GREENWING RESOURCES LTD — Interim / Quarterly Report 2010

Mar 11, 2010

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ABN 31 109 933 995

HALF-YEAR REPORT For the period ended 31 December 2009

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HALF-YEAR REPORT

For the financial period ended 31 December 2009

TABLE OF CONTENTS

Corporate	Directory	3
Directors’	Report	4
Review of	Operations
•	Que River Mine Operation	5
•	Hellyer Mine Project	6
•	Hellyer Tailings Re-Treatment Project	7
•	Exploration	7
•	Corporate Administration	10
Financial Statements
•	Consolidated Condensed Statement of Comprehensive Income	11
•	Consolidated Condensed Statement of Financial Position	12
•	Consolidated Condensed Statement of Changes in Equity	13
•	Consolidated Condensed Statement of Cash Flows	14
•	Condensed Notes to the Financial Statements	15
Directors’	Declaration	28
Auditor’s Independence Declaration		29
Independent Review Report to Members		30

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HALF-YEAR REPORT

For the financial period ended 31 December 2009

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

PageSeager Lawyers 162 Macquarie Street Hobart, TAS 7000

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 Audit Pty Ltd Level 1 10 Kings Park Road West Perth WA 6005

STOCK EXCHANGE LISTINGS

ASX Limited (Code: BSM & BSMOA) Deutsche Börse (R2F-Ber (Berlin) and R2F-FRA (Frankfurt))

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HALF-YEAR REPORT For the financial period ended 31 December 2009

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DIRECTORS REPORT

Your Directors submit the financial report on the Consolidated Group for the half-year ended 31 December 2009.

Directors

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

Mr David Donald Boyer – Non-executive Chairman

Mr Michael Benjamin Rosenstreich – Managing Director

Mr Craig Ian McGown – Non-executive Director

Mr Patrick Anthony Treasure – Non-executive Director

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

Consolidated Entities

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

Hellyer Mill Operations Pty Ltd.

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HALF-YEAR REPORT For the financial period ended 31 December 2009

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REVIEW OF OPERATIONS

Bass has had a successful half-year with a robust viable new project indicated from the Fossey feasibility study, strong operating cash flows continuing from the Que River mine and several exciting exploration results including 2.4 metres at 25% zinc, 8.7% lead, 192 g/t silver, and 4.9 g/t gold, building momentum toward another discovery. The following commentary and financial statements reflect Bass’ transformation into an emerging mid-tier diversified mining business.

1.0 QUE RIVER MINE OPERATION

1.1 Safety & Environment

No lost time injuries have occurred during the period or since the start of the project in September, 2007.

1.2 Mining Activities

Ore production and deliveries to MMG Rosebery are summarised in Table 1. Reconciliation of actual mined tonnages vs predicted from the resource model continues to be highly positive with 24% more tonnes mined at grades between 57 to 78% higher than predicted. Deliveries were 4% under budget at higher grades.

Table 1: Mining Summary – 6 Months to 31 December 2009

	Tonnes (wmt)	Zn (%)	Pb (%)	Cu (%)	Ag (g/t)	Au (g/t)
Opening Stocks at QR	5,504	17.7	10.2	0.3	243	5.2
Ore mined*	27,563	16.5	9.4	0.4	210	3.1
Ore Delivered to MMG	29,032	17.2	9.7	0.4	224	3.5
Remaining Stocks at QR	4,035	9.9	5.6	0.2	133	1.7

1.3 Operating Performance

Ore sales for the period were $10.6 million which equates to average net revenue of $385/t of ore mined and $365/t ore sold. Unit costs for ore mined and sold are shown on a quarterly basis in Table 2.

Table 2: Unit Operating Costs

Unit Cost basis	Unit	Dec 09 Qtr	Sept 09 Qtr	June 09 Qtr	Mar 09 Qtr
Ore Sold	$/dmt	208	240	205	279
Ore Mined	$/wmt	180	313	227	267

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 Quarter consistent with the Company’s accounting policies as detailed in the 30 June 2009 Annual Report. The difference between “sold” and “mined” unit cost reflects the closing inventory position and minor moisture content.

1.4 Mining Outlook

The Company intends to complete the current mine plan which mainly comprises the PQ North cut back and the QR32 pit to produce a further 40,000 tonnes of ore. This mining activity is planned to be completed in June 2010, with ore deliveries to MMG continuing under the current Ore Sales Agreement until approximately September 2010.

The Company has commenced assessment of the remaining Que River Mineral Resource for mining and processing at its Hellyer Mill.

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HALF-YEAR REPORT For the financial period ended 31 December 2009

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2.0 HELLYER MINE PROJECT (HMP)

The Company’s core focus during the period was to complete the Fossey Definitive Feasibility Study (DFS) and negotiate secure concentrate off-take and financing facilities to support the development of the Hellyer Mine Project (HMP), as well as undertake further optimisation-style planning and testwork activity.

Bass plans to be in production in the September quarter of 2010 at its Hellyer Mine Project. It is focussed on developing a mining and processing plan based on a combined Mineral Resource base of 2.3 million tonnes of high grade polymetallic massive sulphide resources located at Fossey, Hellyer and Que River, all within a 4km radius of the Hellyer Mill. The DFS has focussed solely on new mine development at the Fossey deposit, with the assumption that additional feedstock could be opportunistically sourced from the Que River and Hellyer resource inventories to generate a 4 to 5 year mine project.

The DFS outcomes are summarised in Table 3 with metal price assumptions presented in Table 4 below. Two particularly positive aspects of the DFS outcomes are the strong operating surplus generated of approximately $48 million and the benchmark C1 cost estimated to be US$0.33/lb of payable zinc, after credits - placing it well into the lower half of the world cost curve.

Table 3: Fossey DFS Technical & Financial Summary

Technical Parameters
Ore Reserve/Mining Inventory	851kt at 8.6% Zn, 5.0% Pb, 0.3% Cu, 120 g/t Ag & 2.4 g/t Au
Mine Life	c. 3 years (from start-up, i.e. decline commencement, to completion)
Concentrate Production	Zinc Concentrate: 105kt at 53% Zn 150 g/t Ag
	Lead Concentrate: 53kt at 59% Pb, 478 g/t Ag & 2.3 g/t Au
	Copper-Silver Concentrate: 9kt at 18% Cu, 4374 g/t Ag & 9.1 g/t Au
Estimates of Financial Outcomes
	Units	Total	A$/t ore
Gross Revenue	A$M	229	269
Net Smelter Return	A$M	174	205
Site Operating Costs	A$M	86	101
Royalties*	A$M	14	17
EBITDA	A$M	74	87
Start-up Capital Costs	A$M	18	21
Ongoing Capital Costs	A$M	8	9
EBIT	A$M	48	57
EBIT Margin	%	c.28%	c.28%
C1 Costs(per lb payable Zn after credits)	US$/lb	US$0.33
*includes State and production/incentive royalties.

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HALF-YEAR REPORT

For the financial period ended 31 December 2009

Table 4: Commodity price & FX assumptions

	Units	Price
Zinc	US$/t	1,950
Lead	US$/t	2,100
Copper	US$/t	6,000
Silver	US$/oz	17
Gold	US$/oz	1,000
AUD:USD		0.87

Subsequent to the end of the period the Company has announced that off-take terms for its zinc and lead concentrates had been agreed with Nyrstar and that RMB Resources Limited had been mandated to arrange a $12 million Project Loan and a hedging facility.

It is important to note that the agreed off-take terms and current metal prices are better than those assumed by Bass in its DFS assumptions. As the Company completes its DFS optimisation process further updates and financial forecasts will be provided.

Following EPA Tasmania and Bass Board approval for the commencement of the project site works started in January, 2010. First ore production is planned in the September quarter and concentrates sales in the December quarter of 2010.

3.0 HELLYER TAILINGS RE-TREATMENT PROJECT

Como Engineers has commenced a pre-feasibility study on re-starting the tailings re-treatment project. This project was operated for 18 months until October 2008 by the previous owners. Bass now owns all of the major equipment such as the dredge and shore tanks, which are all in excellent condition. The concept is to run the mill continuously on alternate campaigns of hard-rock ore and tailings as it is not feasible to mix two such diverse feedstocks. The tailings would be processed into a bulk lead-zinc-silver concentrate. Work is ongoing to evaluate the potential to recover the 2.6 g/t of gold within the tailings. At present it has a mineralogical focus i.e. trying to determine which sulphide minerals preferentially host the very fine grained gold particles and then to determine if those sulphides can be preferentially concentrated.

4.0 EXPLORATION

Strategically, the exploration focus is refocussing on the areas prospective for the larger scale volcanic hosted massive sulphide (VMS) deposits such as Que River, Hellyer and Rosebery – the type of world class polymetallic deposits that the Mt Read volcanic belt is renowned for. In this respect, Bass already controls some of the most prospective areas, particularly on the Hellyer and Que River mine leases. Coincident with this refocusing, the Company has made significant reductions to its more regional tenements. These relinquishments resulted in a write-down of $0.8 million of exploration expenditure from the Company’s accounts for the reporting period. Further rationalisation is currently underway as part of the routine and prudent exploration land assessment process. Figure 1 illustrates the Company’s tenement holdings at the end of the rationalisation process.

4.1 New Target Generation

The majority of the exploration activity during the period was focussed on target generation utilising new exploration technologies. These were trialled by Bass in the Hellyer-Mt Charter-Que River area to identify new targets in the substantial areas of untested “host horizon”. The new techniques include mineral spectral data collection of 66,000 readings and 3,500 litho geochemical samples for low-level multi-element analysis. In November 2009 the first phase of the new targeting process was completed and drill testing commenced on the nine targets, with the first drill hole completed at Switchback and a second one started at North Hellyer.

Switch Back Target

During the period, the first of four prospective areas at the Switchback target was tested by a 350.2 metre diamond drill hole. The drill hole intersected 2.35 metres of high grade massive base metal sulphide mineralisation (2.35 metres at 25.0% Zn, 8.7 % Pb, 192 g/t Ag and 4.9 g/t Au) within an overall 9.25 metre zone (9.25 metres at 8.5 % Zn, 3.3 % Pb, 69 g/t Ag and 1.6 g/t Au) within a clastic sequence. The drill hole then passed into a wide zone of footwall alteration.

The presence of significant hanging wall and footwall alteration is indicative that an active VMS system existed in this area and the presence of mineralised clasts (boulders) indicates that it had ore-forming potential and further major exploration work is planned.

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HALF-YEAR REPORT

For the financial period ended 31 December 2009

Figure 1: Bass Metals tenement plan-NW Tasmania

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HALF-YEAR REPORT For the financial period ended 31 December 2009

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North Hellyer Target

Drilling commenced testing the North Hellyer target, where there is a 750 metre long “window” of prospective stratigraphy underlain by favourable footwall alteration and untested by previous explorers directly along strike from the Hellyer deposit.

4.2 Near Mine Exploration

Fossey

Four drill holes were completed around the Fossey deposit and whilst significant alteration was intersected, no ore-grade values were returned and no further follow-up work in this area is planned.

Que River

Drill hole QRD1311 designed to test an enigmatic downhole EM anomaly south of Que River encountered problems at 530 metres depth and had to be abandoned short of the target. Four shallow drill holes testing for extensions to PQ mineralisation at a possible waste dump location were completed during the period, with no ore intersected.

4.3 Regional Exploration

Bass was successful in its tender for the Lake Margaret EL on behalf of the Bass (75%) and Clancy Exploration Limited (25%) joint venture. This highly prospective ground is located between the million ounce Henty gold deposit and the +120 million tonne Mt Lyell copper-gold orebody. Bass' application was based on its targeting work focussed on North Lyell style high grade copper with gold and silver mineralisation. The target area identified contains glacial erratic boulders with assays that average 5.6 % Cu, 0.6 g/t Au and 29 g/t Ag which Bass considers are from a proximal (local) source.

Mineral exploration requires that ground is also relinquished as the assessment process indicates reduced likelihood of a discovery as the targets are tested and eliminated. Bass has made significant tenement reductions during the period and early in 2010 resulting in the current tenement position shown in Figure 1.

The majority of the tenements affected are part of the regional joint venture with Clancy (formerly Geoinformatics Exploration) under the terms of the Tasmanian Alliance Agreement (TAA) executed in 2005. The TAA was established to test a series of targets generated by Geoinformatics and subsequently assigned to Clancy on both TAA joint venture and 100% Bass tenements.

By way of background, Bass purchased a 75% interest in the 9 original joint venture tenements from Clancy. Under the terms of the TAA, Bass funds all exploration on the licences until a pre-feasibility study is completed on any one of the tenements. An Area of Mutual Interest (AMI) was also agreed over a defined area in western Tasmania where tenements acquired or joint ventured must be offered to the other party for consideration as to whether those interests will form a new joint venture under the TAA.

A key rationale for entering into the alliance was that Clancy agreed to apply its targeting process (a proprietary technique used to develop and assess mineral targets) to all of Bass’ project areas in Western Tasmania, regardless of whether Clancy had a joint venture interest or not. The relationship was considered to be an efficient way in which to assimilate and utilise a vast historical database for the large joint venture tenement area. As Clancy was also undertaking targeting work on non-TAA joint venture tenements the parties agreed that Clancy would be entitled to receive Performance Shares at the rate of 250,000 Bass shares for every 500,000 ounces of gold (or gold equivalent) discovered on all of the Company’s tenements above pre-agreed thresholds, capped at 5 million shares (equivalent to 10 million ounces over the threshold levels) until 10[th] May 2015.

Over the past several years Bass, as the Manager of the joint venture, has systematically tested targets identified by Clancy on the 9 original joint venture tenements but no significant discoveries have resulted and these tenements have either been relinquished or no longer form part of the joint venture. The only remaining tenement in the joint venture is the Lake Margaret EL, which Bass recently won through an ERA tender, and pursued based on its own targeting strategy and local experience. This ERA falls within the AMI and therefore within the joint venture. No Performance Shares have been issued to Clancy to date. The AMI clause in the TAA will expire on either the 10 May, 2010 or when the last joint venture tenement is relinquished.

Bass has a commodity based (iron, tin and tungsten) joint venture with Venture Minerals on exploration licences EL 31/2003 Heazlewood and EL 36/2003 Whyte River. During the period Venture reported (VMS ASX release 1/12/2009) high grade iron at surface including 14 meters grading 66 % Fe at the Rocky River South Prospect in the southern portion of EL 36/2003. The high grade iron occurs over a strike length of 800 meters, is open to the north and surface sampling suggests very low impurities. Drilling is planned in the new year to test this prospect.

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HALF-YEAR REPORT For the financial period ended 31 December 2009

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4.4 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.

5.0 CORPORATE ADMINISTRATION

The Company initiated a large capital raising process late in 2009, which was subsequently completed in January 2010. The raising was comprised of a Placement to new investors of 43.6 million shares (in two tranches) to raise $10 million and a Rights Issue of 19.1 million shares to existing, pre-Placement Bass shareholders to raise $4.4 million. . A 3.93 million share shortfall from the Rights Issue was placed early in 2010 to raise an additional $0.9 million. In conjunction with a proposed $12 million debt facility this capital raising is planned to ensure that the Company has sufficient funding to develop the first phase of the HMP and maintain a vigorous exploration programme.

The Financial Position of the Company as at the end of the half-year consisted of; cash balances of $16,689,805 (31 Dec. 2008: $7,797,324); a Working Capital position of $12,934,020 (31 Dec. 2008: $11,114,714); carried forward exploration expenditure was $12,558,288 (31 Dec. 2008: $12,178,755); and, net assets of the Company were $48,598,436 (31 Dec. 2008: $26,906,879).

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 29.

Signed in accordance with a resolution of the directors:

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M Rosenstreich Managing Director

West Perth, Western Australia 12 March 2010

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HALF-YEAR REPORT

For the financial period ended 31 December 2009

CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2009

Note Sales revenue 2 Operating costs 3 Operating Profit Other income 2 Other expenses 3 Share based payment expenses 3 Finance costs 3 Profit/(loss) before income tax Income tax benefit Profit/(loss) after income tax for the period Other comprehensive income/(loss) Total comprehensive income/(loss) for the period Profit/(loss) attributable to: Members of the parent entity Earnings per share Basic earnings per share (cents) Diluted earnings per share (cents)	Half-year ended 31 Dec 2009 $ 31 Dec 2008 $ 10,605,982 11,712,527 (7,476,336) (7,370,664)
	3,129,646 4,341,863 136,827 1,958,066 (4,077,352) (1,649,028) (232,686) (108,416) (19,695) (26,739)
	(1,063,260) 4,515,746 247,454 -
	(815,806) 4,515,746
	- -
	(815,806) 4,515,746
	(815,806) 4,515,746
	(0.78) 4.36 (0.78) 4.10

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

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HALF-YEAR REPORT For the financial period ended 31 December 2009

CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2009

Note CURRENT ASSETS Cash and cash equivalents 5 Trade and other receivables Inventories Derivative financial assets Other assets Total Current Assets NON-CURRENT ASSETS Trade and other receivables Plant and equipment Mine properties Capitalised exploration and evaluation 11 Deferred tax assets Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Borrowings Derivative financial liabilities Provisions Other liabilities 6 Total Current Liabilities NON-CURRENT LIABILITIES Provisions Contingent consideration Deferred tax liabilities Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 4 Option reserve Retained profits TOTAL EQUITY	31 Dec 2009 $ 30 June 2009 $ 16,689,805 4,542,837 6,631,563 5,789,818 673,885 1,057,637 - 5,747 73,273 180,887
	24,068,526 11,576,926
	1,769,457 1,717,457 24,331,409 24,264,659 11,131,395 10,924,932 12,558,288 11,949,001 4,804,604 4,180,605
	54,595,153 53,036,654
	78,663,679 64,613,580
	3,234,432 2,090,470 22,324 156,267 267,507 52,511 1,759,877 1,840,902 5,850,366 -
	11,134,506 4,140,150
	5,239,000 5,234,071 2,756,319 2,756,319 10,935,418 10,767,862
	18,930,737 18,758,252
	30,065,243 22,898,402
	48,598,436 41,715,178
	29,760,819 22,294,441 1,032,317 799,631 17,805,300 18,621,106
	48,598,436 41,715,178

The above Consolidated Condensed Statement of Financial Position should be read in conjunction with the accompanying notes.

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HALF-YEAR REPORT For the financial period ended 31 December 2009

CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2009

Balance at 01 Jul 2008 Share options issued during the period in accordance with AASB 2 - Share Based Payments Total comprehensive income for the period Balance at 31 Dec 2008 Balance at 01 Jul 2009 Shares issued during the period Share issue costs Tax benefit relating to share issue costs Share options issued during the period in accordance with AASB 2 - Share based Payments Total comprehensive loss for the period Balance at 31 Dec 2009	Issued Capital $ Retained Profits/ (Accumulated Losses) $ Option Reserve $ Total $
	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
	22,294,441 18,621,106 799,631 41,715,178 7,954,019 - - 7,954,019 (696,630) - - (696,630) 208,989 - - 208,989 - - 232,686 232,686 - (815,806) - (815,806)
	29,760,819 17,805,300 1,032,317 48,598,436

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

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HALF-YEAR REPORT For the financial period ended 31 December 2009

CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2009

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 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 share payments 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 2009 $ 31 Dec 2008 $ 9,636,040 9,737,630 (6,204,447) (5,476,905) - (36,432) - 338,986 127,644 177,179 (24,552) (25,701)
	3,534,685 4,714,757 (137,215) (116,593) - (500,000) (1,940,965) (2,315,339) (1,873,873) (2,453,915) (571,180) 4,048,913
	(4,523,233) (1,336,934) 13,703,581 - (128,065) (10,068) (440,000) -
	13,135,516 (10,068) 12,146,968 3,367,755 4,542,837 4,429,569
	16,689,805 7,797,324

The above Consolidated Condensed Statement of Cash Flows should be read in conjunction with the accompanying notes.

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HALF-YEAR REPORT

For the financial period ended 31 December 2009

CONDENSED NOTES TO THE FINANCIAL STATEMENTS

1. Summary of Accounting Policies

Basis of preparation

These general purpose financial statements for the interim half-year reporting period ended 31 December 2009 have been prepared in accordance with requirements of the Corporations Act 2001 and Australian Accounting Standards including AASB134: Interim Financial Reporting. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards.

This interim financial report is intended to provide users with an update on the latest annual financial statements of Bass Metals Ltd and its controlled entities (“the Group”). As such, it does not contain information that represents relatively insignificant changes occurring during the half-year within the Group. It is therefore recommended that this financial report be read in conjunction with the annual financial statements of the Group for the year ended 30 June 2009, together with any public announcements made during the half-year.

The same accounting policies and methods of computation have been followed in this interim financial report as were applied in the most recent annual financial statements except for the adoption of the following new and revised Accounting Standards.

Accounting Standards not Previously Applied

The Group has adopted the following new and revised Australian Accounting Standards issued by the AASB which are mandatory to apply to the current interim period. Disclosures required by these Standards that are deemed material have been included in this financial report on the basis that they represent a significant change in information from that previously made available.

Presentation of Financial Statements

AASB 101 prescribes the contents and structure of the financial statements. Changes reflected in this financial report include:

• The replacement of Income Statement with Statement of Comprehensive Income. Items of income and expense not recognised in profit or loss are now disclosed as components of ‘other comprehensive income’. In this regard, such items are no longer reflected as equity movements in the Statement of Changes in Equity;

• The adoption of the separate income statement/single treatment approach to the presentation of the Statement of Comprehensive Income;

• Other financial statements are renamed in accordance with the Standard.

Operating Segments

From 1 January 2009, operating segments are identified and segment information disclosed on the basis of internal reports that are regularly provided to, or reviewed by, the Group’s chief operating decision maker, which for the Group is the Managing Director. In this regard, such information is provided by using different measures to those used in preparing the Statement of Comprehensive Income and Statement of Financial Position. Reconciliation of such management information to the statutory information contained in the interim financial report has been included.

As a result of the adoption of the revised AASB 8, certain cash generating units have been redefined having regard to the requirements in AASB 136: Impairment of Assets.

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HALF-YEAR REPORT

For the financial period ended 31 December 2009

CONDENSED NOTES TO THE FINANCIAL STATEMENTS

2. Revenue

Revenue
(a) Sales revenue Ore sales Total sales revenue (b) Other income Interest received Other revenue - joint venture establishment fee Net gain on derivative financial instruments Total other income	31 Dec 2009 $ 31 Dec 2008 $ 10,605,982 11,712,527
	10,605,982 11,712,527
	136,827 195,853 - 50,000 - 1,712,213
	136,827 1,958,066

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HALF-YEAR REPORT For the financial period ended 31 December 2009

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CONDENSED NOTES TO THE FINANCIAL STATEMENTS

3. Expenses

(a) Operating costs Production costs Amortisation of mine closure and restoration Amortisation of mining properties Royalties Treatment charges Mining contractor net profit share Total operating costs (b) Other expenses Employee benefit expense Contracting 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 maintenance1 Net loss on derivative financial instruments Total other expenses (c) Share based payments Share based payments (note 10) (d) Finance costs Finance costs Total expenses	31 Dec 2009 $ 31 Dec 2008 $ 2,753,659 2,358,925 - 348,498 2,193,277 2,570,211 512,775 666,319 1,151,395 1,426,711 865,230 -
	7,476,336 7,370,664
	593,731 372,864 359,447 445,302 44,970 52,753 298,948 199,533 59,767 46,120 791,395 422,751 92,081 78,193 980,525 31,512 856,488 -
	4,077,352 1,649,028
	232,686 108,416 19,695 26,739
	11,806,069 9,154,847

Note 1: The acquisition of the Hellyer operating infrastructure and mining lease was formally executed on 12 March 2009. Consequently expenditure was less during the half-year ended 31 December 2008.

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HALF-YEAR REPORT For the financial period ended 31 December 2009

CONDENSED NOTES TO THE FINANCIAL STATEMENTS

4. Movements in Issued Capital

At the beginning of the financial period Issued during the half-year Ordinary shares issued at 13 cents pursuant to the employee share plan on 23 January 2009 Ordinary shares issued at 14.5 cents pursuant to the employee share plan on 1 May 2009 Ordinary shares issued at 23.0 cents pursuant to the employee share plan on 13 November 2009 Ordinary shares issued at 29.0 cents pursuant to the employee share plan on 13 November 2009 Ordinary shares issued at 23.0 cents being tranche 1 of the $10 million share placement issued on 7 December 2009 Ordinary shares issued at 23.0 cents being part of the non- renounceable rights issue, issued on 29 December 2009 Less share issue costs Current and previously unrecognised tax benefit relating to share issue costs Balance at the end of the financial period

31 Dec 2009 Number of Shares $ 30 June 2009 Number of Shares $ 103,648,803 22,294,441 103,573,803 22,097,969 - - 50,000 6,500 - - 25,000 3,625 100,000 23,000 - - 100,000 29,000 - - 15,207,320 3,497,684 - - 19,149,281 4,404,335 - - - (696,630) - - - 208,989 - 186,347

138,205,404 29,760,819 103,648,803 22,294,441

5. Cash and Cash Equivalents

Included in cash and cash equivalents is a restricted amount of $1,310,000 on deposit as credit support for short dated forward sales agreements.

6. Other Liabilities

Included in other liabilities is an amount of $5,850,366 being share placement receipts held in trust pending issue of securities following shareholder approval in January 2010.

7. Operating Segments

Segment Information

Identification of reportable segments

The Group has identified its operating segments based on the internal reports that are reviewed and used by the chief operating decision maker in assessing performance and determining the allocation of resources in accordance with AASB 8.

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HALF-YEAR REPORT For the financial period ended 31 December 2009

CONDENSED NOTES TO THE FINANCIAL STATEMENTS

The operating segments identified are based on geographical location, different risk profiles and performance assessment criteria.

Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics and are also similar with respect to the following:

• the products sold/and or services provided by the segment;

• the manufacturing or production processes.

Reportable segments

Tasmanian Operations - Mining

The Tasmanian Operations - Mining segment produces ore from its Tasmanian mining operations, containing zinc, lead, copper, silver and gold.

Tasmanian Operations- Processing

The Tasmanian Operations - Processing segment includes the Hellyer Mill and associated infrastructure and is anticipated to treat ore generated by the Group’s mining operations as well as from third parties.

Exploration

The exploration segment covers activities related to the identification and discovery of new and additional mineral resources.

Basis of accounting for purposes of reporting by operating segments

Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board of Directors with respect to operating segments are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group.

Inter-segment transactions

No inter-segment transactions have been included this period.

Segment assets

Where an asset is used across multiple segments, the asset is allocated to the segment that has greatest influence over the asset economic value. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location.

Segment liabilities

The Group does not report liabilities to the chief operating decision maker that are allocated to the operating segments and consequently has not reported any liabilities in this note.

19

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HALF-YEAR REPORT For the financial period ended 31 December 2009

CONDENSED NOTES TO THE FINANCIAL STATEMENTS

Unallocated items

The following items of revenue, expense, assets and liabilities are not allocated to operating segments as they are not considered part of the core operations of any segment:

• corporate costs;

• interest revenue and expense;

• share based payments;

• derivates;

• income tax expense;

• deferred tax assets and liabilities.

20

HALF-YEAR REPORT For the financial period ended 31 December 2009

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CONDENSED NOTES TO THE FINANCIAL STATEMENTS

Comparative information

This is the first reporting period in which AASB 8: Operating Segments has been adopted. Comparative information has been restated to conform to the requirements of the Standard.

(a) Segment Performance

Half-year ended 31 December 2009 Revenue External sales Total segment revenue Segment net profit before income tax Reconciliation of segment result to Group net loss before income tax Unallocated items: • Interest revenue • Corporate costs • Net loss on derivative financial instruments • Share based payments • Write-off of project evaluation expenditure Net loss before income tax	Tasmanian Operations - Mining Tasmanian Operations - Processing Exploration $ $ $ 10,605,982 - -	Total $ 10,605,982
	10,605,982 - -	10,605,982
	3,129,647 (987,509) (874,064)	1,268,074 136,827 (1,351,456) (856,488) (232,686) (27,531)
		(1,063,260)

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HALF-YEAR REPORT

For the financial period ended 31 December 2009

CONDENSED NOTES TO THE FINANCIAL STATEMENTS

(a) Segment Performance

Half-year ended 31 December 2008 Revenue External sales Total segment revenue Segment net profit before income tax Reconciliation of segment result to Group net profit before income tax Unallocated items: • Interest revenue • Net gain on derivative financial instruments • Other revenue – Joint venture establishment fee • Corporate costs • Share based payments • Write-off of project evaluation expenditure Net profit before income tax	Tasmanian Operations - Mining Tasmanian Operations - Processing Exploration $ $ $ 11,712,527 - -	Total $ 11,712,527
	11,712,527 - -	11,712,527
	4,341,863 (31,512) (499,795)	3,810,556 195,853 1,712,213 50,000 (1,121,673) (108,416) (22,787)
		4,515,746

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HALF-YEAR REPORT

For the financial period ended 31 December 2009

CONDENSED NOTES TO THE FINANCIAL STATEMENTS

(b) Segment assets 31 December 2009 Segment assets Segment asset additions during the period: • Plant and equipment • Capitalised exploration and evaluation Sub-total Reconciliation of segment assets to Group assets	Tasmanian Operations - Mining Tasmanian Operations - Processing Exploration Total $ $ $ $ 8,500,262 35,549,298 10,944,827 54,994,387 - 66,897 43,565 110,462 - - 1,818,630 1,818,630
	- 66,897 1,862,195 1,929,092
	8,500,262 35,616,195 12,807,022 56,923,479

Unallocated assets:

• Cash and cash equivalents • Trade and other receivables • Plant and equipment • Other assets • Deferred tax assets Total Group assets	16,689,805 117,020 55,497 73,274 4,804,604
	78,663,679

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HALF-YEAR REPORT

For the financial period ended 31 December 2009

CONDENSED NOTES TO THE FINANCIAL STATEMENTS

(b) Segment assets 30 June 2009 Segment assets Segment asset additions during the period: • Plant and equipment • Capitalised exploration and evaluation Sub-total Reconciliation of segment assets to Group assets Unallocated assets: • Cash and cash equivalents • Trade and other receivables • Plant and equipment • Other assets • Derivative financial assets • Deferred tax assets Total Group assets	Tasmanian Operations - Mining Tasmanian Operations - Processing Exploration $ $ $ 7,845,822 11,463,104 10,907,465 - 24,092,327 9,397 - - 1,273,184	Total $ 30,216,391 24,101,724 1,273,184
	- 24,092,327 1,282,581	25,374,908
	7,845,822 35,555,431 12,190,046	55,591,299 4,542,837 55,231 56,974 180,887 5,747 4,180,605
		64,613,580

24

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HALF-YEAR REPORT For the financial period ended 31 December 2009

CONDENSED NOTES TO THE FINANCIAL STATEMENTS

(c) Revenue by geographical region

The Group only operates within Australia.

(d) Major customers

The Group has one customer, MMG Australia Limited.

8. Contingent Liabilities

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

9. Subsequent Events

On 11 January 2010 at the General Meeting, shareholders resolved in favour of the proposed resolutions for 43,478,261 shares to be issued at an issue price of 23 cents per share.

On 27 January 2010 the Company’s Board approved the commencement of the Fossey Mine Development.

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

10. Share Based Payments

The following options were issued during the half-year:

• (a) On 16 October 2009, 1,455,000 unlisted options exercisable at $0.425 each on or before 16 October 2012 were issued to employees of the Group pursuant to the Group’s employee share option plan approved at the 2007 Annual General Meeting (AGM) of Shareholders.

Number of options	1,455,000
Fair value at grant date1	$0.143
Share price	$0.33
Exercise price	$0.425
Volatility factor	70.6%
Expiry date of the options	16 October 2012
Risk free interest rate2	5.19%

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

• 2 Based on the 2 year Commonwealth Government Bond rate.

25

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HALF-YEAR REPORT For the financial period ended 31 December 2009

CONDENSED NOTES TO THE FINANCIAL STATEMENTS

10. Share Based Payments

• (b) On 27 October 2009, 200,000 unlisted options exercisable on or before 1 September 2013 were issued to employees of the Group pursuant to the Group’s employee share option plan approved at the 2007 AGM of Shareholders.

Number of options	100,000	100,000
Fair value at grant date1	$0.183	$0.157
Share price	$0.305	$0.305
Exercise price	$0.25	$0.35
Volatility factor	68.5%	68.5%
Expiry date of the options	1 September 2013	1 September 2013
Risk free interest rate2	5.43%	5.43%

1 The basis of measuring fair value of the options was the Black-Scholes Option Pricing Model. 2 Based on the 3 year Commonwealth Government Bond rate.

• (c) On 7 December 2009, 900,000 unlisted options exercisable on or before 31 December 2012 were issued to the Managing Director as approved by shareholders at the AGM on 16 November 2009.

Number of options	300,000	300,000	300,000
Fair value at grant date1	$0.127	$0.120	$0.115
Share price	$0.26	$0.26	$0.26
Exercise price	$0.26	$0.285	$0.305
Volatility factor	67.3%	67.3%	67.3%
Expiry date of the options	31 December 2012	31 December 2012	31 December 2012
Risk free interest rate2	5.02%	5.02%	5.02%

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

• 2 Based on the 3 year Commonwealth Government Bond rate.

26

HALF-YEAR REPORT For the financial period ended 31 December 2009

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CONDENSED NOTES TO THE FINANCIAL STATEMENTS

• (d) On 7 December 2009, a total of 950,000 unlisted options exercisable on or before 31 December 2012 were issued to Non-executive Directors and the Company Secretary as approved by shareholders at the AGM on 16 November 2009.

Number of options	950,000
Fair value at grant date1	$0.116
Share price	$0.26
Exercise price	$0.30
Volatility factor	67.3%
Expiry date of the options	31 December 2012
Risk free interest rate2	5.02%

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

2 Based on the 3 year Commonwealth Government Bond rate.

11. Exploration and Evaluation Expenditure

The Consolidated Group 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 Write-off on tenements not relinquished1 Transfer to mine properties for development of Que River Balance at the end of the period

31 Dec 2009 $ 30 June 2009 $ 11,949,001 12,178,755 1,819,191 1,273,185 (763,239) (1,200,028) (28,156) - - (302,911) (418,509) -

12,558,288 11,949,001

Note 1: The above write-off on tenements not relinquished is as a result of a review on the carrying values of tenements in which Venture Minerals Limited can earn an interest through a joint venture agreement.

12. Capital and Leasing Commitments

There has been no significant change to capital and leasing commitments disclosed in the annual report at 30 June 2009.

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HALF-YEAR REPORT For the financial period ended 31 December 2009

DIRECTORS’ DECLARATION

In the opinion of the directors the Consolidated Group:

1. The financial statements and notes set out on pages 11 to 27 are in accordance with the Corporations Act 2001 including:

2. (a) giving a true and fair view of the financial position of the Consolidated Group as at 31 December 2009 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.

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

Dated at Perth, Western Australia this 12[th] day of March 2010.

Signed in accordance with a resolution of the directors:

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M Rosenstreich

Managing Director

28

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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 2009, 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.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

==> picture [143 x 55] intentionally omitted <==

M J Hillgrove Director – Audit & Assurance

Perth, 12 March 2010

Grant Thornton Audit Pty Ltd ACN 130 913 594, 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

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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 admin@gtwa.com.au W www.grantthornton.com.au

Independent Auditor’s Review Report To the Members of Bass Metals Ltd

We have reviewed the accompanying half-year financial report of Bass Metals Ltd (the “Company”), which comprises the consolidated financial statements being the statement of financial position as at 31 December 2009, and the statement of comprehensive income, statement of changes in equity and statement of cash flows 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 both the Company and the entities it controlled at the half-year’s end or from time to time during the half-year.

Directors’ responsibility for the 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 controls 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 the Auditing Standard on Review Engagements ASRE 2410: Review of Interim and Other Financial Reports Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the 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 2009 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 Ltd, 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

Grant Thornton Audit Pty Ltd ACN 130 913 594, 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. 30

with Australian Auditing Standards and consequently does not enable us to obtain assurance 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 Limited 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 2009 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 AUDIT PTY LTD Chartered Accountants

==> picture [143 x 55] intentionally omitted <==

M J Hillgrove Director – Audit & Assurance

Perth, 12 March 2010

Grant Thornton Audit Pty Ltd ABN 94 269 609 023, 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. . 31