LOTUS RESOURCES LIMITED — Interim / Quarterly Report 2012

Jul 30, 2012

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ASX Announcement ASX Code: DLE Released: 31 July 2012

Quarterly Report

For the period ended 30 June 2012

For Further Information

Gang Xu Managing Director Tel: +61 8 9322 6009

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Highlights

• Rocklea resource updated by Golder Associates from 2011 to 2012 drilling; 93.59Mt @ 52.19% Fe (59.16% caFe) with over 84% in the “Indicated” category.

Directors

Jie Chen Chairman

Gang Xu Managing Director

Tim Williams COO, Executive Director

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Share Registry

Computershare Investor Services Level 2, Reserve Bank Building 45 St George’s Terrace Perth WA 6000

www-au.computershare.com

Contact Details

Dragon Energy Ltd Suite 8, 1297 Hay Street West Perth, WA 6005 PO Box 1968, WA 6872

Tel: +61 8 9322 6009 Fax: +61 8 9322 6128

• Nameless maiden resource calculated by CSA Global Pty Ltd from 2012 drilling; 81Mt @ 52.39% Fe (57.08% caFe).

• Dragon Energy Ltd to acquire Murchison’s Rocklea iron project, including the southern extension of Dragon’s Rocklea Deposit Channel Iron Mineralisation with additional 89Mt@ 53.2% Fe (59.9% caFe) JORC Resource.

• Continued advancement of early development of the Pilbara Iron Project (the Rocklea and Nameless Deposits), including:

• Negotiations on-going with respective native title claimants in relation to the mining lease applications for both Rocklea project and Nameless Project;

• Environmental survey- Northern Quoll & Olive Python completed and a Subterranean Fauna Survey and Surface Water and Groundwater Studies initiated at the Rocklea Project;

• Mine-Waste Study completed;

• Various studies and commercial negotiations of short term infrastructure transport options and port access continued.

• DMP granted the eleven prospecting tenements of the Meekatharra Project.

www.dragonenergyltd.com

ABN: 38 119 992 175

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ASX: DLE

Quarterly Report to 30 June 2012

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Introduction

Dragon Energy Ltd (“Dragon”) is a mineral exploration company which controls a portfolio of tenements in Western Australia.

Dragon presently holds 9 projects located in the Pilbara and Midwest regions of Western Australia. These projects comprise 31 tenements (including 7 applications), totalling 1,505km[2] in area. With the Murchison project acquisition this will increase to 34 tenements over a 1,821km[2] area. The primary exploration target is iron ore, with the potential for manganese, gold, base metals and uranium.

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Pilbara Iron Project- development of a DSO operation

Following the decision to pursue rapid development of the Pilbara Iron Project a number of studies and negotiations have been completed or are in the planning phase:

Completed

Scoping Study- conducted by GHD Limited on Dragon’s Pilbara Iron Project (Rocklea and Nameless deposits) (‘the Project’) was completed December 2011. It assessed the potential viability of the Project and identified immediate priorities to advance the Project. It concluded that, subject to the identification and establishment of a suitable port operation, the Project may commence production through road transportation as early as the end of 2013.

Environmental Studies- Vertebrate, SRE, Northern Quoll & Olive Python, and Flora surveys completed. A Mine Waste report finalised.

Resource Update- completed for the Rocklea deposit.

Resource Estimation- a maiden resource calculation for Nameless deposit completed. A further 2.5km of palaeochannel remains to be drill tested to the west.

Ongoing and Planned

Environmental Studies- a subterranean fauna survey initiated. A soil characterisation study will follow geotechnical drilling.

Metallurgical Study- a diamond core drilling programme to be designed, based upon the resource models, and assessment of Murchison’s project data.

Dragon Energy Ltd

2

Quarterly Report to 30 June 2012

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Water- a surface water study has been initiated. A LiDAR survey of the area was flown by FUGRO, for an on-going surface water study. A hydrogeological drilling programme has recently been approved by the DMP.

Mining Lease Application- heritage negotiations on-going with respective native title claimants in relation to both Rocklea and Nameless projects.

Port- securing approvals for an export port suited to road transportation, while awaiting development of Anketell Port.

Finance- identifying and securing financing for the projects development.

Rocklea Project is located 33km southwest of the mining town of Tom Price, 9km south of Rio Tinto’s Turner Syncline deposits and 24km north-east of API’s Hardey deposit.

The Rocklea Project is located on the eastern margin of the Rocklea Dome where Archaean age Fortescue Group Formations dip to the east and are overlain by Tertiary age CID and other Cainozoic deposits of sand and gravels. The Rocklea CID comprises goethitic and hematitic detrital deposits of the Tertiary Robe Pisolites.

Golder Associates recently completed an updated resource calculation for Dragon’s Rocklea deposit using the additional 2011-2012 drilling data: the Mineral Resource was updated to 93.59Mt@ 52.19% Fe (59.16% caFe) using a 50%Fe cut-off, or 117.06Mt @ 51.65%Fe (58.60% caFe) using a 45% Fe cut-off (ASX Release 25[th] July 2012) (Table 1).

Rocklea Deposit	Rocklea Deposit	Cut-off Grade	Mt	Fe %	caFe %	SiO2 %	Al2O3 %	P %	S %	LOI %
Main Main North Pod	Indicated Inferred Inferred	45% Fe 45% Fe 45% Fe	96.32 12.00 8.75	51.85 50.89 50.47	58.77 57.98 57.52	8.80 8.91 8.41	3.48 3.85 5.03	0.030 0.030 0.035	0.019 0.022 0.013	11.78 12.23 12.27
Total Mineral Resource			117.06	51.65	58.60	8.78	3.63	0.030	0.019	11.86
Main Main North Pod	Indicated Inferred Inferred	50% Fe 50% Fe 50% Fe	78.94 9.44 5.22	52.37 51.40 50.97	59.31 58.49 58.11	8.48 8.69 8.00	3.27 3.58 4.62	0.030 0.030 0.034	0.019 0.021 0.013	11.71 12.13 12.28
Total Mineral Resource			93.59	52.19	59.16	8.48	3.37	0.030	0.019	11.78
Main Main North Pod	Indicated Inferred Inferred	53% Fe 53% Fe 53% Fe	24.84 0.89 0.84	54.15 53.52 53.69	61.06 60.86 61.10	7.46 6.64 6.34	2.60 3.00 3.71	0.029 0.026 0.037	0.017 0.028 0.011	11.31 12.07 12.13
Total Mineral Resource			26.57	54.12	61.06	7.40	2.65	0.030	0.017	11.37

Table 1: Dragon’s Rocklea JORC Resources[1]

With the acquisition of Murchison’s Rocklea Iron Project expected to be completed early August 2012, subject to the parties obtaining consent to the assignment of a standard heritage agreement, Dragon’s Rocklea project will increase from 35km[2] to 350.6km[2] in area (Figure 2). The improved land position will provide substantial exploration potential for further CIM discoveries. The combined mineral resource for Rocklea will increase to 182.6Mt @ 52.7% Fe (59.5% caFe) using a 50% Fe cut-off (Table 2).

1 The Mineral Resource was updated in 2012 in accordance with the guidelines of the Australasian Code for reporting Exploration Results, Mineral Resources and Ore reserves (JORC Code 2004) using a 45%, 50% & 53% Fe lower cut-off grade, and a specific gravity of 2.7. No mining parameters were applied to the model.

Dragon Energy Ltd

3

Quarterly Report to 30 June 2012

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50% cut-off grade	50% cut-off grade	Mt	Fe %	caFe %	SiO2 %	Al2O3 %	P %	LOI %
Dragon- Rocklea Deposit2
Main Main North Pod	Indicated Inferred Inferred	78.94 9.44 5.22	52.37 51.40 50.97	59.31 58.49 58.11	8.48 8.69 8.00	3.27 3.58 4.62	0.030 0.030 0.034	11.71 12.13 12.28
sub-total		93.59	52.19	59.16	8.48	3.37	0.030	11.78
Murchison- Rocklea Deposit3
	Indicated Inferred	15.0 74.0	53.2 53.2	60.0 59.9	7.7 8.3	4.0 3.4	0.040 0.030	11.4 11.2
sub-total		89.0	53.2	59.9	8.2	3.5	0.032	11.2
Total Mineral Resource		182.6	52.7	59.5	8.3	3.4	0.031	11.5
Table 2: Rocklea JORC				Resources Consolidated

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A Northern Quoll & Olive Python survey and a baseline assessment of Mine-Waste baseline assessment were completed in the June quarter. A Subterranean Fauna survey was initiated at the end of the quarter. FUGRO airborne LiDAR was flown as part of a surface water study, and a hydrogeological drilling programme approved for drilling by the DMP.

The next phase of activity will include the design of geotechnical and metallurgical drilling programmes, followed by a soil study. The exploration potential of the recently acquired tenements from Murchison will also be assessed.

Negotiations with the native landholders in relation to a mining lease application (M47/1471) are ongoing.

2 The Mineral Resource was updated in 2012 in accordance with the guidelines of the Australasian Code for reporting Exploration Results, Mineral Resources and Ore reserves (JORC Code 2004) using a 50% lower cut-off grade, and a specific gravity of 2.7. No mining parameters were applied to the model.

3 The Mineral Resource was updated in 2009 in accordance with the guidelines of the Australasian Code for reporting Exploration Results, Mineral Resources and Ore reserves (JORC Code 2004) using a 50% Fe lower cut-off grade, and a specific gravity of 2.37. No mining parameters were applied to the model.

Dragon Energy Ltd

4

Quarterly Report to 30 June 2012

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Nameless Project is located 10km NW of Tom Price in the Pilbara.

The project is situated along the south-dipping northern limb of the Mt Turner Syncline within the South Pilbara Basin of the Hamersley Basin. Bedrock lithologies comprise volcano-sedimentary rocks from the Fortescue and Hamersley Groups, with the Marra Mamba Iron Formation paralleling the southern boundary of the tenement. Cainozoic cover sequences include the Robe Pisolite Formation.

Mapping by AusQuest Limited in 2005 & 2008 delineated 15km strike of a prospective 200-600m wide palaeochannel. Dragon completed infill drilling of 12.5km strike of the palaeochannel in 2012 which was used to calculate a maiden JORC Inferred Resource of 159Mt grading 49.43% Fe (53.85% caFe) with a 45% Fe cut-off, including 81Mt grading 52.39% Fe (57.08% caFe) with a 50% Fe cut-off (Table 3). To the west of the Resource a further 2.5km of palaeochannel remains to be drill tested, with iron rock chip samples in this area up to 60.36% Fe. This area will be tested after a mining lease application M47/1452 is granted.

Category	Cut-off Grade	Mt	Fe %	caFe %	SiO2 %	Al2O3 %	P %	S %	LOI %
Inferred	45% Fe	159	49.43	53.85	9.71	7.10	0.050	0.020	8.20
Inferred	50% Fe	81	52.39	57.08	7.55	5.69	0.051	0.020	8.21
		Table 3: Nameless JORC Resource4

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4 The Inferred Resource was updated in 2012 in accordance with the guidelines of the Australasian Code for reporting Exploration Results, Mineral Resources and Ore reserves (JORC Code 2004) using a 45% and 50% lower cut-off grade, and a specific gravity of 2.65. No mining parameters were applied to the model.

Dragon Energy Ltd

5

Quarterly Report to 30 June 2012

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Lee Steere Project is located some 200km NE of Wiluna, in the Earaheedy Basin of the Midwest.

Previous exploration

Previous exploration	Previous exploration
activities in the
1970s identified
enriched hematite
mineralisation of
Banded	Iron
Formations	and
Superior-type iron
within the	Frere
Formation;	rock
chips of	up to
66.1% Fe	were
reported.	The
project	contains
48km strike	of the
prospective	Frere
Formation,	as

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identified from magnetics and outcrop. Dragon’s exploration focus has been on supergene enriched hematite/goethite and outcropping manganese mineralisation.

A drilling programme has been designed primarily to test an identified stratabound manganese unit adjacent to Superior-type iron mineralisation. New native title access agreements are in the negotiation process and require a resolution before heritage surveys can be undertaken, following which Dragon will apply to the DMP for approvals for drilling.

Mt Gibson Project lies 80km NE of the town of Wubin, 7-32km south and east of the Extension Hill Hematite/Magnetite Project, and adjacent to the Mt Gibson Gold Operation. The project is situated in the Midwest Region of the Yilgarn Craton.

E59/1686 lies adjacent to the Mount Gibson Gold Operation (870,000oz mined), within the southern Retaliation Belt. Regional magnetics indicate that similar geological and structural features hosting gold mineralisation extend within E59/1686 and E59/1637, together with magnetic (BIF/ultramafic) units. A soil sampling programme has been designed to test various structural and geological targets. No activity this quarter.

Broad spaced soil samples taken from E59/1687 revealed low level gold anomalies, up to 2.58ppb (x4 background) in transported cover and mafic subcrop.

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Stream sediment samples taken from E59/1638 focussed on the southern Ninghan Belt greenstones. No significant assays received. A small targeted soil sampling programme has been designed to test a lithological unit which hosts Cu-Pb-Zn prospects to the NW.

Dragon Energy Ltd

6

Quarterly Report to 30 June 2012

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Carters Well Project is located 30km south of Mt Magnet, adjacent to the Great Northern Highway, in the Yilgarn Craton of the Midwest.

A total of 4 geochemical anomalous zones, including Au-Ag, Ce-Pb, Pb-Zn-Cu, Pb-Zn, were identified from MMI surface sampling in 2011. The most notable a 3km, NE striking gold and coincident silver anomaly to the southeast of the project area which returned gold values up to 50 times above background. Lead anomalies to the northeast are coincident with cerium (Ce) which is indicative of felsic volcanics. In the Mt Magnet district potential gold pathfinder elements also includes Cu and Zn (Parkinson Pit) and Pb (Stellar & Quasar Deposits). A drilling programme has been designed to test these various surface anomalies.

A heritage survey is planned in the latter half of the year, and mines department approval for drilling is currently being sought.

Meekatharra Project is located 13km SE of Meekatharra, within the Midwest Region of the Yilgarn Craton.

The project lies in the Archaean Meekatharra greenstone belt, a regional N-NE trending synclinal structure. Gold was discovered in the area in the 1890s, with mineralisation generally structurally hosted and associated with quartz veining. Arsenic anomalies have been found to be associated with gold mineralisation (eg. Jones

Prospect). Limited exploration activities in the project area identified linear northerly trending arsenic anomalies with coincident weakly anomalous gold mineralisation to the north, and gold anomalies on lithological contacts with strongly anomalous arsenic to the south.

The prospecting licences were granted during the quarter. A broad-spaced soil sampling programme has been designed to test the project area, and is expected to be carried out in the following quarter.

Dragon Energy Ltd

7

Quarterly Report to 30 June 2012

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Ashburton Project is located in the Ashburton Basin, and is 10 to 40km from rail and other infrastructure associated with the Paraburdoo operations of Rio Tinto Iron Ore.

Approximately 50% of the project area has a Cainozoic cover which potentially conceals Channel Iron Mineralisation within the braided drainages of Turee and Seven Mile Creeks, which drain the ranges of the Brockman Iron Formation near Paraburdoo. Base metals and gold provide alternative exploration targets.

A reconnaissance drilling

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programme has been designed to test for potential CIM. Mines department approval for drilling will be sought after a planned heritage survey in the latter half of the year.

Milly Milly Project is located 196km west of Meekatharra, and 58km east of the Jack Hills iron operation in the northern Yilgarn Craton.

The project has the potential to host high quality magnetite iron ore deposits, with drilling to the north returning significant magnetite intercepts. BMR regional magnetic surveys indicate favourable host rocks of 42km strike within the tenement. Banded Iron Formation (quartzmagnetite) outcrop has been mapped in the project area by the GSWA. Rock chip sampling returned grades of up to 44% Fe. A chromite rich

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magnetite layer with an interpreted strike length of 1.6km provides an alternative exploration target.

No exploration activities undertaken as the tenement is currently progressing through the application process.

Dragon Energy Ltd

8

Quarterly Report to 30 June 2012

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Yamarna Project is located 120km NE of Laverton, within the Goldfields-Esperance Region.

The project is situated between two greenstone belts; the CosmoNewberry Greenstone belt to the west and the Yamarna Greenstone belt to the east. Gold mineralisation identified to the east is hosted by laminated quartzmica-amphibole schist units- altered and sheared mafic volcanics and sediments.

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Dragon’s project lies 5km to the south of Platina Resources & Global Nickel’s Mt Venn Cu-Ni-PGE Prospect. Regional magnetics indicate that the greenstone succession at Mt Venn is also present on E38/2665. The licence is in application, no exploration activity this quarter.

Corporate Development

The Board conducted a review of its structure in the June Quarter with the aim of ensuring that the Board is well positioned to guide the company through its next phase of operations focussed on the development of the Pilbara Iron Project. As a result of that review, two directors, Mr Qingyong Guo and Mr Anthony Ho, agreed to resign from the company along with the company secretary, Ms Karen Logan. Mr Ho, who is a valuable contributor to the company and has been with Dragon since its listing in 2009, has maintained a role in the company with his appointment as the company secretary, replacing Ms Logan.

As a result of these changes, the Board now consists of only the minimum 3 directors with only one of those being associated with Dragon’s major shareholder, the Shandong Taishan Group. This structure recognises the Board’s desire to appoint experienced technical and independent professionals to director positions at an appropriate time in the future when the demands of the company’s operations necessitate a strengthening of the Board, but while still maintaining a small and efficient Board.

Discussions with a number of Chinese parties regarding different modes of cooperation remain ongoing. The genuine interest shown by these parties continues to be encouraging.

Authorised by:

Gang Xu Managing Director

Dragon Energy Ltd

9

Quarterly Report to 30 June 2012

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For further information or corporate opportunities please refer to our website www.dragonenergyltd.com or contact:

Gang Xu Tim Williams Managing Director COO/Executive Director Telephone: +61 8 9322 6009 Telephone: +61 8 9322 6009 Mobile: +61 411 039 645

About Dragon Energy

Dragon Energy Limited (“Dragon”) listed on the Australian Securities Exchange (ASX) in February 2009 ( ASX: DLE ).

Dragon’s flagship projects are Rocklea and Nameless iron projects in the Pilbara with sizeable JORC Resources defined at both the Rocklea and Nameless Projects. Dragon Energy’s portfolio of tenements has numerous multi-commodity targets, including Fe, Mn, Au, base metals and U in Western Australia.

Competent Person’s Statement

The information in the report to which this statement is attached that relates to Exploration Results is based on information compiled by Mr Mark Hafer, who is a Member of The Australian Institute of Geoscientists. Mr Hafer is a full-time employee of the company.

The information that relates to the Nameless Mineral Resource Estimate has been compiled by Dr. Bielin Shi who is a Member of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists, and an employee of CSA Global Pty Ltd. The information that relates to the Rocklea (Dragon) Mineral Resource Estimate is based on information compiled by Mr Stephen Godfrey who is a Member of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists, and an employee of Golder Associates Pty Ltd. The information that relates to the Rocklea (Murchison) Mineral Resource Estimate has been compiled by Mr. Daniel Guibal who is a Fellow of the Australasian Institute of Mining and Metallurgy, and an employee of SRK Consulting.

Messrs Hafer, Shi, Godfrey and Guibal have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Messrs Hafer, Shi, Godfrey and Guibal consent to the inclusion in the report of the matters based on their information in the form and context in which it appears.

Dragon Energy Ltd

10

Appendix 5B Mining exploration entity quarterly report

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10

Name of entity

DRAGON ENERGY LTD

ABN 38 119 992 175	Quarter ended (“current quarter”)
38 119 992 175	30 June 2012

Consolidated statement of cash flows

Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other (provide details if material) Net Operating Cash Flows	Current quarter $A’000	Year to date (12 months) $A’000
	- (1,184) - - (180) - 128 - - -	- (5,471) - - (1,033) - 535 (1) - -
	(1,236)	(5,970)
Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)	- - - - - - - - -	- - (5) - - - - - -
	-	(5)
	(1,236)	(5,975)

• See chapter 19 for defined terms.

17/12/2010 Appendix 5B Page 1

Appendix 5B Mining exploration entity quarterly report

1.13 Total operating and investing cash flows (brought forward)	(1,236)	(5,975)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. (net of issue costs) 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) Net financing cash flows	- - - - - -	- - - (40) - -
	-	(40)
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end ofquarter	(1,236) 10,667 -	(6,015) 14,708 738
	9,431	9,431

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.23 1.24	1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
			(231)
			-
1.25 Explanation necessaryfor an understandingof the transactions Directors’ remuneration (231) Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows N/A 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reportingentityhas an interest N/A		Explanation necessaryfor an understandingof the transactions
		Directors’ remuneration (231)
	N/A
	Details of outlays made by other entities to establish or increase their share in projects in which the reportingentityhas an interest
	N/A

• See chapter 19 for defined terms.

Appendix 5B Page 2

17/12/2010

Appendix 5B Mining exploration entity quarterly report

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000	Amount used $A’000
	-	-
	-	-

Estimated cash outflows for next quarter

Estimated cash outflows for next quarter
4.1 Exploration and evaluation (including acquisition costs) 4.2 Development 4.3 Production 4.4 Administration	$A’000
	(3,960)
	-
	-
	(200)
Total	(4,160)

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details)	948 8,483 - -	1,172
		9,495
		-
		-
Total: cash at end of quarter(item 1.22)	9,431	10,667

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note (2))	Interest at beginning ofquarter	Interest at end of quarter
	-	-	-	-
	P51/2734 P51/2735 P51/2736 P51/2737 P51/2738 P51/2739 P51/2740 P51/2741 P51/2742 P51/2743 P51/2744	Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted	- - - - - - - - - - -	100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

• See chapter 19 for defined terms.

17/12/2010 Appendix 5B Page 3

Appendix 5B Mining exploration entity quarterly report

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number quoted	Issue price per security (see note3) (cents)	Amount paid up per security (see note3) (cents)
7.1 Preference +securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs, redemptions	-	-
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs	206,426,374	206,426,374
	- -	- -	- -	- -
7.5 +Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted	-	-
7.7 Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	47,460,245	47,460,245	Exercise price $0.35	Expiry date 18 November 2014
	-	-
	-	-
	11,150,000	-	$0.30	31 May 2012
7.11 Debentures (totals only)	-	-
7.12 Unsecured notes (totals only)	-	-

• See chapter 19 for defined terms.

Appendix 5B Page 4

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Appendix 5B Mining exploration entity quarterly report

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 5).

• 2 This statement does give a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: 31 July 2012 (Managing Director)

Print name: Gang Xu

Notes

• 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

• 2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

• 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

• 4 The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.

• 5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

• See chapter 19 for defined terms.

17/12/2010 Appendix 5B Page 5