KGL RESOURCES LIMITED — Annual Report 2005

Mar 15, 2005

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KENTOR GOLD N.L.

A.B.N. 52 082 658 080

AND CONTROLLED ENTITY

FINANCIAL REPORT FOR THE YEAR ENDED 30TH JUNE 2003

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KENTOR GOLD N.L.

A.B.N. 52 082 658 080

AND CONTROLLED ENTITY

CONTENTS

Directors' Report Directors' Declaration Statement of Financial Performance Statement of Financial Position Statement of Cash Flows Notes to the Financial Statements Auditor's Report

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KENTOR GOLD N.L. A.B.N. 52 082 658 080 AND CONTROLLED ENTITY

DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE 2003.

The directors present their report on the company and its controlled entity for the financial year ended 30 June 2003.

DIRECTORS

The names of the directors in office at any time during or since the end of the year are:

Charles Allen Moir Hider (Chairman - resigned 10 November 2004) David Royle (Managing Director - appointed 1 March 2004) Hugh McKinnon (Managing Director) Robin Clive Wightman (Resigned 4 July 2003) K Brent Cook (Appointed 4 July 2003 - resigned 10 November 2004) Ian Ennis (Alternate for Mr. C.A.M. Hider - appointment terminated 10 November 2004) Heather Joyce Wightman (Alternate for Mr. H. McKlnnon) Heather Joyce Wightman (Alternate for Mr. RC Wightman - appointment terminated 4 July 2003) John Barr (appointed 10 November 2004) Andrew Daley (appointed 10 November 2004)

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

PRINCIPAL ACTIVITIES

The principal activity of the economic entity during the financial year was the exploration for gold and base metals.

There were no significant changes in the nature of the principal activities of the economic entity during the financial year.

OPERATING RESULTS

The consolidated loss of the economic entity for the financial year after providing for income tax and eliminating outside equity interests is \$180,814.

DIVIDENDS

No dividends were paid during the year, nor are any dividends recommended.

REVIEW OF OPERATIONS

During the year, the economic entity continued its exploration program in the Kyrgyz Republic.

SIGNIFICANT CHANGES

For the year ended 30 June 2003, the following share and option issues took place:

• (A) 8 November 2002 491,500 ordinary shares were issued at 4 cents per share to a director
• (B) 14 January 2003 71,428 ordinary shares were issued at 7 cents per share
• (C) 1 April 2003 2,500,000 options to ordinary shares were issued, exercisable at 10 cents each on or before 1 April 2006
• (D) 1 April 2003 1,160,000 options to ordinary shares were issued, exercisable at 10 cents each on or before 1 April 2006
• (E) 1 April 2003 1,500,000 options to ordinary shares were issued, exercisable at 7 cents each on or before 1 April 2005
• (F) 1 May 2003 500,000 ordinary shares were issued at 3 cents per share
• (G) 30 June 2003 950,000 ordinary shares were issued at 4 cents per share to a director
• (H) 30 June 2003 185,714 ordinary shares were issued at 7 cents per share to a director

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KENTOR GOLD N.L. A.B.N. 52 082 658 080 AND CONTROLLED ENTITY

DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE, 2003 (CONTINUED)

SIGNIFICANT CHANGES (continued)

(I) 30 June 2003 - 6,378,499 ordinary shares were issued at 7 cents per share

A General Meeting of members was held on 25 October 2004. A resolution was passed to:

• (a) change its company type from a public no liability company to a public company limited by shares; and
• (b) change its name from Kentor Gold NL to Kentor Gold Ltd

No other significant changes in the state of affairs of the company occurred during the financial year.

FUTURE DEVELOPMENTS

Likely developments in the operations of the economic entity and the expected results of those operations have not been included in this report as the directors believe, on reasonable grounds, that the inclusion of such information would be likely to result in unreasonable prejudice to the economic entity.

AFTER BALANCE DATE EVENTS

After balance date, additional capital has been raised for working capital purposes.

INFORMATION ON DIRECTORS

INFORMATION ON DIKEUTORS
Charles Hider	Mr. Hider was previously a Senior Partner at Rigby Cooke, Solicitors, Melbourne, and a Barrister and Solicitor since 1959. He has had extensive experience in Australia and South East Asia in respect of both minerals and oil. He is presently the Chairman of Landex Realty Limited, (an unlisted public company) and Action Hydrocarbons Limited (also an unlisted public company). He was formerly a director of Geo2 Limited, St Barbara Mines Ltd and a number of other resource companies.
Interest in shares	9,012,486 ordinary shares in Kentor Gold N.L. and options to acquire a further 500,000 ordinary shares. - Note: 5,526,569 options to ordinary shares expired 1 July 2003.
Hugh McKinnon	Mr. McKinnon has been a mining engineer with over twenty-five years experience in the management and development of many operations and exploration programs in Australia, Africa and Central Asia. He is also a director of Action Hydrocarbons Limited (an unlisted public company).
Interest in shares	13,827,214 ordinary shares in Kentor Gold N.L - Note: 13,450,000 options to ordinary shares expired 1 July 2003.

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KENTOR GOLD N.L. A.B.N. 52 082 658 080 AND CONTROLLED ENTITY

DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE, 2003 (CONTINUED)

INFORMATION ON DIRECTORS (Continued)

Robin Wightman	Mr. Wightman is an independent businessman with experience in the development of business ventures in China as well as in the sports and leisure industries in Australia. He is a director of Action Hydrocarbons Limited (an unlisted public company), and is married to Mrs. Heather Wightman.
Interest in shares	Nil - Options to acquire 160,000 ordinary shares.
lan Ennis	Mr. Ennis is involved in the mining industry with particular emphasis on business development and marketing of mineral processing technology internationally. He graduated with a Mineral Processing Diploma in 1991. He is also a Director of Action Hydrocarbons Ltd (an unlisted public company) and has wide experience in gold mining.
Interest in shares	3,704,875 ordinary shares in Kentor Gold N.L. and options to acquire a further 500,000 ordinary shares - Note: 3,655,125 options to ordinary shares expired 1 July 2003.
Heather Wightman	Mrs. Wightman has been a company director for over fifteen years. She is married to Mr. Wightman, a director of the parent entity, and has been involved in the administration of sporting bodies. She is also a director of Action Hydrocarbons Limited (an unlisted public company).
Interest in shares	Nil
John Barr	Mr. Barr has had a long involvement with the Australian minerals and metals industry having been Managing Director of Metallgesellschaft's Australian subsidiary since the company's
	inception in 1974 until his retirement in 1994. He is Chairman of Utilities of Australia Pty Ltd, a major infrastructure investment fund, a Director of Iluka Resources Limited and a former Director of Oxiana Limited.

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KENTOR GOLD N.L. A.B.N. 52 082 658 080 AND CONTROLLED ENTITY

DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE, 2003 (CONTINUED)

INFORMATION ON DIRECTORS (Continued)

Mr. Daley is a mining engineer and resources finance executive. Mr. Andrew Daley Daley spent several years working on mining projects in Africa before relocating to Australia as Senior Engineer with Fluor Australia in 1981. In late 1983 he joined the National Australia Bank resources project finance team in Melbourne. Since then he has been Executive Director and State Manager of NAB's Investment Bank in Sydney, head of Barclays Australia's resource team in Sydney, Director of Chase Manhattan's project finance team in Melbourne and more recently Director of Barclays Capital mining team in London. He is a Chartered Engineer, a former Director of Oxiana Limited, a Director of Pan Australian Resources Limited, a Member of IOM3 and a Fellow of the Australasian Institute of Mining and Metallurgy.

1,144,410 ordinary shares in Kentor Gold N.L. and options to acquire Interest in shares a further 291,149 ordinary shares

MEETINGS OF DIRECTORS

During the financial year, 1 meeting of directors was held and attended by the following directors: Meetings

	. Attended
CAM Hider
H McKinnon
R Wightman
H Wightman (Alternate for R Wightman)	4

In addition, 5 circulatory resolutions were issued for ratification by all directors.

DIRECTORS' EMOLUMENTS

Mr. Hugh McKinnon receives a remuneration of \$36,000 per annum.

ENVIRONMENTAL ISSUES

The economic entity, at this stage, operates only as an exploration company, and only in the Kyrgyz Republic. Accordingly, its environmental issues are covered by the laws of that country. No drilling operations had commenced at 30 June 2003. There have been no breaches of environmental requirements or laws.

DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE, 2003 (CONTINUED)

DIRECTORS' AND AUDITOR'S INDEMNIFICATION

The economic entity has not, during or since the end of the financial year, in respect of any person who is or has been a director or auditor of the economic entity or of a related body corporate:

• indemnified or made any relevant agreement for indemnifying against a liability including costs and expenses in successfully defending legal proceedings; or
• paid or agreed to pay a premium in respect of a contract insuring against a liability for the costs or expenses to defend legal proceedings.

OPTIONS

1,160,000 options to acquire ordinary shares were issued to directors or director related entities during the year, exercisable at 10 cents each on or before 1 April 2006.

2,500,000 options to acquire ordinary shares were issued during the year, exercisable at 10 cents each on or before 1 April 2006.

1,500,000 options to acquire ordinary shares were issued during the year, exercisable at 7 cents each on or before 1 April 2005.

No person entitled to exercise the options had or has any right by virtue of the options to participate in any share issue of any other body corporate.

No shares have been issued by virtue of the exercise of an option during the year or to the date of this report. 28,981,632 options to acquire ordinary shares expired 1 July 2003. There are 5,160,000 unissued ordinary shares for which options are outstanding at the date of this report.

PROCEEDINGS ON BEHALF OF COMPANY

No person has applied for leave of Court to bring proceedings on behalf of the economic entity or intervene in any proceedings to which the economic entity is a party for the purpose of taking responsibility on behalf of the economic entity for all or any part of those proceedings.

The economic entity was not a party to any such proceedings during the year.

Dated at Melbourne on this $\sqrt{2}$ day of December 2004 Signed in accordance with a resolution of the Board of Directors,

⊣N BARR DIRECTOR

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KENTOR GOLD N.L. A.B.N. 52 082 658 080 AND CONTROLLED ENTITY

DIRECTORS' DECLARATION

The directors of the company declare that:

• the financial statements and notes are in accordance with the Corporations Act 2001: $\overline{1}$
• comply with Accounting Standards and the Corporations Regulations 2001; and $(a)$
• give a true and fair view of the financial position as at 30 June 2003 and of the $(b)$ performance for the year ended on that date of the company;
• In the directors' opinion, there are reasonable grounds to believe that the Company will $2.$ be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors,

Dated this $2x^{\omega}$ day of December 2004 JOHN/BARR

BIRECTOR

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KENTOR GOLD NL A.B.N. 52 082 658 080 AND CONTROLLED ENTITY

STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30TH JUNE 2003

		Economic Entity		Parent Entity
	Note	2003	2002	2003 \$	2002 \$
CLASSIFICATION OF EXPENSES BY NATURE Revenues from ordinary activities Other expenses from ordinary activities Foreign Exchange Gain/(Loss)	2 2 3	16.974 (40.051) (157.737)	6.827 (66.018) (141, 277)	211 (16, 764) (48,476)	(13,688) (24.367)
Loss from ordinary activities before income tax expense Total changes in equity other than those	з	(180.814)	(200.468)	(65,029)	(38,055)
resulting from transactions with owners as owners		(180.814)	(200, 468)	(65,029)	(38,055)

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KENTOR GOLD NL A.B.N. 52 082 658 080 AND CONTROLLED ENTITY

STATEMENT OF FINANCIAL POSITION AS AT 30TH JUNE 2003

		Economic Entity		Parent Entity
	Note	2003	2002	2003	2002
		\$	s	\$	\$
CURRENT ASSETS
Cash assets	6	441,459	33,126	433,585	28,755
Receivables	$\overline{t}$	47,549	65,719	25,012	46,880
Other	8		930
TOTAL CURRENT ASSETS		489,008	99,775	458,597	75,636
NON-CURRENT ASSETS
Other financial assets	8	248,889	240,813	915,222	789,567
Property, plant and equipment	9	12,330	29,454		11,839
Intangible assets	10	9.332	10,871	1,570	1,570
TOTAL NON-CURRENT ASSETS		270.551	281,138	916,792	802,976
TOTAL ASSETS		759 559	380,913	1,375,389	878,612
CURRENT LIABILITIES Payables	11	63 206	25,901	62.919	23,268
TOTAL CURRENT LIABILITIES		63,206	25,901	62.919	23,268
TOTAL LIABILITIES		63,206	25,901	62,919	23,268
NET ASSETS		696.353	355,012	1,312,470	855,344
EQUITY					1,007,945
Contributed equity	12	1,530,100	1,007,945	1,530,100
Accumulated losses	5	(715, 951)	(558, 293)	(217, 630)	(152, 601)
Outside Equity Interest	13	(117, 796)	(94, 640)
TOTAL EQUITY		696,353	355,012	1,312,470	855,344

The accompanying notes form part of these financial statements.

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KENTOR GOLD NL A.B.N. 52 082 658 080 AND CONTROLLED ENTITY

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30TH JUNE 2003

	Economic Entity		Parent Entity
	2003	2002	2003	2002
	\$	s	S	s.
CASH FLOW FROM OPERATING ACTIVITIES
Payment to Suppliers and employees	4,716	(90.443)	24,005	(96, 187)
Net Cash (used in) / provided by operating activities	4,716	(90.443)	24,005	(96, 187)
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for Exploration Costs	(148, 839)	(169, 915)
USD Funds Advanced to Subsidiary			(38,58)	(49.127)
AUD Funds Advanced to Subsidiary			(135, 339)	(90.452)
Disposal of Minor Items	930	(9)
Payment for Intangibles	(2)	(13) (14, 539)
Payment for Property, Plant & Equipment	12,321	24,386	11,839
Proceeds on Disposal of Property, Plant & Equipment	21868	(46, 880)	21,368	(46, 880)
Proceeds from Action Hydrocarbons Ltd	(3,698)	19,039
Proceeds provided to Other Debtors Payment to Related Parties	(1, 118)	(7,940)	(1, 118)	(7, 940)
	(118,538)	(195, 871)	(141, 331)	(194.399)
Net Cash used in investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from share issue	522.155	319,148	522,155	319,148
Net Cash provided by financing activities	522,155	319,148	522,155	319,148
Net increase in cash held	408.333	32,834	404.829	28,562
Cash at beginning of year	33,126	292	28.756	194
Cash at end of year	441,459	33,126	433,585	28,756

The accompanying notes form part of these financial statements.

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KENTOR GOLD NL A.B.N. 52 082 658 080
AND CONTROLLED ENTITY

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30TH JUNE 2003

	Economic Entity		Parent Entity
	2003	2002	2003	2002
	\$	5	s	\$.
Notes to the Statement of Cash Flows
Reconciliation of Cash
Cash at the end of financial year as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows:
Cash on Hand Cash at Bank	1 441458	1 33,125	1 433,584	28,755
	441459	33,126	433,585	28,756
Reconciliation of Net Cash provided by Operating Activities to profit from ordinary activities after Income Tax
Operating loss after income tax	(180, 814)	(200, 468)	(65,029)	(38,055)
Depreciation Amortisation of Intangible Assets Foreign Exchange Translation Loss	4.803 1.541 140,763	8,111 1,482 134,450	48,265	3,436 24,367
Changes in Assets and Liabilities: (Decrease) increase in trade and other creditors	38,423	(34,018)	40.769	(85, 935)
Cash flows from operations	4,716	(90, 443)	24,005	(96.187)

The accompanying notes form part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2003

Statement of Significant Accounting Policies $\overline{1}$

The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Urgent Issues Group Consensus Views and other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

The financial report covers the economic entity of Kentor Gold N.L. and controlled entities, and Kentor Gold N.L. as an individual parent entity. Kentor Gold N.L. is a company incorporated and domiciled in Australia.

The financial report has been prepared on an accruals basis and is based on historical costs and does not take into account changing money values or, except where stated, current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets.

The following is a summary of the material accounting policies adopted by the economic entity in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

(a) Principals of Consolidation

A controlled entity is any entity controlled by Kentor Gold N.L. Control exists where Kentor Gold N.L. has the capacity to dominate the decision-making in relation to the financial and operating policies of another entity so that the other entity operates with Kentor Gold N.L. to achieve the objectives of Kentor Gold N.L. A list of controlled entities is contained in Note 17 to the financial statements.

All inter-company balances and transactions between entities in the economic entity, including any unrealized profits or losses, have been eliminated on consolidation.

Where controlled entities have entered or left the economic entity during the year, their operating results have been included from the date control was obtained or until the date control ceased.

Outside interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial report.

(b) Income Tax

The economic entity adopts the liability method of tax-effect accounting whereby the income tax expense is based on the profit from ordinary activities adjusted for any permanent differences.

Timing differences, which arise due to the different accounting periods in which items of revenue and expense are included in the determination of accounting profit and taxable income, are brought to account as either a provision for deferred income tax or as future income tax benefit at the rate of income tax applicable to the period in which the benefit will be received or the liability will become payable.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond any reasonable doubt. Future income tax benefits in relation to tax losses are not brought to account unless there is virtual certainty of realisation of the benefit.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2003

(c) Investments

Non-current investments are measured on the cost basis. The carrying amount of investments is reviewed annually by directors to ensure it is not in excess of the recoverable amount of the investments. The recoverable amount is assessed from the quoted current market value for shares in listed companies or the underlying net assets for other non-listed corporations. The expected net cash flows from investments have not been discounted to their present value in determining the recoverable amounts.

(d) Property, Plant and Equipment

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation.

Property

Freehold land and buildings are measured on the fair value basis, being the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction. It is the policy of the economic entity to have an independent valuation every three years, with annual appraisals being made by the directors.

The revaluation of freehold land and buildings has not taken account of the potential capital gains tax on assets acquired after the introduction of capital gains tax.

Plant and equipment

Plant and equipment are measured on the cost basis.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount of those assets. The recoverable amount is assessed on the basis of expected net cash flows which will be received from the assets' employment and subsequent disposal. The expected net cash flows have not been discounted to present values in determining recoverable amounts.

Depreciation

The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land, are depreciated on straight line basis over their estimated useful lives to the economic entity commencing from the time the asset is held ready for use. Properties held for investment purposes are not subject to a depreciation charge.

(e) Employee Benefits

Contributions are made by the economic entity to an employee superannuation fund and are charged as expenses when incurred.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2003

(f) Cash

For purposes of the statement of cash flows, cash includes deposits at call with financial institutions and other highly liquid investments with maturity within less than 3 months which are readily convertible to cash on hand at the investor's opinion and are subject to an insignificant risk of changes in value, and borrowings which are integral to the cash management function and which are not subject to a term facility.

(g) Revenue

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

All revenue is stated net of the amount of goods and services tax (GST).

(h) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the assets or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST.

(i) Preliminary Expenses

Preliminary expenses have been carried forward to be written off in the first year of income received from trading.

(j) Exploration and Development Expenditure

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not 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 profits 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.

(k) Foreign Currency Transactions and Balances

Foreign currency transactions during the year are converted to Australian currency at the rates of exchange applicable at the dates of the transactions. Amounts receivable and payable in foreign currencies at balance date are converted at the rates of exchange ruling at that date.

The gains and losses from conversion of assets and liabilities, whether realised or unrealised, are included in profit from ordinary activities as they arise.

The assets and liabilities of the overseas controlled entities, which are intergrated, are translated in accordance with AASB 1012 Foreign Currency Translation, and the operating results are translated using the average exchange rate for the year. Gains and losses arising on translation are taken directly to the profit and loss statement.

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KENTOR GOLD NL A.B.N. 52 082 658 080 AND CONTROLLED ENTITY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2003

		Economic Entity		Parent Entity
		2003	2002	2003	2002
		5	Ś.	s.	\$
2	Revenues and Expenses
	Operating Revenues
	Other revenue	16,974	6,827	211
		16,974	6,827	211
	Operating Expenses
	Depreciation	4,803	8,111		3,436
	Amortisation	1,541	1,482
	Audit Remuneration	3,302	2,145	2,442	2,145
	Capital Raising Costs	11,194	$\blacksquare$	11,194
	Consulting Services	3,977	(8,672)	3,977	(8.672)
	Printing & Stationery		1,959		1,959 750
	Rental		750 12,787	(2.849)	12,787
	Travel	(2,649) 18,083	47,456	2,000	1,283
	Other expenses
		40,051	66,018	16,764	13,688
	Auditors' Remuneration
	Remuneration of the auditor of the parent entity for:
	- auditing or reviewing the financial report	2,442	2,145	2,442	2,145
	Remuneration of other auditors of subsidiaries for:
	- auditing or reviewing the financial reports of	860
	subsidiaries
3	Profit from Ordinary Activities
	Profit from ordinary activities before
	income tax expense has been
	determined after:
	Expenses:
	Foreign Exchange Loss on revaluation of USD Loan Receivable from foreign controlled entity			48,476	24,367
	Net Exchange difference recognised on translation
	of foreign controlled entity	157,737	141.277
4	Income Tax Expense
	Future income tax benefits are not brought to account, the
	benefits of which will only be realised if the conditions for
	deductibility set out in Note 1 occur.
	- Tax losses	381,282	200 468	103,084	38,055

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KENTOR GOLD NL A.B.N. 52 082 658 080 AND CONTROLLED ENTITY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2003

			Economic Entity Parent Entity
		2003 \$	2002 s	2003 5	2002 \$
$\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\over$	Accumulated Losses
	Accumulated losses at the beginning of the
	financial year	(558, 293)	(390, 308)	(152, 601)	(114, 546)
	Net loss attributable to members
	of the company	(180, 814)	(200, 468)	(65,029)	(38,055)
	Net loss attributable to Outside Equity Interest	23,156	32,483
	Accumulated losses at the end of the
	financial year	(715, 951)	(558, 293)	(217, 630)	(152, 601)
6	Cash Assets
	Cash on Hand	1	1	1	1
	Cash at Bank	441458	33,125	433,584	28,755
		441 459	33,126	433,585	28,756
7	Receivables
	CURRENT				46,880
	Loan (unsecured) - Action Hydrocarbons Limited Other Receivable	25,012 22,537	46,880 18,839	25,012
		47,549	65,719	25,012	46,880
8	Other Financial Assets
	CURRENT
	Raw Materials		15
	Items of Little Value		915
			930
	Exploration Expenditure
	Costs carried forward in respect of areas of interest
	in exploration and evaluation phases	248,889	240,813
	USD Loan Receivable from foreign controlled entity			233,549	243 233
	AUD Loan Receivable from foreign controlled entity			654,538	519.199
	Investment in foreign controlled entity			27,135	27,135
		248.889	240,813	915,222	789,567

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KENTOR GOLD NL A.B.N. 52 082 658 080
AND CONTROLLED ENTITY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2003

	2003	2002	2003	2002
				-1
Property, Plant and Equipment
Less: Accumulated Depreciation	33,857	31,651	$\blacksquare$
	12,330	17,615	$\mathbf{u}_\mathrm{f}$
		32,040		32,040
Less: Accumulated Depreciation		20,201	۰	20,201
		11,839		11,839
	12.330	29,454	$\rightarrow$	11,839
	Plant & Equipment Motor Vehicle - at Cost Total Plant and Equipment	46,187	Economic Entity 49,266	Parent Entity

Movement in Carrying Amounts: Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year.

$\bar{\beta}$

Economic Entity Balance at beginning of the year Disposals Depreciation expense	Freehold Land 5 $\mathbf{a}$	Buildings \$ ۰.	Plant and Equipment 5 17,615 (482) (4, 803)	Motor Vehicles s 11,839 (11, 839)	Total 5 29,454 (12,321) (4, 803)
Carrying amount at the end of the vear		$\blacksquare$	12,330	м.	12,330
Parent Entity Balance at beginning of the year Disposals	Freehold Land s	Buildings \$	Plant and Equipment s	Motor Vehicles Ъ 11.839 (11, 839)	Total s 11,839 (11, 839)
Carrying amount at the end of the year

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2003

		Economic Entity		Parent Entity
		2003	2002	2003	2002
		\$	s	s	\$.
10	Intangibles Assets
	Preliminary Expenses (at cost)	1.570	1,570	1,570	1,570
	Geological Information & Licenses	7762	9,301
		9.332	10,871	1,570	1,570
11	Payables CURRENT Trade Creditors Unsecured loans from director related entities	58.624 4 3 3 2 200	20,201 5,500 200	58,337 4,382 200	17,568 5,500 200
	Unsecured Ioans - Director	63,206	25,901	62,919	23,268
12 1	Contributed Equity Paid Up Capital: 44,964,628 (2002 - 36,387,487) Fully Paid Ordinary Shares	1,530,100	1,007,945	1,530,100	1,007,945
	At the beginning of the reporting period Shares issued during the period (as listed below)	1,007,945 522,155	688,797 319, 148	1,007,945 522,155	688,797 319,148
		1,530,100	1,007,945	1,530,100	1,007,945

During the year the following capital transactions occurred:

• (A) 8 November 2002 116,500 ordinary shares were issued at 4 cents per share
• (B) 8 November 2002 375,000 ordinary shares were issued at zero cents per share to a director

(C) 14 January 2003 - 71,428 ordinary shares were issued at 7 cents per share

• (D) 1 April 2003 2,500,000 options to ordinary shares were issued, exercisable at 10 cents on or before 1 April 2006.
• (E) 1 April 2003 1,160,000 options to ordinary shares were issued to directors, exercisable at 10 cents on or before 1 April 2006.
• (F) 1 April 2003 1,500,000 options to ordinary shares were issued, exercisable at 7 cents on or before 1 April 2005.
• (G) 1 May 2003 500,000 ordinary shares were issued at 3 cents per share.
• (H) 30 June 2003 950,000 ordinary shares were issued at 4 cents per share to a director.
• (I) 30 June 2003 185,714 ordinary shares were issued at 7 cents per share to a director.
• (J) 30 June 2003 6,378,499 ordinary shares were issued at 7 cents per share.

$\mathbf{F}_{\mathrm{in}}$

E,

KENTOR GOLD NL A.B.N. 52 082 658 080 AND CONTROLLED ENTITY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2003

		Economic Entity		Parent Entity
		2003 2002		2003	2002
13	Outside Equity Interest
	Outside Equity Interest comprises
	Share Capital	6.784	6.784	$\blacksquare$
	Reserves			$\overline{\phantom{a}}$
	Retained Profits/(Losses)	(124, 580)	(101.424)	-
		(117, 796)	(94, 640)	$\blacksquare$

Directors' and Executives' Remuneration $14$

$15$

(a) Names and positions held of parent entity directors at any time during the financial year

Parent Entity Directors
--------------------------------	--

Charles Allen Moir Hider		Chairman
Hugh McKinnon		Managing Director
Robin Clive Wightman
lan Ennis		Alternate for Mr. C.A.M. Hider
Heather Joyce Wightman		. Alternate for Mr. H. McKinnon
Heather Joyce Wightman			Alternate for Mr. RC Wightman - appointed 7/11/02
	(b) Parent Entity Directors' Remuneration
	Income paid or payable to all directors of the parent entity
by the parent entity			36,000	36,000
	Number of directors whose income from the parent entity
	was within the following bands:
$$0 - $9,999$			4	4
\$30,000 - \$39,999			1	1.
Parent Entity Related Party Transactions	Transactions between parent entity related parities are on normal commercial terms and conditions no more favourable than those available to other persons unless otherwise stated.
	PARENT ENTITY DIRECTOR RELATED ENTITIES
	Action Hydrocarbons Limited - a company in which Messrs CAM Hider, ID Ennis, H McKinnon, RC Wightman, and Mrs HJ Wightman are directors - for net movement in loan funds relating to payments for exploration and other costs.		26,528	55,020
	Torrington Investments Pty Ltd - in which Mr CAM Hider is a Director - accrued consultancy fees for 1998 and 1999 of \$50,000
of shares at \$0.02 cents	(adjusted by subsequent AGM Minute) and satisfied by issue			(7,000)

$\hat{\boldsymbol{\beta}}$

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2003

		Economic Entity		Parent Entity
		2003		2002	2003	2002
				S
15	Parent Entity Related Party Transactions (continued)
	Mr Ian Ennis - accrued consultancy fees for 1998 and 1999 Of \$50,000 (adjusted by subsequent AGM Minute) and
	Satisfied by the issue of shares at \$0.04 cents				(10.010)

The names of the directors who have held office during the year are: Messrs CAM Hider, ID Ennis, H McKinnon, RC Wightman and HJ Wightman (appointed 4 February 2002).

Financial Instruments

16

(a) Interest Rate Risk

The economic entity's exposure to interest rate risk, which is the risk that a financial instrument's value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on those financial assets and liabilities, is as follows:

	Floating interest Rate		Non Interest Bearing		Total Carrying Amount as per Statement of Financial Position		Weighted Average Effective Interest Rate
Financial Instruments
	June	June	June	June	June	June	June	June
	2003	2002	2003	2002	2003	2002	2003	2002
	s	s	3	5	s	5	٧.	$\frac{1}{2}$
(I) Financial Assets
Cash at Bank	441,459	33,126			441,459	33 126	5.0	5.0
Receivables			$-7,549$	65,710	47.549	65 719
Total Financial Assets	441.459	33,126	47,549	65,719	489,008	98.845
(ii) Financial Liabilities
Trace Creditors			58,624	20,201	58.624	20,201
Other Payables			4,5821	5,700	4,582	5.700
Total Financial Liabilities			63,206	25,901	63,206	25,901

(b) Credit Risk

The maximum exposure to credit risk, excluding the value of any collateral or other security at balance date, to recognised financial assets is the carrying amount of those assets, net of any provisions for doubtful debts, as disclosed in the statement of financial position and notes to the financial statements.

The economic entity does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the economic entity.

(c) Net Fair Values

The net fair values of financial assets and liabilities approximate their carrying value. No financial assets and financial liabilities are readily traded on organised markets in standardised form other than listed investments. Financial assets where the carrying amount exceeds net fair values have not been written down as the economic entity intends to hold these assets to maturity.

The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the statement of financial position and in the notes to the financial statements.

$\mathcal{A}(\mathcal{G})$ , $\mathcal{A}(\mathcal{G})$

$\hat{\mathcal{A}}$

$\omega$ $\frac{1}{\pi}$

KENTOR GOLD NL A.B.N. 52 082 658 080 AND CONTROLLED ENTITY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2003

		Economic Entity 2003 S	2002	Parent Entity 2003	2002 s
17	Controlled Entities	Country of Incorporation	Percentage Owned (%) 2002 2003
	Parent Entity: Kentor Gold N.L.	Australia
	Subsidiaries of Kentor Gold N.L.
	Closed Joint-Stock Company Kentor	The Kyrgyz Republic		80%	80%

Company Detalls 18

The registered address and principal place of business of the parent entity is:

$\sim$

$\sim 0.1$

Kentor Gold N.L. Level 1 524 Malvern Road Prahran Vic 3181

LEVEL 2, 50 BURWOOD ROAD, HAWTHORN

P.O. Box 325, Hawthorn, Victoria 3122, Australia Tel +613 9819 4011 Fax +613 9619 6780 Web www.raggweir.com.au Email raggweir@raggweir.com.cu

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF KENTOR GOLD NL

Scope

We have audited the financial report of Kentor Gold NL for the financial year ended 30 June 2003. The financial report comprises the Statement of Financial Position, Statement of Financial Performance, Statement of Cash Flows, accompanying notes to the financial statements and the directors' declaration for the year ended 30 June 2003. The consolidated entity comprises both the company and the entity it controlled during the year.

The company's directors are responsible for the financial report.

We have conducted an independent audit of the financial report in order to express an opinion on it to the members of Kentor Gold NL. Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the financial report is free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion whether, in all material respects, the financial report is presented fairly in accordance with Accounting Standards and other mandatory professional reporting requirements and statutory requirements in Australia so as to present a view which is consistent with our understanding of the company's and consolidated entity's financial position and performance as represented by the results of their operations and cash flows.

The audit opinion expressed in this report has been formed on the above basis.

Qualification

The operations of the subsidiary are funded by loans from the parent entity as indicated in Note 8 to the financial statements. As the subsidiary is in a net asset deficiency position this means that there is a diminution in the carrying value of the loans receivable from and investment in the subsidiary as stated in the parent company's accounts. The parent entity has not recognised the diminution in value as indicated by the accounts of the parent entity disclosing a higher net assets position than the economic entity at 30 June 2003. In our opinion a provision of \$498,321 should have been recognised in the accounts of the parent entity. Had this been done the parent company accounts would show a loss for the year of \$563,350, an accumulated loss of \$715,951 and other non current financial assets of \$416,901.

Qualified Audit Opinion

In our opinion, except for the effects on the financial report of the matters referred to in the qualification paragraph the financial report of Kentor Gold Ltd is in accordance with:

a. the Corporations Act 2001, including:

• i. giving a true and fair view of the company's and consolidated entity's financial position as at 30 June 2003 and of their performance for the year ended on that date; and
• ii. complying with Accounting Standards in Australia and the Corporation Regulations 2001; and

b. other mandatory professional reporting requirements in Australia.

Mr Ragg Wen

MSI RAGG WEIR CHARTERED ACCOUNTANTS

$\mathcal{L}_l$ , $\mathcal{L}_l$ , fibond . G.D. WOOD

PARTNER

Melbourne: 22 December 2004