MEC RESOURCES LIMITED — Interim / Quarterly Report 2012

Feb 14, 2012

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Appendix 4D -Half year report Results for announcement to the market

Appendix 4D -Half year report Results for announcement to the market
Name of Entity	MECResourcesLimited
ABN	44 113 900 020
Half Year Ended	31 December 2011
Previous CorrespondingReportingPeriod	31 December 2010
$A'000
Revenues from ordinary activities (Loss) from ordinary activities after tax attributable to members Net (loss) for the period attributable to members		down 39% to 233 Up 308% to (8,438) Up 308% to (8,438)
Dividends (distributions)		Amount per security	Franked amount per security
Final dividend Interim dividend		Nil	Nil
Previous corresponding period		N/A	N/A

Please refer to attached accounts for commentary on the results

Other notes to the condensed financial statements

Other notes to the condensed financial statements
Ratios	Current period	Previous corresponding Period
Loss before tax / revenue Consolidated (loss) from ordinary activities before tax as a percentage of revenue	(3610)%	(536.88)%
Loss after tax / equity interests Consolidated net (loss) from ordinary activities after tax attributable to members as a percentage of equity (similarly attributable) at the end ofthe period	(33.85)%	(8.29)%
NTA Backing	Current period	Previous corresponding Period
Net tangible asset backing per ordinary security	3.88 cps	15.36 cps

Contents

MEC Resources Ltd and its controlled entities

The operating loss for the consolidated entity after tax for the year ended 31 December was $8,438,252 (2010: $2,067,740).

The net assets of the consolidated entity have decreased by $8,526,361 to $37,607,258 at 31 December 2011. The decrease can be attributed to the loss incurred in the sale of shares held in BPH Energy Limited (“BPH”) during the period, from the selective buy back conducted by BPH.

Developments during the year included:

• During the period MEC Resources Limited (“MEC Resources”) entered into a selective buyback agreement with BPH. BPH agreed to buy back up to $1.35 million of MEC Resources’ shareholding in the Company. The number of buy-back Shares was determined by dividing the total Consideration by the 5-day volume weighted average closing price of Shares prior to the date of the buy-back.

• MEC Resources investee Advent Energy Ltd (“Advent Energy”) achieved an independently assessed (RISC) mean Contingent Resource for the Weaber Gas Field (RL1) of 18.4 Bcf following reprocessing of seismic data and review of all available well data from Weaber. The field has been assessed as comprising a 3C upside potential Contingent Resource of 45.8 Bcf.

• MEC Resources investee Advent Energy re-entered Vienta-1 located within EP 386 for the purpose of recompletion and production testing. Production testing on the lower zone of Vienta-1 was performed and the well observed strong pressure recovery. Preliminary interpretations are that this well was heavily damaged during the drilling of the well, and that the geological formation from which gas is flowing is relatively ‘tight’ (low inherent permeability).

• MEC Resources investee Advent Energy re-entered Waggon Creek-1 located within EP386, and 10km from Vienta-1, for the purpose of recompletion and production testing. The well was flowed for 6 hours before operations were suspended for the northern wet season. Stable flow rates in excess of 1MMscf/d were achieved through a ½ inch choke.

• MEC Resources investee Advent Energy is investigating a considerable potential shale gas resource within EP386 and RL1. Studies indicate significant potential upside in prospective shale gas resources with estimated unrisked OGIP in the range from 19 Tcf to 141 Tcf.

MEC Resources Ltd and its controlled entities

Page Number

Contents

Directors’ Report ....................................................................................................................................... 1 Auditor Independence Declaration ..................................................................................................... 3 Directors’ Declaration .............................................................................................................................. 4 Condensed Consolidated Statement of Comprehensive Income ................................................. 5 Condensed Consolidated Statement of Position ............................................................................... 6 Condensed Consolidated Statement of Changes in Equity ............................................................ 7 Condensed Consolidated Statement of Cash Flows ......................................................................... 8 Notes to the Financial Statements ......................................................................................................... 9 Independent Auditor’s Review Report ............................................................................................... 16

Company Information

Directors

H Goh – Non-Executive Chairman D L Breeze – Executive Director K O Yap – Non-Executive Director C T Lim – Non-Executive Director D Ambrosini – Executive Director

Company Secretary Deborah Ambrosini

Registered Office

14 View Street NORTH PERTH WA 6006

Auditor

Deloitte Touche Tohmatsu Woodside Plaza Level 14, 240 St Georges Terrace PERTH WA 6000

Share Registry

Security Transfer Registrars Pty Ltd 770 Canning Highway APPLECROSS WA 6153

Australian Stock Exchange Listing

Principal Business Address

14 View Street NORTH PERTH WA 6006 Telephone: (08) 9328 8400 Facsimile: (08) 9328 8733 Website: www.mecresources.com.au E-mail: admin@mecresources.com.au

Australian Stock Exchange Limited (Home Exchange: Perth, Western Australia) ASX Code: MMR

Australian Business Number

44 113 900 020

Directors’ Report (continued)

MEC Resources Ltd and its controlled entities

The directors of MEC Resources Ltd (“ MEC Resources ”) submit herewith the financial report for the half year ended 31 December 2011. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

Directors

The names of the directors of the company during or since the end of the period are: H Goh

D L Breeze

K O Yap C T Lim

D Ambrosini

Review of Operations

• Operating loss for the entity after tax for the half-year ended 31 December 2011 was $8,438,252 (2010: $2,067,740).

• On 16 August 2011 the Company entered into a selective buyback agreement with BPH Energy Limited (“BPH”). BPH agreed to buy back up to $1.35 million of the Companys’s shareholding in BPH. The number of buy-back Shares was determined by dividing the total Consideration by the 5-day volume weighted average closing price of Shares prior to the date of the buy-back.

• MEC Resources investee Advent Energy Ltd (“ Advent Energy ”) achieved an independently assessed (RISC) mean Contingent Resource for the Weaber Gas Field (RL1) of 18.4 Bcf following reprocessing of seismic data and review of all available well data from Weaber. The field has been assessed as comprising a 3C upside potential Contingent Resource of 45.8 Bcf.

• MEC Resources investee Advent Energy re-entered Vienta-1 located within EP 386 for the purpose of recompletion and production testing. Production testing on the lower zone of Vienta-1 was performed and the well observed strong pressure recovery. Preliminary interpretations are that this well was heavily damaged during the drilling of the well, and that the geological formation from which gas is flowing is relatively ‘tight’ (low inherent permeability).

• MEC Resources investee Advent Energy re-entered Waggon Creek-1 located within EP386, and 10km from Vienta-1, for the purpose of recompletion and production testing. The well was flowed for 6 hours before operations were suspended for the northern wet season. Stable flow rates in excess of 1MMscf/d were achieved through a ½ inch choke.

• MEC Resources investee Advent Energy is investigating a considerable potential shale gas resource within EP386 and RL1. Studies indicate significant potential upside in prospective shale gas resources with estimated unrisked OGIP in the range from 19 Tcf to 141 Tcf.

• During the period Advent Energy repaid an amount of $1.8M in full and final settlement of its obligations under the secured loan agreement entered into with BPH on 15 June 2010.

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MEC Resources Ltd and its controlled entities

Directors’ Report (continued)

Subsequent Events

Other than referred in note 10 of these financial accounts there have not been any matters or circumstance that have arisen since the end of the period, that have significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

Dividends

The Directors recommend that no dividend be paid in respect of the current period and no dividends have been paid or declared since the commencement of the period.

Auditor’s Independence

The directors received a declaration of independence from the auditor. This is included in the financial report on page 3.

Signed in accordance with a resolution of the directors made pursuant to s306(3) of the Corporations Act 2001.

On behalf of the Directors

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D L Breeze Executive Director

PERTH, 15 February 2012

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Deloitte Touche Tohmatsu ABN 74 490 121 060

Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia

The Board of Directors MEC Resources Limited 14 View Street NORTH PERTH WA 6006

Tel: +61 8 9365 7000 Fax: +61 (08)93657000 www.deloitte.com.au

15 February 2012

Dear Board Members

MEC Resources Limited

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of MEC Resources Limited.

As lead audit partner for the half year review of the financial statements of MEC Resources Limited for the half year ended 31 December 2011, I declare that to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• (ii) any applicable code of professional conduct in relation to the review.

Yours sincerely

DELOITTE TOUCHE TOHMATSU

Chris Nicoloff Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

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Directors’ Declaration

MEC Resources Ltd and its controlled entities

The directors declare that:

• (a) 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; and

• (b) in the directors ‘opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001 , including compliance with accounting standards and giving a true and fair view of the financial position and performance of the consolidated entity.

Signed in accordance with a resolution of the directors made pursuant to s.303(5) of the Corporations Act 2001 .

On behalf of the Directors

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D L Breeze Executive Director PERTH, 15 February 2012

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Condensed Consolidated Statement of Comprehensive Income for the half year ended 31 December 2011 MEC Resources Ltd and its controlled entities

Note Revenue Revenue from ordinary activities 4 Other (losses)/gains 4 Administration expenses Consulting and legal expenses 4 Management services expense Employee Benefits expense Share of gains and losses in associate Interest expense Insurance expenditure Other expenses Traveling expense Loss before income tax Income tax expense Loss from continuing operations Other Comprehensive Income Total Comprehensive Income for the period Loss attributable to non-controlling interest Loss attributable to members of the parent entity Total Comprehensive Income attributable to non- controlling interest Total Comprehensive Income attributable to parent Earnings Per Share - Basic and Diluted (cents per share)	Consolidated 31 December 2011 $ 31 December 2010 $ 233,725 385,605 (7,868,265) (1,483,442) (124,132) (281,824) 111,361 (806,313) (173,520) (173,520) (409,777) (735,589) (33,989) (201,809) (22,647) (100,786) (27,138) (25,261) (254,450) (206,207) (87,961) (228,912)
	(8,656,793) (3,858,058) - -
	(8,656,793) (3,858,058) - -
	(8,656,793) (3,858,058)
	(218,541) (1,790,318)
	(8,438,252) (2,067,740)
	(218,541) (1,790,318)
	(8,438,252) (2,067,740)
	(5.41) (1.16)

The accompanying notes form part of these financial statements.

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Condensed Consolidated Statement of Financial Position as at 31 December 2011

MEC Resources Ltd and its controlled entities

Note Current Assets Cash and cash equivalents 5 Trade receivables Financial assets 11 Other current assets Total Current Assets Non-Current Assets Other non-current assets Evaluation and exploration costs 12 Investments in associates 9 Financial Assets 11 Property, plant & equipment Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Financial Liabilities Short-term provisions Total Current Liabilities Non-Current Liabilities Provisions Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital 6 Option Reserve Accumulated losses Total Equity Attributable to Owners Non-controlling Interest Total Equity

Consolidated 31 December 2011 $ 30 June 2011 $

8,721,744 12,415,165 325,167 277,971 40,698 40,698 42,980 18,435 9,130,589 12,752,269 22,673 22,673 31,656,207 29,505,867 - 9,673,230 898,520 477,542 9,257 4,165 32,586,657 39,683,477 41,717,246 52,435,746 3,556,803 3,972,732 435,457 2,219,050 113,029 106,103 4,105,289 6,297,885 4,699 4,242 4,699 4,242 4,109,988 6,302,127 37,607,258 46,133,619 24,922,465 24,920,661 335,570 262,690 (18,915,067) (10,476,815) 6,342,968 14,706,536 31,264,290 31,427,083 37,607,258 46,133,619

The accompanying notes form part of these financial statements.

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Condensed Consolidated Statement of Changes in Equity for the half year ended 31 December 2011 MEC Resources Ltd and its controlled entities

Consolidated Balance at 1 July 2010 Loss attributable to members of the consolidated entity Other comprehensive income Total comprehensive income Shares issued during the financial period Options exercised during the financial period Options issued during the financial period Capital raising costs incurred Balance at the half year ended 31 December 2010 Balance at 1 July 2011 Loss attributable to members of the consolidated entity Other comprehensive income Total comprehensive income Options exercised during the financial period Options issued during the financial period Balance at the half year ended 31 December 2011	Ordinary Share Capital $ Accumulated losses $ Options $ Total attributable to owners S Non- Controlling Interest $ Total Equity $
	11,808,203 (7,582,991) 293,107 4,518,319 19,393,360 23,911,679 - (2,067,740) - (2,067,740) (1,790,318) (3,858,058) - - - - - -
	- (2,067,740) - (2,067,740) (1,790,318) (3,858,058) 10,984,715 - - 10,984,715 16,400,000 27,384,715 2,434,743 - - 2,434,743 - 2,434,743 - - 458,158 458,158 - 458,158 (307,000) - - (307,000) - (307,000)
	24,920,661 (9,650,731) 751,265 16,021,195 34,003,042 50,024,237
	24,920,661 (10,476,815) 262,690 14,706,536 31,427,083 46,133,619 - (8,438,252) - (8,438,252) (218,541) (8,656,793) - - - - - -
	- (8,438,252) - (8,438,252) (218,541) (8,656,793) 1,804 - - 1,804 - 1,804 - - 72,880 72,880 55,728 128,628
	24,922,465 (18,915,067) 335,570 6,342,968 31,264,290 37,607,258

The accompanying notes form part of these financial statements.

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Condensed Consolidated Statement of Cash Flows for the half year ended 31 December 2011 MEC Resources Ltd and its controlled entities

Note Cash Flows From Operating Activities Receipts from customers Payments to suppliers and employees Interest received Net cash used in operating activities Cash Flows From Investing Activities Payment for Property, Plant and Equipment Amounts loaned from/(to) other entities Payment for investments Deferred exploration costs Net cash used in investing activities Cash Flows From Financing Activities Proceeds from share issue Net cash provided by financing activities Net increase (decrease) in Cash Held Cash At the Beginning Of The Period Cash At The End Of The Period 5	Consolidated 31 December 2011 $ 31 December 2010 $
	- 423,600 (1,268,192) (524,646) 233,725 258,496
	(1,034,467) 157,450
	(6,383) (1,628) (1,853,731) 3,995,279 1,350,000 (6,632,135) (2,150,340) (25,861,418)
	(2,660,454) (28,499,902)
	1,500 25,599,094
	1,500 25,599,094
	(3,693,421) (2,743,358) 12,415,165 17,360,848 8,721,744 14,617,490

The accompanying notes form part of these financial statements

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Notes to the Financial Statements For the half year ended 31 December 2011 MEC Resources Ltd and its controlled entities

1. CORPORATE INFORMATION

The financial report of MEC Resources Ltd (the company) and its controlled entities for the half-year ended 31 December 2011 was authorised for issue in accordance with a resolution of the directors on 15 February 2012.

MEC Resources Ltd is a company incorporated in Australia and limited by shares which are publicly traded on the Australian Securities Exchange.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

The half-year financial report is a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standard AASB 134: Interim Financial Reporting. Compliance with AASB 134 ensures compliance with International Financial Reporting Standards IAS 34 Interim Financial Reporting.

The half-year financial report does not include all of the notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.

The half-year financial report should be read in conjunction with the Annual Financial Report of MEC Resources Ltd as at 30 June 2011.

For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period.

It is also recommended that the half-year financial report be considered together with any public announcements made by MEC Resources Ltd and its controlled entities during the half-year ended 31 December 2011 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.

(a) Basis of Preparation

Reporting Basis and Conventions

The half-year report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

(b) Significant Accounting Policies

The half-year condensed consolidated financial statements have been prepared using the same accounting policies as used in the annual financial statements for the year ended 30 June 2011, except for the impact of the standards interpretations below in Note 2(c). The accounting policies are consistent with Australian Accounting Standards and with International Reporting Standards.

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Notes to the Financial Statements For the half year ended 31 December 2011

MEC Resources Ltd and its controlled entities

(c) New Standards and Interpretations

(a) Changes in Accounting Policies and Disclosures

The Consolidated Entity has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board that are relevant to their operations and are effective for the current financial reporting period, being the half year ended 31 December 2011.

Significant new and revised standards and interpretations effective for the current financial reporting period that are relevant to the Company are:

• AASB 124: Related Party Disclosures;

• AASB 2010-4: Further Amendments to Australian Accounting Standards arising from Annual Improvements Project;

• AASB 2010-5: Amendments to Australian Accounting Standards;

• AASB 2010-6: Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets.

The adoption of these standards has not had an impact on the Company.

(b) Accounting Standards and Interpretations issued but not yet effective.

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective and have not been adopted by the Consolidated Entity for the half year ending 31 December 2011. Management are in the process of assessing the impact of the adoption of these standards and interpretations on the consolidated entity.

3. SEGMENT INFORMATION

Identification of reportable segments

The group has identified its operating segments based on the internal reports that are reviewed and used by the managing director and his management team (the chief operating decision makers) in assessing performance and in determining the allocation of resources.

The operating segments are identified by management based on their investment in exploration companies. Discrete financial information about each of these operating segments is reported to the managing director and his management team on at least a monthly basis. Currently, management’s focus is on the exploration program of Advent Energy projects PEP 11 and EP 386/RL1.

The Group operates predominantly in one industry, namely investments in the mining and resources. These activities are predominantly in Australia.

Accounting policies and inter-segment transactions

The accounting policies used by the Group in reporting segments are the same as those contained in note one to the accounts and in the prior period.

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Notes to the Financial Statements For the half year ended 31 December 2011

MEC Resources Ltd and its controlled entities

4. REVENUE, INCOME AND EXPENSES

Revenue Consulting Fees Interest revenue : other entities Total revenue Other gains and losses Net gain/loss on financial assets designated as fair value through profit and loss Losses on disposal of associate Net Fair Value Gains on Foreign currency derivative Expenses During the period Advent Energy settled a disputed claim for an amount significantly less than the accrual made at 30 June 2011 resulting in consulting and legal expenses having a credit balance at reporting date.	Consolidated 31 December 2011 $ 31 December 2010 $
	958 127,109 232,767 258,496
	233,725 385,605
	(38,740) (140,083) (7,829,525) - - (1,343,359)
	(7,868,265) (1,483,442)

5. CASH AND CASH EQUIVALENTS

For the purpose of the half-year condensed consolidated statement of cash flows, cash and cash equivalents are comprised of the following: Cash at bank and in hand	Consolidated 31 December 2011 $ 31 December 2010 $
	8,721,744 14,617,490
	8,721,744 14,617,490

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Notes to the Financial Statements For the half year ended 31 December 2011

MEC Resources Ltd and its controlled entities

6. CONTRIBUTED EQUITY

TRIBUTED EQUITY
Ordinary shares (i) Less :Capital Raising Costs	Consolidated 31 December 2011 $ 30 June 2011 $
	25,952,614 25,950,810 (1,030,149) (1,030,149)
	24,922,465 24,920,661

(i)Fully paid ordinary shares carry one vote per share and carry the right to dividends.

Movement in ordinary shares on issue As at 1 July 2011 Conversion of options Balance as at 31 December 2011	Number $
	155,803,150 24,920,661 10,000 1,804
	155,813,150 24,922,665

7. Contingent Liabilities

Advent Energy has entered into a secured loan agreement with MEC Resources in November 2010. The principal amount of the loan is $1 million, with further advances of up to an additional $3 million payable at the MEC Resources’ discretion. The Loan is secured by a fixed and floating charge over Advent Energy’s present and future undertakings, assets and rights.

A claim for outstanding consulting fees has been brought against Asset Energy Pty Ltd by Fugro Survey Pty Ltd (“Fugro”). The dispute related to the fees associated with site survey works conducted by Fugro at Petroleum Exploration Permit 11 (PEP 11). As previously advised to the market the quantum of Fugro’s claim is approximately $2.2 million. Asset is vigorously defending the claim and has lodged a substantial counter claim for damages. No date for trial has been set at this time.

8. Commitments

Capital Commitments

In order to maintain an interest in the exploration tenements in which the Company is involved, the Company is committed to meet the conditions under which the tenements were granted.

Capital expenditure forecasted for at the reporting date but not recognised as liabilities as follows:

	Consolidated	Consolidated
	31 December 2011 $	30 June 2011 $
Work Program Commitments – Exploration permits
Payable:
Within one year	2,461,500	1,000,000
Greater than one year less than five years	18,522,500	2,800,000
Total	20,984,000	3,800,000

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Notes to the Financial Statements For the half year ended 31 December 2011 MEC Resources Ltd and its controlled entities

. Investments accounted for using the equity method Shares in Associates	31 Dec 2011 $ 30 June 2011 $
	- 9,673,230

9. Investments accounted for using the equity method

(a) Shares in associates

Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting.

Name of Entity	Country of	Ownership	Ownership	Interest
	Incorporation		%
		31 Dec	11	30 Jun 11
BPH Energy Ltd	Australia	8.33%		26.85%

During the period MEC Resources participated in a selective share buyback with BPH Energy Limited (“BPH”). BPH Energy agreed to buy back up to $1.35 million of the Company’s shareholding in BPH. The number of buy-back Shares was determined by dividing the total Consideration by the 5-day volume weighted average closing price of Shares prior to the date of the buy-back. A total of 48,548,387 shares was sold back to BPH on the 16 September 2011 after BPH shareholder approval was attained. As a result of this transaction BPH is no longer considered an associate of MEC Resources and MEC now holds 8.33% of BPH.

Reconciliation of Movement

Reconciliation of Movement
Proceeds from disposal Plus: fair value of investment retained Less: Carrying amount of investment at date of disposal Loss recognised on disposal	$ 1,350,000 459,715 (9,639,240)
	7,829,525

10. Events after the Balance Date

There have not been any matters or circumstances that have arisen since the end of the financial year, that have significantly affected, or may significantly affect, the operations of the company, the results of those operations, or the state of affairs of the company in future financial years.

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Notes to the Financial Statements For the half year ended 31 December 2011 MEC Resources Ltd and its controlled entities

11. Financial Assets Current Loan receivable – Grandbridge Limited Total Non current Fair Value through Profit and Loss Financial Assets Investment in Central Petroleum Ltd Investment in BPH Energy Ltd Available for sale financial assets Investment in Molecular Discovery Systems Ltd 12. Capitalised Exploration Costs Exploration expenditure capitalised Exploration and evaluation phases	31		Consolidated 31 December 2011 $ 30 June 2011 $

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Notes to the Financial Statements For the half year ended 31 December 2011 MEC Resources Ltd and its controlled entities

Reconciliation of movement during the year Opening balance at 1 July Capitalised expenditure – EP 325 Capitalised expenditure – PEP 11 Capitalised expenditure – EP 386 Less reimbursements – PEP 11 Balance at 30 June		Consolidated 31 December 2011 $ 30 June 2011 $ 29,505,867 5,209,226 2,324 4,564 - 26,320,220 2,148,016 131,857 - (2,160,000)
		31,656,207 29,505,867

Recoverability of the carrying amount of exploration assets is dependent on the successful exploration and sale of natural gas.

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Deloitte Touche Tohmatsu ABN 74 490 121 060

Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia

Independent Auditor’s Review Report to the Members of MEC Resources Limited

Tel: +61 8 9365 7000 Fax: +61 (08)93657000 www.deloitte.com.au

We have reviewed the accompanying half-year financial report of MEC Resources Limited, which comprises the condensed statement of financial position as at 31 December 2011, the condensed statement of comprehensive income, the condensed statement of cash flows and the condensed statement of changes in equity for the half-year ended on that date, selected explanatory notes and, the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the end of the half-year or from time to time during the half-year as set out on pages 4 to 15.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2011 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of MEC Resources Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Auditor’s Independence Declaration

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of MEC Resources Limited, would be in the same terms if given to the directors as at the time of this auditor’s review report.

Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Touche Tohmatsu Limited

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Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of MEC Resources Limited is not in accordance with the Corporations Act 2001 , including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2011 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

DELOITTE TOUCHE TOHMATSU

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Chris Nicoloff Partner Chartered Accountants Perth, 15 February 2012

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