GREENWING RESOURCES LTD — Interim / Quarterly Report 2009

Mar 10, 2009

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ABN 31 109 933 995

HALF-YEAR REPORT For the period ending 31 December 2008

For the financial period ended 31 December 2008

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HALF-YEAR REPORT

TABLE OF CONTENTS

Corporate	Directory	3
Directors’	Report	4
Review of	Operations
•	Highlights	5
•	Introduction	5
•	Que River Mine Operation	5
•	Hellyer Mine Project	9
•	Regional Exploration	13
•	Corporate Administration	15
•	Financial Position	15
Financial Statements
•	Consolidated Income Statement	16
•	Consolidated Balance Sheet	17
•	Consolidated Statement of Changes in Equity	18
•	Consolidated Cash Flow Statement	19
•	Condensed Notes to the Financial Statements	20
Directors’	Declaration	26
Auditor’s Independence Declaration		27
Independent Review Report to Members		28

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HALF-YEAR REPORT

For the financial period ended 31 December 2008

CORPORATE DIRECTORY

DIRECTORS

Don Boyer (Non Executive Chairman) Michael Rosenstreich (Managing Director) Craig McGown (Non Executive Director) Tony Treasure (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: admin@bassmetals.com.au

LEGAL ADVISORS

Wright Legal Unit 1 103 Collins Street West Perth WA 6005

Blakiston & Crabb 1202 Hay 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)

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HALF-YEAR REPORT For the financial period ended 31 December 2008

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DIRECTORS REPORT

Your Directors submit the financial report on the Consolidated Group for the half-year ended 31 December 2008.

Directors

The following were directors of Bass Metals Ltd (“the Company”) during the half-year and until the date of this report are as follows:

Mr David Donald Boyer – Non-executive Chairman

Mr Michael Benjamin Rosenstreich – Managing Director

Mr Craig Ian McGown – Non-executive Director

Mr Kieran George Rodgers – Non-executive Director (resigned 1 October 2008)

Mr Patrick Anthony Treasure – Non-executive Director (appointed 2 December 2008)

Directors were in office for the entire period unless otherwise stated.

Consolidated Entities

The wholly owned subsidiaries of Bass Metals Ltd during the half and until the date of this report are:

Que Metals Pty Ltd.

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HALF-YEAR REPORT

For the financial period ended 31 December 2008

REVIEW OF OPERATIONS

HIGHLIGHTS

• Half-year profit after tax of $4.5 million equivalent to earnings per share of 4.3 cents (31 December 2007 half-year loss after income tax of $0.4 million equivalent to a loss per share of 0.5 cents.).

• An increase in the net tangible asset backing per ordinary share to 26.0 cents (31 December 2007 – 19.4 cents).

• Increase in Mineral Resources with an additional 0.83 million tonnes delineated grading 9% zinc, 5% lead, 120 g/t silver and 2.5 g/t gold at Fossey Zone.

• Binding offer to acquire the 1.5mtpa Hellyer Mill and associated infrastructure for $4.0 million plus a $2.50/t Processing Royalty (capped at $5.0 million). The replacement value is estimated to be in excess of $100 million.

• Que River continues to deliver high grade polymetallic ore with positive reconciliation trends - underpinning the Company’s half-year profit.

• Positive drilling results at Que River indicate additional high grade mineralisation immediately adjacent and beneath the current PQ open pit.

• Positive metallurgical results from Fossey testwork highlighting enhanced responses compared to the Hellyer ore type and the likely potential to produce separate, saleable zinc, lead and copper-silver-gold concentrates.

• The appointment of Mr Kim Denwer as Exploration Manager and Mr Terry Burns as Hellyer Mine Project Study Manager.

INTRODUCTION

The Company has transitioned into a profitable mining business with significant assets in the form of Mineral Resources and processing plant and supporting infrastructure. It has also undertaken several regional exploration programmes over its ground holdings in the highly prospective Mt Read volcanic belt in North West Tasmania. The following commentary and financial statements reflect this ongoing transformation process.

1.0 QUE RIVER MINE OPERATION

1.1 SAFETY & ENVIRONMENT

No lost time injuries have occurred during the Half-year to 31 December 2008 or since the start of the project.

1.2 MINING ACTIVITIES

Mining took place solely from the PQ pit for the final half of 2008. Mined tonnages of ore exceeded predictions from the ore body model by 287% on a tonnage basis ( refer Table 1 ). Actual mined grades for zinc, lead and gold were marginally less than predicted for the period due to additional lower grade (but economic) ore also being excavated and sold.

The project to date reconciliation of mined versus predicted tonnages is strongly positive with a greater ore contribution from the PQ pit. All metal grades, other than the small contribution from copper, are significantly higher than predicted.

Table 1: Production Comparison – Mined vs Predicted

	Tonnes**	Zn (%)	Pb (%)	Ag (g/t)	Au (g/t)	Cu (%)
1 July to 31 December 2008
Predicted (OBM*)	9,612	19.7	10.7	279	6.7	0.3
Ore Mined	37,208	19.4	10.3	276	6.0	0.4
Variance to OBM	287%	-2%	-4%	-1%	-10%	33%
Project to Date
Predicted (OBM*)	44,682	12.1	5.5	134	2.7	0.4
Ore Mined	81,036	15.0	8.0	214	4.3	0.4
Variance to OBM	81%	24%	45%	60%	62%	-8%

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

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HALF-YEAR REPORT For the financial period ended 31 December 2008

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1.3 ORE SALES

Ore sales to OZ Minerals Limited’s (OZL) Rosebery operations comprised 36,372 wet metric tonnes (wmt) during the period, somewhat ahead of Bass Metals’ target of 5,000 wmt per month ( refer Table 2 ). A significant on-site ore inventory position has been maintained at 6,728 wmt as at the end of the year.

Table 2: Mining Summary – 1 July to 31 December 2008

	Tonnes (wmt)	Zn (%)	Pb (%)	Ag (g/t)	Au (g/t)	Cu (%)
Opening Stocks at QR	5,893	10.5	6.0	191	3.4	0.3
Ore mined*	37,208	19.4	10.3	276	6.0	0.4
Ore Delivered to OZL	36,372	18.2	9.7	261	5.4	0.4
Remaining Stocks at QR	6,728	18.3	9.6	281	7.1	0.3

* "Remaining Stocks" and "Mined" grades are estimates from grade control samples and therefore metal grades may not balance.

1.4 OPERATING PERFORMANCE

Revenues

Ore sales for the half-year ended 31 December were $11.7 million. Actual cash receipts in the course of operations after payment of treatment charges to Oz Minerals for the half-year were $9.7 million.

Que River ore is polymetallic and generates revenue from 5 different metals; being gold, silver, zinc, lead and copper. This diverse revenue mix assists in maintaining more stable total revenues because, as one metal price declines others may rise. This is amplified in the second half of calendar 2008 when base metal prices generally declined but precious metal prices firmed in AUD terms. Gold and silver revenues contributed 37% to the revenue pool, almost as much as the 39% of revenue from zinc payments as shown in Figure 1 below.

Figure 1: Que River Revenue Mix.

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Revenue Split for Six Months Ending
31 Dec 2008
2%
20%
22%
Copper
Lead
Zinc
17% Silver
Gold
39%
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Revenue quoted above is based on actual tonnes delivered (corrected for minor moisture content) 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 ( the Quotational Period ); for zinc and lead this time lag is three months, for gold and silver one month and for copper six months. Bass Metals receives provisional payments for its ore deliveries in the first and second months after delivery to support its working capital position.

The Company undertakes Forward Sales contracts for lead and zinc in AUD to mitigate risk of price movements between the provisional payments and the final payments based on the Quotational Period price. Given that gold and silver commodity prices are determined under the ore sales agreement one month after delivery, it is not considered necessary to enter into forward contracts for these metals.

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HALF-YEAR REPORT For the financial period ended 31 December 2008

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The ongoing near-term viability of the Que River mine is subject to prevailing metal prices and the continuation of the ore sales arrangement with OZL. Longer term the Company is examining the viability of processing Que River through the Hellyer Mill (refer section 2.1), subject to compliance with the terms of the Que River Ore Sales Agreement with OZL.

Costs

A summary of operating costs for the period and the preceding 6 months is presented in Table 3 below. The cost calculation is based on all operating costs, including mining, treatment, haulage, royalties, depreciation and amortisation of mine properties but excludes capitalised mine development for the half-year period, consistent with the Company’s accounting policies as detailed in the 30 June 2008 Annual Report. The difference between “sold” and “mined” unit cost reflects the closing inventory position, and minor moisture content.

Table 3: Unit Operating Costs

Unit Cost basis	Unit	1 July to 31 Dec 2008	1 Jan to 30 June 2008
Ore Mined	$/wmt	207	189
Ore Sold	$/dmt	198	168

The above comparative for 1 January 2008 to 30 June 2008 has been used as the Que River Mine was commenced in September 2007. A significant proportion of the increase in operating costs per tonne can be attributed to amortisation of mine closure/restoration and mining properties. The net impact of these costs has been adjusted for below in table 4.

Operating Margin

To monitor and manage the financial performance of the project; i.e. the margin between cash costs and revenues, the Company also prepares management reports to determine the net realisable value (NRV) and operating margin of ore mined. The reports include adjustments to the Company’s accounting policies for the following:

Revenue

• Adds the expected revenues from the stockpiles to those from ore already sold and delivered in the period.

Costs

• Collation of all of the cash costs incurred during a period, with no accounting adjustments for amortisation of mine closure/restoration and mine properties or capitalising of mine development.

• Addition of expected costs to realise value from the stockpile inventory - namely haulage, treatment charges and royalties.

The operating margin over costs of the project has improved strongly during the second half of the calendar year due to the higher grade ore mined and sold, reducing the impact of lower AUD metal prices as presented in Table 4 below.

Table 4: Estimate of Operating Performance

		Actual	Actual
Unit Cost basis	Unit	1 July to 31 Dec 2008	1 Jan to 31 Dec 2008
Value of Ore Mined	$/wmt	344	240
Total Cost of Ore Mined	$/wmt	187	191
Operating Margin	$/wmt	157	49
Margin as a % of Cost	%	84	26

1.5 ORE RESERVE & RESOURCE EXTENSIONS

To the end of December 2008 the Company was mining Ore Reserves from the PQ Pit based on the original Stage 1 Mine Plan (refer 2008 Annual Report). Given the strongly positive ore reconciliation trends and the apparent northern extension of the high grade zones beyond the boundaries of the current Stage 1 pit design, work commenced in November to re-estimate the entire Ore Reserve inventory for the Que River mine and define the potential resource extensions by drilling.

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HALF-YEAR REPORT For the financial period ended 31 December 2008

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1.5.1 Ore Reserves

1.5.1 Ore Reserves	1.5.1 Ore Reserves	1.5.1 Ore Reserves	1.5.1 Ore Reserves	1.5.1 Ore Reserves	1.5.1 Ore Reserves	1.5.1 Ore Reserves
The review of the PQ, S-lens and shallow portions of the QR32 massive sulphide lenses to compile an updated Ore Reserve inventory for the Que River mine was reported on 10 February 2009. The following summaries are reported in accordance with the JORC Code and full details were reported to ASX on 10 February 2009. The Que River Mine Ore Reserve as at 31 December 2008 comprises: Classification Tonnes (kt) Zn (%) Pb (%) Cu (%) Ag g/t Au g/t Proven & Probable 129 9.3 4.9 0.6 122 2.6
Classification	Tonnes (kt)	Zn (%)	Pb (%)	Cu (%)	Ag g/t	Au g/t
Proven & Probable	129	9.3	4.9	0.6	122	2.6

This is a 65% increase in tonnage from June 30[th] 2008.

The total combined Mineral Resource estimate has increased marginally after deducting mine production, from the 30[th] June 2008 estimate. The Que River Mineral Resource at 31 December 2008, which includes the Ore Reserve above, is:

Classification	Tonnes (kt)	Zn (%)	Pb (%)	Cu (%)	Ag g/t	Au g/t
Measured	72	6.0	3.0	1.4	110	2.1
Indicated	452	5.6	2.8	1.2	83	0.8
Inferred	181	4.7	2.6	1.0	71	0.7
Total Combined	705	5.4	2.8	1.2	83	0.9

1.5.2 Extensional Drilling

Drilling commenced to test the high grade PQ Lens for extensions beneath, and immediately to the north of, the currently planned Stage 1 Mine Plan PQ open pit. Completed and proposed hole locations, together with targeted mineralisation and drilling results are shown on Figure 2. Assays for the drill holes shown were reported to ASX on 17 February 2009.

In November and December seven diamond drill holes for 592 metres were completed out of a planned 15 hole program. The assays reported to date and the geological indications are encouraging for the definition of a significant extension of the PQ Mineral Resource to the north.

Figure 2: PQ South Long projection showing pit extension drill hole locations.

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HALF-YEAR REPORT

For the financial period ended 31 December 2008

2.0 HELLYER MINE PROJECT (HMP)

• The HMP was the core focus for the Company during the last half of calendar 2008 with several key milestones being achieved.

• Completion of the Fossey resource estimate increasing the overall resource base to 1.6 million tonnes at HMP and the overall HMP-Que River resource to 2.3 million tonnes of high grade polymetallic mineralisation.

• Execution of Heads of Agreement to purchase from Intec Ltd the Hellyer processing plant, associated infrastructure and the Hellyer Mining lease.

• Appointment of Mr Terry Burns as the HMP Study Manager to complete the Feasibility Study.

The HMP Study is focussed on developing a mining plan based initially on the proximal high grade polymetallic resources and processing these through the Hellyer Mill. The project is considered attractive because of the resource grades, available plant and operating infrastructure and therefore a low capital expenditure and fast track to start up. The Company will also examine other options to utilise the excess processing capacity, such as re-examination of retreatment of the tailings for gold recovery along with its own insitu gold resources.

2.1 The Hellyer Mill & Associated Infrastructure (Under binding conditional offer)

On 10 December 2008, the Company’s production plans were boosted with the execution of a binding conditional agreement to purchase from Intec Ltd the Hellyer processing plant, associated infrastructure and the Hellyer Mining lease. Consideration for the Hellyer processing plant and associated infrastructure is $4.0 million to be paid on settlement (of which $0.5 million has been paid by a refundable deposit) plus a Processing Royalty of $2.50/tonne of ore processed through the mill, capped at $5.0 million. The Hellyer Mining lease will be transferred on settlement. Bass Metals will replace the existing environmental security deposit of $0.99 million. (Refer ASX Announcement made on 11 December 2008).

The assets to be acquired include:

• The 1.5mtpa crushing, grinding, flotation concentrator plant currently on care and maintenance.

• All associated supporting infrastructure including grid power, storage sheds, spares inventory, warehouses, water treatment facilities and railway line access.

• A 300kW electric cutter suction dredge and spares, recently utilised to reclaim tailings for the retreatment project.

• The remaining Hellyer tailings resource. In April 2008 Intec reported a “pre-mining” resource comprising Hellyer tailings of 11 million tonnes at 2.8% zinc, 3.0 % lead, 88 g/t silver and 2.6 g/t gold. Whilst Intec’s Hellyer zinc concentrate project processed approximately 2 million tonnes of this material to recover zinc and lead, the remaining material of approximately 11 million tonnes grades 2.6 g/t Au and 88 g/t silver containing a total of 920,000 ounces of gold and 31 million ounces of silver which are refractory and would require specialist processing.

• The Hellyer Mine Lease (CML103/1987) is also being assigned for no consideration as Bass Metals already holds a sublease over it giving Bass Metals the mineral rights.

Bass Metals’ 100% owned Hellyer, Fossey and Que River deposits total 2.3 million tonnes of moderate to high grade massive sulphide base metal resources, located within 4 km of the Hellyer processing plant as illustrated in Figure 3.

2.2 Fossey Zone Resource Delineation

Fossey Zone Resource Estimate

The initial Fossey resource estimate in September 2008 has increased the overall combined Mineral Resource base to 1.6 million tonnes at the HMP and the overall HMP-Que River combined Mineral resource estimate to 2.3 million tonnes of high grade polymetallic mineralisation. These resources are reported in accordance with the JORC code; please refer to Competent Person attributions below and references to ASX Reports for further details.

MacArthur Ore Deposit Assessments Pty Ltd (MODA) was commissioned by Bass Metals to undertake a Mineral Resource estimate for the mineralisation at the Fossey Zone, which is fully reported in accordance with the JORC Code in a report to ASX on 30 September 2008. The resource estimated at a 5% (Pb+Zn) assay cut-off is summarised in Tables 5 and 6 below.

The resource model comprises three main mineralised domains; a base metal sulphide zone, massive barite zone and a footwall stringer vein zone. A minor zone of gold-rich siliceous pyritic mineralisation was also included on the western side of the barite lens.

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HALF-YEAR REPORT For the financial period ended 31 December 2008

In addition to the base metal mineralisation the large barite body holds significant gold and silver grades. Combined Mineral Resources based on a 1g/t gold cut-off were estimated to be 2.5 million tonnes at 1.9 g/t gold and 66 g/t silver, which suggests that there may be scope for a larger scale, lower-grade mining and processing scenario than the current high-grade base metal focus.

The methodology utilising a relatively high, 5% (Pb+Zn) cut-off, can be regarded as conservative and ensures a focus on grade rather than tonnes.

Figure 3: Hellyer – Que River Location Plan

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HALF-YEAR REPORT

For the financial period ended 31 December 2008

Table 5: Fossey Zone Total Combined Mineral Resource*

Summary of Classified Fossey Mineral Resources

5% Combined Pb + Zn Cut Off

Table 5: Fossey Zone Total Combined Mineral Resource*	Table 5: Fossey Zone Total Combined Mineral Resource*	Table 5: Fossey Zone Total Combined Mineral Resource*	Table 5: Fossey Zone Total Combined Mineral Resource*	Table 5: Fossey Zone Total Combined Mineral Resource*	Table 5: Fossey Zone Total Combined Mineral Resource*	Table 5: Fossey Zone Total Combined Mineral Resource*	Table 5: Fossey Zone Total Combined Mineral Resource*
Summary of Classified Fossey Mineral Resources >5% Combined Pb + Zn Cut Off
Mineralisation Type	JORC Code Category	Tonnes (000's)	Zn %	Pb %	Cu %	Ag g/t	Au g/t
Base Metal Sulphide Footwall style Barite / Minor Lenses	Indicated Indicated Indicated	410 0 0	9.7 0 0	4.7 0 0	0.4 0 0	140 0 0	2.8 0.0 0.0
TOTAL INDICATED		410	9.7	4.7	0.4	140	2.8
Base Metal Sulphide Footwall style Barite / Minor Lenses	Inferred Inferred Inferred	200 140 80	10.1 7.8 5.7	4.7 5.0 3.0	0.4 0.2 0.3	130 50 110	3.0 1.3 1.8
TOTAL INFERRED		420	8.5	4.5	0.3	99	2.2
TOTAL MINERAL RESOURCE		830	9.1	4.6	0.3	120	2.5
Base Metal Sulphide Footwall style Barite / Minor Lenses	Combined Combined Combined	610 140 80	9.8 7.8 5.7	4.7 5.0 3.0	0.4 0.2 0.3	140 50 110	2.9 1.3 1.8

*Note the above results have been rounded

Table 6: HMP-Que River Total Combined Mineral Resource Summary*

		Summary of Classified Mineral Resources >5% Combined Pb + Zn Cut Off	Summary of Classified Mineral Resources >5% Combined Pb + Zn Cut Off	Summary of Classified Mineral Resources >5% Combined Pb + Zn Cut Off	Summary of Classified Mineral Resources >5% Combined Pb + Zn Cut Off	Summary of Classified Mineral Resources >5% Combined Pb + Zn Cut Off	Summary of Classified Mineral Resources >5% Combined Pb + Zn Cut Off	Summary of Classified Mineral Resources >5% Combined Pb + Zn Cut Off
Mineralisation Type	JORC Code Category		Tonnes (000's)	Zn %	Pb %	Cu %	Ag g/t	Au g/t
Que River Hellyer Fossey	Measured Measured Measured		56 - -	2.1 - -	0.7 - -	1.7 - -	69.4 - -	0.3 - -
TOTAL MEASURED			56	2.1	0.7	1.7	69	0.3
Que River Hellyer Fossey	Indicated Indicated Indicated		458 641 410	6.0 6.8 9.7	3.0 4.0 4.7	1.2 0.4 0.4	88 83 140	1.0 1.3 2.8
TOTAL INDICATED			1,509	7.3	3.9	0.6	100	1.6
Que River Hellyer Fossey	Inferred Inferred Inferred		187 107 420	5.0 8.1 8.5	2.8 4.9 4.5	1.0 0.2 0.3	74 107 99	0.8 1.5 2.2
TOTAL INFERRED			714	7.5	4.1	0.5	94	1.7
TOTAL MINERAL RESOURCE			2,279	7.3	3.9	0.6	97	1.6
Que River Hellyer Fossey	Combined Combined Combined		701 748 830	5.4 7.0 9.1	2.7 4.1 4.6	1.2 0.4 0.4	83 86 120	0.9 1.3 2.5
TOTAL COMBINED			2,279	7.3	3.9	0.6	97	1.6

*Rounding errors may occur

The second phase of the Fossey Zone drilling program, consisting of approximately 4,600 metres in 16 holes to infill the resource area to 25 metre spaced sections, was completed during the Period. Drilling focussed on ore body margins and the results of the program were largely as expected and provide resolution for initial stoping block designs. Assay highlights for the programme are illustrated in a schematic long projection in Figure 4.

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HALF-YEAR REPORT

For the financial period ended 31 December 2008

Figure 4: Fossey Zone: Long Projection for holes completed to 31 December 2008

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(Note assays received and reported in February 2009)

2.3 Mining Study

The conceptual mine plan currently under consideration assumes that the Fossey Mineral Resource forms the “base load” for a mining and milling operation of approximately 250,000 – 350,000tpa. Additional ore may also be sourced from the Hellyer and Que River inventory to supplement production as part of a staged evaluation and development process.

Mancala Pty Ltd and Bass Metals have agreed in principle to extend the current Que River Mining Alliance Agreement, in general terms, to include the HMP.

2.4 Metallurgy

Metallurgical test work is being undertaken at the Burnie Research Laboratory and the results to date support the predictions from MODA’s mineralogical observations that the preferred treatment option is sequential flotation of copper, lead and zinc with minimal or no production of bulk concentrate.

The results to date suggest that:

• Fossey Zone preliminary grind at 80% passing 50 microns is coarser than that required for Hellyer (80% passing 40 - 45 microns).

• Lead metallurgy is better than Hellyer.

• Zinc metallurgy is better than Hellyer which only achieved +70% recovery to zinc concentrate after running for approximately 5 years.

• Copper metallurgy is at least as good as or better than Hellyer, which made a low grade concentrate at modest recovery.

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HALF-YEAR REPORT For the financial period ended 31 December 2008

It must be pointed out that these results are preliminary only and are likely to understate what could be achievable in a dedicated production plant. These open-circuit results do not include regrinding which is used to reduce the misplacement of metal values to other concentrates and can understate metal recoveries.

The results confirm an earlier prediction based on the quantitative mineralogy that the Fossey Zone mineralisation would at least equal and most probably surpass the metallurgical performance of Hellyer ore if treated with the same flow sheet. This is important because whilst the Hellyer ore type was metallurgically challenging, 16 million tonnes of it was mined and processed successfully through the purpose built Hellyer Mill and effectively provides access to a vast array of testwork and experience to benchmark the ongoing Fossey results. The detailed closed circuit test work is in progress.

2.5 Regulatory Approvals / Permitting

A Notice of Intent for a mining and processing operation at Hellyer was lodged on 23rd December 2008 with the Board of Environmental Management and Pollution Control - Tasmanian Environment Protection Authority.

3.0 REGIONAL EXPLORATION

Mr Kim Denwer, an experienced and well regarded Tasmanian geologist commenced as Exploration Manager in September 2008. He is involved in all aspects of the Company’s exploration and development activities including at Que River and HMP including early stage regional exploration work, highlights of which are summarised below.

Magnet Mine - Waratah (EL64/2004)

(Bass Metals Ltd 75% & Clancy Exploration Limited 25%)

Four diamond drill holes comprising 468.8 metres were drilled along a 200 metre strike extent of the historic Magnet Mine to explore for remnant hangingwall mineralisation and parallel lodes which may be amenable to open-cut mining. The drilling intersected minor sphalerite-rich vein/breccia zones but these do not warrant any follow-up.

North Rosebery (EL54/2004)

(Bass Metals Ltd 75% & Clancy Exploration Limited 25%)

The 375 sample (8.5 line km) North Rosebery partial digest soil survey was completed during the period. The survey covers prospective stratigraphy north along strike from the Rosebery Mine sequence. Interpretation of the assay results suggests several anomalies indicative of extensions of the Rosebery mineralising system to the south have been identified.

Oonah (EL63/2004)

(Bass Metals Ltd 75% & Clancy Exploration Limited 25%)

A significant work programme was undertaken at the Oonah prospect; key elements included;

• Four costeans – to intersect near surface lodes for a total length of 180 metres.

• Channel sampling along the line of lode at the historic Montana Mine with a best result of 7 metres at 4.4 % zinc, 2.8 % lead and 650g/t silver Ag.

• Detailed mapping of the Montana workings in preparation for drilling.

• A reverse circulation (RC) drilling program comprising 10 drill holes for 531 metres testing for shallow, potentially open pitable mineralisation.

• Whilst assays from 154 samples are pending, geological observation and Niton XRF analysis indicates only sub-grade mineralisation with better results including:

• Drill hole MO3 intersecting 5 metres at 4.3% lead 0.9% zinc and 650 g/t silver; and,

• Drill hole MO1 intersecting 6 metres at 1.6% lead and 0.44% zinc.

• A total of 154 samples have been sent to the Burnie Laboratory for analysis results are expected in the March 2009 Quarter.

The drilling and mapping results indicate there is limited potential to define an open pittable resource at this prospect.

Heazlewood (EL31/2003)

(Bass Metals Ltd 70% & Pioneer Nickel Limited 30%)

The Company has two early stage targets on this lease; Fentons and Jones Creek. The Fentons target is a high priority early stage prospect, distinct from, and more prospective than the Jones Creek prospect because of the strong ground EM anomaly generated recently as part of the follow-up work to the airborne VTEM survey completed in early 2008. The EM survey confirmed

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HALF-YEAR REPORT For the financial period ended 31 December 2008

the presence and location of a conductive anomaly with characteristics considered consistent with a sulphide conductor. Logistical constraints precluded drilling the Fentons anomaly first, ahead of the Jones Creek prospect.

At the Jones Creek prospect a single 296.5 metre diamond drillhole was completed to test the co-incident geophysical (VTEM) and soil (0.3%Ni with occasional 0.5%Ni peaks) anomaly in the Heazlewood Ultramafic complex. No significant sulphide nickel mineralisation was observed and Niton XRF analyses of the drill-core confirmed the lack of nickel mineralisation. The source of the surface soil geochemical and geophysical anomalies has not been explained and downhole geophysics will be undertaken in mid2009.

Oz Minerals Hellyer Exploration Alliance (HEA)

(Oz Minerals Limited earning 70%)

No ground work was completed on the alliance joint venture areas in the second half of 2008. Assay results were received from the Highpoint Joint Venture drilling (Diamond drill hole MS-2) with a peak assay of 0.15m at 0.7% Pb and 0.53% Zn from 777.8 – 777.95 metres. Down-hole geophysics surveys of MS-2 were negative with no in-hole or off-hole electrical conductors detected.

Subsequent to the end of the year OZL and Bass Metals agreed to terminate the Hellyer Exploration Alliance and the resultant 4 joint ventures due to OZL’s exploration budget constraints in meeting its joint venture expenditure commitments.

Venture Minerals Iron-Tin-Tungsten Joint Venture

Bass Metals and Venture Minerals Limited (VMS) have formed a joint venture under which VMS has the right to earn up to 70% of any Fe, Sn or W projects that VMS generates on BSM’s Heazlewood and Whyte River tenements. Bass Metals understands that VMS has selected certain areas with magnetic Sn-W-Fe skarn targets for further geological mapping, stream sediment and rock chip sampling work in 2009.

4.0 ATTRIBUTIONS

The information within this report that relates to exploration results is based on information compiled by Mr Kim Denwer and Mr Mike Rosenstreich who are both full time employees of the Company. Mr Rosenstreich is a Member of The Australasian Institute of Mining and Metallurgy and Mr Denwer is a Member of the Australian Institute of Geoscientists. They both, individually have sufficient experience relevant to the styles of mineralisation and types of deposits under consideration and to the activities currently being undertaken to qualify as a Competent Person(s) as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and they consent to the inclusion of this information in the form and context in which it appears in this report.

S Lens, QR32 & Nico Resource 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 BSM 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.

14

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HALF-YEAR REPORT

For the financial period ended 31 December 2008

PQ Resource & PQ S Lens QR32 Reserve 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 BSM 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 exQue River Mine mining personnel involved in the mining of PQ Lens in the 1980’s.

5.0 CORPORATE ADMINISTRATION

The Company did not issue any shares or options during the period.

The Company did not enter into debt facilities during the period.

5.1 Financial Position

As at the end of the half-year the Company had: net cash balances of $7,797,324 (31 Dec. 2007: $6,159,987); a Working Capital position of $11,114,714 (31 Dec. 2007 - $7,326,206); carried forward exploration expenditure was $12,178,755 (31 Dec. 2007 - $8,766,396); and, net assets of the Company were $26,906,879 (31 Dec. 2007 - $20,054,670).

Auditor’s Independence Declaration

A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is set out on page 27

Signed in accordance with a resolution of the directors:

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M Rosenstreich Managing Director

West Perth, Western Australia 11th March 2009

15

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HALF-YEAR REPORT

For the financial period ended 31 December 2008

CONSOLIDATED INCOME STATEMENT FOR THE HALF-YEAR ENDED 31 DECEMBER 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 expense Profit/(loss) after income tax Basic earnings/(loss) per share (cents) Diluted earnings/(loss) per share (cents)	Half-year ended 31 Dec 2008 $ 31 Dec 2007 $ 11,712,527 1,931,638 (7,370,664) (1,380,640)
	4,341,863 550,998 1,958,066 365,340 (1,649,028) (1,247,879) (108,416) (99,805) (26,739) (3,168)
	4,515,746 (434,514) - -
	4,515,746 (434,514)
	0.0436 (0.0047) 0.0410 (0.0043)

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

16

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HALF-YEAR REPORT For the financial period ended 31 December 2008

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2008

Note CURRENT ASSETS Cash and cash equivalents 5 Trade and other receivables Inventories Financial assets Total Current Assets NON-CURRENT ASSETS Trade and other receivables Plant & equipment Mine properties Capitalised exploration and evaluation 10 Financial assets Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Financial liabilities Provisions Total Current Liabilities NON CURRENT LIABILITIES Provisions Total Non Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 4 Option reserve Retained profits/(accumulated losses) TOTAL EQUITY	31 Dec 2008 $ 30 June 2008 $ 7,797,324 4,429,569 5,302,259 3,820,639 1,169,873 768,661 146,226 2,128,194
	14,415,682 11,147,063
	633,780 617,000 189,581 180,342 2,797,646 3,223,613 12,178,755 10,403,093 2 579,741
	15,799,764 15,003,789
	30,215,446 26,150,852
	1,923,490 2,952,016 56,478 66,545 1,321,000 846,000
	3,300,968 3,864,561
	7,599 3,574
	7,599 3,574
	3,308,567 3,868,135
	26,906,879 22,282,717
	22,097,969 22,097,969 794,381 685,965 4,014,529 (501,217)
	26,906,879 22,282,717

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

17

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HALF-YEAR REPORT For the financial period ended 31 December 2008

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2008

Balance at 01 Jul 2007 Shares issued during the period Share options issued during the period in accordance with AASB 2 - Share Based Payments Loss attributable to members of parent entity Balance at 31 Dec 2007 Balance at 01 Jul 2008 Share options issued during the period in accordance with AASB 2 - Share based Payments Profit attributable to members of parent entity Balance at 31 Dec 2008	Issued Capital $ Retained Profits/ (Accumulated Losses) $ Option Reserve $ Total $
	15,406,200 (2,276,750) 574,160 13,703,610 6,685,769 - - 6,685,769 - - 99,805 99,805 - (434,514) - (434,514) 22,091,969 (2,711,264) 673,965 20,054,670
	22,097,969 (501,217) 685,965 22,282,717 - - 108,416 108,416 - 4,515,746 - 4,515,746 22,097,969 4,014,529 794,381 26,906,879

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

18

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HALF-YEAR REPORT

For the financial period ended 31 December 2008

CONSOLIDATED CASH FLOW STATEMENT FOR THE HALF-YEAR ENDED 31 DECEMBER 2008

CONSOLIDATED CASH FLOW STATEMENT FOR THE HALF-YEAR ENDED 31 DECEMBER 2008
Note Cash flows from operating activities Cash receipts in the course of operations Cash payments in the course of operations Other – security deposits Other – research and development offset Interest received Interest paid Net cash provided by/(used in) operating activities Cash flows from investing activities Payments for plant and equipment Payment of deposit for Hellyer mining lease and operating infrastructure Payments for exploration and evaluation Payments for development of mineral properties Proceeds/(payments) for derivative financial instruments Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Repayments of borrowings Costs of share issues Net cash provided by/(used in) financing activities Net increase in cash held Cash at the beginning of the financial period Cash at the end of the financial period 5	Half-year ended 31 Dec 2008 $ 31 Dec 2007 $ 9,737,630 1,378,864 (5,476,905) (1,389,196) (36,432) (382,500) 338,986 - 177,179 158,520 (25,701) (3,168)
	4,714,757 (237,480) (116,593) (433,638) (500,000) - (2,315,339) (1,533,505) (2,453,915) (858,339) 4,048,913 (2,133,772)
	(1,336,934) (4,959,254) - 6,988,839 (10,068) (11,020) - (231,725)
	(10,068) 6,746,094 3,367,755 1,549,360 4,429,569 4,610,627
	7,797,324 6,159,987

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

19

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HALF-YEAR REPORT

For the financial period ended 31 December 2008

CONDENSED NOTES TO THE FINANCIAL STATEMENTS

1. Summary of Accounting Policies

Basis of preparation

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

It is recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2008 and any public announcements made by Bass metals Ltd and its controlled entities during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001. The accounting policies have been consistently applied by the entities in the consolidated group and are consistent with those in the June 2008 financial report.

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

Accounting estimates

The preparation of the interim financial report requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing this interim financial report, the significant judgments made by management in applying the Consolidated Entity accounting policies and the key sources of estimation uncertainty are consistent with those of previous financial year and corresponding interim reporting period.

Significant accounting policies

The following significant policies have been adopted in the preparation and presentation of the half-year financial report. All other accounting policies adopted are consistent with those of previous financial year and corresponding interim reporting period.

(a) Revenue Recognition

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 Consolidated Entity,

• (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.

(b) Derivative financial instruments

The Consolidated Entity has entered into a variety of derivative financial instruments to manage it’s exposure to commodity price and foreign exchange risk, including AUD and USD put commodity options, AUD call / USD put foreign currency options and forward sales contracts of zinc and lead.

20

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HALF-YEAR REPORT For the financial period ended 31 December 2008

1. Summary of Accounting Policies (continued)

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in the Income Statement immediately.

(c) Inventories

Inventories are valued at the lower of costs 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.

(d) 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 Consolidated Entity 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.

New Accounting Standards and Interpretations

These consolidated interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 30 June 2008.

The following applicable standards have been issued but have not been early adopted:

• AASB 101: Presentation of Financial Statements (Revised 2007)

• AASB 8: Operating Segments

AASB 101 (Revised 2007) makes certain changes to the format and titles of the primary financial statements and to the presentation of some items within these statements. It also gives rise to additional disclosures. The measurement and recognition of the Group's assets, liabilities, income and expenses is unchanged. AASB 101 affects the presentation of owner changes in equity and introduces a 'Statement of comprehensive income'. Further, a 'Statement of changes in equity' is now presented as a primary statement.

AASB 8 now reports segment results based on internal management reporting information that is regularly reviewed by the Board of Directors. In the previous annual and interim financial statements, segments were identified by reference to the dominant source and nature of the Group's risks and returns. This may result in a different set of segments being identified than those previously disclosed under AASB 114.

21

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HALF-YEAR REPORT

For the financial period ended 31 December 2008

2. Revenue (a) Sales revenues Ore sales Total sales revenue (b) Other income Interest received Other revenue - exploration management fees Other revenue - joint venture establishment fee Net gain on derivative financial instruments Total other income	31 Dec 2008 $ 31 Dec 2007 $ 11,712,527 1,931,638
	11,712,527 1,931,638
	195,853 158,520 - 119,288 50,000 - 1,712,213 87,532
	1,958,066 365,340

22

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HALF-YEAR REPORT

For the financial period ended 31 December 2008

3. 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 Contract and consulting expense Operating lease expense Other administration expense Depreciation – plant and equipment Write-off of capitalised exploration and evaluation expenditure Exploration expenditure expensed Hellyer operating infrastructure – care and maintenance Total other expenses (c) Share based payments Share based payments (note 9) (d) Finance costs Finance costs Total expenses	31 Dec 2008 $ 31 Dec 2007 $ 2,358,925 810,209 348,498 78,412 2,570,211 160,575 666,319 39,681 1,426,711 291,763
	7,370,664 1,380,640
	372,864 257,810 445,302 128,775 52,753 25,618 199,533 420,986 46,120 38,726 422,751 306,370 78,193 69,594 31,512 -
	1,649,028 1,247,879
	108,416 99,805 26,739 3,168
	9,154,847 2,731,492

23

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HALF-YEAR REPORT

For the financial period ended 31 December 2008

4. Movements in Issued Capital

At the beginning of the financial period Issued during the half-year Ordinary shares issued at 24 cents pursuant to the employee share plan on 18 April 2008 Balance at the end of the financial year.	31 Dec 2008 Number of Shares $ 30 June 2008 Number of Shares $ 103,573,803 22,097,969 103,548,803 22,091,969 - - 25,000 6,000
	103,573,803 22,097,969 103,573,803 22,097,969

5. Cash and Cash Equivalents

Included in cash and cash equivalents is a restricted amount of $810,000 on deposit as credit support for short dated forward sales agreements.

6. Segment Reporting

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

7. Contingent Liabilities

As announced to ASX on 11 December 2008, the Company (through its wholly owned subsidiary Que Metals Pty Ltd) entered into a binding conditional agreement to purchase from Intec Ltd the Hellyer processing plant and associated infrastructure for $4.01 million (of which $0.5 million has been paid by a refundable deposit) plus a Processing Royalty of $2.50/tonne processed through the mill, capped at $5.0 million, and the Hellyer Mining Lease which will be transferred on settlement. Bass Metals will replace the existing environmental security deposit of $0.99 million. (Refer ASX Announcement made on 11 December 2008).

As at the date of signing this report several Conditions Precedent remain outstanding including execution of the formal Acquisition Agreement. The Company is required to complete the Conditions Precedent by the 30 April 2009 and settle within 5 days following that. Following settlement the Company will seek Ministerial Approval for the transfer of the Hellyer Mine Lease. If this approval is not forthcoming within 30 days of the Company paying the $3,510,000 at settlement then the transaction will terminate and all monies paid by the Company will be refunded by Intec, including Care & Maintenance expenditures.

At the end of the financial period the Consolidated Entity had no other contingent liabilities.

8. Subsequent Events

On 19 February 2008 at the General Meeting, shareholders resolved in favour of the proposed acquisition of mining assets from Intec Ltd.

No other significant events have occurred subsequent to the half-year that would have material effect on the half-year report.

24

For the financial period ended 31 December 2008

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HALF-YEAR REPORT

9. Share Based Payments

• (a) On 31 December 2007, 830,000 unlisted Options exercisable at $0.51 each on or before 31 December 2012 were issued to employees of the Consolidated Entity pursuant to the Consolidated Entity employee share option plan approved at the 2007 Annual General Meeting of Shareholders. 640,000 of these options vested on 31 December 2008.

Fair value at grant date1	$0.1694
Share price	$0.345
Exercise price	$0.51
Volatility factor	61.25%
Expiry date of the options	31 December 2012
Risk free interest rate2	6.535%

1: The basis of measuring fair value of the options was the Black-Scholes Option Pricing Model.

• 2: Based on the 5 year Commonwealth Government Bond rate on 31 December 2008.

10. Exploration and Evaluation Expenditure

The Consolidated Entity 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 Expenditure capitalised for the period Write-off resulting from relinquished tenements Write-off of project evaluation expenditure Balance at the end of the period	31 Dec 2008 $ 30 June 2008 $ 10,403,093 8,766,396 2,198,413 1,821,330 (399,964) (184,633) (22,787) -
	12,178,755 10,403,093

11. Capital and Leasing Commitments

There has been no significant change to capital and leasing commitments disclosed in the annual report at 30 June 2008.

25

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HALF-YEAR REPORT For the financial period ended 31 December 2008

DIRECTORS’ DECLARATION

In the opinion of the directors the Consolidated Entity:

1. The financial statements and notes set out on pages 16 to 25 are in accordance with the Corporations Act 2001 including:

2. (a) giving a true and fair view of the financial position of the Consolidated Entity as at 31 December 2008 and of its performance, as represented by the results of its operations and cash flows for the half-year ended on that date; and

3. (b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and

4. There are reasonable grounds to believe that the Consolidated Entity will be able to pay its debts as and when they become due and payable.

Dated at Perth, Western Australia this 11[th] day of March 2009.

Signed in accordance with a resolution of the directors:

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M Rosenstreich

Managing Director

26

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

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF BASS METALS LTD

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

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of Bass Metals Ltd for the half-year ended 31 December 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 review; and

• b No contraventions of any applicable code of professional conduct in relation to the review.

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GRANT THORNTON (WA) PARTNERSHIP Chartered Accountants

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J W VIBERT Partner

Perth, 11 March 2009

Grant Thornton (WA) Partnership ABN 17 735 344 518, a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389. Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards Legislation. 27

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

INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF BASS METALS LTD

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

We have reviewed the accompanying half-year financial report of Bass Metals Ltd, which comprises the consolidated interim balance sheet as at 31 December 2008, and the income statement, statement of changes in equity and cash flow statement for the half-year ended on that date, a statement of accounting policies, other selected explanatory notes and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the half-year’s end or from time to time during that half-year.

Directors’ responsibility for the half-year financial report

The directors of the Company are responsible for the preparation and fair presentation of the half-year 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 control relevant to the preparation and fair presentation of the half-year 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.

Auditor’s responsibility

Our responsibility is to express a conclusion on the consolidated half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagement ASRE 2410: Review of an Interim and Other Financial Reports Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the consolidated entity’s financial position as at 31 December 2008 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Bass Metals Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance

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

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

Liability limited by a scheme approved under Professional Standards Legislation. 28

that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

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

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Bass Metals Ltd is not in accordance with the Corporations Act 2001, including:

• 1 giving a true and fair view of the consolidated entity’s financial position as at 31 December 2008 and of its performance for the half-year ended on that date; and

• 2 complying with Accounting Standard AASB 134: Interim Financial Reporting and Corporations Regulations 2001.

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GRANT THORNTON (WA) PARTNERSHIP Chartered Accountants

==> picture [66 x 58] intentionally omitted <==

J W VIBERT Partner

Perth, 11 March 2009

Grant Thornton (WA) Partnership ABN 17 735 344 518, a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389. Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards Legislation. 29