LEGEND MINING LIMITED — Annual Report 2003

Mar 27, 2003

FACSIMILE TRANSMISSION

TO: Australian Stock Exchange

ATTENTION: Company Announcement Office

FROM: Greg Ledger FAX NO. 1900 999 279

PAGES NO.

$3\lambda$

28^TH March 2003 DATE:

SUBJECT: ASIC ANNUAL ACCOUNTS

The information contained in this message is CONFIDENTIAL and is intended only for the use of the addressee/s only. Could you please notify us if you receive this fax by mistake.

Q URGENT	$\Box$ FOR REVIEW	Q PLEASE COMMENT	Q PLEASE REPLY

Dear Sir

Please find enclosed the Annual Financial Statements for the year to 31 December 2002, which have been fully audited.

Yours faithfully LEGEND MINING LIMITED

Greg Ledger Company Secretary

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LEGEND MINING LIMITED A.C.N. 060 966 145

ANNUAL REPORT

2002

LEGEND MINING LIMITED

CONTENTS	COMPANY DIRECTORY
Page	Directors
Company Directory .	Michael Atkins (Chairman) Murray Vincent McDonald (Managing Director) Ian David Cowden
Chairman's Report	Secretary
Project Locations	Ross Gregory Ledger Registered Office
Review of Activities	Suite 1 46 Ord Street
Geology and Tenure, Munni Munni Joint Venture	PO Box 626 WEST PERTH WA 6005
Geology and Drillhole Locations, M47/341	Telephone: (08) 9322 3700 Facsimile: (08) 9322 3800
Tenement Directory	Share Registry Advanced Share Registry Services
Corporate Governance Statement	Level 6 200 Adelaide Terrace PERTH WA 6000
Directors' Report	Telephone: (08) 9221 7288 Facsimile: $(08)$ 9221 7869
Statement of Financial Performance	Bankers
Balance Sheets	National Australia Bank 1238 Hay Street WEST PERTH WA 6005
Statements of Cash Flows	Auditors
Financial Notes the Statements to	Grant Thornton Chartered Accountants 256 St Georges Terrace
Directors' Declaration	PERTH WA 6000 Home Exchange
Independent Auditor's Report	Australian Stock Exchange Ltd 2 The Esplanade PERTH WA 6000
Shareholder Information

LEGEND MINING LIMITED TENEMENT DIRECTORY AS AT 31.12.2002

	$\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1$	1999 - Andrea Congressor, american a congressor and a strategy of the strategy of the strategy of the strategy of
Munni Munni	M47/340	Legend Mining Limited
	M47/341	Legend Mining Limited	33.33/100 33.33/100
	M47/342	Legend Mining Limited	33.33/100
	M47/343	Legend Mining Limited	33.33/100
	E47/587	Legend Mining Limited	33.33/100
	M47/414*	Legend Mining Limited	33.33/100
	M 27 /415*	Legend Mining Limited	33.33/100
Carlow Castle	E47/562	Legend Mining Limited	100/100
	M47/409*	Legend Mining Limited	100/100
	E47/952	Legend Mining Limited	100/100
	E47/957	Legend Mining Limited	100/100
	E47/967	Legend Mining Limited	100/100
	P47/944	Legend Mining Limited	100/100
	F47/945 M47/417*	Legend Mining Limited Legend Mining Limited	100/100
à.	M47/490*	Legend Mining Limited	100/100 100/100
	M47/491*	Legend Mining Limited	100/100
	E47/1180*	Armada Mining Limited	100/100
	E47/1181*	Armada Mining Limited	100/100
	P47/1128*	Armada Mining Limited	100/100
	P47/1129*	Armada Mining Limited	100/100
	P47/1130*	Armada Mining Limited	100/100
	P47/1133*	Armada Mining Limited	100/100
	P47/1134*	Armada Mining Limited	100/100
Bradley Well	E47/1049	Legend Mining Limited	100/100
Mount Marie	E47/11.50*	Legend Mining Limited	100/100
	P47/1112*	Legend Mining Limited	100/100
	P47/1113 E47/1149	Legend Mining Limited Armada Mining Limited	100/100
	P47/1126*	Armada Mining Limited	100/100 100/100
	P47/1132*	Armada Mining Limited	100/100
	P47/1135*	Armada Mining Limited	100/100
	P47/1136*	Armada Mining Limited	100/100
	P47/1137*	Armada Mining Limited	100/100
	P47/1159*	Legend Mining Limited	100/100
Mount Sholl	E47/966	Legend Mining Limited	100/100
Twin Table Hills	M47/462*	Legend Mining Limited	100/100
	M47/463*	Legend Mining Limited	100/100
	M47/493*	Legend Mining Limited	100/100
Radio Hill	M47/494* E47/567	Legend Mining Limited Legend Mining Limited	100/100 100/100
	E47/1048	Legend Mining Limited	100/100
	M47/457*	Legend Mining Limited	100/100
	M47/466*	Legend Mining Limited	100/100
	E47/1148*	Armada Mining Limited	100/100
	M47/518*	Armada Mining Limited	100/100
	P47/1131*	Armada Mining Limited	100/100
	P47/1158*	Legend Mining Limited	100/100
Emerald	E30/118	Legend Mining Limited	40/100
Maitland	E47/1152*	Legend Mining Limited	100/100
Donnington Hill	P47/1124 E70/2507	Legend Mining Limited Legend Mining Limited	100/100 100/100
Ruth Well	P47/1127*	Armada Mining Limited	100/100

The information on exploration results and Mineral Resources contained in this report is based on information compiled by consulting geologists Mr Ian Cowden FAusIMM, CPGeo, MAIG and Mr Frans Voermans
FAusIMM, CPGeo, MAIG. Each has appropriate relevant experience to be considered as a Competent Person
as defined in the JORC Code 1 the matters based on their information in the form and context in which it appears.

LEGEND MINING LIMITED CORPORATE GOVERNANCE STATEMENT

This statement outlines the main Corporate Governance practices that were in place throughout the period 1 January 2002 to 31 December 2002. These practices are dealt with under the following headlines: Board of Directors, Business Risks, Ethical Standards and Directors Dealings in Company Shares.

1. BOARD OF DIRECTORS

The board is responsible for the overall Corporate Governance of Legend Mining Limited ("the Company") including the strategic direction, establishing goals for management and monitoring the achievement of these goals. Due to the size of the board, issues of nomination and remuneration of directors and business risk management are considered by the full board. The board has established a framework for the management of the Company including an overall framework of internal control, a business risk management process and the establishment of appropriate ethical standards.

Composition of Board

The directors of the Company in office at the date of this statement are:

Name	Position	Expertise
Michael Atkins	Lhairman
M V McDonald	Managing Director	Management
I D Cowden	Executive Director	Exploration and Mining

The composition of the board is determined using the following principles:

• * The board comprises 3 directors and may be increased where it is felt that additional expertise is required in specific areas, or when an outstanding candidate is identified.
• * The board should comprise directors with a broad range of expertise.

The board reviews its composition on an annual basis to ensure that the board has the appropriate mix of expertise and experience. When a vacancy exists, for whatever reason, or where it is considered that the board would benefit from the services of a new director with particular skills, the board selects a panel of candidates with the appropriate expertise and experience. Potential candidates are identified by the board with advice from an external consultant, if necessary. The board then appoints the most suitable candidate who must stand for election at the general meeting of shareholders.

The terms and conditions of the appointment and retirement of directors are set out in a letter of appointment, which covers remuneration, expectations, terms, the procedures for dealing with conflicts of interest and the availability of independent professional advice.

The performance of all directors is reviewed by the chairman each year. Directors whose performance is unsatisfactory will be requested to retire.

Independent Professional Advice

Each director has the right to seek independent professional advice at the Company's expense. However, prior approval of the chairman is required, which will not be unreasonably withheld.

LEGEND MINING LIMITED

CORPORATE GOVERNANCE STATEMENT

$\mathbf{1}$ . BOARD OF DIRECTORS cont'd...

Remuneration

Due to the size of the Company remuneration is considered by the full board. The board reviews remuneration packages and policies applicable to the managing director and directors themselves. Remuneration levels are competitively set to attract the most qualified and experienced directors and senior executives. The board obtains independent advice on the appropriateness of remuneration packages.

Further details of directors' remuneration, superannuation and retirement payments are set out in the notes to the financial statements.

Audit

Being a small Company with three directors the board has not established a separate audit committee; however, the external auditor has full access to the board throughout the year.

The responsibilities of the board ordinarily include:

• * Reviewing internal control and recommending enhancements;
• Monitoring compliance with Corporations Act 2001, Stock Exchange Listing Rules, matters outstanding with auditors, Australian Taxation Office, Australian Securities and Investment Commission, Australian Stock Exchange and financial institutions:
• Improving the quality of the accounting function;
• reviewing external audit reports to ensure that where major deficiencies or breakdowns in controls or procedures have been identified appropriate and prompt remedial action is taken by management; and
• liaising with the external auditors and ensuring that the annual audit and half-year review are conducted in an effective manner.

The board reviews the performance of the external auditors on an annual basis and nomination of auditors is at the discretion of the board.

2. BUSINESS RISKS

Significant areas of concern are discussed at board level. When appropriate, experts are invited to address board meetings on the major risks facing the consolidated entity and to develop strategies to mitigate those risks.

3. ETHICAL STANDARDS

The board subscribes to the statement of Ethical Standards as published by the Institute of Company Directors.

All directors and employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the company.

DIRECTORS DEALINGS IN COMPANY SHARES $\mathbf{4}$

Directors must notify the Australian Stock Exchange Limited of any acquisition or disposal of shares by lodgement of a notice of directors interests. Board policy is to prohibit directors from dealing in company shares whilst in possession of price sensitive information.

LEGEND MINING LIMITED DIRECTORS' REPORT

The board of directors of Legend Mining Limited ("the Company") have pleasure in submitting their report together with the consolidated financial report for the year ended 31 December 2002, and auditors report thereon.

DIRECTORS $\mathbf{1}$ .

The directors of the Company in office at any time during or since the financial year are: $(n)$

Albert Kevin Robert Watson (Resigned 12 December 2002)

Mr Watson has extensive experience in the commercial and banking and finance industries. He was employed at ANZ for 43 years and during that time held various senior executive positions including State Manager, WA and Assistant General Manager, SA and WA. Mr Watson is also closely affiliated with the Chamber of Commerce and Industry of WA of which he is a past President. In later years, he has been involved extensively in the resources industry and is currently a director of Pan Pacific Petroleum NL and New Zealand Oil and Gas Limited. Mr Watson was appointed in 1995.

Murray Vincent McDonald

Mr McDonald is a Certified Practising Accountant who has, over his last 23 years, participated in the management of a number of companies in the mining industry. Mr McDonald's expertise ranges from operational management of mining projects to resource project funding and implementation. He is a member of the Taxation Institute of Australia, an affiliate member of the Australasian Institute of Mining and Metallurgy and an affiliate member of the Securities Institute of Australia. He is the founder of Legend Mining Limited. Director since 1995.

Ian David Cowden

Appointed 18 July 2000, Mr Cowden (FAusIMM CPGeo MAIG) is a consulting geologist who has had over 30 years experience in the exploration and mining industry worldwide. He had held executive and senior positions in junior explorers and major international mining companies, with emphasis on feasibility studies and successful development and mining of a range of commodities including gold and silver

Michael Atkins (Appointed 14 February 2003)

Mr Atkins accepted the Board's invitation to join the company as a non-executive chairman, and was formally appointed on 14 February 2003. He is a fellow of the Institute of Chartered Accountants in Australia, and was a founding partner of a national accounting practice from 1979 to 1987. Since 1987 he has acted as Executive Director, and been involved in the executive management of several publicly listed resource companies with operations in Australia, USA, South East Asia and South Africa. Mr Atkins was a founding Executive Chairman and later non-Executive Chairman of Gallery Gold Limited until 2000. He is currently a non-executive director of Aurex Consolidated Ltd, Servicepoint Ltd and Sun Capital Group Ltd.

LEGEND MINING LIMITED DIRECTORS' REPORT

$(b)$ At the date of this report, the direct interests of the directors in the shares and other equity securities of the Company and related bodies corporate were:

-------------------------------------- . Name	Shares	Listed Options
A K R Watson		$\Delta \Delta$
M V McDonald	7,525,001	682,439
ID Cowden	-	$\blacksquare$

$2.$ PRINCIPAL ACTIVITIES

The principal activities of the consolidated entity during the financial year were mineral exploration.

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

$\overline{3}$ . OPERATING RESULTS

The consolidated loss of the consolidated entity after providing for income tax amounted to \$1,871,020 $(2001: $969,305)$ .

$\overline{4}$ . DIVIDENDS PAID OR RECOMMENDED

No amounts have been paid or declared as dividends during the course of the financial year.

$5.$ REVIEW OF OPERATIONS

The details of the consolidated entity's exploration and mining activities during the year are included within the Review of Activities.

6. CHANGES IN STATE OF AFFAIRS

The state of affairs of the consolidated entity was not affected by any significant changes during the financial year other than:

• On 4 November 2002 the Company placed 500,000 shares issued at 7 cents per fully paid share to raise \$35,000 in additional working capital;
• On 30 May 2002 the company completed a capital raising of \$361,893 by an entitlement issue to existing shareholders of 20,867,332 options issued at 1 cent and a pro-rata placement to previous optionholders of 15,321,875 options issued at 1 cent each.

LEGEND MINING LIMITED

DIRECTORS' REPORT

$7₁$ AFTER BALANCE DATE EVENTS

On $19^th$ February 2003 a prospectus was lodged with ASIC and the ASX for the purposes of raising capital of approximately \$422.346 via a 1:3 non-renounceable entitlement issue to existing shareholders of approximately 14.078.221shares. The offer closed on 21 March 2003. The financial effect of this transaction has not been brought to account at balance date.

Other than the matter detailed above, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

8. ENVIRONMENTAL REGULATION

The consolidated entity's operations are subject to various environmental regulations under both Commonwealth and State legislation. The directors have complied with these regulations and are not aware of any breaches of the legislation during the financial year which are material in nature.

9. FUTURE DEVELOPMENTS

Likely developments in the operations of the consolidated entity, and expected results of those operations in subsequent financial years have been discussed, where appropriate, in the Chairman's Report and Review of Activities.

$10₁$ MEETINGS OF DIRECTORS

The following table sets out the number of meetings of the Company's directors held during the year ended 31 December 2002 and the numbers of meetings attended by each director.

	No of Meetings Attended	No of Meetings held whilst a Director
Number of meetings attended by:
Albert Kevin Robert Watson		4
Murray McDonald		4
Ian David Cowden

The Company does not have a formally appointed audit committee as all directors are involved in all activities of the Company and the size and scope of operations does not warrant its formation.

$11.$ 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 of any part of those proceedings. The company was not a party to any such proceedings during the year.

12. SHARE OPTIONS

The details of the options on issue by the Company is disclosed in Note 18 to the financial report.

LEGEND MINING LIMITED

DIRECTORS' REPORT

INDEMNIFICATION OF OFFICERS AND AUDITORS 13.

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 an $(a)$ 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 an $(b)$ officer for the costs or expenses to defend legal proceedings.

14. DIRECTORS AND EXECUTIVE OFFICERS EMOLUMENTS

Details of the nature and amount of each major element of the emoluments of each director of the Company and each of the named officers (who total less than 5) receiving the highest emolument are:

Director	Base Emoluments	Superannuation	T otal
	S	S	s
Mr A K Watson	25,000		25,000
Mr M McDonald	138,000	10,080	148,080
Mr I D Cowden	20,000		20,000
Officer
Mr R G Ledger	10,500		10,500

This report is made in accordance with a resolution of the directors.

Dated at Perth this 28^TH day of March 2003

M V McDonald

MANAGING DIRECTOR

Statement of Financial Performance for the year ended 31 December 2002

		Consolidated		Company
	Note	2002 S	2001 \$	2002 S.	2001 \$
Revenue from ordinary activities	$\mathfrak{D}$	51,545	1,241,217	51,545	1,241,217
Raw materials and consumables used			(837, 727)		(837.727)
Employee benefits expense		(209,760)	(95, 968)	(209, 760)	(95,968)
Depreciation & amortisation expense	3(a)	(38, 428)	(31, 951)	(38, 428)	(31, 951)
Administration expenses		(655,084)	(636, 749)	(654, 203)	(636,749)
Borrowing costs expense	3(a)		(5,897)		(5,897)
Other expenses from ordinary activities	3(b)	(1,019,293)	(602, 230)	(1,019,293)	(602, 230)
Loss from ordinary activities before income tax expense		(1,871,020)	(969, 305)	(1,870,139)	(969, 305)
Income tax expense relating to ordinary activities
Net loss		(1,871,020)	(969, 305)	(1,870,139)	(969, 305)
Total changes in equity other than those resulting from transactions with owners as owners.		(1,871,020)	(969, 305)	(1,870,139)	(969, 305)
EARNINGS PER SHARE
Basic loss per share (cents per share) Diluted loss per share (cents per share)		(4.48) (4.37)	(2.76) (2.76)

$\bar{z}$

The accompanying notes form part of these financial statements

$\bar{z}$

l,

$\sim$

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$\mathcal{A}$

Statement of Financial Position as at 31 December 2002

			Consolidated	Company
	Note	2002 \$	2001 S	2002 \$	2001 S
CURRENT ASSETS
Cash	7	375,767	247,086	375,667	246,986
Receivables	8	20,929	635,140	21,809	635,140
TOTAL CURRENT ASSETS		396,696	882,226	397,476	882,126
NON-CURRENT ASSETS
Other financial assets	9	45,118	15,530	45,120	15,530
Plant & Equipment	10	145,133	175,546	139,898	170,312
Exploration, evaluation & development
expenditure	11	1,387,502	1,601,192	1,387,502	1,601,192
TOTAL NON-CURRENT ASSETS		1,577,753	1,792,268	1,572,520	1,787,034
TOTAL ASSETS		1,974,449	2,674,494	1,969,996	2,669,160
CURRENT LIABILITIES
Payables	12	633,999	157,767	633,999	157,767
Interest bearing liabilities	13	255,860	5,865	255,860	5,865
Provisions	14	57,500	5,307	57,500	5,307
TOTAL CURRENT LIABILITIES		947,359	168,939	947,359	168,939
NON-CURRENT LIABILITIES
Interest bearing liabilities	13	30,290	34,625	30,290	34,625
TOTAL LIABILITIES		977,649	203,564	977,649	203,564
NET ASSETS		996,800	2,470,930	992,347	2,465,596
EQUITY
Contributed Equity	15	7,674,016	6,736,415	7,674,016	6,736,415
Reserves	16	361,890	902,601	361,890	902,601
Accumulated losses	17	(7,039,106)	(5,168,086)	(7,043,559)	(5,173,420)
		996,800	2,470,930	992.347	2.465.596

The accompanying notes form part of these financial statements

$\bar{z}$

$\overline{1}$

LEGEND MINING LIMITED Statement of Cashflows for year ended 31 December 2002

$\sim 10$

$\overline{\phantom{a}}$

$\hat{\mathcal{A}}$

			Consolidated	Company
		2002	2001	2002	2001
	Note	S	\$	S	S
Cash flows from operating activities
Receipts from operations		651,666	544,943	651,666	544,943
Payments to suppliers & employees		(844, 404)	(1, 372, 192)	(843, 524)	(1,372,192)
Interest received		14,090	16,344	14,090	16,344
Interest paid & borrowing costs		(15,319)	(19,017)	(15,319)	(19,017)
Net cash used in operating activities
	$21$ (ii)	(193, 967)	(829, 922)	(193,087)	(829, 922)
Cash flows from investing activities
Payments for exploration, evaluation &
development activities		(531,241)	(79, 120)	(531, 241)	(79, 120)
Payments for property, plant &
equipment		(8,014)	(22, 335)	(8,014)	(22, 335)
Payment to joint venture partner			(750,000)		(750,000)
Proceeds from sale of investments		32,187	39,197	32,187	39,197
Proceeds from sale of headframe Payment for investments		(24, 500)	33,000 (4, 475)	(24, 500)	33,000 (4, 475)
Net cash used in investing activities		(531, 568)	(783, 733)	(531, 568)	(783, 733)
Cash flows from financing activities
Proceed from issue of shares & options		396,890	1,175,000	396,890	1,175,000
Proceeds from borrowings		465,000		465,000
Finance lease payments		(7,674)		(7,674)
Loan to controlled entity				(880)
Net cash provided by financing
activities		854,216	1,175,000	853,336	1,175,000
Net increase/ (decrease) in cash held		128,681	(438, 655)	128,681	(438, 655)
Cash at the beginning of the financial уеаг		247,086	685,741	246,986	685,641
Cash at the end of the financial year	21(i)	375,767	247,086	375,667	246,986

$\sim 5.3$ GeV.

$\mathbf{1}$ . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

$(a)$ Basis of accounting

The financial report is a general purpose financial report that has been prepared in accordance with 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 Legend Mining Limited and its controlled entity, and Legend Mining Limited as an individual parent entity. Legend Mining Limited is a listed public 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 noncurrent 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.

$(b)$ Going Concern

The financial statements have been prepared on the going concern basis, which assumes the realisation of assets and the settlement of liabilities in the ordinary course of business. At 31 December 2002, the Group had a deficiency in working capital of \$550,663. The directors believe it is appropriate to adopt the going concern basis in the preparation of the financial statements as:

• further cash resources are expected to be made available for operations and exploration activities via capital raisings from equity issues; and
• the Directors and management will continue to focus on cost containment in an effort to reduce cash used in operating activities and improve profitability.

The Group is dependent on future capital raisings and continued support and/or renegotiation of its current obligations with current financiers, in order to continue as a going concern. If this is not forthcoming, the Group may need to realise its assets and extinguish its liabilities other than in the ordinary course of business. No adjustments have been made to the financial statements to reflect this.

$\left( c\right)$ Exploration, evaluation and development expenditure

The Company's policy with respect to exploration expenditure is to use the "area of interest" method. Under this method, expenditure is carried forward on the following basis:-

$\left($ i) Each area of interest is considered separately when deciding whether and to what extent to carry forward or to write off exploration and evaluation costs.

$\mathbf{1}$ . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

• Exploration and evaluation costs related to an area of interest are carried forward provided $(ii)$ the rights to tenure of the area are current and provided that one of the following conditions is met:
• such costs are expected to be recouped through successful development and exploitation $\bullet$ of the area of interest, or alternatively by its sale; or
• exploration and/or evaluation activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in or in relation to the area are continuing.
• $(iii)$ Accumulated costs in relation to an abandoned area are written off in full against profit and loss 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. Each area of interest is limited to the size related to known or probable mineral resources capable of supporting a mining operation.

Amortisation is not charged on costs carried forward in respect of areas of interest in development phase until production reaches commercial levels. When commercial production commences carried forward exploration, evaluation and development costs are amortised on a units of production basis over the life of economically recoverable reserves.

$(d)$ Taxation

The economic entity adopts the liability method of tax effect accounting whereby the income tax expense is based on the loss from ordinary activities adjusted for any permanent differences. Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt. Future income tax benefit in relation to tax losses are not brought to account unless there is virtual certainty of realisation of the benefit.

$(e)$ 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 cashflows which will be received from the assets employment and the subsequent disposal. The expected net cashflows have not been discounted to their present values in determining recoverable amounts.

Depreciation

The depreciable amount of all plant and equipment is depreciated on a straight line basis over their useful lives to the economic entity commencing from the time the asset is held ready for use.

The depreciation rates used for plant and equipment is between 10% and 40%.

$(f)$ Investments

Investments in Shares - Investments in listed shares are carried at market value. Gains and $(i)$ losses are included in the loss from ordinary activities before income tax. Dividends are brought to account when the right to receive has been established.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

• $(i)$ Controlled Entities - Investment in the controlled entity is carried at cost. Dividends and distributions are brought to account in the statement of financial performance when they are declared by the controlled entity.
• $(iii)$ Joint Venture – The Consolidated Entity's interest in an unincorporated joint venture is brought to account by including its interest in the following amount in the appropriate categories in the statement of financial position and statement of financial performance:
• each of the individual assets employed by the Joint Venture;
• liabilities incurred by the consolidated entity in relation to the Joint Venture and $\bullet$ liabilities for which it is jointly and/or severally liable; and
• expenses incurred in relation to the Joint Venture.

Details of the consolidated entity's interests in joint ventures are shown in note 27.

$(g)$ Share Issue Expenses

Share issue expenses incurred by the Company are offset against share capital.

$(h)$ Earnings per share

Basic Earnings per share $(i)$

Basic earnings per share is determined by dividing the loss from ordinary activities after income tax by the weighted average number of ordinary shares outstanding during the financial period.

$(ii)$ Diluted Earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share by taking into account amounts unpaid on ordinary shares and any reduction in earnings per share that will arise from the exercise of options and other potential ordinary shares outstanding during the financial period.

$(i)$ Rehabilitation and restoration costs

Provisions are made for mine site rehabilitation and restoration on an incremental basis during the course of mine life (which includes the mine closure phase). Provisions, which are determined on an undiscounted basis, include the following costs: reclamation, plant closure, waste site closure and monitoring activities. These costs have been determined on the basis of current costs, current legal requirements and current technology. Changes in estimates are dealt with on a prospective basis.

$(j)$ Employee entitlements

Provision is made for the Company's liability for employee entitlements arising from services rendered by employees to balance date. Employee entitlements expected to be settled within one year together with entitlements arising from wages and salaries, and annual leave which will be settled within one year, have been measured at their nominal amount and include related on-costs.

$(k)$ Principles of consolidation

A controlled entity is any entity controlled by Legend Mining Limited. Control exists where Legend Mining Limited 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 Legend Mining Limited to achieve the objectives of Legend Mining Limited. A list of controlled entities is contained in note 25 to the financial statements.

Inter-entity balances resulting from transactions with or between controlled entities are eliminated in full on consolidation.

$\mathbf{1}$ . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

$(1)$ Receivables

Trade debtors to be settled are carried at the amounts due. Specific provision is made for any accounts, the collectibility of which is considered doubtful.

$(m)$ Revenue Recognition

Sales revenue comprises revenue earned from the provision of products to entities outside the consolidated entity. Sales revenue is recognised when the control of goods passes to the customer. Other income is recognised as it accrues.

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 $(GST)$ .

$(n)$ Accounts payable

Liabilities are recognised for amounts to be paid in the future for goods or services received whether or not billed to the company or consolidated entity.

$(0)$ Foreign currency

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

Exchange differences relating to amounts payable and receivable in foreign currencies are brought to account as exchange gains or losses in the statement of financial performance in the period in which the exchange rates change.

$(p)$ Comparative figures

The Comparative figures are amended where appropriate to conform with any change in the current year presentation.

$(q)$ Leased Assets

Leases under which the Company or its controlled entities assume substantially all the risks and benefits of ownership are classified as finance leases. Other leases are classed as operating leases. Finance leases are capitalised. A lease asset and lease liability equal to the present value of minimum lease payments recorded at the inception of the lease. Lease liabilities are reduced by repayments of principal. The interest components of the lease payments are expensed.

$(1)$ Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST) except where the amount of GST incurred is not recoverable. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position. Cashflows are included in the statement of cashflows on a gross basis. The GST components of cashflows arising from investing activities which are recoverable from, or payable to, the ATO are classed as operating eashflows.

LEGEND MINING LIMITED Notes to the financial statements
for year ended 31 December 2002

		Consolidated	Company
	2002	2001	2002	2001
2. REVENUE	\$	\$	\$	\$
Operating activities:
Sales of ore		222,676
Sales of tailings dam		930,000		222,676 930,000
Sale of head frame		33,000		33,000
Interest received	14,090	16,344	14,090	16,344
Non-operating activities:
Unrealised gain on investments	5,268		5,268
Proceeds from sale of shares	32,187	39,197	32,187	39,197
	51,545	1,241,217	51,545	1,241,217
з. LOSS FROM ORDINARY ACTIVITIES
Loss from ordinary activities before income tax expense:
(a) Loss from ordinary activities has been arrived
after charging / (crediting) the following: Interest expense	15,319	13,121
Depreciation			15,319	13,121
$-$ plant & equipment	30,882	26,851	30,882	26,851
- leased assets	7,546	5,100	7,546	5,100
Borrowing costs		5,897		5,897
Net expense from movements in provision for
employee entitlements	52,193	(22, 675)	52,193	(22, 675)
Net gain on disposal of investments	32,187	288	32,187	288
Interest charges on capitalised leases	3,334	2,465	3,334	2.465
(b) Individually significant items included in loss from ordinary activities before income tax expense:
Net gain on disposal of tailings dam		405,135		405,135
Exploration expenditure written off in respect of
areas of interest abandoned	950,000		950,000
4. EARNINGS PER SHARE
(a) Reconciliation of earnings to net loss: Net Loss
Earnings used in the calculation of basic EPS	(1, 871, 020) (1, 871, 020)	(969, 305) (969, 305)
Increase in earnings on convertible notes	21,000
Earnings used in the calculation of dilutive EPS	(1, 850, 020)	(969, 305)
(b) Weighted average number of shares on issue during the financial year used in the calculation of
basic EPS Weighted average number of converting notes on	41,812,747	35,108,824
issue	513,699
Weighted average number of ordinary shares on issue used in the calculation of dilutive EPS.	42,326,446	35,108,824
	16

$\bar{\beta}$

$\hat{\mathcal{A}}$

	Consolidated		Company
	2002 S	2001 s	2002 Æ	2001 S
INCOME TAX 5.
(a) The prima facie income tax benefit on the loss from ordinary activities reconciles to the income tax expense in the accounts as follows:
Loss from ordinary activities Prima facie tax payable calculated at 30%	(1,871,020)	(969, 305)	(1,870,139)	(969,305)
(2001: 30%) of the loss from ordinary activities Add/ (less) tax effect of permanent difference:	(561, 306)	(290, 791)	(561, 042)	(290, 791)
Non-deductible expenditure Tax losses not brought to account as future income	2,924	90,389	2,924	90,389
tax benefits	558,382	200,402	558,118	200,402
Income tax benefit attributed to operating loss
(b) Future income tax benefits not brought to account The potential future income tax benefits arising from tax losses and timing differences have not been recognised as an asset because recovery of tax losses is not virtually certain and recovery of timing differences is not assured beyond reasonable doubt:
Tax losses carried forward $@30\%$	1,156,227	597,844	1,090,930	532,548
Timing differences @ 30%	108,839	28,981	108,839	28,981
	1,265,066	626,825	1,199,769	561,529

The potential future income tax benefit will only be obtained if:

• (i) The consolidated entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deduction to be realised;
• (ii) The consolidated entity continues to comply with the conditions for deductibility imposed by the law; and
• (iii) There are no changes in tax legislation adversely affecting the consolidated entity in realising the benefit from deductions.

$6.$ SEGMENT INFORMATION

The Company operates in one business and geographical segment being mineral exploration in Australia.

		Consolidated		Company
	2002 S	2001 S	2002 \$	2001 s
CASH 7.
Cash on hand	200	200	100	100
Cash at bank	296,148		296,148
Deposits-at call	79.419	246,886	79,419	246,886
	375,767	247,086	375,667	246,986
RECEIVABLES 8. Current
Trade Debtors	60,350	691,963	60,350	691,963
Less provision for doubtful debts	(60, 350)	(60, 351)	(60, 350)	(60,351)
GST Receivable	20,929	3,528	20,929	3,528
Loans to controlled entities			880
	20,929	635,140	21,809	635,140
OTHER FINANCIAL ASSETS 9. Non-current
Shares in controlled entity - at cost			2	2
Shares in listed companies
- at cost		7,000		7,000
- at net market value	45,118	8,530	45,118	8,528
	45,118	15,530	45,120	15,530

No capital gains tax would be payable if the shares in listed companies were sold at balance date.

10. PLANT AND EQUIPMENT Plant and equipment $-$ at cost Less accumulated depreciation	255,921 (136, 778)	275,442 (133, 432)	250,686 (136, 778)	251,039 (114, 263)
Total plant and equipment	119,143	142,010	113,908	136,776
Leased assets $-$ at cost Less accumulated depreciation	38,636 (12.646)	38,636 (5,100)	38.636 (12,646)	38.636 (5,100)
Total leased assets	25,990	33,536	25,990	33,536
Total plant $\&$ equipment $-$ at cost	294,557	314,078	289,322	289,675
Less accumulated depreciation	(149, 424)	(138, 532)	(149, 424)	(119, 363)
Total net book value	145,133	175,546	139,898	170,312

$\sqrt{N}N$

$\bar{z}$

$\ddot{\phantom{0}}$

10. PLANT AND EQUIPMENT (cont'd)

(a) Movements in carrying value

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

	Plant & Equipment	Lessed Assets	Total
	\$	\$	\$
Consolidated
Balance at the beginning of year	142,011	33,536	175,547
Additions	8.014		8,014
Depreciation Expense	(30, 882)	(7, 546)	(38,428)
Carrying amount at end of year	119,143	25,990	145,133
	S	\$	\$
Company
Balance at the beginning of year	136,776	33.536	170,312
Additions	8,014		8,014
Depreciation Expense	(30, 882)	(7.546)	(38, 428)
Carrying amount at end of year	113,908	25.990	139,898

11. EXPLORATION, EVALUATION & DEVELOPMENT EXPENDITURE

	Consolidated		Company
	2002 S	2001 \$	2002 S	2001 \$
Non-current
Costs carried forward in respect of areas
of interest
Expenditure brought forward	1,601,192	772.072	1,601,192	772,072
Expenditure incurred during the year	736,310	829,120	736,310	829,120
Expenditure written off during the year	(950.000)		(950,000)	$\blacksquare$
	1,387,502	1,601,192	1,387,502	1,601,192

The Munni Munni silver mine was on care and maintenance as at balance date. The balance carried forward represents projects in exploration and evaluation phase. The recoverability of exploration and evaluation expenditure carried forward is dependent upon the establishment of economic operations in the respective areas to which exploration and evaluation relates, or the future sale of the tenements for a consideration sufficient to cover their carrying value.

LEGEND MINING LIMITED Notes to the financial statements for year ended 31 December 2002

		Consolidated		Company
	2002 \$	2001 S	2002 \$	2001 S
12. PAYABLES Current – unsecured
Trade creditors (ii)	162,088	91,806	162,088	91,806
Other creditors $\&$ accruals (i)	471,911	65,961	471,911	65,961
	633,999	157.767	633,999	157,767

Included within this balance is a \$215,000 loan from an unrelated third party. \$90,000 of this loan $(i)$ is convertible into ordinary shares of the Company on or before 30 September 2003 at a rate equal to the weighted average selling price of ordinary shares in the Company during the 3 months prior to the date of conversion. The balance of this non interest bearing loan, being \$125,000 is repayable in full by 30 September 2003.

Included in this amount is \$57,324 owing to Iana Pty Ltd, a company controlled by Mr Cowden. $(ii)$ Refer to Note 20(c) of these financial statements.

	Consolidated		Company
	2002 \$	2001 \$	2002 \$	2001 \$
13. INTEREST BEARING LIABILITIES Current
Secured Borrowings (i)	250,000		250,000
Lease liability (ii)	5,860	5,865	5,860	5,865
	255,860	5,865	255,860	5,865
Non-current Secured
Lease liability (ii)	30,290	34.625	30,290	34,625

$\left( i\right)$ Secured via a fixed charge over the asset to which it relates.

$(ii)$ Effectively secured over the leased assets.

Borrowings consist of amounts lent to the Company by an unrelated third party and are in the nature of a convertible note. The convertible bears an interest rate of 12% per annum and is convertible into ordinary shares of the Company at the rate of 10 cents per share on or before 30 November 2003.

		Consolidated		Company
	2002 5	2001 \$	2002 \$	2001 \$
14. PROVISIONS Current
Employee entitlements	57,500	5,307	57,500	5,307
	57,500	5.307	57,500	5,307
Number of employees at year end

An Le

	Consolidated		Company
	2002 S	2001 \$	2002 \$	2001 S
15. CONTRIBUTED EQUITY 42,234,665 fully paid ordinary shares (2001:41,734,665)
Balance at the beginning of the reporting period:	6,736,415	5,411,416	6,736,415	5,411,416
Shares Issued 500,000 (2001: 7,760,660) shares issued for cash on 4 November
2002	35,000	1,174,999	35,000	1,174,999
1,000,000 shares issued for cash $\blacksquare$ and professional services Expiry of $30,643,750$ options on $31$ $\blacksquare$		150,000		150,000
March 2002	902,601		902,601
	7,674,016	6,736,415	7,674,016	6,736,415

Terms and Conditions

The holders of ordinary shares are entitled to received dividends as declared from time to time and are entitled to one vote per share at shareholders' meetings

In the event of winding up the Company, ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any proceeds of liquidation.

16. RESERVES

	Consolidated			Company
	2002 S	2001 \$	2002 S	2001 5
Option premium reserve
Balance at beginning of year	902.601	902,601	902.601	902,601
- Expiry of $30,643,750$ options on $31$ March 2002	(902, 601)		(902, 601)
- Entitlement issue to existing shareholders of $20,867,332$ ( $2001$ :nil) options expiring 30 April 2005 - Pro-rata placement to past option-holders 15,321,875 (2001:nil) options expiring	208,672		208,672
30 April 2005	153,215		153.215
Balance at end of year	361,890	902,601	361,890	902,601

The option premium reserve records funds held on issue of options.

山桥高

LEGEND MINING LIMITED Notes to the financial statements for year ended 31 December 2002

	Consolidated		Company
	2002 S	2001 3	2002 5	2001 \$
17. ACCUMULATED LOSSES Accumulated losses at the beginning of the
financial year	(5,168,086)	(4,198,781)	(5,173,420)	(4.204, 115)
Net loss attributable to members of the parent
entity	(1,871,020)	(969.305)	(1,870,139)	(969,305)
Accumulated losses at the end of the financial
year	7,039,106)	(5,168,086)	(7,043,559)	(5,173,420)

18. OPTIONS

$\bar{a}$

The Company had on issue at 31 December 2002 options over fully paid shares as follows:

Number of options	Expiry date	Exercise date	Exercise price
2,350,000 (unlisted)	01/06/06	Any time prior to expiry	-22 cents
36,189,207 (listed)	30/05/05	Any time prior to expiry	15 cents

These options do not entitle the holder to participate in any share issue of any other corporation.

	Consolidated		Company
	2002 \$	2001 S.	2002 \$	2001 \$
19(a) REMUNERATION OF DIRECTORS Income paid or payable or otherwise made available to all directors of each entity in the economic entity by the Company or any related party.	183,000	196,040	183,000	196,040
The number of directors whose income from the Company or related parties was within the
following bands:
	Number			Number
	2002	2001	2002	2001
\$20,000 - \$29,999	2	2	2	2
$$140,000 - $149,999$	1	1	1	1
19(b) REMUNERATION OF EXECUTIVES The number of executive officers whose remuneration falls within the following bands:
	Number			Number
	2002	2001	2002	2001
$$140,000 - $149,999$	1	1	1
Total remuneration received, or due and receivable by executive officers of the Company and economic entity from any entity and related party for the management of the affairs of the Company and its subsidiaries whose income is
\$100,000 or more	\$148,080	\$149,040	\$148,080	\$149,040

20. RELATED PARTIES

(a) The names of persons who were directors of the Company at any time during the financial year are as follows:

Albert K R Watson (resigned 12 December 2002) Murray V McDonald Ian D Cowden

• (b) Information on the remuneration of directors is set out in note 19.
• (c) Related party transactions

Mr I D Cowden and Iana Pty Ltd (a company controlled by Mr Cowden) received fees for the provision of geological services to the Company during the year. The aggregate amount charged for such services and expenses was \$117,983 (2001: \$113,286) which has not been included in remuneration of directors at note 19(a). The balance owing to Iana Pty Ltd at the end of year was \$57,324.

• (d) All amounts referred to in note (c) were charged at normal commercial rates.
• (e) Directors holdings of shares and share options.

The interests of directors and their director related entities in shares and share options of Legend Mining Limited at year end are set out below:

	2002	2001
	Number Held	Number Held
Ordinary Shares	7.525.001	7.525.001
Options over ordinary shares (listed)	682,435	6.835.122
Options over ordinary shares (unlisted)		1,250,000

(f) Transactions of directors and director-related entities concerning shares or share options.

During the year directors and director related entities disposed of no ordinary shares of Legend Mining Limited.

21. NOTES TO STATEMENTS OF CASH FLOWS

(i) Reconciliation of Cash

For the purposes of the Statements of Cash Flows, cash includes cash on hand and at bank and short term deposits at call, net of outstanding bank overdrafts. Cash as at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows:

		Consolidated			Company
		2002	2001	2002	2001
	Note	S	\$	\$	S
Cash on hand	7	200	200	100	100
Cash at bank	7	296,148		296,148
Deposits - at call	$\overline{7}$	79,419	246,886	79,419	246,886
		375,767	247,086	375,667	246,986
(ii) Reconciliation of loss from ordinary activities after income tax to net cash used in operating activities
Operating loss from ordinary activities after
income tax		(1,871,020)	(969, 305)	(1,870,139)	(969, 305)
Add /(less) items classified as investing/financing activities:
Finance charges on capitalised finance leases		3,334		3,334
Profit on disposal of investments		(32,187)		(32, 187)
Add /(less) non cash items:
Depreciation		38,428	31,951	38,428	31,951
Exploration expenditure written off		950,000	$\overline{a}$	950,000
Movement in provision for annual leave		52,193	(22, 675)	52,193	(22, 675)
Shares issued for professional services			150,000		150,000
Provision for rehabilitation			(100,000)		(100,000)
Provision for doubtful debts			5,601		5,601
Unrealised (gains)/ losses in the market value of investments		(5,268)	17,184	(5,268)	17,184
		(864, 520)	(887, 244)	(863, 639)	(887, 244)
Change in assets & liabilities:
(Increase)/ decrease in receivables		615,028	(226, 033)	615,028	(226, 033)
Decrease / (Increase) in inventory			644,063		644,063
(Decrease)/ Increase in payables &
borrowings		55,525	(360, 708)	55,524	(360,708)
Net Cash provided/ (Used) in Operating
Activities		(193, 967)	(829, 922)	(193, 087)	(829, 922)

(iii) Non cash financing and investment activities During the financial year, the consolidated entity acquired plant and equipment with an aggregate value of \$nil (2001: \$38,636) by means of finance leases. These leases are not reflected in the statement of cashflows.

$\sim$

$\mathcal{L}_{\rm{max}}$

LEGEND MINING LIMITED Notes to the financial statements for year ended 31 December 2002

	Consolidated		Company
	2002 S	2001 s	2002 S	2001 S
22. FINANCE LEASE COMMITMENTS
Finance lease commitments are payable: - Within one year - One year or later and no later than five years - Less future finance charges	7,673 31,882 (3, 405) 36.150	7,673 39,554 (6,737) 40,490	7,673 31,882 (3,405) 36,150	7,673 39,554 (6, 737) 40,490
Less liabilities provided for in the financial statements - Current - Non Current Total lease liability	5.860 30.290 36,150	5,865 34,625 40,490	5,860 30,290 36,150	5,865 34,625 40,490
23. FINANCING ARRANGEMENTS

The consolidated entity has access to the following lines of credit: Total facilities $\overline{a}$

Pertormance Bond	63.000	63.000	63.000	63.000
	63,000	63,000	63.000	63,000
Facilities used:
Performance Bond/Bank Guarantee	63.000	63.000	63,000	63,000
	63,000	63.000	63.000	63.000

أتعامد أنفعا

للأمام القائر

بديد بدد

Overseas Bills Purchase Facility

Interest on this facility is charged at prevailing market rates plus 3.50%.

24. COMMITMENTS FOR EXPENDITURE

(a) Exploration expenditure commitments.

In order to maintain current rights of tenure to exploration tenements, the Company will be required to outlay in 2003 amounts of approximately \$119,958 (2001: \$141,040) in respect of tenement lease rentals and to meet minimum expenditure requirements of the Department of Minerals and Energy. These obligations are expected to be fulfilled in the normal course of operations and have not been provided for in the financial report.

TAMAY

24. COMMITMENTS FOR EXPENDITURE (cont'd)

(b) Mining plant rental commitments

The Company and its joint venture partner, East Coast Minerals NL ("the rentors") have entered into a rental agreement for the rental of mining plant for their Munni Munni operations for a period of not less than 12 months. This is currently being re-negotiated however and the directors estimate that within the next 12 months the Company's share of rental commitment is to a maximum of \$20,000. Under the terms of the agreement, the Company has the right at any time, to terminate the rental agreement without notice and without assigning a reason provided that the rentors pay the owner of the mining plant \$30,000 in satisfaction of all obligations and liabilities of the rentors to the owner.

25. INVESTMENTS IN CONTROLLED ENTITIES

--------- Name	******** Class of Share	™™™™™™™™™™™™™™™™™™™™™™™™™™™™™™™™™™™™™ Interest Held 2002	Interest Held 2001 ________
Ltd Arbe: nech . _________		.00% ********	'00%

Grant Thornton has not acted as auditor for Arbotech Pty Ltd. The Company has effectively been dormant during the year. The Company was incorporated in Australia.

26. FINANCIAL INSTRUMENTS DISCLOSURE

(a) Interest Rate Risk

The consolidated entity's exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities is set out below:

2001	Weighted Average Interest Rate	Floating Interest Rate	Fixed Interest Rate	Non- Interest Bearing	Total
Financial assets:
Cash	3.5%	246,886		200	247,086
Other Financial Assets				15,530	15,530
Receivables		a.		635,140	635,140
		246,886		650.870	897,756
Financial liabilities
Payables				157,767	157,767
Interest bearing liabilities	7.2%	۰	40,490		40,490
			40,490	157,767	198.257
2002	Weighted	Floating	Fixed	Non-
	Average Interest Rate	Interest Rate	Interest Rate	Interest Bearing	Total
Financial assets:
Cash	3.7	296,149	79,418	200	375,767
Other Financial Assets				45,118	45,118
Receivables				20,929	20,929
		296,149	79.418	66,247	441.814
Financial liabilities
Payables				633,999	633,999
Interest bearing liabilities	11.4		286,150		286,150

5.MH

26. FINANCIAL INSTRUMENTS DISCLOSURE (cont'd)

(b) Credit Risk Exposures

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.

On-Statement of Financial Position Financial Instruments

The credit risk on financial assets, excluding investments, of the consolidated entity which have been recognised on the statement of financial position, is the carrying amount, net of any provision for doubtful debts.

(c) Net Fair Value of Financial Assets and Liabilities

On-Statement of Financial Position Financial Instruments

The Company's financial assets and liabilities as disclosed in the statement of financial position are carried at amounts that approximate their net fair value.

Following are the carrying amounts and estimated net fair values of the consolidated entity's non-current financial instruments as at the reporting date. The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing partners.

	2002	2002	2001	2001
	Carrying	Net Fair	Carrying	Net Fair
	Amount	Value	Amount	Value
ومعصصه Investments in listed corporations	45,118	45,118	15.530	15,530

27. INTEREST IN JOINT VENTURE OPERATIONS

Legend Mining Limited has an interest in the following joint venture arrangements:

Joint Venture	Project	Activity	2002	2001
			Interest	Interest
Munni Munni Joint Venture	Elizabeth Hill	Silver Exploration	33.33%	-23.33%
Titan Resources NL	Radio Hill West	Nickel Exploration	100%	100%
Emerald Joint Venture	Mt Ida Greenstone Belt	Nickel/Gold	40%	91%
		Exploration

高原石

27. INTEREST IN JOINT VENTURE OPERATIONS (Cont'd)

Included in the assets of the Company and the consolidated entity are the following items which represent the Company's and the consolidated entity's interests in the assets employed in the joint ventures.

	Consolidated		Company
	2002 \$	2001 \$	2002 \$	2001 \$
Non-Current Assets Plant and equipment – net book value	402	80,055	402	75,867
Current Liabilities $\cdot$ Overdraft	14.335	$\overline{a}$	14,335	$\blacksquare$
Provisions	14,494	$\blacksquare$	14,494	л.
Total Liabilities	28,829	÷	28,829	$\blacksquare$
Net Liabilities	(28, 427)	80,055	(28, 427)	75,867 والمحاملات المناقب

For the year ended 31 December 2002 the contribution of the Munni Munni Joint Venture to the operating loss of the Company and the consolidated entity was operating expenses of \$(28,427) (2001: \$500,000).

28. SIGNIFICANT EVENTS AFTER BALANCE DATE

On 19^th February 2003 a prospectus was lodged with ASIC and the ASX for the purposes of raising capital of approximately \$422,346 via a 1:3 non-renounceable entitlement issue to existing shareholders of approximately $14.078,221$ shares. The offer closed on 21^st March 2003. The effect of this transaction has not been brought to account at balance date.

	Consolidated		Company
	2002 s	2001 S	2002 S	2001 \$
29. AUDITORS REMUNERATION
Remuneration of the auditor of the parent entity for:
- auditing or reviewing the financial report	10,000	10,000	10,000	10,000
- other services		1,000		1.000

10,000

11,000

AMINI

$10,000$

11,000

DIRECTORS' DECLARATION

The directors of the Company declare that: $1.$

• the financial statements and notes, set out on pages 9 to 28, are in accordance with the Corporations $\left( \mathbf{a}\right)$ Act 2001, including:
• giving a true and fair view of the financial position of the Company and consolidated entity $(i)$ as at 31 December 2002 and of their performance, for the year ended on that date; and
• complying with Accounting Standards and the Corporations Regulations 2001; $(ii)$
• in the directors opinion there are reasonable grounds to believe that the Company will be able to pay $(b)$ its debts as and when they become due and payable

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

M V McDonald DIRECTOR

$\pm$

Dated this 28^th day of March 2003.

INDEPENDENT AUDIT REPORT

To the Members of Legend Mining Limited

Scope

We have audited the financial report of Legend Mining Limited and its controlled entity for the financial year ended 31 December 2002, comprising the Statement of Financial Performance, Statement of Financial Position. Statement of Cash Flows, Notes to the Financial Statements and Directors' Declaration.

The financial report includes the consolidated financial statements of the consolidated entity comprising the company and the entity it controlled at the year's end or from time to time during the financial year. The company's directors are responsible for the financial report. We have conducted an independent audit of this financial report in order to express an opinion on it to the members of the company.

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 in Australia and statutory requirements so as to present a view which is consistent with our understanding of the company's and the consolidated entity's financial position, and performance as represented by the results of their operations and their cash flows.

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

Audit Opinion

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

• the Corporations Act 2001, including: я)
• giving a true and fair view of the company's and consolidated entity's financial position as at $i)$ 31 December 2002 and of their performance for the year ended on that date; and
• complying with Accounting Standards in Australia and the Corporations Regulations 2001; $\mathbf{ii}$ and
• other mandatory professional reporting requirements in Australia. b)

Inherent Uncertainty Regarding Continuation as a Going Concern

Without qualification to the opinion expressed above, attention is drawn to the following matter. As a result of the matters described in Note 1(b) to the financial statements, unless additional share capital is raised and the consolidated entity continues to receive ongoing support from its financiers, there is significant uncertainty whether the consolidated entity will be able to continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business at the amounts stated in the financial report.

Grant Thornton Chartered Accountants

Perth, WA Dated this 28th day of March 2003

Level 6 256 St. Georges Terrace Perth Western Australia 6000 Postal Address: GPO Box P 1213 Perth Western Australia 6844 Tel: (08) 9481 1448 Fax: (08) 9481 0152 Email: gtperth@gtwa.com.au http: www.grantthornton.com.au

Greg LeGuier Partner

A Western Australian Partnership - A Member of Grant Thornton Association Inc.- the Australian Member of Grant Thornton International

Partners: P Constantinou PJ Fallon GP Kidd MJ Kitay GM LeGuier SP McGurk Consultant: V Zappavigna