GREENWING RESOURCES LTD - Annual Report 2008

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ABN 31 109 933 995

Annual Report

for the year ended 30 June 2008

ANNUAL REPORT For the year ended 30 June 2008

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1)	Corporate Directory	2
2)	Review of Operations	3
3)	Corporate Governance	18
4)	Directors’ Report and Financial Statements
	− Directors’ Report	21
	− Income Statement	28
	− Balance Sheet	29
	− Statement of Changes in Equity	30
	− Cash Flow Statement	31
	− Statement of Significant Accounting Policies	32
	− Directors’ Declaration	59
5)	Independent Audit Report	60
6)	Auditor’s Independence Declaration	62
7)	Additional Information	63

ANNUAL REPORT For the year ended 30 June 2008

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1. CORPORATE DIRECTORY

DIRECTORS

Don Boyer (Non Executive Chairman) Michael Rosenstreich (Managing Director) Craig McGown (Non Executive Director) Kieran Rodgers (Non Executive Director)

COMPANY SECRETARY

Susan Hunter

REGISTERED OFFICE

16 Thelma Street West Perth Western Australia 6005

PO Box 1330 West Perth Western Australia 6872

Telephone: (08) 9322 8044 Facsimile: (08) 9481 2846 Website: www.bassmetals.com.au Email: [email protected]

LEGAL ADVISORS

Blakiston & Crabb 1202 Hay Street West Perth WA 6005

Wright Legal Unit 1 103 Collins Street West Perth WA 6005

FINANCIAL RISK ADVISORY

Noah’s Rule Level 8, 182-186 Blues Point Road McMahons Point NSW 2060

SHARE REGISTRY

Computershare Investor Services Pty Ltd Level 2, 45 St Georges Terrace Perth WA 6000 Telephone: 1300 55 70 10

AUDITORS

Grant Thornton (WA) Partnership Level 1 10 Kings Park Road West Perth WA 6005

STOCK EXCHANGE LISTINGS

ASX Limited (Code: BSM & BSMOA)

ANNUAL REPORT For the year ended 30 June 2008

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2. REVIEW OF OPERATIONS

2.0 OVERVIEW

Bass Metals Ltd has during the course of this past year become a profitable, safe, mining company with the development of the polymetallic (Zn, Pb, Ag, Au & Cu) Que River Mine. This small scale, high grade open pit mining operation enables the Company to be a largely “self funding” exploration and development Company. The focus throughout the year and in the near term is to explore and develop the other potentially larger scale polymetallic projects in the Company’s portfolio, in particular the Hellyer Mine Project.

In addition Bass Metals has a significant tenement position and has continued to systematically test new targets with the aim of discovering new large scale deposits such as typify the region in which the Company operates.

An updated tenement map is shown in Figure 1, which also identifies Bass Metals’ various exploration joint venture interests.

Figure 1: Tenement Location Plan

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ANNUAL REPORT For the year ended 30 June 2008

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2. REVIEW OF OPERATIONS (continued)

2.1 MINE OPERATIONS - Que River Mine (Zn-Pb-Ag-Au-Cu)

Mining operations commenced at Que River in late September 2007, and after exceptionally heavy rainfall in the December Quarter, which caused some production delays, settled into steady state operation in 2008. The mine is a simple open pit mining operation with two key ore sources in the Stage 1 Mine Plan; PQ Pit and S-Lens Pit. Ore is stockpiled, sampled and assayed before being trucked to Oz Minerals Ltd’s (“OZL” - formerly Zinifex Limited) Rosebery flotation concentrator plant. Bass Metals is paid a percentage of the zinc, lead, copper, gold and silver contained in the ore.

2.1.1 Safety and Environment

No lost time injuries or material environmental incidents have occurred during the year since the start of the project.

2.1.2 Mining Activities

Mined tonnages of ore during the year exceeded predictions from the Ore Reserve model by 25% ( refer Table 1 ). Actual mined grades for zinc, lead, silver and gold exceeded predictions by 13% to 79%, with copper grades down by 22% but from a low base of 0.43% copper.

Table 1: Production Comparison – Mined vs. Predicted

	Tonnes**	Zn(%)	Pb(%)	Ag (g/t)	Au(g/t)	Cu(%)
Predicted (OBM*)	35,070	10.0	4.3	93	1.6	0.43
OreMined	43,807	11.3	6.1	162	2.9	0.34
Variance to OBM	25%	13%	42%	73%	79%	-22%

(OBM=Ore Body Model used for the original budget; *Tonnes are wet metric tonnes (wmt))

2.1.3 Ore Sales

A total of 37,965 tonnes of ore was sold to OZL during the year in accordance with a binding Ore Sales Agreement (refer Table 2). The ore sales process is operating well and it is important to note that whilst zinc is a core component of the revenue stream at 42%, contributions are also made from the other four payable metals; lead contributed 31%, gold and silver 24% and copper 3%. A significant inventory position has been maintained at 5,893 wmt as at the end of the year.

Table 2: Mining Summary – FY07/08

	Tonnes	Zn(%)	Pb(%)	Ag (g/t)	Au(g/t)	Cu(%)
Opening Stocks at QR (wmt)	Nil
Ore mined*(wmt)	43,807	11.3	6.1	162	2.90	0.34
OreDelivered to OZL(dmt)*	37,965	11.9	6.7	161	3.03	0.36
Remaining Stocks at QR**(wmt)	5,893+	10.5	6.0	191	3.40	0.30

* dmt is dry metric tonnes.

** "Remaining Stocks" and "Mined" grades are estimates from grade control
+ reference to wmt and dmt means the closing tonnes do not exactly reconcile

2.1.4 Operating Performance

2.1.4a Revenues

Revenue for ore sold during the year was $9.37 million. This amount does not include hedging gains associated with ore sold.

After correcting for minor moisture content, ore tonnes sold is 37,965 dry metric tonnes (dmt) which yields gross revenue of $247/dmt sold. Revenue quoted above is based on actual tonnes delivered and invoiced. Revenue estimates and eventual cash flows are affected by the time lag between delivery of the sold ore and fixing the realised price; for zinc and lead. This time lag is three months, for gold and silver one month and for copper six months.

The payment terms under the Ore Sales Agreement were revised in January 2008, based on changes to smelter terms affecting OZL’s revenue from the Que River ore. This resulted in a modest decrease in the net payable value of the ore to Bass Metals. These terms are reviewed annually.

Hedging gains associated with ore sold during the year were $1.43 million or approximately $38 per tonne of ore sold.

ANNUAL REPORT For the year ended 30 June 2008

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2. REVIEW OF OPERATIONS (continued)

2.1.4b Costs

A summary of costs for the mining operation since start up in late September 2007 are presented in Table 3 below. These costs are broadly in line with planned budget costs for the period, though on a unit cost basis are approximately 15% above budget, due mainly to less ore being sold because of start-up delays related to exceptionally wet weather, but increased fuel and explosive prices have also contributed to the increased unit cost.

Table 3: Unit Operating Costs

Cost Centre	$/t ore sold
Site Operating costs	88
Treatment Costs	40
State Royalties	4
Depreciation & Amort.	57
Total Operating Cost	189

Total capital costs for the project to date are $0.60 million, which is in line with the mine plan.

2.1.4c Operating Margin

On a Profit & Loss basis, Que River generated a profit for the Company during the year as shown in Table 4 below. The operating margin over costs was 31%, and after addition of the average realised hedge gains of $38 per tonne the margin increased to $97 per tonne of ore sold or 52% over costs.

Table 4: Unit profit estimate –per tonne of ore sold

	Unit	value
Average ore value	$/t	247
Total OperatingCosts	$/t	188
Operating Margin	$/t	59
Operating Margin	%	31
Realised hedge gains	$/t	38
Total Margin over costs	$/t	97

2.1.5 Mineral Resource and Reserve Estimation

A review of the Company’s Mineral Resource and Reserves base at Que River was undertaken in July 2008 following mine depletion at PQ and S-Lens deposits as part of the Stage 1 mining operation. Whilst some minor additional drilling was undertaken in the project area no other modifications to the Mineral Resources have been finalised.

The methodology adopted was to utilise the 2007 Mineral Resource computer ore-body models and, where affected by mining activity, deplete using the topography survey as at end of June 2008 to account for the mine depletion.

No adjustments or factors were applied to account for the positive mine reconciliation as indicated in Table 1 above.

Mining parameters (dilution and recovery) of 15% and 90% respectively of resource tonnage for both S and PQ were applied.

The Mineral Resource, inclusive of the ore reserves, are summarised in Table 5 below.

ANNUAL REPORT For the year ended 30 June 2008

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2. REVIEW OF OPERATIONS (continued)

Table 5: Summary of classified Que River Mineral Resources

Deposit/Lens	JORC Category	Tonnes (000’s)	Zn (%)	Pb (%)	Cu (%)	Ag g/t	Au g/t

QR32	Measured
S-Lens	Measured	56	2.1	0.7	1.7	69	0.34
PQ	Measured
Nico	Measured
Total Measured		56	2.1	0.7	1.7	69	0.34

QR32	Indicated	134	5.9	3.5	0.2	83	1.10
S-Lens	Indicated	263	4.3	1.6	1.9	68	0.32
PQ	Indicated	28	19.2	10.9	0.4	248	6.8
Nico	Indicated	33	9.0	5.4	0.3	130	1.00
Total Indicated		458	6.0	3.0	1.2	88	1.0

QR32	Inferred	54	4.6	2.7	0.1	72	1.00
S-Lens	Inferred	58	0.6	0.2	2.5	33	0.15
PQ	Inferred	6	11.4	6.5	0.3	156	3.3
Nico	Inferred	69	8.3	4.6	0.4	102	0.91
Total Inferred		187	5.0	2.8	1.0	74	0.78

Total Mineral Resource		701	5.4	2.7	1.2	83	0.88

The Ore Reserve comprises mineralisation within two pit designs; the PQ and S-Lens pits. The Ore reserve position for the approved Stage 1 Mine Plan is summarised in Table 6 below.

Table 6: Summary of Que River Stage 1 Mining Inventory

Ore Deposit	JORC Category	Tonnes (000’s)	Zn %	Pb %	Cu %	Ag g/t	Au g/t
ROMStockpiles	Proven	5.9	10.5	6.0	0.3	191	3.4
PQ	Probable	26.5	18.8	10.4	0.3	240	6.3
S-Lens	Probable	46.0	3.1	1.0	1.1	43	0.3
Total Proven & Probable Ore Reserve		78.4	9.0	4.6	0.8	121	2.6

In PitResource- PQ	Inferred	6.2	10.5	6.1	0.3	148	3.1
Total Mining Inventory		84.6	9.1	4.7	0.7	123	2.6

2.1.6 Que River Mine Outlook

At the end of the financial year, the operation had reserves of approximately 78kt, which are based on the original approved Stage 1 Mine Plan. Since the start of the operation in September 2007 there have been several significant factors leading the Company to review this mine plan, including changes to the ore payment factors, reduction in metal prices, highly positive ore reconciliations from PQ pit and increased waste rock uncovered at S-Lens which is potentially acid forming. Given these issues, the Company is currently focussing only on mining the PQ pit whilst it reviews the potential to reschedule the mine sequence; for example to enable mining of shallow portions of the QR32 and Nico resources ahead of the S-Lens reserve. This would aid in the management of the PAF material, by dumping it into the QR32/Nico mine voids. This work is in progress and subject to prevailing metal prices and Government approval to mine at QR32 and Nico and may result in adjustments to the mining plans and reserves.

ANNUAL REPORT For the year ended 30 June 2008

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2. REVIEW OF OPERATIONS (continued)

Que River Competent Persons Statements

S-Lens, Nico and QR32Mineral Resources Attribution.

The resource estimates are based on geological models compiled by consulting geologist, Mr. Steven Richardson. Tonnage and grade estimation has been undertaken by Mr. Richardson using anisotropic 2D inverse distance interpolation (Nico and S Lens) or 3D ordinary kriging (QR32 Lens). The drill hole database used for these estimates comprises diamond core drill holes completed by Bass Metals as well as historic diamond drill holes. In addition, original 1:500 scale mine geology cross-sections, long projections and underground development surveys were available. Mined out areas were not surveyed but details were sourced from end of mine life reports and discussions with ex-Que River Mine mining personnel involved in mining at Que River in the late 1980’s.

Mr. Steven Richardson BSc(Hons) MAusIMM, a fulltime employee of McArthur Ore Deposit Assessments (MODA) has 26 years experience, including 10 years at Que River-Hellyer. He completed the bulk of the estimation work under the direction and supervision of Dr Gary McArthur PhD FAusIMM MICA MSEG, principal of MODA. Dr McArthur has over 35 years experience as a professional in the mining industry (including 10 years at Hellyer), with considerable involvement in the estimation of resources over a wide variety of commodities and mineralisation styles. As such, Dr McArthur meets the formal requirements as defined in the JORC Code (Joint Ore Reserves Committee, 2004) to be a Competent Person for the estimation of the Que River S Lens Mineral Resources and has consented to the inclusion of his name in this report.

PQ Attribution

The resource estimate is based on a geological model compiled by the Que River Mining Alliance project Manager, Mr. Tim Akerman. Tonnage and grade estimation has been undertaken by Mr. Akerman using a simple polygonal model using length weighted averages to estimate grades.

Mr. Akerman BSc (Hons) MAusIMM has 20 years industry experience including 4 years as a production geologist at Que River from 1986. Since then he has had direct involvement in the planning and development of 5 other similar deposits in the Que River region as well as extensive resource delineation and mine planning work on many deposits in Australia and overseas. Mr. Akerman meets the formal requirements as defined in the JORC Code to be a Competent Person for the estimation of the Que River PQ Lens Mineral Resources and has consented to the inclusion of his name in this report.

The drill hole database used for this estimate comprises the diamond core drill holes completed by Bass Metals as well as 35 historic diamond drill holes used to delineate the original PQ Ore Reserve. In addition, original detailed mine geology cross-sections and a long projection were available. Details on mined out areas were sourced from an end of mine life report and discussions with ex-Que River Mine mining personnel involved in the mining of PQ Lens in the 1980’s.

ANNUAL REPORT For the year ended 30 June 2008

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2. REVIEW OF OPERATIONS (continued)

2.2 BASE METAL EXPLORATION ACTIVITIES

2.2.2 HELLYER MINE PROJECT (HMP)

The HMP comprises the Hellyer Mineral Resource and the adjacent Fossey Zone mineralisation located in close proximity to the decommissioned high grade polymetallic (Zn-Pb-Cu-Ag-Au) Hellyer Mine.

2.2.2a Hellyer

An initial combined Mineral Resource (Indicated and Inferred) of 748,000 tonnes grading 7% Zn, 4% Pb, 0.3% Cu, 87 g/t Ag and 1.3 g/t Au has been estimated around the former Hellyer underground mining operation.

The initial Mineral Resource estimate for the HMP represents a significant milestone for the Company towards expanding its base metal resources and potentially its production profile. A summary of the estimate, prepared by Coffey Mining and reported in accordance with the JORC Code, is presented in Table 7 and the location of key components illustrated schematically in Figure 2. This does not include the unmined Fossey Zone (refer next section).

Table 7: Hellyer Mine Project Mineral Resource

	Summary of Classified Hellyer Mineral Resources >5% Combined Pb + Zn Lower Cut Off	Summary of Classified Hellyer Mineral Resources >5% Combined Pb + Zn Lower Cut Off	Summary of Classified Hellyer Mineral Resources >5% Combined Pb + Zn Lower Cut Off	Summary of Classified Hellyer Mineral Resources >5% Combined Pb + Zn Lower Cut Off	Summary of Classified Hellyer Mineral Resources >5% Combined Pb + Zn Lower Cut Off	Summary of Classified Hellyer Mineral Resources >5% Combined Pb + Zn Lower Cut Off	Summary of Classified Hellyer Mineral Resources >5% Combined Pb + Zn Lower Cut Off
Mineralisation Type	JORC Code Category	Tonnes (000's)	Zn %	Pb %	Cu %	Ag g/t	Au g/t
Stringer Zones Base Metals Sulphide Remnant Pillar & Surrounds	Measured Measured Measured	0 0 0	0 - -	0 - -	0 - -	0 - -	0 - -
*TOTAL MEASURED*		0	0	0	0	0	0
Stringer Zones Base Metals Sulphide Remnant Pillar & Surrounds	Indicated Indicated Indicated	255 190 195	4.4 10.6 6.4	2.7 6.0 3.8	0.4 0.4 0.3	48 145 70	0.9 2.0 1.2
*TOTAL INDICATED*		641	6.8	4.0	0.4	83	1.3
Stringer Zones Base Metals Sulphide Remnant Pillar & Surrounds	Inferred Inferred Inferred	24 27 56	7.3 8.9 8.0	3.6 5.7 5.1	0.1 0.2 0.3	69 138 109	0.9 1.7 1.6
*TOTAL INFERRED*		107	8.1	4.9	0.2	107	1.5

*TOTAL MINERAL RESOURCE*		748	7.0	4.1	0.3	87	1.3

Stringer Zone Base Metals Sulphide Remnants	Combined Combined Combined	279 217 251	4.6 10.4 6.8	2.8 6.0 4.1	0.4 0.4 0.3	50 144 79	0.9 2.0 1.3

Note the above results have been rounded

Coffey Mining was commissioned by Bass Metals to undertake a Mineral Resource estimate for the mineralisation occurring adjacent to the mined areas of the Hellyer deposit. This mineralisation comprises both massive base metal sulphide zones and distinct areas of strong base metal veins referred to as stringer zones, generally occurring in the footwall position to the main mined portion of the Hellyer deposit. As well, Coffey Mining was requested to assess and classify areas of potentially recoverable remnant mineralisation associated with the former mine workings. Full details on the Mineral Resource estimate are available in the Company’s report to ASX on the 26 October 2007.

ANNUAL REPORT For the year ended 30 June 2008

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2. REVIEW OF OPERATIONS (continued)

Figure 2: HMP Schematic Long Section

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2.2.2b Fossey Zone

The Fossey Zone mineralisation is located immediately south of the Hellyer deposit and mine workings. Narrow, discontinuous zones of massive sulphide mineralisation had been intersected in the area on wide spaced drill lines by previous explorers but never followed up and no mining of this mineralisation has ever occurred. One of Bass Metals’ early holes intersected 57 metres downhole at 9.2% Zn, 4.7% Pb, 94 g/t Ag & 2.9 g/t Au. This led to a significant reinterpretation of the prospect highlighting the potential for a steeply dipping zone of high grade massive sulphide mineralisation within an extensive wedge of auriferous barite as illustrated in Figure 3. This interpretation has been confirmed with a major drilling programme comprising 5,093 metres of diamond core drilling in 22 holes to the end of June 2008. Drilling is ongoing. Better drill results during the period include:

HLD957: 57.7 metres at 9.2% Zn, 4.7% Pb, 0.3% Cu, 94 g/t Ag & 2.9 g/t Au
HLD960: 21.4 metres at 17.3% Zn, 8.3% Pb, 0.7% Cu, 231 g/t Ag & 3.4 g/t Au
• HLD962: 9.1 metres at 13.2% Zn, 8.5% Pb, 0.5% Cu, 373 g/t Ag & 4.1 g/t Au • HLD967: 12.8 metres at 18.5% Zn, 8.8% Pb, 0.6% Cu, 272 g/t Ag & 2.8 g/t Au
HLD969: 20 metres at 8.7% Zn % 5.5% Pb, 0.3% Cu, 44 g/t Ag, 1.1 g/t Au

The Company has initiated a mining evaluation study for the HMP which will include a mineral resource estimate for the Fossey mineralisation, mining, metallurgical and environmental studies. The objective of the study is to determine if a staged mining operation accessing ore from both the Fossey Zone and the Hellyer Mineral Resource can sustain a mining operation producing between 150 to 250,000tpa. This scale of production is considered a reasonable target to generate significant cash flows to further grow the business. Processing options will be assessed on completion of the first phase of metallurgical testwork later in 2008; these include utilisation of the Hellyer flotation concentrator or an ore sales arrangement to OZL’s Rosebery facility.

ANNUAL REPORT For the year ended 30 June 2008

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2. REVIEW OF OPERATIONS (continued)

Figure 3: HLD957 – Schematic Cross Section 10150N

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ANNUAL REPORT For the year ended 30 June 2008

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2. REVIEW OF OPERATIONS (continued)

2.2.3 ADVANCED BASE METALS EXPLORATION PROJECTS

The Company has a very active regional and grass roots base metals focused exploration programme. Activities during the year included the following:

2.2.3a Farrell Line Project (Cu-Pb-Zn-Ag potential)

(EL47/2003 Bass Metals Ltd 100%)

The Farrell Line project covers a 4km extent of the Henty fault which hosts numerous high grade polymetallic base metal and gold occurrences on the Company’s lease including the historic Mt Farrell mining centre. The Mt FarrellMurchison Mines had significant historic Pb-Ag production of approximately 700,000 tonnes at 13% Pb and 14oz./t Ag. At the time of mining, sphalerite (zinc-sulphide) was regarded as a gangue mineral; the mineralisation here has strong zinc potential as indicated in rock chip results in Table 8 below.

Rock-chip samples collected on an orientation traverse over the 4km north-south extent of the historic workings have returned several high-grade silver-lead-zinc assay results which confirm the high tenor of ore mined from the field. Better results from waste dumps at Murchison, Macintosh, South Farrell and North Mt Farrell Mine workings are presented in Table 8 below.

Table 8: Farrell ore and mullock samples

Sample	Locality	Cu	Pb	Zn	Ag	Au
		%	%	%	ppm	ppm
MF97001	Murchison riverdump-ore	0.84	11.3	16.3	824	1.99
MF97002	Murchison River Mine ore	2.4	2.3	4.2	569	0.53
MF97003	Nth MtFarrellopencut	0.09	8.7	0.94	289	0.11
MF97004	Nth MtFarrellopencut	0.07	4.4	7.3	96	0.08
MF97005	Nth MtFarrellopencut	0.11	7.1	10.7	350	0.10
MF97007	MtFarrell(Finnies)	0.01	12.8	0.78	382	0.02
MF97008	New Nth MtFarrell	0.21	19.1	3.2	1047	0.10
MF97009	North Macintosh Mine	0.29	14.3	26.3	648	0.07
MF97011	South Farrell -Jekyll's adit	0.06	11	1.2	408	<0.01

The Mt Farrell target has potential to generate new ore shoots of similar style to those mined previously, which could support a small scale, high grade underground mine. The project area is well located with respect to roads and processing infrastructure and has excellent potential to generate additional high grade mineral resources.

2.2.3b Oonah Project (Cu-Pb-Zn-Ag-Au & Sn potential)

(EL63/2004 75% Bass Metals Ltd 25% Clancy Exploration Limited.)

The Oonah project contains several historic mining operations including Oonah, Montana and Zeehan Western with the following historic production records noted in the MRT database:

Oonah: 863,000 tonnes at 1.1% Cu, 1.2 % Pb, 1.0% tin (Sn) and 153 g/t Ag Montana: 40,000 tonnes at 5.3% Pb, 143 g/t Ag and 0.5 g/t Au Zeehan Western: 300,000 tonnes at 8.7% Pb, 480 g/t Ag and 0.5 g/t Au

Note sphalerite was considered a gangue at the time of mining, and the rock-chip results below clearly demonstrate the zinc potential.

Bass Metals Ltd has two exploration objectives at Oonah:

(a) Discovery of a large-scale new high grade Pb-Zn-Ag or Cu-Sn deposits.

(b) Delineation of high grade mineralised zones which may be amenable to small scale mining and trucking.

During the year Bass Metals conducted a reconnaissance field inspection during which samples were collected from historic workings and mine mullock dumps. Sample results support the high grade polymetallic nature of mineralisation in the area. Better assay results from outcropping lodes and Mullock dumps are listed in Tables 9 and 10; these results will help to prioritise historic workings for further follow-up work.

ANNUAL REPORT For the year ended 30 June 2008

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2. REVIEW OF OPERATIONS (continued)

Table 9: Summary of assay results from Montana Silver Lead mine rock chip samples

Sample	Rock Type	Pb	Zn	Cu	Ag
MSL002	Bulkoreinpit	12.1%	4.41%	504ppm	392g/t
MSL010	Stockwork ore in pit wall	13.1%	7.50%	482 ppm	422 g/t
MSL014	Breccia oreinpitwall	15.3%	15.4%	0.4%	846 g/t

Table 10: Summary of best assay results from Oonah Mine mullock samples

Sample	Rock Type	Results	Provenance
141401	Mullock	0.1% Cu, 6.4 % Pb, 3.5 % Zn, 346 g/t Ag & 0.14 % Sn	Galena Lode
141402	Mullock	1.0% Sn	CassiteriteLode
141404	Mullock	4.0% Cu	Carbonate Lode
141409	Mullock	1.1% Cu,1.1%As,252g/tAg, 3.0% Sn	StanniteLode
141421	Mullock	1.3% Pb, 108 g/t Ag, 3.7% Sn	Stannite Lode
141422	Mullock	1.5% Cu & 148 g/t Ag	Carbonate Lode

The results for a soil geochemistry program completed in December 2007 comprising 365 samples collected over 200 metres spaced grid lines identified two areas for further work:

• A discrete coincident Cu-Pb-Zn and low-level Sn anomaly extending north-south over approximately 600 metres over a sharp bend in the Tenth Legion Fault; a large scale regional structure associated with mineralisation in the Zeehan district.

• A low level Sn in soil anomaly in the north-western part of the lease.

2.2.3c Bonds Range (Cu-Pb-Zn-Ag potential)

(EL28/2002 – 60% Bass Metals Ltd 40% Adamus Resources Limited)

During the year an additional two diamond drill holes were completed to further test the Iris River mineralisation intersected in the previous year by drill hole BRD001; 3.5 metres at 5.0% Pb, 1.1% Zn, 120 g/t Ag and 1.1 g/t Au, from 88 metres down-hole. The follow-up drilling indicated that mineralisation was confined to narrow, sporadic structures with a low potential of becoming mineable resources. No further work was undertaken on the Iris River prospect, but early stage work is continuing on a large alteration system in the north of the Licence area. The other licence held in joint venture with Adamus Resources, Selina (EL29/2002) was relinquished during the year.

2.2.3d Waratah (Pb-Zn-Ag potential)

( EL64-2004 75% Bass Metals Ltd 25% Clancy Exploration Limited )

The Company’s initial focus is on the early mining potential of extensions to mineralisation associated with lodes in the historic Magnet Mine, which according to Mineral Resource Tasmania (MRT) records produced 630,000 tonnes grading 5.7% Pb, 7.3% Zn and 394 g/t Ag between 1895 and 1940.

A planned programme of 12 diamond drill holes to test the near-surface resource potential around the Magnet Mine was suspended after one drill hole was completed at 97 metres due to difficult drilling conditions. The programme will resume with a more appropriate drill rig in late 2008. The completed drill hole (MGD001) was drilled to intersect possible northern extensions of the Magnet Lode system. It intersected weakly developed vein related sphalerite mineralisation at the target position 70 metres downhole. The persistence of the mineralised structure leaves open the possibility of finding more substantive mineralisation along strike, particularly to the south adjacent to the known workings.

ANNUAL REPORT For the year ended 30 June 2008

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2. REVIEW OF OPERATIONS (continued)

2.2.4 EARLY STAGE & REGIONAL BASE METAL EXPLORATION

2.2.4a Hellyer Exploration Alliance (HEA)

The HEA between OZL and Bass Metals Ltd has matured during the year with OZL selecting a further three areas, bringing the total to four, to complete its agreed number of Special Project Joint Venture (SPJV) areas under the HEA agreement.

The areas are shown schematically in Figure 4. They all cover prospective portions of the Hellyer-Que River stratigraphy and include the promising early stage Switchback prospect where strong alteration and anomalous base metal sulphides were intersected during the HEA phase of exploration drilling.

Under the terms of the HEA executed in August 2005, and subsequently amended, OZL has the right to select up to four SPJV areas each with an area of up to 2 km[2] . It can acquire a 51% interest by spending at least $4.5 million in aggregate within three years of having made its first election. During this period OZL will act as joint venture manager and undertake all exploration activities. Bass Metals may continue its own exploration and development activities outside of the SPJV areas.

OZL may withdraw prior to satisfying the earning-in criteria subject to proper notification and completion of budget commitments. Upon any such withdrawal it will retain no equity in the SPJV or underlying tenements.

OZL may earn a further 19% interest in any of the SPJV areas (taking its total interest to 70%) by continuing to solefund work to the delivery of a bankable feasibility study. Bass Metals’ 30% interest shall be free-carried during this period.

The joint venture with OZL enables Bass Metals to share early stage exploration risk allowing it to focus on continuing the development of its advanced Que River and Hellyer Mine Project Mineral Resources.

ANNUAL REPORT For the year ended 30 June 2008

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2. REVIEW OF OPERATIONS (continued)

Figure 4: Summary of HEA drilling and targets

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2.2.4b Regional Airborne Geophysical Survey

The Company has maintained an active early stage exploration programme targeted on the discovery of new, large scale deposits. This work has included ground mapping, soil and rock chip sampling and airborne geophysics.

A major advance on the regional prosects occurred following the interpretation of data collected by the aerial VTEM time domain system geophysical survey flown for Bass Metals by Geotech Airborne Pty Ltd during March 2008 which generated conductive electromagnetic (EM) targets on each of the project areas flown including ( refer Figure 1 ):

Heazlewood Nickel prospect - broad EM response coincident with the Wilson nickel in soil anomaly; as well as a new target generated outside of the soil grid area.
Waratah near Mt Bischoff Tin Mine - possible extensions to the north-east of the Mt Bischoff tin mineralisation.
Wilmot (base metal target) - a cluster of three unexplained discrete late-time anomalies potentially indicating massive sulphide mineralisation.
Loyetea (base metal targets) – several EM responses, in particular two considered to represent potential conductive bodies related to granite skarn style mineralisation.

These are preliminary results and further geophysical data and processing is being undertaken. Overall the survey generated “clean” reliable data and has clearly highlighted several areas on the tenements which may represent bodies of mineralisation which warrant further work.

ANNUAL REPORT For the year ended 30 June 2008

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2. REVIEW OF OPERATIONS (continued)

2.3 GOLD EXPLORATION

The Company has a “full-profile” of gold projects from the advanced Mt Charter and Sterling Valley gold projects to early stage gold targets. There is also potential to delineate distinct gold rich zones around the Hellyer and Que River base metals deposits. Due to other priorities only minor work was completed on these during the year in preparation for a further drilling campaign.

2.3.1 MT CHARTER (AU & AG POTENTIAL)

(RL11/1997 – 100% Bass Metals Ltd)

The project hosts a total combined Mineral Resource of 6.1 million tonnes at 1.22 g/t Au, 35.5 g/t Ag, 9.7% Ba and 0.5% Zn. The resource is reported above a 0.7 g/t Au cut-off within the mineralised envelope boundary and is classified as Indicated and Inferred Resources according to the JORC code (December 2004), as listed in Table 11 below.

The tonnage and grade estimation is based on a ‘change of support’ geostatistical technique that is targeted at modelling the deposit behaviour using anticipated open pit mining on five metre high benches and a mining selectivity of 5 metres by 10 metres by 5 metres. The change of support process is based on multi-element conditional simulation. Full details on the estimation process are provided in a report to the ASX dated 30 October 2006.

Table 11: Summary of Classified Mt Charter Mineral Resource (0.7g/t Au cut-off)

JORC Code Category	Tonnes Mt	Au g/t	Ag g/t	Ba %	Zn Au % koz	Ag koz	Au (eq)* koz
Indicated Inferred	1.9 4.2	1.21 1.22	36.3 35.2	9.1 10.0	0.7 74 0.4 165	2,218 4,754	118 260
Total	6.1	1.22	35.5	9.7	0.5 239	6,971	378
* Au (Eq) is based on Au & Ag price only; US$590/oz and US$11.80/oz respectively to give an Ag to Au ratio of50:1.

The Mt Charter mineralisation interpretation for this estimate was compiled by Dr Travis Murphy; Senior Exploration Geologist with Bass Metals, with assistance from Snowden Mining Industry Consultants. Paul Blackney of Snowden reviewed data collection procedures undertook database checks and inspected core on site. Shaun Hackett (Snowden) reviewed the geological interpretation and was responsible for compiling the grade estimates. Both P Blackney and S Hackett are Competent Persons being Members of the AusIMM with more than five years experience relevant to gold and multi-element mineral resource estimation. Full details on the resource estimate are available in ASX Release dated 30 October, 2006 on the Company’s website.

2.3.2 STERLING VALLEY (AU POTENTIAL)

(EL47/2003 – 100% Bass Metals Ltd)

The Sterling Valley Gold project extends for approximately 4km along the Henty Fault. It includes the historic Sterling Gold mine (no production records) and several zones of gold-arsenic-copper mineralisation indicated from drilling. Better historic drill intercepts included:

7.7 metres at 3.8 g/t Au
3.7 metres at 5.9 g/t Au
17 metres at 1.5 g/t Au

This is regarded as an advanced exploration project and further work including drilling is planned for the next financial year. The “plus 1 million ounce” Henty gold deposit, owned by Barrick Limited, lies approximately 5 km south along the same Henty Fault trend. The objective at Sterling Valley is to delineate a high grade Henty style gold deposit in structures associated with the Henty Fault zone.

ANNUAL REPORT For the year ended 30 June 2008

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2. REVIEW OF OPERATIONS (continued)

2.4 NICKEL, PLATINUM and IRON EXPLORATION

Any mineral exploration activity in the north west of Tasmania must be alert to “other” commodities such as nickel, Platinum Group (PGM) and iron as there is an amazing diversity of mineralisation styles in this district many of which comprise significant deposits and mines; for example Avebury (nickel) and Savage River (magnetite iron). The Company has an interesting early stage nickel prospect ready for drilling which it generated as well as lower priority PGM and iron prospects. Reconnaissance nickel exploration planned for the Whyte River licence was not completed due to access difficulties with high river flows.

2.4.1 HEAZLEWOOD (NI-CU-PGM POTENTIAL)

(EL31/2003 Bass Metals Ltd 70%, Pioneer Nickel Limited 30%)

This licence is considered prospective for nickel and PGM deposits, based on intrusive-related and carbonatereplacement base metal, and ultramafic/granite contact aureole (Avebury nickel style) deposit models.

Approximately 221 line-km of VTEM was completed to follow-up on encouraging nickel in soil assay results which defined a 1.5km long nickel in soil anomaly (refer Figure 5).

Several anomalies were detected and two were selected for follow-up work on the basis that they either have EM signatures characteristic of a good conductor or are coincident with extensive soil anomalism (e.g. Wilson Soil Anomaly). The Wilson anomaly is inferred to be situated in the axial region of an antiformal fold, analogous to the setting of the Avebury nickel deposit. This anomaly will be tested by diamond-drilling as soon as practical.

Figure 5: Heazlewood regional geological summary and VTEM anomaly positions (yellow outlines)

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ANNUAL REPORT For the year ended 30 June 2008

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2. REVIEW OF OPERATIONS (continued)

2.3 Corporate

During the year the following occurred:

On 6 August 2007, the Company announced that approximately 98% of the BSMO options exercisable at 31 July 2007 had been taken up.

On 28 August 2007, the Company announced the Ore sales agreement with OZL (formerly Zinifex Limited) and that Board approval for commencement of the Que River Mine development had been given.

In September 2007, the Company completed a placement of approximately 12.8 million ordinary fully paid shares at an issue price of $0.42 per share as an excluded offer. The placement raised approximately $5.4 million before brokerage and costs to fund mine development costs, boost exploration activities and for general working capital.

In December 2007, 830,000 options exercisable at 51 cents were issued to Employees under the Company’s Employee Share Option Plan.

ANNUAL REPORT For the year ended 30 June 2008

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3. CORPORATE GOVERNANCE

3.1 Introduction

The Directors of Bass Metals Ltd have established a framework of corporate governance, which they review on a regular basis.

In order to promote investor confidence and to assist companies meet stakeholder expectations, the ASX Corporate Governance Council developed and released corporate governance guidelines for Australian listed entities. The first edition, Principles of Good Corporate Governance and Best Practice Recommendations (“First Edition Corporate Governance Guidelines”) was released in March 2003.

The Board and management are committed to the principles of corporate governance and, to the extent they are applicable to the Company (given its size and scale of operations), have adopted the Ten Essential Corporate Governance Principles and each of the Best Practice Recommendations as published in the ASX Corporate Governance Council’s First Edition Corporate Governance Guidelines..

It is noted the Company is currently undertaking a review of its corporate governance practices in line with the release in August 2007 of the ASX Corporate Governance Council’s second edition Corporate Governance Principles and Recommendations (“Second Edition Corporate Governance Guidelines”). The Second Edition Corporate Governance Guidelines apply to listed entities on and from the commencement of a listed entities financial year for 2008 (1 January 2008 or 1 July 2008).

While the Board has demonstrated, and continues to demonstrate, its commitment to best practice in corporate governance, it emphasises that good corporate governance is only one factor contributing to the success of the Company's operations. The Company operates in the high risk mineral exploration and development industry, and its future success is highly dependent on successful development and exploitation of its exploration properties and projects.

The following additional information about the Company's corporate governance policy is set out on the Company's website at www.bassmetals.com.au:

Board charter detailing functions and responsibilities of the Board and management, criteria for selection and appointment of new Directors, processes for performance evaluation of the Board, Board committees and key executives.
Corporate code of conduct for Directors, senior executives and dealings with stakeholders.
Occupational health and safety policy.
Environmental policy.
Risk Management policy.
Board performance evaluation.
Continuous disclosure policy.
Shareholders communications policy.
Share trading policy.

ANNUAL REPORT For the year ended 30 June 2008

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3. CORPORATE GOVERNANCE (continued)

3.2 Corporate Governance Disclosures

During the Company's 2007/2008 financial year (" Reporting Period ") the Company complied with the ASX First Edition Corporate Governance Guidelines other than in relation to the matters specified below:

Principle Reference	Recommendation Reference	Notification of Departure	Explanation for Departure
2	2.1; 2.2	No Director was considered an independent Director.	The Board considers that its structure has been, and continues to be, appropriate in the context of the Company's recent history. The Company considers that each of the non-independent Directors possess skills and experience suitable for building the Company. Furthermore, the Board considers that in the current phase of the Company's growth, the Company's shareholders are better served by Directors who have a vested interest in the Company. Nonetheless, the Board takes the responsibilities of best practice in corporate governance seriously and will consider the appointment of independent Directors if deemed appropriate depending on the scope and scale of its operations.
2	2.4	A separate Nomination Committee has not been formed.	The role of the Nomination Committee is carried out by the full Board. The Board considers that given its size, no efficiencies or other benefits would be gained by establishing a separate Nomination Committee.
4	4.2; 4.3	A separate Audit Committee has not been formed.	The role of the Audit Committee is carried out by the full Board. The Board considers that given its size and stage of development, no efficiencies or other benefits would be gained by establishing a separate Audit Committee. The Board will re-consider establishing a separate Audit Committee as the Company's operations grow.
9	9.2	A separate Remuneration Committee has not been formed.	The full Board carried out the functions of the Remuneration Committee. All matters of remuneration were determined by the Board in accordance with Corporations Act requirements, especially in respect of related party transactions. That is, no Directors participated in any deliberation regarding his own remuneration or related issues.

Skills, experience, expertise and term of office of each Director

A profile of each Director containing the applicable information is set out in the Directors’ Report.

Identification of independent Directors

There are currently no Directors considered to be independent. The Board will consider the appointment of independent Directors if deemed appropriate depending on the scope and scale of its operations.

Statement concerning availability of independent professional advice

Subject to the approval of the other Directors an individual Director may engage an outside adviser at the expense of Bass Metals Ltd for the purposes of seeking independent advice in appropriate circumstances.

ANNUAL REPORT For the year ended 30 June 2008

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3. CORPORATE GOVERNANCE (continued)

Names of nomination committee members and their attendance at committee meetings

The full Board carries out the functions of the Nomination Committee. The Board did not convene formally as the Nomination Committee during the Reporting Period, but rather, discussed relevant issues on an as-required basis.

Names and qualifications of audit committee members

The full Board performs the functions of the Audit Committee.

Number of audit committee meetings and names of attendees

During the reporting period Mr Rosenstreich met with the external auditors in respect of the half year and full year financial reports.

Confirmation whether performance evaluation of the Board and its members have taken place and how conducted

As part of its commitment to good corporate governance practice, and consistent with the Company’s Corporate Governance policy, the Board conducts an internal formal annual review of its performance as a whole to ensure that individual Directors and the Board as a whole work efficiently and effectively in achieving their functions. This involves completion of questionnaire requesting feedback from each Director on governance issues. The Board then assesses the results and may, if considered appropriate by the Board, undertake further action based on the responses. The Board also conducts informal reviews during regular meetings of the Board.

Company’s remuneration policies

All of the non-executive Directors received a separate Directors’ fee, which is inclusive of statutory superannuation. There is no direct link between remuneration paid to any of the Non-executive Directors and corporate performance such as bonus payments for achievements of key performance indicators.

Remuneration of Directors and key executives is competitively set with the assistance of externally prepared surveys and reports, taking into account the experience and qualifications of each individual.

Names of remuneration committee members and their attendance at committee meetings

The full Board carried out the function of the Remuneration Committee. During the Reporting Period, the Board did not convene formally as the Remuneration Committee, but rather, dealt with remuneration-related issues on an asrequired basis during regular meetings of the Board.

Existence and terms of any schemes for retirement benefits for Non-executive Directors

There are currently no retirement benefits for Non-executive Directors.

ANNUAL REPORT For the year ended 30 June 2008

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4. DIRECTORS’ REPORT

The Directors are pleased to present their report to shareholder of Bass Metals Ltd, together with the Financial Statements for the financial year ended 30 June 2008.

Bass Metals Ltd (“BSM” or the “Company”) is a company limited by shares that is incorporated and domiciled in Australia.

Directors

The Company’s Directors in office during the financial period and until the date of this report are as follows. Directors were in office for the entire period unless otherwise stated.

Mr David Donald Boyer - Non-executive Chairman BSc (Hons), CP Geo, FAIMM, MAIG, MAICD Appointed - 2 August 2004

Mr Boyer is a geologist and resource company manager with over 35 years experience in gold and base metals exploration and management of resource projects in Australia and overseas. He has considerable experience in exploration management, project management and assessment, feasibility studies and development analysis. His experience includes responsibility for technical operations from project acquisition through discovery to production and he has been instrumental in the listing of a number of successful junior exploration companies.

Mr Boyer was Managing Director of Gilt-Edged Mining NL, from its listing in 1996 until the successful take-over of that company by Goldfields Limited in 2000 and has held management positions in various companies including MIM Holdings Limited’s exploration division, a subsidiary of the French group COGEMA, and a number of listed Australian resource companies, including most recently the Managing Director position with Australian Mines Ltd.

He is also currently the Non-executive Chairman of Midas Resources Ltd.

Mr Boyer was previously a Non-executive Chairman of Western Areas NL until 28 August 2006.

Mr Michael Benjamin Rosenstreich - Managing Director BSc (Hons), MMEE, MAIMM Appointed - 15 December 2004

Mr Rosenstreich has a strong combination of technical and commercial skills gained over the past 23 years in the banking and mining sectors. He is a geologist with 12 years of experience gained in both exploration and mining roles including senior management positions with companies such as Homestake Mining, Dominion Mining and Consolidated Gold.

Since then he was a senior member of the NM Rothschild Australia resource finance team where he was involved in domestic and offshore project and corporate financings covering a range of commodity types. He left Rothschild in late 2002 to become involved with several junior and start-up resources companies in management, corporate advisory and technical consulting roles. He has been the fulltime Managing Director of BSM since November 2004.

Graduating in 1984 from Otago University (NZ) with an Honours degree in Geology, he went on to complete a Masters of Mineral and Energy Economics at Macquarie University in 1996. He is a member of the Australian Institute of Mining and Metallurgy.

ANNUAL REPORT For the year ended 30 June 2008

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4. DIRECTORS’ REPORT (continued)

Mr Craig Ian McGown - Non-executive Director

B. Comm, FCA, ASIA Appointed - 7 July 2004

Mr McGown has more than 35 years experience in corporate finance, covering mergers and acquisitions, capital raisings in both domestic and international financial markets, asset acquisitions and asset disposals, initial public offerings and corporate restructurings.

He holds a Bachelor of Commerce degree from the University of Western Australia, is a Fellow of the Institute of Chartered Accountants and an Affiliate of the Financial Services Institute of Australasia (FINSIA).

Mr McGown has significant experience with capital raisings in both domestic and foreign financial markets and has been involved in a number of successful capital raising transactions. Mr McGown has also served on the Boards of a number of listed and unlisted companies including Resource Finance Corporation Limited as an executive Director and as the executive chairman of DJ Carmichael Pty Limited.

Mr McGown is also currently an Executive Director of New Holland Capital Pty Limited, Non-executive Chairman of Pioneer Nickel Ltd, Entek Energy Ltd and Non-executive Director of Peel Exploration Limited.

Mr Kieran George Rodgers - Non-executive Director B.E. (Hons.) Min. (UNSW), MBA (IMD) Appointed - 21 March 2005

Mr Rodgers is the Finance Director and Chief Financial Officer of ASX-listed Intec Ltd.

He was appointed an Executive Director of Intec Ltd on 28 February 2007 and is Intec Ltd’s nominated Director on the Board of BSM.

He joined Intec Ltd in March 2001 after 13 years of experience in merchant banking and financial consulting, largely with Resource Finance Corporation Ltd, with a specific focus on the Australian and international resources industry.

Prior to entering the merchant banking sector, he gained three years of operational mining engineering experience in the gold and base metals industries, including at the Cobar copper mine.

Ms Susan Patricia Hunter - Company Secretary BCom, ACA, F Fin (GDipAFin(SecInst)), MAICD (Dip), ACIS (Dip) Appointed – 28 September 2006

Ms Hunter has over 14 years experience in the corporate finance industry.

She holds a Bachelor of Commerce degree from the University of Western Australia majoring in accounting and finance, is a Member of the Australian Institute of Chartered Accountants, a Fellow of the Financial Services Institute of Australasia, a Member of the Australian Institute of Company Directors and is an Associate Director of consulting firm Norvest Corporate Pty Ltd.

Ms Hunter is also a Member of the Institute of Chartered Secretaries and Administrators and Chartered Secretaries Australia and she is currently Company Secretary for several Australian Stock Exchange listed companies and an AIM listed company.

Principal Activities

During the period the principal activities of the Company consisted of mineral exploration, development and extraction industry within Australia. There has been no significant change in these activities during the financial period.

Dividends

No dividends have been paid during the period and no dividends have been recommended by the Directors.

Result for the Financial Period

Profit from ordinary activities after income tax expense was $1,775,533 (2007: $1,312,002 loss)

Review of Operations

A review of the operations during the financial year is set out in Section 2 of this report.

ANNUAL REPORT For the year ended 30 June 2008

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4. DIRECTORS’ REPORT (continued)

Remuneration Report (Audited)

This report details the amount and nature of remuneration of each Director of the Company and the executives receiving the highest remuneration.

Remuneration Policy

The principles used to determine the nature and amount of remuneration are applied through a remuneration policy which ensures the remuneration package properly reflects the person’s duties and responsibilities and that the remuneration is competitive in attracting, retaining and motivating people of the highest quality.

The remuneration policy, setting the terms and conditions for the Directors and other executives has been developed by the Board after seeking professional advice and taking into account market conditions and comparable salary levels for companies of a similar size and operating in similar sectors.

The remuneration policy is to provide a fixed remuneration component and a specific equity related component. The Board believes that this remuneration policy is appropriate given the stage of development of the Company and the activities which it undertakes and is appropriate in aligning Director and executive objectives with shareholder and businesses objectives.

The remuneration framework has regard to shareholders’ interests in the following ways:

Focuses on sustained growth as well as focusing the executive on key non-financial drivers of value, and
Attracts and retains high calibre executives.

The remuneration framework has regard to executives’ interests in the following ways:

Rewards performance, capability and experience,
Reflects competitive reward for contributions to shareholder growth,
Provides a clear structure for earning rewards, and
Provides recognition for contribution.

Non-executive Directors

The Board policy is to remunerate Non-executive Directors at market rates for comparable companies for time, commitment and responsibilities. The Board determines payments to the Non-executive Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to Non-executive Directors is subject to approval by shareholders at a General Meeting. Fees for Non-executive Directors are not linked to the performance of the Company. However, to align Non-executive Directors’ interests with shareholder interests, the Non-executive Directors are encouraged to hold shares in the Company and may receive options.

The Directors have resolved that Non-executive Directors fees will be $65,000 per annum for the Chairman and $40,000 per annum for Non-executive Directors, inclusive of statutory superannuation contributions. Shareholders approved on 10 August 2006 the aggregate remuneration for all Non-executive Directors at an amount of $250,000 per annum. This amount does not include the value of options provided to Non-executive Directors.

Non-executive Directors are eligible for participation in the Bass Metals Ltd Share Purchase Plan and the Bass Metals Ltd Employee Share Option Plan. Any issue of shares to Directors under the Bass Metals Ltd Employee Share Purchase Plan or options under the Bass Metals Ltd Employee Share Option Plan will be subject to shareholder approval pursuant to the provisions of the ASX Listing Rules and the Corporations Act 2001.

Executives

Executive Directors and executives receive either a salary plus superannuation guarantee contributions as required by law, currently set at 9%, or provide their services via a consultancy arrangement. Directors and executives do not receive any retirement benefits. Individuals may, however, choose to sacrifice part of their salary to increase payments towards superannuation. In addition long term incentives are received through participation in the Bass Metals Ltd Share Purchase Plan and the Bass Metals Ltd Employee Share Option Plan.

All remuneration paid to Directors and executives is valued at cost to the Company and expensed. Options are valued using the Black-Scholes methodology.

ANNUAL REPORT For the year ended 30 June 2008

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4. DIRECTORS’ REPORT (continued)

Base Salary

Structured as a total employment cost package comprising cash, leave benefits and superannuation. Executives’ remuneration is reviewed annually with regard to competitiveness and performance. There are no guaranteed salary increases fixed in any senior executives’ contracts.

Benefits

Executives may receive reimbursements of out-of-pocket expenses incurred in the undertaking of their duties, including reasonable travel, accommodation and entertainment expenses.

Bass Metals Ltd Share Purchase Plan

Information on the Bass Metals Ltd Share Purchase Plan is set out in Note 23 (i).

Bass Metals Ltd Employee Share Option Plan

Information on the Bass Metals Ltd Employee Share Option Plan is set out in Note 23 (ii).

Compensation of Key Management Personnel for the year ended 30 June 2008.

The following table discloses the remuneration of the Key Management Personnel (Directors and Company executives) of the Company. The information in this table is audited.

	Short- term benefits Post- employment benefits Non cash benefits Share- based payments (options) Total remuneration represented by options Total
	$ $ $ $ % $
Executive Director Mr M Rosenstreich1 2008 2007 Non-Executive Directors Mr D Boyer 2008 2007 Mr C McGown2 2008 2007 Mr K Rodgers3 2008 2007 Total Directors 2008 2007 Company Executives Ms S Hunter4 2008 2007 Dr T Murphy 2008 2007 Mr L Henley 2008 2007 Total Company Executives 2008 2007
	262,750 20,000 1,126 12,204 4.1 296,080
	201,190 15,476 - 242,900 52.8 459,566
	59,633 5,367 - - 65,000
	59,150 5,850 - 66,900 131,900
	40,000 - - - 40,000
	40,000 - - 50,175 90,175
	40,000 - - - 40,000
	40,000 - - 50,175 90,175
	402,383 25,367 1,126 12,204 441,080
	340,340 21,326 410,150 771,816
	69,157 - - 23,000 25.0 92,157
	90,880 - - - 90,880
	137,615 12,385 - 27,800 15.6 177,800
	114,000 18,060 - 8,625 6.1 140,685
	141,767 18,233 1,126 12,000 6.9 173,126
	32,767 3,900 - - 36,667
	348,539 30,618 1,126 62,800 443,083
	237,647 21,960 8,625 268,232

Note 1 – Included in short-term benefits is a bonus paid during the year of $50,000 which was approved by the Board and was based on the operational performance at Que River mine.

Note 2 – Mr McGown’s short-term benefits were paid to a wholly owned subsidiary of D J Carmichael Pty Limited of which Mr C McGown was a Director and employee.

Note 3 – Mr K Rodgers’ short-term benefits are paid to a wholly owned subsidiary of Intec Ltd of which Mr K Rodgers is a Director and employee.

Note 4 – Ms Hunter’s short-term benefits are paid direct to Norvest Corporate Pty Ltd as Ms Hunter is an associate of that Company.

ANNUAL REPORT For the year ended 30 June 2008

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4. DIRECTORS’ REPORT (continued)

Other than the Executive Directors and Company executives, no other person is concerned in, or takes part in, the management of the Company; or has authority and responsibility for planning, directing and controlling the activities of the entity. As such, during the financial year, the Company did not have any person, other than Directors and Company executives, that would meet the definition of “Key Management Personnel” for the purposes of AASB124 or “Company Executive” for the purposes of section 300A of the Corporations Act 2001 (“Act”). Remuneration details of the Company Secretary are disclosed as section 300A(1B)(a) of the Act defines a “Company Executive” to specifically include a secretary of the entity.

The fair value of the options is calculated at the date of grant using the Black-Scholes model and allocated to each reporting period equally over the period from grant date to vesting date. Details of the inputs used for these calculations are included in note 23(iii). The value disclosed above is a portion of the fair value of the options allocated to this reporting period.

Shareholders approved on 10 August 2006 the aggregate remuneration for all Non-executive Directors at an amount of $250,000 per annum. This amount does not include the value of options provided to Non-executive Directors.

Employment Contracts

The Managing Director, Mr Mike Rosenstreich, is retained via an employment contract dated 22 September 2008 and is valid to 30 June 2011. This agreement provides for a total package amount inclusive of prescribed superannuation and for participation in the Company’s Share Purchase Plan and Employee Share Option Plan. The cash remuneration inclusive of superannuation paid under the agreement from 1 July 2008 is $300,000 and is subject to annual review.

Options Issued as Part of Remuneration

Options are issued to Directors and executives as part of their remuneration. The options are not issued based on performance criteria, but are issued to Directors and executives of Bass Metals Ltd to increase goal congruence between executives, Directors and shareholders.

Directors
Mr D Boyer
Mr M Rosenstreich
Mr C McGown
Company
Executives
Ms S Hunter
Ms S Hunter
Dr T Murphy
Dr T Murphy
Mr L Henley
Mr L Henley

Vested
number
Granted
number
Grant date
Value per
option at
grant date
Exercise
price
First
exercise
date
Last
exercise
date
300,000
300,000
22/12/2006
22.3 cents
27.5 cents
-
22/12/2011
850,000
850,000
22/12/2006
22.3 cents
27.5 cents
-
22/12/2011
225,000
225,000
22/12/2006
22.3 cents
27.5 cents
-
22/12/2011
125,000
125,000
31/12/2006
18.4 cents
37.5 cents
-
31/12/2011
100,000
100,000
31/12/2007
-
51.0 cents
-
31/12/2012
125,000
125,000
31/12/2006
18.4 cents
37.5 cents
-
31/12/2011
100,000
100,000
31/12/2007
-
51.0 cents
-
31/12/2012
100,000
100,000
31/12/2007
-
51.0 cents
-
31/12/2012
125,000
125,000
18/04/2008
9.6 cents
37.5 cents
-
02/11/2011

Share Options

At the date of this report unissued ordinary shares of the Company under option are:

Grant Date 22 December 2006 31 December 2006 23 April 2007 31 December 2007 18 April 2008	Date of expiry Exercise price	Number under option
	22 December 2011 27.5 cents 31 December 2011 37.5 cents 30 April 2010 40 cents 31 December 2012 51 cents 02 November 2011 37.5 cents	1,600,000 400,000 4,176,939 665,000 125,000
		6,966,939

ANNUAL REPORT For the year ended 30 June 2008

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4. DIRECTORS’ REPORT (continued)

Directors’ Interest

The relevant interest of each Director in the shares and options over shares issued by the Company at the date of this report is as follows:

Director Mr D Boyer Mr M Rosenstreich Mr C McGown Mr K Rodgers1	Ordinary Shares Options Direct Indirect Direct Indirect
	1,150,000 140,000 357,376 6,875 1,246,251 - 892,813 - 15,002 1,336,913 625 279,971 110,135 32,433 3,007 1,622

Note 1 - These amounts do not include 23,992,649 ordinary shares and 1,227,477 options held by Intec Hellyer Metals Pty Ltd for which Mr K Rodgers is a Director but does not have a legal relevant interest in these securities.

Company Performance

Comments on performance are set out in the review of operations.

Significant Changes in the State of Affairs

There were no significant changes in the state of affairs of the Company since the year end.

Likely Developments and Expected Results

The likely developments in the operation of the Company and the expected results of those operations in future financial years are as follows.

The Company will continue to:

Secure a strategic land position incorporating a full spectrum of targets from advanced drill ready prospects to conceptual large scale anomalies.
Evaluate the development of the Hellyer Mine Project including the Fossey and Hellyer Resource.
Assess opportunities to expand its business via development of its existing assets and potential project acquisitions both within Australia and overseas.

Environmental Regulation

The Company is subject to environmental regulation in respect of its exploration activities. The Company makes every effort to comply with the relevant regulations and is not aware of any breaches.

Meetings of Directors

The following table sets out the number of meetings of the Company’s Directors held during the year ended 30 June 2008 and the number of meetings attended by each Director.

Director	Directors’	Meetings
	A	B
Mr D Boyer	17	17
Mr M Rosenstreich	17	17
Mr C McGown	16	17
Mr K Rodgers	17	17
A – meetings attended
B – meetings held whilst a Director

As at the date of this report, the Company has not formed any committees other than a hedge committee as the Directors consider that at present the size of the Company does not warrant such. Audit, corporate governance, Director nomination and remuneration matters are all handled by the full Board.

ANNUAL REPORT For the year ended 30 June 2008

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4. DIRECTORS’ REPORT (continued)

Proceedings on Behalf of the Company

No person has applied to the Court under Section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of the proceedings.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under Section 237 of the Corporations Act 2001.

Indemnification and Insurance of Directors and Officers

Indemnification

The Company has agreed to indemnify current Directors and officers and past Directors and officers against all liabilities to another person (other than the Company or a related body corporate), including legal expenses that may arise from their position as directors and officers of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. The agreement stipulates that the Company will meet the full amount of any such liabilities, including costs and expenses.

Insurance

The Directors have not included details of the amount of the premium paid in respect of the Directors’ and officers’ liability insurance contract, as such disclosure is prohibited under the terms of the contract.

Events Subsequent to Reporting Date

No matters or circumstances have arisen, since the end of the financial year, which significantly affected, or may significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the Company in subsequent financial years.

Non-audit Services

The Board of Directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons:

all non-audit services are reviewed and approved by the Board prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and
the nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES110 : Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.

The fees for non-audit services paid/payable to Grant Thornton (WA) Partnership during the year ended 30 June 2008 is set out in Note 28 in the financial statements.

Auditors Independence Declaration

Section 307C of the Corporations Act 2001 requires the Company’s auditors, Grant Thornton (WA) Partnership, to provide the Directors with a written Independence Declaration in relation to their audit of the financial report for the year ended 30 June 2008. This written Auditor’s Independence Declaration is attached to the Auditor’s Independent Audit Report to the members and forms part of this Director’s Report.

Signed in accordance with a resolution of Directors.

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M Rosenstreich Managing Director

West Perth, Western Australia 26 September 2008

ANNUAL REPORT For the year ended 30 June 2008

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INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2008

Note Sales revenue 2 Cost of sales 3 Gross profit Other income 2 Other expenses 3 Share based payment expenses 3 Finance costs 3 Profit/(loss) before income tax Income tax benefit 4 Profit/(loss) after income tax Basic and diluted earnings/(loss) per share (cents) 5	2008 $ 2007 $ 9,370,918 - (7,135,951) -
	2,234,967 - 1,890,273 365,709 (2,556,045) (1,263,273) (111,804) (407,121) (20,844) (7,317)
	1,436,547 (1,312,002) 338,986 -
	1,775,533 (1,312,002)
	1.8 (2.1)

The above Income Statement should be read in conjunction with the accompanying notes.

ANNUAL REPORT For the year ended 30 June 2008

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BALANCE SHEET AS AT 30 JUNE 2008 Note CURRENT ASSETS Cash and cash equivalents 6 Trade and other receivables 7 Inventories 8 Financial assets 9 Total Current Assets NON-CURRENT ASSETS Trade and other receivables 7 Plant & equipment 10 Mine properties 11 Capitalised exploration and evaluation 12 Financial assets 9 Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 14 Financial liabilities 15 Provisions 16 Total Current Liabilities NON-CURRENT LIABILITIES Financial liabilities 15 Provisions 16 Total Non Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 17 Option reserve 18 Accumulated losses TOTAL EQUITY	2008 $ 2007 $ 4,429,569 4,610,627 3,820,639 669,665 768,661 - 2,128,194 -
	11,147,063 5,280,292
	617,000 259,100 180,342 151,231 3,223,613 - 10,403,093 8,809,022 579,741 2
	15,003,789 9,219,355
	26,150,852 14,499,647
	2,952,016 702,404 66,545 19,072 846,000 -
	3,864,561 721,476
	- 74,561 3,574 -
	3,574 74,561
	3,868,135 796,037
	22,282,717 13,703,610
	22,097,969 15,406,200 685,965 574,160 (501,217) (2,276,750)
	22,282,717 13,703,610

The above Balance Sheet should be read in conjunction with the accompanying notes.

ANNUAL REPORT For the year ended 30 June 2008

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STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2008

Balance at 01 Jul 2006 Shares issued during the year Transaction costs Share options issued during the period in accordance with AASB 2 - Share based payments Loss attributable to members of parent entity Balance at 30 June 2007 Balance at 01 Jul 2007 Shares issued during the year Transaction costs Share options issued during the period in accordance with AASB 2 - Share based payments Profit attributable to members of parent entity Balance at 30 June 2008	Issued Capital Accumulated Losses	Option Reserve Total
	$ $ 5,516,114 (964,748) 10,313,631 - (423,545) - - - - (1,312,002)	$ $ 159,940 4,711,306 - 10,313,631 - (423,545) 414,220 414,220 - (1,312,002)
	15,406,200 (2,276,750)	574,160 13,703,610
	15,406,200 (2,276,750) 6,965,339 - (273,570) - - - - 1,775,533	574,161 13,703,611 - 6,965,339 - (273,570) 111,804 111,804 - 1,775,533
	22,097,969 (501,217)	685,965 22,282,717

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

ANNUAL REPORT For the year ended 30 June 2008

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CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2008

Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Other - security deposits Interest received Interest paid Payments for derivative financial instruments Net cash provided by/(used in) operating activities 22(i) Cash flows from investing activities Purchase of plant and equipment Payments for exploration properties Payments for exploration and evaluation Payments for development of mineral properties Net cash (used in) investing activities Cash flows from financing activities Proceeds from issue of shares Repayments of borrowings Payments for share issue costs Net cash provided by financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash at the end of the year 6	2008 $ 2007 $ 6,855,778 - (5,232,747) (1,095,426) (384,967) (105,000) 335,617 153,688 (5,990) (7,317) (1,301,727) -
	265,964 (1,054,055) (715,360) (73,734) - (365,393) (3,302,654) (3,709,775) (3,103,339) -
	(7,121,353) (4,148,902) 6,988,839 8,968,130 (20,582) (10,181) (293,926) (423,545)
	6,674,331 8,534,404 (181,058) 3,331,447 4,610,627 1,279,180
	4,429,569 4,610,627

The above Cash Flow Statement should be read in conjunction with the accompanying notes.

ANNUAL REPORT For the year ended 30 June 2008

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1. Statement of Significant Accounting Policies

This financial report covers Bass Metals Ltd. Bass Metals Ltd is a listed public Company, incorporated and domiciled in Australia.

(a) 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 presented below. They have been consistently applied unless otherwise stated.

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.

(b) Income Tax

The Company adopts the liability method of tax-effect accounting whereby the income tax expense is based on the profit from operations adjusted for any non-assessable or disallowed items.

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.

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 taxation 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.

Research and development tax offsets are treated as an income tax benefit (or reduction in income tax expense when received or receivable.

(c) Cash & Cash Equivalents

For the purposes of the Cash Flow Statement, cash and cash equivalents includes cash on hand and in banks, and money market investments readily convertible to cash within two working days, net of outstanding bank overdrafts.

(d) Trade and Other Receivables

All trade debtors are recognised at the amounts receivable as they are due for settlement no more than 30 days from the date of recognition.

Collectibility of trade debtors is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impairment is raised where some doubt as to collection exists.

(e) Inventories

Inventories are measured at the lower of cost and net realisable value. Costs, including an appropriate portion of fixed and variable overhead expenses, are assigned to inventory on hand by the method most appropriate to each particular class of inventory, with the majority being valued on a first in first out basis. Net realisable value represents the estimated selling price less all estimated costs of completion.

ANNUAL REPORT For the year ended 30 June 2008

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1. Statement of Significant Accounting Policies (continued)

(f) Financial Instruments

Recognition and Initial Measurement

Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention.

Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below.

Derecognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity is no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.

Classification and Subsequent Measurement

(i) Financial assets at fair value through profit or loss

Financial assets are classified at fair value through profit or loss when they are held for trading for the purpose of short term profit taking, where they are derivatives not held for hedging purposes, or designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Realised and unrealised gains and losses arising from changes in fair value are included in profit or loss in the period in which they arise.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost using the effective interest rate method.

(iii) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Company’s intention to hold these investments to maturity. They are subsequently measured at amortised cost using the effective interest rate method.

(iv) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated as such or that are not classified in any of the other categories. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.

(v) Financial liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest rate method.

Derivative Instruments

Derivative instruments are measured at fair value. Gains and losses arising from changes in fair value are taken to the income statement unless they are designated as hedges.

Fair Value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

ANNUAL REPORT For the year ended 30 June 2008

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1. Statement of Significant Accounting Policies (continued)

(f) Financial Instruments (continued)

Impairment

At each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement.

Financial Guarantees

Where material, financial guarantees issued, which require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due, are recognised as a financial liability at fair value on initial recognition.

The guarantee is subsequently measured at the higher of the best estimate of the obligation and the amount initially recognised less, when appropriate, cumulative amortisation in accordance with AASB 118: Revenue. Where the entry gives guarantees in exchange for a fee, revenue is recognised under AASB 118.

The fair value of financial guarantee contracts has been assessed using a probability weighted discounted cash flow approach. The probability has been based on:

the likelihood of the guaranteed party defaulting in a year period;
the proportion of the exposure that is not expected to be recovered due to the guaranteed party defaulting; and
the maximum loss exposed if the guaranteed party were to default.

(g) Plant & Equipment

Plant and equipment is measured on the cost basis less depreciation and impairment losses.

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 been discounted to their present values in determining recoverable amounts.

Depreciation is calculated on the straight line method and is brought to account over the estimated useful lives of all plant and equipment from the time the asset is held ready for use. The depreciation rates used are:

Office furniture 20.00% Office computer equipment 33.33%

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 assets carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposal are determined by comparing proceeds with the carrying amount.

(h) Leases

Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership, that are transferred to the Company, are classified as finance leases.

Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term.

ANNUAL REPORT For the year ended 30 June 2008

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1. Statement of Significant Accounting Policies (continued)

(h) Leases (continued)

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

(i) Mine Properties

Mine properties represent the accumulation of all exploration, evaluation and development expenditure incurred in respect of areas of interest in which mining has commenced. When further development expenditure is incurred in respect of mine property after the commencement of production, such expenditure is carried forward as part of the mine property only when substantial future economic benefits are thereby established, otherwise such expenditure is classified as part of the cost of production.

Amortisation is provided on a unit of production basis (other than restoration and rehabilitation expenditure detailed below) which results in a write off of the cost proportional to the depletion of the proven and probable mineral reserves.

The net carrying value of each area of interest is reviewed regularly and to the extent to which this value exceeds its recoverable amount, the excess is either fully provided against or written off in the financial year in which this is determined.

The Company provides for environmental restoration and rehabilitation at site which include any cost to dismantle and removal of certain items of plant and equipment. The cost of an item includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs when an item is acquired or as a consequence of having used the item during that period. This asset is depreciated on the basis of the current estimate of the useful life of the asset.

In accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets an entity is also required to recognise as a provision the best estimate of the present value of expenditure required to settle the obligation. The present value of estimated future cashflows is measured using a current market discount rate.

(i) Capitalised Exploration and Evaluation Expenditure

Exploration and evaluation 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.

Accumulated costs in relation to an abandoned area are written off in full against profit or loss 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 (refer to Mine Properties above).

A regular review for impairment is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

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

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

ANNUAL REPORT For the year ended 30 June 2008

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1. Statement of Significant Accounting Policies (continued)

(j) Trade and Other Payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial period and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

(k) Provisions

Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

(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 outflows to be made for those benefits. Those cashflows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cashflows.

Issues of employee options are brought to account through the Income Statement. At the time of exercise, the amounts receivable from employees are recognised in the Balance Sheet as share capital.

(l) Revenue and Other Income

(i) Ore Sales

Revenue from the sale of ore is recognised when the product has been delivered and:

(i) risk has been passed to the customer;
(ii) the product is in a form suitable for delivery;
(iii) the quantity of the product can be determined with reasonable accuracy;
(iv) the product has been delivered to the customer and is no longer under the physical control of the Company; and,
(v) the selling price can be determined with reasonable accuracy.

Sales revenue represents gross proceeds receivable from the customer. Sales are initially recognised at an estimated value when the product has been delivered. Adjustments are made to reflect variations in the metal price, assay, weight and currency between the time of delivery and the time of final settlement of sales proceeds.

(ii) Interest

Interest earned is recognised as and when it is receivable, including interest which is accrued and is readily convertible to cash within two working days. Accrued interest is recorded as part of other debtors.

(iii) Other Income

Other income is recognised as and when it is receivable and has been recorded as part of other receivables if it has not yet been received.

(m) 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 Balance Sheet are shown inclusive of GST.

ANNUAL REPORT For the year ended 30 June 2008

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1. Statement of Significant Accounting Policies (continued)

(n) Borrowing Costs

Borrowing 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 borrowing costs are recognised in the Income Statement in the period in which they are incurred.

(o) Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

(p) Critical Accounting Estimates and Judgements

The directors evaluate estimates and judgements 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 Company.

Key estimates and assumptions made in preparation of these financial statements are described below:

Impairment

The Company assesses impairment at each reporting date by evaluating conditions specific to the entity 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.

No impairment has been recognised for the year ended 30 June 2008.

Recoverability of Assets

Certain assumptions are required to be made in order to assess the recoverability of assets. Key assumptions include the future price of commodities, future cash flows, an estimated discount rate and estimates of ore reserves. In addition, cash flows are projected over the life of mine, which is based on proved and probable ore reserves. Estimates of ore reserves in themselves are dependent on various assumptions, in addition to those described above, including cut-off grades. Changes in these estimates could materially impact on ore reserves, and could therefore affect estimates of future cash flows used in the assessment of recoverable amount.

Determination of Ore Reserves and Remaining Mine Life

The Company estimates its ore reserves and mineral resources based on information complied by Competent Persons (as defined in accordance with the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Resources are revised to the December 2004 (the JORC code). Reserves determined in this way are taken into account in the calculation of depreciation, amortisation, impairment, deferred mining costs, rehabilitation and environmental expenditure.

In estimating the remaining life of the mine for the purposes of amortisation and depreciation calculations, due regard is given, not only of remaining recoverable metals contained in proved and probable ore reserves, but also to limitations which could arise from the potential for changes in technology, demand, and other issues which are inherently difficult to estimate over a lengthy time frame.

Where a change in estimated recoverable metals contained in proved and probable ore reserves is made, depreciation and amortisation is accounted for prospectively.

The determination of ore reserves and remaining mine life affects the carrying value of a number of the Company’s assets and liabilities including deferred mining costs and the provision for rehabilitation.

Provision for Restoration and Rehabilitation

Certain assumptions are required to be made in determining the amount expected to be incurred to settle its obligations in relation to restoration and rehabilitation of the mine site. Key assumptions include the amount and timing of future cash flow estimates. A 10% increase to cost assumptions will result in a $0.1 million increase in the liability and in the carrying value of the asset.

ANNUAL REPORT For the year ended 30 June 2008

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(q) Application of Accounting Standards

The following Australian Accounting Standards have recently been issued or amended but are not yet effective. They have not been adopted in preparation of the financial statements at reporting date.

AASB Amendment	Affected Standard(s)	Nature of Change to Accounting Policy	Application Date of *Standard **	Application Date for Group
AASB 2007 – 3 Amendments to Australian Accounting Standards	AASB 5 “Non-current assets held for sale and discontinued operations” AASB 6 “Exploration for and Evaluation of Mineral Resources” AASB 102 Inventories AASB 107 Cash Flow Statements AASB 119 “Employee Benefits” AASB 127 “Consolidated and Separate Financial Statements” AASB 134 “Interim Financial Reporting” AASB 136 “Impairment Assets” AASB 1023 “General Insurance Contracts” AASB 1038 “Life Insurance Contracts”	The disclosure requirements of AASB 114: Segment Reporting have been replaced due to the issuing of AASB 8: Segment Reporting in February 2007. These amendments will involve changes to segment reporting disclosures within the finance report. However, it is anticipated there will be no direct impact on recognition and measurement criteria amounts included in the financial report.	1 Jan 09	1 Jul 09
AASB 8 Operating Segments	AASB 114 Segment Reporting	As above.	1 Jan 09	1 Jul 09
AASB 2007 – 6 Amendments to Australian Accounting Standards	AASB 1 First time adoption of AIRFRS AASB 101 Presentation of Financial Statements AASB 107 Cash Flow Statements AASB 111 Construction Contracts AASB 116 Property Plant and Equipment AASB 138 Intangible Assets	The revised AASB 123: Borrowing Costs issued in June 2007 has removed the option to expense all borrowing costs. This amendment will require the capitalisation of all borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset. However, there will be no direct impact to the amounts included in the Company as the Company currently does not have any borrowings attributable to the acquisition, construction or production of a qualifying asset.	1 Jan 09	1 Jul 09
AASB 123 Borrowing Costs	AASB 123 Borrowing Costs	As above.	1 Jan 09	1 Jul 09
AASB 2007-8 Amendments to Australian Accounting Standards	AASB 101 Presentation of Financial Statements	The revised AASB 101: Presentation of Financial Statements issued in September 2007 requires the presentation of a statement of comprehensive income and make changes to the statement of changes in equity.	1 Jan 09	1 Jul 09
AASB 101	AASB 101 Presentation of Financial Statements	As above.	1 Jan 09	1 Jul 09

ANNUAL REPORT For the year ended 30 June 2008

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2. Revenue

(a) Sales revenue Ore sales Trial mining commitment fee Total sales revenue (b) Other income Interest received Exploration management fees Net gain on derivative financial instruments Other income Total other income Total revenues	2008 $ 2007 $ 9,370,918 - - 100,000
	9,370,918 100,000
	336,482 153,688 125,942 110,542 1,427,849 - - 1,479
	1,890,273 265,709
	11,261,191 365,709

3. Profit for the Year

The profit or loss for the year is stated after taking into account the following:

Expenses

(a) Cost of sales Production costs Amortisation of mine closure and restoration Amortisation of mining properties Royalties Treatment charges Total cost of sales (b) Other expenses Employee benefit expense Contracting and consulting expense Operating lease expense Other administration expense Depreciation – plant & equipment Write-off of capitalised exploration expenditure Exploration expenditure expensed Total other expenses (c) Share based payments Share based payments (d) Finance costs Finance costs Total expenses	3,321,579 - 507,600 - 1,642,432 - 153,994 - 1,510,346 -
	7,135,951 -
	631,467 258,698 698,841 392,507 48,615 33,584 416,410 432,989 87,594 66,478 560,597 41,492 112,521 37,525
	2,556,045 1,263,273
	111,804 407,121 20,844 7,317
	9,824,644 1,677,711

ANNUAL REPORT For the year ended 30 June 2008

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4. Income Tax Expense

The prima facie tax on profit/(loss) before income tax is reconciled as follows: Prima facie tax benefit/(expense) on profit/(loss) before income tax at 30% (2007:30%) Add: Tax effect of: - non deductible expenditure - equity based payments Less: Tax effect of: - share issue expenses Add: Tax effect of: - exploration expenditure and evaluation - research and development tax offset Deferred tax asset not brought to account Income tax benefit/(expense) attributable to loss from ordinary activities before tax	2008 $ 2007 $ 430,964 (393,601) 1,180 5,909 33,541 - (65,621) (49,207)
	400,064 (436,899) (1,675,187) (1,606,077) 338,986 - 1,275,123 2,042,976
	338,986 -

The prima facie tax on profit/(loss) before income tax is reconciled as
follows:
Prima facie tax benefit/(expense) on profit/(loss) before income tax
at 30% (2007:30%)
Add:
Tax effect of:
- non deductible expenditure
- equity based payments
Less:
Tax effect of:
- share issue expenses
Add:
Tax effect of:
- exploration expenditure and evaluation
- research and development tax offset
Deferred tax asset not brought to account
Income tax benefit/(expense) attributable to loss from ordinary
activities before tax

2008
$
2007
$
430,964
(393,601)
1,180
5,909
33,541
-
(65,621)
(49,207)

400,064
(436,899)
(1,675,187)
(1,606,077)
338,986
-
1,275,123
2,042,976

338,986
-

The potential deferred tax asset relating to tax losses amounting to $4,436,214 (2007: $3,248,628) and temporary differences amounting to $257,031 (2007: $121,366) which have been offset by the potential deferred tax liability of temporary differences amounting to $4,320,853 (2007: $2,642,707) has not been brought to account in these financial statements as the benefits will only be realised if the conditions for deducibility set out in Note 1(b) occur.

5. Earnings Per Share

Basic and diluted earnings/(loss) per share (cents) Profit/(loss) used in the calculation of basic EPS Weighted average number of shares outstanding during the year used in calculations of basic earnings/(loss) per share	2008 Cents 2007 Cents 1.8 (2.1)
	1,775,533 (1,312,002)
	97,736,977 62,406,676

Diluted earnings/(loss) per share has not been disclosed as it is not materially different from basic earnings/(loss) per share.

6. Cash and Cash Equivalents

Cash at bank and in hand Short-term bank deposit	2008 $ 2007 $ 104,328 50,254 4,325,241 4,560,373
	4,429,569 4,610,627

The effective interest rate on short-term bank deposits was 7.25% (2007 : 6.0%); a majority of these deposits are at call.

ANNUAL REPORT For the year ended 30 June 2008

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7. Trade and Other Receivables

Note Current Trade receivables Other receivables Prepayments Government research and development offset 4 Operating lease bonds Non-current Tenement security deposits1 Operating lease bonds Loan to key management personnel2	2008 $ 2007 $ 3,099,434 488,319 309,714 138,468 68,938 42,878 338,986 - 3,567 -
	3,820,639 669,665
	597,500 215,000 - 1,100 19,500 43,000
	617,000 259,100

Note 1: Tenement security deposits are held in fixed term deposits of three months duration. These amounts are not available for use and thus do not constitute cash assets.

Note 2: Further information relating to the loan to key management personnel is set out in Note 27(iii).

8. Inventories

At cost Finished goods (ore to be delivered) Financial Assets Current Derivative financial instruments – at fair value1 Non-current Derivative financial instruments – at fair value1 Shares in controlled entity – at cost	768,661 -
	768,661 -
	2,128,194 -
	2,128,194 -
	579,739 - 2 2
	579,741 2

9. Financial Assets

Note 1: Further information relating to the derivatives is set out in note 26.

The following controlled entity was incorporated on 31 May 2007:

Que Metals Pty Ltd 100% Interest

Bass Metals Ltd has not prepared consolidated financial statements for this period on the basis that Que Metals Pty Ltd is dormant, only has share capital of $2 and consolidation would not have a material effect on Bass Metals Ltd’s financial statements.

ANNUAL REPORT For the year ended 30 June 2008

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10. Plant & Equipment

Plant and Equipment At cost Accumulated depreciation Leased Plant and Equipment At cost Accumulated depreciation Total Plant and Equipment	2008 $ 2007 $ 240,764 127,443 (106,198) (44,882)
	134,566 82,561
	103,020 103,020 (57,244) (34,350)
	45,776 68,670
	180,342 151,231

Movements in carrying amounts

The carrying amounts of each class of plant and equipment between the beginning and end of the current and last financial year are set out below:

Plant and Equipment Leased Plant and Equipment Total $ $ $ Balance at 1 July 2006 40,970 103,004 143,974 Additions 73,733 - 73,733 Disposals - - - Depreciation expense (32,142) (34,334) (66,476) Balance at 30 June 2007 82,561 68,670 151,231 Plant and Equipment Leased Plant and Equipment Total Balance at 1 July 2007 82,561 68,670 151,231 Additions 119,108 - 119,108 Disposals (2,403) - (2,403) Depreciation expense (64,700) (22,894) (87,594) Balance at 30 June 2008 134,566 45,776 180,342 Mine Properties 2008 $ 2007 $ Que River Capital Infrastructure At cost 602,040 - Accumulated amortisation (218,394) - 383,646 - Que River Mine Closure and Restoration At cost 846,000 - Accumulated amortisation (507,600) - 338,400 - Que River Mine Development At cost 3,925,605 - Accumulated amortisation (1,424,038) - 2,501,567 - Total Mine Properties 3,223,613 -	Plant and Equipment Leased Plant and Equipment Total	Plant and Equipment Leased Plant and Equipment Total
	$ $ $ 40,970 103,004 143,974 73,733 - 73,733 - - - (32,142) (34,334) (66,476)
	82,561 68,670 151,231
	Plant and Equipment Leased Plant and Equipment Total
	82,561 119,108 (2,403) (64,700)	68,670 151,231 - 119,108 - (2,403) (22,894) (87,594)
	134,566	45,776 180,342
		2008 $ 2007 $ 602,040 - (218,394) -
		383,646 -
		846,000 - (507,600) -
		338,400 -
		3,925,605 - (1,424,038) -
		2,501,567 -
		3,223,613 -

11. Mine Properties

ANNUAL REPORT For the year ended 30 June 2008

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11. Mine Properties (continued)

The carrying amounts of each class of mine properties between the beginning and end of the current financial year are set out below:

Balance at 1 July 2007 Additions Transfer from capitalised exploration and evaluation Amortisation expense Balance at 30 June 2008	Que River capital infrastructure Que River mine closure and restoration Que River mine development Total
	$ $ $ $ - - - - 602,040 846,000 3,103,339 4,551,379 - - 822,266 822,266 (218,394) (507,600) (1,424,038) (2,150,032)
	383,646 338,400 2,501,567 3,223,613

12. Capitalised Exploration and Evaluation Expenditure

The Company has mineral exploration costs carried forward in respect of areas of interest currently in the phase of exploration and evaluation: Balance at the beginning of the period Exploration properties acquired Expenditure capitalised for the period Write-off resulting from relinquished tenements Transfer to mine properties for development of Que River Write-off of project evaluation expenditure Balance at the end of the period	2008 $ 2007 $ 8,809,022 3,451,110 - 1,652,493 2,976,934 3,746,911 (560,597) - (822,266) - - (41,492)
	10,403,093 8,809,022

The Company has mineral exploration costs carried forward in respect
of areas of interest currently in the phase of exploration and evaluation:
Balance at the beginning of the period
Exploration properties acquired
Expenditure capitalised for the period
Write-off resulting from relinquished tenements
Transfer to mine properties for development of Que River
Write-off of project evaluation expenditure
Balance at the end of the period

2008
$
2007
$
8,809,022
3,451,110
-
1,652,493
2,976,934
3,746,911
(560,597)
-
(822,266)
-
-
(41,492)

10,403,093
8,809,022

Ultimate recoupment of costs carried forward in respect of areas of interest in the exploration and evaluation phase is dependent on successful development and commercial exploitation, or alternatively, sale of respective areas at an amount at least equivalent to the carrying value.

ANNUAL REPORT For the year ended 30 June 2008

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13. Interests in Tenements

Agreements have been entered into with third parties, whereby Bass Metals can earn an interest in exploration areas by expending specified amounts in the exploration areas. The Company’s percentage interests in the future output, having fulfilled its obligations are as follows:

Partner Adamus Resources Ltd Clancy Exploration Limited Clancy Exploration Limited Clancy Exploration Limited Clancy Exploration Limited Clancy Exploration Limited Clancy Exploration Limited Clancy Exploration Limited Clancy Exploration Limited Clancy Exploration Limited Clancy Exploration Limited Clancy Exploration Limited Clancy Exploration Limited Pioneer Nickel Limited Pioneer Nickel Limited Trade and Other Payables Current Unsecured liabilities:- Trade payables Sundry payables and accrued expenses Financial Liabilities Current Lease liability Non-current Lease liability	Licence EL28/2002 Bonds Range EL51/2004 Wilmot EL52/2004 Loyetea EL53/2004 Leven River EL54/2004 North Rosebery EL63/2004 Oonah EL64/2004 Waratah EL2/2005 Lynchford EL3/2005 Huskisson EL4/2005 Highclere EL38/2005 Grass Ridge ELA36/2005 Paradise River ELA16/2006 Pinnacles EL31/2003 Heazlewood EL36/2003 Whyte River 2008 $ 1,980,253 971,763 2,952,016 Note 66,545 - 19(i) 66,545	Licence EL28/2002 Bonds Range EL51/2004 Wilmot EL52/2004 Loyetea EL53/2004 Leven River EL54/2004 North Rosebery EL63/2004 Oonah EL64/2004 Waratah EL2/2005 Lynchford EL3/2005 Huskisson EL4/2005 Highclere EL38/2005 Grass Ridge ELA36/2005 Paradise River ELA16/2006 Pinnacles EL31/2003 Heazlewood EL36/2003 Whyte River 2008 $ 1,980,253 971,763 2,952,016 Note 66,545 - 19(i) 66,545	Interest 60% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 70% 70% 2007 $ 622,621 79,783
		2,952,016	702,404
		66,545 -	19,072 74,561
		66,545	93,633

14. Trade and Other Payables

15. Financial Liabilities

ANNUAL REPORT For the year ended 30 June 2008

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16. Provisions

The carrying amounts and class of provisions between the beginning and end of the current financial year are set out below:

Balance at 1 July 2007 Additions Balance at 30 June 2008 Analysis of total provisions Current Non-current	Que River Mine Closure and Restoration	Long-term Employee Benefits Total
	$ - 846,000	$ $ - - 3,574 849,574
	846,000	3,574 849,574
		2008 $ 2007 $ 846,000 - 3,574 -
		849,574 -

17. Issued Capital

103,573,803 (June 2007: 84,358,843) fully paid ordinary shares 22,097,969 15,406,200

Ordinary shares

The Company has 103,573,803 fully paid ordinary shares.

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares.

On a show of hands every holder of ordinary shares present at a meeting, in person or by proxy, is entitled to one vote and upon a poll each share is entitled to one vote.

The Company has no authorised share capital and the shares have no par value.

Options

For information relating to the Company employee option plan, including details of options issued, exercised and lapsed during the financial year-end, refer to Note 23 Share based payments.
For information relating to share options issued to key management personnel during the financial year, refer to Note 27 Key management personnel.

Capital management

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

The Companys’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets.

There are no externally imposed capital requirements.

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

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

ANNUAL REPORT For the year ended 30 June 2008

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17. Issued Capital (continued)

The movement in ordinary shares during the year are as follows:

At the beginning of the year Issued during the year • Exercise of 25 cents options expiring 31 July 20071 • Ordinary shares issued at 32 cents pursuant to the employee share plan on 10 September 2007 • Ordinary shares issued at 42 cents per share pursuant to a placement on 5 November 2007 • Ordinary shares issued at 42 cents per share pursuant to a placement on 20 December 2007 • Exercise of 25 cents options expiring 31 December 2007 • Exercise of 40 cents options expiring 30 April 2010 • Ordinary shares issued at 24 cents pursuant to the employee share plan on 18 April 2008 • Issue of shares 25 August 2006 • Issued pursuant to placement – issued 15 August 2006 • Issue of shares to Clancy Exploration Limited – consideration pursuant to Tasmanian Alliance Agreement – issued 23 October 2006 • Issue of shares to Saracen Mineral Holdings Limited – consideration for purchase of tenements – issued 3 November 2006 • Ordinary shares issued at 22 cents pursuant to the employee share plan on 28 March 2007 • Ordinary shares issued at 28 cents per share pursuant to rights issue prospectus on 23 April 2007 • Exercise of 25 cents options expiring 31 December 2007 • Exercise of 25 cents options expiring 31 July 2007 • Exercise of 40 cents options expiring 30 April 2010 Less share issue costs Balance at the end of the year	2008 Number of Shares $ 2007 Number of Shares	$
	84,358,843 15,406,200 36,600,003 5,020,551 1,247,012 25,000 8,000 9,757,442 4,098,126 2,995,717 1,258,201 1,390,000 347,500 1,250 500 25,000 6,000 10 20,000,000 300,000 6,400,000 25,000 16,715,054 750,000 3,568,151 625 (273,570)	5,516,114 2 3,200,000 60,000 1,280,000 5,500 4,680,215 187,500 900,164 250 (423,545)
	103,573,803 22,097,969 84,358,843	15,406,200

1: Included in the number of shares are 32,503 shares which were issued on the 3rd July 2007. The remittance of funds for these shares was received on 29[th] June 2007.

ANNUAL REPORT For the year ended 30 June 2008

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18. Option Reserve

The option reserve records items recognised as expenses on valuation of employee share options and as consideration for acquiring tenements or rights to participate in joint ventures. An analysis of movements in this reserve is provided in the Statement of Changes in Equity.

19. Capital and Leasing Commitments

(i) Finance Lease Commitments Payable – minimum lease payments - not later than 12 months - between 12 months and five years Minimum lease payments Less future finance charges Present value of minimum lease payments	2008 $ 2007 $ 70,180 25,062 - 78,196
	70,180 103,258 (3,635) (9,625)
	66,545 93,633

The Company entered into two motor vehicle finance leases in April/May 2006. There are monthly repayments and both lease terms are three years expiring in April/May 2009. Both motor vehicles have a residual amount that will be payable at the end of the lease term.

(ii) Operating Lease Commitments

Non-cancellable operating leases contracted for but not capitalised in the financial statements Payable – minimum lease payments - not later than 12 months - between 12 months and five years	25,877 19,602 - 4,900
	25,877 24,502

The Company entered into an operating lease on 30 September 2005 for office space it occupies in West Perth. The term of the lease is three (3) years and expires on 29 September 2008.

Subsequent to year end the Company has signed a new office lease for 3 years at an initial rent of $76,500 per annum.

(iii) Capital Expenditure Commitments

Exploration Tenements

In order to maintain current rights of tenure to exploration tenements, the Company is required to outlay rentals and to meet the minimum expenditure requirements of Mineral Resources Tasmania. These obligations are not provided for in the financial statements and are payable:

- not later than 12 months - between 12 months and five years - greater than five years	1,046,603 1,216,089 2,861,817 1,865,513 - -
	3,908,420 3,081,602

20. Contingent Liabilities

At the end of the financial period the Company had no contingent liabilities.

21. Segment Reporting

The Company operates within one business and one geographical segment, being the mineral exploration, development and extraction industry within Australia.

ANNUAL REPORT For the year ended 30 June 2008

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22. Cash Flow Information

(i) Reconciliation of cash flows from operations with profit /(loss) after income tax

Operating profit/(loss) after income tax Depreciation and amortisation Provision for employee entitlements Non-current asset write-off Share option expense Provision for restoration Change in operating assets and liabilities: Increase in trade and other receivables Increase in inventories Increase in other assets Increase/(decrease) in trade and other payables Increase in provisions Net cash provided by/(used in) operating activities	2008 $ 2007 $ 1,775,533 (1,312,002) 2,237,626 66,478 11,840 12,875 2,403 - 111,804 407,121 (846,000) -
	3,293,206 (825,528) - (3,510,731) (140,523) (768,661) - (1,301,727) - 1,696,037 (88,004) 857,840 -
	265,964 (1,054,055)

Operating profit/(loss) after income tax
Depreciation and amortisation
Provision for employee entitlements
Non-current asset write-off
Share option expense
Provision for restoration
Change in operating assets and liabilities:
Increase in trade and other receivables
Increase in inventories
Increase in other assets
Increase/(decrease) in trade and other payables
Increase in provisions
Net cash provided by/(used in) operating activities

2008
$
2007
$
1,775,533
(1,312,002)
2,237,626
66,478
11,840
12,875
2,403
-
111,804
407,121
(846,000)
-

3,293,206
(825,528)
-
(3,510,731)
(140,523)
(768,661)
-
(1,301,727)
-
1,696,037
(88,004)
857,840
-

265,964
(1,054,055)

(ii) Non-cash financing and investment transactions

Issue of 25,000 shares to Dr T Murphy for $8,000 through the granting of a loan by the Company under Share Purchase Plan.
Issue of 25,000 shares to Mr L Henley for $6,000 through the granting of a loan by the Company under Share Purchase Plan.

(iii) Credit Standby Arrangements with Banks

The Company has an unused Asset Finance Leasing facility with National Australia Bank for $100,000.

23. Share Based Payments

The following share-based payment arrangements existed at 30 June 2008

(i) Bass Metals Ltd Share Purchase Plan

The establishment of the Bass Metals Ltd Share Purchase Plan was approved by shareholders at the general meeting held 21 March 2005. Amendments to the share purchase plan were also approved by shareholders at the annual general meeting held on 27 November 2007. The Directors of the Company may in their absolute discretion make offers of shares and, on behalf of the Company, make corresponding loans to an eligible employee of the Company to which the Board has resolved that the Share Purchase Plan shall for the time being apply. The Board may, subject to any approvals of shareholders of the Company required by law, and at intervals determined by the Board, invite any eligible employee to participate in the Share Purchase Plan.

Participation is optional and subject to the Rules of the Plan. Offers made under the Share Purchase Plan are not renounceable. Shares offered under the Plan are offered at market value or, if the Board determines, for an amount equal to: (market value x N - $1.00)/N where N is the number of shares offered to the participant. The market value of a share subscribed for or acquired under the Plan is determined by the weighted average price at which the shares are traded on the ASX in the one week period up to and including the date of entitlement to that Share, or if there were no transactions on the Exchange in relation to the Shares during the relevant one week period (i) the last price at which an offer was made on the ASX in that period or (ii) if (i) does not apply, the arms length value assessed by an independent registered Company auditor or otherwise calculated in a manner approved by the Commissioner of Taxation.

There are currently 75,000 shares issued under this Plan.

ANNUAL REPORT For the year ended 30 June 2008

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23. Share Based Payments (continued)

(ii) Bass Metals Ltd Employee Share Option Plan

The establishment of the Bass Metals Ltd Employee Share Option Plan was approved by shareholders at a general meeting held 21 March 2005. The Directors of the Company will administer the Employee Share Option Plan and in their absolute discretion determine to whom the securities will be offered, the number to be offered and any performance criteria that may apply before options may be exercised.

Options may not be offered to a Director or associates except where approval is given by shareholders at a general meeting.

No consideration is payable by an eligible person for a grant of an Option, unless the Board decides otherwise. Subject to the Rules of the Plan and to the ASX Listing Rules, the Company (acting through the Board) may offer Options to any eligible person at such times and on such terms as the Board considers appropriate. Options may be exercised at any time during the period commencing on the issue date and ending no later than five years from the date of issue. Options issued under the Plan will automatically lapse in 30 days or such longer period as the Board determines in the event that the eligible person either resigned voluntarily from employment with the Company or is dismissed in certain circumstances.

Options issued under this Plan carry no dividend or voting rights.

On exercise, each option is convertible to one ordinary share within 10 business days of the receipt of the exercise notice and payment of the exercise price in Australian dollars. Amounts received on the exercise of options are recognised as share capital.

Set out below is a summary of options granted under the Employee Share Option Plan.

Outstanding at the beginning of the year (exercise price 25 cents, expiry 31 December 2007) Forfeited Exercised Expired Outstanding at year-end Outstanding at the beginning of the year (exercise price 37.5 cents, expiry 31 December 2011) Forfeited Exercised Expired Outstanding at year-end Granted (exercise price 51 cents, expiring 31 December 2012) Forfeited Exercised Expired Outstanding at year-end	2008 Number of Options 2007 Number of Options 250,000 375,000 - - (250,000) (125,000) - -
	- 250,000
	450,000 500,000 (50,000) (50,000) - - - -
	400,000 450,000
	830,000 - (165,000) - - - - -
	665,000 -

ANNUAL REPORT For the year ended 30 June 2008

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23. Share Based Payments (continued)

(iii) Other Options

Outstanding at the beginning of the year Granted Forfeited Exercised Expired Outstanding at year-end Exercisable at year-end	2008 2007 Number of Options Weighted Average Exercise Price$ Number of Options Weighted Average Exercise Price$
	3,815,000 0.27 5,225,000 0.26 1,030,000 0.49 2,275,000 0.30 (165,000) 0.51 (50,000) 0.375 (1,140,000) 0.25 (3,185,000) 0.25 (750,000) 0.32 -
	2,790,000 0.35 4,265,000 0.28
	2,125,000 0.30 3,815,000 0.27

The above table includes both employee share and key management personnel share options detailed in notes 23(ii) and 27(iv).

Options outstanding at 30 June 2008 had a weighted average exercise price of $0.35 (2007 $0.28) and a weighted average remaining contractual life of 3.7 years (2007: 0.9 years). Exercise prices range from $0.275 to $0.51 in respect of options outstanding.

The weighted average fair value price for options granted during the year was $0.08 (2007 $0.21). These amounts exclude 830,000 options which were granted but have not vested during the year. Consequently the fair value of these options can not be determined until the vesting date 31 December 2008. This price was calculated by using a Black-Scholes option pricing model applying the following inputs at grant date:

Options issued	75,000	125,000
Grant date	07/09/2007	18/04/2008
Expiry date	31/12/2007	02/11/2011
Weighted average exercise price	$0.25	$0.375
Weighted average life of the option	0.2 years	3.5 years
Underlying share price	$0.29	$0.24
Expected share price volatility	63.4%	66.6%
Risk free interest rate	6.50%	6.37%

Historical volatility has been the basis for determining expected share price volatility as it assumed that this is indicative of future tender, which may not eventuate.

The life of the options is based on the expiry date, which may not eventuate in the future. Included under share option expense in the income statement is $111,804 (2007: $407,121) and relates, in full, to equity-settled share-based payment transactions.

24. Events after the Balance Sheet Date

The financial report was authorised for issue on 26 September 2008 by the Board of Directors.

Since 30 June 2008 there has not been any matter or circumstance not otherwise dealt with in the financial report that has significantly affected or may significantly affect the Company.

ANNUAL REPORT For the year ended 30 June 2008

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25. Related Party Transactions

Key Management Personnel

Disclosures relating to the remuneration and shareholdings of key management personnel are set out in the Directors’ Report and Note 27 respectively.

Other transactions with key management personnel are as follows:

(i) D J Carmichael Pty Ltd, an entity which was related to Mr C McGown, was paid $84 (2007: $78,353) for reimbursement at cost for expenditure made on behalf of the Company. During the year 2007, payments also related to Company placement fees, management fees in relation to capital raising.
(ii) Boyer Exploration Pty Ltd, an entity related to Mr D Boyer, was paid $8,274 (2007: $25,980) for exploration and management consulting, and was reimbursed at cost for expenditure made on behalf of the Company.
(iii) Intec Hellyer Metals Pty Ltd, an entity related to Mr Kieran Rodgers, was paid $68,675 (2007 $64,016) for reimbursement at cost for expenditure made on behalf of the Company and for site costs for use of utilities.

26. Financial Risk Management

a. Financial Risk Management Policies

The Company’s financial instruments consist of at call and short term deposits with banks, accounts receivable and payable, leases and derivatives.

Derivatives are used by the Company for hedging purposes. Such instruments include Australian Dollar (AUD) and US Dollar (USD) put commodity price options and AUD call / USD put foreign currency options. The Company does not speculate in the trading of derivative instruments.

(i) Treasury Risk Management

A Hedge Committee consisting of the Managing Director, the Financial Controller and a Non-executive Director involved in financial markets meet on a regular basis to analyse financial risk exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts. The Board is provided with regular updates of the Company’s financial instruments.

The Committee’s overall risk management strategy seeks to assist the Company in meeting its financial targets, whilst minimising potential adverse effects on financial performance.

The Company operates under policies approved by the Board of Directors. Risk management policies are approved and reviewed by the Board on a regular basis. These include the use of hedging derivative instruments.

(ii) Financial Risk Exposures and Management

The main risks the Company is exposed to through its financial instruments and operations are interest rate risk, foreign currency risk, liquidity risk, credit risk and price risk.

Interest rate risk

The Company manages interest rate risk by investing in financial instruments, which under normal market conditions are readily convertible to cash. Short term borrowings interest rate risk is mitigated as 100% of the debt is at a fixed rate. For further details on interest rate risk refer to Note 26 (b)(iv).

Foreign currency risk

The Company is exposed to fluctuations in foreign currencies arising from the sale of ore and purchase of goods and services in currencies other than the Company’s measurement currency. Refer to Note 26 (b)(i) for further details.

Liquidity risk

The Company manages liquidity risk by monitoring forecast cash flows and investing in financial instruments which under normal market conditions are readily converted to cash.

ANNUAL REPORT For the year ended 30 June 2008

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26. Financial Risk Management (continued)

Credit risk

The maximum exposure to credit risk, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the balance sheet and note to the financial statements.

There are no amounts of collateral held as security at 30 June 2008.

Credit risk is managed on a Company basis and reviewed regularly by the Company. It arises from exposures to customers as well as through certain derivative financial instruments and deposits with financial institutions.

Company monitors credit risk by actively assessing the rating quality and liquidity of counter parties:

only banks and financial institutions with a high rating are utilised; and
all potential customers are rated for credit worthiness taking into account their size, market position and financial standing

The credit risk for counterparties included in trade and other receivables and financial assets at 30 June 2008 are detailed below:

Trade and other receivables Trade receivables - counterparties not rated1 Other receivables - counterparties not rated2	2008 $ 2007 $ 3,099,434 488,319 1,269,267 397,568
	4,368,701 885,887

Note 1 - Bass Metals Ltd currently only has trade receivables with Oz Minerals Ltd. Trade receivables during 2007 related to management fees which were collected in full.

Note 2 – Other receivables exclude prepayments detailed in note 7.

Trade and other receivables are expected to be received as follows:

Less than 6 months 6 months to 1 year 1 to 5 years Over 5 years Financial assets – derivative financial instruments AA rated counterparties BBB rated counterparties	3,748,134 626,787 3,567 - 617,000 259,100 - - 4,368,701 885,887 1,796,995 - 910,938 - 2,707,933 -

Note: The above are based on long term Fitch ratings as at 30 June 2008.

Credit risk for derivative financial instruments arises from the potential failure by counter parties to the contract to meet their obligations. The credit risk exposure to commodity and foreign exchange options is the net fair value of these contracts as disclosed above.

Price Risk

The Company is exposed to commodity price risk through its Que River development. The Company manages this risk by entering into AUD and USD Zinc and Lead commodity hedge contracts over a significant proportion of its forecast ore sales. The amount and nature of hedging has been determined and administered by the Hedge Committee in line with the Company’s Financial Risk Management Policy Statement.

ANNUAL REPORT For the year ended 30 June 2008

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26. Financial Risk Management (continued)

b. Financial Instruments

(i) Derivative Financial Instruments

Derivative financial instruments are used by the Company to hedge exposure to exchange rate and price risk associated with ore sales under the ore sales agreement with Oz Minerals Ltd. Transactions for hedging purposes are undertaken without the use of collateral as only reputable institutions with sound financial positions are dealt with.

AUD Zinc price put options Settlement Less than 6 months 6 months to 1 year Greater than 1 year AUD Lead price put options Settlement Less than 6 months 6 months to 1 year Greater than 1 year USD Zinc price put options Settlement Less than 6 months 6 months to 1 year Greater than 1 year USD Lead price put options Settlement Less than 6 months 6 months to 1 year Greater than 1 year Total commodity price options AUD call / USD put foreign exchange options Settlement Less than 6 months 6 months to 1 year Greater than 1 year Total foreign exchange options Total options	2008 $ Average Commodity Price $ 251,013 3700 AUD / t 216,547 3700 AUD / t 57,277 3700 AUD / t
	524,837
	179,078 3000 AUD / t 164,618 3000 AUD / t 42,406 3000 AUD / t
	386,102
	257,829 2250 USD / t 231,500 2250 USD / t 205,667 2250 USD/ t
	694,996
	344,517 2875 USD / t 228,200 2875 USD / t 233,260 2875 USD / t
	805,977
	2,411,912
	2008 $ Average Exchange Rate $ 103,896 0.96 AUD/USD 150,996 0.96 AUD/USD 41,130 0.96 AUD/USD
	296,022
	2,707,934

No comparative has been provided for the year ended 30 June 2007 as the Company did not have any derivative financial instruments at that date.

ANNUAL REPORT For the year ended 30 June 2008

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26. Financial Risk Management (continued)

(ii) Financial instrument composition and maturity analysis

The tables below reflect the undiscounted contractual settlement terms for financial instruments of a fixed period of maturity, as well as management’s expectations of the settlement period for all other financial instrument. As such, the amounts may not reconcile to the balance sheet.

Fixed Interest Rate Maturing

		Fixed Interest Rate Maturing
30 June 2008 Financial Assets: Cash & cash equivalents Trade and other receivables Total Financial Assets Financial Liabilities: Trade and other payables Short-term borrowings Total Financial Liabilities 30 June 2007 Financial Assets: Cash & cash equivalents Trade and other receivables Total Financial Assets Financial Liabilities: Trade and other payables Short-term borrowings Total Financial Liabilities	Weighted Average Effective Interest Rate	Floating Interest Rate Within Year 1 to 5 Years Over 5 Years Non- nterest bearing Total
	7.17% 7.92% 8.54% 7.30% Weighted Average Effective Interest Rate	$ $ $ $ $ $ 4,429,569 - - - - 4,429,569 - - 597,500 - 3,840,139 4,437,639
		4,429,569 - 597,500 - 3,840,139 8,867,208
		- 16,344 - - 2,935,672 2,952,016 - 66,545 - - - 66,545
		- 82,889 - - 2,935,672 3,018,561
		Fixed Interest Rate Maturing Floating Interest Rate Within Year 1 to 5 Years Over 5 Years Non- interest bearing Total
	6.00% 4.80% - 7.30%	$ $ $ $ $ $ 4,610,627 - - - - 4,610,627 - - 216,100 - 712,687 928,787
		4,610,627 - 216,100 - 712,687 5,539,414
		- - - - 702,404 702,404 - 19,072 74,561 - - 93,633
		- 19,072 74,561 - 702,404 796,037

Trade and other payables are expected to be paid as follows :

Less than 6 months 6 months to 1 year 1 to 5 years Over 5 years	2008 $ 2007 $ 2,952,016 702,404 - - - - - -
	2,952,016 702,404

ANNUAL REPORT For the year ended 30 June 2008

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26. Financial Risk Management (continued)

(iii) Net Fair Values

The net fair values of the Companies at call and short term deposits with banks, accounts receivable and payable, leases and derivatives are all in line with the carrying values.

No financial assets and financial liabilities are readily traded on organised markets in standardised form other than derivative financial instruments.

Aggregate net fair values and carrying amounts of financial assets and financial liabilities at balance date are as follows:

Financial Assets Cash and cash equivalents Trade and other receivables Derivative financial instruments	2008 2007
	Carrying Amount Carrying Amount
	$ $ 4,429,569 4,610,627 4,437,639 928,765 2,707,933 -
	11,575,141 5,539,392

The fair values of financial assets are comparable to the carrying amount.

Financial Liabilities Trade and other payables Finance lease commitments	2008 2007
	Carrying Amount Carrying Amount
	$ $ 2,952,016 702,404 66,545 93,633
	3,018,561 796,037

The fair values of financial liabilities are comparable to the carrying amount.

(iv) Sensitivity Analysis

Interest Rate Risk, Foreign Currency Risk and Price Risk

The Company has performed a sensitivity analysis relating to its exposure to interest rate risk, foreign currency risk and price risk at balance date. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these risks.

Interest Rate Sensitivity Analysis

At 30 June 2008, the effect on profit and equity as a result of changes in the interest rate with all other variables remaining constant would be as follows:

	2008	2007
	$	$
Change in profit
- Increase in interest rate by 2% (200 bps)	92,695	51,229
- Decline in interest rate by 2% (200 bps)	(92,695)	(51,229)
Change in equity
- Increase in interest rate by 2% (200 bps)	92,695	51,229
- Decline in interest rate by 2% (200 bps)	(92,695)	(51,229)

ANNUAL REPORT For the year ended 30 June 2008

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26. Financial Risk Management (continued)

Foreign Currency Risk Sensitivity Analysis

At 30 June 2008, the effect on profit and equity as a result of changes in the value of the Australian Dollar to the US Dollar, with all other variables remaining constant is as follows:

	2008	2007
	$	$
Change in profit
- Improvement in AUD to USD by 5%	(1,010,076)
- Decline in AUD to USD by 5%	1,010,076		-
Change in equity
- Improvement of AUD to USD by 5%	(1,010,076)		-
- Decline in AUD to USD by 5%	1,010,076		-

Price Risk Sensitivity Analysis

At 30 June 2008, the effect on profit and equity in Australian Dollars as a result of changes in the price risk, with all other variables remaining constant would be as follows:

	2008	2007
	$	$
Change in profit
- Increase in zinc price by $200 USD/tonne	384,940		-
- Increase in lead price by $200 USD/tonne	216,549		-
- Decrease in zinc price by $200 USD/tonne	(384,940)		-
- Decrease in lead price by $200 USD/tonne	(216,459)		-
Change in equity
- Increase in zinc price by $200 USD/tonne	384,940		-
- Increase in lead price by $200 USD/tonne	216,459		-
- Decrease in zinc price by $200 USD/tonne	(384,940)		-
- Decrease in lead price by $200 USD/tonne	(216,459)		-

27. Key Management Personnel

This note should be read in conjunction with the remuneration section of the Directors Report.

(i) Details of Key Management Personnel

Chairman – non-executive

Mr D Boyer (from 2 August 2004)

Executive Director

Mr M Rosenstreich (from 15 December 2004)

Non-executive Directors

Mr C McGown (from 7 July 2004) Mr K Rodgers (from 21 March 2005)

Other Key Management Personnel

Ms S Hunter – Company Secretary (from 28 September 2006) Dr T Murphy – Exploration Manager (Eastern Australia) (from 13 March 2006) Mr L Henley – Financial Controller (from 10 April 2007)

ANNUAL REPORT For the year ended 30 June 2008

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27. Key Management Personnel (continued)

(ii) Shareholdings of Key Management Personnel

Shares held directly and indirectly in the Company:

Mr D Boyer Mr M Rosenstreich Mr C McGown Mr K Rodgers1 Dr T Murphy Mr L Henley	Balance at the start of the period On exercise of options2 Net change other Balance at the end of theperiod
	1,285,000 5,000 - 1,290,000 856,251 390,000 - 1,246,251 1,111,915 240,000 - 1,351,915 92,568 - 50,000 142,568 25,000 - 25,000 50,000 - - 25,000 25,000
	3,370,734 635,000 100,000 4,105,734

Note 1 - These shares do not include 23,992,649 ordinary shares held by Intec Hellyer Metals Pty Ltd for which Mr K Rodgers is a Director but does not have a legal relevant interest in the shares.

Note 2 – Options exercised include both options issued as part of remuneration and options acquired as part of prior year rights issues.

All equity transactions with key management personnel, which relate to the Company’s listed ordinary shares, have been entered into on an arms length basis.

(iii) Loans to Key Management Personnel

The loans to key management personnel during the year are as follows:

Mr M Rosenstreich Dr T Murphy Mr L Henley	Balance at the start of the period Additional loans Repayment of loans Balance at the end of theperiod
	$ $ $ $ 37,500 - 37,500 - 5,500 8,000 - 13,500 - 6,000 - 6,000
	43,000 14,000 37,500 19,500

Under the terms of the employee share option plan no interest is payable in respect of the above loans. Based on interest rate of 8.05% the following amounts would have been charged on an arms length basis for the period outstanding during the year.

	2008	2007
	$	$
Mr M Rosenstreich	907	3,011
Dr T Murphy	967	115
Mr L Henley	108	-

All loans granted under this plan are unsecured and are made for either a period of 10 years, until the employee repays the loan, the Company forgives the loan or until the employee ceases his employment with the Company, which ever occurs first.

ANNUAL REPORT For the year ended 30 June 2008

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27. Key Management Personnel (continued)

(iv) Options held by Key Management Personnel

Details of options over ordinary shares provided as compensation to each key management personnel of the Company are set out below. When exercised each option is convertible to one ordinary share in Bass Metals Ltd.

Directors Mr D Boyer Mr M Rosenstreich Mr C McGown Company Executives Ms S Hunter Dr T Murphy Dr T Murphy Mr L Henley	Balance at start of the period Issued during the period Exercised during the period Lapsed during the period Balance at the end of the period Vested and exercisable at the end of the period Exercise Price
	300,000 - - - 300,000 300,000 27.5 cents 1,940,000 - 390,000 700,000 850,000 850,000 27.5 cents 425,000 - 200,000 - 225,000 225,000 27.5 cents
	2,665,000 - 590,000 700,000 1,375,000 1,375,000 -
	- 125,000 - - 125,000 125,000 37.5 cents 75,000 75,000 100,000 50,000 - - 25.0 cents - 125,000 - - 125,000 125,000 37.5 cents - 125,000 - - 125,000 125,000 37.5 cents
	75,000 450,000 100,000 50,000 375,000 375,000

28. Remuneration of Auditors

Amounts received or due and receivable by Grant Thornton (WA) Partnership for: Audit or review of the financial reports Taxation services	2008 2007 $ $ 28,052 37,757 6,358 14,877
	34,410 52,634

ANNUAL REPORT For the year ended 30 June 2008

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Directors Declaration

In the opinion of the Directors of Bass Metals Ltd (the “Company”):
a. The financial statements and notes and the remuneration disclosures that are contained in sections of the Remuneration Report in the Directors’ report, set out on pages 21 to 27 are in accordance with the Corporations Act 2001, including:
- i. Giving a true and fair view of the Company’s financial position as at 30 June 2008 and of its performance, for the financial year ended on that date; and
- ii. Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001;
b. The remuneration disclosures that are contained in the Remuneration report in the Directors’ report comply with Australian Accounting Standard AASB 124 Related Party Disclosures ; and
c. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive officer and chief financial officer for the financial year ended 30 June 2008.

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

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M Rosenstreich Managing Director

West Perth, Western Australia 26 September 2008

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INDEPENDENT AUDITOR’S REPORT To the members of Bass Metals Ltd

Report on the Financial Report

Grant Thornton (WA) Partnership ABN: 17 735 344 518 Level 1 10 Kings Park Road West Perth WA 6005 PO BOX 570 West Perth WA 6872 T +61 8 9480 2000 F +61 8 9322 7787 E [email protected] W www.grantthornton.com.au

We have audited the accompanying financial report of Bass Metals Ltd, which comprises the balance sheet as at 30 June 2008, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.

Auditor’s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

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

Independence

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

Liability limited by a scheme approved under Professional Standards Legislation. 60

Grant Thornton (WA) Partnership is an independent business entitled to trade under the international name Grant Thornton. Grant Thornton is a trademark owned by Grant Thornton International and used under licence by independent firms and entities throughout the world.

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Electronic presentation of audited financial report

This auditor’s report relates to the financial report of Bass Metals Ltd for the year ended 30 June 2008 included on the Company’s web site. The Company’s directors are responsible for the integrity of the Company’s web site. We have not been engaged to report on the integrity of the Company’s web site. The auditor’s report refers only to the statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/from these statements. If users of this report are concerned with the inherent risks arising from electronic data communications they are advised to refer to the hard copy of the audited financial report to confirm the information included in the audited financial report presented on this web site.

Auditor’s Opinion

In our opinion:

(a) the financial report of Bass Metals Ltd is in accordance with the Corporations Act 2001 including:
i. giving a true and fair view of the company’s financial position as at 30 June 2008 and of performance for the year ended on that date; and
ii. complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 23 to 26 of the directors’ report for the year ended 30 June 2008. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s Opinion

In our opinion the Remuneration Report of Bass Metals Ltd for the year ended 30 June 2008, complies with section 300A of the Corporations Act 2001.

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GRANT THORNTON (WA) PARTNERSHIP

Chartered Accountants

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J W VIBERT Partner

Liability limited by a scheme approved under Professional Standards Legislation.

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Grant Thornton (WA) Partnership ABN: 17 735 344 518 Level 1 10 Kings Park Road West Perth WA 6005 PO BOX 570 West Perth WA 6872 T +61 8 9480 2000 F +61 8 9322 7787 E [email protected] W www.grantthornton.com.au

AUDITOR’S INDEPENDENCE DECLARATION

TO THE DIRECTORS OF BASS METALS LTD

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Bass Metals Ltd for the year ended 30 June 2008, I declare that, to the best of my knowledge and belief, there have been:

a No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b No contraventions of any applicable code of professional conduct in relation to the audit.

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GRANT THORNTON (WA) PARTNERSHIP Chartered Accountants

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J W VIBERT Partner

Perth, 26 September 2008

Grant Thornton is a trademark owned by Grant Thornton International Ltd (UK) and used under licence by independent firms and entities throughout the world. Grant Thornton member firms in Australia are businesses trading independently under the name Grant Thornton. Grant Thornton Australia Ltd has been incorporated to conduct those businesses as a single national entity, and public notification will be given upon commencement. Liability limited by a scheme approved under Professional Standards legislation.

ANNUAL REPORT For the year ended 30 June 2008

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7. ADDITIONAL INFORMATION

Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 15 September 2008.

(a) Distribution of shares

The numbers of shareholders, by size of holding are:

Category (size of holding) 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – and over	Number Ordinary Shares Number of Holders 5,766 19 764,949 249 1,865,399 215 21,844,222 612 79,093,467 150
	103,573,803 1,245

The number of shareholdings held in less than marketable parcels is 218.

(b) Twenty largest shareholders

The names of the twenty largest holders of fully paid ordinary shares are:

SHAREHOLDERS
1.
Intec Hellyer Metals Pty Ltd
2.
Saracen Mineral Holdings Limited
3.
Merrill Lynch (Australia) Nominees Pty Limited
4.
Citicorp Nominees Pty Limited
5.
Mr Robert Lord
6.
Damplin Investments Pty Ltd
7.
Ionikos Pty Ltd
8.
Mr Michael Rosenstreich & Mrs Wendy Rosenstreich
9.
Mr David Donald Boyer
10. Dr John Larking Superannuation Fund A/C
11. Mr David Dawson
12. Grimwood Nominees Pty Ltd
13. Clancy Exploration Limited
14. PM-TEC Pty Ltd
15. Mrs Sandra Anne Coombes
16. Fortis Clearing Nominees P/L Settlement A/C
17. Inada Pty Ltd Loveband Superannuation A/C
18. Mr Stephen Scanlan
19. Mr Guy Lance Jones, Mrs Ann Lyndal Bayly & Mrs Fiona Winten Late Rex Jones A/C >
20. Property Mate Pty Ltd Property Mate Super Fund A/C

Number of
Shares Held
%
Holding
23,992,649
23.16
6,400,000
6.18
3,265,625
3.15
2,339,289
2.26
1,940,000
1.87
1,533,711
1.48
1,276,913
1.23
1,207,188
1.17
1,135,000
1.10
1,000,000
0.97
957,875
0.92
870,000
0.84
861,250
0.83
844,000
0.81
800,000
0.77
789,746
0.76
700,000
0.68
700,000
0.68
600,000
0.58
600,000
0.58

51,813,246
50.02

Stock Exchange Listing – Listing has been granted for all ordinary fully paid shares of the Company on issue on ASX Limited .

ANNUAL REPORT For the year ended 30 June 2008

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(c) Distribution of options

The numbers of optionholders, by size of holding are:

Category (size of holding) 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – and over	Number Options Number of Holders 58,207 103 281,073 115 278,276 39 1,541,188 49 2,018,195 5
	4,176,939 311

(d) Twenty largest option holders

The names of the twenty largest holders of quoted options are:

OPTION HOLDERS
1.
Intec Hellyer Metals Pty Ltd
2.
Citicorp Nominees Pty Limited
3.
Merrill Lynch (Australia) Nominees Pty Limited Berndale A/C
4.
Mr James Russell Godfrey Bell
5.
Rbc Dexia Investor Services Australia Nominees Pty Limited MLCI A/C
6.
Biddenham Investments Pty Ltd
7.
Property Mate Pty Ltd Property Mate Super Fund A/C
8.
Sonderkind Pty Ltd Baldwin Super Fund A/C
9.
Grimwood Nominees Pty Ltd
10. Damplin Investments Pty Ltd
11. Oregon Nominees Pty Ltd Oregon Nominees Super A/C
12. Mr Dominic Pisano
13. Hysin Pty Limited
14. Mr David Donald Boyer
15. Clancy Exploration Limited
16. Ionikos Pty Ltd
17. PM-TEC Pty Ltd
18. Mr Michael Rosenstreich & Ms Wendy Rosenstreich
19. Mr Guy Lance Jones Mrs Ann Lyndal Bayly Mrs Fiona Winten Est Late
Rex Jones A/C
20. Stadjoy Pty Ltd

Number of
options
held
% Holding
1,227,477
29.39
516,517
12.37
191,406
4.58
119,609
2.86
94,970
2.27
90,301
2.16
78,125
1.87
75,626
1.81
73,750
1.77
62,500
1.50
62,500
1.50
59,406
1.42
57,433
1.38
56,751
1.36
56,250
1.35
52,471
1.26
42,200
1.01
40,860
0.98
39,063
0.94
37,500
0.90

3,034,715
72.68

Stock Exchange Listing – Listing has been granted for 4,176,939 options over ordinary shares of the Company on ASX Limited.

ANNUAL REPORT For the year ended 30 June 2008

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(e) Substantial shareholders

The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are:

SUBSTANTIAL SHAREHOLDERS	Number of	%
	Shares	Holding
	Held
Intec Hellyer Metals Pty Ltd	23,992,649	23.16
Saracen Mineral Holdings Limited	6,400,000	6.18

(f) Voting rights

All ordinary fully paid shares carry one vote per unit without restriction.

(g) Company Secretary

The Company Secretary is Ms Susan Hunter.

(h) Registered Office

The Company’s Registered Office is 16 Thelma Street, West Perth, Western Australia, 6005. Telephone +61 8 9322 8044.

(i) Share Registry

The Company’s Share Registry is Computershare Investor Services Pty Ltd of Level 2, 45 St Georges Terrace, Perth WA 6000. Telephone 1300 55 70 10.

(j) Restricted Securities

No securities are held under restriction agreements as at 15 September 2008.

(k) Unquoted Equity Securities and On Market Buy-backs

The Company has 2,790,000 unlisted options on issue as at 15 September 2008 and is not currently performing an on market buy-back. The distribution schedule of number of holders of unlisted options on issue as at 15 September 2008 is included below.

Unlisted Options – 27.5c 22/12/11 Unlisted Options – 37.5c 31/12/11 Unlisted Options – 51c 31/12/12 Unlisted Options – 37.5c 2/11/11	1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – and over	Total
	- - - - 4 - - - 2 2 - - - 9 - - - - - 1	4 4 9 1

ANNUAL REPORT For the year ended 30 June 2008

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(l) Interests in Mining Tenements

The Companies interests in mining tenement are as follows:

Tenement	Interest
EL28/2002 Bonds Range	60%
EL51/2004 Wilmot	75%
EL52/2004 Loyetea	75%
EL53/2004 Leven River	75%
EL54/2004 North Rosebery	75%
EL63/2004 Oonah	75%
EL64/2004 Waratah	75%
EL2/2005 Lynchford	75%
EL3/2005 Huskisson	75%
EL4/2005 Highclere	75%
EL38/2005 Grass Ridge	75%
EL36/2005 Paradise River	75%
EL16/2006 The Pinnacles	75%
EL31/2003 Heazlewood	70%
EL36/2003 Whyte River	70%
EL47/2003 Tullah	100%
EL48/2003 Mt Block	100%
EL55/2004 Moxon Saddle	100%
EL24/2004 Bulgobac River	100%
CML 103M/1987 Hellyer Mine Lease	100%*
ML 68M/1984 Que River Mine Lease	100%
Hellyer 10W/1980 Access Easement to QRML	100%
RL11/1997 Mt Charter Retention	100%

This tenement is held through a sublease which entitles the Company to all the sub surface mining rights.

AI assistant

GREENWING RESOURCES LTD — Annual Report 2008

65029_rns_2008-09-25_8b75564f-0001-4bf7-9e1b-3188c4b859b4.pdf

ABN 31 109 933 995

Annual Report

Table of Contents

1. CORPORATE DIRECTORY

DIRECTORS

COMPANY SECRETARY

REGISTERED OFFICE

LEGAL ADVISORS

FINANCIAL RISK ADVISORY

SHARE REGISTRY

AUDITORS

STOCK EXCHANGE LISTINGS

2. REVIEW OF OPERATIONS

2.0 OVERVIEW

2. REVIEW OF OPERATIONS (continued)

2.1 MINE OPERATIONS - Que River Mine (Zn-Pb-Ag-Au-Cu)

2.1.1 Safety and Environment

2.1.2 Mining Activities

2.1.3 Ore Sales

Table 2: Mining Summary – FY07/08

2.1.4 Operating Performance

2.1.4a Revenues

2. REVIEW OF OPERATIONS (continued)

2.1.4b Costs

2.1.4c Operating Margin

2.1.5 Mineral Resource and Reserve Estimation

2. REVIEW OF OPERATIONS (continued)

2.1.6 Que River Mine Outlook

2. REVIEW OF OPERATIONS (continued)

Que River Competent Persons Statements

S-Lens, Nico and QR32Mineral Resources Attribution.

PQ Attribution

2. REVIEW OF OPERATIONS (continued)

2.2 BASE METAL EXPLORATION ACTIVITIES

2.2.2 HELLYER MINE PROJECT (HMP)

2.2.2a Hellyer

Table 7: Hellyer Mine Project Mineral Resource

2. REVIEW OF OPERATIONS (continued)

Figure 2: HMP Schematic Long Section

2.2.2b Fossey Zone

2. REVIEW OF OPERATIONS (continued)

Figure 3: HLD957 – Schematic Cross Section 10150N

2. REVIEW OF OPERATIONS (continued)

2.2.3 ADVANCED BASE METALS EXPLORATION PROJECTS

2.2.3a Farrell Line Project (Cu-Pb-Zn-Ag potential)

(EL47/2003 Bass Metals Ltd 100%)

2.2.3b Oonah Project (Cu-Pb-Zn-Ag-Au & Sn potential)

(EL63/2004 75% Bass Metals Ltd 25% Clancy Exploration Limited.)

2. REVIEW OF OPERATIONS (continued)

2.2.3c Bonds Range (Cu-Pb-Zn-Ag potential)

2.2.3d Waratah (Pb-Zn-Ag potential)

( EL64-2004 75% Bass Metals Ltd 25% Clancy Exploration Limited )

2. REVIEW OF OPERATIONS (continued)

2.2.4 EARLY STAGE & REGIONAL BASE METAL EXPLORATION

2.2.4a Hellyer Exploration Alliance (HEA)

2. REVIEW OF OPERATIONS (continued)

Figure 4: Summary of HEA drilling and targets

2.2.4b Regional Airborne Geophysical Survey

2. REVIEW OF OPERATIONS (continued)

2.3 GOLD EXPLORATION

2.3.1 MT CHARTER (AU & AG POTENTIAL)

(RL11/1997 – 100% Bass Metals Ltd)

2.3.2 STERLING VALLEY (AU POTENTIAL)

(EL47/2003 – 100% Bass Metals Ltd)

2. REVIEW OF OPERATIONS (continued)

2.4 NICKEL, PLATINUM and IRON EXPLORATION

2.4.1 HEAZLEWOOD (NI-CU-PGM POTENTIAL)

(EL31/2003 Bass Metals Ltd 70%, Pioneer Nickel Limited 30%)

2. REVIEW OF OPERATIONS (continued)

2.3 Corporate

3. CORPORATE GOVERNANCE

3.1 Introduction

3. CORPORATE GOVERNANCE (continued)

3.2 Corporate Governance Disclosures

Skills, experience, expertise and term of office of each Director

Identification of independent Directors

Statement concerning availability of independent professional advice

GREENWING RESOURCES LTD Annual Report 2008