INOVIQ LTD — Annual Report 2003

Oct 26, 2003

Annual Report 2003

Eurogold Limited - Annual Report 2003 CORPORATE DIRECTORY

Directors

Peter Gunzburg B.Comm (Chairman) Brett Montgomery Dennis W Franks F.C.P.A.

Joint Company Secretaries Les Kozel Pauline Collinson

Principal Registered Office in Australia

Level 4 172 St Georges Terrace PERTH Western Australia 6000 Telephone: 08 9481 0572 Facsimile: 08 9481 3586 Website: www.eurogold.com.au Email: eurogold@iinet.net.au

Postal Address

PO Box 7493 Cloisters Square PERTH Western Australia 6850

Share Registry

Computershare Registry Services Pty Ltd Level 2, Reserve Bank Building 45 St George's Terrace PERTH Western Australia 6000 Telephone: 08 9323 2000 Facsimile: 08 9323 2033

Auditors

Ernst & Young Central Park 152 St George's Terrace PERTH Western Australia 6000

Solicitors Hardy Bowen Level 1, 28 Ord Street WEST PERTH Western Australia 6005 门.

Bankers

BankWest 853 Hay Street WEST PERTH Western Australia 6000

ASX Code

EUG - Fully Paid Ordinary Shares

Controlled Entities

Explorer S.A., Romania Esmeralda Mining Limited, Cyprus

	Eurogold Limited - Annual Report 2003
CHAIRMAN'S STATEMENT	.

Over the last 12 months Eurogold's 50% subsidiary, Transgold S.A, has successfully positioned itself to take advantage of the resurgence in the gold price.

The Central Tailings Dam, which is scheduled to come onstream towards the end of 2004 and contains the equivalent of approximately 130,000 ounces of gold, will provide a profitable base which can be built on with Transgold's other activities, namely:

• $\mathbf{1}$ The development and processing of its hard rock deposits;
• $2)$ The successful application of biological leaching techniques which have initially been applied to the "Suior" concentrate of 525,000 tonnes @ 11g/t Au; and
• 3) Its ongoing toll treatment activities

These activities highlight the importance of owning the only modern CIL gold facility in the Carpathian Region.

Given that the plant, with a replacement cost of some US\$28m, is now debt free, and Transgold enjoys a tax free status until 2008, it is anticipated that Eurogold's 50% share of earnings will far exceed the current market capitalisaiton of only A\$9m.

At the same time, your Board continues to evaluate other opportunities which might compliment the solid base that is being developed in Romania.

PETER GUNZBURG Executive Chairman

27 October 2003

	Eurogold Limited - Annual Report 2003
DIRECTORS' REPORT	. ******

Your directors submit their report for the year ended 30 June 2003.

DIRECTORS

The names and details of the directors of the company in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

Names, qualifications, experience and special responsibilities

Peter L Gunzburg	Chairman Appointed 24 September 2001 Mr Gunzburg has 20 years experience as a stockbroker. He has a Commerce Degree from the University of Western Australia and has previously been a director of Resolute Ltd, the Australian Stock Exchange Limited, Eyres Reed Ltd and CIBC World Markets Australia Limited. He is the Chairman of Fleetwood Corporation and PieNetworks. He is the largest shareholder of Eurogold (20%).
Brett Montgomery	Director Appointed 15 August 1989 Mr Montgomery has over 20 years experience in the gold mining industry and management of public companies.
Dennis W Franks	Director Appointed 24 September 2001 Mr Franks has in excess of 30 years experience in the finance-investment banking and mining and exploration industries. He has an Accounting Degree and has considerable experience in the management of listed companies both within Australia and overseas.

Interests in the shares and options of the company and related bodies corporate

As at the date of this report, the interests of the directors in the shares and options of Eurogold Limited were:

	Ordinary Shares	Options over Ordinary shares
Peter Gunzburg	23,196,085
Brett Montgomery	Nil	Nil
Dennis W Franks		Nil

LOSS PER SHARE

	Cents.
Basic Loss Per Share	-4)
Diluted Loss Per Share	71 A V

Eurogold Limited - Annual Report 2003. DIRECTORS' REPORT (cont'd)

CORPORATE INFORMATION

Corporate structure

Eurogold Limited is a company limited by shares that is incorporated and domiciled in Australia. Eurogold Limited is the ultimate parent entity and has prepared a consolidated financial report incorporating the entities that it controlled during the financial year (refer note 7 in the financial report).

The registered office and principal place of business of Eurogold Limited is located at:

Level 4, 172 St Georges Terrace Perth, Western Australia, 6000

Nature of operations and principal activities

During the year, the principal activities of Eurogold Limited and its controlled entities were the exploration and assessment of mineral tenements held, and the provision of exploration services in Romania.

There have been no significant changes in the nature of those activities during the year.

Employees

The consolidated entity employed a total of 26 employees as of 30 June 2003 (2002: 199).

REVIEW AND RESULTS OF OPERATIONS

Review of Operations

Corporate Highlights

May 2003 -20,000,000 Ordinary Shares issued after successful Placement Facility at \$0.06 each raising \$1.2 million.

Investments

Transgold SA - Baia Mare Tailings Retreatment Project – Romania (Eurogold 50%)

$1.0$ General

Transgold faced a year of transition with the completion of the "Meda" dam and the beginning of work to bring the "Central" Tailings Dam onstream. Reliance was placed on treating toll ores supplied by Remin, the State owned mining company, as well as a limited amount of concentrate material that was sourced within Romania. The major project activities of Transgold undertaken during the year included commissioning of a crusher facility of 120,000 tonnes per annum and undertaking the rehabilitation of the Meda dam site.

An active exploration programme was undertaken to further research and evaluate prospective tenement areas owned by Transgold. Some encouraging results were achieved and work is continuing in those areas.

$2.0$ Production

Gold Operations

Transgold's first tailings dam, 'Meda', was completed in May 2002 and a US\$1.4m site rehabilitation project then commenced. At year end rehabilitation was 50% complete. However, as a result of the closure of Meda, produced gold ounces from operations had declined to 31,457 ozs from 36,569 ozs the previous year.

With the removal of the dam an area of 21 hectares will become available for the towns expansion. Ownership of the land does not belong to Transgold and will revert to Remin, the State owned mining company, when rehabilitation is completed. The Meda dam produced a total of 63,545 ounces of gold and 469,408 ounces of silver at an average cash cost of US\$227/ounce gold equivalent and a resource reconciliation of 96% for recovered gold.

Transgold continues to regularly toll treat material from SC Remin SA, the Romanian government owned State mining entity and co-shareholder in Transgold. Despite minor supply interruptions, this toll treatment underpins the ongoing operations of Transgold. During the year Transgold treated 263,140 tonnes of material.

Transgold has also treated a steady supply of concentrate material, sourced from a variety of suppliers. Transgold will continue to keenly pursue the sourcing and treatment of alternative feedstock from suppliers both within and external to Romania. As concentrates contain a much higher grade of gold and silver, this material forms an important supplementary revenue stream. This material is transported to the Transgold plant and either stockpiled or immediately treated, depending on production requirements. A total of 35,191 tonnes of concentrates were treated during the year.

Development of the Hanau open pit continued during the year. The construction of access ramps to the upper levels of the pit and 10m vertically spaced berms were cut in preparation for overburden stripping that commenced in September 2003. The pit has a probable reserve of 148,000 tonnes $\hat{\omega}$ 2.9 g/t Au and is expected to be mined at a rate of up to 10,000 tonnes/month.

The proposed new 'Central' dam project consists of approximately 8 million tonnes of mineable material with a recoverable grade of 0.42 $g/t$ Au and 5.2 $g/t$ Ag, containing a total reserve of approximately 108,000 ounces Au and 1.34 million ounces Ag.

Final design for the project pipeline corridor has been completed and environmental approval is held. Design and permitting for the operations at Central dam are well underway and the construction permit is expected by mid 2004.

The economics of the Central dam are enhanced by the addition of Transgold's own hard rock resources, initially from its Hanau deposit (probable reserve 148,000 tonnes $\hat{a}$ ) 2.90 $g/t$ ), and by the fact that the 2.5 Mtpa Transgold plant is debt free and does not pay company income tax until vear 2008.

Transgold undertakes regular projects to help improve the environment surrounding its operations, which are above those imposed by legal requirements such as the tree planting and revegetation of some areas surrounding operational areas.

Eurogold Limited - Annual Report 2003 6 DIRECTORS' REPORT (cont'd)

$3.0$ Exploration

All exploration has been conducted by SC Explorer SA, a Romanian registered, 98% owned subsidiary of Eurogold. Explorer conducts exploration on three tenements totalling 75km² that it holds in its own right and manages the exploration on three tenements $(78 \text{km}^2)$ held by SC Transgold SA. All tenements are located within the inner Carpathian volcanic belt of the Baia Mare region of Romania. Gold has been mined from this low-sulphidation epithermal belt for more than 1000 years.

Exploration during 2003 focused on the delineation of readily accessible mineralisation that could be rapidly upgraded to mineable reserves at minimum cost, as well as conducting broader reconnaissance exploration to identify mineralised structures that had not previously been recognized. Exploration work including regional geochemistry, trenching, diamond drilling, channel sampling and resource estimation continued on all tenements during the year.

4.0 Regulatory Issues

SC Aurul SA (now Transgold SA) was previously the subject of litigation from a number of small litigants and the Hungarian Government, following the incident at the Tailings Dam in January 2000. At the fifth court hearing on 26 May 2003, the Hungarian Court delayed proceedings pending the appointment of a new judge to the case and the reconsideration of evidence submitted to date. The next court hearing date is yet to be announced. Transgold continues to vigorously defend its position.

Explorer S.A. (Eurogold 98%)

5.0 General

A new law was promulgated by the Romanian government during the year that enables licence holders to retain exploration licences for 5 years without any relinguishment, subject to the holder satisfying expenditure commitments. This is very beneficial to Eurogold, providing the company more time to properly evaluate the complex geology of the Baia Mare tenure.

Sasar Licence (Eurogold 50%) - Exploration Licence No 22

Exploration activities during the year consisted of trenching, diamond drilling, geochemistry and resource estimation.

A twelve-hole diamond-drilling programme was completed over the Sophia and Popradel prospects to ascertain the potential for mineralisation between veins X and XXV of the historically mined Sophia deposit and the adjacent Popradel breccia. The drilling intersected strongly silica-adularia-pyrite altered brecciated andesite with quartz veining and iron oxides. Frequent narrow quartz veins were intersected, often containing high grades, up to 0.3m at 73.4g/t Au. Unfortunately the vein spacing was too wide and intervein material is insufficiently mineralised to sustain a bulk mining operation.

An inferred resource was estimated for the Aurum deposit at two cut-off grades.

Variant 1: 1.0g/t Au Cut-off	310,000t at 2.04g/t Au
Variant 2: 1.4g/t Au Cut-off	126,000t at 3.35g/t Au

	Eurogold Limited – Annual Report 2003
DIRECTORS' REPORT (cont'd)

The Aurum resource is located 6km by road from the Transgold treatment plant and a scoping study has indicated that it may be economically viable to mine the high grade core of the resource from a small open pit. More drilling and trenching is required verify the resource.

A 1.8km² soil geochemistry survey was completed over the Borzas prospect around the Borzas Au-Ag stockwork deposit that hosts a resource of approximately 5Mt at 1.8g/t Au and is currently being mined by Remin. The survey delineated three very strong, discrete Au-Ag-As Sb-Tl anomalies. Gold in soil grades reached a maximum of 2210ppb adiacent to the Borzas deposit but two separate anomalies located 600m east and 700m south, recorded peak Au values of 697 and 855ppb respectively. The anomalies have similar surface areas to the Borzas anomaly. A detailed investigation of the anomalous areas will be completed during late 2003.

A detailed geochemical survey is to be completed over the Fata Mare-Alunis prospects in an attempt to identify a possible mineralised breccia or stockwork systems.

Baița Licence (Eurogold 50%) - Exploration Licence No 23

Exploration activity on the Baita licence included geochemical sampling, trenching and drilling with the focus being on the III Lapusna and Piatra Handal prospects.

At the III Lapusna prospect, located 200m west of the Nistru deposit, trenching and channel sampling was undertaken to ascertain whether there was sufficient remnant mineralisation in the hanging and foot walls to sustain open pit mining operations. The main vein at III Lapusna was mined historically along a strike length of more than 1000m and the ensuing subsidence has resulted in a 10m deep trench along the vein. exposing the walls. A dense network of veining is apparent in the walls where channel sampling has returned intersections of 132m at 2.49g/t Au and 6.9g/t Ag, 34m at 4.71g/t Au and 19.9g/t Ag and 35m at 3.46g/t Au and 10.2g/t Ag. It must be noted that the channel sampling was conducted parallel with the vein but in the footwall. Several diamond holes were drilled across the structure but drilling was difficult due to significant subsidence and the presence of old mine workings. Significant intersections include:

• 11.2m @ 4.37g/t Au and 24.7g/t Ag from 52.5m TLDD-2 $\bullet$
• TLDD-3 4.9m @ 3.74g/t Au and 17.9g/t Ag from 34.7m
• 3.0m @ 8.38g/t Au and 25.2g/t Ag from 44.4m. TLDD-13

All data is to be reviewed to ascertain the potential to mine the remnant mineralisation. Numerous additional veins have been identified up to 500m into the hanging wall of the III Lapusna vein.

A soil geochemistry survey was completed over 1.65km² of the Piatra Handal prospect to evaluate the Piatra Handal diatreme and adjacent Coroana de Aur vein. The principal objectives of the survey failed to generate significant anomalism however a 15 hectare anomaly with peak values of 1180ppb Au and 15.5ppm Ag was identified at Pintenul Handal. A field inspection has revealed 3-4 oblique quartz vein sets within strongly altered rhyo-dacite pyroclastics. Rock chip sampling has returned values up to 7.8 g/t Au. Trenching and drilling of the prospect is scheduled for late 2003.

Ilba Licence (Eurogold 50%) - Exploration Licence No. 24

Exploration activities for the year included trenching, diamond drilling, geochemical sampling and data interpretation.

	Eurogold Limited – Annual Report 2003
DIRECTORS' REPORT (cont'd)	www.communication.com/article/2012/07/industrial/article/2012/07/industrial/article/article/article/

Infill drilling was completed at the Hanau prospect and a probable reserve of 148,000t at 2,90 $g/t$ Au and $12.2\alpha$ /t Ag was estimated for a trial open pit mining operation. All required permits have been received for the operation and an access road and pre-production development works completed in readiness for stripping to commence during late 2003. It is anticipated that the deposit will be mined at a rate of approximately 10,000tpm.

Trenching and drilling continued on the contiguous Firzan NE and Firizan SW prospects, resulting in the estimation of an inferred resource of 243,000t at 2.8g/t Au and $12g/t$ Ag to a maximum depth of 60m from surface, on Vein 10 Firizan. The vein was historically mined at depth confirming the continuity of mineralisation. A scoping study will be completed to evaluate the viability of mining the resource from an open pit.

Trenching and drilling was conducted at the Mihai-Nepomuc prospect to test a major NW striking regional lineament for gold mineralisation. The structure has been historically mined underground in parts for both gold and base metals and reaches a true width of up to 38m. A 70m wide zone of deformation has been identified in which drilling intersected highly silicified, oxidised andesite breccia with varying intensity of argillic alteration. Drill hole F.3-MN intersected 16.8m at 2.67g/t Au and 5.7g/t Ag from 29.2m. Sporadic strong base metal mineralisation was recorded in drill hole F. 1-MN, with assays for Pb, Zn and Cu up to 4.26%, 3.75% and 0.69% respectively. The Mihai-Nepomuc structure remains untested for more than 700m to the SE.

Soil geochemistry in this area revealed two anomalies, one coincident with the location of drill hole F.3-MN, and a second 700m to the SE. The latter anomaly is coincident with an area of strong silicification and minor argillic alteration, adjacent to a dacitic intrusion. The anomaly has moderate Au-Ag values, 60ppb and 2.45ppm respectively, but there is strong coincident As (574ppm), Ba (341ppm), K (2980ppm) and Sb (14.1ppm) anomalism over a wide area indicating that the region has been the focus of significant hydrothermal fluid flow.

At the Purcaret North prospect, three trenches have confirmed extensive gold anomalism in argillic altered, silicified andesitic hydrothermal breccia, located in an area interpreted to be an extension of Vein 10 Firizan, on the south side of the Mihai-Nepomuc lineament. Trench results include, S-92, 39m at 1.0g/t Au. Drill testing of the prospect failed to intersect economic grades.

Drilling at the Plopat and Purcaret prospects failed to intersect significant precious metal mineralisation

Bixad Tenement (Eurogold 98%) - Exploration Licence No. 46

Trenching on the Corneasca veins was completed to 50m spacing and drilling to 100m from which an inferred resource of 317,000t at 4.5g/t was estimated. Additional exploration was conducted over an intervein breccia zone at the north end of the Corneasca veins but no significant mineralisation was encountered. No further work is proposed on the Corneasca veins at this stage.

A soil geochemical sampling programme was completed over 1.4km² of the Valea Rosie prospect where mapping and rock chip sampling has identified an area containing brecciated andesite with quartz veining and strong argillic alteration. The survey failed to identify any indications of precious metal mineralisation.

	Eurogold Limited – Annual Report 2003 Contained a contained a set of the Second Second Second Second Second Second Second Second Second Second Second Second Second Second Second Second Second Second Second Second Secon
DIRECTORS' REPORT (cont'd)

Racsa-Zugau Tenement (Eurogold 98%) - Exploration Licence No 85

Geochemical sampling conducted over the central part of the tenement identified a strong Au-Ag anomaly over the position of the alleged 600,000t Racsa-Zugau resource, delineated by drilling and underground exploration by the Romanian State during the 1960's and early 1970's. Explorer drilled eight diamond drill holes into this position, intersecting strongly altered andesite breccia with quartz veining, however there was negligible gold mineralisation. Explorer subsequently gained access to a previously unavailable report prepared during the mid 1970's, which revealed that there had been a major analytical problem during the early exploration, resulting in dramatic overstatement of gold and silver grades. No further work is proposed for the prospect.

Geochemical sampling is to be completed over the southeast corner of the tenement, along the trend of the Mihai-Nepomuc lineament where numerous structures have been identified, in an attempt to locate a possible mineralised breccia or stockwork body.

Racşa Sud-Est Tenement (Eurogold 98%) - Exploration Licence No 698

The Racsa Sud-Est tenement encompasses the Transgold tenements centered on the NW striking precious and base metal mineralised corridor of the western Baia Mare region. The tenement was acquired to ensure that Eurogold had exposure to tenure covering all potential gold mineralisation in the region. There has been little historical exploration conducted on the Racsa Sud-Est tenement so regional soil geochemistry has been required to identify anomalous areas.

A detailed geochemical sampling programme was completed over 2.5 $km²$ of the Tarnita prospect. The prospect contains frequent quartz veining within strong argillic-adularia alteration and silicification of pyroxene andesites and rhyo-dacite pyroclastics. The Salvador prospect, where explorer intersected 14m at $3.75g/t$ Au in trench No 56, is located within the Tarnita area. The soil geochemistry revealed a number of strong anomalies, the strongest situated over the Salvador prospect with peak values of 4880ppb Au, 15.8ppm Ag. Several other anomalies have yet to be evaluated in detail.

Seventeen trenches and five diamond drill holes were completed at the Salvador prospect and although extensive mineralisation was intersected the prospect does not appear to host an economically viable gold deposit. The best drill intersection recorded was 14.7m at $1.63g/t$ Au and 7.0g/t Ag in intensely silicified and pyrite altered andesites with abundant quartz veining, in drill hole SVDD-2.

A 1.25 $km^2$ soil geochemistry programme was also conducted over the Tigher prospect. Three anomalous areas were defined where follow up trenching encountered previously unrecognized quartz veining. brecciation and adularia alteration however gold values were sub-economic. An extensive Ag-As anomaly is located directly over the interpreted position of a possible maar volcano, where lacustrine sediments overlay a volcanic breccia. A hole is to be drilled to test for mineralisation located beneath the impermeable sediment cap.

Soil geochemistry was also conducted over the Valea Bradului $(1.4 \text{km}^2)$ and Mihai Nepomuc $(1.0 \text{km}^2)$ and Beneci $(0.8 \text{km}^2)$ prospects but there was little significant precious metal anomalism.

Trenching and reconnaissance sampling was also conducted at the Cetatii, Seini, Ungaresc Lapusna Mare and Muncei prospects where sporadic gold mineralisation up to 9.4g/t was recorded.

Eurogold Limited - Annual Report 2003 $\Omega$ . DIRECTORS' REPORT (cont'd)

Mr Doug Cook, Geologist for SC Explorer SA, has been responsible for the preparation of the geological sections of this report. Mr Cook has more than fifteen years' experience in the estimation and evaluation of mineral resources.

Operating results for the Year

Operating results for the year were:

	2003	2002 S
Revenue from ordinary activities	1,283,098	2,243,739
Operating loss after taxation	(1,352,716)	(177,316)

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There have been no significant changes in the state of affairs of the chief entity or the consolidated entity during the financial year.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

There are no other matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in subsequent financial years.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

Other than as referred to in this report, further information as to likely developments in the operations of the consolidated entity would, in the opinion of the directors, be likely to result in unreasonable prejudice to the consolidated entity.

ENVIRONMENTAL REGULATION AND PERFORMANCE

Eurogold has obligations under documentation entered into between, amongst others, it and the lending banks to an associated entity with respect to compliance with environmental law.

Eurogold is not in default in relation to any of those obligations.

DIVIDENDS

No dividend has been declared or paid during the financial year.

Eurogold Limited - Annual Report 2003 $\overline{11}$ DIRECTORS' REPORT (cont'd)

SHARE OPTIONS

Unissued shares

At the date of this financial report, there are no unissued ordinary shares under options.

Shares issued as a result of the exercise of options

During the financial year, 7,100,000 options to acquire ordinary shares in Eurogold Limited were exercised at an issue price of 5 cents. Since the end of the financial year no further options have been exercised and no new shares have been issued.

Shares forfeited as a result of the failure to exercise options

During the financial year, 7,325,000 options to acquire ordinary shares in Eurogold Limited at an issue price of 40 cents expired without exercise.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

The Company does not currently have any indemnification or any insurance of directors and officers.

INTERESTS IN CONTRACTS OR PROPOSED CONTRACTS WITH THE COMPANY

During or since the financial year, no director has had any interest in a contract or proposed contract with the company being an interest the nature of which has been declared by the director in accordance with Section 300(11)(d) of the Corporations Act 2001.

DIRECTORS' MEETINGS

During the year 6 directors' meetings, were held. The number of meetings in which directors were in attendance was as follows:

	Directors' Meetings
	No. of meetings held
	while in office	Meetings attended
Peter L Gunzburg	Ð
Brett Montgomery	O
Dennis W Franks	O	ł,

DIRECTORS' AND OTHER OFFICERS' EMOLUMENTS

Remuneration policy

The Board of Directors is responsible for determining and reviewing compensation arrangements for the directors and the executive team. The Board assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team. Such officers are given the opportunity to receive their base emolument in the form of salary and fringe benefits such as motor vehicle allowances.

To assist in achieving these objectives, the Board links the nature and amount of executive directors' and officers' emoluments to the company's financial and operational performance.

Details of the nature and amount of each element of the emoluments of each director and the executive officers of the company and the consolidated entity are as follows:

Emoluments of directors of Eurogold Limited

			Annual Cash Emoluments
	Office	Base Fee	Other	Super- annuation	Total Cash Emoluments	Options Granted
		$\mathcal S$	S	\$	S	S
P L Gunzburg	Chairman	88,000	12,000	63,500	163,500	nil
B Montgomery	Non- Executive Director	25,000	nil	nil	25,000	nil
D W Franks	Non- Executive Director	34,500	nil	3,105	37,605	nil

Emoluments of the executive officers of the company and the consolidated entity

		Annual Cash Emoluments
	Office	Base Fee	Other	Super- annuation	Total Cash Emoluments	Options Granted
		$\mathbb S$	S	\$	$\mathcal S$	S
I Hudrea	Executive $Chairman -$ Explorer S.A.	62,003	nil	nil	62,003	nil
$L$ Kozel*	Joint Company Secretary	nil	nil	nil	nil	nil
P Collinson	Joint Company Secretary	35,000	nil	3,150	38,150	nil

*Paid by an associated company.

Eurogold Limited - Annual Report 2003
. ******* DIRECTORS' REPORT (cont'd)

DIRECTORS' AND OTHER OFFICERS' EMOLUMENTS (cont'd)

The terms 'director' and 'officer' have been treated as mutually exclusive for the purposes of this disclosure.

The elements of emoluments have been determined on the basis of the cost to the company and the consolidated entity.

Executives are those directly accountable and responsible for the operational management and strategic direction of the company and the consolidated entity.

The category 'Other' includes the value of any non-cash benefits provided.

Options granted to directors and executive officers

The company does not presently have an Options Scheme. During the year no options were granted to either directors or executive officers of the Company.

INDEPENDENT ADVICE

Each Director is entitled to independent professional advice at the Company's expense provided that prior approval of the Managing Director is obtained.

COMPENSATION ARRANGEMENTS

All compensation arrangements for Directors and Senior Executives are determined by the full Board, after taking into account the current competitive rates prevailing in the market.

EXTERNAL AUDITORS

The auditors of the Company, Ernst & Young, have open access to the Board of Directors at all times. Ernst & Young have audited the Company and its subsidiaries for a number of years and have adopted a policy of rotating audit partners in accordance with any regulatory requirements.

CORPORATE GOVERNANCE

In recognising the need for the highest standards of corporate behaviour and accountability, the directors of Eurogold Limited support and have adhered to the principles of corporate governance. The company's corporate governance statement is contained in the following section of this annual report.

	Eurogold Limited – Annual Report 2003 . T.T. Y.T.
DIRECTORS' REPORT (cont'd)

AUDIT COMMITTEE

The Company presently does not have an audit committee as the directors believe that the Company is not of a size, nor are its financial affairs of such complexity to justify a separate Audit Committee, All matters which might be dealt with by such a committee are subject to full scrutiny of Board meetings. This decision will be reviewed as the Company develops in the future. Notwithstanding this it is the Board's responsibility to ensure that an effective internal control framework exists within the entity. This includes the safeguarding of assets, the maintenance of proper accounting records and the reliability of financial information as well as non-financial considerations.

MANAGING RISKS

The Board meets regularly to evaluate, control, review and implement the Company's operations and objectives.

Regular controls established by the Board include:

• detailed monthly financial reporting;
• delegation of authority to the Managing Director to ensure approval of expenditure obligations;
• implementation of operating plans, cash flows and budgets by management and Board $\blacktriangle$ monitoring of progress against projections; and
• procedures to allow directors, and management in the furtherance of their duties, to seek independent professional advice via the utilisation of various external technical consultants.

Signed in accordance with a resolution of the directors

P L Gunzburg Chairman

Date 30 September 2003

CORPORATE GOVERNANCE

In recognising the need for the highest standards of corporate behaviour and accountability, the directors of Eurogold Limited support and have adhered to the principles of Corporate Governance.

The Board is comprised of three directors, of which the Chairman and the Managing Director is the only executive director. Details of the Directors are set out in the Directors' Report.

The Board (subject to members voting rights in general meeting) is responsible for selection of new members and has regard to a candidates experience and competence in areas such as mining, exploration. geology, finance and administration that can assist the Company in meeting its corporate objectives and plans. The Board delegates responsibility for the Company's administration to its Managing Director who is accountable to the Board.

Under the Company's Constitution:

• the maximum number of directors on the Board is ten;
• it is considered by the Board that the retirement and appointment of the directors (both executive and non-executive) be maintained in accordance with the Constitution of the Company and that the current directors of the company are suitably qualified and experienced to guide the company in its current activities:
• at the Annual General Meeting each year effectively one third of the directors in office retire by rotation and must seek re-election by shareholders.

Eurogold Limited – Annual Report 2003 $-16$ NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (cont'd) sa BBC errette
See Serrettes YEAR ENDED 30 JUNE 2003

		Consolidated		Eurogold Limited
		2003	2002	2003	2002
	Notes	\$	$\mathbb{S}$	\$	\$
REVENUES FROM ORDINARY
ACTIVITIES	$\overline{2}$	1,283,098	2,243,739	659,917	975,964
Borrowing costs	3	(92)	(1,909)	(92)
Depreciation expense	3	(57,222)	(36,765)	(2, 437)	(3,873)
Consumables		(167, 779)	(337, 376)
Administration expenses		(456, 661)	(282, 408)	(442, 439)	(273,705)
Salaries and employee benefits		(695, 341)	(425,708)	(214, 191)	(179, 408)
Consultants fees		(482, 633)	(304, 301)	(51,200)	(56,092)
Write off of capitalised expenditure		(210, 694)
Foreign exchange gain/(loss)	3	80,398	54,866	(100, 133)	(9,292)
Cost of listed investments disposed of	3	(746, 800)	(885,068)	(746, 800)	(885,068)
PROFIT / (LOSS) FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE		(1,453,726)	25,070	(897, 375)	(431, 474)
INCOME TAX BENEFIT / (EXPENSE) RELATING TO ORDINARY ACTIVITIES	$\overline{4}$	101,010	(202, 386)
NET LOSS		(1,352,716)	(177, 316)	(897, 375)	(431, 474)
NET LOSS/(PROFIT) ATTRIBUTABLE TO OUTSIDE EQUITY INTERESTS	15	10,996	(4,970)
NET LOSS ATTRIBUTABLE TO THE MEMBERS OF EUROGOLD LIMITED	14	(1,341,720)	(182, 286)	(897,375)	(431, 474)
Share issue costs TOTAL CHANGES IN EQUITY OTHER	13(a)	(47, 273)		(47, 273)
THAN THOSE RESULTING FROM TRANSACTIONS WITH OWNERS AS OWNERS ATTRIBUTABLE TO MEMBERS OF EUROGOLD LIMITED		(1,388,993)	(182, 286)	(944, 648)	(431, 474)
Basic loss per share (cents per share)	20	$(1.4)$ cents	$(0.3)$ cents
Diluted loss per share (cents per share)	20	$(1.4)$ cents	$(0.3)$ cents

The Statement of Financial Performance should be read in conjunction with the accompanying notes.

Eurogold Limited - Annual Report 2003 و به این استفاده استفاده باشد.
در دریافت و باشد که باشد باشد باشد باشد باشد باشد باشد باشد NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (cont'd) YEAR ENDED 30 JUNE 2003

$17.$

. . . . . . . .

			Consolidated		Eurogold Limited
		2003	2002	2003	2002
	Notes	\$	\$	S	$\mathbb{S}$
CURRENT ASSETS
Cash assets	16(b)	1,040,022	668,559	891,685	551,703
Receivables	5	75,319	127,883	18,381	23,421
Inventory	6		1,770
Other financial assets	7	118,682	631,875	118,682	631,875
Other	8	1,498
TOTAL CURRENT ASSETS		1,235,521	1,430,087	1,028,748	1,206,999
NON-CURRENT ASSETS
Receivables	5	8,990	10,623	1,109,096	515,490
Property, plant and equipment	9	194,770	135,209	3,888	5,960
Deferred exploration and evaluation expenditure	10	1,223,932	1,296,448
TOTAL NON-CURRENT
ASSETS		1,427,692	1,442,280	1,112,984	521,450
TOTAL ASSETS		2,663,213	2,872,367	2,141,732	1,728,449
CURRENT LIABILITIES
Payables	11	90,877	343,059	50,422	252,762
Provisions	12	18,551	13,280	18,551	13,280
TOTAL CURRENT LIABILITIES		109,428	356,339	68,973	266,042
NON-CURRENT LIABILITIES
Deferred tax liabilities	4	70,423	187,677
TOTAL NON-CURRENT LIABILITIES		70,423	187,677
TOTAL LIABILITIES		179,851	544,016	68,973	266,042
NET ASSETS		2,483,362	2,328,351	2,072,759	1,462,407
EQUITY
Contributed equity	13	17,561,794	16,054,067	17,561,794	16,054,067
Accumulated losses	14	(15,084,642)	(13, 742, 922)	(15,489,035)	(14,591,660)
Total parent entity interest in equity		2,477,152	2,311,145	2,072,759	1,462,407
Total outside equity interest	15	6,210	17,206
TOTAL EQUITY		2,483,362	2,328,351	2,072,759	1,462,407

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

Eurogold Limited – Annual Report 2003

$\overline{\cdots}$ 18 :

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (cont'd) YEAR ENDED 30 JUNE 2003

		Consolidated		Eurogold Limited
		2003	2002	2003	2002
	Notes	\$	\$	\$	$\mathbb{S}$
CASH FLOWS USED IN OPERATING ACTIVITIES
Receipts from customers		664,173	929,829
Payments to suppliers and employees		(1,946,677)	(1,207,911)	(899, 859)	(519,983)
Interest received		12,300	47,043	12,300	27,950
Dividends received			1,500		1,500
Borrowing costs paid		(92)		(92)
Expenditure on mining interests		(138, 178)	(715, 978)
NET CASH FLOWS USED IN OPERATING ACTIVITIES	16(a)	(1,408,474)	(945, 517)	(887, 651)	(490, 533)
CASH FLOWS USED IN INVESTING ACTIVITIES
Payments for plant and equipment		(116, 783)	(64, 482)	(365)	(7,203)
Proceeds from sale of plant and equipment		43,452	700	43,452	700
Proceeds from sale of listed shares		604,165	945,814	604,165	945,814
Purchase of listed shares		(233, 607)	(1, 392, 835)	(233, 607)	(1, 392, 835)
Advances to related parties				(693, 739)	(515, 490)
NET CASH FLOWS USED IN INVESTING ACTIVITIES		297,227	(510, 803)	(280, 094)	(969, 014)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of ordinary shares		1,555,000	2,011,250	1,555,000	2,011,250
Payment of share issue costs		(47, 273)		(47,273)
NET CASH FLOWS FROM FINANCING ACTIVITIES		1,507,727	2,011,250	1,507,727	2,011,250
NET INCREASE IN CASH HELD		396,480	554,930	339,982	551,703
Add opening cash brought forward		668,559	145,708	551,703
Effects of exchange rate changes on cash		(25, 017)	(32,079)
CLOSING CASH CARRIED FORWARD	16(b)	1,040,022	668,559	891,685	551,703

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

$(a)$ Basis of accounting

YEAR ENDED 30 JUNE 2003

The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, applicable Accounting Standards and other mandatory professional reporting requirements (Urgent Issues Group Consensus Views).

The financial report has been prepared in accordance with the historical cost convention.

$(b)$ Change in accounting policy

The accounting policies adopted are consistent with those of the previous financial year except for the accounting policy with respect to employee entitlements.

(i) Employee entitlements

The consolidated entity has adopted the revised AASB 1028 "Employee Benefits", which has resulted in a change in accounting policy for the measurement of employee benefit liabilities. Previously, the consolidated entity measured the provision for employee benefits based on remuneration rates at the date of recognition of the liability. In accordance with the requirements of the revised Standard, the provision for employee benefits is now measured based on the remuneration rates expected to be paid when the liability is settled. The change in accounting policy has not had a material financial effect on the financial statements of the consolidated entity.

Principles of consolidation $\epsilon$

The consolidated financial statements are those of the consolidated entity, comprising Eurogold Limited (the parent company) and all entities that Eurogold Limited controlled from time to time during the year and at balance date.

Information from the financial statements of subsidiaries is included from the date the parent company obtained control until such time as control ceases. Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during which the parent company has control.

Subsidiary acquisitions are accounted for using the purchase method of accounting.

The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist.

All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered.

$(d)$ Foreign currencies

Translation of foreign currency transactions

Transactions in foreign currencies of entities within the consolidated entity are converted to local currency at the rate of exchange ruling at the date of the transaction.

Amounts payable to and by the entities within the consolidated entity that are outstanding at the reporting date and are denominated in foreign currencies have been converted to local currency using rates of exchange ruling at the end of the financial year.

All resulting exchange differences arising on settlement or restatement are brought to account in determining the net profit or loss for the financial year.

Translation of financial reports of overseas operations

All overseas operations are deemed integrated foreign operations, as each is financially and operationally dependent on Eurogold Limited. The financial reports of overseas operations are translated using the temporal method and any exchange differences are recognised as revenue or expense in net profit or loss in the reporting period in which they arise.

$(e)$ Cash and cash equivalents

Cash on hand and in banks and short-term deposits are stated at nominal value.

For the purposes of the Statement of Cash Flows, cash includes cash on hand and in banks, and money market investments readily convertible to cash within 2 working days, net of outstanding bank overdrafts.

Bank overdrafts are carried at the principal amount. Interest is charged as an expense as it accrues.

$(f)$ Receivables

Trade receivables are recognised and carried at original invoice amount less a provision for any uncollectable debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

Receivables from related parties are recognised and carried at the nominal amount due. Interest is taken up as income on an accrual basis.

$(2)$ Inventories

Inventories are valued at the lower of cost and net realisable value on a first in first out basis.

$($ $\bf{h}$ $)$ Investments

Listed shares held for trading are carried at cost.

Investments in associates are carried at the lower of the equity-accounted amount and recoverable amount in the consolidated financial report and the lower of cost and recoverable amount in Eurogold Limited's financial report.

All other non-current investments are carried at the lower of cost and recoverable amount.

$(i)$ Recoverable amount

Non-current assets are not revalued to an amount above their recoverable amount, and where carrying values exceed this recoverable amount assets are written down. In determining recoverable amount the expected net cash flows have not been discounted to their present value.

Property, plant and equipment $(i)$

Cost and valuation

All classes of plant and equipment are measured at cost.

Depreciation

Depreciation is provided on a straight-line basis on all plant and equipment, at rates calculated to allocate the cost less estimated residual value at the end of the useful lives of the assets against revenue over those estimated useful lives.

Major depreciation periods are:

Plant and equipment $3 - 5$ years

$\left( \mathbf{k}\right)$ Exploration, evaluation, development and restoration costs

Costs carried forward

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area, or where activities in the area have not at balance date, reached a stage to allow reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an area of interest abandoned are written off in full in the year in which the decision to abandon the area of interest is made.

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

Amortisation

When production commences the accumulated costs for the relevant area of interest are amortised over the life of the area on a production output basis.

Restoration costs

While an obligation exists for restoration activities to be undertaken for any exploration activities performed on the tenements, these are usually performed during the year and recognised in the statement of financial performance for the period.

$(1)$ Pavables

Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the consolidated entity.

Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is recognised as an expense on an accruals basis.

$(m)$ Employee entitlements

Provision is made for employee entitlement benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries, annual leave and long service leave.

Liabilities arising in respect of wages and salaries, annual leave and any other employee entitlements expected to be settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates expected to be paid when the liability is settled. All other employee entitlement liabilities are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date. In determining the present value of future cash outflows, the interest rates attaching to government guaranteed securities that have terms to maturity approximating the terms of the related liability are used.

Employee benefit expenses and revenues arising in respect of the following categories:

• wages and salaries, non-monetary benefits, annual leave, long service leave, sick leave and other leave benefits: and
• other types of employee benefits

are recognised against profit on a net basis in their respective categories.

Provisions $(n)$

Provisions are recognised when the consolidated entity has a legal, equitable or constructive obligation to make a future sacrifice of economic benefits to other entities as a result of past transactions or other past events, it is probable that a future sacrifice of economic benefits will be required and a reliable estimate can be made of the amount of the obligation.

$\omega$ Contributed equity

Issued and paid up capital is recognised at the fair value of the consideration received by the company.

Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

$(p)$ Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

Rendering of Services

Revenue is recognised when the services have been rendered in accordance with the terms and conditions of the contract.

Interest

Control of a right to receive consideration for the provision of, or investment in, assets has been attained.

Dividends

Control of a right to receive consideration for the investment in assets is attained, usually evidenced by approval of the dividend at a meeting of shareholders.

$(q)$ Taxes

Income tax

Tax-effect accounting is applied using the liability method whereby income tax is regarded as an expense and is calculated on the accounting profit after allowing for permanent differences. To the extent timing differences occur between the time items are recognised in the financial statements and when items are taken into account in determining taxable income, the net related taxation benefit or liability, calculated at current rates, is disclosed as a future income tax benefit or a provision for deferred income tax. The net future income tax benefit relating to tax losses and timing differences is not carried forward as an asset unless the benefit is virtually certain of being realised.

The income tax expense for the year is calculated using the 30% tax rate.

Goods and services tax

Revenues, expenses and assets are recognised net of the amount of GST except:

• where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position.

Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or pavable to, the taxation authority.

$(r)$ Earnings per share

Basic EPS is calculated as net profit attributable to members, adjusted to exclude costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted EPS is calculated as net profit attributable to members, adjusted for:

• costs of servicing equity (other than dividends) and preference share dividends;
• the after tax effect of dividends and interest associated with dilutive potential ordinary shares $\blacksquare$ that have been recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares;

divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

Operating Leases $(s)$

The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased item, are recognised as an expense on a straight-line basis.

Comparatives $(t)$

Where necessary, comparatives have been reclassified and repositioned for consistency with current year disclosures.

(i) AASB 1044

As a result of the first time application of AASB 1044 "Provisions, Contingent Liabilities and Contingent Assets", comparatives for provisions, as set out in Note 11, are not required to be disclosed.

Eurogold Limited - Annual Report 2003 $25₁$ NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (cont'd) YEAR ENDED 30 JUNE 2003

		Consolidated		Eurogold Limited
2.	REVENUES FROM ORDINARY	2003	2002	2003	2002
	ACTIVITIES	\$	\$	\$	S
	Revenues from operating activities
	Revenues from the provision of exploration
services		621,469	1,244,864
	Revenues from outside the operating activities
	Interest received
	- Other persons/corporations	14,012	48,952	12,300	27,950
	Dividend received
	- Other persons/corporations		1,500		1,500
	Proceeds from disposal of listed
	investments	604,165	945,814	604,165	945,814
	Proceeds from sale of property	43,452		43,452
	Other income		2,609		700
	Total revenues from outside the operating activities	661,629	998,875	659,917	975,964
	Total revenue from ordinary activities	1,283,098	2,243,739	659,917	975,964
3.	EXPENSES AND LOSSES/(GAINS)
$\bf(a)$	Expenses
	Depreciation of non current assets
	Plant and equipment	57,222	36,765	2,437	3,873
	Borrowing costs expensed
	Interest expense
	- Other persons/corporations	92	1,909	92
	Operating lease rental
	Minimum lease payments	20,414	12,020	20,414	12,020
	Provision for employee entitlements	9,578	6,024	9,578	6,024
	Directors' fees	59,500	45,100	59,500	45,100
	Cost of listed investments disposed of	746,800	885,068	746,800	885,068
(b)	Losses/(Gains)
	Net loss/(gain) on disposal of shares	142,635	(60, 746)	142,635	(60, 746)
	Net foreign currency losses/(gains)	(80, 398)	(54, 866)	100,133	9,292
	Gain on disposal of plant and equipment		(700)		(700)
	Gain on disposal of property	(43, 452)		(43, 452)

Eurogold Limited - Annual Report 2003 26 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (cont'd). YEAR ENDED 30 JUNE 2003

	Consolidated		Eurogold Limited
	2003 $\mathbb{S}$	2002 \$	2003 S	2002 \$
INCOME TAX 4.
The prima facie tax on operating loss is different to the income tax provided in the financial statements as follows:
Prima facie tax (benefit)/expense on (loss)/profit from ordinary activities at 30%	(436,118)	7,521	(269,213)	(129, 442)
Add/(less) tax effect of permanent differences:
Non-deductible expenditure Other items (net)	(101, 010)	65,423
Tax losses not brought to account as future income tax benefits	436,118	129,442	269,213	129,442
Income tax (benefit)/expense attributable to ordinary activities	(101, 010)	202,386
Deferred tax assets and liabilities Current tax payable
Provision for deferred income $tax -non$ current Future income tax benefit $-$ non current	70,423	187,677

(i) Unrecognised future income tax benefits:

The future income tax benefit in respect of tax losses of the parent entity and the consolidated entity has not been accounted for as an asset in the financial statements as the realisation of the benefit is not virtually certain. The future income tax benefit applicable to the tax losses are subject to confirmation from the Australian Taxation Office.

These benefits will only be obtained if:

• (a) The consolidated entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from the losses and deductions to be realized;
• (b) The consolidated entity continues to comply with the conditions for deductibility imposed by the law; and
• (c) No changes in tax legislation adversely affect the consolidated entity in realising the benefit from the deduction for the losses.

Eurogold Limited - Annual Report 2003

$27.$ NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (cont'd) YEAR ENDED 30 JUNE 2003

		Consolidated		Eurogold Limited
		2003	2002	2003	2002
	Notes	\$	\$	S	\$
RECEIVABLES 5.
CURRENT
Other debtors	5(a)	21,378	25,192	18,381	23,421
Amounts other than trade debts receivable from related parties: Other related parties
- associated companies		53,941	102,691
		75,319	127,883	18,381	23,421
NON-CURRENT
Other receivables	17(b)	8,990	10,623
Related party receivables
Other related parties	$5(a)$ , 25
- controlled entities (partly owned)				1,109,096	515,490
		8,990	10,623	1,109,096	515,490

(a) Terms and conditions

Terms and conditions relating to the above financial instruments:

(i) Other debtors are non-interest bearing and have repayment terms between 30 days and 60 days.

(ii) Details of the terms and conditions of related party receivable are set out in note 25.

(b) Australian dollar equivalents

Australian dollar equivalents of amounts receivable in foreign currencies not effectively hedged: - United States dollars

INVENTORIES (CURRENT) 6.

Raw materials and stores
At cost	$\overline{\phantom{a}}$	10.623
Provision for diminution in value	$\overline{\phantom{a}}$	(8.853)	-
Total inventories at lower of cost and net
realisable value	$\blacksquare$	- 770	-

65,927

115,085

422,869

76,410

Eurogold Limited - Annual Report 2003 28 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (cont'd) -YEAR ENDED 30 JUNE 2003

		Consolidated		Eurogold Limited
		2003	2002	2003	2002
	Notes	S	S	S	\$
7. OTHER FINANCIAL ASSETS
CURRENT
Shares
unlisted at cost		50,000		50,000
listed at cost	7(a)	68,682	631,875	68,682	631,875
		118,682	631,875	118,682	631,875
NON-CURRENT
Shares in controlled entities at cost	7(b)			756,296	778,097
Provision for diminution in value	7(b)			(756, 296)	(778, 097)
Unlisted shares in associated entity	7(c)		$\blacksquare$	7,605,188	7,605,188
Provision for diminution in value	7(c)		$\blacksquare$	(7,605,188)	(7,605,188)
Quoted market value of shares listed on a (a) prescribed stock exchange at balance date
Listed shares		56,000	622,653	56,000	622,653
(b) Particulars relating to controlled entities:
Chief Entity	Country of Incorporation		Percentage held by consolidated entity		Chief Entity Investment
		2003 $\frac{6}{6}$	2002 $\%$	2003 T	2002 \$
Chief Entity:
Eurogold Limited
Controlled entities of Eurogold Limited:
Australia Mining Investment S.A. (ii)	Romania		100
Explorer S.A. (iii) Esmeralda Mining Limited (i)	Romania	98 100	98 100
	Cyprus

All interests in controlled entities are in the ordinary shares of these entities.

(i) These entities are not audited by Ernst & Young as there is no statutory requirement for these entities to be audited.

(ii) This entity was deregistered during the year. Prior to that time the entity was dormant, as such there was no financial impact on the accounts of the consolidated entity.

(iii) This entity is audited by a member firm of Ernst & Young International.

Eurogold Limited - Annual Report 2003 29 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (cont'd). YEAR ENDED 30 JUNE 2003

$7.$ OTHER FINANCIAL ASSETS (cont'd)

(c) Investments in associated entities comprise:

Name	Country of Incorporation	Percentage held by consolidated entity		Chief Entity Investment
		2003 $\frac{0}{2}$	2002 $\%$	2003	2002 S
Transgold S.A.	Romania	50	50.	$\blacksquare$

The principal activity of Transgold S.A. is the operation of a tailings retreatment facility in Romania and associated exploration.

The directors have assessed that at balance date the investment in Transgold S.A. has no recoverable amount due to the potential liability to Transgold S.A that may arise due to litigation resulting from the accidental overflow of treatment water from the tailings dam spillage in January 2000. The equity method of accounting has been suspended following the write down of the investment to nil.

		Consolidated		Eurogold Limited
		2003	2002	2003	2002
	Notes	\$	\$	$\mathbb{S}$	\$
8. OTHER CURRENT ASSETS
Prepayments		1,498
PROPERTY, PLANT AND 9. EQUIPMENT
Plant and equipment
$-$ At cost		369,028	252,245	41,916	41,551
- Accumulated depreciation		(174, 258)	(117,036)	(38,028)	(35,591)
Total plant and equipment	9(a)	194,770	135,209	3,888	5,960
Reconciliations (a) Reconciliations of the carrying amounts of plant and equipment and at the beginning and end of the current and previous financial year.
Plant and equipment Carrying amount at beginning		135,209	90,308	5,960	2,630
Additions		116,783	81,666	365	7,203
Disposals
Depreciation expense		(57, 222)	(36, 765)	(2, 437)	(3, 873)
Carrying amount at end		194,770	135,209	3,888	5,960

Eurogold Limited - Annual Report 2003
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (cont'd) $\overline{30}$ YEAR ENDED 30 JUNE 2003

			Consolidated		Eurogold Limited
			2003	2002	2003	2002
		Notes	S	\$	${\mathbb S}$	\$
10.	DEFERRED EXPLORATION, EVALUATION AND DEVELOPMENT COSTS
	Exploration, evaluation and development costs carried forward in respect of mining areas of interest
	Pre-production - exploration and evaluation phases		1,223,932	1,296,448
	The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent on the successful development and commercial exploitation or sale of the respective mining areas.
11.	PAYABLES (CURRENT)
	Trade creditors Sundry creditors and accruals	11(a) 11(a)	66,873 24,004	149,900 193,159	30,422 20,000	128,654 124,108
			90,877	343,059	50,422	252,762
parties:	Aggregate amounts payable to related Directors and director-related entities
	- directors			14,164
$\left( a\right)$	Terms and conditions Terms and conditions relating to the above financial instruments
(i)	Trade liabilities are non-interest bearing and are normally settled on 30 day terms.
(ii)	Sundry creditors and accruals are non interest bearing and have an average term of 45 days.
	(b) Australian dollar equivalents
	Australian dollar equivalents of amounts
	payable in foreign currencies not effectively hedged:
	- United States dollars		40,455	90,297

Eurogold Limited – Annual Report 2003
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (cont'd) $31.$ YEAR ENDED 30 JUNE 2003

				Consolidated		Eurogold Limited
		Notes	2003 \$	2002 \$	2003 $\mathbb S$	2002 $\mathbb{S}$
12.	PROVISIONS (CURRENT)
Employee entitlements		12(a) 21	18,551	13,280	18,551	13,280
provision	(a) Movements in employee entitlement
year	Carrying amount at beginning of financial		13,280		13,280
Additional provision			9,578		9,578
Amounts utilised during the year	Carrying amount at end of financial year		(4,307) 18,551		(4,307) 18,551
13.	CONTRIBUTED EQUITY
Issued and paid up capital
Ordinary shares fully paid		13(a)	17,561,794	16,054,067	17,561,794	16,054,067
(a)	Movements in shares on issue
			Number of	2003 S	Number	2002 \$
			shares		of shares
Beginning of the financial year Issued during the year			89,065,209	16,054,067	48,840,209	14,042,817
- capital raising for working capital			20,000,000	1,200,000	40,000,000	2,000,000
- exercise of options			7,100,000	355,000	225,000	11,250
- share issue costs				(47, 273)
End of the financial year			116,165,209	17,561,794	89,065,209	16,054,067

Eurogold Limited - Annual Report 2003 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (cont'd) YEAR ENDED 30 JUNE 2003

$13.$ CONTRIBUTED EQUITY (cont'd)

(b)	Movements in options on issue	2003 Number of options	2002 Number of options
at $$0.40$ :	(i) 22 December 2002 options exercisable
- lapsed	Beginning of the financial year	7,325,000 (7,325,000)	7,325,000
End of the financial year			7,325,000
at 80.05:	$(i)$ 22 December 2005 options exercisable
- exercised	Beginning of the financial year	7,100,000 (7,100,000)	7,325,000 (225,000)
End of the financial year			7,100,000
	Total options outstanding at 30 June 2003		14,425,000

Terms and conditions of contributed equity $(c)$

Ordinary shares

Ordinary shares have the right to receive dividends as declared and, in the event of the winding up of the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.

Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company.

		Consolidated		Eurogold Limited
	2003	2002	2003	2002
	S	\$	\$	\$
ACCUMULATED LOSSES 14.
Balance at the beginning of the year Net loss attributable to members of Eurogold	(13,742,922)		$(13,560,636)$ $(14,591,660)$ $(14,160,186)$
Limited	(1, 341, 720)	(182, 286)	(897,375)	(431, 474)
Balance at end of the year	(15,084,642)	(13,742,922)		$(15,489,035)$ $(14,591,660)$
OUTSIDE EQUITY INTEREST 15.
Reconciliation of outside equity interest in controlled entities:
Opening balance	17,206	12,236
Add share of operating (loss)/profit	(10,996)	4,970
Closing balance	6,210	17,206

32

Eurogold Limited - Annual Report 2003 $\sim$ 33 $\cdot$ $\begin{minipage}{0.5\textwidth} \begin{tabular}{|c|c|} \hline & \multicolumn{1}{|c|}{0.5\textwidth} \put(0,0){\dashbox{0.5}\textwidth} \put(1,0){\dashbox{0.5}\textwidth} \put(2,0){\dashbox{0.5}\textwidth} \put(1,0){\dashbox{0.5}\textwidth} \put(2,0){\dashbox{0.5}\textwidth} \put(3,0){\dashbox{0.5}\textwidth} \put(4,0){\dashbox{0.5}\textwidth} \put(5,0){\dashbox{0.5}\textwidth} \put(5,0){\dashbox{0.5}\textwidth} \put(5,0){\dashbox$ NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (cont'd) YEAR ENDED 30 JUNE 2003

		Consolidated		Eurogold Limited
		2003	2002	2003	2002
		S	S	$\mathbf S$	S
16.	STATEMENT OF CASH FLOWS
(a)	Reconciliation of the operating loss after tax to the net cash flows from operations
	Net loss	(1,352,716)	(177,316)	(897,375)	(431, 474)
	Non cash items
	Depreciation of non-current assets Profit on disposal of property, plant	57,222	36,765	2,437	3,873
	and equipment Loss/(profit) on disposal of listed	(43, 452)	(700)	(43, 452)	(700)
	shares	142,635	(60, 746)	142,635	(60,746)
	Net foreign currency (gains)/losses	(80, 398)	(54, 866)	100,133	9,292
	Write off of capitalised expenditure	210,694
	Changes in assets and liabilities
	(Increase)/decrease in receivables	54,197	(121, 338)	5,040	(23, 421)
	(Increase)/decrease in prepayments	(1,498)
	(Increase)/decrease in inventory	1,770
	(Increase)/decrease in other assets -
	exploration	(32,763)	(869, 451)
	(Decrease)/increase in payables	(252, 182)	87,312	(202, 340)	(637)
	(Decrease)/increase in provisions	5,271	13,280	5,271	13,280
	(Decrease)/increase in deferred tax
	liability	(117, 254)	201,543
	Net cash flows used in operating
	activities	(1,408,474)	(945, 517)	(887, 651)	(490, 533)
(b)	Reconciliation of cash
	Cash balances comprises
	- Cash at bank	920,154	636,690	891,685	551,703
	- Deposits at call	119,868	31,869
		1,040,022	668,559	891,685	551,703

Eurogold Limited - Annual Report 2003 34 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (cont'd) YEAR ENDED 30 JUNE 2003

			Consolidated		Eurogold Limited
			2003	2002	2003	2002
		Notes	\$	\$	\$	\$
17.	EXPENDITURE COMMITMENTS
(a)	Exploration expenditure
	commitments	17(b)
	- not later than one year		299,670	3,282,507
	- later than one year but not later
	than five years		614,324	9,118,075
	- later than five years
	- aggregate expenditure contracted for at balance date but not
	provided for		913,994	12,400,582

$(b)$ The amounts are part of the exploration activity permit obligations agreed with the National Agency for Minerals and Resources (Romania). One of the conditions for retention of the exploration licenses held is meeting the stipulated regulations, minimum exploration expenditure and activity as set by the National Agency for Minerals and Resources. Otherwise forfeiture of tenements may occur.

There are three bank deposit guarantees included in non-current assets totalling \$8,990 (2002: \$10,623) (note 5), that have been granted in favour of the National Agency for Minerals and Resources representing 0.5% of the annual required exploration expenditure program submitted by Explorer S.A. and approved by the National Agency for Minerals and Resources

14.148	12.096	14.148	12,096
6,120	28.166	6.120	28,166
		20,268	40.262
	17(d) 20,268	40,262

$(d)$ Operating leases have an average lease term of 5 years.

18. SEGMENT INFORMATION

Revenue is derived by the consolidated entity from the provision of exploration services.

The consolidated entity operates predominantly within the gold exploration and extraction business segment and in one geographical segment being Romania.

19. ECONOMIC DEPENDENCY

The consolidated entity does not have any economic dependency with any one client or group of clients.

	2003 S	2002 S
LOSS PER SHARE 20.
The following reflects the income and share data used in the calculation of basic and diluted earnings per share:
Net loss	(1,352,716)	(177,316)
Adjustments: Less net loss/(profit) attributable to outside equity interest	10,996	(4,970)
Earnings used in calculation of diluted earnings per share	(1,341,720)	(182, 286)
	No.	No.
Weighted average number of ordinary shares on issue used in the calculation of basic EPS	98,379,456	73,519,154
Effect of dilutive securities Share options (i)
Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share	98, 379, 456 73, 519, 154

(i) Share options are not considered dilutive, as their impact would be to decrease the net loss per share.

There have been no conversions, calls, subscriptions or issues after 30 June 2003.

Eurogold Limited - Annual Report 2003 36 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (cont'd) YEAR ENDED 30 JUNE 2003

			Consolidated		Eurogold Limited
			2003	2002	2003	2002
		Notes	\$	\$	${\mathbb S}$	\$
21.	EMPLOYEE ENTITLEMENTS AND SUPERANNUATION COMMITMENTS
	Employee Entitlements The aggregate employee entitlements liability is comprised of:
	Accrued wages, salaries and on costs Provisions (current)	12	18,551	11,140 13,280	18,551	11,140 13,280
			18,551	24,420	18,551	24,420
22.	REMUNERATION OF DIRECTORS
	Income paid or payable, or otherwise made available, in respect of the financial year, to all directors of each entity in the consolidated entity, directly or indirectly, by the entities of which they are directors or any related party		288,108	181,434
	Income paid or payable, or otherwise made available, in respect of the financial year, to all directors of Eurogold Limited, directly or indirectly, from the entity or any related party				226,105	160,400
	The number of directors of Eurogold Limited whose remuneration (including superannuation contributions) falls within the following bands is:
					No.	No.
\$10,000 \$20,000 \$30,000	$- $19,999$ $-$ \$29,999 - \$39,999 \$110,000 $- $119,999$ $$160,000 - $169,999$				1 1

In the opinion of the directors, remuneration paid to directors is considered reasonable.

Eurogold Limited - Annual Report 2003 $\frac{1}{2}$ 37. $\mathbb{R}$ . The set --------------------------------------NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (cont'd) YEAR ENDED 30 JUNE 2003

	Consolidated		Eurogold Limited
		2003	2002	2003	2002
	Notes	\$	\$	\$	\$
REMUNERATION OF EXECUTIVES 23.
Remuneration received or due and receivable by executive officers of the consolidated entity whose remuneration is \$100,000 or more, from entities in the consolidated entity or a related party, in connection with the management of the affairs of the entities in the consolidated entity whether as an executive officer or otherwise:		163,500	218,732
Remaneration received or due and receivable by executive officers of the company whose remuneration is \$100,000 or more, from the company or any related party, in connection with the management of the affairs of the company or any of its subsidiaries, whether as an executive officer or otherwise:				163,500	112,500
The number of executives of the consolidated entity and the company whose remuneration (including superannuation contributions) falls within the following bands is:		No.	No.	No.	No.
$$100,000 - $109,999$ $$110,000 - $119,999$		- $\overline{\phantom{a}}$	1 1		1
$$160,000 - $169,999$		1		1
24. AUDITORS' REMUNERATION
Amounts received or due and receivable by Ernst & Young Australia for:
an audit or review of the financial report of the entity and any other entity in the consolidated entity		30,975	39,165	30,975	39,165
tax advice provided to the entity and any $\overline{\phantom{0}}$
other entity in the consolidated entity		19,650	20,583	19,650	20,583
Amounts received or due and receivable by a related practice of Ernst & Young Australia for:		50,625	59,748	50,625	59,748
an audit or review of the financial report of subsidiaries		13,183	8,853
		63,808	68,601	50,625	59,748

Eurogold Limited - Annual Report 2003 38 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (cont'd). YEAR ENDED 30 JUNE 2003

25. RELATED PARTY DISCLOSURES

Directors

The directors of Eurogold Limited during the financial year were:

Peter L Gunzburg Brett Montgomery Dennis W Franks

Director transactions

Loans

During the year Mr P Gunzburg advanced \$75,000 interest free to Eurogold Limited to fund working capital requirements. This advance has been fully repaid by the company at 30 June 2003.

Director related entity transactions

Services

Consulting fees of \$25,000 (2002: \$18,750) were paid to Gerise Pty Ltd a company in which Mr B Montgomery is a director and has a financial interest and all transactions are on normal commercial terms and have been included in remuneration of directors (Note 22).

Other related party transactions

Loans

During the year, Eurogold Limited has provided interest free loans to partly owned subsidiaries totalling \$593,606 (2002: \$515,490). At balance date the total amount outstanding was \$1,109,096 (2002: \$515,490). There is no specified repayment date and no repayments were made during the year.

Equity instruments of directors

Interests at balance date

Interests in shares and options of entities within the consolidated entity held by directors of the reporting entity and their director related entities.

	Eurogold Limited Ordinary Shares		Eurogold Limited Options Over Ordinary Shares
	2003	2002		2003		2002
Director	No.	No.	No.	Exercise Price/Expiry	No.	Exercise Price - Expiry
P L Gunzburg	23,196,085	15,907,751	Nil	N/A	2,500,000	$40$ cents $-$ 22/12/2002
			Nil	N/A	2,500,000	$5$ cents $-$ 22/12/2005
B Montgomery	Nil	Nil	Nil	N/A	Nil	N/A
D W Franks	Nil	Nil	Nil	N/A	Nil	N/A

25. RELATED PARTY DISCLOSURES (cont'd)

Movements in directors' equity holdings

During the year Mr P L Gunzburg acquired 2,500,000 ordinary shares through the exercise of options at an average exercise price of 5 cents, 3,963,334 ordinary shares under the terms of the capital raising in April 2003, and 825,000 ordinary shares through an on market purchase in January 2003.

There have been no other transactions concerning shares or share options between entities in the reporting entity and directors of the reporting entity or their director related entities.

All equity dealings with directors have been entered into with terms and conditions no more favourable than those that the entity would have adopted if dealing at arm's length.

Ultimate parent

Eurogold Limited is the ultimate Australian holding company.

26. SUBSEQUENT EVENTS

There has been no event or circumstance since balance date which may have an effect on this financial report.

$27.$ FINANCIAL INSTRUMENTS

$(a)$ Interest rate risk

The consolidated entity's exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities, both recognised and unrecognised at balance date, are as follows:

FINANCIAL INSTRUMENT	FLOATING INTEREST RATE		NON-INTEREST BEARING		TOTAL		WEIGHTED AVERAGE EFFECTIVE INTEREST RATE
	2003 S	2002 \$	2003 \$	2002 S	2003 \$	2002 S	2003 ₩	2002 %
FINANCIAL ASSETS (i)
Cash assets	1,040,022	668,559		÷	1.040.022	668,559	3.36	3.12
Trade and other receivables		$\scriptstyle\star$	21,378	25,192	21.378	25,192	N/A	N/A.
Receivables – other related parties		$\overline{\phantom{a}}$	53,941	102,691	53,941	102,691	N/A	N/A.
Other financial assets	$\overline{r}$	$\tilde{\phantom{a}}$	118,682	631,875	118.682	631,875	N/A	N/A
Total financial assets	1,040,022	668,559	194,001	759,758	1,234,023	1,428,317
FINANCIAL (ii) LIABILITIES
Trade and other payables		$\overline{\phantom{a}}$	90,877	328,895	90,877	328,895	N/A	N/A
Payables – other related parties	۰	$\,$	$\cdot$	14,164	۰	14,164	N/A.	N/A
Total financial liabilities		$\overline{\phantom{a}}$	90,877	343,059	90.877	343,059

27. FINANCIAL INSTRUMENTS (CONT'D)

(b) Net fair values of financial assets and liabilities

All financial assets and liabilities have been recognised at the balance date at their net fair values, except for listed shares which have a fair value of \$56,000 (2002: \$622,653). The directors have not reduced the carrying value to fair value as the impact on these financial statements is immaterial.

40

(i) The following methods and assumptions are used to determine the net fair values of financial assets and liabilities

Recognised Financial Instruments

Cash and cash equivalent: The carrying amount approximates fair value because of their short-term maturity.

Receivables and payables: The carrying amount approximates fair value.

Listed shares: Fair value is the current quoted market bid price, adjusted for transaction costs necessary to realise the asset or settle the liability.

(e) Credit Risk Exposures

The consolidated entity's maximum exposure to credit risk at balance date in relation to each class of recognised financial assets is the carrying amount, net of any provision for doubtful debts, of those assets as indicated in the balance sheet.

Concentration of Credit Risk

The consolidated entity minimises concentrations of credit risk in relation to accounts receivable by undertaking transactions with a large number of customers within the resources industry. The consolidated entity is not materially exposed to any individual overseas country or individual customer.

CONTINGENT LIABILITIES 28.

Eurogold Limited is a defendant in proceedings commenced by the Republic of Yugoslavia in Yugoslavia seeking damages for the accidental overflow of treatment water from the tailings dam spillage on January 30, 2000. Legal advice received by Eurogold Limited is that Eurogold Limited has no liability to the Republic of Yugoslavia with respect to those proceedings.

Eurogold Limited has a contingent liability under the terms of the release of its obligations to the bankers to the construction of the Baia Mare Project. Eurogold Limited was a security provider to the bankers. An associated company, Transgold S.A., must comply with its obligations to rehabilitate the Meda damsite, failing which the company's obligations (otherwise released by Deed of Release) will be reinstated. The directors believe that Transgold S.A. will be able to comply with its rehabilitation obligations.

Eurogold Limited - Annual Report 2003 Container and Container and Alexander Alexander Alexander Alexander Alexander Alexander Alexander Alexander Alexander Alexander Alexander Alexander Alexander Alexander Alexander Alexa
DIRECTORS' DECLARATION	$\sim$ . The state construction of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract

In accordance with a resolution of the directors of Eurogold Limited, I state that:

• $\mathbf{1}$ In the opinion of the directors:
• the financial statements and notes of the company and of the consolidated entity are in $(a)$ accordance with the Corporations Act 2001, including:
  • giving a true and fair view of the company's and consolidated entity's financial $(i)$ position as at 30 June 2003 and of their performance for the year ended on that date; and
  • complying with Accounting Standards and Corporations Regulations 2001; and $(ii)$
• there are reasonable grounds to believe that the company will be able to pay its debts as and $(b)$ when they become due and payable.

On behalf of the Board

P L Gunzburg Chairman

Perth, 30 September 2003

INDEPENDENT AUDIT REPORT

To the members of Eurogold Limited

Scope

The financial report and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance. statement of cash flows, accompanying notes to the financial statements, and the directors' declaration for Eurogold Limited (the company) and the consolidated entity, for the year ended 30 June 2003. The consolidated entity comprises both the company and the entities it controlled during that year.

47

The directors of the company are responsible for preparing a financial report that gives a true and fair view of the financial position and performance of the company and the consolidated entity, and that complies with Accounting Standards in Australia, in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Audit approach

We conducted an independent audit of the financial report in order to express an opinion on it to the members of the company. Our audit was conducted in accordance with Australian Auditing Standards in order to provide reasonable assurance as to whether the financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected.

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001, including compliance with Accounting Standards in Australia, and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the company's and the consolidated entity's financial position, and of their performance as represented by the results of their operations and cash flows.

We formed our audit opinion on the basis of these procedures, which included:

• examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and
• assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made by the directors.

While we considered the effectiveness of management's internal controls over financial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls

Eurogold Limited - Annual Report 2003 43 INDEPENDENT AUDIT REPORT (cont'd)

We performed procedures to assess whether the substance of business transactions was accurately reflected in the financial report. These and our other procedures did not include consideration or judgement of the appropriateness or reasonableness of the business plans or strategies adopted by the directors and management of the company.

Independence

We are independent of the company, and have met the independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001. In addition to our audit of the financial report, we were engaged to undertake the services disclosed in the notes to the financial statements. The provision of these services has not impaired our independence,

Audit opinion

In our opinion, the financial report of Eurogold Limited is in accordance with:

• the Corporations Act 2001, including: $(a)$
• $(i)$ giving a true and fair view of the financial position of Eurogold Limited and the consolidated entity at 30 June 2003 and of their performance for the year ended on that date: and
• complying with Accounting Standards in Australia and the Corporations Regulations $(ii)$ 2001; and
• other mandatory financial reporting requirements in Australia. $(b)$

Ernst & Young

G H Meyerowitz Partner Perth

27 October 2003

	Eurogold Limited - Annual Report 2003 Marshall 2003 Marshall 24.
ASX INFORMATION	. ******

• As at 21 October 2003 Eurogold Limited had an issued capital of 116,165,208 ordinary shares $(a)$ held by 1144 shareholders.
• $(b)$ Distribution of Shareholders

	Size of Holding	Number of Shareholders
	1,000	701
1,001	5,000	172
5,001	10,000	57
10,001	100,000	119
100,001	and over	95
		1,144

(d)	The Top 20 Shareholders held	71.58%

Substantial Shareholders $(e)$

$\left( c\right)$

Name	Number of Shares Held	Percentage
Peter Lynton Gunzburg	23,196,085	19.97
Nefco Nominees Pty Ltd	21,343,046	18.37

894

$(f)$ List of Top 20 Shareholders as at 21 October 2003

Name	Number of Shares Held	Percentage
Nefco Nominees Pty Ltd	21,343,046	18.37
Trovex Pty Ltd	20,196,085	17.39
Colbern Fiduciary Nominees Pty Ltd	4,000,000	3.44
ANZ Nominees Limited	3,687,325	3.17
Cogent Nominees Pty Ltd	3,476,210	2.99
Banyan Pty Ltd	3,146,733	2.71
Peter Lynton Gunzburg	3,000,000	2.58
Melling Investments Limited	2,987,656	2.57
BB Nominees Pty Ltd	2,580,000	2.22
Invia Custodian Pty Limited <wam a="" c)<="" capital="" limited="" td="">	2,502,000	2.15	2,502,000	2.15
Ibella Company Limited	2,259,000	1.94
Rollason Pty Ltd	2,000,000	1.72
Topsfield Pty Ltd	1,800,000	1.55
Invia Custodian Pty Ltd (WAM Equity Fund A/C)	1,668,000	1.44
Transcontinental Asset Management Pty Ltd	1,666,666	1.43
Australian Resource Finance Ltd	1,500,000	1.29
Pillage Investments Pty Ltd	1,500,000	1.29
Peloton Pty Ltd	1,442,700	1.24
Rivista Pty Ltd	1,387,344	1.19
Bouchi Pty Ltd	1,050,000	0.90
	83,192,765	71.58

	Eurogold Limited - Annual Report 2003 Committee Contract Contract 24
ASX INFORMATION

Voting Rights $\left( \mathbf{g} \right)$ Each shareholder is entitled to one vote per ordinary share.

$(h)$ The consolidated entity does not have an audit committee as directors are involved in its day to day operation and therefore do not consider that an audit committee is necessary.

Composition of the Board

The board comprises directors with an appropriate range of qualifications and expertise to manage and oversee the current activities of the company. The directors in office as at the date of this statement are:

Peter Lynton Gunzburg - Executive Chairman Dennis Wayne Franks - Non Executive Director Brett Montgomery - Non Executive Director

The board shall meet at least quarterly and follow meeting guidelines to ensure that all directors are made aware of, and have available, all necessary information relevant to the activities of the company.

It is considered by the board that the retirement and appointment of the directors (both executive and non executive) be maintained in accordance with the Constitution of the Company and that the current directors of the company are suitably qualified and experienced to guide the company in its current activities.

Board Committees

Because of the current limited extent of the company's operations and the day to day involvement of the executive directors in the running of the company, it is felt that it is not appropriate to have audit, nomination and remuneration committees.

Board Responsibilities

The board acts on behalf of the shareholders and is responsible for ensuring the efficient operation and administration of the company and is responsible for identifying areas of business risk and ensuring that these risks are adequately managed.

The board has procedures to allow directors, in the furthermore of their duties, to seek independent professional advice at the company's expense.

Eurogold Limited - Annual Report 2003
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