LIVIUM LTD — Annual Report 2007

Dec 10, 2007

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ABN 29 126 129 413

ANNUAL REPORT AND FINANCIAL STATEMENTS

PERIOD ENDED 30 JUNE 2007

CONTENTS

PAGE

CORPORATE DIRECTORY CHAIRMAN’S REPORT DIRECTORS’ REPORT AUDITOR’S INDEPENDENCE DECLARATION BALANCE SHEET INCOME STATEMENT STATEMENT OF CHANGES IN EQUITY CASH FLOW STATEMENT NOTES TO THE FINANCIAL STATEMENTS DIRECTORS’ DECLARATION INDEPENDENT AUDIT REPORT

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

CORPORATE DIRECTORY

DIRECTORS

Jonathan O’Callaghan (Chairman) David Seymour(Non-Executive Director) Philip Miolin (Non-Executive Director)

COMPANY SECRETARY

Lisa Wynne

REGISTERED OFFICE & PRINCIPAL PLACE OF BUSINESS

AUDITORS

Rix Levy Fowler Level 1, 12 Kings Park Road WEST PERTH WA 6005

SHARE REGISTRY

Advanced Share Registry Services 110 Stirling Highway NEDLANDS WA 6009 Telephone: (08) 9389 8033 Facsimile: (08) 9389 7871

Level 1 22 Oxford Close West Leederville, Western Australia 6007 Phone: +618 9388 2816 Facsimile: +618 9381 5911 Email: info@midwinterresources.com.au Website: www.midwinterresources.com.au

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

CHAIRMAN’S REPORT

Dear Shareholder,

Pursuant to Section 292 of the Corporations Act 2001 the following documents form part of the annual report for Midwinter Resources NL ("Midwinter") for the period ending 30 June 2007.

For the period under review in this report Midwinter was a public unlisted company whose focus during the period had been the acquisition, through an option agreement, of the Wilson’s Reef and Old Bronzewing Project. Full details of the which are contained within the Midwinter prospectus which was prepared to undertake the $4,356,250 capital raising.

Midwinter looks forward to an exciting year of exploration and on behalf of my fellow directors, Phil Miolin and David Seymour, I would like to thank all shareholders for their support to date and look forward to reporting the results of our exploration over the coming year.

Yours sincerely,

Jon O’Callaghan 14 November 2007

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

DIRECTORS’ REPORT

The Directors present their report on Midwinter Resources NL for the period ended 30 June 2007.

BOARD OF DIRECTORS

The names and details of the Midwinter Resources NL (“Company”) directors in office during the financial period and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

Jonathon O’Callaghan (Executive Chairman)

Mr O'Callaghan has two decades of business experience, primarily as a corporate financer to emerging natural resource companies. His experience includes initiating, structuring, managing and capitalising a broad range of transactions including IPOs and secondary capital raisings, stock exchange listings, asset acquisitions and divestments, takeovers and re-organisations.

Mr O'Callaghan has played a key role in the inception, growth and development of numerous companies, including three that have gone on to become S&P/ASX Top 200 companies. Now based in London, he continues to draw on his extensive network and business experience to identify and secure exceptional natural resource projects

Responsibilities: Mr O’Callaghan is a member of the Nomination and Remuneration Committee and a member of the Audit Committee.

Philip Miolin (Non-Executive Director)

Mr Miolin has a Bachelor of Arts and is presently actively involved in the Arts. He has a Graduate Diploma in Education and is a sessional lecturer at Curtin University. He has a long history of involvement in the resources sector and is a long term investor in Australian Mining stocks.

He has a strong network of mining industry contacts that will further assist in the Company’s growth.

Responsibilities: Mr Miolin is a member of the Audit Committee and a member of the Nomination and Remuneration Committee.

David Seymour (Non-Executive Director)

David has over 25 years experience at executive level in the financial markets primarily in Investment banking and equities. He spent 10 years as a director of Capital Markets with UBS as well as holding positions as a Treasurer and General Manager with other financial institutions.

He has experience in equity/capital markets raisings, due diligence, risk management and ASX compliance and regulatory requirements combined with an extensive knowledge of global interest rate markets.

David brings additional financial, strategic and investment analysis skills to the Company.

Responsibilities: Mr Seymour is Chairman of the Audit Committee and a member of the Nomination and Remuneration Committee.

Lisa Wynne (Company Secretary)

Ms Wynne is a Chartered Accountant with 6 years experience working with listed entities in senior financial roles responsible for management and financial reporting, taxation, and ensuring continuous disclosure and compliance. Lisa presently works with a number of emerging ASX listed resource companies and specialises in financial and company secretarial transaction and corporate work.

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

DIRECTORS’ REPORT

CORPORATE STRUCTURE

Midwinter Resources NL is a company limited by shares that is incorporated and domiciled in Australia. Midwinter Resources NL had no controlled entities during the financial period.

NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES

The principal activity of the Company during the period was due diligence on the exploration assets acquired subsequent to year end.

Midwinter lodged a prospectus dated 12 September 2007, with the intention to raise $4,356,250 and gain admission to the official list of ASX.

REVIEW OF OPERATIONS

Midwinter Resources NL was incorporated on 22 June 2007 for the purpose of acquiring and exploring the Wilson’s Reef and Old Bronzewing prospects.

RESULTS OF OPERATIONS

The operating loss after income tax of the Company for the period ended 30 June 2007 was $6,702.

No dividend has been paid during or is recommended for the financial period ended 30 June 2007.

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

There were no significant changes in the state of affairs of the Company during the financial period not otherwise dealt with in this report and the financial statements.

FUTURE DEVELOPMENTS

Other than as referred to in this report, further information as to likely developments in the operations of the Company and expected results of those operations would, in the opinion of the Directors, be speculative and prejudicial to the interests of the Company and its shareholders.

SUBSEQUENT EVENTS

There has not been any matter or circumstance that has arisen since 30 June 2007, which has significantly affected, or may significantly affect the operations of the Company, the result of those operations, or the state of affairs of the Company in subsequent financial years, other than:

On 17 July 2007 the Company issued 4,200,000 fully paid ordinary shares and 11,700,000 partly paid contributing shares to seed investors

On 31 August 2007 the Company issued 3,075,000 fully paid ordinary shares to seed investors

On 28 September 2007, shareholders approved the adoption of a new constitution.

The Company was admitted to the Official List of the ASX on 25 October 2007 following the closure of an initial public offer of 17,425,000 shares to raise $4,356,250 before capital raising costs.

On 25 October 2007, the Company completed the acquisitions of all initial interests in the Wilson’s Reef and Old Bronzewing Projects as detailed in the Company’s Prospectus dated 12 September 2007 and the accompanying Supplementary Prospecuts dated 28 February 2007. As consideration for the projects, the Company paid $50,000 plus GST and issued 300,000 fully paid ordinary shares to the Vendors on this date.

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

DIRECTORS’ REPORT

FINANCIAL POSITION

The Company’s working capital, being current assets less current liabilities was $6,702 (deficit) at 30 June 2007.

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.

DIRECTORS’ MEETINGS

The number of meetings attended by each of the Directors of the Company during the financial period was:

Jon O’Callaghan David Seymour Philip Miolin	BoardMeetings
	Number held and entitled to attend Number Attended 2 2 2 2 2 2

No meetings of the Audit Committee of the Company were held during the financial period.

ENVIRONMENTAL ISSUES

The Company’s operations are subject to State and Federal laws and regulation concerning the environment. Details of the Company performance in relation to environmental regulation are as follows:

The Company’s exploration activities are subject to the Western Australian Mining Act. The Company has a policy of complying with or exceeding its environmental performance obligations. The Board believes that the Company has adequate systems in place for the management of its environmental requirements. The Company aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in compliance with all environmental legislation. The Directors of the Company are not aware of any breach of environmental legislation for the financial period under review.

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.

SHARE OPTIONS

As at the date of this report, there were no unissued ordinary shares under option.

No person entitled to exercise any option referred to above have or had, by virtue of the option, a right to participate in any share issue of any other body corporate.

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

DIRECTORS’ REPORT

REMUNERATION REORT

This report details the type and amount of remuneration for each director of Midwinter Resources NL, and for the executives receiving the highest remuneration.

Remuneration Policy

It is the company’s objective to provide maximum stakeholder benefit from the retention of a high quality board by remunerating directors fairly and appropriately with reference to relevant employment market conditions. To assist in achieving the objective the Board links the nature and amount of executive directors’ emoluments to the company’s financial and operational performance. The expected outcomes of this remuneration structure are:

• Retention and Motivation of Directors

• Performance rewards to allow Directors to share the rewards of the success of Midwinter Resources NL

The remuneration of an executive director will be decided by the Remuneration and Nomination Committee. In determining competitive remuneration rates the Committee reviews local and international trends among comparative companies and the industry generally. It also examines terms and conditions for the employee share option plan.

The maximum remuneration of non-executive Directors is the subject of Shareholder resolution in accordance with the Company’s Constitution, and the Corporations Act 2001 as applicable. The appointment of non-executive Director remuneration within that maximum will be made by the Board having regard to the inputs and value of the Company of the respective contributions by each nonexecutive Director.

The Board may award additional remuneration to non-executive Directors called upon to perform extra services or make special exertions on behalf of the Company.

There is no scheme to provide retirement benefits, other than statutory superannuation, to nonexecutive directors.

All equity based remuneration paid to directors and executives is valued at the cost to the company and expensed. Options are valued using the Black-Scholes methodology.

Performance Based Remuneration

The issue of options to directors is in accordance with the Company’s employee share option plan to encourage the alignment of personal and shareholder returns. The intention of this program is to align the objectives of directors/executives with that of the business and shareholders. In addition all directors and executives are encouraged to hold shares in the Company.

The Company has not paid bonuses to directors or executives to date.

Company Performance, Shareholder Wealth and Directors’ and Executives’ Remuneration

The remuneration policy has been tailored to maximise the commonality of goals between shareholders and directors and executives. The method applied in achieving this aim to date being the issue of options to directors to encourage the alignment of personal and shareholder interests. The company believes this policy will be the most effective in increasing shareholder wealth.

Details of Remuneration for Period Ended 30 June 2007

The remuneration for each director and of the one executive officer of the Company during the period was as follows:

Directors and Executive Officers’ Emoluments

No remuneration was paid to Directors or Executives during the financial period ended 30 June 2007.

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

DIRECTORS’ REPORT

Employment Contracts of Directors and Senior Executives

There were no formal contracts finalised as at the completion of the June 2007 financial period for Nonexecutive Directors. Non-executive Directors are paid under the terms agreed to by a directors resolution at rates detailed below:

Mr O’Callaghan will receive director’s fees of $50,000 per annum inclusive of superannuation requirements.

Mr Seymour will receive director’s fees of $35,000 per annum inclusive of superannuation requirements.

Mr Miolin will receive director’s fees of $35,000 per annum inclusive of superannuation requirements

The Company Secretary has a monthly agreement on ordinary commercial terms.

DIRECTORS’ INTERESTS IN SHARES AND OPTIONS

As at the date of this report, the interests of the Directors in the ordinary shares and options of the Company are:

		Ordinary Shares			Options
Directors	Balance at	Purchased/(Sold)	Balance at	Balance at	Expired	Issued		Balance at
	beginning		end of period	beginning				end of
	of period			of period				period
J O’Callaghan	-	1	1	-	-		-	-
D Seymour	-	100,000	100,000	-	-		-	-
P Miolin	-	100,001	100,001	-	-		-	-

As at the date of this report, the interests of the Directors in the Partly Paid Contributing Shares (“Contribs”) of the Company are:

			Partly Paid Contributing	Shares
Directors	Balance at		Purchased/(Sold)	Balance at end of period
	beginning of
	period
J O’Callaghan		-	-	-
D Seymour		-	100,000	100,000
P Miolin		-	100,000	100,000

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

Post year end, the Company paid a premium of $12,367 to insure Directors and Officers of the Company. The Directors and Officers have indemnities in place with the Company whereby the Company has agreed to indemnify the Directors and Officers in respect of certain liabilities incurred by the Director or Officer while acting as a director of the Company and to insure the Director or Officer against certain risks the Director or Officer is exposed to as an officer of the Company.

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

DIRECTORS’ REPORT

NON-AUDIT SERVICES

The board of directors is satisfied that the provision of non-audit services during the period is compatible with the general standard for audit independence imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons:

• The nature of the services provided do not compromise the general principles relating to auditor independence as set out in the Institute of Chartered Accountants in Australia and CPA Australia’s Professional Statement F1: Professional Independence.

No fees for non-audit services were paid to the external auditors during the period.

AUDITOR’S INDEPENDENCE DECLARATION

The lead auditor’s independence declaration for the period ended 30 June 2007 has been received and immediately follows the Directors’ Report.

CORPORATE GOVERNANCE

In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Midwinter Resources support and have adhered to the principles of sound corporate governance.

The Board recognises the recent recommendations of the Australian Stock Exchange Corporate Governance Council, and considers that Midwinter Resources is in compliance with those guidelines which are of critical importance to the commercial operation of a junior listed resources company. During the financial period, shareholders continued to receive the benefit of an efficient and costeffective corporate governance policy for the Company. The Company’s corporate governance statement and disclosures are contained in the annual report.

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

Philip Miolin Director

Perth, Western Australia 14 November 2007

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

To The Board of Directors

Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

This declaration is made in connection with our audit of the financial report of Midwinter Resources NL for the period ended 30 June 2007 and in accordance with the provisions of the Corporations Act 2001.

We declare that, to the best of our knowledge and belief, there have been:

• no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit;

• no contraventions of the Code of Professional Conduct of the Institute of Chartered Accountants in Australia in relation to the audit.

Yours faithfully

RIX LEVY FOWLER Audit & Corporate Pty Ltd

CHRIS WATTS Director

DATED at PERTH this 14 day of November 2007

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BALANCE SHEET As at 30 June 2007

Note Current Assets Cash and cash equivalents 5 Trade and other receivables 6 Total Current Assets Non-Current Assets Exploration and evaluation expenditure 7 Total Non-Current Assets TOTAL ASSETS Current Liabilities Trade and other payables 8 TOTAL LIABILITIES NET LIABILITIES Equity Issued capital 9 Accumulated losses 10 TOTAL EQUITY	2007 $ - 227
	227
	-
	-
	227
	6,927
	6,927
	(6,700)
	2 (6,702)
	(6,700)

The above balance sheet should be read in conjunction with the accompanying notes.

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

INCOME STATEMENT For the Period Ended 30 June 2007

Note Expenses Administration costs 3 Exploration costs 3 Loss before income tax expense Income tax expense 4 Net loss attributable to members of Company	2007 $ (6,677) (25)
	(6,702) -
	(6,702)

The above income statement should be read in conjunction with the accompanying notes.

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

STATEMENT OF CHANGES IN EQUITY For the Period Ended 30 June 2007

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----- Start of picture text -----

Issued Capital Accumulated Reserves Total
losses
$ $ $ $
Balance on
- - - -
incorporation
Loss - (6,702) - (6,702)
Issue of shares 2 - - 2
Balance at 30 June 2007 2 (6,702) - (6,700)
----- End of picture text -----

The above statement of changes in equity should be read in conjunction with the accompanying notes.

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

CASH FLOW STATEMENT For the Period Ended 30 June 2007

Note Cash Flows from Operating Activities Payments for exploration and evaluation Payments to suppliers, contractors and employees Interest received Net cash flows used in operating activities 11 Cash Flows from Financing Activities Proceeds from issue of shares Pre-paid share issue expenses Net cash flows from financing activities Net increase cash and cash equivalents Cash and cash equivalents at the beginning of the financial period Cash and cash equivalents at the end of the financial period 5	2007 $ - (2) -
	(2)
	2 -
	2
	- -
	-

The above cash flow statement should be read in conjunction with the accompanying notes.

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS For The Period Ended 30 June 2007

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

(a) Financial Reporting Framework

The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. Accounting Standards include Australian equivalents to International Financial Reporting Standards (‘A-IFRS’). Compliance with the A-IFRS ensures that the financial statements and notes of the Company comply with International Financial Reporting Standards (‘IFRS’).

The financial report covers Midwinter Resources NL, which at 30 June 2007 was an unlisted 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 non-current assets. Cost is based on the fair values of the consideration given in exchange for assets.

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

(b) Statement of compliance

Australian Accounting Standards that have recently been issued or amended but are not yet effective have not been adopted for the annual reporting period ending 30 June 2007 because they do not require a change to accounting policies and therefore have no impact or they are not applicable to the Company.

(c) Revenue

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

(d) Impairment

Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The impairment loss is recognised for the amount by which the assets’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs to sell and value in use.

(e) Cash and cash equivalents

For the purpose of the cash flow statement, cash includes cash on hand and at call deposits with banks or financial institutions and investments in money market instruments with less than 30 days to maturity.

(f) Trade and other receivables

Trade receivables, loans, and other receivables are recorded at amortised cost less impairment

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS For The Period Ended 30 June 2007

(g) Exploration and Evaluation Expenditure

Exploration and evaluation expenditure incurred by or on behalf of the Company is accumulated separately for each area of interest. Such expenditure comprises net direct costs and an appropriate portion of related overhead expenditure. Each area of interest is limited to a size related to a known or probable mineral resource capable of supporting a mining operation.

Exploration expenditure for each area of interest is written off as incurred, except that it may be carried forward provided that one of the following conditions is met:

• such costs are expected to be recouped through successful development and exploitation of the area of interest or, alternatively, by its sale; or

• exploration activities in an area of interest have not, at balance date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves.

The Company performs impairment testing when facts and circumstances suggest the carrying amount has been impaired. If it was determined that the asset was impaired it would be immediately written off to the income statement.

Expenditure is not carried forward in respect of any area of interest unless the Company’s right of tenure to that area of interest is current. Expenditures incurred before the Company has obtained legal rights to explore a specific area is expensed as incurred. Amortisation is not charged on areas under development, pending commencement of production.

(h)

Trade and other payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

(i) Provisions

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the balance sheet date.

(j) Employee entitlements

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

Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled. All other employee benefit liabilities are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date.

In determining the present value of future cash outflows, the market yield as at the reporting date on national government bonds, which have terms to maturity approximating the terms of the related liabilities, are used.

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

• wages and salaries, non-monetary benefits, annual leave, long service leave and other leave benefits, and

• other types of employee benefits are recognised against profits on a net basis in their respective categories.

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS For The Period Ended 30 June 2007

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

(k) Income tax

Current tax

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

Deferred tax

Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items.

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

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

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the company intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax for the period

Current and deferred tax is recognised as an expense or income in the income statement, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess.

(l) Equity based payments

The Company determines the fair value of options issued to employees as remuneration and recognises the expense in the income statement. This policy is not limited to options and also extends to other forms of equity based remuneration.

Fair value is measured using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period.

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS For The Period Ended 30 June 2007

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

(m) Goods and services tax (GST)

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

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

• receivables and payables are stated with the amount of GST included.

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

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

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

(n) Comparative amounts

This is the first financial report prepared by the Company which was incorporated in June 2007.

(o) Critical accounting estimates and judgments

The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic date, obtained both externally and within the Company.

Examples of those areas which require accounting estimates and judgments include carrying values of exploration expenditure and share–based payments.

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS For The Period Ended 30 June 2007

2. Revenue Interest received 3. Expenses Company set up costs Stationery Audit fees Travel Exploration costs written off (refer note 1(g)) 4. Income taxes (a) Income tax recognised in profit or loss Prima facie tax on operating loss before income tax at 30% Add: Deferred tax asset not brought to account at balance date as realisation of the benefit is not probable. Income tax attributable to operating loss		2007 $ - 630 20 4,000 2,025 25 (2,010) 2,010
		-

No income tax is payable by the Company. The Directors have considered it prudent not to bring to account the deferred tax asset of income tax losses and exploration deductions until it is probable of deriving assessable income of a nature and amount to enable such benefit to be realised.

5. Cash and cash equivalents Cash at bank 6. Trade and other receivables Current Receivables Sundry debtors Provision for doubtful debtors 7. Exploration and Evaluation Expenditure Written down value - opening Exploration expenditure Write downs (refer note 1(g)) Written down value - closing	-
	227 -
	227
	- 25 (25)
	-

Exploration expenditure relates to expenditures incurred before the Company obtained legal rights to explore a specific area.

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS For The Period Ended 30 June 2007

8. Trade and other payables Current Payables Trade creditors Accruals	2,927 4,000
	6,927

Trade liabilities are non-interest bearing and normally settled on 30-day terms.

9. Issued Capital Ordinary shares Fully paid (a)	2007 Number 2007 $ 2 2
	2 2

(a) Ordinary shares

On 22 June 2007 the company was incorporated with 2 shares issued at $1 per share.

10. Accumulated Losses Balance at the beginning of this period Loss for the period Balance at the end of the period 11. Notes to the Cash Flow Statement (a) Reconciliation of net cash used in operating activities to operating loss after income tax Operating loss after tax Add non cash items: Changes in net assets and liabilities Increase in receivables Increase in payables Net cash outflow from operating activities (b) Non-cash financing and investing activities None		2007 $ - 6,702
		6,702
		(6,702) - (227) 6,927
		(2)

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS For The Period Ended 30 June 2007

12. Key Management Personnel Compensation

(a) Directors and Specified Executives

The names and positions held by key management personnel in office at any time during the period are:

Directors

J O’Callaghan

P Miolin

D Seymour

Non-Executive Chairman (Appointed 22 June 2007) Non-Executive Director (Appointed 22 June 2007) Non-Executive Director (Appointed 22 June 2007)

Executives & Officers

L Wynne

Company Secretary (Appointed 22 June 2007)

(b) Remuneration of Directors

No payments were made to Directors during the financial period.

(c) Remuneration of Executives and Officers

No payments were made to Executives and Officers during the financial period.

(d) Remuneration Options: Granted and Vested during the Period

No options were issued to Directors or Executives during the financial period.

• (e) Option holdings of directors and officers

Nil

(f) Shareholdings of directors and officers

Ordinary Shares

The numbers of ordinary shares held by each director and other key management personnel of the Company, including their personally related parties, are set out below:

			Ordinary Shares
Directors	Balance at		Purchased/(Sold)	Balance at end of
	beginning of			period
	period
J O’Callaghan		-	1	1
P Miolin		-	1	1
D Seymour		-	-	-

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS For The Period Ended 30 June 2007

12. Director and Executive Disclosures (continued)

(h) Remuneration Policy

It is the company’s objective to provide maximum stakeholder benefit from the retention of a high quality board by remunerating directors fairly and appropriately with reference to relevant employment market conditions. To assist in achieving the objective the Board links the nature and amount of executive directors’ emoluments to the company’s financial and operational performance. The expected outcomes of this remuneration structure are:

• Retention and Motivation of Directors

• Performance rewards to allow Directors to share the rewards of the success of Midwinter Resources NL

The remuneration of an executive director will be decided by the Remuneration and Nomination Committee. In determining competitive remuneration rates the Committee reviews local and international trends among comparative companies and the industry generally. It also examines terms and conditions for the employee share option plan.

The maximum remuneration of non-executive Directors is the subject of Shareholder resolution in accordance with the Company’s Constitution, and the Corporations Act 2001 as applicable. The appointment of non-executive Director remuneration within that maximum will be made by the Board having regard to the inputs and value of the Company of the respective contributions by each non-executive Director.

The Board may award additional remuneration to non-executive Directors called upon to perform extra services or make special exertions on behalf of the Company.

There is no scheme to provide retirement benefits, other than statutory superannuation, to nonexecutive directors.

All equity based remuneration paid to directors and executives is valued at the cost to the company and expensed. Options are valued using the Black-Scholes methodology.

Performance Based Remuneration

The issue of options to directors is in accordance with the Company’s employee share option plan to encourage the alignment of personal and shareholder returns. The intention of this program is to align the objectives of directors/executives with that of the business and shareholders. In addition all directors and executives are encouraged to hold shares in the Company.

The Company has not paid bonuses to directors or executives to date.

Company Performance, Shareholder Wealth and Directors’ and Executives’ Remuneration

The remuneration policy has been tailored to maximise the commonality of goals between shareholders and directors and executives. The method applied in achieving this aim to date being the issue of options to directors to encourage the alignment of personal and shareholder interests. The company believes this policy will be the most effective in increasing shareholder wealth.

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS For The Period Ended 30 June 2007

13. Equity-based payments

The Company has entered into an Employee Share Option Plan that allows for share options to be granted to eligible employees and officers of the Company. The number of share options that can be issued under the plan cannot exceed 5% of the total number of shares on issue. The terms and conditions of the share option issued under the plan are at the discretion of the Board however, the maximum term of the share option is five years.

During the year Nil share options were granted to directors.

All options granted to directors and key management personnel are ordinary shares in Midwinter Resources NL, which confer a right of one ordinary share for every option held

uditors’ Remuneration Amounts received or due and receivable by the auditors for: Auditing accounts Other services	2007 $ 4,000 -
	4,000

14. Auditors’ Remuneration

1. Commitments There were no outstanding commitments as at 30 June 2007

16. Financial Instruments

Financial Instruments
Floating Interest Rate $ 2007 Financial assets Cash and cash equivalents - Trade and other receivables - Total financial assets Financial liabilities Trade and other payables Total financial liabilities	1 year or less $ Over 1-5 years $ Non interest bearing $ Total $ - - - - - - 227 227
	- - 227 227
	- - 6,927 6,927
	- - 6,927 6,927

Weighted average interest rate Nil%

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS For The Period Ended 30 June 2007

16. Financial Instruments (Cont’d)

Interest rate risks

The Company’s exposure to interest rate risk is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates. The Company does not have a formal policy in place to mitigate such risks.

Credit risk

The maximum exposure to credit risk at balance date is the carrying amount (net of provision of doubtful debts) of those assets as disclosed in the balance sheet and notes to the financial statements. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded are spread amongst approved counterparties.

Net fair value

The net fair value of all assets approximates their carrying value.

17. Segment Information

The Company operates in the mining industry within the geographical area of Australia.

18. Subsequent Events

There has not been any matter or circumstance that has arisen since 30 June 2007, which has significantly affected, or may significantly affect the operations of the Company, the result of those operations, or the state of affairs of the Company in subsequent financial years, other than:

On 17 July 2007 the Company issued 4,200,000 fully paid ordinary shares and 11,700,000 partly paid contributing shares to seed investors

On 31 August 2007 the Company issued 3,075,000 fully paid ordinary shares to seed investors

On 28 September 2007, shareholders approved the adoption of a new constitution.

The Company was admitted to the Official List of the ASX on 25 October 2007 following the closure of an initial public offer of 17,425,000 shares to raise $4,356,250 before capital raising costs.

On 25 October 2007, the Company completed the acquisitions of all initial interests in the Wilson’s Reef and Old Bronzewing Projects as detailed in the Company’s Prospectus dated 12 September 2007 and the accompanying Supplementary Prospecuts dated 28 February 2007. As consideration for the projects, the Company paid $50,000 plus GST and issued 300,000 fully paid ordinary shares to the Vendors on this date.

19. Contingent Liabilities

The Company does not have any contingent liabilities.

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

DIRECTORS’ DECLARATION

The Directors of the Company declare that:

1. the financial statements and notes are in accordance with the Corporations Act 2001 and:

2. (a) comply with Accounting Standards and the Corporations Regulations 2001; and

3. (b) give a true and fair view of the financial position as at 30 June 2007 and of the performance for the period ended on that date of the Company;

4. 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.

Philip Miolin Director

Dated at Perth this 14th day of November 2007

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Midwinter Resources NL ABN 54 1189 12495 Annual Report 2007

Independent Audit Report

To the Members of Midwinter Resources NL

We have audited the accompanying financial report of Midwinter Resources NL (the company), which comprises the balance sheet as at 30 June 2007, and the income statement, statement of changes in equity and cash flow statement for the period ended on that date, a summary of significant accounting policies and other explanatory notes and the directors’ declaration of the company.

Directors Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standards AASB 101: Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards (IFRS) ensures that the financial report, comprising the financial statements and notes, complies with IFRS.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Independent Auditor’s Report

To the Members of Midwinter Resources NL (Continued)

Independence

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

Auditor’s Opinion

In our opinion:

• a. the financial report of Midwinter Resources NL is in accordance with the Corporations Act 2001, including:

• i. giving a true and fair view of the company’s financial position as at 30 June 2007 and of its performance for the period ended on that date; and

• ii. complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and

• b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

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RIX LEVY FOWLER Audit & Corporate Pty Ltd

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CHRIS WATTS. Director

DATED at PERTH this 14 day of November 2007

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