Statement of Financial Performance is based on the loss from ordinary

activities before income tax adjusted for any permanent differences.

Timing differences which arise due to the different accounting periods in which items of revenue

and expense are included in the determination of loss from ordinary activities before income tax

and taxable income are brought to account as either a provision for deferred income tax or an

asset described as future income tax benefit at the rate of income tax applicable to the period in

which the benefit will be received or the liability will become payable.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt. Future income tax benefits in relation to tax losses are not brought to account unless there is virtual certainty of realisation of the benefit.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income tax legislation and the anticipation that the Company will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

$(b)$ Property, Plant & Equipment

Plant and equipment is measured on the cost basis.

The carrying amount of plant & equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from those assets. Recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employment and subsequent disposal. The expected net cash flows have not been discounted to present values in determining recoverable amounts.

Depreciation is calculated on the prime cost method and is brought to account over the estimated economic lives of all plant and equipment. The depreciation rates used are:

20% Office furniture Office computer equipment 33.33%

Exploration, evaluation and development expenditure $(c)$

The Company's policy with respect to costs of exploration properties is to use the area of interest method.

Exploration and evaluation costs are carried forward on the following basis.

• Each area of interest in considered separately when deciding whether, and to what $(i)$ extent, to carry forward or write off exploration and evaluation costs.
• Exploration and evaluation costs related to an area of interest are carried forward $(ii)$ provided that rights to tenure of the area of interest are current and that one of the following conditions is met:
• Such costs are expected to be recouped through successful development and exploitation of the area of interest or alternatively, by its sale; or
• Exploration and/or evaluation activities in the area of interest have not yet reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in relation to the area are continuing.
• Exploration and evaluation costs accumulated in respect of each particular area of $(iii)$ interest include only net direct expenditure.
• Exploration and evaluation costs accumulated in respect of each particular area of $(iv)$ interest include only net direct expenditure.
• The Company has minimum annual expenditure commitments to maintain its tenements $(v)$ in good standing. These expenditure commitments are disclosed in the Prospectus.
• The directors believe that the Company will maintain the tenements in good standing for $(vi)$ at least the next twelve months.
• The carrying values of mineral tenements are reviewed annually by the directors where $(vii)$ results of exploration and/or evaluation of an area of interest are sufficiently advanced to permit a reasonable estimate of the amount expected to be recouped through successful development of the area of interest or by its sale. Expenditure in excess of this estimate is written off to the Statement of Financial Performance in the period in which the review occurs.

$(d)$ Operating Cycle

An operating cycle of twelve months has been used as the basis for identifying current assets and current liabilities in the Statements of Financial Position.

$(e)$ Cash

Cash includes cash on hand and at call deposits with banks or financial institutions, which are readily convertible to cash on hand and which are used in the cash management function on a day to day basis, net of bank overdrafts.

$(f)$ Receivables

Trade accounts receivable and other receivables represent the principal amounts due at balance date plus accrued interest and less, where applicable, any unearned income and provisions for doubtful debts.

Note 2 - Assumptions in Compiling the Consolidated Pro Forma Statements of Financial Position

The Pro Forma Statements of Financial Position reflect the following transactions as if they had taken place as at 30 June 2005:

• (a) The issue of 150,000 fully paid ordinary shares at an issue price of \$0.15 to Geoinformatics Exploration Australia Pty Ltd (Geoinformatics) pursuant to a binding term sheet dated 17 December 2004 relating to the acquisition of a 75% interest in certain mineral exploration assets.
• (b) The issue of 150,000 options to Pioneer Nickel Ltd with a 25 cent strike price and 31 July 2007 expiry date upon the Company's successful listing on the ASX.
• (c) The issue of 17,500,000 fully paid ordinary shares at \$0.20 per share for maximum subscription of \$3,500,000 received.
• (d) The granting of one option for every four shares issued in (c) above at an exercise price of \$0.25 and with an expiry date of 31 July 2007, resulting in issuing 4.375,000 options to acquire ordinary shares.

Quantity	Strike Price	Expiry	Trigger Price
350,000	\$0.25	31 December 2007	\$0.35
350,000	\$0.30	31 December 2007	\$0.40
350,000	\$0.35	31 December 2007	\$0.45

To meet the Trigger Price threshold, the Shares must have closed above that price for five consecutive days.

(a) The issue of 250,000 fully paid ordinary shares at an issue price of \$0.15 to the Managing Director pursuant to shareholder approval at a general meeting held 21 March 2005, upon the Company's successful listing on ASX.

• (b) The advance by the Company to the Managing Director of \$37,500 to fund the purchase of 250,000 ordinary shares at an issue price of \$0.15 pursuant to shareholder approval at a general meeting held 21 March 2005, upon the Company's successful listing on ASX.
• (c) The amount of \$259,200 of costs associated with raising capital under the Prospectus has been charged against contributed equity.

Note 3 - Cash Assets

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	Note	Actual 30 June 2005	Pro Forma 30 June 2005 Maximum
		\$	Subscription \$
Cash at bank and on hand		517,476	3,758,276
Movement in cash
Balance at 30 June 2005			517,476
Proceeds from the Offer Costs of the Offer			3,500,000 (259, 200)
Pro Forma at 30 June 2005			3,758,276
Note 4 - Receivables
CURRENT Other debtors		24,585	62,085
Movement in Receivables
Balance at 30 June 2005			24,585
Share Purchase Managing Director's Entitlement Loan			37,500
Pro Forma at 30 June 2005			62,085
NON-CURRENT Security deposits		85,000	85,000
Note 5 - Prepayments
Operating costs prepayments		851	851
Note 6 - Plant & Equipment
Plant & equipment - at cost Less accumulated depreciation		17,905 (406)	17,905 (406)
		17,499	17,499

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Note $t -$ exploration expenditure	Note	Actual 30 June 2005	Pro Forma 30 June 2005 Maximum
		\$	Subscription s
Exploration and evaluation expenditure		1,537,116	1,559,616
Movement in Exploration Expenditure
Balance at 30 June 2005 Purchase of 75% interest in tenements from			1,537,116
Geoinformatics			22,500
Pro Forma at 30 June 2005			1,559,616
Note 8 - Payables
Trade creditors and accruals		70,489	70,489
Note 9 - Contributed Equity
Share capital		2,230,256	5,531,056

	Note	30 June 2005 S	30 June 2005 Number
(a) Shares
Actual
Issue of 3 Shares on 8 July 2004 Issue of 3,000,000 fully paid ordinary shares		23	3
at \$0.01 each on 20 July 2004 Issue of 250,000 fully paid ordinary shares at		30,000	3,000,000
\$0.01 each on 20 July 2004 Issue of 7,000,000 ordinary shares under the Prospectus dated 5 August 2004 at \$0.15		2,500	250,000
each, paid up to \$0.05 each Final call of \$0.10 each on 21 March 2005 on 7,000,000 ordinary shares issued under the Prospectus dated 5 August 2004 partly paid		350,000	7,000,000
up to \$0.05 each Issue of 8,000,000 fully paid ordinary shares at \$0.15 each as consideration under the Intec Hellyer Metals Pty Ltd Tenement		700,000
Acquisition Agreement on 19 April 2005 Share Issue Costs relating to issues of		1,200,000	8,000,000
shares prior to 31 December 2004		(52,267)
At 30 June 2005		2,230,256	18,250,003

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$\frac{1}{\sqrt{2}}$ , $\frac{1}{\sqrt{2}}$ , $\frac{1}{\sqrt{2}}$ , $\frac{1}{\sqrt{2}}$

Note 7 - Eveloration Exponditure

$\Delta \phi = 0.01$ .

$\bar{\lambda}$

$\sim 10^{11}$

$\sim 100$ $\sim$

$\cdot$

	Note	30 June 2005 \$	30 June 2005 Number
Maximum Subscription
Shares to be issued to Geoinformatics Shares to be issued under Share Purchase		22,500	150,000
Entitlement		37,500	250,000
Shares to be issued pursuant to the Offer Expenses of the Offer		3,500,000 (259, 200)	17,500,000
Pro Forma at 30 June 2005		5,531,056	36,150,003
(b) Options over issued shares
	Note		30 June 2005 Number
Actual
31 July 2007 Options
Opening balance			3,750,000
31 December 2007 Options
Opening balance			2,000,000
Total Number of Options over Ordinary Shares on Issue			5,750,000
Maximum Subscription
31 July 2007 Options
Opening balance Issue of 150,000 options exercisable at \$0.25 to Pioneer Nickel Ltd as consideration			3,750,000
for entering into the Pioneer Agreement Issue of 4,375,000 Options on a one for four basis to IPO subscribers exercisable at			150,000
\$0.25			4,375,000 8,275,000
31 December 2007 Options
Opening balance			2,000,000
Issue of 350,000 Options to the Managing Director exercisable at \$0.25 upon reaching
the trigger price of \$0.35 each Issue of 350,000 Options to the Managing Director exercisable at \$0.30 upon reaching			350,000
the trigger price of \$0.40 each Issue of 350,000 Options to the Managing Director exercisable at \$0.35 upon reaching			350,000
the trigger price of \$0.45 each			350,000
			3,050,000
Pro Forma at 30 June 2005			11,325,000

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سندرج والمحارب

Page 7 of 8

$\frac{1}{2}$ , and $\frac{1}{2}$ , and $\frac{1}{2}$

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	Note	Actual 30 June 2005 \$	Pro Forma 30 June 2005 Maximum Subscription \$
Option Premium Reserve		71,800	71,800
Note 11 - Accumulated Losses	Note	Actual 30 June 2005	Pro Forma 30 June 2005 Maximum Subscription
		\$	Ŝ
Accumulated Losses		(190, 018)	(190,018)

Note 10 - Option Premium Reserve

$\Delta \sim 10^{-10}$ km $^{-1}$

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Page 8 of 8

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

25. EMPLOYEE BENEFITS

At the end of the financial period the Company had no provisions for employee benefits and related on-costs.

Resource Finance and Investments Limited Share Purchase Plan

Information on the Resource Finance and Investments Limited Share Purchase Plan is set out in Note 13.

Resource Finance and Investments Limited Employee Option Plan

Information on the Resource Finance and Investments Limited Employee Option Plan is set out in Note 13.

Set out below are summaries of options granted under the Plan.

	No. of Options	Exercise Price
Balance at the beginning of the financial period $Is sued - 30 June 2005$	500,000	0.25
Balance at 30 June 2005	500,000

No employee options were exercised during the period.

26. INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

The Australian Accounting Standards Board (AASB) has adopted IFRS for application to reporting periods beginning on or after 1 January 2005. The AASB has issued AASB equivalents to IFRS, and will issue Urgent Issues Group abstracts corresponding to International Financial Reporting interpretations adopted by the International Accounting Standards Board (IASB).

The adoption of Australian equivalents to IFRS will first be reflected in the Company's financial statements for the half-year ending 31 December 2005 and the year ending 30 June 2006.

Entities complying with the Australian equivalents to IFRS for the first time will be required to restate their comparative financial statements to amounts reflecting the application of IFRS to that comparative period. Most adjustments required on transition to IFRS will be made retrospectively against opened retained earnings as at 1 July 2004.

The Company is currently assessing the significance of these changes and preparing for their implementation.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Set out below are key areas that have been identified to date where accounting policies under IFRS impacts on the Company's financial reporting:

Financial instruments $(a)$

Under AASB 139 "Financial Instruments: Recognition and Measurement" financial instruments will be required to be classified into five categories and to be measured based on the nature of the classification. The five categories and basis of measurement are:

• Financial asset or financial liability measured at fair value through the Statement of Financial Performance
• Held to maturity investments measured at amortised cost, subject to impairment
• Loans and receivables measured at amortised cost, subject to impairment
• Available for sale assets measured at fair value with changes in fair value measured directly in equity
• Financial liability measured at amortised cost

This will result in a change to the current accounting policy that does not classify financial instruments.

$(b)$ Exploration and evaluation costs

AASB 6 "Exploration for and Evaluation of Mineral Resources" continues to allow companies to apply "area of interest" account to their exploration and evaluation expenditures, effectively grandfathering the treatment of capitalising exploration and evaluation costs currently used by the Company under AASB 1022 "Accounting for the Extractive Industries". Under AASB 6, if facts and circumstances suggest that the carrying amount of any recognised exploration and evaluation assets may be impaired. the Company must perform impairment tests on those assets and measure any impairment in accordance with AASB 136 "Impairment of Assets". Impairment of exploration and evaluation assets is to be assessed at a cash generating unit or group of cash generating units level provided this is no larger than an area of interest. Any impairment loss is to be recognised in accordance with AASB 136. It is anticipated that it is unlikely that the requirements of this standard will have a material impact on the financial position of the Company, except where areas of interest are abandoned and written off.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Income Tax $(c)$

Under AASB 112 "Income Taxes", deferred tax balances are determined using the "balance sheet method" which calculates temporary differences based on the carrying amounts of an entity's assets and liabilities in the Statement of Financial Position and their associated tax bases

This will result in a change to the current accounting policy under which deferred tax balances are determined using the income statement method.

On adoption by the Company, the change is not expected to result in the recognition of any material additional deferred tax assets and liabilities, or any corresponding impact on retained earnings.

$(d)$ Impairment

Under AASB 136 "Impairment of Assets", recoverable amount is defined as the higher of an asset's (or a cash generating unit's) fair value less cost to sell and its value in use. Value in use is the present value of estimated future cash flows expected to arise from an asset or cash generating unit. The discount rate used must be an asset specific risk adjusted rate. Recoverable amount is to be determined whenever there is any indication that an asset may be impaired.

This will result in a change to the current accounting policy, under which the estimated future cash flows used to determine recoverable amounts of non-current assets on an annual basis are not discounted to their present values.

The impact of this change is expected to be nil.

$(e)$ Share based payments

Under AASB 2 "Share Based Payments", the Company will be required to determine the fair value of options issued to employees as remuneration and recognise them in the Statement of Financial Performance.

This standard is not limited to options and also extends to other forms of equity based remuneration. It applies to all share based payments issued after 7 November 2002, which have not vested as at 1 January 2005.

To the extent that any of the remuneration options on issue have not vested by 1 January 2005, they will need to be recognised and measured in accordance with AASB $2.$

This will result in a change to the current accounting policy, under which no expense is recognised for equity based compensation.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

The most significant impact will be the recognition of an expense of \$78,400 to adjust
the profit for the period ended 30 June 2005, with a corresponding adjustment to reduce contributed equity by the same amount.

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