LAKE RESOURCES N.L. — Annual Report 2003

Sep 10, 2003

ABN 49 079 471 980

FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2003

CORPORATE GOVERNANCE STATEMENT

Board of Directors

Responsibilities

The Board is responsible for the overall Corporate Governance of the company, including the strategic direction, establishing goals for management and monitoring the achievement of those goals.

Composition

The Board currently has four directors, comprising two non-executive directors and two executive directors. The Chairman is elected by the Board and is an independent director. The composition of the Board is reviewed on an annual basis by the Chairman to ensure that the Board has the appropriate mix of expertise and experience.

Nomination and Election of Directors

When a vacancy arises, or where it is considered that the Board would benefit from the services of a new Director with particular skills, a Nominations Committee is formed to select a panel of suitable candidates. The Board will then appoint the most suitable candidate who must stand for election at the next general meeting of shareholders. This committee will then be disbanded. Previously, the Board has held the view that it was not necessary to establish a permanent Nomination Committee.

Independent Advice

The company has well-established procedures enabling any Director or committee of the Board to seek external professional advice as considered necessary, at the company's expense. Prior written approval of the Chairman is required, but this will not be unreasonably withheld.

Risk Management

The Board sets the framework for the Company's long-term success, approving its annual budget, assessing business risks and providing overall policy guidance. The Board monitors safety and environmental performance on a continuing basis and has systems in place to review company controls and to ensure compliance with laws and ethical behaviour.

Ethical Standards

The company's policy regarding directors and employees trading in its securities is set by the Board collectively. The policy restricts directors and employees from acting on material information until it has been released to the market and adequate time has been given for this to be reflected in the security's price.

Audit Committee

At the date of this report the company does not have an audit committee. Given the nature of the company's activity, directors do not believe that the efficiency or effectiveness of the Board in meeting its fiscal responsibilities would be enhanced through the formation of an audit committee at this stage.

The Board oversees the existence and maintenance of internal controls and accounting systems through the use of independent accounting services, appropriate financial reporting processes and the review of company performance and activity with the company's auditor.

ASX Corporate Governance Guidelines

The Board is currently undertaking a review of the ASX Corporate Governance Guidelines with a view to assessing the company's level of compliance with those guidelines and determining what additional governance measures should be implemented.

DIRECTORS' REPORT

Your directors present their report of the company for the year ended 30 June 2003.

1 Directors

The directors of the company at any time during or since the end of the year are listed below. During the year there were 6 meetings of the full board of directors. The meetings attended by each director were:

DIRECTORS	FULL BOARD MEETING OF DIRECTORS
K.J. Foots - Chairman	b
J.C. Clavarino - Exploration Director	f,
P.J. Gilchrist - Managing Director	6
R. Johnston-	5

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

2 Principal Activities

The principal activity of the company in the course of the year was mineral exploration.

3 Review of Operations

The operating loss after applicable income tax was \$2,377,619 (2002: \$969,149 loss). Refer also to the Chairman's Report.

4 Dividends

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

5 Significant Changes in State of Affairs

The following significant changes in the state of affairs of the company occurred during the financial year:

• On 13 January 2003, the company issued 583,687 shares for \$58,369, in satisfaction of accrued fees for services provided to the company by geological consultants.
• On 20 April 2003, the company withdrew from the exploration agreement with Zinkgruvan Mining AB in relation to an agreed area in the Bergslagen District of Sweden. The company has discontinued exploration activity in this area.
• On 4 September 2002 the company reached agreement with BHP Billiton on joint venture terms ٠ for the company's Moskosel Project in northern Sweden. BHP Billiton subsequently withdrew from the joint venture on 18 July 2003.

DIRECTORS' REPORT

6 Future Developments

Likely developments in the operation of the company and the expected results of those operations in future financial years have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the company.

7 Share Options

At the date of this report, the unissued ordinary shares of the company under option are as follows:

Grant Date	Expiry Date	Exercise Price	No. Under Option
-30 June 1999 -	30 June 2004	\$0.40	4.610.364

8 Officers' and Auditors' Indemnification

The company has not, during or since the financial year, in respect of any person who is or has been an officer or auditor of the company or a related body corporate:

• indemnified or made any relevant agreement for indemnifying against a liability incurred as $\bullet$ an officer, 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 incurred as $\bullet$ an officer for the costs or expenses to defend legal proceedings.

9 Directors' Emoluments

Details of remuneration provided to Directors are shown below:

Directors	Director's
	Feee
K.J. Foots	\$3,000
J.C. Clavarino	\$3,000
P.J. Gilchrist	\$3,000
R. Johnston	\$3,000

10 After Balance Date Events

It is proposed that, subject to shareholder approval, the company will sell the shares it currently owns in Lake Resources Holdings India Private Limited ("LHI") to Mr Steve Newbery, a former director of parent entity and Mr Ramon Newbery. LHI is a wholly owned, dormant subsidiary of the parent entity.

Consideration for the sale will consist of all the Lake Resources shares currently held by Messrs Newbery. This represents 230,250 shares, issued at \$0.40 per share and 117,623 options to acquire fully

DIRECTORS' REPORT

paid shares in Lake at an exercise price of \$0.40. The value of this consideration is \$15,197 based on the last sale price of Lake shares on the ASX at the close of trade on 31 March 2003 (\$0.066).

The shares held in LHI are carried in Lake's books at a zero value. The book value of the investment was written-off in the 2001/02 financial year, following a decision not to proceed with exploration activity in India. On completion of the transaction the shares acquired by Lake would be cancelled.

No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the company, the results of those operations, or the state of affairs of the company in future financial years.

11 Environmental Regulations

The company's operations are not regulated by any significant environmental regulation under the law of the Commonwealth or of a State or Territory.

12 Information on Directors

The Company's Directors have a strong background in mineral exploration, mining engineering, mine management, finance and accounting, with considerable international experience including Australia, USA, Canada, Philippines, Indonesia, Papua New Guinea, Pakistan, Myanmar and Sweden.

Name	Qualifications
Ken J. Foots	B.Eng.(Mining), C.P.A.
Peter J. Gilchrist	B.Eng.(Civil), M.Eng.Sc, M.B.A.
James G. Clavarino	F.R.M.I.T.(Geology) M.A.I.M.M., M.M.I.C.A.
Ross Johnston	B.Comm, F.C.A.

Relevant interests of the Directors in the share and options of the Company and related bodies corporate are:

	Ordinary Shares	Options
Ken.J.Foots	561.000	51.938
Peter J. Gilchrist	395,004	46.501
James G. Clavarino	998,600	821,025
Ross Johnston	280.000	33.337

Messrs Foots, Gilchrist and Johnston have an interest in 444,960 ordinary shares held by Kemkay Pty Ltd, a subsidiary of 202 Ltd of which they are Directors and substantial shareholders. They also have an interest in 2,329,850 options held by 202 Ltd.

Mr Foots also has an interest in 208,000 shares held by K.J. & N.A. Foots as trustee for the Viken Super Fund. Mr Foots is a Director of Kenpammer Pty Ltd, which holds 175,000 shares in the company.

DIRECTORS' REPORT

Mr Gilchrist is also a Director of and a substantial shareholder in Trenlin Pty Ltd a company that held 361,611 shares in the company.

Mr Ross Johnston is a Director and substantial shareholder of the following companies, which held shares in Lake Resources N.L.

Company	Shares Held
Oberon Pty. Ltd.	150.000
Bushfly Air Charter Pty. Ltd.	318,000
	468,000

13 Proceedings on Behalf of the Company

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

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

This report has been made in accordance with a resolution of Directors.

Ken Foots

• Gillt

K.J. Foots Director

Signed: 1 September 2003 Brisbane, Queensland

. . . . . . . . . . . . . . . . . . . .

P.J. Gilchrist Director

. . . . . . . . . . . . . . . . . . . .

DIRECTORS' DECLARATION

The directors of the company declare that:

• $\mathbf{1}$ The attached financial statements and notes are in accordance with the Corporations Act 2001 and:
• ${a}$ comply with Accounting Standards and the Corporations Regulations 2001; and
• $(b)$ give a true and fair view of the company's financial position as at 30 June 2003 and performance for the year ended on that date.
• $\overline{2}$ In the directors' opinion 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 is made in accordance with a resolution of the Board of Directors.

Ken Foots

. . . . . . . . . . . . . . . . . . . . K.J. Foots Director

• Gillt

. . . . . . . . . . . . . . . . . . . . P.J. Gilchrist Director

September 2003 Dated this 1 st day of

ABN 49 079 471 980

STATEMENT OF FINANCIAL PERFORMANCE

for the year ended 30 June 2003

	Note	2003	2002
		\$	\$
Revenues from ordinary activities	2	84,169	42,210
Classification of Expenses by Function:	3
Write-off of deferred exploration costs		(1, 133, 055)	(615,739)
Write-off of exploration costs carried at valuation		(1,160,000)
Current year exploration costs			(184, 835)
Administrative costs		(101,692)	(135, 168)
Corporate costs		(51,253)	(53, 474)
Occupancy costs		(15,788)	(17, 143)
Other expenses from ordinary activities			(5,000)
Loss from ordinary activities before income tax expense		(2,377,619)	(969, 149)
Income tax expense relating to ordinary activities	$\overline{4}$
Net loss		(2,377,619)	(969, 149)
Net movement in asset revaluation reserve	16	(891, 802)	(300,000)
Transfer from accumulated losses	17	891,802
Total changes in equity other than those resulting from
transactions with owners as owners		(2,377,619)	(1,269,149)
Basic earnings per share (cents per share)	7	(0.108)	(0.046)
Diluted earnings per share (cents per share)	7	(0.090)	(0.038)

The accompanying notes form part of these financial statements.

STATEMENT OF FINANCIAL POSITION as at 30 June 2003

	Note	2003	2002
		\$	\$
CURRENT ASSETS
Cash assets	8	727,314	971,607
Receivables	9	28,963	60,861
Other	10	4,362	8,967
Total Current Assets		760,639	1,041,435
NON-CURRENT ASSETS
Other financial assets	11	324,373	265,000
Property, plant and equipment	12	14,029	18,558
Exploration and evaluation expenditure	13	1,957,568	4,087,134
Total Non-Current Assets		2,295,970	4,370,692
TOTAL ASSETS		3,056,609	5,412,127
CURRENT LIABILITIES
Payables	14	24,107	60,375
Total Current Liabilities		24,107	60,375
TOTAL LIABILITIES		24,107	60,375
NET ASSETS		3,032,502	5,351,752
EQUITY
Contributed equity	15	4,698,340	4,639,971
Reserves	16	1,051,609	1,943,411
Accumulated losses	17	(2,717,447)	(1,231,630)
TOTAL EQUITY		3,032,502	5,351,752

The accompanying notes form part of these financial statements.

STATEMENT OF CASH FLOWS

for the year ended 30 June 2003

	Note	2003 \$	2002 \$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers Interest received		(325, 957) 25,169	(1,203,781) 42,210
Net cash provided by/ (used in) operating activities	18	(300, 788)	(1,161,571)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment Purchase of investments		(1,501) (373)	(876) (160,000)
Net cash provided by/ (used in) investing activities		(1,874)	(160, 876)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares Costs associated with share issue		58,369	1,716,479 (34,777)
Net cash provided by/ (used in) financing activities		58,369	1,681,702
Net increase/(decrease) in cash held		(244, 293)	359,255
Cash at 1 July 2002		971,607	612,352
Cash at 30 June 2003	8	727,314	971,607

The accompanying notes form part of these financial statements.

Notes to the Financial Statements for the year ended 30 June 2003

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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 accounting policies have been consistently applied, unless otherwise stated.

The following is a summary of the material accounting policies adopted by the company in the preparation of the financial report.

(a) Exploration and Evaluation Expenditure

Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are written off as incurred, except that they may be carried forward, provided that rights to tenure of an area of interest are correct and the costs are expected to be recouped through the successful development of the area, or sale, or 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 profit in the year in which the decision to abandon the area is made.

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.

(b) Income Tax

The company adopts the liability method of tax-effect accounting whereby the income tax expense shown 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 an asset described 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 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 company will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

(c) Cash

For the purpose of the statement of cash flows, cash includes:

• cash on hand and at call deposits with banks or financial institutions, net of bank overdrafts; and $(i)$
• $(ii)$ investments in money market instruments with less than 14 days to maturity.

(d) Revenue

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

Dividend revenue is recognised when the right to receive a dividend has been established. Dividends received from associates are accounted for in accordance with the equity method of accounting.

Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. All revenue is stated net of the amount of goods and services tax (GST).

Notes to the Financial Statements for the year ended 30 June 2003

Note 1: Summary of Significant Accounting Policies (continued)

(e) Property Plant and Equipment

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

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 from these assets. The recoverable amount is assessed on the basis of the 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 their present values in determining recoverable amounts.

Depreciation

The depreciable amount of all fixed assets including building and capitalised lease assets, but excluding freehold land, is depreciated over their useful lives commencing from the time the asset is held ready for use. Properties held for investment purposes are not subject to a depreciation charge.

Depreciation is calculated on the straight line basis so as to write off the net cost of each depreciable non-current asset over its expected useful life.

The depreciation rates used for each class of depreciable asset are:-

CLASS OF FIXED ASSET	DEPRECIATION RATE
Plant and Equipment-	-20%

Leasehold improvements are amortised over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

(f) Investments (Non-Current)

Non-current investments are measured on the cost basis. The carrying amount of non-current investments is reviewed annually by directors to ensure it is not in excess of the recoverable amount of these investments. The recoverable amount is assessed from the quoted market value for listed investments or the underlying net assets for other non-listed investments.

The expected net cash flows from investments have not been discounted to their present value in determining the recoverable amounts.

(g) Comparative Figures

Where required by Accounting Standards, comparative figures have been adjusted to conform with changes in presentation for the current year.

(h) Foreign Currency Transactions and Balances

Foreign currency transactions during the year are converted to Australian currency at the rates of exchange applicable at the date 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 short-term assets and liabilities, whether realised or unrealised, are included in profit from ordinary activities as they arise.

(i) 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 asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST.

ABN 49 079 471 980

Notes to the Financial Statements for the year ended 30 June 2003

	2003	2002
	\$	\$
NOTE 2: REVENUE
Operating activities:
Interest received from other persons	25,169	42,210
Consulting geological services to external parties	59,000
Total revenue	84,169	42,210
NOTE 3: PROFIT/(LOSS) FROM ORDINARY ACTIVITIES
Profit/(Loss) from ordinary activities before income tax has been determined after: (a) Expenses
Exploration expenditure		184,835
Write-down of investment in controlled entity		5,000
Depreciation of non-current assets:
- plant and equipment Foreign currency translation (gains)/losses	6,030 (530)	5,838 311
(b) Significant revenues and expenses
Write-down of capitalised exploration expenditure to recoverable
amount	1,133,055	615,739
Write-down of exploration expenditure carried at valuation to recoverable amount	1,160,000
NOTE 4: INCOME TAX EXPENSE/(BENEFIT)
Prima facie tax payable/(benefit) on profit/(loss) from ordinary activities before tax income tax at 30% (2002: 30%).	(713, 286)	(290,745)
Add tax effect of:
Other non-allowable items	13	57
Write-down on exploration and evaluation cost carried at valuation	348,000	1,500
Future income tax benefit of tax losses not brought to account	73,791	532,674
Less tax effect of:
Timing differences between income tax and accounting treatment
of exploration and other expenditure	291,482	(243, 486)
Income tax expense attributable to profit/(loss) from ordinary
activities before income tax

The company has unrecouped, unconfirmed carry forward tax losses of approximately \$ 3,680,000 (2002: \$3,375,000).

The future income tax benefit of these carry forward losses has not been brought to account as realisation is not virtually certain. The benefit will only be realised if:

(a) the company derives future assessable income of a nature and of an amount sufficient to enable the benefits from the deductions for the losses to be realised;

(b) the company continues to comply with the conditions for deductibility imposed by the law; and

(c) no changes in tax legislation adversely affect the company in realising the benefit from the losses.

ABN 49 079 471 980

Notes to the Financial Statements for the year ended 30 June 2003

	2003	2002
	\$	\$
NOTE 5: REMUNERATION AND RETIREMENT BENEFITS
The names of directors who have held office during the financial year are: James G. Clavarino Kenneth J. Foots Peter J. Gilchrist Ross Johnston
a. Directors' Remuneration
Income paid or payable to all directors of the company by the entity and any related parties.	12,000	12,000
The number of directors of the company whose income from the company or any related party falls within the following bands: \$0 - \$9,999	4	4
b. Retirement and Superannuation Payments
Amounts of a prescribed benefit given during year by the company or a related party to director or a prescribed superannuation fund in a connection with the retirement from a prescribed office:
c. Executive Remuneration
Amounts of a prescribed benefit given during year by the company or a related party to director or a prescribed superannuation fund in a connection with the retirement from a prescribed office:
NOTE 6: AUDITORS' REMUNERATION
Remuneration of the auditor of the company for: - auditing or reviewing the financial report	5,250	4,750
NOTE 7: EARNINGS PER SHARE
(a) The earnings figure used in the calculation of both the basic EPS and the dilutive EPS are the same.	(2,377,619)	(969, 149)
(b) Weighted average number of ordinary shares outstanding during the year used in the calculation of basic EPS	22,059,014	21,145,419
Weighted average number of options outstanding	4,431,364	4,431,364
Weighted average number of ordinary shares outstanding during the year used in the calculation of dilutive EPS	26,490,378	25,576,783

(c) Classification of Securities

Options to acquire ordinary shares in the company have been classified as potential ordinary shares and included in determination of dilutive EPS.

ABN 49 079 471 980

Notes to the Financial Statements for the year ended $30$ June $2003$

	2003 \$	2002 \$
NOTE 8: CASH ASSETS
Cash at bank	597,792	745,136
Cash Deposits on Tenements	129,522	226,471
	727,314	971,607
NOTE 9: RECEIVABLES
Current:
Other Debtors	14,340	13,362
Foreign Currency Receivables
- Current assets not effectively hedged - Swedish Krone	14,623	47,499
	28,963	60,861
NOTE 10: OTHER ASSETS
Current:
Prepayments	4,362	8,967
NOTE 11: OTHER FINANCIAL ASSETS
Non-Current:
Unlisted investments, at cost
- shares in other entities	269,373	100,000
- shares in director related entities	55,000	165,000
	324,373	265,000
NOTE 12: PROPERTY, PLANT AND EQUIPMENT
Plant and equipment
At cost	31,097	29,596
Accumulated depreciation	(17,068)	(11,038)
Total Property, Plant and Equipment	14,029	18,558
Movement in carrying amount
Movement in the carrying amounts for each class of property, plant	Plant and
and equipment are set out below:	Equipment
Balance at the beginning of year	18,558
Additions	1,501
Disposals Depreciation expense	(6,030)
Carrying amount at the end of year	14,029

ABN 49 079 471 980

Notes to the Financial Statements for the year ended $30$ June $2003$

		2003 \$	2002 \$
NOTE 13: EXPLORATION AND EVALUATION EXPENDITURE
Exploration and evaluation costs carried forward in respect of areas of interest are:
- at cost	(a)	457,568	1,427,134
- at directors' valuation	(b)	1,500,000	2,660,000
		1,957,568	4,087,134
Movement during the year in exploration and evaluation expenditure: (a) At cost:
Opening balance		1,427,134	1,222,759
Capitalised exploration and evaluation expenditure		163,489	820,114
Write down of discontinued exploration tenements		(1, 133, 055)	(615, 739)
Carrying amount at the end of year		457,568	1,427,134
(b) At directors' valuation:
Opening balance		2,660,000	2,960,000
Write down of discontinued exploration tenements		(1,160,000)	(300,000)
		1,500,000	2,660,000
Carrying amount at the end of year
NOTE 14: PAYABLES
Current:
Unsecured Creditors
Trade Creditors			39,174
Sundry creditors and accrued expenses		24,107	21,201
		24,107	60,375
NOTE 15: CONTRIBUTED EQUITY
22,374,055 (2002: 21,790,358) fully paid ordinary shares		4,698,340	4,639,971
Fully paid ordinary shares
Balance at the beginning of the reporting period		4,639,971	2,958,269
Shares issued during the year for cash:
- 4,904,226 on 9 August 2001			1,716,479
- 583,687 on 13 January 2003		58,369
Transaction costs relating to share issues			(34, 777)
Balance at reporting date		4,698,340	4,639,971
		No.	No.
Balance at the beginning of the reporting period		21,790,358	16,886,132
Shares issued during the year:
-9 August 2001 - 13 January 2003		583,697	4,904,226
Balance at reporting date		22,374,055	21,790,358

ABN 49 079 471 980

Notes to the Financial Statements for the year ended 30 June 2003

2003	2002
\$	\$

NOTE 15: CONTRIBUTED EQUITY (Continued)

On 9 August 2001, the company issued 4,904,226 shares, at \$0.35 per share, pursuant to a prospectus dated 22 June 2001. The company was admitted to the official list of the Australian Stock Exchange on 24 August, 2001

On 13 January 2003, the company issued 583,697 shares at \$0.10 each as payment to geological consultants for work performed.

Ordinary shares participate in dividends and the proceeds on winding up of the entity in proportion to the number of shares held.

At shareholders' meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

Options

At 30 June 2003 there were 4,610,364 (2002: 4,610,364) unissued shares for which options were outstanding. Options are exercisable at \$0.40 per share. The options are exercisable on or before 30 June 2004.

NOTE 16: RESERVES

Capital profits	4,997	4,997
Asset revaluation	1,046,612	1,938,414
	1,051,609	1,943,411
Asset Revaluation Reserve:
Opening Balance	1,938,414	2,238,414
Decrement from discontinuation of exploration tenements	(891, 802)	(300,000)
Closing Balance	1,046,612	1,938,414
NOTE 17: ACCUMULATED LOSSES
Accumulated loss at the beginning of the financial year	1,231,630	262,481
Net loss	2,377,619	969,149
Transfer from asset revaluation reserve	(891, 802)
Accumulated loss at the end of the financial year	2,717,447	1,231,630

ABN 49 079 471 980

Notes to the Financial Statements for the year ended 30 June 2003

(2,377,619)	(969, 149)
6,030	5,838
1,133,055	615,739
(163, 488)	(820, 115)
1,160,000	5,000
(59,000)
31,898	(19, 717)
4,605	(5,342)
(36, 268)	26,175
(300, 787)	(1,161,571)

NOTE 19: RELATED PARTY TRANSACTIONS

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

Directors' transactions with the Company

Directors' remuneration is detailed in Note 5.

The company paid Argent Resources Pty Ltd, a company of which Mr J.C. Clavarino is a director, fees for professional services in relation to exploration work undertaken on behalf of the company.

The company paid Trenlin Pty Ltd, a company of which Mr P.J. Gilchrist is a director, fees for professional services undertaken on behalf of the company.

During the year the entity rented office space to Oroplata Limited, a company of which Mr K J Foots, a director of the company, was also a director until May 2003.

During the year the entity rented office space to Diamonex Limited, a company of which Mr P J Gilchrist, a director of the company, is also a director.

64,575	73,500
36,045	28,975
5,500	2,500
12,000	5,000

ABN 49 079 471 980

Notes to the Financial Statements for the year ended 30 June 2003

	2003 £	2002 \$
NOTE 19: RELATED PARTY TRANSACTIONS (Continued)
During the year the entity entered into an agreement to rent office space to Little Digger Mining Limited, a company of which Mr K
J Foots, a director of the company, is also a director.	12,000	4,250
During the year the entity entered into an agreement to rent office space to 202 Ltd, a company of which Mr K J Foots and Mr PJ
Gilchrist, directors of the company, are also directors.	8,800	6.145
During the year the entity provided consulting services to Diamonex Limited, a company of which Mr P J Gilchrist, a
director of the company, is also a director.	50,000

Directors' transactions in shares and options

No options were issued to director related entities during the year (2002: nil). No options held by director related entities were exercised during the year (2002: nil).

Directors' holding of shares and options

Directors and director-related entities hold directly, indirectly or beneficially as at the reporting date, the following equity interests in the company:

.	No.	No.
Ordinary shares	2,234,604	2,234,604
Options over ordinary shares	972.051	972,051

NOTE 20: CAPITAL AND LEASING COMMITMENTS

Operating Lease Commitment

Non-cancellable operating leases contracted for but not capitalised in the financial statements

Payable
not later than 1 year	57.408	50.160
later than 1 year but not later than 5 years	200.928	200,640
later than 5 years		29.260

The property lease is a non-cancellable lease with a 6 year term, with rent payable monthly in advance. Contingent rental provisions within the lease agreement require the minimum lease payments shall be increased by the greater of CPI or 4% per annum. The lease allows for subletting of all lease areas.

NOTE 21: INTERESTS IN JOINT VENTURES

During the year, the company withdrew from the exploration agreement with Zinkgruvan Mining AB (ZMAB) in relation to an agreed area in the Bergslagen District of Sweden.

On 4 September 2002 the company reached agreement with BHP Billiton on joint venture terms for the company's Moskosel Project in northern Sweden. BHP Billiton subsequently withdrew from the joint venture on 18 July 2003.

ABN 49 079 471 980

Notes to the Financial Statements for the year ended 30 June 2003

	2003 S	2002
NOTE 22: CONTINGENT LIABILITIES
Estimate of the maximum amount of contingent liability that may become payable:
Guarantee
The company has provided a guarantee to third parties in relation to obligations under its property lease rental agreement.	34.406	34.406

NOTE 23: FINANCIAL INSTRUMENTS

a. 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, net of any provisions for doubtful debts of those assets, as disclosed in the statement of financial position and notes to the financial statements.

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

b. Net Fair Values

No financial assets or liabilities are readily traded on organised markets in a standardised form. Financial assets where the carrying amount exceeds net fair values have not been written down, as the company intends to hold these assets to maturity.

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

c. Interest Rate Risk

The company'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 classes of financial assets and financial liabilities, is as follows:

		Weighted Average Effective Interest Rate	Floating Interest Rate		Non-Interest Bearing		Total
	2003	2002	2003	2002	2003	2002	2003	2002
	%	%	S.	\$	£	\$	\$
Financial Assets:
Cash	4.70	4.84	597,792	745,136	129,522	226,471	727,314	971,607
Receivables					28,963	60,861	28,963	60,861
Total Financial Assets			597,792	745,136	158,485	287,332	756,277	1,032,468
Financial Liabilities:
Trade and sundry creditors					24,107	60,375	24.107	60,375
Total Financial Liabilities					24,107	60,375	24.107	60,375

Notes to the Financial Statements for the year ended 30 June 2003

NOTE 24: SEGMENT REPORTING

The Company operates internationally in the mineral exploration industry. At balance date the company has been granted mineral tenements in Pakistan and Sweden.

Primary Reporting: Geographical Segments

		Australia	Sweden		Pakistan		Economic Entity
	2003	2002	2003	2002	2003	2002	2003	2002
	\$	\$	Ş,	\$	\$	\$	\$	\$
REVENUE
Interest	25,169	42,210					25,169	42,210
Total revenue from ordinary activities	25,169	42,210					25,169	42,210
RESULT
Loss from ordinary activities before income tax expense
Income tax expense	(84, 564)	(353, 410)	(2,067,059)	(258, 459)	(225,996)	(357, 280)	(2,377,619)	(969, 149)
Loss from ordinary activities after income tax expense	(84, 564)	(353, 410)	(2,067,059)	(258, 459)	(225,996)	(357, 280)	(2,377,619)	(969, 149)
ASSETS
Segment assets	932,614	1,032,600	233,846	2,228,053	1,890,149	2,151,474	3,056,609	5,412,127
LIABILITIES
Segment liabilities	24.107	42,665		17,710			24,107	60,375
OTHER Acquisitions of non current
Segment assets	1,873	160,876	118,817	742,240	44,672	77,874	165,362	980,990
Depreciation of Segment assets	4,263	4,151	1,767	1,686			6,030	5,837
Non-cash expenses other than depreciation		5,000	2,067,059	573,398	225,996	42,341	2,293,055	620,739

There were no transfers between segments reflected in the revenues, expenses or result above. The pricing of any intersegment transactions is based on market values.

Secondary Reporting: Business Segments

Business Segments	Segment Revenues from External Customers		Carrying Amount of Segment Assets		Acquisition of Non- Current Segment Assets
	2003	2002	2003	2002	2003 £	2002 S
Mineral Exploration	25.169	42.210	3.056.609	5.412.127	165,362	980,990

NOTE 25: COMPANY DETAILS

The registered office and principal place of business of the company is:

Lake Resources NL Level 2 183 North Quay Brisbane Qld 4000

Independent audit report to members of Lake Resources NL

Scope

The financial report and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the financial statements, and the directors' declaration for Lake Resources NL (the company), for the year ended 30 June 2003.

The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Audit approach

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

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

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

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

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

Independence

In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

Independent audit report to members of Lake Resources NL (continued)

Audit opinion

In our opinion, the financial report of Lake Resources NL is in accordance with:

• a) the Corporations Act 2001, including:
• i. giving a true and fair view of the company's financial position as at 30 June 2003 and of its performance for the year ended on that date; and
• ii. complying with Accounting Standards in Australia and the Corporations Regulations 2001; and
• b) other mandatory financial reporting requirements in Australia.

Inherent Uncertainty Regarding Capitalised Mineral Exploration Costs

Without qualification to the opinion expressed above, attention is drawn to the following matter. As set out in Note 13 to the financial statements, \$ 1,957,568 (2002: \$4,087,134) has been included in the company's financial statements as non-current assets, being the company's exploration properties. This is the principal asset of the company. The ultimate recovery of this asset is primarily dependent upon the successful development and commercial exploitation or, alternatively, sale of the areas of interest.

Kobertron

Robertsons Chartered Accountants

lefer Numan

A W Thomas Partner

Brisbane Date: 1 September 2003

ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES

$\mathbf 1$ Shareholding:

Distribution of Shareholders Number $(a)$

Category Number (Size of Holding)	Number of Shareholders	Number of Shares Held
$1 - 1,000$		3.000
$1,001 - 5,000$	75	218,237
$5,001 - 10,000$	208	1,854,274
10,001 - 100,000	305	8,815,423
100,001 - and over	40	11,483,111
	632	22.374.045

$(b)$ The number of shareholdings held in less than marketable parcels is 143.

$(c)$ 20 Largest Shareholders - Ordinary Shares

		Number of	% Held of Ordinary
		Ordinary Fully	Issued Capital
		Paid Shares Held
1	Billiton Development Far East B.V.	2,745,669	12.27
2	James Clavarino	998,600	4.46
3	Alexandra Marie Clavarino	500,000	2.23
4	Kenneth James Foots	467,438	2.09
5	Kemkay Pty Ltd	444,960	2.00
6	Peter John Gilchrist	395,004	1.77
7	Bushfly Air Charter Pty Ltd	318,000	1.42
8	Herb McRae	292,500	1.31
9	James Clavarino	279,400	1.25
10	Timothy James Johnston	271,500	1.21
11	Norma Agnes Foots	270,000	1.21
12	Ross Johnston	266,884	1.19
13	Rodney Lawrence Dawney	253,274	1.13
14	Permanent Trustee Company Limited	225,000	1.01
15	Ramon Newbery	220,250	0.98
16	Followsea Pty Ltd	218,750	0.98
17	Ross Di Bartolo	199,300	0.89
18	Spanlex Pty Ltd	187,505	0.84
19	Bretton Pty Ltd	181,000	0.81
20	Kenpammer Pty Ltd	175,000	0.78
		8.823.731	39.82

$(d)$ The names of the substantial shareholders listed in the company's register as at 20 August 2003 are:

Shareholder	Ordinary Shares
Billiton Development Far East B.V.	2.745.669

ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES (continued)

$(e)$ Voting Rights

Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting has one vote on a show of hands.

• $2.$ The name of the company secretary is Mr. Peter Gilchrist.
• 1. The address of the principal registered office in Australia is Level 2 183 North Quay Brisbane Qld 4000. Telephone (07) 3220-0282.
• 1. Registers of securities are held at the following addresses

Douglas Heck and Burrell GPO Box 35 Brisbane QId 4000

1. Stock Exchange Listing

Quotation has been granted for all the ordinary shares of the company on all Member Exchanges of the Australian Stock Exchange Limited, other than those classified as restricted securities and detailed below.

1. Restricted Securities

The company has issued the following restricted securities:

Security	Number Issued	Date of Cessation of Restriction
' Ordinary Shares	5,352,427	29 August 2003
Options	3,698,066	29 August 2003

$\overline{7}$ Use of Cash and Convertible assets

During the period from admission to the official list of the Australian Stock Exchange to 30 June 2003, the company has used cash and assets readily convertible to cash in a manner consistent with its business activities. The company is involved in mineral exploration, principally on Sweden and Pakistan.

ABN 49 079 471 980

ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES (continued)

Schedule of Tenements and Tenement Applications $\bf 8$

Country &	Tenement	Tenement	Area	Lake	Date of	Date of
Region	Name	Number	$\mathrm{Km}^2$	Interest	Grant	Expiry
Pakistan
Balochistan
Province	Amalaf	EL P/B.Metal	63	100%	20/03/2000	19/03/2006
		$(1)/1059-69$
	Dasht-I-Gauran	EL P/B.Metal	59	100%	20/03/2000	19/03/2006
		$(4)/1048 - 58$
	Koh-I-Sultan	EL P/B.Metal	121	100%	20/03/2000	19/03/2006
		$(3)/1037-47$
Sweden
Bergslagen
District	Simas Nr2	nr 31/2002	8.5	100%	28/03/2002	27/03/2005
Norrbotten
District	Tjamotis Nr3	nr 35/2002	32	100%	11/04/2002	10/04/2005
	Moskosel Nr 1	nr 71/2002	42	100%	31/07/2002	30/07/2005
	Moskosel Nr 2	nr 88/2002	476	100%	29/08/2002	29/08/2005
	Moskosel Nr 3	nr 132/2002	14	100%	02/12/2002	01/12/2005

Lake Resources NL ABN 49 079 471 980

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the ANNUAL GENERAL MEETING of Lake Resources NL will be held at the Registered Office of the Company, Level 2,183 North Quay, Brisbane Old, on Thursday, 27 November 2003 at 4 p.m.

BUSINESS

• To receive, consider and adopt the financial report of the company and of the economic entity for the $\mathbb{L}$ year ended 30 June 2003 and the reports by directors and auditors thereon.
• To elect directors: $2¹$

Ross Johnston retires by rotation in accordance with the provisions of the constitution and, being eligible, offers himself for re-election.

1. Consider and approve the following resolution as a special resolution:

That approval be given to undertake a selective share buy-back of 230,250 shares and 117,623 options held by Mr. S P Newbery, a former director of the company, and Mr R Newbery, as consideration for the sale of shares held by the company in Lake Resources Holdings India Private Limited.

Lake Resources Holdings India Private Limited is a wholly owned, dormant subsidiary of Lake Resources NL. Consideration for the sale will consist of all the Lake Resources shares and options currently held by Messrs Newbery. This represents 230,250 shares, issued at \$0.40 per share and 117,623 options to acquire fully paid shares in Lake at an exercise price of \$0.40. The value of this consideration is \$13,815 based on the last sale price of Lake shares on the ASX at the close of trade on 1 September 2003 (\$0.060).

The shares held in Lake Resources Holdings India Private Limited are carried in Lake's books at a zero value. The book value of the investment was written-off in the 2001/02 financial year, following a decision not to proceed with exploration activity in India. On completion of the transaction the shares acquired by Lake would be cancelled.

1. General: To transact any business which may be lawfully brought forward.

By Order of the Board

Peter Gilchrist Secretary 24 October, 2003

A member entitled to attend and vote is entitled to appoint a proxy to attend and vote in his/her stead. That person need not be a member of the company, but should be a natural person over the age of 18 years. Forms must be lodged at the registered office of the company not less than 48 hours before the timing of the meeting.

Lake Resources NL A RN 49 079 471 980

PROXY FORM

Registered Office: Level 2,183 North Quay, Brisbane, 4000 1/We .................................... $Of$ ....................................... . . . . . . . . . . . . . . . . . . . . being a member/members of Lake Resources NL hereby appoint: ....................................... οf . . . . . . . . . . . . . . . . . . . . ....................................... or in his/her absence, .................................... οf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

or in his/her absence, the Chairman of the Meeting as my/our general/special proxy to vote on my/our behalf at the Annual General Meeting of the company to be held on Thursday, 27 November, 2003 or at any adjournment of that meeting.

Signed this: day of 2003

Signature of Shareholder

Unless otherwise instructed the proxy will vote as he or she thinks fit, or abstain from voting. If the chairman is appointed proxy, he will vote all undirected proxies in favour of the resolutions. Should the member wish to direct the proxy how to vote, the following should be completed.

Agenda item No.:	FOR	AGAINST	ARSTAIN
1. Adoption of Financial Report
2. Election and appointment of Director - Re-election of Mr R Johnston
3. Approval of special resolution in relation to a selective share buy-back