KGL RESOURCES LIMITED - AGM Information 2008

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KENTOR GOLD LTD

ACN 082 658 080

Registered Office Level 36 Riparian Plaza, 71 Eagle St Brisbane 4000 Phone: 61 (0) 7 3121 3206 Email: [email protected]

www.kentorgold.com.au

Kyrgyz Republic Office 235/2 Erkindik Prospect, Bishkek Kyrgyz Republic 720739 Phone: +996 312 909 826 Email: [email protected]

21 April 2008

Dear Shareholder,

I am pleased to invite you to attend the Annual General Meeting of Kentor Gold Limited (Kentor Gold) to be held at;

RACV Club

501 Bourke Street

Melbourne VIC 3000

On Thursday 22 May 2008 at 10am (eastern standard time).

The business to be dealt with at the meeting is set out in the attached Notice of Meeting with the Explanatory Notes providing further detail to the proposed resolutions.

Also included in this pack is a copy of Kentor Gold’s Annual Report. A change to the legislation has meant that shareholders must now elect to continue to receive a hard copy of future Annual Reports otherwise access will only be available electronically through the company’s website. A form is included for you to record your preference.

If you are able to attend the meeting, please bring the enclosed proxy form with you to assist registration.

If you do not plan to attend the meeting, you may wish to appoint a proxy to attend and vote on your behalf. To do this, you will need to complete and lodge the enclosed Appointment of Proxy form in accordance with the instructions. Proxy forms must be received by 10 am (Eastern Standard Time) 20th May 2008.

Yours Faithfully,

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W.H. John Barr Chairman

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS GIVEN that the ANNUAL GENERAL MEETING of the shareholders of Kentor Gold Limited ACN 082 658 080 will be held at RACV Club, 501 Bourke Street, Melbourne VIC 3000 on 22[nd] May 2008 at 10 am (eastern standard time).

ORDINARY BUSINESS

Reports

To receive and consider the financial report of the Company and the directors’ and auditors’ reports for the year ended 31 December 2007.

Resolution 1. Re-election of Director, Mr Andrew Daley

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“That Mr Andrew Daley, a director who retires in accordance with the Constitution and being eligible offers himself for re-election as a director of the Company, is reelected as a director of the Company.”

Resolution 2. Re-election of Director, Mr Hugh McKinnon

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“That Mr. Hugh McKinnon, a director who retires in accordance with the Constitution and being eligible offers himself for re-election as a director of the Company, is re-elected as a director of the Company.”

Resolution 3. Election of Director, Mr Simon Milroy

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“That Mr. Simon Milroy, a director who being eligible offers himself for election as a director of the Company, is elected as a director of the Company.”

Resolution 4. Remuneration Report

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“That the Remuneration Report set out in the Company’s Annual Report (as part of the Directors’ Report) for the year ended 31 December 2007 is approved.”

Resolution 5 Appointment of Auditor

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

“That, for the purposes of Section 327B(1) and for all other purposes, BDO Kendalls is appointed as the Company’s new auditor and the Directors are authorised to agree the new auditor’s remuneration.”

SPECIAL BUSINESS

Resolution 6. Ratification of Share Placement to clients of Far East Capital Limited

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“That, for the purposes of Listing Rule 7.4 and for all other purposes, the issue by the Company of 7,500,000 fully paid ordinary shares at $0.18 per share to clients of Far East Capital Limited, as announced to the ASX on 17 December 2007, is ratified.”

Resolution 7. Ratification of Share Placement to Zen Drilling Limited

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“That, for the purposes of Listing Rule 7.4 and for all other purposes, the issue by the Company of 1,336,997 fully paid ordinary shares at $0.159 per share to Zen Drilling Limited, as announced to the ASX on 6 July 2007, is ratified.”

Resolution 8. Approval for the Issue of New Shares

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“That, for the purposes of Listing Rule 7.1 and for all other purposes, approval is given for the issue of as many shares in the Company as is needed to raise $4,000,000, provided that the shares are issued within 3 months of the date of this Annual General Meeting and provided that the minimum issue price per share will not be less than 80% of the average market price of shares in the capital of the Company traded on ASX over the last 5 days on which sales were recorded before the day on which the issue or issues are made and otherwise on the terms and conditions as set out in the Explanatory Memorandum.”

Resolution 9. Approval of issue of Options to Mr. Simon Milroy (Managing Director)

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“That, for the purposes of Listing Rule 10.11 and for all other purposes, approval is given for Simon Milroy to be issued 2,000,000 unlisted options on the terms and conditions set out in the Explanatory Memorandum.”

Resolution 10. Approval of issue of Options to Mr. Hugh McKinnon (Executive Director)

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“That, for the purposes of Listing Rule 10.11 and for all other purposes, approval is given for Hugh McKinnon to be issued 900,000 unlisted options on the terms and conditions set out in the Explanatory Memorandum.”

Resolution 11. Approval of Employee Share Option Plan

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“That, for the purposes of Exception 9 of Listing Rule 7.2 and for all other purposes, approval is given for the Company’s Employee Share Option Plan to be constituted and administered in accordance with the rules of the Employee Share Option Plan as summarised in the Explanatory Memorandum.”

Resolution 12. Approval of Increase in Non-executive Directors’ Fee Pool

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“That for the purposes of Listing Rule 10.17 and the Constitution, the maximum aggregate remuneration payable out of the funds of the Company to nonexecutive directors of the Company for their services as directors is increased by $50,000 to $200,000 per annum to be split between the non-executive directors as the board determines.”

Voting Exclusion Statement

(a) In respect of Resolution 6, the Company will disregard any votes cast on that Resolution by any of the persons who participated in the issue of shares to the clients of Far East Capital Limited that was announced on 17 December 2007 and any of their associates.
(b) In respect of Resolution 7, the Company will disregard any votes cast on that Resolution by any of the persons who participated in the issue of shares to Zen Drilling Limited that was announced on 6 July 2007 and any of their associates.
(c) In respect of Resolution 8, the Company will disregard any votes cast on that Resolution by any of the persons identified by the date of the Annual General Meeting as persons who are likely to participate in the issue or might obtain a benefit in the issue or an associate of a person who is likely to participate or obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the resolution is passed.
(d) In respect of Resolution 9, the Company will disregard any votes cast on that Resolution by Mr Simon Milroy and his associates.
(e) In respect of Resolution 10, the Company will disregard any votes cast in favour of Resolution 9 by Mr Hugh McKinnon and his associates.
(f) In respect of Resolutions 11 and 12, the Company will disregard any votes cast in favour of Resolution 11 or 12 by the Directors of the Company and their associates.

However, the Company need not disregard a vote if it is cast by:

a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

BY ORDER OF THE BOARD

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Kylie Anderson Company Secretary

Notes

The Company has determined that for the purposes of the Annual General Meeting all shares in the Company will be taken to be held by the persons who held them as registered shareholders at 7.00 pm on 20 May 2008. Accordingly, share transfers registered after this time will be disregarded in determining entitlements to attend and vote at the Meeting.
A member entitled to attend and vote may attend and vote in person or by proxy, or attorney or (where the member is a body corporate) by representative.
The proxy of a member does not need to be a member of the Company.
A member who is entitled to cast two or more votes may appoint two proxies and may specify the proportion or number of the member’s votes each proxy is entitled to exercise. If the appointment does not specify the proportion or number of the member’s votes, each proxy may exercise one half of those votes.
A proxy form accompanies this Notice of Meeting and to be effective must be received by the Company’s corporate registry by 10am (eastern standard time) 20 May 2008:

Link Market Services Limited Level 9 333 Collins Street Melbourne VIC 3000 Fax: (02) 9287 0309

Explanatory Memorandum

Introduction

This Explanatory Memorandum should be read in conjunction with the Notice of Annual General Meeting to which this Explanatory Memorandum is attached and forms part. Please take the time to read through this document.

Financial Reports

Whilst the Corporations Act requires the Financial Report and the reports of the directors’ and auditors’ to be laid before the Annual General Meeting, neither the Corporations Act or the Constitution requires shareholders to vote on, approve or adopt those reports.

Shareholders will, however, have ample opportunity at the Annual General Meeting to raise questions on these reports.

Unless the Company’s share registry has been notified otherwise, each shareholder will have been sent a copy of the Annual Report, which contains the Financial Report, Directors’ Report and Auditors’ Report for the year ended 31 December 2007.

Resolution 1 Re-election of Mr Andrew Daley

Mr Daley retires pursuant to clause 13.5 of the Constitution and offers himself for re-election as director of the Company in accordance with the Company’s Constitution.

The Board recommends that shareholders vote in favour of the resolution for the reelection of Mr Daley.

Resolution 2 Re-election of Mr Hugh McKinnon

Mr McKinnon retires pursuant to clause 13.5 of the Constitution and offers himself for election as director of the Company in accordance with the Company’s Constitution.

The Board recommends that shareholders vote in favour of the resolution for the election of Mr McKinnon.

Resolution 3 Election of Mr Simon Milroy

Mr Milroy offers himself for election as director of the Company in accordance with the Company’s Constitution.

The Board recommends that shareholders vote in favour of the resolution for the election of Mr Milroy.

Resolution 4

Remuneration Report

Section 300A of the Corporations Act requires the Directors’ Report to include a separately identified Remuneration Report. Listed entities are further required to submit the Remuneration Report for adoption at the Company’s Annual General Meeting. However the vote on the resolution is advisory only and does not bind the directors of the Company.

As detailed in the Remuneration Report, the Board believes that the remuneration granted to Directors and key executives is in line with market conditions.

The Board recommends that shareholders vote in favour of the Company’s Remuneration Report as set out in the Directors Report of the Company’s Annual Report.

Resolution 5 Appointment of Auditor

As of the 2[nd] January 2008, Kentor Gold re-located its corporate functions from Melbourne to Brisbane. As part of this relocation, the Company auditors, DTT Victoria have resigned as at the date of this Annual General Meeting. The Company has sought to appoint a local Brisbane firm, BDO Kendalls, as the Company’s auditors and has received consent from BDO to act in this capacity.

The Board recommends that shareholders vote in favour of the resolution for the appointment of new auditors.

Resolutions 6 and 7 Ratification of Share Placement to clients of Far East Capital Limited and Ratification of Share Placement to Zen Drilling Limited

On 17 December 2007 the Company announced it had carried out a placement of 7,500,000 new shares to clients of Far East Capital Limited at an issue price of $0.18 to raise $1,350,000. The purpose of the issue was to fund the drilling and exploration of the Company’s key projects and as part consideration for drilling services provided.

On 6 July 2007 the Company announced it had carried out a placement of 1,336,997 new shares to Zen Drilling Limited at an issue price of $0.159 to raise $212,583. The issue was part consideration for services provided as part of the 2006 drilling campaign.

ASX Listing Rule 7.4 states that where securities have been issued without shareholder approval under ASX Listing Rule 7.1 that issue can be treated as having been made with approval for the purpose of ASX Listing Rule 7.1 where the holders of ordinary shares approve the issue.

ASX Listing Rule 7.1 operates to prevent a company from issuing any more than 15% of its issued shares, in any 12 month period, without obtaining shareholder approval. The issue of shares to the clients of Far East Capital Limited and to Zen Drilling Limited amounted to a maximum of 12.3% of the issued shares of the Company and consequently did not breach ASX Listing Rule 7.1. While shareholder approval was not required under ASX Listing Rule 7.1, the Company seeks approval for this share issue under ASX Listing Rule 7.4 so that this issue of shares will not be counted towards the 15% allowable in a 12 month period under ASX Listing Rule 7.1.

Listing Rule 7.5 requires certain information to accompany a Notice of General Meeting in relation to approval sought under Listing Rule 7.4. This information is set out below:

Share placement to clients of Far East Capital Limited:

Date of issue	07/01/08
Number of securities allotted	7,500,000
Issue price persecurity	$0.18
Terms of the securities	Ordinary fully paid shares ranking equally with all other fully paid ordinary shares ofthe Company
Basis on which the allottees were determined	Clients of Far East Capital Limited
Intended use of funds	To fund drilling and exploration in key company projects including: (a) Drilling on the Savoyardy and Akbel gold projects in The Kyrgyz Republic; (b) Exploration on the Yangidavan and Chunkei base metals projects in The Kyrgyz Republic; and (c) Uranium exploration in the Dunmarra basin in the Northern Territory.

Share placement to Zen Drilling Limited:

Date of issue	04/07/07
Numberofsecurities allotted	1,336,997
Issue price per security	$0.159
Terms of the securities	Ordinary fully paid shares ranking equally with all other fully paid ordinary shares of the Company
Name of Allottee	Zen DrillingLimited
Intended use of funds	As part consideration for services provided as part of the 2006 drilling campaign

A voting exclusion statement is included in the Notice of Meeting of which this Explanatory Memorandum forms part.

The Board recommends that shareholders vote in favour of the resolutions to ratify the issue of securities to clients of Far East Capital Limited and to Zen Drilling Limited.

Resolution 8 Approval of Share Issue.

Under Listing Rule 7.1, the Company must not issue more equity securities than 15% of its issued shares in the preceding 12 months without shareholder approval. In order to continue with its exploration programs, the Company needs to raise an additional $4,000,000 in funds. As such the Company requires approval from shareholders to issue capital in excess of the 15% limit.

Terms of Issue:

Terms of Issue:
Maximum Number of securities to be allotted	The number of securities to be issued will be calculated by dividing $4,000,000 by the issue price, once determined.
Minimum Issue price	The Shares shall be issued at an issue price to be determined by the Board in its absolute discretion but in any event no less than 80% of the average market price of ordinary shares in the capital of the Company trading on ASX during the 5 days in which sales were recorded before the date of the issue.
Date of Issue and Allotment	No later than three months from the date of this Annual General Meeting. The allotment of the securities will occurprogressively as andwhenallottees areidentified.
Terms of the securities	Ordinary fully paid shares ranking equally with all other fully paid ordinary shares of the company. The Company will as soon as possible after the date of issue apply for the shares issued under Resolution 8 to be quoted on the ASX.
Basis on which the allottees were determined	The identity of the allottees is not known at the date of the Notice of AnnualGeneral Meeting.
Intended use of Funds:	The Company has developed a comprehensive exploration and evaluation plan for the 2008 calendar year. The majority of the expenditure will be focused on the Savoyardy tenements where already encouraging drilling results have been reported. Capital raised through this placement will be used to fund, the ongoing drilling program in Savoyardy, exploration in the other tenements owned by the Company in the Kyrgyz Republic and the necessary administration and corporate functions of the Company.

The Board recommends that shareholders vote in favour of the additional issue of shares.

Resolution 9 Issue of Options to Mr Simon Milroy (Managing Director)

Resolution 9 seeks approval from shareholders for the issue of 2,000,000 unlisted options to Mr Milroy as part of his salary package. The Company announced the issue of the options on 13/07/07 subject to shareholder approval. The terms and conditions of the issue to Mr Milroy are detailed below. ASX Listing Rule 10.11 requires a listed company to obtain shareholder approval by ordinary resolution prior to the issue of securities to a related party of the Company. Accordingly, shareholder approval is required pursuant to ASX Listing Rule 10.11 for the issue of the options to Mr Milroy.

Pursuant to ASX Listing Rule 10.13.3, the options will be issued to Mr Milroy on 23 May 2008 and in any case no later than 1 month after the date of this meeting.

Under Chapter 2E of the Corporations Act a public company cannot give a financial benefit to a related party unless an exception applies or shareholders have in a general meeting approved the giving of that financial benefit to the related party.

Mr Simon Milroy is a related party of the Company due to the fact that Mr Milroy is a director of the Company. The issue of options constitutes a “Financial Benefit” as described in the Corporations Act. Accordingly, the proposed issue of options to Mr Milroy will constitute the provision of a financial benefit to a related party of the company.

It is the view of the Directors that the exemptions under section 211 of the Corporations Act (remuneration and reimbursement) apply to the proposed option issue pursuant to Resolution 9. Accordingly, while the Directors have not determined to seek shareholder approval under section 208 of the Corporations Act, shareholder approval must nonetheless be obtained pursuant to ASX Listing Rule 10.11.

The terms of the issue of options to Mr Milroy are as follows:

Number of Options	Exercise Price	Hurdle Price
700,000	$0.20	$0.25 or above continuously as measured over a 30 day period
650,000	$0.25	$0.30 or above continuously as measured over a 30 day period
650,000	$0.30	$0.40 or above continuously as measured over a 30 day period

The Options will be issued for nil consideration.

The Board, with Mr Milroy abstaining, recommends that shareholders vote in favour of the issue of options.

Resolution 10 Issue of Options to Mr Hugh McKinnon (Executive Director)

Resolution 10 seeks approval from shareholders for the issue of 900,000 unlisted options to Mr Hugh McKinnon as part of his salary package. The Company announced the issue of the options on 13/07/07 subject to shareholder approval. The terms and conditions of the issue to Mr McKinnon are detailed below. ASX Listing Rule 10.11 requires a listed company to obtain shareholder approval by ordinary resolution prior to the issue of securities to a related party of the Company. Accordingly, shareholder approval is required pursuant to ASX Listing Rule 10.11 for the issue of the options to Mr McKinnon.

Pursuant to ASX Listing Rule 10.13.3, the options will be issued to Mr McKinnon on 23 May 2008 and in any case no later than 1 month after the date of this meeting.

Mr Hugh McKinnon is a related party of the Company due to the fact that Mr McKinnon is a director of the Company. The issue of options constitutes a “Financial Benefit” as described

in the Corporations Act. Accordingly, the proposed issue of options to Mr McKinnon will constitute the provision of a financial benefit to a related party of the company.

It is the view of the Directors that the exemptions under section 211 of the Corporations Act (remuneration and reimbursement) apply to the proposed option issue pursuant to resolution 10. Accordingly, while the Directors have not determined to seek shareholder approval under section 208 of the Corporations Act, shareholder approval must nonetheless be obtained pursuant to ASX Listing Rule 10.11.

The terms of the issue of options to Mr McKinnon are as follows:

Number of Options	Exercise Price	Hurdle Price
300,000	$0.20	$0.25 or above continuously as measured over a 30 day period
300,000	$0.25	$0.30 or above continuously as measured over a 30 day period
300,000	$0.30	$0.40 or above continuously as measured over a 30 day period

The Options will be issued for nil consideration.

The Board, with Mr McKinnon abstaining, recommends that shareholders vote in favour of the issue of options.

Resolution 11 Approval of Employee Share Option Plan

The Board has resolved to adopt an Employee Share Option Plan (Plan) and now seeks shareholder approval for the Plan. The objective of the Plan is to assist in the attraction and retention of high quality employees and to create a sense of ownership in the Company.

This is the first Plan adopted by the Company and as such no securities have been previously issued under the scheme.

A summary of the terms of the scheme are detailed as follows:

Eligibility

The Board may offer Options to any Eligible Employee including Executive and Nonexecutive Directors.

Entitlement

Each Option entitles the holder to subscribe for one Share. When issued, each Share will rank equally with all other Share then on issue.

Issue of Options

The Board may, at its discretion, determine to offer options to an Eligible Employee. The Options will be issued for consideration comprising the services that are expected to be provided by an Eligible Employee to or for the benefit of the Company but no further monetary or other consideration will be payable unless the Board otherwise determines. Options are personal and may not be exercised by any other person or body corporate unless approved by the Board

The Company must apply to the ASX for quotation of Shares issued on exercise of the Options if the Shares are officially quoted on the ASX at that time, however the Company cannot guarantee that the Shares will be quoted.

Exercise of Options

The Exercise period will be fixed by the Board at the time of issue. Options will lapse if an Eligible Employee has been dismissed or removed from office for a reason which allows which entitles the company to dismiss the Eligible Employee without notice, has committed an act of fraud or gross misconduct or has done an act which brings the Company into disrepute.

Exercise Price

The Exercise Price will be:

(a) the variable weighted average price of a Share for the 5 Business Days prior to the date on which the Directors resolved to grant the Option but not less than the market price on the grant date ; or

(b) such other amount as determined by the Board from time to time, but not less than the price as determined in (a).

New Issue of Securities

Eligible Employees will not be entitled to participate in any new issue of securities in the Company unless they exercise their Options prior to the record date for the determination of entitlements to the new issue, and participate as a result of holding Shares.

Bonus Issues

If the Company makes a bonus issue of Shares or other securities (whether before or during the Exercise Period) to existing shareholders (other than an issue in lieu or in satisfaction of dividends or by way of dividend reinvestment), and no Share has been issued in respect of an Option before the record date for determining entitlements to the bonus issue, then the number of Shares over which the Option is exercisable shall be increased by the number of Shares which the Holder of the Option would have received if the Option had been exercised before the record date for the bonus issue.

Rights Issue

If before or during the Exercise Period of an Option, the Company makes a pro rata issue of Shares (except a bonus issue) to existing shareholders (other than an issue in lieu or in satisfaction of dividends or by way of dividend reinvestment) and no Share has been issued in respect of an Option before the record date for determining entitlements to the issue, the Exercise Price of the Option shall be reduced in accordance with Listing Rule 6.22.2 as amended, substituted or replaced from time to time.

Capital Reorganisation.

If there is any reorganisation of capital of the Company (whether before or during the Exercise Period) then the rights attaching to Options will be changed to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation.

The Board recommends that shareholders vote in favour of the Employee Share Option Plan.

Resolution 12 Approval of Increase in Directors’ Fee Pool.

The Directors of Kentor Gold are contemplating the appointment of an additional nonexecutive Director to the Board of Kentor Gold. In order to accommodate this possible appointment, the board is seeking to increase the Fee Pool from which non-executive directors are paid by $50,000 to $200,000.

The Board, with the non-executive directors abstaining, recommends that shareholders vote in favour of the increase in Non-executive Directors Fee Pool

GLOSSARY OF TERMS

“ASX” means Australian Securities Exchange Limited;

“Board” means the board of directors of the Company;

“Company” means Kentor Gold Limited ACN 082 658 080;

“Constitution” means the Constitution of the Company adopted on 25 October 2004;

“Corporations Act” means the Corporations Act 2001 (Commonwealth);

“Listing Rules” means the listing rules of the ASX.

ACN 082 658 080

APPOINTMENT OF PROXY

If you would like to attend and vote at the Annual General Meeting, please bring this form with you. This will assist in registering your attendance.

Please return your Proxy forms to: Link Market Services Limited Level 12, 680 George Street, Sydney, NSW, 2000 Locked Bag A14, Sydney South, NSW, 1235 Telephone: 1300 554 474 From outside Australia: +61 2 8280 7111 Facsimile: +61 2 9287 0309 ASX Code: KGL Website: www.linkmarketservices.com.au

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I/We being a member(s) of Kentor Gold Limited and entitled to attend and vote hereby appoint

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A
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the Chairman OR if you are NOT appointing the Chairman of the of the Meeting Meeting as your proxy, please write the name of the (mark box) person or body corporate (excluding the registered securityholder) you are appointing as your proxy

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or failing the person/body corporate named, or if no person/body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following instructions (or if no directions have been given, as the proxy sees fit) at the Annual General Meeting of the Company to be held at 10:00am on Thursday, 22 May 2008, at the RACV Club, 501 Bourke Street, Melbourne VIC and at any adjournment of that meeting.

Where more than one proxy is to be appointed or where voting intentions cannot be adequately expressed using this form an additional form of proxy is available on request from the share registry. Proxies will only be valid and accepted by the Company if they are signed and received no later than 48 hours before the meeting. The Chairman of the Meeting intends to vote undirected proxies in favour of all items of business.

B

To direct your proxy how to vote on any resolution please insert in the appropriate box below.X

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ORDINARY BUSINESS SPECIAL BUSINESS
For Against Abstain Resolutions For Against Abstain
Resolutions
1 Re-election of Director, Mr Andrew Daley 6 Ratification of Share Placement to clients
of Far East Capital Limited
2 Re-election of Director, Mr Hugh 7 Ratification of Share Placement to
McKinnon Zen Drilling Limited
3 Election of Director, Mr Simon Milroy 8 Approval for the Issue of New Shares
9 Approval of issue of Options to
4 Remuneration Report Mr. Simon Milroy (Managing Director)
5 Appointment of Auditor 10 Approval of issue of Options to
Mr. Hugh McKinnon (Executive Director)
11 Approval of Employee Share Option Plan
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12 Approval of Increase in Non-executive Directors’ Fee Pool

IMPORTANT: FOR ITEMS 11 AND 12 ABOVE

If the Chairman of the Meeting is appointed as your proxy, or may be appointed by default and you do not wish to direct your proxy how to vote as your proxy in respect of Items 11 and 12 above, please place a mark in this box. By marking this box, you C acknowledge that the Chairman of the Meeting may exercise your proxy even though he/she has an interest in the outcome of these Items and that votes cast by him/her for these Items, other than as proxyholder, would be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the Chairman of the Meeting will not cast your votes on Items 11 and 12 and your votes will not be counted in calculating the required majority if a poll is called on these Items. The Chairman of the Meeting intends to vote undirected proxies in favour of Items 11 and 12.

If you mark the Abstain box for a particular Item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

D SIGNATURE OF SECURITYHOLDERS – THIS MUST BE COMPLETED

Securityholder 1 (Individual) Joint Securityholder 2 (Individual) Joint Securityholder 3 (Individual) Sole Director and Sole Company Secretary Director/Company Secretary (Delete one) Director

This form should be signed by the securityholder. If a joint holding, either securityholder may sign. If signed by the securityholder’s attorney, the power of attorney must have been previously noted by the registry or a certified copy attached to this form. If executed by a company, the form must be executed in accordance with the securityholder’s constitution and the Corporations Act 2001 (Cwlth).

Link Market Services Limited advises that Chapter 2C of the Corporations Act 2001 requires information about you as a securityholder (including your name, address and details of the securities you hold) to be included in the public register of the entity in which you hold securities. Information is collected to administer your securityholding and if some or all of the information is not collected then it might not be possible to administer your securityholding. Your personal information may be disclosed to the entity in which you hold securities. You can obtain access to your personal information by contacting us at the address or telephone number shown on this form. Our privacy policy is available on our website (www.linkmarketservices.com.au).

KGL PRX842

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ANNUAL REPORT 2007

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CONTENTS
CORPORATE PROFILE	3	FINANCIAL REPORT	17
HIGHLIGHTS	4	Corporate Governance
CHAIRMAN’S LETTER TO		Statement	17
SHAREHOLDERS	5	Directors’report	21
MANAGING DIRECTOR’S REPORT	6
		Auditor’s independence
Savoyardy	6	declaration	29
Akbel	7
		Income statement	30
Yangidavan	7
		Balance sheet	31
Chunkei	8
Chaarkuduk	8	Statement of changes
		in equity	32
Kurgan	10
Bashkol	11	Cash f ow statement	34
Geothermal	11-12	Notes to the f nancial
		statements	35
Dunmarra	13
		Directors’ declaration	60
CORPORATE	14
KYRGYZ REPUBLIC	15	Independent audit report	61
OUTLOOK FOR GOLD	16	Supplementary information	63
TENEMENT SCHEDULE	16	CORPORATE DIRECTORY	65

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KYRGYZ REPUBLIC
Central Asia
NORTHERN TERRITORY
Australia
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2 | KENTOR GOLD ANNUAL REPORT 2007

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CORPORATE PROFILE

Kentor Gold Ltd (ASX Code: KGL) is an Australian-listed company formed in 1998 as a specialist gold explorer. The Company today is a diversifi ed international explorer with gold, geothermal and base metals exploration assets in the Kyrgyz Republic in Central Asia and uranium exploration assets in Australia’s Northern Territory.

Our vision is to build wealth for shareholders through the acquisition of projects and by advancing these through exploration, development and into production. Kentor Gold is establishing a diversifi ed portfolio of projects and its key strengths are:

Gold, base metals and geothermal assets in the Kyrgyz Republic, Central Asia
Uranium exploration applications in Northern Territory, Australia
Experienced board and management team with local operating experience
Strong government and community relations and access to a vast store of technical data.

Current exploration activity includes:

Exploration of the Savoyardy, Akbel and Bashkol gold exploration licences in the Kyrgyz Republic
Geothermal energy exploration in fi ve prospecting tenements in the Kyrgyz Republic
Base metal exploration in the Chaarkuduk, Kurgan, Chunkei and Yangidavan prospects in the Kyrgyz Republic.

Kentor Gold’s vision is to build wealth for shareholders through the acquisition of projects and by advancing these through exploration, development and into production.

Kentor Gold has an important strategic advantage in the Kyrgyz Republic with its long serving in-country management team fl uent in Russian and permanently based in the capital Bishkek.

The management team has also developed a strong relationship with both the Kyrgyz Geophysical Expedition and the Kyrgyz Government and has access to the complete Soviet geological database for the Kyrgyz Republic.

KENTOR GOLD ANNUAL REPORT 2007 | 3

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HIGHLIGHTS

MAY 07 - Mr Simon Milroy employed as the Company’s Managing Director
FEB 08 - Mr Craig Irvine appointed as General Manager – Exploration

High grade gold results were received from the fi rst diamond drill programme at Savoyardy

JAN 08 - Ms Kylie Anderson employed as Chief Financial Offi cer and Company Secretary
JUN and DEC 07 - Two share placements were successfully completed to raise A$2,600,000 and A$1,350,000
NOV 07 - MAR 08 - New Mineral Exploration Licences were granted by the Kyrgyz Republic at Chaarkuduk, Kurgan, Yangidavan and Chunkei
MAY 07 - Joint Venture agreement signed with Perseus Mining Limited whereby Kentor Gold will earn 70 per cent of the Savoyardy gold project through the expenditure of US$6m before 2012
OCT 07 - High-grade gold results were received from the fi rst diamond drill program at Savoyardy
MAY 07 - Geothermal energy Exploration Licences were granted in the Kyrgyz Republic
MAR 08 - Panax Geothermal Ltd completed its six month evaluation and committed to go ahead with the Kyrgyz Geothermal Energy Joint Venture.

Akbel tenement during exploration program

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4 | KENTOR GOLD ANNUAL REPORT 2007

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CHAIRMAN’S LETTER

Dear Shareholder,

I am pleased to report that Kentor Gold Ltd has made signifi cant progress during the past year in pursuit of our vision to build wealth for shareholders. Our aim is to develop the Company’s premier assets through the acquisition of advanced projects and by advancing these from exploration to development and into production.

While the environment for acquiring advanced projects in Australia is proving to be highly competitive, we have successfully secured a number of promising, high-quality assets within the Kyrgyz Republic.

Drill testing of the Savoyardy gold project in the Kyrgyz Republic was a major focus for Kentor Gold during 2007. This testing has highlighted signifi cant high-grade results which will form the basis of further exploration programs in 2008.

The Geothermal Energy project we have secured in the Kyrgyz Republic represents the start of an exciting new era for the Company. Recent test results have demonstrated that the Kyrgyz Republic is endowed with some of the highest geothermal gradients known in the world. The project has the full support of the Kyrgyz Government and reached an important milestone in April when Panax Geothermal Ltd, our Joint Venture partner, completed its six-month evaluation and took the decision to invest A$5 million to earn equity in the project.

...the year ahead is shaping up to be one with sound prospects for Kentor, especially in regard to our gold and geothermal projects.

So the year ahead is shaping up to be one with sound prospects for Kentor Gold, especially in regard to our gold and geothermal projects. World focus has now turned to future energy resources especially with the generation of clean energy growing in importance as the impact of global warming is being increasingly felt.

Kentor Gold now has a signifi cant strategic advantage in the Kyrgyz Republic with its long serving, in-country management team fl uent in Russian and permanently based in the capital Bishkek. The management team has also developed a strong relationship with both the Kyrgyz Geophysical Expedition and the Kyrgyz Government and has access to the complete Soviet geological database for the Kyrgyz Republic.

The Board remains committed to growing your Company and increasing the value of Kentor Gold for all our shareholders.

In conclusion and on behalf of the Board, I would like to thank all members of the Kentor Gold management team for their much-valued contribution, in particular the strong leadership and direction of Simon Milroy, the Company’s Managing Director and Hugh McKinnon, our executive Director in Bishkek.

Thank you for your continuing support,

John Barr AM, MAICDr , Chairman, Non-Executive Director

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KENTOR GOLD ANNUAL REPORT 2007 | 5

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Kentor Gold has found the Kyrgyz Republic a sound place for doing business…

MANAGING DIRECTOR’S REPORT

A turning point for the company in 2007 was the receipt of high-grade gold results from the diamond drilling program at the Savoyardy Gold Project. Savoyardy will continue to be the focus of activities in 2008, along with getting work underway on the new base metal projects we acquired in late 2007 and early 2008.

Kentor Gold has found the Kyrgyz Republic a sound place for doing business as it is a country with high geological prospectivity and a large number of undeveloped projects. We have a good relationship with the Government which has provided tremendous support for our exploration and development activities.

Kentor Gold has a strict code of conduct that applies to the Company and all of its employees and contractors. The code of conduct recognises sustainable development and covers compliance with the law, environment, health, safety and community development. A copy of the code of conduct is available on the Company website: www.kentorgold.com.au.

Savoyardy Gold Project (KGL earning 70%) Gold, Antimony

In 2007 Kentor Gold signed a Joint Venture agreement with Perseus Mining Ltd where Kentor Gold will earn 70% of the Savoyardy gold project through the expenditure of US$6m before 2012. A diamond drilling program completed 1,030m of core before drilling was stopped in November 2007 due to adverse weather conditions. The drilling resulted in a number of high grade gold intersections, the best being hole SVD_PD_07 which returned an intersection of 15m @ 14.2 g/t Au from 21m . The rigs have been kept on site over the winter and it is expected that the surface drilling program will resume in May 2008.

We have also had a team of miners working to rehabilitate the underground exploration adits. This work was completed in February 2008. Rehabilitation of the adits will improve access to the site, provide underground access to the ore body for mapping and sampling and enable us to commence diamond drilling from the underground workings. Drilling from underground is expected to commence in April 2008.

In 2008 we are planning to conduct induced polarisation surveys to identify areas of high conductivity associated with sulphides. This will be followed up with soil sampling and drilling. We are planning to drill 1,500 metres from underground and an additional 3,000 metres from the surface. Approximately half of the planned surface drilling will be targeting new mineralised zones.

6 | KENTOR GOLD ANNUAL REPORT 2007

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Akbel (KGL 80%) Gold

In early 2008, Kentor Gold commenced diamond drilling at Akbel, targeting induced polarisation anomalies near the licence boundary with the Kumtor gold ore body. The drilling at Akbel has continued to be challenging with harsh winter conditions and high altitudes combining with poor ground conditions. However, considerable opportunity exists to identify high-grade extensions to the 13 Moz Kumtor gold ore body located immediately along strike from Akbel.

Yangidavan (KGL 80%) Lead, Copper, Silver

Kentor Gold’s 80 per cent-owned Kyrgyz subsidiary, CJSC Kentor, has been granted an Exploration Licence of 160 square kilometres for non-radioactive minerals in the southern Batken Oblast of the Kyrgyz Republic. The primary exploration target within the Yangidavan licence area is the Jilisu base metal prospect.

The Jilisu base metal prospect is a sub-vertical tabular mineralised zone mapped by Soviet explorers along a strike of 1,200 metres on the north bank of the Jilisu River with reported high grades of lead, copper and silver. The average width of the zone is reported as 8.7 metres. The zone has been mapped a further kilometre from the south bank of the Jilisu River. It is open to the south along a contact between midCarboniferous sandy limestone (Yangidavan suite) and late-Carboniferous conglomerate (Hoja-achkan suite).

The area is of rugged relief with swift-fl owing rivers. In 2008, Kentor Gold plans to conduct mapping, sampling and geo-physical surveys on the Yandidavan licence.

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Drilling at Akbel

KENTOR GOLD ANNUAL REPORT 2007 | 7

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Chunkei (KGL 80%) Lead

Kentor Gold’s subsidiary, CJSC Kentor, has been granted a Prospecting Licence (1488 MP) over an area of 149 square kilometres for lead, zinc and other minerals in the central Naryn Oblast of the Kyrgyz Republic. The primary exploration targets within the licence area are carbonate-hosted base metal deposits indicated by a series of high-grade lead occurrences with accompanying zinc, copper and silver.

The best known of the occurrences is located at Chunkei, consisting of 5 vein-like galena-barite bodies in Palaeogene conglomerate adjacent to a contact with Palaeozoic sediments. The bodies at the Chunkei occurrence are confi ned within a zone 100 metres long and 15 metres wide.

A second high grade lead occurrence (Berkut-Ya) was mapped by Soviet geologists one kilometre to the south-west of Chunkei in a similar geological setting along a structure that appears to include the old Kulja-Bashat mine, a further six kilometres to the southwest (not in Kentor Gold’s licence area). This is recorded as having produced 32,000 tonnes of lead in the years up to 1930 from high-grade ore. Two further occurrences are recorded within Kentor Gold’s licence area 10 kilometres to the north-east of Chunkei along the same geological trend on the northern bank of the Naryn River.

There are seven known occurrences of minerals located on the Chaarkuduk licence area, including lead, copper, gold and uranium.

There is a hot spring on the south bank of the Naryn River near the Chunkei occurrence indicating an active hydrothermal environment. The exploration model suggests that the surface occurrences in Palaeogene and Neogene sediments are recent re-mobilisations of sulphides from a deeper carbonate-hosted base metal deposit. Kentor Gold plans to test this concept by using geophysics along the geological trend to explore for additional sulphide targets which will then be drill tested during 2008.

The area is of moderate relief at an altitude of 2,200 metres which will allow for an extended fi eld season. The surrounding district is well developed with good road access.

Chaarkuduk (KGL 80%) Lead, Zinc, Copper, Gold, Silver, Uranium

Chaarkuduk is a known lead occurrence drilled by the Soviets and further explored by a number of exploration and development adits. It is described as fi ve stratiform bodies in mid-Carboniferous carbonates. There are seven known occurrences of minerals located on the Chaarkuduk licence area, including lead, copper, gold and uranium. The occurrences have been defi ned by varying amounts of surface mapping and sampling, exploration adits and some limited amounts of diamond drilling.

8 | KENTOR GOLD ANNUAL REPORT 2007

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The other known prospects on the Chaarkuduk licence are:-

Uchkashka #2

A gold and bismuth-bearing quartz-epidote-magnetite vein in Ordovician porphyry granite. The outcropping vein is described as being four metres wide and 60 metres long.

Kyzyljar

A copper-silver occurrence in a zone of quartz-calcite breccia in Carboniferous conglomerate. The mineralised zone is recorded as 200 metres long and fi ve metres wide. There has been no drilling to date.

Jergalan

An occurrence of uranium in six coal beds and three beds of sandstone. Underground workings exist, but the uranium beds remain unmined.

Lower Tyup

An occurrence of lead, silver and gold in fi ve galenatourmaline-quartz veins within Devonian granodiorite and granite porphyry. The veins range in thickness from 0.5 to two metres, and in length from 60 to 2,500 metres. Soviet reports state high grades of lead, with accompanying gold and silver of varying grade.

Upper Tyup

An occurrence of lead and silver in a series of quartz-galenasphalerite veins within Devonian volcanics. The veins are described as narrow, with widths ranging from 0.05 to 0.6 metres.

Tash-Tyubin

A lead occurrence explored by the development of adits. Two mineralised beds in Carboniferous limestone, with widths described as varying from 0.87 to 5.64 metres.

Map showing known mineral occurences of the Chaarkuduk Exploration Licence

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Siliciclastic sediments. Epicontinental marine basins. Carbonate-siliciclastic and siliciclastic (local tuffogenic) sediments. North volcanic belt rear depression.

Marine and continental molassa. Front (+relic) and intermontane depressions. Subalkaline volcanic rocks. The North and South marginal belts. Shallow water siliclastic-carbonate sediments. Shelf of the North Tyan-Shan microcontinent. Granodiorite-granite (S-type). The North Tyan-Shan collision belt.

Fault U occurence Pb occurence Au occurence Cu occurence

The Company is currently examining Soviet reports with a view to planning a geophysical and drilling campaign on the best targets at the earliest possible date.

KENTOR GOLD ANNUAL REPORT 2007 | 9

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Kurgan (KGL 80%) Lead, Zinc, Silver, Gold

CJSC Kentor has also been granted an Exploration Licence of 310 square kilometres for all minerals in the Jalalabad Oblast of the Kyrgyz Republic.

The licence area is considered prospective for lead, zinc, silver and gold and contains a number of mineral occurrences which have previously been defi ned by work carried out during the Soviet era.

The existing data for the Kurgan licence area is currently being compiled into a geological database and it is expected that geophysics and drilling of the most promising target areas will take place this northern summer.

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Continental molassa. Intermontane and submontane depressions. Greywacke-arkose flysch and molassa. The Karatau-Talas collision zone relic (front) depressions. Shallow water sediments. Carbonate banks of external shelf of the North Tyan-Shan microcontinent. Carbonate-siliciclastic flysch. Marginal sea of the Eshim-Karatau ocean basin. Shallow water siliciclastic-carbonate sediments. Shelf of the North Tyan-Shan microcontinent. Greywacke and tuffogenic flysch. The Kaptash-East-Terskei island arc. Graben sediments.

Granodiorite-granite (S-type). The North Tyan-Shan collision belt. Fault Mineral occurence Au placer (excluded from Kentor PL)

Map showing known mineral occurrences on the Kurgan Exploration Licence

10 | KENTOR GOLD ANNUAL REPORT 2007

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Bashkol (KGL 80%) Gold, Uranium

The Bashkol prospecting licence has been re-issued to CJSC Kentor, with boundaries adjusted to include two uranium occurrences discovered by Soviet geologists in the 1950s, but unexplored since then. The two occurrences are:

East Kuylyu

An occurrence of uranium, vanadium and molybdenum noted by Soviet geologists but totally unexplored. In 1959 a Soviet party recorded the occurrence as two mineralised horizons of siliceous Cambrian-Ordovician carbonaceous shale. The mineralised horizons are described as having widths of 450 metres and 300 metres.

Kaindybulak

Another occurrence of uranium, vanadium and molybdenum noted by Soviet geologists but totally unexplored. In 1953 a Soviet party recorded the occurrence as a stratiform horizon of siliceous Carboniferous carbonaceous shale. The stratiform horizon is described as two kilometres long and 100 metres wide.

The parts of the previous Bashkol license that were covered by the Sarychat nature reserve have now been relinquished.

Kentor Gold intends to send a fi eld party to the area for reconnaissance in the Northern summer.

Geothermal Energy Project (KGL 80%)

Kentor Gold continued work on collecting and analysing all available existing information on the geothermal licence applications in the Kyrgyz Republic.

Dr. Graeme Beardsmore, a geothermal energy expert, commissioned by Panax Geothermal Ltd (Kentor Gold’s Joint Venture partner), spent 12 days in the Kyrgyz Republic reviewing the data and conducting site visits. During the site visit, Dr. Beardsmore confi rmed the geothermal gradient at Inylchek as being over 100 degrees centigrade per kilometre to a depth of 700m from surface, and came to the conclusion that “the Inylchek prospect represents a world-class engineered geothermal system opportunity”. Heat fl ows of up to 300 mW/m[2] have also been calculated at the Inylchek licence.

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Bashkol PL Sketch Geological Map

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Shallow water carbonate sediments. External shelf of the Kyrgyz-Kazakh microcontinent.

Carbonate-siliciclastic and siliciclastic (local tuffogenic) sediments. North volcanic belt rear depression. Marine and continental molassa. Front (+ relic) and intermontane depressions. Flyschoid sediments. Slope of the Tarim microcontinent (the Middle Tyan-Shan block).

Abyssal carbonate-carboniferous-siliceous sediments. Slope and foot of the Tarim microcontinent (Middle Tyan-Shan block). Subalkaline volcanic rocks. The North and South marginal belts. Shallow water siliciclastic-carbonate sediments. Shelf of the North Tyan-Shan microcontinent.

Graben sediments.

Sedimentary and igneous rocks metamorphosed in amphibolite and epidote-amphibolite facies. Basement of microcontinents. Granite-granodiorite, tonalite-granondiorite (autochthon). Accretionary prepaleozoic basement of microcontinent.

Granite-granodiorite. The Beltau-Kurama volcanic belt - 2 stage.

Fault

Au occurence

U occurence “the Inylchek prospect represents a world-class engineered geothermal system opportunity”

KENTOR GOLD ANNUAL REPORT 2007 | 11

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The Kyrgyz Minister of Economic Development has stated his full support for the project.

In January 2008, Kentor Gold and Panax Geothermal conducted a number of presentations on the Geothermal Energy Project to the Kyrgyz Government. The Kyrgyz Minister of Economic Development has stated his full support for the project.

The results of the work to date have indicated the Inylchek geothermal energy exploration licence has a high chance of hosting a world-class heat reservoir at a relatively shallow depth. Due to these indications, an application was made to increase the size of the exploration licence. This has now been granted by the Kyrgyz Government. The new licence area is known as Akshirak and covers an area of 823 square kilometres.

On the 12 March 2008, the evaluation phase of the memorandum of understanding with Panax Geothermal Ltd came to an end. Panax Geothermal has now made the commitment to proceed with the Geothermal Energy Joint Venture. Panax Geothermal has the right to earn up to 51% equity in Kentor Gold’s geothermal exploration licences by spending A$5 million over a four year period and an additional 10% by spending an extra A$1 million.

Schematic diagram of the Haulage Adit at Inylcheck (elevation +- 3500) (Sary Jaz Granite)

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12 | KENTOR GOLD ANNUAL REPORT 2007

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Dunmarra Uranium (KGL 100%) Uranium

Dunmarra Uranium Limited, a wholly owned subsidiary of Kentor Gold, now has a total area of 6,000 square kilometres under application in the Northern Territory, Australia. These licence areas are considered prospective for sandstone-hosted uranium deposits.

Two of the licences have now been granted and it is expected that the remaining fi ve licence applications will be granted during this year.

Work planned for 2008 includes collection of all existing data, reconnaissance surveys, radiometric surveys and sampling of water bores.

These licence areas are considered prospective for sandstonehosted uranium deposits.

Dunmarra Uranium Ltd. Location of Project Areas

EL26105 = 250.6 sq. km EL26106 = 1541 sq. km EL26107 = 343.6 sq. km EL26108 = 259.5 sq. km EL26516 = 473 sq. km EL26517 = 1594 sq. km EL26518 = 1539 sq. km

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Macarthur River
Mine site
-16˚
Dunmarra
Roadhouse EL26517
EL26106
EL26516
-17˚
EL26518
Elliot
EL26107
EL26108
-18˚
EL26105
-19˚
Three Ways
Barkly
Tennant Creek Homestead
-20˚
15 0 15 30 Scale 1:2,000,000
Kilometres
Capricorn Highway
Stuart Highway
133˚ 134˚ 135˚ 136˚
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Competent Person Statement

The exploration results reported in this document are based on information compiled by Craig Irvine, who is a member of the Australasian Institute of Mining and Metallurgy and a full time employee of Kentor Gold Ltd. Mr Irvine has suffi cient experience which is relevant to the style of the mineralisation and the type of deposit under consideration and to the activity to which he is undertaking, to qualify as a Competent Person as defi ned in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Irvine has consented to the inclusion of this information in the form and context in which it appears in this report.

KENTOR GOLD ANNUAL REPORT 2007 | 13

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CORPORATE

Kentor Gold conducted two placements during 2007. In June a placement of 20 million fully paid ordinary shares, at a price of A$0.13 each, raised A$2,600,000.

This was followed by a placement in December 2007 of 7.5 million fully paid ordinary shares at a price of A$0.18 each, raising a further A$1,350,000.

During the year the following new employees were recruited:

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Managing Director: Simon Milroy

Simon Milroy is a mining engineer with twenty years experience across a diverse range of metals. He has spent the last seven years working in South East Asia on mining development projects. His most recent experience has been with Kingsgate in Thailand and with Pan Australian Resources in Laos. Mr Milroy is a member of the Australian Institute of Mining and Metallurgy.

Chief Financial Offi cer and Company Secretary: Kylie Anderson

Kylie Anderson has fi fteen years experience in the resources industry and holds a Masters in Professional Accounting and Masters in Business Administration, backed by a Bachelor of Science (Chemistry). Since 1993 Ms Anderson has held senior Financial and Company Secretary positions with a number of resource companies including Rio Tinto and Felix Resources, as well as lecturing at Central Queensland University. Ms Anderson is a member of the Australian Institute of Company Directors and an affi liate of the Chartered Secretaries Association of Australia.

General Manager - Exploration: Craig Irvine

Craig Irvine is a geologist with twenty years experience, including more than 10 years in various senior roles for a range of operational and development projects across Australia. Prior to his most recent position at Perilya Ltd’s Beltana Zinc Project, Mr Irvine’s experience has been primarily in gold and copper operations and development projects for companies including Newcrest Mining and Western Mining Corporation. Mr Irvine is a member of the Australasian Institute of Mining and Metallurgy.

14 | KENTOR GOLD ANNUAL REPORT 2007

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KYRGYZ REPUBLIC

The Kyrgyz Republic is the focus of increasing international attention for its minerals exploration potential. The political climate and highly-prospective ground provide an excellent environment for Kentor Gold to conduct business.

The fi gures released by the Government of the Kyrgyz Republic reveal almost US$50 million was spent during 2007 on exploration in the country - an area the size of the State of Victoria.

International companies operating in the region include 15 western companies listed on various major securities exchanges, as well as a number of Russian, Chinese, and Kazakh companies. Signifi cant gold discoveries were reported in 2007 by several companies and the intensity of activity has created competition for experienced local geologists, drill contractors and laboratory facilities.

The Government of the Kyrgyz Republic has recently initiated two major legislative reforms. In conjunction with widespread private sector consultation, a new Tax Code and a revised edition of the Law on Subsoil are under consideration.

Kyrgyz Republic President Kurmanbek Bakiev set the attraction of direct foreign investment as a government priority, placing emphasis on sectors include mining and energy. An Investment Council was established to recommend and implement strategies for the attraction and retention of foreign investment - such as Kentor Gold’s Kyrgyz program. The Council is chaired by President Bakiev and has private sector and multilateral organisations represented.

Tenement Location Map

The Republic’s political climate continues to stabilise. A new national constitution was adopted by referendum and democratic parliamentary elections were held during 2007.

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This has resulted in a more constructive relationship between the various branches of government and in turn, a stable base for Kentor Gold to conduct business.

KENTOR GOLD ANNUAL REPORT 2007 | 15

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OUTLOOK FOR GOLD

The most prospective of all Kentor Gold’s projects is the Savoyardy Gold project.

Gold - London PM Fix 2000 - present

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1000
900
800
700
600
500
400
300
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US$ per ounce
Jan00 Jul00 Jan01 Jul01 Jan02 Jul02 Jan03 Jul03 Jan04 Jul04 Jan05 Jul05 Jan06 Jul06 Jan07 Jul07 Jan08 Mar08
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The price of gold is determined ultimately by supply and demand but unlike other commodities, the majority of gold mined still exists in above-ground stocks. This adds a degree of complexity to price forecasting that does not exist in other commodities and often results in gold prices being infl uenced by sentiment rather than strict economic factors. Historically gold has been seen as a safe haven in times of rising infl ation, low interest rates, fi nancial uncertainty, monetary disruptions and civil unrest.

Since the year 2000 gold prices have increased by more than 200 per cent and in 2008 so far prices have increased of more than 15 per cent. This has been largely driven by the record high oil prices, declines in the US dollar versus the Euro and concerns regarding the American economy. On the production side, South African mines have been forced to cut production as a result of country-wide power rationing.

A number of forecasters have increased their 2008 gold price forecasts to in excess of US$1000/oz and although it is unlikely that these levels will be maintained in the longer term, most forecasts predict prices to remain above US$700/oz in the coming years.

TENEMENT SCHEDULE

Kyrgyz Republic - Minerals	Kyrgyz Republic - Minerals	Kyrgyz Republic - Minerals	Kyrgyz Republic - Minerals	Kyrgyz Republic - Minerals
Tenement Number	Tenement Name	Licenced Holder	KGL Benef cial Interest	Area(km2)
AP340	Akbel	CJSC Kentor	80%	365
AP1602	Bashkol	CJSC Kentor	80%	700
MP1629	Chaarkuduk	CJSC Kentor	80%	228
MP1487	Yangydavan	CJSC Kentor	80%	160
MP1488	Chunkei	CJSC Kentor	80%	149
MP1648	Kurgan	CJSC Kentor	80%	310
Australia - Minerals
Tenement Number	Tenement Name	Licenced Holder	KGL Benef cial Interest	Area(km2)
EL26105	EL26105	Dunmarra Uranium	100%	251
ELA26106	EL26106	Dunmarra Uranium	100%	1,541
ELA26107	EL26107	Dunmarra Uranium	100%	344
EL26108	EL26108	Dunmarra Uranium	100%	260
ELA26516	EL26516	Dunmarra Uranium	100%	473
ELA26517	EL26517	Dunmarra Uranium	100%	1,594
ELA26518	EL26518	Dunmarra Uranium	100%	1,539
Kyrgyz Republic - Geothermal Energy
Tenement Number	Tenement Name	Licenced Holder	KGL Benef cial Interest	Area(km2)
GP1125	South Issykkul	CJSC Kyldoo	80%	240
GP1127	Aksai	CJSC Kyldoo	80%	4,134
GP1128	Kyzylompul	CJSC Kyldoo	80%	1,657
VP1460	Jumgal	CJSC Kyldoo	80%	971
VP1649	Akshyrak	CJSC Kyldoo	80%	823

16 | KENTOR GOLD ANNUAL REPORT 2007

ABN 52 052 658 080

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CORPORATE GOVERNANCE STATEMENT

CORPORATE GOVERNANCE

As a listed company with Australian Securities Exchange Limited (ASX), Kentor Gold Limited must comply with the ASX Listing Rules, which were amended on 1 January, 2003 to enhance compliance by listed companies with corporate governance best practice.

These provisions require listed companies to report on their main corporate governance practices by reference to the essential corporate governance principles (Principles) and best practice recommendations (Recommendations) of the ASX Corporate Governance Council (the Council), and require a company to highlight those areas of departure from the Recommendations of the Council and explain that departure.

Principle 1 Lay solid foundations for management and oversight

Recommendation 1.1 - Formalise and disclose the functions reserved to the Board and those delegated to management.

The Board of Directors has been charged by members to oversee the affairs of the Company to ensure that they are conducted appropriately and in the interests of all members. The Board defi nes the strategic goals and objectives of the Company, as well as broad issues of policy, and establishes an appropriate framework of corporate governance within which Board members and management must operate. The Board is proactively involved with management in key matters of strategic direction.

The Board has delegated to the Managing Director responsibility for the formulation of strategy and management of the day-to-day operations and administration of the Company, consistent with the objectives and policies set down by the Board. The Managing Director is directly accountable to the Board for the performance of the management team.

Principle 2 Structure the Board to add value

Recommendation 2.1 - A majority of the Board should be independent directors

Recommendation 2.2 - The chairperson should be an independent director

Recommendation 2.3 - The roles of chairperson and chief executive offi cer should not be exercised by the same individual

Recommendation 2.4 - The Board should establish a Nomination Committee

The skills, experience and expertise relevant to the position of director held by each director in offi ce at the date of the annual report is included in the Directors’ Report under the section headed “Directors”. Directors of Kentor Gold Limited are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with the exercise of their independent judgement.

In the context of director independence, to be considered independent, a non-executive director may not have a direct or indirect material relationship with the Company. The Board has determined that a material relationship is one which has, or has the potential to, impair or inhibit a director’s exercise of judgement on behalf of the Company and its shareholders. In accordance with the defi nition of independence above, the following Directors of Kentor Gold Limited are considered to be independent:

Name Position

W H J Barr Chairman, Non-executive Director A E Daley Non-executive Director

KENTOR GOLD ANNUAL REPORT 2007 | 17

CORPORATE GOVERNANCE STATEMENT (cont.)

Where a vacancy arises or it is considered appropriate to increase the size of the Board, the Chairman proposes nominations at the fi rst instance. All such nominations are reviewed and, if suitable, are ratifi ed by the full Board. Due to the size and development status of Kentor Gold Limited, it is not the current intention of the Board to establish a Nomination Committee.

The Directors’ terms of appointment are governed by the Constitution of the Company. A Director appointed to fi ll a casual vacancy, or as an addition to the Board, only holds offi ce until the next general meeting of members and must then retire. After providing for the foregoing, one-third of the remaining Directors (excluding the Managing Director) must retire at each annual general meeting of members. The term of offi ce held by each Director in offi ce at the date of this Annual Report is set out in the Directors’ Report.

All Directors of the Company have direct access to the management of the Company and, where necessary, to external advisers.

Each Director has the right to request independent professional advice at the expense of the Company, which request is not to be unreasonably withheld.

Principle 3 Promote ethical and responsible decision-making

Recommendation 3.1 - Establish a code of conduct to guide the Directors, the Managing Director, the Chief Executive Offi cer and any other key executives as to:

3.1.1 the practices necessary to maintain confi dence in the Company’s integrity; and
3.1.2 the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

The Board has adopted a Code of Conduct, which is posted on the Company’s website at www.kentorgold.com.au.

Recommendation 3.2 - Disclose the policy concerning trading in Company securities by Directors, offi cers and employees.

The Board has adopted a Securities Trading Policy, which is posted on the Company’s website at www.kentorgold.com.au.

Principle 4 Safeguard integrity in fi nancial reporting

Recommendation 4.1 - Require the Managing Director and the Chief Financial Offi cer to state in writing to the Board that the Company’s fi nancial reports present a true and fair view, in all material respects, of the Company’s fi nancial condition and operational results and are in accordance with relevant accounting standards.

For the fi nancial year ending 31 December 2007, the Managing Director, the Executive Director and the Chief Financial Offi cer have provided a statement to the Board that, in their view, the Company’s fi nancial statements present a true and fair view of the Company’s fi nancial position at that date, and are based on a sound system of internal control.

Recommendation 4.2 - The Board should establish an Audit Committee

It is the Board’s responsibility to ensure that an effective internal control framework exists within the entity. This includes internal controls to deal with both the effectiveness and effi ciency of signifi cant business processes, the safeguarding of assets, the maintenance of proper accounting records and the reliability of fi nancial information as well as non fi nancial considerations. The Board has delegated the responsibility for the establishment and maintenance of a framework of internal control and ethical standards for the management of the consolidated entity to the Audit & Compliance Committee.

The Audit & Compliance Committee also provided the Board with additional assurance regarding the reliability of fi nancial information for

Recommendation 4.3 - Structure the Audit Committee so that it consists of;

only non-executive Directors
a majority of independent Directors
an independent chairperson, who is not chairperson of the Board
at least three members.

18 | KENTOR GOLD ANNUAL REPORT 2007

CORPORATE GOVERNANCE STATEMENT (cont.)

The Audit & Compliance Committee comprises A E Daley (Chairman of the Committee and independent non-executive Director) and W H J Barr (non-executive Director), supported where necessary by appropriate external consultants and advisors. Messrs Daley and Barr each have had many years experience in the fi nancial management of public companies.

Recommendation 4.4 - The Audit Committee should have a formal charter

The Board has adopted an Audit & Compliance Committee Charter, which is posted on the Company’s website at www.kentorgold.com.au.

Principle 5 Make timely and balanced disclosure

Recommendation 5.1 - Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance.

The Board has adopted an ASX Disclosure Compliance Policy and Procedures document, which is posted on the Company’s website at www.kentorgold.com.au.

Principle 6 Respect the rights of shareholders

Recommendation 6.1 - Design and disclose a communications strategy to promote effective communication with shareholders and encourage effective participation at general meetings.

Information is communicated to the members through compliance with ASX Listing Rules and the Corporations Act 2001, by way of the Annual Report, Half-Yearly Report, Quarterly Activities Reports, Appendix 5B cashfl ow reports, the Annual General Meeting and other meetings that may be called to obtain approval for Board recommendations. The Company also maintains a website - www.kentorgold.com.au - where all of the Company’s ASX announcements and media releases can be viewed at any time.

Recommendation 6.2 - Request the external auditor to attend the Annual General Meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report.

This will be done by way of letter from the Company to the external auditor.

Principle 7 Recognise and manage risk

Recommendation 7.1 - The Board or relevant Board Committee should establish policies on risk oversight and management.

The Directors continually monitor areas of signifi cant business risk, recognising that there are inherent risks associated with the exploration for, development and mining of mineral deposits.

Specifi cally, in relation to risk oversight the Board is conscious of its responsibilities to: ensure compliance in legal, statutory and ethical matters; monitor the business environment; identify business opportunities; and monitor the systems established to ensure proper and appropriate responses to member complaints and enquiries.

The Board has delegated the responsibility for the establishment and maintenance of a framework for risk oversight and the management of risk for the consolidated entity to the Audit & Compliance Committee.

Recommendation 7.2 - The Managing Director and the Chief Financial Offi cer should state to the Board in writing that:

7.2.1 the statement given in accordance with best practice Recommendation 4.1 (the integrity of fi nancial statements) is founded on a sound system of risk management and internal compliance and control which implements the policies of the Board; and

7.2.2 the Company’s risk management and internal compliance and control system is operating effi ciently and effectively in all material respects.

For the fi nancial year ending 31 December 2007, the Managing Director and the Chief Financial Offi cer have provided a statement to the Board that, in their view: the integrity of the Company’s fi nancial statements is founded on a sound system of risk management and internal compliance and control which implements the policies of the Board; and the Company’s risk management and internal compliance and control system is operating effi ciently and effectively in all material respects.

KENTOR GOLD ANNUAL REPORT 2007 | 19

CORPORATE GOVERNANCE STATEMENT (cont.)

Principle 8 Encourage enhanced performance

Recommendation 8.1 - Disclose the process for performance evaluation of the Board, its Committees and individual directors, and key executives.

Such a performance evaluation for the Board and its members and key executives has not taken place in the reporting period.

Principle 9 Remunerate fairly and responsibly

Recommendation 9.1 - Provide disclosure in relation to the Company’s remuneration policies to enable investors to understand (i) the costs and benefi ts of those policies and (ii) the link between remuneration paid to directors and key executives and corporate performance.

A full discussion of the Company’s remuneration philosophy and framework and the remuneration received by Directors and executives in the current fi nancial year is included in the Remuneration Report, which is contained within the Directors’ Report (which immediately follows this Corporate Governance Statement).

Details of the Company’s remuneration policy and the total remuneration, including monetary and non-monetary components, payable to each Director and specifi ed executive is included in the Notes of the Financial Statements.

Recommendation 9.2 - The Board should establish a Remuneration Committee

The Board has established a Remuneration Committee, comprising the two non-executive directors. Members of the Remuneration Committee are A E Daley (Chairman of the Committee and independent non-executive director) and W H J Barr (non-executive director).

The Board has adopted a Remuneration Committee Charter, which is posted on the Company’s website at www.kentorgold.com.au.

Recommendation 9.3 - Clearly distinguish the structure of Non-Executive Director’s remuneration from that of executives

The Constitution of the Company provides that the aggregate remuneration of all Directors, in their capacity as Directors, must not exceed $150,000 per annum, or such other sum as the Company in general meeting may approve. This amount is to be apportioned amongst them in such manner as the Directors agree and, in default of agreement, equally. Non-Executive Directors who chair any of the Board committees do not receive additional remuneration for such duties.

There are no arrangements currently in place for payment of retirement benefi ts to Non-Executive Directors, other than statutory superannuation contributions.

Principle 10 Recognise the legitimate interests of stakeholders

Recommendation 10.1 - Establish and disclose a code of conduct to guide compliance with legal and other obligations to legitimate stakeholders.

The Board has adopted a Code of Conduct, which is posted on the Company’s website at www.kentorgold.com.au.

20 | KENTOR GOLD ANNUAL REPORT 2007

DIRECTORS’ REPORT

The directors of Kentor Gold Limited submit herewith the fi nancial report of the Company for the year ended 31 December 2007. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

DIRECTORS

The names and details of the Company’s directors in offi ce during the fi nancial year and until the date of this report are as follows. Directors were in offi ce for this entire period unless otherwise stated.

Names, qualifi cations experience and special responsibilities

John Barr AM	John Barr has had a long involvement with the Australian minerals and metals industry having been
MAICD	Managing Director of Metallgesellschaft’s Australian subsidiary since the company’s inception in 1974
Non-Executive Chairman	until his retirement in 1994. He is a former Director of Iluka Resources Limited, Acacia Resources Ltd,
Appointed 10 November 2004	Oxiana Limited, and Transurban City Link Ltd. In August 2005 he retired as Chairman of Utilities of
	Australia Pty Ltd, a major unlisted infrastructure investment fund.
	Other Current Directorships of Listed Companies
	None.
	Former Directorships of Listed Companies in last three years
	Iluka Resources Limited (1994 –2006).
Andrew Daley	Mr Daley is a Chartered Engineer, a Member of IOM3 and a Fellow of the Australasian IMM. He is
BSc (Hons)(Mining)	a Director of Investor Resources Finance Pty Limited (“IRF”), a company based in Melbourne which
Non-Executive Director	provides f nancial and corporate advisory services to the mining industry. Mr Daley is also a Director
Appointed 10 November 2004	of Australian Resources Investment Group Pty Limited, a joint venture between IRF and Babcock and
	Brown, which was set up to seek investments in the resource sector.
	Mr Daley commenced his career with Anglo American on the Zambian copper belt and later worked
	with Rio Tinto and Conoco Minerals in Africa. He moved to Australia with Fluor Australia in 1981
	and since 1983 has been focused on resource project f nance with National Australia Bank, Chase
	Manhattan and more recently was a Director at Barclays Capital mining team in London.
	Mr Daley is a member of the Audit and Risk Management Committee and the Remuneration and
	Nomination Committee.
	Other Current Directorships of Listed Companies
	Pan Australian Resources Limited (appointed August 2004), Dragon Mining Ltd (appointed March 2005),
	Uranex NL (appointed November 2007) and AIM-listed Minerva Resources Plc (appointed July 2007).
	Former Directorships of Listed Companies in last three years
	In the past three years he has also been a Director of AIM-listed Gladstone Pacif c Nickel Limited
	(appointed February 2005 and resigned December 2007).
Simon Milroy	Simon Milroy is a mining engineer who most recently spent nearly 4 years as General Manager –
BEng (Mining)	Project Development and Manager Technical Services for Pan Australian Resources Limited in Laos.
Managing Director	In those roles he was responsible for scoping and feasibility studies, evaluations of projects and
Appointed 14 May 2007	companies, ore reserves and technical support of the companies operations. During that period key
	achievements were managing the feasibility studies and environmental and social impact assessments
	for the Phu Bia gold mine and the Phu Kham copper-gold mine.
	Other Current Directorships of Listed Companies
	None.
	Former Directorships of Listed Companies in last three years
	None.

KENTOR GOLD ANNUAL REPORT 2007 | 21

DIRECTORS’ REPORT (cont.)

Hugh McKinnon BEng (Mining) Executive Director Appointed 28 May 1998

Hugh McKinnon has been involved in the mining industry in Australia, Africa, and Asia for 30 years in activities ranging from exploration ventures to mine production. Since early 1996 he has worked on mining and exploration projects across Central Asia from Tajikistan to Mongolia, with a particular interest in the Kyrgyz Republic. Hugh speaks competent Russian.

Other Current Directorships of Listed Companies None.

Former Directorships of Listed Companies in last three years None.

David Royle

David Royle David Royle has extensive international experience in exploration for precious metals, base metals and BSc (Hons) (Geology) diamonds with major multinational resource companies over the past 30 years. He has a track record Managing Director for the discovery of a number of signifi cant minerals deposits through grass roots exploration. He is Appointed 1 March 2004 a Fellow and CP of the Australasian Institute of Mining and Metallurgy and Fellow of the Society of Resigned 30 March 2007 Economic Geologists.

Other Current Directorships of Listed Companies None.

Former Directorships of Listed Companies in last three years None.

COMPANY SECRETARY

Bruce Paterson Appointed 31 March 2006 Resigned 5 June 2007

Greg Burgess Appointed 5 June 2007 Resigned 31 December 2007

Kylie Anderson BSc, MBA (Int. Bus.), MPA, MAICD Appointed 2 January 2008

Mr Paterson is a lawyer with over 30 years of secretarial, legal and commercial experience in the mineral resources and energy sectors.

Mr Burgess is a qualifi ed accountant who has held various senior positions in the government and private sectors in Austalia. Currently he is also company secretary and a director of Gold Bullion Securities Limited.

Ms Anderson has held senior fi nancial and company secretarial roles with a number of companies in the resources sector.

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

At the date of this report, the interest of the directors in the shares and options of Kentor Gold Limited are:

Director	Ordinary shares	Options over	Option expiry date
		ordinary shares
W H J Barr	258,000	-	n/a
A E Daley	381,470	-	n/a
H McKinnon	2,064,627	900,000	n/a*
S Milroy	657,555	-	n/a

These options were granted as a share-based payment and have no expiry date except, in the event of the cessation of employment, 30 days after the date of cessation.

22 | KENTOR GOLD ANNUAL REPORT 2007

DIRECTORS’ REPORT (cont.)

CORPORATE INFORMATION

Corporate structure

Kentor Gold Limited is a listed public company that is incorporated and domiciled in Australia.

The registered offi ce and principal place of business of Kentor Gold Limited is as follows:

Level 36 Riparian Plaza 71 Eagle Street BRISBANE QLD 4000 Telephone (07) 3121 3206.

Kentor Gold has prepared a consolidated fi nancial report incorporating the entities that it controlled during the fi nancial year and which are

Principal activities

The principal activity of the consolidated entity during the fi nancial year was exploration for gold and base metals in the Kyrgyz Republic and Australia.

Employees

The consolidated entity employed 10 employees as at 31 December 2007 (2006: 10 employees).

CONSOLIDATED RESULTS

The loss for the consolidated entity after income tax and providing for outside equity interests was $926,564 (2006: loss of $1,591,655).

DIVIDENDS

No dividends in respect of the current fi nancial year have been paid, declared or recommended for payment.

OPERATING AND FINANCIAL REVIEW

Group overview

Kentor Gold Limited was established in May 1998 for the purpose of exploring for and developing gold properties in the Kyrgyz Republic and was listed with the Australian Stock Exchange on 17 March 2005.

Financial overview

Operating results for the period

The loss for the consolidated entity after income tax was $926,564 (2006: loss of $1,591,655). This result was in line with expectations of costs associated with managing the exploration program. During the year licence fees totalling $42,870 were received from third parties for the provision of the Company’s exploration database.

During the year, the Company continued its exploration program in the Kyrgyz Republic through its foreign controlled entity CJSC Kentor.

The cash fl ows of the Company consist of: in the case of the foreign controlled entity, payments to employees and suppliers for exploration activities on tenements held; and the maintenance of the corporate head offi ce which manages existing projects as well as costs involved in investigating new exploration opportunities.

CAPITAL RAISINGS / CAPITAL STRUCTURE

During the year, the Company raised $2,560,333 of equity (net of capital raising costs) to fund the continuation of the Company’s drilling program and to provide working capital for the Company.

The Directors note that $1,350,000 had been received in December 2007 for the issue of 7,500,000 shares in January 2008.

KENTOR GOLD ANNUAL REPORT 2007 | 23

DIRECTORS’ REPORT (cont.)

Summary of shares and options on issue – 31 December 2007

At 31 December 2007 there were 60,988,129 (2006 : 39,651,132) ordinary shares and 3,966,667 (2006: 7,533,335) unissued ordinary shares in respect of which the options listed below were outstanding:

				Number of ordinary
Unlisted options	Number	In escrow	Exercise price	shares under options
On or before 1 July 2008	266,667	266,667 until 17 March 2008	$0.75	266,667
On or before 31 May 2012	100,000		$0.60	100,000
On or before 31 May 2012	100,000		$0.80	100,000
On or before 31 May 2011	100,000		$1.00	100,000
On or before 31 May 2009	2,500,000		20c to 31 May 2008;
			30c thereafter	2,500,000
Unlisted executive options
30 days after ceasing employment	300,000	300,000 until 17 March 2007	$0.625	300,000
30 days after ceasing employment	300,000	300,000 until 17 March 2007	$0.75	300,000
30 days after ceasing employment	300,000	300,000 until 17 March 2007	$0.875	300,000

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There were no signifi cant changes in the state of affairs of the Company during the fi nancial year.

GOING CONCERN BASIS

The consolidated entity is involved in the exploration and evaluation of mineral tenements and as such expects to be cash absorbing until these tenements demonstrate that they contain economically recoverable reserves.

As at 31 December 2007, the group recorded accumulated losses from continuing operations after taxation of $5,260,350. In addition, the Company had incurred negative cashfl ows from operations of $700,576 for the fi nancial year and has a surplus of current assets over current liabilities of $1,479,425 as at 31 December 2007.

Notwithstanding the above, the fi nancial statements have been prepared on a going concern basis which contemplates the continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

To continue as a going concern, the consolidated entity requires the generation of suffi cient funds from operating activities including successful development of the existing tenements and/or future equity or debt fund raisings.

Having carefully assessed the uncertainties relating to the likelihood of securing additional funding and the consolidated entity’s and Company’s ability to effectively manage their expenditures and cashfl ows from operations, the Directors believe that the consolidated entity and Company will continue to operate as going concerns for the foreseeable future and therefore it is appropriate to prepare the fi nancial statements on a going concern basis.

In the event that the assumptions underpinning the basis of preparation do not occur as anticipated, there is uncertainty whether the consolidated entity and Company will continue to operate as going concerns. If the consolidated entity and Company are unable to continue as going concerns they may be required to realise their assets and extinguish their liabilities other than in the normal course of

No adjustments have been made to the fi nancial report relating to the recoverability and classifi cation of the asset carrying amounts or the classifi cation of liabilities that might be necessary should the consolidated entity and Company not continue as going concerns.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

Since 31 December 2007, the Company has moved its registered offi ce and principal place of business from Melbourne (VIC) to Brisbane (QLD). A new company secretary was appointed on 2 January 2008.

No other matter or circumstance has arisen since 31 December 2007 which has signifi cantly affected or may signifi cantly affect the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity, in subsequent fi nancial years.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

The Board of Directors intends to continue with the exploration program in the Kyrgyz Republic focussing primarily on the Akbel – Bashkol tenements, the Savoyardy gold project and the Geothermal tenement.

As the Company is listed on the Australian Stock Exchange, it is subject to the continuous disclosure requirements of the ASX Listing Rules which require immediate disclosure to the market of information that is likely to have a material effect on the price or value of Kentor Gold Limited’s securities.

24 | KENTOR GOLD ANNUAL REPORT 2007

DIRECTORS’ REPORT (cont.)

ENVIRONMENTAL REGULATION

The consolidated entity’s operations are not subject to any signifi cant environmental regulations under either Commonwealth or State legislation.

MEETINGS OF DIRECTORS

The number of Directors’ meetings held during the fi nancial year and the number of meetings attended by each Director while they were a Director were as follows:

Director were as follows:
Directors	Attended	Held
W H J Barr	8	8
A Daley	8	8
S Milroy	6	6
H McKinnon	7	8
D Z Royle	2	2
Committee membership and meetings

The Audit and Compliance Committee and the Remuneration Committee were established on 17 January 2005. The members of the Committees are the independent Directors, Andrew Daley (Chairman) and John Barr. Two meetings of the Audit and Compliance Committee were held during the year, and they were attended by both members. One meeting was held by the Remuneration Committee during the year, attended by both members.

REMUNERATION REPORT

REMUNERATION PHILOSOPHY

The Board of Directors of Kentor Gold Limited is responsible for determining and reviewing compensation arrangements for the Directors, the Chief Executive Offi cer and the executive team. The Board’s remuneration policy is to ensure that the remuneration package properly refl ects the person’s duties and responsibilities, with the overall objective of ensuring maximum stakeholder benefi t from the retention of a high quality board and executive team. Such offi cers are given the opportunity to receive their base emolument in a variety of forms, including cash and fringe benefi ts such as motor vehicles. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost to the Company.

To assist in achieving these objectives, the Board intends to link the nature and amount of executive offi cers’ emoluments to the Company’s fi nancial and operational performance. No formal plan has been adopted at this time.

Employment agreements are entered into with executive Directors and specifi ed executives. The current employment contract with the Managing Director will terminate on 13 May 2009 unless renewed by mutual agreement arrived at not later than 14 February 2009. The employment contract with the executive Director is automatically renewed for 6 months periods unless the Company gives notice of termination between 60 and 90 days prior to the expiry of the current extension period. Contracts do not provide for any additional

REMUNERATION COMMITTEE

The Remuneration Committee of the Board of Directors of the Company is responsible for determining and reviewing compensation arrangements for the Directors and executives.

REMUNERATION STRUCTURE

In accordance with best practice corporate governance, the structure of non-executive Director and executive remuneration is separate and distinct.

NON-EXECUTIVE DIRECTOR REMUNERATION

Objective

The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.

Structure

The Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the Directors as agreed. The latest determination was in the Company’s constitution adopted on 19 October 2004 which approved an aggregate remuneration of $150,000 per year.

KENTOR GOLD ANNUAL REPORT 2007 | 25

DIRECTORS’ REPORT (cont.)

The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst Directors is reviewed annually. The Board considers advice from external consultants as well as the fees paid to non-executive directors of comparable companies when undertaking the annual review process.

Each Director receives a fee for being a director of the Company. Directors who are called upon to perform extra services beyond the Director’s ordinary duties may be paid additional fees for those services.

Non-executive Directors have long been encouraged by the Board to hold shares in the Company. It is considered good governance for Directors to have a stake in the company on whose Board he or she sits.

The remuneration of non-executive Directors for the year ended 31 December 2007 is detailed in this Directors’ Report.

SENIOR EXECUTIVE REMUNERATION

Objective

The Company aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the Company and so as to:

reward executives for Company, business unit and individual performance against targets set by reference to appropriate benchmarks;
align the interests of executives with those of shareholders;
link reward with the strategic goals and performance of the Company; and
ensure total remuneration is competitive by market standards.

Structure

In determining the level and make-up of executive remuneration, the Board obtained independent advice from external consultants on market levels of remuneration for comparable executive roles. It is the Board’s policy that employment contracts are entered into with the all senior executives.

VARIABLE REMUNERATION – LONG TERM INCENTIVES

Objective

The objectives of long term incentives are to:

recognise the ability and efforts of the employees of the Company who have contributed to the success of the Company and to provide them with rewards where deemed appropriate;
provide an incentive to the employees to achieve the long term objectives of the Company and improve the performance of the Company; and
attract persons of experience and ability to employment with the Company and foster and promote loyalty between the Company and its employees.

Structure

No formal plan has been implemented at this time. It is proposed that long term incentives granted to senior executives will be delivered in the form of options in accordance with an Employee Share Option Plan, subject to shareholders’ approval. At the commencement of each fi nancial year, the Company and each senior executive will agree upon a set of fi nancial and non-fi nancial objectives related to the senior executive’s job responsibilities. The objectives will vary but all will be targeted to relate directly to the Company’s business and fi nancial performance and thus to shareholder value.

26 | KENTOR GOLD ANNUAL REPORT 2007

DIRECTORS’ REPORT (cont.)

EMPLOYMENT CONTRACTS

Simon Milroy

By an employment agreement dated 8 May 2007 the Company and Mr Simon Milroy agreed the terms of his employment includes inter alia:

Mr Milroy is engaged to provide services in the capacity of Managing Director commencing on 14 May 2007 for a term ending on 13 May 2009 at an annual salary of $200,000.
A restraint for a period of 6 months after termination on Mr Milroy undertaking employment in the Kyrgyz Republic or within 5 kilometres of any mining tenements or applications in Uzbekistan, Kazakhstan, China or the Northern Territory of Australia in which the Company has any interest.
An obligation on Mr Milroy to maintain confi dentiality in respect of proprietary information obtained during employment.
Subject to approval by the Company’s shareholders, the grant of 2,000,000 options to Mr Milroy in 3 tranches:
700,000 options exercisable at 20c following a continuous 30 day period where Kentor shares have traded at or above 25c per share
650,000 options exercisable at 25c following a continuous 30 day period where Kentor shares have traded at or above 30c per share
650,000 options exercisable at 30c following a continuous 30 day period where Kentor shares have traded at or above 40c per share.

The options are not transferable and may be exercised at any time during employment and for 30 days after cessation of employment, after which they lapse. They will not be quoted.

In addition Mr Milroy is entitled to the following bonuses
$30,000 on the execution of an agreement which brings a signifi cant new project into the Company within one year of commencement date
$30,000 on the intersection of greater than 10 gram metres in a single hole within the Akbel or Bashkol licence areas within one year of commencement date
$30,000 on the increase of more than 50% of the company’s share price within one year of commencement date.

Hugh McKinnon

By an employment agreement dated 1 December 2004 and deed of variation dated 1 January 2007, the Company and Mr Hugh McKinnon agreed the terms of his employment includes inter alia:

Mr McKinnon is engaged to provide services in the Kyrgyz Republic in the capacity of Executive Director and Country Manager for a term ending on 30 June 2007, renewable thereafter for 6 months periods at a current annual salary of $135,000 with annual review. His place of employment is in the Kyrgyz Republic.
A restraint on Mr McKinnon undertaking employment in the Kyrgyz Republic for a period of 6 months after termination.
An obligation on Mr McKinnon to maintain confi dentiality in respect of proprietary information obtained during employment.
The grant of 900,000 options on commencement of employment to a company associated with Mr McKinnon in 3 tranches: a) 300,000 options exercisable at $0.625
b) 300,000 options exercisable at $0.75
c) 300,000 options exercisable at $0.875.

The options are not transferable and may be exercised at any time during employment and for 30 days after cessation of employment, after which they lapse. They will not be quoted.

KENTOR GOLD ANNUAL REPORT 2007 | 27

DIRECTORS’ REPORT (cont.)

REMUNERATION OF NON-EXECUTIVE DIRECTORS

John Barr

By mutual agreement approved by the Board of Directors, Mr John Barr is engaged to provide services as a non-executive Director, with an annual fee of $87,200 with annual review.

Andrew Daley

By mutual agreement approved by the Board of Directors, Mr Andrew Daley is engaged to provide services as a non-executive Director through his company Dalenier Enterprises Pty Ltd, with an annual fee of $54,500 with annual review.

REMUNERATION OF DIRECTORS AND EXECUTIVES

The directors and key management personnel received the following compensation for their services to the Company during the year.

		Post	Share based
	Short term	employment	payment
	Salary & fees	Superannuation	Options	Total
2007	$	$	$	$
Directors
W.H.J. Barr	15,000	61,300	-	76,300
S.J. Milroy	112,500	12,500	-	125,000
A.E. Daley*	43,600	-	-	43,600
H. McKinnon	140,417	-	-	140,417
D.Z. Royle	46,667	4,200	-	50,867
Other key management personnel
Greg Burgess **	33,458	-	-	33,458

Directors fees were paid to Dalenier Enterprises Pty Ltd, a company which is controlled by Andrew Daley.
** Fees were paid to Investor Resources Services Pty Ltd for the services of Greg Burgess

Options granted as part of remuneration

No options were issued or granted to the Directors and executives of the Company during the year.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

The Company has entered into Deeds of Indemnity with the Directors and the company secretary, indemnifying them against certain liabilities and costs to the extent permitted by law.

The Company has also agreed to pay a premium in respect of a contract insuring the Directors and offi cers of the Company. Full details of the cover and premium are not disclosed in this report as the insurance policy prohibits the disclosure.

AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES

The auditor’s independence declaration is included on page 57 of the annual report.

Non-audit services

No non-audit services were provided by the entity’s auditor, Deloitte Touche Tohmatsu.

Signed in accordance with a resolution of Directors made pursuant to s.298(2) of the Corporations Act 2001.

On behalf of the Directors

A E DALEY

Director Melbourne 27 March 2007

28 | KENTOR GOLD ANNUAL REPORT 2007

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KENTOR GOLD ANNUAL REPORT 2007 | 29

INCOME STATEMENT

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2007

	Consolidated Company
	2007 2006 2007 2006 $ $ $ $
Revenue 2 Foreign exchange gains/(losses) Employment related costs Depreciation and amortisation expense Off ce expenses Travel related expenses Administrative expenses Share-based payments Impairment of amount receivable from foreign controlled entity Impairment of investment in controlled entity Exploration and evaluation costs written off Impairment of exploration and evaluation costs Other expenses Loss before income tax expense 2 Income tax expense 3 Net loss attributable to members of Kentor Gold Limited Basic earnings per Share (cents per share) 4 Diluted earnings per Share (cents per share) 4	119,126 178,625 112,250 172,301 391,850 330,538 (27,162) (3,383) (499,521) (622,835) (438,557) (573,512) (31,744) (46,229) (12,648) (20,352) (45,431) (61,144) (21,351) (32,196) (102,145) (98,229) (101,692) (97,910) (287,166) (250,023) (277,568) (240,176) (65,556) - (65,556) - - - (182,596) (1,533,318) - - (88,429) - (341,899) - (54,271) - - (921,923) - - (35,758) (100,435) (35,841) (95,954)
	(898,244) (1,591,655) (1,193,421) (2,424,500) (28,320) - - -
	(926,564) (1,591,655) (1,193,421) (2,424,500)
	(1.83) (4.53) (1.83) (4.53)

The accompanying notes form part of these fi nancial statements

30 | KENTOR GOLD ANNUAL REPORT 2007

BALANCE SHEET

AS AT 31 DECEMBER 2007

	Consolidated Company 2007 2006 2007 2006 $ $ $ $ 2,456,323 1,465,255 2,444,831 1,453,921 518,344 370,500 44,051 12,042 17,020 14,605 17,020 14,605 2,991,687 1,850,360 2,505,902 1,480,568 - - 4,328,021 3,137,221 168,313 140,194 49,701 27,061 3,795,628 2,725,968 - - 573,265 - 611,971 27,135 7,685 - - - 4,544,891 2,866,162 4,989,693 3,191,417 7,536,578 4,716,522 7,495,595 4,671,985 147,839 69,789 95,285 25,252 14,423 54,885 14,423 54,885 1,350,000 - 1,350,000 - 1,512,262 124,674 1,459,708 80,137 - - 11,571 - - - 11,571 - 1,512,262 124,674 1,471,279 80,137 6,024,316 4,591,848 6,024,316 4,591,848 12,226,963 9,666,630 12,226,963 9,666,630 (942,291) (862,868) 107,856 (79,578) (5,260,356) (4,211,914) (6,310,503) (4,995,204)

Current assets Cash and cash equivalents 19(b) Trade and other receivables 5 Other 6 Total current assets Non-current assets Trade and other receivables 7 Plant and equipment 8 Deferred exploration and evaluation costs 9 Other f nancial assets 10 Intangible assets 11 Total non-current assets Total assets Current liabilities Trade and other payables 12 Provisions 13 Other liabilities 14 Total current liabilities Non-current liabilities Other payables Total non-current liabilities Total liabilities Net assets Equity Parent entity interest Issued capital 15 Reserves 16 Accumulated losses Total parent entity interest in equity Minority interest 18 Total equity
	6,024,316 4,591,848 6,024,316 4,591,848 - - - - 6,024,316 4,591,848 6,024,316 4,591,848

The accompanying notes form part of these fi nancial statements

KENTOR GOLD ANNUAL REPORT 2007 | 31

STATEMENT OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2007

CONSOLIDATED	Attributable Share Foreign to equity Share Option Currency Accumulated holders of Minority Capital Reserve Reserve Losses the parent Interest Total $ $ $ $ $ $ $ 9,085,407 42,300 (72,323) (2,620,259) 6,435,125 - 6,435,125 - - - (1,591,655) (1,591,655) - (1,591,655) - - - (1,591,655) (1,591,655) - (1,591,655) 625,000 - - - 625,000 - 625,000 (43,777) - - - (43,777) - (43,777) - - (832,845) - (832,845) - (832,845) 9,666,630 42,300 (905,168) (4,211,914) 4,591,848 - 4,591,848 9,666,630 42,300 (905,168) (4,211,914) 4,591,848 - 4,591,848 - - - (926,564) (926,564) - (926,564) - - - (926,564) (926,564) - (926,564) 2,600,000 - - - 2,600,000 - 2,600,000 193,745 - - - 193,745 - 193,745 (233,412) - - - (233,412) - (233,412) - 65,556 - - 65,556 - 65,556 - - (266,857) - (266,857) - (266,857) - - 121,878 (121,878) - - -

Balance at 1 January 2006 Loss for the period Total recognised income and expenses Issue of shares Share issue costs Currency translation differences Balance at 31 December 2006 Balance at 1 January 2007 Loss for the period Total recognised income and expenses Issue of shares Issue of shares for services performed Share issue costs Share based payments Currency translation differences Transfer to retained earnings Balance at 31 December 2007
	12,226,963 107,856 (1,050,147) (5,260,356) 6,024,316 - 6,024,316

The accompanying notes form part of these fi nancial statements

32 | KENTOR GOLD ANNUAL REPORT 2007

STATEMENT OF CHANGES IN EQUITY (cont.)

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2007

COMPANY	Attributable Share Foreign to equity Share Option Currency Accumulated holders of Minority Capital Reserve Reserve Losses the parent Interest Total $ $ $ $ $ $ $ 9,085,407 42,300 (121,878) (2,570,704) 6,435,125 - 6,435,125 - - - (2,424,500) (2,424,500) - (2,424,500) - - - (2,424,500) (2,424,500) - (2,424,500) 625,000 - - - 625,000 - 625,000 (43,777) - - - (43,777) - (43,777) 9,666,630 42,300 (121,878) (4,995,204) 4,591,848 - 4,591,848

Balance at 1 January 2006 Loss for the period Total recognised income and expenses Issue of shares Share issue costs Balance at 31 December 2006 Balance at 1 January 2007 Loss for the period Total recognised income and expenses Issue of shares Issue of shares for services performed Share issue costs Share based payments Transfer to retained earnings Balance at 31 December 2007
	9,666,630 42,300 (121,878) (4,995,204) 4,591,848 - 4,591,848 - - - (1,193,421) (1,193,421) - (1,193,421)
	- - (1,193,421) (1,193,421) - (1,193,421) 2,600,000 - - - 2,600,000 - 2,600,000 193,745 - - - 193,745 - 193,745 (233,412) - - (233,412) - (233,412) - 65,556 - - 65,556 - 65,556 - - 121,878 (121,878) - - - 12,226,963 107,856 - (6,310,503) 6,024,316 - 6,024,316

The accompanying notes form part of these fi nancial statements

KENTOR GOLD ANNUAL REPORT 2007 | 33

CASH FLOW STATEMENT

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2007

	Consolidated Company
Note	2007 2006 2007 2006 $ $ $ $
Cash f ows from operating activities Receipts from customers Payments to suppliers and employees Interest received Interest paid Net cash used in operating activities 19(a) Cash f ows from investing activities Purchase of plant and equipment Proceeds from sale of plant and equipment Payment for exploration costs Funds advanced to subsidiary Net cash used in investing activities Cash f ows from f nancing activities Proceeds from issue of ordinary shares Payment of share issue costs Net cash provided by f nancing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the f nancial year Effects of currency rate changes on the balance of cash held in foreign currencies Cash and cash equivalents at the end of the f nancial year 19(b)	63,817 - 42,870 - (833,707) (1,525,965) (753,713) (1,030,737) 69,380 108,767 69,380 108,767 (66) - (66) -
	(700,576) (1,417,198) (641,529) (921,970)
	(74,015) (40,060) (35,788) (11,000) 500 - 500 - (1,992,510) (1,150,651) (627,536) (473,730) - - (1,461,826) (1,158,328)
	(2,066,025) (1,190,711) (2,124,650) (1,643,058)
	3,923,000 625,000 3,923,000 625,000 (165,911) (43,777) (165,911) (43,777)
	3,757,089 581,223 3,757,089 581,223
	990,488 (2,026,686) 990,910 (1,983,805) 1,465,255 3,496,273 1,453,921 3,437,726 580 (4,332) - -
	2,456,323 1,465,255 2,444,831 1,453,921

The accompanying notes form part of these fi nancial statements

34 | KENTOR GOLD ANNUAL REPORT 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007

Note Contents

Summary of signifi cant accounting policies
Revenue and expenses
Income tax
Earnings per share
Trade and other receivables – current
Other current assets
Trade and other receivables – non current
Plant and equipment
Deferred exploration and evaluation costs
Intangible assets
Trade and other payables – current
Provisions – current
Other liabilities
Issued capital 16. Reserves 17. Franking credits 18. Minority interest 19. Cash and cash equivalents 20. Subsequent events
Employee benefi ts and superannuation commitments
Key management personnel remuneration
Auditors remuneration 24. Related party disclosures 25. Segment information 26. Financial instruments 27. Commitment for expenditure 28. Contingent liabilities and contingent assets

KENTOR GOLD ANNUAL REPORT 2007 | 35

NOTES TO THE FINANCIAL STATEMENTS (cont.)

FOR THE YEAR ENDED 31 DECEMBER 2007

1 Summary of signifi cant accounting policies

Statement of compliance

The fi nancial report is a general purpose fi nancial report which has been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and complies with other requirements of the law. The fi nancial report includes the separate fi nancial statements of the company and the consolidated fi nancial statements of the Group.

Accounting Standards include Australian equivalents to International Financial Reporting Standards (‘A-IFRS’). Compliance with A-IFRS ensures that the fi nancial statements and notes of the company and the Group comply with International Financial Reporting Standards (‘IFRS’).

The fi nancial statements were authorised for issue by the directors on 27 March 2008.

Basis of preparation

The fi nancial report has been prepared on a historical cost basis.

The fi nancial report is presented in Australian dollars.

The following signifi cant accounting policies have been adopted in the preparation and presentation of the fi nancial report:

(a) Adoption of new and revised Accounting Standards

In the current year, the company has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for annual reporting periods beginning on 1 January 2007. The adoption of these standards has had no impact on the fi nancial results of the company.

At the date of authorisation of the fi nancial report, the following standards were in issues but not yet effective:

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AASB 8 ‘Operating Segments’ and consequential amendments to other accounting Effective for annual reporting periods
standards resulting from its issue beginning on or after 1 January 2009
AASB 101 ‘Presentation of Financial Statements’ (revised September 2007), AASB Effective for annual reporting periods
2007-8 Amendment to Australian Accounting Standards arising from AASB 101 beginning on or after 1 January 2009
AASB 1048 ‘Interpretation and Application of Standards (September 2007) Effective for annual reporting periods
beginning on or after 30 September 2007
Interpretation 11 ‘Group and Treasury Share Transactions and consequential Effective for annual reporting periods
amendments to other accounting standards resulting from its issue beginning on or after 1 March 2007
AASB 2008-1 ‘Amendments to Australian Accounting Standards - Share-based Effective for annual reporting periods
Payments: Vesting Conditions and Cancellations’ beginning on or after 1 July 2009
Amendments to IFRS 2 ‘Share-based Payment – Vesting Conditions and Effective for annual reporting periods
Cancellations beginning on or after 1 January 2009
Interpretation 12 ‘Service Concession Arrangements’ and consequential amendments Effective for annual reporting periods
to other accounting standards resulting from its issue beginning on or after 1 January 2008
Interpretation 13 ‘Customer Loyalty Programmes’ Effective for annual reporting periods
beginning on or after 1 July 2008
Interpretation 14 ‘AASB 14 – The Limit on a Defi ned Benefi t Asset, Minimum Funding Effective for annual reporting periods
Requirements and their Interaction’ beginning on or after 1 January 2008
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The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material fi nancial impact on the fi nancial statements of the company or the group.

(b) Principles of consolidation

The consolidated fi nancial statements are prepared by combining the fi nancial statements of all the entities that comprise the consolidated entity, being the company (the parent entity) and its subsidiaries as defi ned in Accounting Standard AASB 127 Consolidated and Separate Financial Statements. A list of subsidiaries appears in note 10 to the fi nancial statements. Consistent accounting policies are employed in the preparation and presentation of the consolidated fi nancial statements.

Where necessary, adjustments are made to the fi nancial statements of subsidiaries to bring their accounting policies into line with those used by the group.

36 | KENTOR GOLD ANNUAL REPORT 2007

NOTES TO THE FINANCIAL STATEMENTS (cont.)

FOR THE YEAR ENDED 31 DECEMBER 2007

Minority interests in the net assets of consolidated subsidiaries are identifi ed separately from the group’s equity. Minority interests consist of the amount of those interests at the date of the original business combination and the minority’s share of changes in equity since then. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of the group except to the extent that the minority has a binding obligation and is able to make additional investments to cover the losses.

The consolidated fi nancial statements include the information and results of each subsidiary from the date on which the Company obtains control and until such time as the Company ceases to control such entity.

In preparing the consolidated fi nancial statements, all intercompany balances and transactions, and unrealised profi ts arising within the consolidated entity are eliminated in full.

(c) Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the purchase method.

On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifi able net assets acquired is recognised as goodwill. If, after reassessment, the fair values of the identifi able net assets acquired exceed the cost of acquisition, the defi ciency is credited to profi t and loss in the period of acquisition.

(d) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefi ts will fl ow to the entity and the revenue can be reliably measured. The following specifi c recognition criteria must also be met before revenue is recognised:

Interest Income

Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the fi nancial asset to that asset’s net carrying amount.

Other income

Other revenue is recognised at the completion of the transaction when the Company’s right to receive payment has been established

(e) Income tax

Current tax

Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profi t or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).

Deferred tax

Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the fi nancial statements and the corresponding tax base of those items. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that suffi cient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profi t. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, branches, associates and joint ventures except where the consolidated entity is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets arising from deductible temporary differences associated with these investments and interests are only recognised to the extent that it is probable that there will be suffi cient taxable profi ts against which to utilise the benefi ts of the temporary differences and they are expected to reverse in the foreseeable future.

KENTOR GOLD ANNUAL REPORT 2007 | 37

NOTES TO THE FINANCIAL STATEMENTS (cont.) FOR THE YEAR ENDED 31 DECEMBER 2007

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets refl ects the tax consequences that would follow from the manner in which the consolidated entity expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

(f) Share-based payments

Equity settled share-based payments with employees and Directors are measured at fair value of the equity instrument at the grant date. Fair value is measured by use of a binomial model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. The fair value determined at the grant date of the share-based payments is expensed on a straight line basis over the vesting period.

Equity settled share-based payment transactions with other parties are measured at fair value of the goods and services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date goods or services were obtained.

(g) Goods and services tax (GST)

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 balance sheet.

Cash fl ows are included in the Cash Flow Statement on a gross basis and the GST component of cash fl ows arising from investing and fi nancing activities, which is recoverable from, or payable to, the taxation authority are classifi ed as operating cash fl ows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(h) Foreign currency

Foreign currency transactions

All foreign currency transactions during the fi nancial year are brought to account using the exchange rate in effect at the date of the transaction. Foreign currency monetary items at reporting date are translated at the exchange rate existing at reporting date. Nonmonetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined.

Foreign operations

On consolidation, the assets and liabilities of the consolidated entity’s overseas operations are translated at exchange rates prevailing at the reporting date. Income and expense items are translated at the average exchange rates for the period unless exchange rates fl uctuate signifi cantly. Exchange differences arising, if any, are recognised in the foreign currency translation reserve, and recognised in profi t or loss on disposal of the foreign operation.

(i) Cash and cash equivalents

For the purposes of the Cash Flow Statement, cash includes cash on hand and in banks, and money market investments readily converted to cash, net of outstanding bank overdrafts.

(j) Financial assets

Investments are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs.

Subsequent to initial recognition, investments in subsidiaries are measured at cost. Subsequent to initial recognition, investments in associates are accounted for under the equity method in the consolidated fi nancial statements and the cost method in the Company

Other fi nancial assets are classifi ed into the following specifi ed categories: ‘available-for-sale’ fi nancial assets, and ‘loans and receivables’. The classifi cation depends on the nature and purpose of the fi nancial assets and is determined at the time of initial recognition.

38 | KENTOR GOLD ANNUAL REPORT 2007

NOTES TO THE FINANCIAL STATEMENTS (cont.)

FOR THE YEAR ENDED 31 DECEMBER 2007

Certain shares held by the consolidated entity are classifi ed as being available-for-sale and are stated at fair value less impairment. Gains and losses arising from changes in fair value are recognised directly in the available-for-sale revaluation reserve, until the investment is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in the available-for-sale revaluation reserve is included in profi t or loss for the period.

The fair value of investments that are actively traded is determined by reference to quoted market prices. For investments with no active market, fair value is determined by reference to recent arm’s length transactions and other considerations determined by the Directors.

Loans and receivables

Trade receivables, loans, and other receivables that have fi xed or determinable payments that are not quoted in an active market are classifi ed as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less impairment.

Interest is recognised by applying the effective interest rate.

Intercompany loan receivable

The carrying value of the inter company loan receivable is assessed with reference to the net assets of the subsidiary company that support the recovery of the loan amount.

Impairment of fi nancial assets

Financial assets, other than those at fair value through profi t or loss, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred after the initial recognition of the fi nancial asset the estimated future cash fl ows of the investment have been impacted. For fi nancial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash fl ows, discounted at the original effective interest rate.

The carrying amount of the fi nancial asset is reduced by the impairment loss directly for all fi nancial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profi t or loss.

With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profi t or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of available-for-sale equity instruments, any subsequent increase in fair value after an impairment loss is recognised directly in equity.

(k) Exploration and evaluation assets

The consolidated entity applies AASB 6 Exploration For and Evaluation of Mineral Resources . Exploration and evaluation expenditure incurred is accumulated in respect of each identifi able area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves.

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

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

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

(l) Impairment of assets

At each reporting date, the consolidated entity reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash fl ows that are independent from other assets, the consolidated entity estimates the recoverable amount of the cash-generating unit to which the asset belongs.

KENTOR GOLD ANNUAL REPORT 2007 | 39

NOTES TO THE FINANCIAL STATEMENTS (cont.)

FOR THE YEAR ENDED 31 DECEMBER 2007

Goodwill, intangible assets with indefi nite useful lives and intangible assets not yet available for use are tested for impairment annually and whenever there is an indication that the asset may be impaired. An impairment of goodwill is not subsequently reversed.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset for which the estimates of future cash fl ows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profi t or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profi t or loss immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase.

(m) Plant and equipment

Acquisition

Items of plant and equipment are initially recorded at cost and depreciated as outlined below.

Depreciation

Plant & equipment and computer equipment are depreciated on a straight line basis at rates based upon the expected useful lives of these assets. The expected useful lives of these assets are 3-6 years (2006: 3-6 years).

Plant & equipment 3-6 years

Computer equipment 3-6 years

(n) Intangible assets

Intangible assets (software) are are recorded at cost less amortisation. They are amortised on a straight line basis at rates based upon the their expected useful lives. The expected useful lives of these assets are 3-6 years (2006: 3-6 years).

(o) Leases

Leases are classifi ed at their inception as either operating or fi nance leases based on the economic substance of the agreement so as to refl ect the risks and benefi ts incidental to ownership.

Operating Leases

The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and benefi ts of ownership of the leased item, are recognised as an expense on a straight line basis. Contingent rentals are recognised as an expense in the fi nancial year in which they are incurred.

(p) Payables

Trade payables and other accounts payable are recognised when the consolidated entity becomes obliged to make future payments resulting from the purchase of goods and services.

(q) Issued capital

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

Transaction costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the proceeds of the equity instruments to which the costs relate. Transaction costs are the costs that are incurred directly in connection with the issue of those equity instruments and which would not have been incurred had those instruments not been issued.

(r) Employee benefi ts

Provision is made for benefi ts accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave when it is probable that settlement will be required and they are capable of being measured reliably.

40 | KENTOR GOLD ANNUAL REPORT 2007

NOTES TO THE FINANCIAL STATEMENTS (cont.)

FOR THE YEAR ENDED 31 DECEMBER 2007

Provisions made in respect of employee benefi ts expected to be settled within 12 months, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Provisions made in respect of employee benefi ts which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outfl ows to be made by the consolidated entity in respect of services provided by employees up to reporting date.

(s) Earnings per share (“EPS”)

Basic EPS is calculated as net profi t 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 profi t 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 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.
(t) Comparatives

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

(u) Going concern basis

As at 31 December 2007, the group recorded accumulated losses from continuing operations after taxation of $5,260,356. In addition, the Company had incurred negative cashfl ows from operations of $700,576 in the fi nancial year and has a surplus of current assets over current liabilities of $1,479,425 as at 31 December 2007.

To continue as a going concern, the consolidated entity require the generation of suffi cient funds from operating activities including successful development of the existing tenements; and/or future equity or debt fund raisings.

In the event that the assumptions underpinning the basis of preparation do not occur as anticipated, there is uncertainty whether the consolidated entity and company will continue to operate as going concerns. If the consolidated entity and Company are unable to continue as going concerns they may be required to realise their assets and extinguish their liabilities other than in the normal course

KENTOR GOLD ANNUAL REPORT 2007 | 41

NOTES TO THE FINANCIAL STATEMENTS (cont.) FOR THE YEAR ENDED 31 DECEMBER 2007

	Consolidated Company
	2007 2006 2007 2006 $ $ $ $
2. Revenue and expenses (a)Revenue Revenue from continuing operations consisted of: Interest –other persons/corporations Other revenue Total revenue from continuing operations Total revenue (b)Loss before income tax Loss before income tax has been arrived at after crediting/ (charging) the following expenses, gains and losses Depreciation and amortisation Interest expense – Other persons/corporations Operating lease payments Foreign exchange (gain)/losses 3. Income tax (a)Income tax recognised in prof t and loss Current tax expense (b)Reconciliation of prima facie income tax to income tax expense Loss from continuing operations Income tax expense (benef t) calculated at 30% Effect of expenses that are not deductible in determining taxable prof t or loss Effect of impairment losses on receivables that are not deductible Effect of unused tax losses and tax offsets not recognised as deferred tax assets (c)Gross tax losses not brought to account Unconf rmed tax losses brought forward Current year tax losses Prior year tax losses not previously recognised Closing balance	69,380 108,767 69,380 108,767 49,746 69,858 42,870 63,534
	119,126 178,625 112,250 172,301
	119,126 178,625 112,250 172,301
	31,744 46,229 12,648 20,352 66 - 66 - 8,023 16,626 8,023 16,626 (391,850) (330,538) 27,162 3,383 28,320 - - -
	(898,244) (1,591,655) (1,193,421) (2,424,500) (269,473) (477,497) (358,026) (727,350) 19,667 - 19,667 - - - 54,779 459,995 278,126 477,497 283,580 267,355
	28,320 - - -
	1,614,951 1,137,454 1,303,841 978,698 278,126 477,497 283,580 267,355 1,891,171 - 2,196,827 57,788
	3,784,248 1,614,951 3,784,248 1,303,841

This future income tax benefi t will only be obtained if:

(i) future assessable income is derived of a nature and of an amount suffi cient to enable the benefi t to be realised;

(ii) the conditions for deductibility imposed by tax legislation continue to be complied with; and

(iii) no changes in tax legislation adversely affect the consolidated entity in realising the benefi t.

42 | KENTOR GOLD ANNUAL REPORT 2007

NOTES TO THE FINANCIAL STATEMENTS (cont.) FOR THE YEAR ENDED 31 DECEMBER 2007

			Consolidated
		2007	2006
4.	Earnings per share
	The following ref ects the income and share data used in calculating
	basic and diluted earnings per share:
	Net loss	$926,564	$1,591,655
	Basic and diluted loss per share (cents per share)	1.83c	4.53c
	Weighted average number of ordinary shares used in the
	calculation of basic and diluted earnings per share	50,532,065	35,116,885

Diluted earnings per share is calculated after classifying all options on issue remaining unconverted at 31 December 2007 as potential ordinary shares. At 31 December 2007, the Company has on issue 3,966,667 options (2006: 7,533,335 options) over unissued capital and has incurred a net loss. As the notional exercise price of these options is signifi cantly greater than the current market price of the shares they have not been included in the calculations of diluted earnings per share. These options are anti dilutive as the group is in a loss situation.

	Consolidated Company
	2007 2006 2007 2006 $ $ $ $
5. Trade and other receivables – current Deposits GST receivable (net) Other receivables	- 1,524 - 1,524 11,012 10,286 11,012 10,286 507,332 358,690 33,039 232
	518,344 370,500 44,051 12,042

Terms and conditions relating to the above fi nancial instruments

(i) Other receivables are non interest bearing and have repayment terms between eight and ninety days.

(ii) Details of the terms and conditions of any related party receivables are set out in Note 24.

6. Other current assets Prepayments 7. Trade and other receivables – non current Amount receivable from foreign controlled entity Less impairment Impairment Balance at beginning of f nancial year Increase in impairment Balance at end of f nancial year	17,020 14,605 17,020 14,605
	17,020 14,605 17,020 14,605
	- - 6,686,734 5,313,338 - - (2,358,713) (2,176,117)
	- - 4,328,021 3,137,221
	- - (2,176,117) (642,799) - - (182,596) (1,533,318)
	- - (2,358,713) (2,176,117)

KENTOR GOLD ANNUAL REPORT 2007 | 43

NOTES TO THE FINANCIAL STATEMENTS (cont.) FOR THE YEAR ENDED 31 DECEMBER 2007

8. Plant and equipment

8. Plant and equipment
	Consolidated Company
	Plant & Computer Plant & Computer Equipment Equipment Total Equipment Equipment Total $ $ $ $ $ $
Year ended 31 December 2007 At 1 January 2007, net of accumulated depreciation Additions Disposals Depreciation expense Depreciation capitalised * At 31 December 2007, net of accumulated depreciation At 1 January 2007 Cost Accumulated depreciation Net carrying amount At 31 December 2007 Cost Accumulated depreciation Net carrying amount Year ended 31 December 2006 At 1 January 2006, net of accumulated depreciation Additions Depreciation expense At 31 December 2006, net of accumulated depreciation At 1 January 2006 Cost Accumulated depreciation Net carrying amount At 31 December 2006 Cost Accumulated depreciation Net carrying amount	123,000 17,194 140,194 9,867 17,194 27,061 71,377 2,638 74,015 33,150 2,638 35,788 (305) (195) (500) (305) (195) (500) (25,348) (6,396) (31,744) (6,252) (6,396) (12,648) (13,652) - (13,652) - - -
	155,072 13,241 168,313 36,460 13,241 49,701
	236,743 47,754 284,497 17,906 47,754 65,660 (113,743) (30,560) (144,303) (8,039) (30,560) (38,599)
	123,000 17,194 140,194 9,867 17,194 27,061
	307,257 50,392 357,649 51,056 50,391 101,447 (152,185) (37,151) (189,336) (14,596) (37,150) (51,746)
	155,072 13,241 168,313 36,460 13,241 49,701
	122,673 23,690 146,363 12,723 23,690 36,413 30,060 10,000 40,060 1,000 10,000 11,000 (29,733) (16,496) (46,229) (3,856) (16,496) (20,352)
	123,000 17,194 140,194 9,867 17,194 27,061
	206,683 37,754 244,437 16,906 37,754 54,660 (84,010) (14,064) (98,074) (4,183) (14,064) (18,247)
	122,673 23,690 146,363 12,723 23,690 36,413
	236,743 47,754 284,497 17,906 47,754 65,660 (113,743) (30,560) (144,303) (8,039) (30,560) (38,599)
	123,000 17,194 140,194 9,867 17,194 27,061

Depreciation on equipments used for exploration by the subsidiary company in the Kyrgyz Republic are capitalised as deferred exploration costs

44 | KENTOR GOLD ANNUAL REPORT 2007

NOTES TO THE FINANCIAL STATEMENTS (cont.)

FOR THE YEAR ENDED 31 DECEMBER 2007

	Consolidated Company
	2007 2006 2007 2006 $ $ $ $
9. Deferred exploration and evaluation costs Balance at beginning of the year Current year expenditure Write-off during f nancial year Provision for licence areas to be relinquished Balance at end of the year Deferred exploration and evaluation costs Provision for licence areas to be relinquished	2,725,968 2,679,972 - - 1,411,559 1,182,387 54,271 - (341,899) - (54,271) - - (1,136,391) - -
	3,795,628 2,725,968 - -
	3,795,628 3,862,359 - - - (1,136,391) - -
	3,795,628 2,725,968 - -

Ultimate recovery of deferred exploration and evaluation costs is dependent upon success in exploration and evaluation or sale or farm-out of the exploration interests.

10. Other f nancial assets – non current Investment in foreign controlled exploration project (i) Investment in foreign controlled entity at cost (ii) Investment in domestic controlled entity at cost (iii) - Shares in Dunmarra Uranium Ltd - Impairment Available-for-sale f nancial assets at fair value - Shares in Action Hydrocarbons Ltd (iv) - Impairment	573,265 - 573,265 - - - 27,135 27,135 - - 100,000 - - - (88,429) - - 14,251 - 14,251 - (14,251) - (14,251)
	573,265 - 611,971 27,135

(i) Investment in Savoyardy exploration project in the Kyrgyz Republic (Refer to Note 27).
(ii) Details of investment in foreign controlled entity are:

(ii)	Details of investment in foreign controlled entity are:
(iii)	Country of 2007 2006 Incorporation % Held % Held
	CJSC Kentor Kyrgyz Republic 80% 80% Details of investment in domestic controlled entity are: Country of 2007 2006 Incorporation % Held % Held
	Dunmarra Uranium Ltd Australia 100% -

(iv) Action Hydrocarbons Ltd is an Australian unlisted public company which has been placed into liquidation and the investment has been fully impaired.

11. Intangible assets

Intangible assets
Software Less accumulated amortisation Accumulated amortisation Balance at beginning of f nancial year Increase in amortisation Balance at end of f nancial year	8,048 - - - (363) - - -
	7,685 - - -
	- - - - (363) - - -
	(363) - - -

KENTOR GOLD ANNUAL REPORT 2007 | 45

NOTES TO THE FINANCIAL STATEMENTS (cont.) FOR THE YEAR ENDED 31 DECEMBER 2007

	Consolidated Company
	2007 2006 2007 2006 $ $ $ $
12. Trade and other payables - current Trade payables Employee benef ts (Note 21)	143,052 66,010 90,285 21,418 4,787 3,779 5,000 3,834
	147,839 69,789 95,285 25,252

Terms and conditions relating to the above fi nancial instruments:

(i) Trade payables are non-interest bearing and are usually settled on 30 day terms.

(ii) Other payables are non-interest bearing and have an average term of 30 days.

13. Provisions - current

13. Provisions - current
Employee benef ts (see Note 21) 14. Other liabilities Deposits received 15. Issued capital (a) Issued and paid up capital Ordinary shares fully paid	14,423 54,885 14,423 54,885
	1,350,000 - 1,350,000 -
	12,226,963 9,666,630 12,226,963 9,666,630

Changes to the then Corporations Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998. Therefore, the Company does not have a limited amount of authorised capital and issued shares do not have a par value.

(b) Movements in shares on issue

(b) Movements in shares on issue
	2007 2006
Details	Number of Issued Number of Issued Shares issued capital Shares issued capital $ $
Beginning of the f nancial year Movements during the year Shares issued Less: costs of share issues Closing balance	39,651,132 9,666,630 34,651,132 9,085,407 21,336,997 2,793,745 5,000,000 625,000 - (233,412) - (43,777)
	60,988,129 12,226,963 39,651,132 9,666,630

Capital transactions

20,000,000 ordinary shares ($2,600,00) were issued on 31 May 2007 at 13 cents per share.

1,366,997 ordinary shares ($193,745) were issued on 4 July 2007 as payment to a supplier under an agreement.

7,500,000 ordinary shares ($1,350,000) were not issued until 7 January 2008 at 18 cents per share following a successful share placement on 17 December 2007. The funds received for these shares are recorded as a liability in the balance sheet at 31 December 2007.

Ordinary shares

Ordinary shares have the right to receive dividends as declared and, in the event of 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.

46 | KENTOR GOLD ANNUAL REPORT 2007

NOTES TO THE FINANCIAL STATEMENTS (cont.) FOR THE YEAR ENDED 31 DECEMBER 2007

(d) Share options

Options over ordinary shares

At the end of the fi nancial year, there were 3,966,667 (31 December 2006: 7,533,335) unissued ordinary shares in respect of which the following options were outstanding:

following options were outstanding:
Expiry date/Duration	Number In Escrow Exercise price 266,667 266,667 until 17 March 2008 $0.75 100,000 $0.60 100,000 $0.80 100,000 $1.00 2,500,000 $0.20 to 31 May 2008, $0.30 thereafter 3,066,667 300,000 $0.625 300,000 $0.75 300,000 $0.875 900,000 3,966,667
Unlisted options On or before 1 July 2008 On or before 31 May 2012 On or before 31 May 2012 On or before 31 May 2011 On or before 31 May 2009* Unlisted executive options 30 days after ceasing employment 30 days after ceasing employment 30 days after ceasing employment TOTAL

2,500,000 options were issued to Haywood Securities Inc. as part of a placement of new shares issued to the same company in December 2006.

16. Reserves

Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the fi nancial statements of the foreign controlled entity. Share option reserves are used to record the value assigned to share-based payments.

Share option reserve

During the year 2,500,000 options valued at $65,556 were issued to a third party as payment for goods and services.

17. Franking credits

There are no franking credits available for the subsequent fi nancial year.

There are no franking credits available for the subsequent f nancial year.
	Consolidated Company
	2007 2006 2007 2006 $ $ $ $
18. Minority interest Minority interests in controlled entities comprises: Contributed equity Accumulated losses	6,784 6,784 - - (6,784) (6,784) - -
	- - - -

KENTOR GOLD ANNUAL REPORT 2007 | 47

NOTES TO THE FINANCIAL STATEMENTS (cont.) FOR THE YEAR ENDED 31 DECEMBER 2007

	Consolidated Company
	2007 2006 2007 2006 $ $ $ $
19. Cash and cash equivalents (a)Reconciliation of loss after tax to net cash f ows from operations Net loss for the year Non cash f ows in operating result Depreciation expense Provision for annual leave Impairment of investment in controlled entity Impairment in amount receivable from foreign controlled entity Exploration costs written off Provision for write-down of exploration and evaluation costs Share based payments Provision for income tax Other non-cash items Currency translation differences Operating cash f ows not expensed (Increase)/Decrease in receivables Increase/(Decrease) in payables Net cash used in operating activities (b)Reconciliation of cash Cash and cash equivalents comprise: Cash on hand and at call Term deposits	(926,564) (1,591,655) (1,193,421) (2,424,500) 31,744 46,229 12,648 20,352 (40,462) 27,490 (40,462) 27,490 - - 88,429 - - - 182,596 1,533,318 341,899 - 54,271 - - 921,923 - - 259,301 - 259,301 - 28,320 - - - 13,071 4,332 - - (266,857) (832,845) - - (217,758) 132,797 (101,924) 36,690 76,730 (125,469) 97,033 (115,320)
	(700,576) (1,417,198) (641,529) (921,970)
	2,456,323 732,423 2,444,831 721,089 - 732,832 - 732,832
	2,456,323 1,465,255 2,444,831 1,453,921

(c) Financing facility

The group has no available fi nance facilities at balance date (2006 : NIL).

(d) Non-cash fi nancing and investing activities

The group did not have any non-cash fi nancing or investing activities during the year.

20. Subsequent events

No matters or circumstances have arisen since the end of the fi nancial period that have signifi cantly affected or may have a signifi cant effect on the fi nancial operations of the consolidated entity, the fi nancial performance of those operations or the fi nancial position of the consolidated entity in the subsequent fi nancial year.

48 | KENTOR GOLD ANNUAL REPORT 2007

NOTES TO THE FINANCIAL STATEMENTS (cont.) FOR THE YEAR ENDED 31 DECEMBER 2007

21. Employee benefi ts and superannuation commitments

Employee benefi ts

Employee benef ts	Employee benef ts
Consolidated Company
2007 2006 2007 2006 $ $ $ $
The aggregate employee benef t liability comprises: Accrued salaries, wages, fees and on-costs 4,787 3,779 5,000 3,834 Provisions (current) 14,423 54,885 14,423 54,885 19,210 58,664 19,423 58,719 Executive options No options over unissued shares of the Company were granted during the year. Information with respect to the number of options granted is as follows: 2007 2006
	Weighted Weighted Number average Number average of options exercise price of options exercise price
Balance at beginning of year - granted - lapsed/exercised Balance at end of year	2,266,667 $0.74 2,266,667 $0.74 - - - - (1,366,667) $0.74 - -
	900,000 $0.74 2,266,667 $0.74

Options held at the beginning and end of the reporting year

No. of options	Grant date	Vesting date	Expiry date	Weighted average	Fair value
				exercise price	at grant date
At 1 January 2007				$	$
546,667	6 December 2004	6 December 2004	n/a*	0.625	0.0162
410,000	6 December 2004	6 December 2004	n/a*	0.75	0.0162
410,000	6 December 2004	6 December 2004	n/a*	0.875	0.0162
300,000	1 December 2004	1 December 2004	n/a*	0.625	0.0294
300,000	1 December 2004	1 December 2004	n/a*	0.75	0.0216
300,000	1 December 2004	1 December 2004	n/a*	0.875	0.0162
At 31 December 2007
300,000	1 December 2004	1 December 2004	n/a*	0.625	0.0294
300,000	1 December 2004	1 December 2004	n/a*	0.75	0.0216
300,000	1 December 2004	1 December 2004	n/a*	0.875	0.0162

The options have no expiry date except, in the event of the cessation of employment, 30 days after the date of cessation of employment.

The fair value of the options were determined using a binomial model. Where relevant, the expected life used in the model has been adjusted based on management’s best estimate for the effects of non-transferability, exercise restrictions and behavioural considerations.

No options were granted or exercised during the reporting year (2006 ; NIL).

Superannuation

The consolidated entity contributes to a defi ned contribution fund in accordance with the Government Superannuation Guarantee legislation.

KENTOR GOLD ANNUAL REPORT 2007 | 49

NOTES TO THE FINANCIAL STATEMENTS (cont.) FOR THE YEAR ENDED 31 DECEMBER 2007

22. Key management personnel remuneration

(a) Key management personnel

The Directors of Kentor Gold Limited during the year were:

W H J Barr Chairman (non-executive) A E Daley Director (non-executive) H McKinnon Executive Director (executive) D Z Royle Managing Director (executive), resigned 30 March 2007 S J Milroy Managing Director (executive), appointed 14 May 2007

The other key management personnel of Kentor Gold Limited during the year were: G J Burgess CFO, resigned 31 December 2007

(b) Compensation of key management personnel

(i) Compensation policy

The Board of Directors of Kentor Gold Limited is responsible for determining and reviewing compensation arrangements for the Directors and executives. The Board’s remuneration policy is to ensure that the remuneration package properly refl ects the person’s duties and responsibilities, with the overall objective of ensuring maximum stakeholder benefi t from the retention of a high quality Board and executives. Such offi cers will be given the opportunity to receive their base emolument in a variety of forms, including cash and fringe benefi ts such as motor vehicles. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost to the Company.

To assist in achieving these objectives, the Board links the nature and amount of executive offi cers’ emoluments to the Company’s fi nancial and operational performance so as to:

reward executives for performance against set targets
align the interests of the executives with those of shareholders
link rewards with strategic goals and performance of the Company; and
ensure total remuneration is competitive by market standards.

All Directors at the discretion of the Board and executives will have the opportunity to qualify for executive options under a proposed Executive Share Option Plan which will provide incentives where specifi ed performance criteria are met.

The Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive Directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the directors as agreed. The latest determination was in the Company’s Constitution adopted on 19 October 2004 which approved an aggregate remuneration of $150,000 per year.

The Company aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the Company and so as to:

reward executives for company, business unit and individual performance against targets set by reference to appropriate benchmarks;
align the interests of executives with those of shareholders;
link reward with the strategic goals and performance of the Company; and
ensure total remuneration is competitive by market standards.

Employment Agreements are entered into with executive Directors and other key management personnel. The current employment contract with the Managing Director will terminate on 13 May 2009 unless renewed by mutual agreement arrived at not later than 14 February 2009. The employment contract with the Executive Director runs until 1 June 2007. The contract fi nishes on 31 May 2010 unless renewed before this time. Contracts do not provide for any additional termination benefi ts.

50 | KENTOR GOLD ANNUAL REPORT 2007

NOTES TO THE FINANCIAL STATEMENTS (cont.) FOR THE YEAR ENDED 31 DECEMBER 2007

(ii) Compensation of key management personnel

(ii) Compensation of key management personnel
	Post Share-based Short-term employment Payment Total
Year ended 31 December 2007 Directors W.H.J. Barr S. J. Milroy A.E. Daley* H. McKinnon D.Z. Royle Other key management personnel Greg Burgess **	Salary & fees Superannuation Options $ $ $ $ 15,000 61,300 - 76,300 112,500 12,500 - 125,000 43,600 - - 43,600 140,417 - - 140,417 46,667 4,200 - 50,867 33,458 - - 33,458
	391,642 78,000 - 469,642
	Post Share-based Short-term employment Payment Total
Year ended 31 December 2006 Directors W.H.J. Barr S, J. Milroy A.E. Daley* H. McKinnon D.Z. Royle Other key management personnel J.W. Rawling Greg Burgess **	Salary & fees Superannuation Options $ $ $ $ 60,000 5,400 - 65,400 - - - - 32,700 - - 32,700 100,000 - - 100,000 140,000 12,600 - 152,600 21,440 1,445 - 22,885 17,000 - - 17,000
	371,140 19,445 - 390,585

Directors fees were paid to Dalenier Enterprises Pty Ltd, a company which is controlled by Andrew Daley.

** Includes $11,250 (2006; $17,000) paid to Greg Burgess by Investor Resources Services Pty Ltd for services provided to Kentor Gold Limited.

(iii) Compensation by category: key management personnel

(iii) Compensation by category: key management personnel
	Consolidated Company
	2007 2006 2007 2006 $ $ $ $
Short term Post employment	391,642 371,140 391,642 371,140 78,000 19,445 78,000 19,445
	469,642 390,585 469,642 390,585

No options were issued or vested during the reporting period (2006; NIL).

(d) Share issued on exercise of remuneration options

No shares were issued on the exercise of remuneration options during the reporting period (2006; NIL).

KENTOR GOLD ANNUAL REPORT 2007 | 51

NOTES TO THE FINANCIAL STATEMENTS (cont.) FOR THE YEAR ENDED 31 DECEMBER 2007

(e) Option holdings of Directors and other key management personnel

31 December 2007	Opening Granted as Options Net change- Closing Vested and balance remuneration exercised other balance exercisable at 1 January 31 December 31 December 2007 2007 2007
Directors A E Daley H. McKinnon D.Z. Royle Total 31 December 2006	174,690 - - (174,690) - - 900,000 - - - 900,000 900,000 1,366,667 - - (1,366,667) - -
	2,441,357 - - (1,541,357) 900,000 900,000
	Opening Granted as Options Net change- Closing Vested and balance remuneration exercised other balance exercisable at 1 January 31 December 31 December 2006 2006 2006
Directors A E Daley H. McKinnon D.Z. Royle Total	174,690 - - - 174,690 174,690 1,033,334 - - (133,334) 900,000 900,000 1,866,667 - - (500,000) 1,366,667 1,366,667
	3,074,691 - - (633,334) 2,441,357 2,441,357

(f) Shareholdings of key management personnel

31 December 2007	Balance Granted as On exercise Net change- Balance 1 January remuneration of options other 31 December 2007 2007
Ordinary Shares Directors W H J Barr A E Daley H McKinnon D Z Royle (resigned 30 March 2007) S J Milroy Total 31 December 2006	No. No. No. No. No. 90,000 - - 68,000 158,000 381,470 - - - 381,470 2,064,627 - - - 2,064,627 833,951 - - (833,951) - - - - 657,555 657,555
	3,370,048 - - (108,396) 3,261,652
	Balance Granted as On exercise Net change- Balance 1 January remuneration of options other 31 December 2006 2006
Ordinary Shares Directors W H J Barr A E Daley H McKinnon D Z Royle Other key management personnel J W Rawling (resigned 31 March 2006) Total	No. No. No. No. No. 50,000 - - 40,000 90,000 381,470 - - - 381,470 2,064,627 - - - 2,064,627 833,951 - - - 833,951 5,000 - - (5,000) -
	3,335,048 - - 35,000 3,370,048

All equity transactions with Directors and other key management personnel other than those arising from the exercise of remuneration options have been entered into under terms and conditions no more favourable than those the entity would have adopted if dealing at arm’s length.

52 | KENTOR GOLD ANNUAL REPORT 2007

NOTES TO THE FINANCIAL STATEMENTS (cont.) FOR THE YEAR ENDED 31 DECEMBER 2007

(g) Other transactions and balances with key management personnel

There were no other transactions with key management personnel (2006; $42,500 paid to Investor Resources Finance Pty Ltd*).

At year end, there was no outstanding amounts payable to key management personnel (2006: $5,000 payable to Investor Resources Finance Pty Ltd*).

As described in Note 22(b)(ii), directors fees payable to Andrew Daley are paid to Dalenier Enterprises Pty Ltd. Fees payable to Greg Burgess were partly paid to Investor Resources Services Pty Ltd and Australian Corporate Secretariat Pty Ltd respectively.

*Investor Resources Finance Pty Ltd is a company with which Andrew Daley is associated.

			Consolidated		Company
		2007	2006	2007	2006
		$	$	$	$
23.	Auditors’ remuneration
	Amounts received or due and receivable by
	Deloitte Touche Tohmatsu for:
	• audit or review of the f nancial statements of the entity
	and any other entity in the economic entity	24,000	22,900	24,000	22,900
	Remuneration of other auditors of controlled entity
	• audit or review of the f nancial statements of controlled entity	1,744	1,151	-	-
24.	Related party disclosures

(a) The Directors during the fi nancial year were:

William Henry John Barr AM

Andrew Edward Daley

Hugh McKinnon

David Zouch Royle

Simon James Milroy

(b) Information on remuneration and retirement benefi ts of Directors is disclosed in Note 22.
(c) Directors’ shareholding

At year end, the current Directors held directly and indirectly 3,261,652 shares (2006: 3,370,048) and 900,000 options (2006: 2,441,357) in the Company. During the year the Directors’ shareholding decreased by a net of 108,396 shares. Options held by the Directors were reduced by 1,541,357.

KENTOR GOLD ANNUAL REPORT 2007 | 53

NOTES TO THE FINANCIAL STATEMENTS (cont.) FOR THE YEAR ENDED 31 DECEMBER 2007

(d) Other related party transactions:

There were no related party transactions other than those described in Note 22(g).and described below.

		Consolidated
	2007	2006
	$	$
Consolidated revenue includes the following amounts arising
from transactions with key management personnel or their related parties
Interest revenue	-	-
Other	-	-
Consolidated prof t includes the following expenses arising from
transactions with key management personnel or their related parties
Interest expense		-
Consulting fees (paid to Investor Resources Finance Pty Ltd)	-	42,500
Total assets arising from transactions other than loans and
amounts receivable in relation to equity instruments with key management
personnel or their related parties
Current	-	-
Non-current	-	-
Total liabilities arising from transactions other than compensation
with key management personnel or their related parties
Current	-	5,000
Non-current	-	-

(e) Intercompany transactions

Balances arising from transactions between the Company and its subsidiaries that are outstanding at 31 December 2007 are disclosed in note 7.

(f) Ultimate parent:

Kentor Gold Limited is the ultimate Australian parent company.

54 | KENTOR GOLD ANNUAL REPORT 2007

NOTES TO THE FINANCIAL STATEMENTS (cont.) FOR THE YEAR ENDED 31 DECEMBER 2007

25. Segment information

Segment products and locations

The consolidated entity operates in one business segment (for primary reporting) being mineral exploration and two geographical segments (for secondary reporting) being Australia and the Kyrgyz Republic. This is consistent with the previous accounting period.

Segment accounting policies

Revenues are attributable to geographic areas based on the location of the assets producing the revenues. Segment accounting policies are the same as the consolidated entity’s policies described in Note 1. During the fi nancial year, there were no changes in segment accounting policies that had a material effect on the segment information.

Geographical segments Australia The Kyrgyz Republic Year ended 31 December 2007 $ $	Total $
Revenue Revenue from external customers 42,870 6,876 Result Segment results (1,080,205) 84,261 Interest Income 69,380 - Net loss for the year Assets and Liabilities Segment assets 3,128,867 4,407,711 Segment liabilities 1,459,708 52,554 Other Segment Information Acquisition of segment assets 35,788 38,227 Depreciation and amortisation 12,648 19,096 Impairment of exploration and evaluation costs 54,271 287,628 Other non-cash expenses Cash Flow Information Net cash f ow from operating activities (641,529) (59,047) Net cash f ow from investing activities (1,400,262) (665,763) Net cash f ow from f nancing activities 3,757,089 -	49,746 (995,944) 69,380
	(926,564) 7,536,578 1,512,262 74,015 31,744 341,899 (700,576) (2,066,025) 3,757,089

Geographical segments
Australia
The Kyrgyz
Republic
Year ended 31 December 2007
$ $

Total
$

Revenue
Revenue from external customers
42,870
6,876
Result
Segment results
(1,080,205)
84,261
Interest Income
69,380
-
Net loss for the year
Assets and Liabilities
Segment assets
3,128,867
4,407,711
Segment liabilities
1,459,708
52,554
Other Segment Information
Acquisition of segment assets
35,788
38,227
Depreciation and amortisation
12,648
19,096
Impairment of exploration and evaluation costs
54,271
287,628
Other non-cash expenses
Cash Flow Information
Net cash f ow from operating activities
(641,529)
(59,047)
Net cash f ow from investing activities
(1,400,262)
(665,763)
Net cash f ow from f nancing activities
3,757,089
-

49,746
(995,944)
69,380

(926,564)
7,536,578
1,512,262
74,015
31,744
341,899
(700,576)
(2,066,025)
3,757,089

KENTOR GOLD ANNUAL REPORT 2007 | 55

NOTES TO THE FINANCIAL STATEMENTS (cont.)

FOR THE YEAR ENDED 31 DECEMBER 2007

Geographical segments Australia The Kyrgyz Republic Year ended 31 December 2006 $ $	Total $
Revenue Revenue from external customers 63,534 6,324 Result Segment results (999,949) (700,473) Interest Income 108,767 - Net loss for the year Assets and Liabilities Segment assets 1,507,629 3,208,893 Segment liabilities 80,137 44,537 Other Segment Information Acquisition of segment assets 11,000 29,060 Depreciation and amortisation 20,352 25,877 Impairment of exploration and evaluation costs - 921,923 Other non-cash expenses 27,490 - Cash Flow Information Net cash f ow from operating activities (921,970) (495,228) Net cash f ow from investing activities (484,730) (705,981) Net cash f ow from f nancing activities 581,223 -	69,858 (1,700,422) 108,767
	(1,591,655) 4,716,522 124,674 40,060 46,229 921,923 27,490 (1,417,198) (1,190,651) 581,223

Geographical segments
Australia
The Kyrgyz
Republic
Year ended 31 December 2006
$ $

Total
$

Revenue
Revenue from external customers
63,534
6,324
Result
Segment results
(999,949)
(700,473)
Interest Income
108,767
-
Net loss for the year
Assets and Liabilities
Segment assets
1,507,629
3,208,893
Segment liabilities
80,137
44,537
Other Segment Information
Acquisition of segment assets
11,000
29,060
Depreciation and amortisation
20,352
25,877
Impairment of exploration and evaluation costs
-
921,923
Other non-cash expenses
27,490
-
Cash Flow Information
Net cash f ow from operating activities
(921,970)
(495,228)
Net cash f ow from investing activities
(484,730)
(705,981)
Net cash f ow from f nancing activities
581,223
-

69,858
(1,700,422)
108,767

(1,591,655)
4,716,522
124,674
40,060
46,229
921,923
27,490
(1,417,198)
(1,190,651)
581,223

56 | KENTOR GOLD ANNUAL REPORT 2007

NOTES TO THE FINANCIAL STATEMENTS (cont.) FOR THE YEAR ENDED 31 DECEMBER 2007

26. Financial instruments

Management monitors and manages the fi nancial risks relating to the operations of the group through regular reviews of the risks. These risks include market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash fl ow interest rate risk.

The group does not use any form of derivatives as it is not at a level of exposure that requires the use of derivatives to hedge its exposure. Exposure limits are reviewed by management on a continuous basis. The group does not enter into or trade fi nancial instruments, including derivative fi nancial instruments, for speculative purposes

The group’s fi nancial instruments consist mainly of deposits with banks, local money market instruments, short-term investments, accounts receivable and payable and loans to and from subsidiaries.

The group has minimal exposure to the fi nancial risks of changes in foreign currency exchange rates and interest rates.

(a) Capital risk management

The group manages its capital to ensure that entities in the group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the equity.

(b) Categories of fi nancial instruments

(b) Categories of f nancial instruments
		Consolidated		Company
	2007	2006	2007	2006
	$	$	$	$
Financial assets
Loans and receivables	513,007	370,500	38,714	12,042
Cash and cash equivalents	2,456,323	1,465,255	2,444,831	1,453,921
Financial liabilities
Trade payables	143,052	66,010	90,285	21,418

(c) Credit risk exposures

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in fi nancial loss to the group. The group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of fi nancial loss from defaults. The group has limited exposure due to the nature of most of its transactions being relatively small. Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually.

The maximum exposure to credit risk, excluding the value of any collateral or other security at balance date is the carrying amount of those assets, net of any impairments, as disclosed in the balance sheet and notes to the fi nancial statements.

The group does not have any signifi cant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics.

KENTOR GOLD ANNUAL REPORT 2007 | 57

NOTES TO THE FINANCIAL STATEMENTS (cont.) FOR THE YEAR ENDED 31 DECEMBER 2007

(d) Interest rate exposures

The following table details the consolidated entity’s exposure to interest rate risk as at 31 December 2007:

	Weighted
	average				Fixed	maturity	dates
	effective	Variable	Less							Non
	interest	interest	than	1-2	2-3	3-4		4-5	5+	interest
	rate	rate	1 year	years	years	years	years		years	bearing	Total
31 December 2007	%	$	$	$	$	$		$	$	$	$
Financial assets
Cash and cash equivalents	5.2%	2,456,323	-	-	-	-		-	-	-	2,456,323
Trade receivables		-	-	-	-	-		-	-	513,007	513,007
Other receivables		-	-	-	-	-		-	-	-	-
Related party loans		-	-	-	-	-		-	-	-	-
		2,456,323	-	-	-	-		-	-	513,007	2,969,330
Financial liabilities
Trade payables		-	-	-	-	-		-	-	137,715	137,715
Current tax liabilities		-	-	-	-	-		-	-	-	-
Related party loans		-	-	-	-	-		-	-	-	-
Other provisions		-	-	-	-	-		-	-	-	-
		-	-	-	-	-		-	-	137,715	137,715
	Weighted
	average				Fixed	maturity	dates
	effective	Variable	Less							Non
	interest	interest	than	1-2	2-3	3-4		4-5	5+	interest
	rate	rate	1 year	years	years	years	years		years	bearing	Total
31 December 2006	%	$	$	$	$	$		$	$	$	$
Financial assets
Cash and cash equivalents	5.2%	1,465,255	-	-	-	-		-	-	-	1,465,255
Trade receivables		-	-	-	-	-		-	-	370,500	370,500
Other receivables		-	-	-	-	-		-	-	-	-
Related party loans		-	-	-	-	-		-	-	-	-
		1,465,255	-	-	-	-		-	-	370,500	1,835,755
Financial liabilities
Trade payables		-	-	-	-	-		-	-	66,010	66,010
Current tax liabilities		-	-	-	-	-		-	-	-	-
Related party loans		-	-	-	-	-		-	-	-	-
Other provisions		-	-	-	-	-		-	-	-	-
		-	-	-	-	-		-	-	66,010	66,010

58 | KENTOR GOLD ANNUAL REPORT 2007

NOTES TO THE FINANCIAL STATEMENTS (cont.) FOR THE YEAR ENDED 31 DECEMBER 2007

(e) Interest rate sensitivity

A sensitivity analysis have been determined based on the exposure to interest rates at reporting date with the stipulated change taking place at the beginning of the fi nancial year and held constant throughout the year.

At reporting date, if interest rates had been 50 basis points higher or lower and all other variables were constant, the effect on net profi t or loss would be $6,858 (2006; $8,578).

(f) Liquidity risk

Ultimate responsibility for liquidity risk management rests with the board of directors, who has built an appropriate liquidity risk management framework for the management of the group’s short, medium and long-term funding and liquidity management requirements. The group manages liquidity risk by maintaining adequate reserves by continuously monitoring forecast and actual cash fl ows and matching the maturity profi les of fi nancial assets and liabilities.

(g) Fair values

All fi nancial assets and liabilities have been recognised at cost less accumulated impairments which approximates their fair value.

Holdings in unlisted shares in controlled entities are stated at cost less impairments. No other measures could be used reliably.
The fair value of other fi nancial assets and liabilities are determined in accordance with generally accepted pricing models

The fi nancial statements include holdings in unlisted shares which are stated at cost less impairments

27. Commitments for expenditure

27. Commitments for expenditure
		Consolidated		Company
	2007	2006	2007	2006
	$	$	$	$
Capital expenditure commitments
Not longer than 1 year	94,673	-	94,673	-

An agreement with Perseus Mining Limited has been signed allowing Kentor Gold Limited to progressively earn an interest in the exploration licence of the Savoyardy Gold Project in the Kyrgyz Republic through JSC Savoyardi, a company wholly owned by Perseus Mining Limited.

Kentor Gold Limited is required to spend a minimum of US$500,000 on the exploration of Savoyardy in the Kyrgyz Republic by 31 March 2008, after which date it can withdraw from the agreement with Perseus Mining Limited. $94,673 is the remaining commitment on the initial phase of this project.

Under the same agreement, Kentor Gold Limited has the option to earn additional interest in this licence, should the directors decide to proceed with a further spending commitment totalling $6,273,526 over the next 5 years.

28. Contingent liabilities and assets

No other contingent liabilities or contingent assets existed at the reporting date except under tenement licences in the Kyrgyz Republic where the controlled entity is required to rehabilitate each licence area to its original state prior to any exploration works.

KENTOR GOLD ANNUAL REPORT 2007 | 59

DIRECTORS’ DECLARATION

In accordance with a resolution of the Directors of Kentor Gold Limited, we state that:

In the opinion of the Directors:
a. the fi nancial statements and notes of the company and of the consolidated entity are in accordance with the Corporations Act 2001, including:
- i. giving a true and fair view of the company’s and consolidated entity’s fi nancial position as at 31 December 2007 and of their performance for the year ended on that date; and
- ii. complying with Accounting Standards and the Corporations Regulations 2001.
b. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the fi nancial year ended 31 December 2007.

On behalf of the Board

A E DALEY Director

Melbourne 27 March 2008

60 | KENTOR GOLD ANNUAL REPORT 2007

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KENTOR GOLD ANNUAL REPORT 2007 | 61

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62 | KENTOR GOLD ANNUAL REPORT 2007

ADDITIONAL INFORMATION REQUIRED BY ASX LISTING RULES INFORMATION IS CURRENT AS AT 26 MARCH 2008

1. Names of Substantial Holders

Nil

2. Number of holders in each class of equities

Number of holders in each class of equities
	Holders	No of Units
Ordinary Shares	653	68,488,129
Unlisted Options over Ordinary Shares	6	3,966,667

3. Voting Rights arrached to each class of security

Each fully paid ordinary shareis entitled to one vote. Unlisted options have no voting rights.

4. Distribution Schedule

4. Distribution Schedule
Range 1-1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over Total 5. Unmarketable Parcels No. of holders with a holding of less than a marketable parcel 6. 20 Largest holders in each class of Quoted Security 1 Merrill Lynch (Australia) Nominees Pty Limited 2 Graham Tuckwell 3 Hugh McKinnon 4 D & D Nominees Pty Ltd 5 Gregorach Pty Ltd 6 ANZ Nominees Limited 7 Haywood Securities Inc in Trust 8 Zen Drilling International Pty Ltd 9 Mr Brian McCubbing 9 H Wallace-Smith and Co Pty Ltd 10 Australian Investors Pty Ltd 11 Ankaa Springs Pty Ltd 12 HSBC Custody Nominees (Australia) Limited 13 Poolette Holdings (Vic) Pty Ltd 14 Twynam Agricultural Group Pty Ltd 15 Natalia Tihomirova 16 Manfree Nominees Pty Ltd 17 Ujanta Pty Ltd 18 Prof Michael Gross 19 Hooperbailie Industries Pty Ltd 20 Jacana Glen Pty Ltd	Total Holders No of Units 6 1,042 118 460,995 95 816,701 307 12,732,683 127 54,476,708
	653 68,488,129 26 3,259,799 4.76% 2,300,000 3.36% 2,064,627 3.01% 1,918,000 2.80% 1,648,500 2.41% 1,500,667 2.19% 1,500,000 2.19% 1,336,997 1.95% 1,200,000 1.75% 1,200,000 1.75% 1,134,546 1.66% 1,075,000 1.57% 984,546 1.44% 923,000 1.35% 900,000 1.31% 898,028 1.31% 850,000 1.24% 800,000 1.17% 783,334 1.14% 728,030 1.06% 700,000 1.02%

Range
1-1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
5. Unmarketable Parcels
No. of holders with a holding of less than a marketable parcel
6. 20 Largest holders in each class of Quoted Security
1
Merrill Lynch (Australia) Nominees Pty Limited
2 Graham Tuckwell
3 Hugh McKinnon
4 D & D Nominees Pty Ltd
5 Gregorach Pty Ltd
6 ANZ Nominees Limited
7 Haywood Securities Inc in Trust
8 Zen Drilling International Pty Ltd
9 Mr Brian McCubbing
9 H Wallace-Smith and Co Pty Ltd
10 Australian Investors Pty Ltd
11 Ankaa Springs Pty Ltd
12 HSBC Custody Nominees (Australia) Limited
13 Poolette Holdings (Vic) Pty Ltd
14 Twynam Agricultural Group Pty Ltd
15 Natalia Tihomirova
16 Manfree Nominees Pty Ltd
17 Ujanta Pty Ltd
18 Prof Michael Gross
19 Hooperbailie Industries Pty Ltd
20 Jacana Glen Pty Ltd

Total Holders
No of Units
6
1,042
118
460,995
95
816,701
307
12,732,683
127
54,476,708

653
68,488,129
26
3,259,799
4.76%
2,300,000
3.36%
2,064,627
3.01%
1,918,000
2.80%
1,648,500
2.41%
1,500,667
2.19%
1,500,000
2.19%
1,336,997
1.95%
1,200,000
1.75%
1,200,000
1.75%
1,134,546
1.66%
1,075,000
1.57%
984,546
1.44%
923,000
1.35%
900,000
1.31%
898,028
1.31%
850,000
1.24%
800,000
1.17%
783,334
1.14%
728,030
1.06%
700,000
1.02%

Name of Company Secretary

Kylie Anderson

KENTOR GOLD ANNUAL REPORT 2007 | 63

ADDITIONAL INFORMATION REQUIRED BY ASX LISTING RULES INFORMATION IS CURRENT AS AT 26 MARCH 2008

8. Address of Registered Offi ce

Kentor Gold Limited Level 36 71 Eagle Street Brisbane 4000 Phone Number 07 3121 3206

9. Name and Address of Share Register

Link Market Services Level 9, 33 Collins St Melbourne 3000 Phone Number 1300 554 474

10. Stock Exchange Listing

Quotation has been granted for the ordinary shares of the Company on all Member Exchanges of the Australian Stock Exchange.

11. Number and Class of Restricted Securities

Nil

12. Details of Each Class of Unquoted Securities

Total Holders Units Options over Ordinary Shares 6 3,966,667

64 | KENTOR GOLD ANNUAL REPORT 2007

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CORPORATE DIRECTORY

Directors

CHAIRMAN W.H. John Barr, AM

MANAGING DIRECTOR Simon Milroy

EXECUTIVE DIRECTOR Hugh McKinnon

NON-EXECUTIVE DIRECTOR Andrew Daley

COMPANY SECRETARY Kylie Anderson

Auditors

Deloitte Touche Tohmatsu 180 Lonsdale Street Melbourne VIC 3000

Share Registry

Link Market Services Limited Level 4, 333 Collins Street Melbourne VIC 3000

Stock Exchange Listing

The company is listed on the Australian Securities Exchange Ltd ASX Code: KGL

Bankers

CHIEF FINANCIAL OFFICER Kylie Anderson

Registered Offi ce Kentor Gold Ltd (ABN 52 082 658 080)

Level 36 Riparian Plaza 71 Eagle Street Brisbane, QLD 4000 Tel 07 3121 3206 Fax 07 3121 3030 Email: [email protected] Website: www.kentorgold.com.au

National Australia Bank Ltd Level 2 330 Collins Street Melbourne Victoria 3000

Communications Advisor

Three Plus 15 Cordelia Street South Brisbane Q 4101 Tel 07 2502 5700 Fax 07 3503 5799

KENTOR GOLD ANNUAL REPORT 2007 | 65

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KENTOR GOLD LTD Level 36, Riparian Plaza 71 Eagle St, Brisbane QLD, AUSTRALIA 4000 Phone: (07) 3121 3206 Fax: (07) 3121 3030 [email protected] www.kentorgold.com

AI assistant

KGL RESOURCES LIMITED — AGM Information 2008

65179_rns_2008-04-20_158285e8-26e0-41b2-ac90-90effacddaba.pdf

KENTOR GOLD LTD

NOTICE OF ANNUAL GENERAL MEETING

ORDINARY BUSINESS

Reports

Resolution 1. Re-election of Director, Mr Andrew Daley

Resolution 2. Re-election of Director, Mr Hugh McKinnon

Resolution 3. Election of Director, Mr Simon Milroy

Resolution 4. Remuneration Report

Resolution 5 Appointment of Auditor

SPECIAL BUSINESS

Resolution 6. Ratification of Share Placement to clients of Far East Capital Limited

Resolution 7. Ratification of Share Placement to Zen Drilling Limited

Resolution 8. Approval for the Issue of New Shares

Resolution 9. Approval of issue of Options to Mr. Simon Milroy (Managing Director)

Resolution 10. Approval of issue of Options to Mr. Hugh McKinnon (Executive Director)

Resolution 11. Approval of Employee Share Option Plan

Resolution 12. Approval of Increase in Non-executive Directors’ Fee Pool

Voting Exclusion Statement

Notes

Explanatory Memorandum

Introduction

Financial Reports

Resolution 1 Re-election of Mr Andrew Daley

Resolution 2 Re-election of Mr Hugh McKinnon

Resolution 3 Election of Mr Simon Milroy

Resolution 4

Remuneration Report

Resolution 5 Appointment of Auditor

The Board recommends that shareholders vote in favour of the resolution for the appointment of new auditors.

Resolutions 6 and 7 Ratification of Share Placement to clients of Far East Capital Limited and Ratification of Share Placement to Zen Drilling Limited

Resolution 8 Approval of Share Issue.

Terms of Issue:

Resolution 9 Issue of Options to Mr Simon Milroy (Managing Director)

Resolution 10 Issue of Options to Mr Hugh McKinnon (Executive Director)

The terms of the issue of options to Mr McKinnon are as follows:

Resolution 11 Approval of Employee Share Option Plan

Eligibility

Entitlement

Issue of Options

Exercise of Options

Exercise Price

New Issue of Securities

Bonus Issues

Rights Issue

Capital Reorganisation.

Resolution 12 Approval of Increase in Directors’ Fee Pool.

The Board, with the non-executive directors abstaining, recommends that shareholders vote in favour of the increase in Non-executive Directors Fee Pool

GLOSSARY OF TERMS

APPOINTMENT OF PROXY

X99999999999

B

To direct your proxy how to vote on any resolution please insert in the appropriate box below.X

IMPORTANT: FOR ITEMS 11 AND 12 ABOVE

CORPORATE PROFILE

HIGHLIGHTS

CHAIRMAN’S LETTER

Dear Shareholder,

MANAGING DIRECTOR’S REPORT

Savoyardy Gold Project (KGL earning 70%) Gold, Antimony

Akbel (KGL 80%) Gold

Yangidavan (KGL 80%) Lead, Copper, Silver

Chunkei (KGL 80%) Lead

Chaarkuduk (KGL 80%) Lead, Zinc, Copper, Gold, Silver, Uranium

Uchkashka #2

Kyzyljar

Jergalan

Lower Tyup

Upper Tyup

Tash-Tyubin

Kurgan (KGL 80%) Lead, Zinc, Silver, Gold

Bashkol (KGL 80%) Gold, Uranium

East Kuylyu

Kaindybulak

Geothermal Energy Project (KGL 80%)

Dunmarra Uranium (KGL 100%) Uranium

Competent Person Statement

CORPORATE

KGL RESOURCES LIMITED AGM Information 2008