METEORIC RESOURCES

METEORIC RESOURCES NL

ABN: 64 107 985 651

ANNUAL REPORT

FINANCIAL YEAR 2005 - 2006

Corporate Directory	$\overline{3}$
Review of Operations	$\overline{4}$
Directors' Report	15
Corporate Governance Statement	21
Income Statement	26
Balance Sheet	27
Statement of Changes in Equity	28
Cash Flow Statement	29
Notes to and forming part of the Financial Statements	30
Directors' Declaration	51
Independent Audit Report	52
Tenement Schedule	53
Other Information	54

CORPORATE DIRECTORY

DIRECTORS

PETER THOMAS Non-Executive Chairman

ROGER THOMSON Managing Director

GEORGE SAKALIDIS Executive Director - Exploration

COMPANY SECRETARY Malcolm Smartt

REGISTERED OFFICE $2^nd$ Floor 35 Outram Street, West Perth WA 6005 Telephone (08) 9485 2836 Facsimile (08) 9485 2840

WEBSITE www.meteoric.com.au

FOR SHAREHOLDER INFORMATION CONTACT

SHARE REGISTRY Security Transfer Registrars Pty Ltd 770 Canning Highway, Applecross WA 6153 Telephone (08) 9315 2333 Facsimile (08) 9315 2233

FOR INFORMATION ON THE COMPANY CONTACT

PRINCIPAL & REGISTERED OFFICE 2^nd Floor 35 Outram Street, West Perth WA 6005 Telephone (08) 9485 2836 Facsimile (08) 9485 2840

SOLICITORS TO THE COMPANY Smyth & Thomas 10 Walker Avenue, West Perth WA 6005

BANKERS Bank of Western Australia Ltd Hay Street, West Perth WA 6005

AUDITORS Somes & Cooke Chartered Accountants Level 1, 1304 Hay Street, West Perth WA 6005

STOCK EXCHANGE Australian Stock Exchange

COMPANY CODE MEI (Fully paid shares)

ISSUED CAPITAL 43,781,701 fully paid ordinary shares 15,516,934 partly paid shares, \$0.20 unpaid

PROJECTS SUMMARY

Meteoric Resources NL is a gold and copper explorer active in Western Australia and the Northern Territory with a portfolio of projects totalling approximately 1,000sq.km ranging from grass roots to advanced projects near the resource definition stage. During the year, Meteoric completed a total of 50,000m of drilling with a focus on its Wilthorpe project north of Meekatharra. WA where a potentially large mineralised sheeted vein system has been identified.

During the year Meteoric earned majority interests in seven projects at Wilthorpe (Meteoric 90%), Ruby Well (60%), Bullfinch (90%), Jarbora Hill (100%), Junction Lake (100%) and Ularring (100%) in WA and at Warrego North (100%) in the NT. Under the terms of the joint venture Meteoric earned 100% of Image Resources interest by expenditure of \$2 million by July 2004. Image Resources' retains a 1% gross royalty interest in the tenements.

Meteoric also earned a 51% interest in the Barkly Joint Venture with Giants Reef Mining Limited, now Centralian Minerals Limited (Subject to Deed of Company Arrangement) by expenditure of \$300,000 before November 2007. Under the terms of the joint venture Meteoric may earn an additional 19% interest by expenditure of an aggregate total of \$500,000 before November 2009.

Additional tenement acquisitions during the year include two optioned properties just south of the Wilthorpe project both of which have reported gold occurrences which have yet to be fully tested. Meteoric has also applied for a 48sq km tenement at Robinson Range approximately 20km southeast of Wilthorpe and considered to be prospective for both gold and iron ore.

WILTHORPE (Meteoric 90%)

This 11sq km project, situated 25km south of the 1Moz Fortnum gold mine, includes the Harrods sheeted vein system and the more recently discovered Cartier prospect some 2km to the south. Both projects contain east-northeast to northeast trending vein sets within a generally north-striking corridor hosted by Proterozoic metasediments.

During the year a total of 35,000m of drilling was completed, comprising 28,800m of RAB and 6.200m of RC. The RC drilling was mainly focused on close-spaced drilling (12.5m centres) of two test panels approximately 50m x 50m in area (termed Areas A and B) to a depth of 50m to provide more information on the nature and continuity of the sheeted vein packages in the oxide zone and to assess the open cut potential of Harrods Central. Significant intersections include:

	Harrods RC Intercepts
Hole No		Collar Coordinates	From	To	Interval	Gold Grade
	Ë	N	m	m	m	g/t
WDRC-47*	6535	4355	4	8	4	5.4
		including	4	5		17.3
			90	91		4.9
			93	95	2	3.8
WDRC-48*	6475	4355	4		3	1.6
			67	71	4	1.9
WDRC-49	6475	4365	50	54	4	3.3
		including	52	53		11.2
			84	86	2	12.9
		including	84	85		25.1
			37	40	2	31

Hole No		Collar Coordinates	From	Тo	Interval	Gold Grade
	Έ	N	m	m	m	g/t
			92	93	1	5.2
			21	23	$\overline{2}$	1.7
			55	56	1	$\overline{3.5}$
WDRC-58	6455	4343	88	90	$\overline{2}$	1.7
			56	59	$\overline{\mathbf{3}}$	3.4
			82	83	1	12.5
WDRC-60	6462.5	4272	4	9	$\overline{5}$	6.2
		including	$\overline{5}$	7	$\overline{2}$	13.8
WDRC-61	6462.5	4297	$\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\over$	$\overline{13}$	$\overline{6}$	1.2
WDRC-62	6462.5	4309.5	$\overline{9}$	$\overline{15}$	$\overline{6}$	1.4
			54	57	$\overline{3}$	5.3
WDRC-64	6462.5	4347	$\overline{37}$	43	$\overline{6}$	2.3
WDRC-66	6475	4316.5	4	$\overline{9}$	5	1.3
			27	$\overline{33}$	$\overline{6}$	1.5
WDRC-67	6475	4329	31	34	$\overline{3}$	1.5
WDRC-68	6475	4341.5	9	15	6	2.3
		including	$\overline{13}$	14	1	7.1
			$\overline{34}$	$\overline{36}$	$\overline{2}$	$\overline{3.8}$
			50	53	$\overline{\overline{3}}$	2.4
WDRC-69	6462.5	4334.5	$\overline{15}$	$\overline{17}$	$\overline{2}$	4.8
			58	60	$\overline{2}$	4.6
WDRC-70	6475	4354	39	49	$\overline{2}$	3.3
WDRC-72	6487.5	4323.5	$\overline{31}$	$\overline{38}$	7	9.1
		including	35	$\overline{37}$	$\overline{2}$	25.9
			55	57	$\overline{2}$	2.0
WDRC-74	6487.5	4348.5	50	57	7	2.9
		including	55	56	1	13.6
WDRC-75	6487.5	4361	$\overline{32}$	$\overline{34}$	$\overline{2}$	2.6
WDRC-76	6500	4329.5	45	48	$\overline{\mathbf{3}}$	12.7
WDRC-77	6500	4342	76 20	80 23	$\overline{4}$ $\overline{3}$	1.6 2.9

			48 40	50 42	$\overline{2}$ $\overline{2}$	4.2
WDRC-78	6500	4367				2.3
			62	65	$\overline{\overline{3}}$	$\overline{1.5}$
WDRC-79	6512.5	4337.5	58	59	$\overline{1}$	3.0
WDRC-80	6512.5	4325	50	52	$\overline{2}$	1.5
WDRC-81	6512.5	4350	40	42	2	10.3
		including	40	41	$\overline{1}$	19.7
			49	51	$\overline{2}$	5.0
WDRC-82	6512.5	4362.5	$\overline{15}$	$\overline{18}$	$\overline{3}$	1.5
			32	34	$\overline{2}$	3.2
			52	57	5	2.8
WDRC-83	6512.5	4362.5	$\overline{22}$	$\overline{24}$	$\overline{2}$	$\overline{3.2}$
			50	53	$\overline{\mathbf{3}}$	$\overline{2.3}$
WDRC-87	6542.5	4415.5	44	49	$\overline{5}$	2.0
WDRC-89	6542.5	4440.5	17	20	$\overline{3}$	1.5
			50	52	$\overline{2}$	3.0
WDRC-90	6542.5	4353	$\overline{34}$	36	$\overline{2}$	3.6
WDRC-92	6555	4422	55	60	$\overline{5}$	5.5
		including	56	57	1	20.9
WDRC-93	6555	4434.5	43	47	4	1.3
			50	55	5	3.2
			61	63	$\overline{2}$	3.7
WDRC-95	6555	4459.5	18	$\overline{22}$	$\overline{4}$	3.0
			43	45	$\overline{2}$	2.8
WDRC-96	6555	4472	31	35	4	3.7
		including	33	34	1	12.4
WDRC-98	6567.5	4441	4	11	7	1.6
			$\overline{13}$	17	4	1.2
WDRC-100	6567.5	4466	12	14	$\overline{2}$	6.7

Hole No		Collar Coordinates	From	To	Interval	Gold Grade
	E	N	m	m	m	g/t
WDRC-101	6580	4435	29	32	3	2.7
WDRC-102	6580	4447.5	7	9	$\overline{2}$	4.0
			$\overline{13}$	15	$\overline{2}$	3.1
			21	22	1	3.9
			49	52	$\overline{\mathbf{3}}$	2.1
WDRC-103	6580	4460	23	24	1	3.2
			26	27	1	11.5
WDRC-104	6580	4472.5	36	$\overline{38}$	$\overline{2}$	4.8
WDRC-105B	6580	4481	10	11	1	3.3
			14	17	3	2.3
WDRC-106	6462.5	4259.5	18	20	$\overline{2}$	4.3
WDRC-107	6512.5	4312	23	33	10	7.1
		including	24	25	1	31.0
WDRC-109	6555	4409	25	29	4	2.8
			35	42	$\overline{7}$	13.4
WDRC-110	6567.5	4416	0	$\overline{2}$	2	3.2
			$\overline{\mathbf{3}}$	14	$\overline{11}$	4.7
		including	8	12	4	10.7
			43	46	$\overline{3}$	4.6
WDRC-111	6567.5	4439	$\overline{2}$	10	8	2.4
		including	4	6	$\overline{2}$	5.5
			34	36	$\overline{2}$	3.0
			53	56	3	7.6

1m samples, uncut, drill azimuth 180°, dip -60° unless otherwise shown

* drill azimuth 090°, dip -60°

Samples analysed using lead collection fire assay (50g charge) with flame AAS finish

The close-spaced drilling has, for the first time, allowed the mineralisation geometry (i.e. the shape) to be interpreted at Harrods with some confidence. In Areas A and B (see plan below) a series of steep-dipping veins and vein packages are evident in a 50m-wide corridor trending north-easterly and open laterally, along strike and down dip, as shown in the cross sections below. The two test panels are estimated to comprise less than 20% of the more intensely mineralised area at Harrods Geological consultants have been engaged to model the shape and grade of the Central. mineralisation within the two test areas and it is expected that the results of this study will be used to determine the optimum drilling density required for resource evaluation.

Harrods Prospect - Bedrock Geochemistry and Drilling

Harrods Area A Drill Sections

Harrods Area B Drill Sections

In addition to the detailed RC drilling, RAB drilling programmes were completed to test potential extensions to Harrods Central and to further define the mineralisation at Harrods South. Significant intercepts include:

Harrods RAB Intercepts

Hole No		Collar Coordinates		T٥	Interval	Gold Grade
	Ë	Ν	m	m	m	g/t
WDRB-668	6860	4075	25	26		1.1
WDRB-676	6860	3878	33	34		1.3
WDRB-677	6860	3853	16	18		1.2
WDRB-678	6860	3830	14	15 ⁵		1.0
WDRB-679	6860	3800	23	24		1.6
			34	35		1.5
WDRB-886	6660	4588	51	53		3.1
WDRB-887	6660	4563		8		1.1
			14	16	n	5.1
WDRB-889	6660	4523	35	36		1.1
			37	38		1.2
WDRB-890	6660	4503	38	40	↷	1.8

Harrods South RAB Intercepts

Hole No		Collar Coordinates	From	To	Interval	Gold Grade
	Ë	N	m	m	m	g/t
WDRB-894	6500	3204	$\overline{7}$	$\overline{8}$	1	2.1
			23	$\overline{25}$	$\overline{2}$	1.6
WDRB-927	6050	2930	$\overline{8}$	9	1	$\overline{1.3}$
WDRB-929	6050	2884	16	$\overline{17}$	1	1.6
WDRB-930	6150	2970	$\overline{33}$	$\overline{34}$	1	1.8
WDRB-937	6250	3076	35	36	1	1.1
WDRB-938	6250	3052	$\overline{36}$	$\overline{39}$	$\overline{3}$	$\overline{2.4}$
		including	$\overline{37}$	$\overline{38}$	1	6.1
WDRB-941	6352	3190	82	83	1	1.4
WDRB-942	6352	3146	$\overline{39}$	43	$\overline{4}$	1.7
			50	56	$\overline{6}$	1.6
WDRB-943	6352	3108	11	12	1	5.9
			27	29	$\overline{2}$	1.4
WDRB-944	6352	3084	52	54	$\overline{2}$	1.1
WDRB-947	6450	3154	$\overline{12}$	13	1	1.7
			16	$\overline{17}$	1	1.8
WDRB-948	6450	3114	$\overline{32}$	34	$\overline{2}$	2.4
WDRB-949	6450	3080	$\overline{6}$	7	1	1.2
			9	12	$\overline{3}$	2.3
			$\overline{24}$	25	1	1.6
WDRB-950	6550	3305	$\overline{33}$	34	1	1.0
WDRB-951	6550	3278	$\overline{20}$	21	1	4.2
WDRB-952	6550	3241	$\overline{7}$	8	1	11.7
			35	$\overline{37}$	$\overline{2}$	1.4
WDRB-953	6550	3212	$\overline{5}$	7	$\overline{2}$	1.3
			15	$\overline{16}$	1	4.5
			56	57	1	1.7
WDRB-954	6550	3177	$\overline{33}$	$\overline{35}$	$\overline{2}$	2.4
			40	41	1 $\overline{2}$	6.5
			44 60	46		$\overline{1.3}$
			62	61 63	1 1	4.4
			66	67	1	1.1 1.4
			68	69	1	3.0
WDRB-956	6650	3295	$\overline{20}$	$\overline{21}$	1	1.2
			$\overline{22}$	$\overline{25}$	$\overline{3}$	1.0
			$\overline{37}$	$\overline{38}$	1	1.4
			40	42	$\overline{2}$	1.0
			48	50	$\overline{2}$	4.8
			51	52	1	1.9

WDRB-958	6650	3249	16	17	1	2.5

Hole No	Collar Coordinates		From	To	Interval	Gold Grade
	Е	Ν	m	m	m	g/t
WDRB-961	6748	3330	71	72.		4.7
WDRB-964	6751	3244	13	14		1.3
WDRB-965	6748	3199	70	72	o	1.1
WDRB-967	6747	3138	13	14		1.5
WDRB-969	6746	3177	45	46		1.6
WDRB-970	6849	3339	11 10		1.2
WDRB-972	6849	3281	14	17	3	1.1
			18	19		4.0
WDRB-985	7100	3330	13	14		1.7
			15	16		1.7
			17	18		3.0

The RAB drilling near Harrods Central indicates some potential for narrow extensions to this mineralisation. At Harrods South the drilling has confirmed the presence of numerous narrow mineralised veins trending east northeast over a strike length of 800m. In the central section of this zone the corridor of sheeted veins broadens to more than 100m in width. Further drilling to assess this mineralisation is likely to proceed in conjunction with the Harrods Central evaluation.

Adjacent and south of the Wilthorpe exploration licence, some 5km south-southwest of Harrods Central, Meteoric has optioned a 160ha prospecting licence where RAB drilling in the 1980's intersected shallow gold mineralisation within metasediments (best intercept 3m at 1.3g/t Au from 24m). Gold mineralisation can be traced over a 500m strike length in an east-northeast direction. A detailed ground magnetic survey has been carried out prior to drill testing of this new target. A second nearby 105ha tenement with reported gold occurrences has also been optioned, subject to grant of access.

BULLFINCH (Meteoric 90%)

Follow-up RC drilling (1.511m) at the Rutherfords Find prospect at Bullfinch intersected high gold grades with a best intercept of 4m at 10.1g/t Au from 71m. The Bullfinch project covers the eastern margin of the Bullfinch greenstone belt 30km northwest of Southern Cross, adjacent to the 1.4Moz Copperhead gold mine. Significant intersections from the drilling include:

Hole No	Collar Coordinates		From	Т٥	Interval	Gold Grade
			m	m	m	g/t Au
BRC-29	69632	11812	67	69		2.6
BRC-30	69632	11763		75		10.1
	includina		ማሳ	74		18.7
BRC-31	69631	11663	66	67		0.9
BRC-34	69595	11711	129	131		2.6
BRC-35	69606	11789	109	110		2.6

Rutherfords Find RC Drilling Results

1m samples, uncut Dip -60°, azimuth 360°

The drilling results demonstrate a potential for high-grade shoots within this line of workings over a strike length of 250m. Following these encouraging results a geochemical survey (200m x 40m spacing) was carried out over a 12sq km area in the Rutherfords Find. The survey identified a northwest-trending, 600m-long gold anomaly with values up to 10 times background and situated along strike from old gold diggings at Golden Frog, near Rutherfords Find. RAB drilling (42 holes, 2,340m) of this anomaly returned generally low values, with a best intercept of 4m at 3.1g/t Au Limited follow-up drilling at Reynolds Find and Withers Find did not intersect from 8m. significant mineralisation and the properties were relinquished. Meteoric plans to follow up the encouraging intersections at Rutherfords Find and also further examine the potential of a previous intersection of 2m at 11.7g/t Au from 81m at Withers South.

JARBORA HILL (Meteoric 100%)

Meteoric has completed further RAB drilling (19 holes, 569m), shallow geochemical drilling (22 holes, 372m) and aircore drilling (31 holes, 1,294m) over geochemical anomalies in laterite at Emu Well. The Jarbora Hill project is situated about 20km along strike from Giralia Resources' Snake Well gold project where a gold resource has been reported. The drilling intersected quartz veining in weathered felsic volcanic rocks in several holes, however, gold values are generally low indicating a weakly mineralised source for the extensive gold-in-laterite anomaly. Consideration is being given to further drilling to test the bedrock mineralisation at depth.

ULARRING (Meteoric 100%)

Reconnaissance mapping and sampling of an under-explored greenstone sequence prospective for gold and nickel has commenced at Ularring, about 70km northwest of Coolgardie.

RUBY WELL (Meteoric 60%)

Geochemical sampling for gold is currently being carried out over structural targets interpreted from aeromagnetics at Ruby Well north of Meekatharra. Ruby Well is situated about 50km southwest of Sandfire Resources recent gold discovery at Doolgunna in the Peak Hill goldfield.

BARKLY JV (Meteoric, 51% earning up to 70%)

A 7,544m shallow RAB drilling programme was completed during the year to test a series of targets defined by detailed gravity and ground magnetic surveys in the Perseverance-Bluebird area about 30km east of Tennant Creek where old diggings and historical drilling have indicated the presence of copper-gold mineralisation in ironstones. The drilling defined a 600m-long bedrock copper anomaly, together with associated gold and bismuth. The anomaly is open to the east and along strike from the Bluebird workings. Limited follow-up RAB drilling (1,373m) at Bluebird returned a best intercept of 8m at 1.0% Cu and 0.3g/t Au from 72m at end of hole in a hematite ironstone.

GEOCHEMISTRY - Cu ppm Cu ppm $30 - 50$ 8.0m @ 1.0% Cu $50 - 100$ 100 - 250 $>250$ Shallow RAB - EOH value Angled RAB - maximum value × GEOCHEMISTRY - Bi ppm æ. Bi ppm $20 - 50$ $50 - 100$ $>100$ Shallow RAB - EOH value Angled RAB - maximum value GEOCHEMISTRY - Au ppm à., Ċ. Au ppm $0.01 - 0.05$ 8.0m @ 0.3a/t Au $0.05 - 0.07$ $0.07 - 0.10$ $>0.10$ Shallow RAB - EOH value Angled RAB - maximum value

Bluebird-Geochemistry

A programme of RAB drilling is planned to follow-up this encouraging result with drilling scheduled to commence in September 2006.

WARREGO NORTH (Meteoric 100%)

A 202m RC hole was completed at the Parakeet prospect, targeting a combined gravity/magnetic anomaly about 50m west of a previous drill hole (best intercept 14m at 0.3% Cu from 145m) which was interpreted to have missed the geophysical target. The new drill hole encountered hematite and magnetite altered sediments but did not intersect significant mineralisation, however the hole flattened substantially and may not have tested the target. Additional tenements have been granted at this project situated north of the 1.3Moz Warrego mine and further mapping and sampling programmes are in preparation.

DIRECTORS' REPORT

Your directors present their report on the Company for the year ended 30 June 2006.

DIRECTORS

The following persons were directors of Meteoric Resources NL ("Meteoric") during the whole of the year (unless otherwise stated) and up to the date of this report:

Peter Thomas Roger Thomson George Sakalidis

PRINCIPAL ACTIVITIES

The principal activities of the Company during the year were the exploration of mineral tenements in Western Australia and Northern Territory.

RESULTS FROM OPERATIONS

During the year the Company recorded an operating loss of \$2,114,401 (2005: \$2,046,505).

DIVIDENDS

No amounts have been paid or declared by way of dividend by the Company since the end of the previous financial year and the Directors do not recommend the payment of any dividend.

REVIEW OF OPERATIONS

A review of operations is covered elsewhere in this Annual Report.

EARNINGS PER SHARE

Basic Loss per share for the financial period was 5.0529 cents (2005: 5.0179 cents). Diluted Loss per share is not significantly different from Basic Loss per Share.

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

There have been no significant changes in the state of affairs of the Company during the financial period.

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL PERIOD

No material matters have occurred subsequent to the end of the financial year which require reporting on other than the matters as reported to ASX.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

Likely developments in the operations of the Company and the expected results of those operations in future financial years have not been included in this report as the directors believe, on reasonable grounds, that the inclusion of such information would be likely to result in unreasonable prejudice to the Company.

ENVIRONMENTAL ISSUES

The Company carries out operations in Western Australian and the Northern Territory which are subject to environmental regulations under both Commonwealth and State legislation in relation to its exploration activities.

The Company has formal procedures in place to ensure regulations are adhered to. During or since the financial period there have been no known significant breaches of these regulations.

INFORMATION ON DIRECTORS AND COMPANY SECRETARIES

Peter Thomas

Chairman

Mr Thomas is a practising Solicitor with more than twenty-five years national and international experience in the resource sector (both oil and minerals) specialising in the provision of general contractual and corporate advice to both miners and explorers. He has been responsible for the structuring, restructuring and reconstruction of a number of companies and has been a director of a number of listed companies. He is also chairman of Image Resources NL and Sandfire Resources NL. He was a director of Magnetic Minerals Limited until it was taken over by Ticor.

Mr Thomas has an interest in 18,000 ordinary fully paid shares and 27,000 contributing shares. He also holds, through an associated entity, an interest in 404,000 fully paid ordinary shares, 6,000 contributing shares and 800,000 options to acquire contributing shares.

Roger Thomson

Managing Director

Mr Thomson is a geologist with more than thirty years experience in mineral exploration, mining geology and management in Australia, Africa, South America and SE Asia. Mr Thomson has held the positions of General Manager Exploration with Delta Gold Ltd and Sons of Gwalia Ltd and has been responsible for, or closely associated with, making economic discoveries of gold and tantalum in Australia. He successfully managed the programme that led to the discovery of the multi-million ounce Sunrise gold deposit, near Laverton in Western Australia. Mr Thomson is an Associate of the Royal School of Mines, a Member of the Australasian Institute of Mining and Metallurgy and a Member of the Society of Economic Geologists. He is a director of Image Resources NL and Mariana Resources NL.

Mr Thomson has an interest in 15,000 ordinary fully paid shares, 22,500 contributing shares and 800,000 options to acquire contributing shares. He also holds, through an associated entity, an interest in 300,000 fully paid ordinary shares and 2,000,000 contributing shares.

George Sakalidis

Exploration Director

Mr Sakalidis is an exploration geophysicist with over twenty-five years industry experience, during which time his career has included extensive gold, diamond, base metals and mineral sands exploration. He was involved in the compilation of what the Board believes to be one of the largest aeromagnetic databases held by any Australian junior explorer, which is now held by Image. Using this database, Mr Sakalidis has been involved in a number of significant mineral discoveries, including the Three Rivers and Rose gold deposits in Western Australia and the tenement applications over the Silver Swan nickel deposit. He was also instrumental in the design of the magnetic surveys and exploration drilling program that led to the discovery of the large mineral sands resources at Magnetic Minerals Limited's Dongara Project. Mr Sakalidis was a founding director of Magnetic Minerals Limited and was previously a director of North Star Resources NL. He is also a director of Image Resources NL.

Mr Sakalidis has an interest in 1,765,162 ordinary fully paid shares, 2,966,986 contributing shares and 800,000 options to acquire contributing shares. He also holds, through associated entities, an interest in 94,600 fully paid ordinary shares and 34,900 contributing shares.

Malcolm K Smartt

Company Secretary - Appointed 16.6.2006

Mr Smartt has held a number of senior finance positions within the resource sector over the past 20 years and completes the finance and company secretarial functions for several listed resources companies.

Rudolf Tieleman

Company Secretary - Resigned 16 June 2006

Mr Tieleman is an accountant with over 21 years professional practice experience and has extensive knowledge in matters relating to the operation of business in Australia.

AUDIT COMMITTEE

At the date of this report the Company does not have a separately constituted Audit Committee as all matters normally considered by an audit committee will be dealt with by the full board.

NON AUDIT SERVICES

The only non audit services provided by the auditor were for option valuation services as shown at Note 6.

A copy of the Auditor's Independence declaration as required by Section 307c of the Corporations Act is set out on page 20.

The board is satisfied that the provision of non- audit services by Somes & Cooke during the year did not compromise the independence of the auditor (Kevin Somes) as required by the Corporations Act because he did not provide any of the non audit services, he has only assumed the role of auditor of the Company this year, and the non-audit services rendered were inconsequential in terms of quantum (\$2,475) relative to the potential loss and exposure arising out of any failure to act in a fit and proper manner with due independence in an entirely disinterested but diligent manner.

MEETINGS OF DIRECTORS

During the financial period ended 30 June 2006, there were 6 meetings of directors. All meetings were attended by all the directors.

DIRECTORS AND EXECUTIVES REMUNERATION REPORT

The Company's policy for determining the nature and amount of emoluments of board members and senior executives (if any) of the Company is as follows:

The remuneration structure for executive officers, including executive directors, seeks to emphasise payments for results through providing various reward schemes, for example the incorporation of Sharebased Incentive Schemes. The objective of the reward schemes is to both reinforce the short and long term goals of the Company and to provide a common interest between management and shareholders.

$(a)$ The names of directors who have held office during the financial year are -

Peter Thomas Roger Thomson George Sakalidis

$(b)$ Retirement and Superannuation Payments

Prescribed benefits were provided by the Company to all executive directors by way of superannuation contributions to complying superannuation funds during the year. These benefits were paid in accordance with the statutory superannuation contribution guarantee requirements. Mr Thomas' directors fees were contributed in their entirety, by way of salary sacrifice, to his superannuation fund.

Non-executive director $(c)$

Fees and payments to the only non-executive director, the Chairman, reflects the demands made on him and his responsibilities. His directors' fees are reviewed annually by the Board and fees are determined independently to the fees of executive directors and are based on comparative roles in the external market. The Chairman is not present at any discussions relating to the determination of his own remuneration. Non-executive directors may receive share-based payments which are required to be approved by shareholders in general meeting.

$(d)$ Directors fees

The current base remuneration was effective from 1 July 2005.

Retirement allowances for directors $(e)$

The company does not have a policy for the payment of retirement allowances for non-executive directors.

$(f)$ Executive pay

The executive pay and reward framework has three components:

Base pay;

Share-based incentives;

Other remuneration such as superannuation.

The combination of these comprise the executives' total remuneration.

Base Pay

Structured as a total employment cost package which may be delivered as a mix of cash and prescribed non-financial benefits at the executives' discretion.

The executives have been offered a competitive base pay that comprises the fixed component of pay and rewards. Base pay for the senior executives is reviewed annually. At the expiry of the term of employment, the executives' base pays are reviewed to remain competitive with the market.

There are no guaranteed base pay increases fixed in the senior executives' contracts.

The emoluments of each Director and each executive officer for the financial period are as follows:

Executive and Position	Primary	Post Employment		Total
	Salary & Salary Equivalents	Superannuation	Options $\left(1\right)$
Peter Thomas Non-Executive Chairman	\$30,000	100% of salary & salary equivalents by way of salary sacrifice	\$144,240	\$174,240
Roger Thomson Executive Managing Director	\$139,555	\$12,560	\$144,240	\$296,355
George Sakalidis Executive Director	\$110,115	\$9,910	\$144,240	\$264,265
Rudolf Tieleman - Company Secretary - Resigned 14.6.06	\$35,249			\$35,249
Malcolm Smartt - Company Secretary - Appointed 14.6.06
Total	\$314,919	\$22,470	\$432,720	\$770,109

Note $(1)$

Equity remuneration represents share options granted during the year as approved at the general meeting of shareholders held 21 November 2005. These options have been valued at grant date using the Black-Scholes option valuation methodology.

Employment agreements -

Remuneration and other terms of employment have been agreed with RM Thomson and G Sakalidis. These are effective as from 1 July 2005 and major provisions of the agreement relating to remuneration are set out as follows:

	Term of agreements	Base remuneration	Review periods	Increase
RM Thomson	3 years from 1 July 2005	\$109.69 per hour	Annually on 1 July
G Sakalidis	3 years from 1 July 2005	$$100.92$ per hour to 31.5.2006 \$109.69 per hour from	Annually on 1 July	Discretionary by Board
		1.6.2006

EMPLOYEES

The Company had two employees at 30 June 2006 (2005: None). For tax purposes, directors are treated as employees but for the purpose of this disclosure, they are not.

CORPORATE STRUCTURE

Meteoric Resources NL is a no liability company limited by shares and is incorporated and domiciled in Australia.

INDEMNIFICATION & INSURANCE OF DIRECTORS AND OFFICERS

The Company has entered into agreements indemnifying, to the extent permitted by law, all the directors and officers of the Company against all losses or liabilities incurred by each director and officer in their capacity as directors and officers of the Company.

OPTIONS

As at the date of this report there were 2,400,000 unlisted options over un-issued partly-paid contributing shares in the Company. These options were issued to the directors as approved at the Company's annual general meeting held on 21 November 2005 and are exercisable at \$0.06 each on or before 21 November 2010.

Signed in accordance with a resolution of the directors

GEORGE SAKALIDIS Director Perth 29 September 2006

Auditor's Independence Declaration to the Directors of Meteoric Resources NL

In relation to the audit of the financial report of Meteoric Resources NL for the year ended 30 June 2006, 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; or
$(ii)$ any applicable code of professional conduct in relation to the review.

Yours sincerely

K.C. Somes

SOMES and COOKE Chartered Accountants

GOOD GOVERNANCE AND PRACTICE RULES

The Australian Stock Exchange Corporate Governance Council has determined a total of ten Governance and Good Practice Rules which must be listed and an explanation provided on whether the Company complies with the rule, or a reason why it does not.

PRINCIPLE	COMPLIANCE OR DETAILS OF PLANNING
PRINCIPLE 1: Lay solid foundations for management and oversight
Formalise and disclose the functions reserved to the Board and those $1.1\,$ delegated to management	A committee has been established to document for Board prepare consideration.
PRINCIPLE 2: Structure the Board to add value
2.1 A majority of the Board should be independent directors	Not complied with for economic reasons.
2.2 The Chairperson should be an independent director	Complied with.
The roles of Chairperson and Chief Executive Officer should not be 2.3 exercised by the same individual	Complied with.
The Board should establish a nomination committee 2.4	Board fulfils The the role ο£ Nomination Committee.
PRINCIPLE 3: Promote ethical and responsible decision-making
3.1 Establish a code of conduct to guide the directors, the Chief Executive Officer (or equivalent), the Chief Financial Officer (or equivalent) and any other key executives as to: 3.1.1 The practices necessary to maintain confidence in the Company's integrity; 3.1.2 The responsibility and accountability of individuals for reporting or investigating reports of unethical practices.	Not complied with. The law embodies sufficient codes of conduct for a company of this size.
Disclose the policy concerning trading in Company securities by 3.2 directors, officers and employees.	A strict policy has been adopted and signed by each director.
PRINCIPLE 4: Safeguard integrity in financial reporting
Require the Chief Executive Officer (or equivalent) to state in writing to 4.1 the Board that the Company's financial reports present a true and fair view, in all material respects, of the Company's financial condition and operational results and are in accordance with relevant accounting standards.	Completed by Managing Director in conjunction with company secretary and auditor.
The Board should establish an audit committee. 4.2	The role of Audit Committee has been assumed by the full Board.
4.3 Structure the audit committee so that it consists of: Only non-executive directors A majority of independent directors An independent chairperson who is not the chairperson of the Board At least three members	Not complied with - see 4.2 above.
The audit committee should have a formal operating charter. 4.4	Not complied with - see 4.2 above.

CORPORATE GOVERNANCE STATEMENT

	PRINCIPLE 5: Make timely and balanced disclosure
5.1	Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance.	No written policy as such, other than in relation to 3.2 above. Minutes of Board meetings frequently address compliance issues. Both the Chairman and the company secretary have detailed knowledge of and long working backgrounds in application of those rules. The executive directors have a good general grasp of these rules and consult the Chairman and company secretary as required. Every member of the Board and company secretary is fully familiar with requirements οf continuous disclosure rules and standards expected of them in relation to trading in company securities.
	PRINCIPLE 6: Respect the rights of shareholders
6.1	Design and disclose a communications strategy to promote effective communication with shareholders and encourage effective participation at general meetings.	Fully designed and disclosed by directors' conduct.
6.2	Request the external auditor to attend the annual general meeting and be available to answer shareholder questions about the audit and the preparation and contents of the auditor's report.	Complied with.
	PRINCIPLE 7: Recognise and manage risk.
7.1	The Board or appropriate board committee should establish policies on	Complied with.
	risk oversight and management.
7.2 7.2.1 7.2.2	The Chief Executive Officer (or equivalent) and the Chief Financial Officer (or equivalent) should state to the Board in writing that: The statement given in accordance with best practice recommendation 4.1 (the integrity of financial statements) is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board. The Company's risk management and internal compliance and control system is operating efficiently and effectively in all material aspects.	Complied with.
	PRINCIPLE 8: Encourage enhanced performance.
8.1	Disclose the process for performance evaluation of the Board, its' committees and individual directors and key executives.	Complied with.
	PRINCIPLE 9: Remunerate fairly and responsibly.
9.1	Provide disclosure in relation to the Company's remuneration policies to enable investors to understand the cost and benefits of these policies and the link between remuneration paid to directors and key executives and corporate performance.	Complied with.
9.2	The Board should establish a remuneration committee.	Complied with.
9.3	distinguish structure of directors' Clearly the non-executive remuneration from that of executive directors.	Complied with.
9.4	Ensure that payment of equity-based executive remuneration is made in accordance with thresholds set in plans approved by shareholders.	Complied with.
	PRINCIPLE 10: Recognise the legitimate interest of stakeholders.
10.1	Establish and disclose a code of conduct to guide compliance with legal and other obligations to legitimate stakeholders.	See 3.1 and 5.1 above.

CORPORATE GOVERNANCE STATEMENT

General:

The Board of Directors of Meteoric Resources NL is responsible for the corporate governance of the Company. The Board guides and monitors the business and affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are accountable.

The substance of the best practice recommendations of the ASX Corporate Governance Council, including corporate governance practices and suggested disclosures (which in unabridged form may be accessed from the ASX website) as adopted with variations by the Company, are set out herein and have been applied for the entire financial year ended 30 June 2006. Where there has been any variation from the recommendations it is because the Board believes that the Company is not as yet of a size, nor are its financial affairs of such complexity to justify some of those recommendations and as such those practices continue to be the subject of the scrutiny of the full Board.

Board Composition:

The Board is comprised of three Directors, of which the Managing Director and Exploration Director are the Executive Directors.

The skills, experience and expertise relevant to the position of each Director who is in office at the date of the annual report, his attendance at meetings and his term of office are detailed in the Directors' Report. Due to the size of the Company, only the Chairman is an independent Director. This situation will be monitored and changes made as the Board sees fit. The names of the Directors of the Company in office at the date of this statement are:

Name	Position	Committees
Peter Sisely Thomas	Non Executive Chairman	Refer details
		herein
Roger Michael Thomson	Managing Director	Refer details
		herein
George Sakalidis	Exploration Director	Refer details
		herein

When determining whether a Director is independent, the Board has determined that the Director must not be an executive and:

is not a substantial shareholder of the Company or an officer of, or otherwise associated directly $\bullet$ with, a substantial shareholder of the Company;
within the last three last years has not been employed in an executive capacity by the Company or $\bullet$ been a Director after ceasing to hold any such employment;
within the last three years has not been a principal or employee of a professional adviser or a $\bullet$ consultant to the Company or an employee associated with the service provided where the quantum of the remuneration in respect thereof are regarded as material to either the company or that person;
is not a material supplier or customer of the Company or an officer of or otherwise associated $\bullet$ directly or indirectly with a significant supplier or customer;
has no material contractual relationship with the Company other than as a Director of the Company; $\bullet$
is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the Director's ability to act in the best interests of the Company.

Directors have the right to seek independent professional advice in the furtherance of their duties as Directors, at the Company's expense, subject to those expenses being reasonable or incurred with the chairman's approval, such approval not to be unreasonably withheld.

The Board and Board Nominations:

The Company does not operate a nomination committee. As such, the full Board (subject to members' voting rights in general meeting) is responsible for selection of new members and has regard to a candidate's experience and competence.

Under the Company's Constitution:

the maximum number of Directors on the Board is ten;
a Director (other than the Managing Director) may not retain office for more than three years without submitting for re-election; and
at the Annual General Meeting each year effectively one third of the Directors in office (other than the Managing Director) retire by rotation and must seek re-election by shareholders.

Securities Trading Policy:

The Company has adopted a formal securities trading policy whereby Directors and employees are restricted from acting on material information until it has been released to the market in accordance with the ASX requirements of continuous disclosure and the market has had sufficient time to absorb that information.

Directors' Remuneration and Policies:

The Company forms a remuneration committee comprising members of the Board and sometime a member of the board and the company secretary who do not have a personal interest in the remuneration and policies being discussed. Due to the number of directors on the Board at this time, any decision is therefore required to be unanimous.

All compensation arrangements for Directors including the Managing Director are determined by disinterested Directors after taking into account the current competitive rates prevailing in the market.

The amount of remuneration for all Directors including the full remuneration packages, comprising all monetary and non-monetary components of the Executive and Non Executive Directors, are detailed in the Directors' Report.

Executives receive base salary, superannuation and in some cases, fringe benefits and share-based incentives. These packages are reviewed on an ongoing basis.

All remuneration paid to present or future executives is accounted for in accordance with the law.

The Board expects that the remuneration structure that is implemented will result in the Company being able to attract and retain the best executives to manage the Company. It will also provide the executives with the necessary incentives to work to grow long-term shareholder value.

The Board can exercise its discretion in relation to approving incentives, bonuses and options.

There are no schemes for retirement benefits other than statutory superannuation for any of the Directors.

External auditors:

The auditors of the Company have open access to the Board of Directors at all times. Somes & Cooke have audited the Company for the last three years. Somes & Cooke attend the Company's annual general meeting.

Audit committee:

The Company does not operate an audit committee separate from the Board, however, there is a recognition that a separate committee may be required in the future in order to comply with good Corporate Governance.

Managing risks:

The Board meets regularly to evaluate, control, review and implement the Company's operations and objectives.

Regular controls established by the Board include:

detailed monthly financial reporting;
delegation of authority to the Managing Director to ensure approval of expenditure obligations within the constraints of an approved budget;
implementation of operating plans, cash flows and budgets by management and Board monitoring of progress against projections; and
procedures to allow Directors, and management in the furtherance of their duties, to seek independent professional advice via the utilisation of various external technical consultants.

The Board recognises the need to identify areas of significant business risk and to develop and implement strategies to mitigate these risks.

Commitment to stakeholders & ethical standards:

The Board supports high standards of corporate governance and requires its members and the management and staff of the Company to act with integrity and objectivity in relation to:

compliance with laws and regulations affecting the Company's operations; $\bullet$
the ASX's Corporate Governance;
employment practices;
responsibilities to:
the community; $\bullet$
the individual; $\bullet$
the environment;
conflict of interests:
confidentiality;
ensuring that shareholders and the financial community are at all times fully informed in accordance with the spirit and letter of the ASX's continuous disclosure requirements;
protection of and proper use of the Company's assets.

Monitoring of the Board's Performance and Communication to Shareholders:

In order to ensure that the Board continues to discharge its responsibilities in an appropriate manner, the performance of all Directors is regularly reviewed by the Chairman. The Company does not have an evaluation of the Board or Board members performed by an independent consultant.

The Board of Directors aims to ensure that shareholders are informed of information necessary to assess the performance of the Company. Information is communicated to the shareholders, subject to the exceptions to the requirements for continuous disclosure permitted by law, through:

the Quarterly Reports;
the Half-Yearly Report; $\bullet$
the Annual Report; $\bullet$
adherence to continuous disclosure requirements;
the Annual General Meeting and other meetings so called to obtain shareholder approval for Board action as appropriate; and
the provision of the Company's website containing all of the above mentioned reports and its constant update and maintenance.

INCOME STATEMENT For the Year Ended 30 June 2006

	Notes	2006 (5)	2005 (5)
Revenue from ordinary activities	3	146,408	213,344
Revenue/(loss) from non-ordinary activities
Borrowing expenses
Depreciation expense	З	(3, 196)	(1,562)
Exploration expenses written-off	3	(1,390,166)	(1,900,401)
Other expenses from ordinary activities	3	(867, 447)	(357, 886)
Loss from ordinary activities before related income tax expense		2,114,401	2,046,505
Income tax expense	4
Loss from ordinary activities after related income tax expense		2,114,401	2,046,505
Net loss attributable to members of Meteoric Resources NL		2,114,401	2,046,505

Basic loss per share (cents per share) Diluted loss per share (cents per share)	7 7	(5.05) (5.05)	(5.02) (5.02)

BALANCE SHEET As at 30 June 2006

	Notes	2006 $($ \$)	2005 (5)
Current Assets
Cash Assets	8	2,109,559	3,145,016
Receivables	9	33,774	31,010
Prepayments	10	1,813	4,710
		2,145,146	3,180,736
Non-Current Assets
Plant and equipment	12	63,864	3,966
Mineral interests	13
Other financial assets	11	310,090	71,000
		373,954	74,966
TOTAL ASSETS		2,519,100	3,255,702
Current Liabilities
Payables	14	127,554	214,618
NET ASSETS		2,391,546	3,041,084
Equity
Contributed equity	15	6,083,106	5,126,650
Reserves		508,407
Accumulated losses		(4, 199, 967)	(2,085,566)
TOTAL EQUITY		2,391,546	3,041,084

STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2006

	Share Capital (S)	Available for Sale Financial Assets Reserve Capital (S)	Employee Benefit Reserve (S)	Accumulated Losses $($ s $)$	Total (S)
Balance at 1.7.2004	4,495,166			(39,061)	4,456,105
Shares issue during the year	1,081,632				1,081,632
Share issuance costs	(450, 148)				(450, 148)
Loss for period	٠			(2,046,505)	(2,046,505)
Balance at 30.6.2005	5,126,650	$\overline{\phantom{0}}$	$\frac{1}{2}$	(2,085,566)	3,041,084
Balance at 1.7.2005	5,126,650			(2,085,566)	3,041,084
Shares issued during the period	1,000,504				1,000,504
Share based payments			432,720		432,720
Changes in fair value of available for sale assets		75,687			75,687
Share issuance costs	(44, 048)				(44, 048)
Loss for period				(2,114,401)	(2,114,401)
Balance at 30.6.2006	6,083,106	75,687	432,720	(4, 199, 967)	2,391,546

CASH FLOW STATEMENT For the Year Ended 30 June 2006

	Notes	2006 (5)	2005 ( \$)
CASH FLOWS FROM OPERATING ACTIVITIES
Receipt from customers
Cash payments to suppliers and contractors		(452, 131)	(403,986)
Interest received		146,408	213,344
Net cash (used in) operating activities	16	(305, 723)	(190, 642)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment		(63,094)
Payments for exploration and evaluation		(1,414,427)	(1,406,101)
Purchase of new prospects		(2,480)	(24, 121)
Advance/(Repayment) of loan		(42,787)	(431,974)
Purchase of investments		(163, 403)	(71,000)
Net cash (used in) / provided by investing activities		(1,686,191)	(1,933,196)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from new issues of shares		1,000,504	949,136
Share issue expenses		(44, 047)	(317, 653)
Net cash provided by financing activities		956,457	631,483
Net (decrease) / increase in cash held		(1,035,457)	(1,492,355)
Cash at the beginning of the financial period		3,145,016	4,637,371
Cash at the end of the financial period	8	2,109,559	3,145,016

NOTE₁ SUMMARY OF ACCOUNTING POLICIES

Statement of Compliance

The financial report is a general purpose financial report that has been prepared in accordance with Accounting Standards ("AASBs") adopted by the Australian Accounting Standard Board ("AASB") and the Corporations Act 2001.

International Financial Reporting Standards ("IFRSs") form the basis of Australian Accounting Standards adopted by the AASB, and for the purpose of this report are called Australian equivalents to IFRS ("AIFRS") to distinguish from previous Australian GAAP. The financial report of the company also complies with IFRS and interpretations adopted by the International Accounting Standards Board.

This is the company's first financial report prepared in accordance with Australian Accounting Standards, being AIFRS and IFRS, and AASB 1 First time adoption of Australian equivalents to International Financial Reporting Standards has been applied. An explanation of how the transition to AIFRSs has affected the reported financial position, financial performance and cash flows of the Company is provided in note 2.

Basis Of Preparation

The following standards and amendments were available for early adoption but have not been applied by the company in these financial statements:

AASB 119 Employee Benefits (December 2004);
AASB 2004-3 Amendments to Australian Accounting Standards (December 2004) amending AASB 1 First time Adoption of Australian Equivalents to International Financial Reporting Standards (July 2004), AASB 101 Presentation of Financial Statements and AASB 124 Related Party Disclosures;
AASB 2005-1 Amendments to Australian Accounting Standards (May 2005) amending AASB 139 Financial Instruments: Recognition and Measurement;
AASB 2005-3 Amendments to Australian Accounting Standards (June 2005) amending AASB 119 Employee Benefits (either July or December 2004);
AASB 2005-4 Amendments to Australian Accounting Standards (June 2005) amending AASB 139 Financial Instruments: Recognition and Measurement, AASB 132 Financial Instruments: Disclosure and Presentation, AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards (July 2004), AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts;
AASB 2005-5 Amendments to Australian Accounting Standards (June 2005) amending AASB 1 First time Adoption of Australian Equivalents to International Financial Reporting Standards (July 2004), and AASB 139 Financial Instruments: Recognition and Measurement;
AASB 2005-6 Amendments to Australian Accounting Standards (June 2005) amending AASB 3 Business Combinations:
AASB 2006-1 Amendments to Australian Accounting Standards (January 2006) amending AASB 121 The Effects of Changes in Foreign Exchange Rates (July 2004);
UIG 4 Determining whether an Arrangement contains a Lease;
UIG 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds; and
UIG 8 Scope of AASB 2
AASB 7 Financial instruments: Disclosure (August 2005) replacing the presentation requirements of financial instruments in AASB 132. AASB 7 is applicable for annual reporting periods beginning on or after 1 January 2007;

NOTE₁ SUMMARY OF ACCOUNTING POLICIES (Continued)

AASB 2005-10 Amendments to Australian Accounting Standards (September 2005) makes consequential amendments to AASB 132 Financial Instruments: Disclosures and Presentation, AASB 101 Presentation of Financial Statements, AASB 114 Segment Reporting, AASB 117 Leases, AASB 133 Earnings per Share, AASB 139 Financial Instruments: Recognition and Measurement, AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards, AASB 4 Insurance Contracts, AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts, arising from the release of AASB 7. AASB 2005-10 is applicable for annual reporting periods beginning on or after 1 January 2007.

The company has assessed the potential impact of the above listed standards, and therefore amendments, and has concluded that: (i) adoption of the standards will have no impact on the company; (ii) are not relevant to the company; or (iii) primarily provide changes to current disclosure requirements.

The preparation of a financial report in conformity with Australian Accounting Standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The accounting policies set out below have been applied consistently to all periods presented in the financial report and in preparing an opening AIFRS balance sheet at 1 July 2004 for the purposes of the transition to Australian Accounting Standards - AIFRS. The company has elected to adopt the exemptions available under AASB 1 relating to AASB 132: Financial Instruments: Disclosure and Presentation, and AASB 139: Financial Instruments: Recognition and Measurement. Refer to Note 24 of the Notes to the Financial Statements for further details on changes in accounting policy.

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.

(a) Revenue

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

(b) Employee Entitlements

Wages and Salaries and Annual Leave - Liabilities for wages and salaries and annual leave are recognised, and are measured as the amount unpaid at the reporting date at current pay rates in respect of employees' services up to that date. There is no liability to Long Service Leave entitlements.

(c) Exploration and Evaluation Expenditure

All exploration and evaluation expenditure is expensed to profit and loss as incurred. The affect of this write-off is to increase the loss incurred from ordinary activities as disclosed in the Income Statement by \$1,222,027 and to decrease the carrying values in the Balance Sheet to \$Nil.

NOTE₁ SUMMARY OF ACCOUNTING POLICIES (Continued)

(d) Acquisition of Assets

The cost method is used for all acquisitions of assets regardless of whether shares or other assets are acquired. Cost is determined as the fair value of assets given up at the date of acquisition plus costs incidental to the acquisition.

Costs relating to the acquisition of new areas of interest are classified as either exploration and evaluation expenditure or mine properties based on the stage of development reached at the date of acquisition.

(e) 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 Statement of Cash Flow on a gross basis and the GST component of cash flows arising from investing and financing activities, which is 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.

$(f)$ Income Tax

The change for current income tax expenses is based on the profit for the year adjusted for any nonassessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognized to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

NOTE₁ SUMMARY OF ACCOUNTING POLICIES (Continued)

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

$(g)$ Cash

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

(i) cash on hand and at call deposits with banks or financial institutions, net of bank overdrafts; and
(ii) investments in money market instruments with less than 30 days to maturity.

(h) Impairment of Assets

At each reporting date, the company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the income statement.

(i) Earnings Per Share

(i) Basic Earnings Per Share Basic earnings per share is determined by dividing the loss from ordinary activities after related income tax expense by the weighted average number of ordinary shares outstanding during the financial year.
(ii) Diluted Earnings Per Share Diluted EPS is calculated as net loss attributable to members, adjusted for:
$-$ costs of servicing equity (other than dividends);
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
other discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares.

(i) Non-current Assets

Items of plant and equipment are recorded at cost, being the fair value of consideration provided plus incidental costs. This cost is written off over its expected economic life, adjusted for any salvage value, if applicable. Estimates of remaining useful lives range between 4 and 5 years.

(k) Recoverable Amount

Non-current assets are not carried at an amount greater than their recoverable amount, and where carrying values exceed this recoverable amount, assets are written down. In determining recoverable amount the expected net cash flows have not been discounted.

(l) Financial Instruments

Financial Assets: Security deposits are recognised at their fair value. Other receivables are carried at nominal amount due less any provision for doubtful debts. An estimate of doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. Sundry debtors and other receivables are non-interest bearing and have repayment terms between 30 and 90 days.

NOTE 1 SUMMARY OF ACCOUNTING POLICIES (Continued)

Financial Liabilities: Liabilities for trade creditors and other accruals are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Company. Trade creditors are normally settled on 30 day terms.

Available-for-sale Financial Assets: Available-for-sale financial assets include any financial assets not included in the above categories and are initially measured at cost being the fair value of the consideration and including acquisition charges associated with the investment. Unrealised gains and losses arising from changes in the fair value of the investment are taken directly to equity.

(m) Contributed Equity

Ordinary share capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

(n) Share-based Payments

Share-based compensation benefits are provided to directors as approved in general meeting by members.

No expense is recognised in respect of share options granted prior to 1 January 2005. The shares will be recognised if and when the options are exercised and the proceeds are received and allocated to share capital.

In respect of share options granted after 1 January 2005, the fair value is recognised as an employee benefit expense with a corresponding increase in equity. The fair value of the options is calculated at the date of grant using Black-Scholes calculation principles taking into account the terms and conditions upon which the options were granted. The expected life used in the model has been adjusted, based on management's best estimates, for the effects of non-transferability, exercise restrictions and behavioural considerations. Upon the exercise of options, the balance of the share-based payments reserve relating to those options is transferred to share capital.

The Black-Scholes calculation principles have been adopted as they are widely recognised by relevant authorities and bodies as being appropriate even though in the experience of the directors the results produced by the application of those principles often fail to reflect market value to a significant degree.

(o) Joint Ventures

Interest in joint venture operations are brought to account by including in the respective classifications, the share of individual assets employed, liabilities and expenses incurred and revenue from the sale of joint venture output. Interest in joint venture operations are brought to account by including assets and liabilities in their respective classifications.

(p) Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial period.

NOTE 2 FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS

	Previous AGAAP At 1.7.2004	Transition Effect to A- IFRS	A-IFRS at 1.7.2004
	\$	\$	\$
Reconciliation of Equity at 1 July 2004
CURRENT ASSETS
Cash and cash equivalents	4,637,371		4,637,371
Trade and other receivables	40,912		40,912
TOTAL CURRENT ASSETS	4,678,283	$\tilde{\phantom{a}}$	4,678,283
NON-CURRENT ASSETS
Plant and equipment	5,528		5,528
Mineral interests	254,640	(254, 640)
TOTAL NON-CURRENT ASSETS	260,168	(254, 640)	5,528
TOTAL ASSETS	4,938,451	(254, 640)	4,683,811
CURRENT LIABILITIES
Trade and other payables	482,346		482,346
TOTAL CURRENT LIABILITIES	482,346	ш.	482,346
TOTAL LIABILITIES	482,346	$\ddot{\phantom{a}}$	482,346
NET ASSETS	4,456,105	(254, 640)	4,201,465
EQUITY
Issued capital	4,495,166		4,495,166
Accumulated losses	(39,061)	(254, 640)	(293,701)
TOTAL EQUITY	4,456,105	(254, 640)	4,201,465

NOTE 2 FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (Continued)

	Previous AGAAP At 30.6.2005	Transition Effect to A- IFRS	AFRS at 30.6.2005
	\$	\$	\$
Reconciliation of Equity at 30 June 2005
CURRENT ASSETS
Cash and cash equivalents	3,145,016		3,145,016
Trade and other receivables	31,010		31,010
Prepayments	4,710		4,710
TOTAL CURRENT ASSETS	3,180,736	ш.	3,180,736
NON-CURRENT ASSETS
Plant and equipment	3,966		3,966
Other financial assets	71,000		71,000
TOTAL NON-CURRENT ASSETS	74,966		74,966
TOTAL ASSETS	3,255,702	ш.	3,255,702
CURRENT LIABILITIES
Trade and other payables	214,618		214,618
TOTAL CURRENT LIABILITIES	214,618		214,618
TOTAL LIABILITIES	214,618		214,618
NET ASSETS	3,041,084		3,041,084
EQUITY
Issued capital	5,126,650		5,126,650
Accumulated losses	(2,085,566)		(2,085,566)
TOTAL EQUITY	3,041,084	u.	3,041,084

NOTE 2 FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (Continued)

	Previous AGAAP	Transition Effect to A- IFRS	A-IFRS
Reconciliation of Profit or Loss for the year ended 30 June 2005	\$	\$	\$
Revenue from ordinary activities	213,344		213,344
Revenue from non-ordinary activities
Depreciation expense	(1,562)		(1,562)
Exploration and tenement expenses written off	(1,900,401)		(1,900,401)
Other expenses from ordinary activities	(357, 886)		(357, 886)
Loss from ordinary activities before income tax expense	(2,046,505)		(2,046,505)
Income tax expense relating to ordinary activities
Loss from ordinary activities after related income tax expense	(2,046,505)		(2,046,505)
Net Loss attributable to members of Meteoric Resources NL	(2,046,505)		(2,046,505)

Notes to the reconciliations of equity and profit and loss at 1 July 2004, 30 June 2005 and 30 June 2006

		30.6.2006	30.6.2005	1.7.2004
		\$	\$	\$
(a)	Retained earnings comprise:
	Impairment loss on mineral interests			(254, 640)
	An impairment loss amounting to \$1,900,401 has been
	recognised under the Australian equivalents to IFRS
	relating to mineral tenements written down to its
	recoverable amount.
	This has been recognised in the income statement for
	the year ended 30 June 2005

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2006 sa mga kalendari ng Kabupatèn Bandari

OPERATING LOSS NOTE 3	2006 $($ \$)	2005 (5)
Operating loss before income tax includes:
Revenue from ordinary activities
Dividends received	857
Interest received	145,551	213,344
	146,408	213,344

Expenses
Depreciation	3,196	1,562

Exploration costs written-off	1,390,166	1,900,401

Occupancy costs
Filing and ASX Fees	25,855	9,108
Corporate and management	704,593	180,449
Other expenses from ordinary activities	136,999	168,329
	867,447	357,886

NOTE 4 INCOME TAX	2006 $($ \$)	2005 $($ \$)
The amount of income tax provided for in the accounts differs from the amount prima facie payable on the operating loss. The difference is reconciled as follows:
Loss from ordinary activities before income
tax	2,114,401	2,046,505
Prima facie tax benefit attributable to loss from ordinary activities before income tax at 30%
	634,320	613,951
Less: Tax effect of Non-allowable items
- Share based payments	(129, 810)
- Other	(16,029)	(291)
Tax losses not brought to account as future
income tax benefit	(488,481)	(613, 660)
Income tax attributable to operating loss

Unbooked future income tax benefits

The Company has accumulated tax losses of \$3,758,279.

The potential future income tax benefit of these losses (\$1,127,484) will only be realised if:

(i) the Company derives future assessable income of a nature and of an amount sufficient to enable the benefit from the losses and deductions to be released:
(ii) the Company continues to comply with the conditions for deductibility imposed by the law; and
(iii) no changes in tax legislation adversely affect the Company in realising the benefit from the deductions for the losses.

NOTE₅ DIRECTORS AND EXECUTIVES REMUNERATION AND RETIREMENT BENEFITS

$(a)$ The names of directors who have held office during the financial year are -

Peter Thomas Roger Thomson George Sakalidis

Retirement and Superannuation Payments - $(b)$

NOTE5 DIRECTORS AND EXECUTIVES REMUNERATION AND RETIREMENT BENEFITS (Continued..)

$(c)$ Non-executive directors -

$(d)$ Directors fees -

The current base remuneration has been effective from 1 July 2005.

Retirement allowances for directors - $(e)$

The company does not have a policy for the payment of retirement allowances for non-executive directors.

$(f)$ Executive pay -

The executive pay and reward framework has three components:

Base pay;

Incentive shares:

Other remuneration such as superannuation.

The combination of these comprise the executives' total remuneration.

Base Pay -

Structured as a total employment cost package which may be delivered as a mix of cash and prescribed non-financial benefits at the executive's discretion.

The executives have been offered a competitive base pay that comprises the fixed component of pay and rewards. Base pay for the senior executives are reviewed at the expiry of the term of employment to ensure the executives' pays are competitive with the market.

There are no guaranteed base pay increases fixed in the senior executives' contracts.

DIRECTORS AND EXECUTIVES REMUNERATION AND RETIREMENT BENEFITS NOTE 5 (Continued..)

The emoluments of each director and each executive officer for the financial period are as follows:

Executive and Position	Primary	Post Employment	Equity	Total
	Salary & Salary Equivalents	Superannuation	Options $\left(1\right)$
Peter Thomas Non-Executive Chairman	\$30,000	100% of salary & salary equivalents by way of salary sacrifice	\$144,240	\$174,240
Roger Thomson Executive Managing Director	\$139,555	\$12,560	\$144,240	\$296,355
George Sakalidis Executive Director	\$110,115	\$9,910	\$144,240	\$264,265
Rudolf Tieleman - Company Secretary - Resigned 16.6.2006	\$35,249			\$35,249
Malcolm Smartt - Company Secretary - appointed 16.6.2006
Total	\$314,919	\$22,470	\$432,720	\$770,109

Note $(1)$

Employment agreements -

Remuneration and other terms of employment have been agreed with RM Thomson and G Sakalidis. These are effective from 1 July 2005 and major provisions of the agreement relating to remuneration are set out as follows:

	Term of agreements	Base remuneration	Review periods	Increase
RM Thomson	3 years from 1 July 2005	\$109.69 per hour	Annually on 1 July
G Sakalidis	3 years from 1 July 2005	$$100.92$ per hour to 31.5.2006 \$109.69 per hour from 1.6.2006	Annually on 1 July	Discretionary by Board

NOTE5 DIRECTORS AND EXECUTIVES REMUNERATION AND RETIREMENT BENEFITS (Continued..)

Option Holdings -

The number of options over partly-paid contributing shares in the Company held during the financial year by each director (or their personally related entities) are set out below:

Name	Balance at	Granted	Exercised	Other	Balance at	Vested
	the start of	during the	during the	changes	the end of	exercisable
	the year	vear	vear	during the	the year	at the end
				vear		of the vear
Peter S Thomas	$\overline{\phantom{0}}$	800,000	$\overline{\phantom{a}}$		800,000	800,000
Roger M Thomson	$\overline{\phantom{0}}$	800,000	٠	$\overline{\phantom{a}}$	800,000	800,000
George Sakalidis	-	800.000	٠	$\overline{\phantom{a}}$	800.000	800.000

These are the only options granted, vested, exercised or sold during the year.

Shareholdings-

The number of shares in the company held during the financial year by each director (or their respective personally-related entities), are set out below:

Name	Balance at the start	Shares movements	Balance at the end
	of the year		of the year
Peter S Thomas
Ordinary shares	322,000	100,000	422,000
Contributing shares	33,000		33,000
Roger M Thomson
Ordinary shares	315,000		315,000
Contributing shares	2,022,500		2,022,500
George Sakalidis
Ordinary shares	1,451,762	393,000	1,844,762
Contributing shares	2,972,386	29,500	3,001,886

Related Party Transactions -

Information on related party transactions are disclosed in Note 22.

AUDITORS REMUNERATION NOTE 6	2006 (3)	2005 (3)
Amounts received or due and receivable by the auditors of the Company for:
Auditing and reviewing the financial report	13.750	10.400
Other valuation services	2.475	$\mathbf{u}$
	16.225	10.400

EARNINGS PER SHARE NOTE ₇		2006 $($ \$)	2005 (5)
calculation of basic and diluted earnings per share	The following reflects the income and share data used in the
Net (loss)		(2,114,401)	(2,046,505)
Adjustments:
Nil
	Earnings used in calculating basic and diluted earnings per
share		(2,114,401)	(2,046,505)
Weighted average number of ordinary shares used in
calculating basic earnings per share		41,845,453	40.784.320
Effect of dilutive securities:
Contributing shares
	Adjusted weighted average number of ordinary shares used in
calculating diluted earnings per share		41,845,453	40.784.320

The Company had 15,516,934 (2005 - 14,711,721) partly-paid contributing shares and 2,400,000 options (2005 - Nil) over partly-paid contributing shares on issue at balance date. These shares and options are considered to be potential ordinary shares. However, they are not considered to be dilutive in nature as their exercise will not result in earnings per share being diluted. The contributing shares and options have not been included in the determination of diluted earnings per share.

There have been no significant conversions to, calls of, or subscriptions for ordinary shares or issues of potential ordinary shares since the reporting date and before the completion of this financial report.

NOTE ₈	CASH ASSETS	2006 (5)	2005 (5)
Cash at bank		578,272	115,106
Deposits at call		1,531,287	3,029,910
		2,109,559	3,145,016
NOTE ₉	CURRENT RECEIVABLES	2006	2005
		$(\mathbb{S})$	(5)
Other receivables		33,774	31,010
NOTE ₁₀	OTHER CURRENT ASSETS	2006	2005
		$($ \$)	(5)
Prepayments		1,813	4,710
NOTE 11	OTHER FINANCIAL ASSETS	2006 $($ \$)	2005 $($ \$)
Non-Current
	Securities in unlisted corporations	2,000
	Securities in listed corporations	291,990	63,000
Security deposits		16,100	8,000
		310,090	71,000

Under AASB 139, available for sale financial assets are revalued to fair value at reporting date. All adjustments resulting from changes in fair value are taken directly to equity. If AASB 1039 had been applied retrospectively, financial assets reflected at cost in the comparative year would have been adjusted to fair value at 30 June 2005. This would have resulted in an increase carrying value attributable to financial assets at 30 June 2005 and a corresponding increase in reserves at that date.

NOTE ₁₂ PLANT AND EQUIPMENT	2006 (\$)	2005 $($ \$ $)$
Plant and equipment	68,692	5,598
Less: Accumulated depreciation	(4,828)	(1,632)
	63,864	3,966
Reconciliations of the carrying amounts of plant and equipment at the beginning and end of the current and previous financial years.
Plant and Equipment
Carrying amount at beginning of year	3,966	5,528
Additions	63,094
Disposals
Depreciation expense	(3,196)	(1,562)
Total plant and equipment at end of year	63,864	3,966

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2006 Maria Alemania (h. 1878).

MINERAL INTERESTS NOTE 13	2006 (5)	2005 $($ \$)
Exploration Expenditure
Areas of interest in exploration and evaluation phases
Opening balance		254,640
Net Expenditure incurred during the year	1,390,166	1,645,761
Tenements disposed of during the year
Expenditure written off	(1,390,166)	(1,900,401)
Closing balance

CURRENT PAYABLES NOTE 14	2006	2005
	$(\$)$	$($ \$)
Trade creditors and accruals	127,554	214,618

NOTE ₁₅ ISSUED CAPITAL	2006 (5)	2005 $($ \$)
Contributed Equity - Ordinary Shares
At the beginning of reporting period 40,872,248 (2005:36,126,567)	5,126,650	4,495,166
Receipt from shares issued prior to 30 June 2005 at \$0.20 on IPO (2005: 4,612,500)	10,000	922,500
Issue of 123,453 shares at \$0.20 pursuant to payment for contributory shares (2005: 133,181)	24,691	26,636
Issue of 2,786,000 shares at \$0.33 (2005: Nil)	919,380
Share issuance costs	(44,048)	(317, 652)
Closing balance: 43,781,701 (2005: 40,872,248)	6,036,673	5,126,650
Contributed Equity - Contributing Shares
At the beginning of reporting period 14,711,721 (2005: Nil)
Issue of 928,666 partly-paid contributing shares at \$0.05 each	46,433
Conversion to 123,453 fully paid ordinary shares upon payment of \$0.20 each (2005: 133,181)
Closing balance: 15,516,934 (2005: 14,711,721)	46,433
Total Equity	6,083,106	5,126,650

As at 30 June 2006, the Company had 2,400,000 options over un-issued partly-paid contributing shares in the Company (2005 - Nil);

Terms and condition of contributed equity

Ordinary Fully Paid Shares

Ordinary shares have the right to receive dividends as declared and, in the event of winding up of the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of, and amounts paid up on, shares held.

On a show of hands, every holder of fully paid ordinary shares present at a meeting in person or by proxy, is entitled to one vote and upon a poll, each member present in person or by proxy or by attorney or duly authorised representative shall have one vote for each fully paid ordinary share.

Contributing Shares

Contributing shares require a further payment of \$0.20 to become fully paid.

On a show of hands, every holder of contributing shares present at a meeting in person or by proxy, is entitled to one vote and upon a poll, each member present in person or by proxy or by attorney or duly authorised representative shall have a fraction of a vote for each partly paid contributing share held. The fraction must be equivalent to the proportion which any amount paid (not credited) is of the total amounts paid (if any) and payable (excluding amounts credited). Any amounts paid in advance of a call are ignored when calculating these fractional voting rights.

NOTE 16 CASH FLOW INFORMATION	2006 (5)	2005 (5)
Reconciliation of operating loss after income tax with funds used in operating activities
Operating loss after income tax	2,114,402	2,046,505
Depreciation and amortisation	(3,196)	(1,562)
Exploration expenditure written off	(1,390,166)	(1,900,401)
Share based payments	(432,720)
Changes in operating assets and liabilities:
(Increase) / Decrease in receivables	(2,764)	9,902
(Increase) / Decrease in prepayments	2,897	(4,710)
Increase / (Decrease) in payables	17,270	40,908
	305,723	190.642

NOTE 17 TENEMENT EXPENDITURES AND LEASING COMMITMENTS

The Company has entered into certain obligations to perform minimum exploration work on tenements held or joint ventured into. These obligations vary from time to time in accordance with contracts signed. Tenement rentals and minimum expenditure obligations which may be varied or deferred on application, are expected to be met in the normal course of business. The minimum statutory expenditure requirements on the granted tenements for the next twelve months amounts to \$704,000.

NOTE₁₈ SEGMENTS

The Company operates only in one business, being the exploration for and development of minerals. Geographically, the Company's activities are conducted mainly within Western Australia and the Northern Territory. Exploration expenditure incurred amounted to \$1,117,621 in respect of Western Australia tenements and \$272,545 in respect of Northern Territory tenements.

NOTE₁₉ JOINT VENTURES

The Company has interests in the following exploration unincorporated joint ventures:

Name of Project	$\frac{0}{0}$	Carrying
	Interest	Amount
Image Resources NL	100% with a 1% royalty payable to Image
Centralian Minerals Ltd (Subject to Deed of Company Arrangement) (Previously Giants Reef NL)	Earned 51%, right to increase earning to 70%

NOTE 20 SUPERANNUATION COMMITMENTS

Superannuation contributions are made to at least satisfy the statutory Superannuation Contribution Guarantee Act and in satisfaction of any salary sacrifice requests. All contributions were made to accumulation type funds selected by the employee and accordingly actuarial assessments were not required.

Mr Thomas' directors fees were contributed in their entirety, by way of salary sacrifice, to his superannuation fund.

EVENTS SUBSEQUENT TO REPORTING DATE NOTE 21

No material matters have occurred subsequent to the end of the financial year which require reporting on other than the matters referred to in the directors' report or as reported to ASX.

NOTE 22 RELATED PARTY TRANSACTIONS

Other transactions with directors and director related entities $(a)$

Peter S Thomas provided legal services to the Company during the financial period on terms and conditions which were more favourable to the Company than Thomas otherwise provides to clients generally. He was paid \$5,984 (Net of GST) for legal services not connected with the management of the Company.

Total amounts owing to directors or their associated entities (including GST) at 30 June 2006 was \$6,582 (2005: \$39,099).

Image Resources NL was an associated entity as at balance date. $(b)$

Image subscribed for one share in Meteoric Resources NL on incorporation. That one share was subdivided into 4,200,000 ordinary shares and subject to escrowed holding restrictions until 16 July 2006. Meteoric entered into an Administration Services Agreement with Image whereby Image agreed to provide various administrative services for a two year period at \$5,400 per month commencing 1 July 2004. This agreement has expired but continues to be honoured on a monthly basis at the same monthly payment until such time as a new agreement is entered into.

Meteoric also entered into a Joint Venture Agreement (Agreement) with Image whereby Image agreed to farm out various interests in various of it's tenements. Meteoric exercised its' option (under the Agreement) to acquire 100% of Image's interest in those tenements in exchange for paying Image a royalty of 1% on production from the tenements.

NOTE₂₃ CONTINGENT LIABILITIES

Native Title

The Company has been notified of a number of native title claims impacting its tenements.

The Company is not in a position to assess the likely effect of any native title claim impacting the Company.

The existence of native title and the policy of the West Australian state government in particular represent, as a general proposition, a serious threat to explorers and miners, not only in terms of delaying the grant of tenements and the progression of exploration development and mining operations, but also in terms of costs arising consequent upon dealing with aboriginal interest groups, claims for native title and the like.

NOTE 24 FINANCIAL INSTRUMENTS DISCLOSURE

(a) Interest Rate Risk

The Company's exposure to interest rate risk, which is the risk that a financial instruments value will fluctuate as a result of changes in market rates and the effective weighted average interest rates on classes of financial assets and liability, is as follows:

2006	Floating Interest Rate	Non Interest Bearing	Total
Financial Assets
Cash Assets	2,109,559		2,109,559
Other Receivables		33,774	33,774
Held for sale investments	310,090		310,090
Total Financial Assets	2,,419,649	33,774	2,453,423
Weighted Average Interest Rate	5.74%
Financial Liabilities
Payables		127,554	127,554

2005	Floating Interest Rate	Non Interest Bearing	Total
Financial Assets
Cash Assets	3,129,580	15,436	3,145,016
Other Receivables		31,010	31,010
Held for sale investments	71,000		71,000
Total Financial Assets	3,200,580	46,446	3,247,026
Weighted Average Interest Rate Financial Liabilities	5.60%

(b) Credit Risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the carrying amount, net of any provisions for doubtful debts, as disclosed in the balance sheet and notes to the financial statements.

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

(c) Net Fair Values

For assets and liabilities, the net fair value approximates their carrying value except for other financial assets as disclosed in Note 11.

No financial assets and financial liabilities are readily traded on organised markets in standardised form other than listed investments.

DIRECTORS' DECLARATION

The directors of the Company declare that:

the financial statements and notes as set out on pages 26 to 50 are in accordance with the Corporations 1. Act 2001 and:
(a) comply with Accounting Standards and the Corporations Act 2001; and
(b) give a true and fair view of the financial position as at 30 June 2006 and performance for the year ended on that date of the Company.
$\overline{2}$ . the Chief Executive Officer has declared that:
(a) the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001;
(b) the financial statements and the notes for the financial year comply with Accounting Standards; and
(c) the financial statements and notes for the financial year give a true and fair view;
in the directors' opinion, there are reasonable grounds to believe that the Company will be able to pay 3. its debts as and when they become due and payable.

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

George Sakalidis DIRECTOR

PERTH

Dated this 29th day of September 2006.

Scope

The financial report and directors' responsibility

The financial report comprises the balance sheet, income statement, statement of changes in equity, cash flow statement, accompanying notes to the financial statements, and the directors' declaration for Meteoric Resources NL ("the company") for the year ended 30 June 2006 as set out on pages 26 to 51.

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

Audit approach

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

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

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

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

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

We performed procedures to assess whether the substance of business transactions was accurately reflected in the financial report. These and our other procedures did not include consideration or judgment of the appropriateness or reasonableness of the business plans or strategies adopted by the directors and management of the company.

Independence

We are independent of the company, and have met the independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

Audit opinion

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

$(a)$ the Corporations Act 2001, including:
giving a true and fair view of the financial position of Meteoric Resources NL at 30 June 2006 and of its $(i)$ performance for the year ended on that date; and
$(ii)$ complying with Accounting Standards in Australia and the Corporations Regulations 2001; and
$(b)$ other mandatory financial reporting requirements in Australia.

Somes & Cooke
	Chartered Accountants

K. C. Somes - Partner Perth, Date: 29 September 2006

TENEMENT SCHEDULE

Tenement	Nature of Interest	Project	Equity $(\%)$
E16/0307	Granted	Ularing	100%
E16/0307	Granted	Ularing	100%
E28/1328	Granted	Junction Lake	100%
E28/1328	Granted	Junction Lake	100%
E51/1111	Granted	Ruby Well3	100%
E51/1111	Granted	Ruby Well3	100%
E52/1453	Granted	Wilthorpe	100%
E52/1453	Granted	Wilthorpe	100%
E52/1851	Granted	Robinson Range	100%
E59/0879	Granted	Jarbora Hill	100%
E59/0879	Granted	Jarbora Hill	100%
E77/0914	Granted	Bullfinch	100%
E77/0914	Granted	Bullfinch	100%
EL 10370	Granted	Barkly	51%
EL 23764	Granted	Warrego North	100%
EL 23764	Granted	Warrego North	100%
EL 24138	Granted	Warrego North	100%
EL 24138	Granted	Warrego North	100%
EL 24255	Application	Warrego North	100%
EL 24255	Application	Warrego North	100%
EL 24257	Application	Warrego North	100%
EL 24257	Application	Warrego North	100%
EL 24362	Granted	Warrego North	100%
EL 24363	Application	Warrego North	100%
M52/0807	Application	Witthorpe	100%
M52/0807	Application	Witthorpe	100%
M52/0808	Application	Withorpe	100%
M52/0808	Application	Witthorpe	100%
M52/0836	Application	Witthorpe	100%
M52/0836	Application	Witthorpe	100%
M59/0646	Application	Jarbora Hill	100%
M59/0646	Application	Jarbora Hill	100%
M77/1057	Application	Bullfinch	100%
M77/1057 MLC 57	Application	Bullfinch	100% 51%
MLC 217	Granted Granted	Barkly Barkly	51%
MLC 218	Granted	Barkly	51%
MLC 219	Granted	Barkly	51%
MLC 220	Granted	Barkly	51%
MLC 221	Granted	Barkly	51%
MLC 222	Granted	Barkly	51%
MLC 223	Granted	Barkly	51%
MLC 224	Granted	Barkly	51%
P77/3261	Granted	Bullfinch	100%
P77/3261	Granted	Bullfinch	100%

The following information was applicable as at 27 September 2006.

Shareholding:

The number of shareholdings held in less than marketable parcels is 799.

The names of the substantial shareholders listed in the Company's register as at 27 September 2006:

Shareholder Name:	Number:	$\frac{6}{6}$
Image Resources NL	4.970.000	10.65

Twenty largest fully paid shareholders:

	Shareholder Name	Number of Shares	% of Issued Share Capital
1.	Image Resources NL	4,970,000	11.35
2.	Cairnglen Investments Pty Ltd	1,749,712	4.00
3.	George Sakalidis	1,408,751	3.21
4.	Bond Street Custodians Ltd (MBW 143750)	1,249,032	2.85
5.	Gilpin Park Pty Ltd	1,096,667	2.50
6.	Sancoast Pty Ltd	900,000	2.05
7.	Lowline Holdings Pty Ltd	810,000	1.85
8.	Robert John Thomas	805,000	1.84
9.	Frederick Denis Ribton	699,637	1.60
10.	Ocean View Nominees Pty Ltd	671,326	1.53
11.	Michael Mandzij	600,000	1.37
12.	Barrington Dance	545,170	1.24
13.	Francis James Forster	515,000	1.18
14.	Invia Custodian Pty Ltd	453,334	1.03
15.	Dixtru Pty Ltd	450,000	1.03
16,	Peter Thomas and S Goodwin (Super Plan)	422,000	0.96
17.	Bond Street Custodians Ltd (MBW THO482)	416,651	0.95
18.	Toltec Holdings Pty Ltd	400,000	0.91
19.	Top Nominees Pty Ltd	400,000	0.91
20.	Bond Street Custodians Ltd (FCL TO0080)	342,950	0.78
	Total	18,905,230	43.19

Twenty largest contributing shareholders:

George Sakalidis 2,947,486 1. R and R Thomson (Trustee) 2. 2,022,500 Ian R Baron 3. 2,000,000 Frederick D L Ribton 861,956 4. 5. Barrington Dance 817,755 Invia Custodian Pty Ltd 680,001 6. 7. Russell Nominees Pty Ltd 500,000 8. Cairnglen Investments Pty Ltd 464,275 Michael Mandzij 9. 433,333 Robert John Thomas 200,000 10. 11. Auto Management Pty Ltd 158,625 12. Gilpin Park Pty Ltd 145,001 Bond Street Custodians 13. (MBW) 139,425 Ltd TO0080) 14. Jove Management Pty Ltd 93,439 15. Anthony John Vetter 83,000 Fobira Pty Ltd 16. 81,430 Pannin Pty Ltd 17. 66,667 Twopots Pty Ltd 18. 66,667 AWD Consultants Pty Ltd 19. 61,000 VC and JE Wheatley (A/c Super Fund) 60,000 20. Total 11,882,560	Contributing Shareholder Name	Number of Contributing Shares	% Held
			19.00
			13.04
			12.89
			5.56
			5.27
			4.38
			3.22
			2.99
			2.79
			1.29
			1.02
			0.93
			0.90
			0.60
			0.53
			0.52
			0.43
			0.43
			0.39
			0.39
			76.55

There is a total of 43,775,851 (2005: 40,872,248) fully paid ordinary shares and 15,522,784 partly paid contributing shares on issue, all (2005: only the 40,872,248 fully paid ordinary shares) of which are listed on Australian Stock Exchange Limited (ASX).

Voting Rights

The voting rights attaching to ordinary shares are governed by the Constitution. On a show of hands every person present who is a Member or representative of a member shall have one vote and on a poll, every member present in person or by proxy or by attorney or duly authorised representative shall have one vote for each fully paid share and a fraction of a vote for each partly paid share held. The fraction must be equivalent to the proportion which any amount paid (not credited) is of the total amounts paid (if any) and payable (excluding amounts credited). Any amounts paid in advance of a call are ignored when calculating these fractional voting rights.

Use of Funds

Since admission to the official lists of ASX, the Company has used its cash and assets in a form readily convertible to cash in a way that was consistent with its business objectives.

AI assistant

METEORIC RESOURCES NL — Annual Report 2006

65311_rns_2006-10-01_06c82de4-6b5f-4a77-afbf-921b95b25c42.pdf

METEORIC RESOURCES NL

ABN: 64 107 985 651

ANNUAL REPORT

FINANCIAL YEAR 2005 - 2006

CONTENTS

CORPORATE DIRECTORY

DIRECTORS

FOR INFORMATION ON THE COMPANY CONTACT

PROJECTS SUMMARY

WILTHORPE (Meteoric 90%)

Harrods Area B Drill Sections

Harrods RAB Intercepts

Harrods South RAB Intercepts

BULLFINCH (Meteoric 90%)

JARBORA HILL (Meteoric 100%)

ULARRING (Meteoric 100%)

RUBY WELL (Meteoric 60%)

BARKLY JV (Meteoric, 51% earning up to 70%)

WARREGO NORTH (Meteoric 100%)

DIRECTORS' REPORT

DIRECTORS

PRINCIPAL ACTIVITIES

RESULTS FROM OPERATIONS

DIVIDENDS

REVIEW OF OPERATIONS

EARNINGS PER SHARE

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL PERIOD

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

ENVIRONMENTAL ISSUES

INFORMATION ON DIRECTORS AND COMPANY SECRETARIES

Peter Thomas

Chairman

Roger Thomson

Managing Director

George Sakalidis

Malcolm K Smartt

Rudolf Tieleman

AUDIT COMMITTEE

NON AUDIT SERVICES

MEETINGS OF DIRECTORS

DIRECTORS AND EXECUTIVES REMUNERATION REPORT

$(a)$ The names of directors who have held office during the financial year are -

$(b)$ Retirement and Superannuation Payments

Non-executive director $(c)$

$(d)$ Directors fees

Retirement allowances for directors $(e)$

$(f)$ Executive pay

Base Pay

Note $(1)$

Employment agreements -

EMPLOYEES

CORPORATE STRUCTURE

INDEMNIFICATION & INSURANCE OF DIRECTORS AND OFFICERS

OPTIONS

GOOD GOVERNANCE AND PRACTICE RULES

CORPORATE GOVERNANCE STATEMENT

CORPORATE GOVERNANCE STATEMENT

General:

Board Composition:

The Board and Board Nominations:

Securities Trading Policy:

Directors' Remuneration and Policies:

External auditors:

Audit committee:

Managing risks:

Commitment to stakeholders & ethical standards:

Monitoring of the Board's Performance and Communication to Shareholders:

INCOME STATEMENT For the Year Ended 30 June 2006

BALANCE SHEET As at 30 June 2006

STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2006

CASH FLOW STATEMENT For the Year Ended 30 June 2006

NOTE1 SUMMARY OF ACCOUNTING POLICIES

Statement of Compliance

Basis Of Preparation

NOTE1 SUMMARY OF ACCOUNTING POLICIES (Continued)

(a) Revenue

METEORIC RESOURCES NL Annual Report 2006

NOTE₁ SUMMARY OF ACCOUNTING POLICIES

NOTE₁ SUMMARY OF ACCOUNTING POLICIES (Continued)

NOTE₁ SUMMARY OF ACCOUNTING POLICIES (Continued)

NOTE₁ SUMMARY OF ACCOUNTING POLICIES (Continued)

NOTE₅ DIRECTORS AND EXECUTIVES REMUNERATION AND RETIREMENT BENEFITS

NOTE₁₈ SEGMENTS

NOTE₁₉ JOINT VENTURES

NOTE₂₃ CONTINGENT LIABILITIES