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2007 annual report

03 Company highlights 04 Chairman’s address
08 Chief Executive Officer’s report
10 Directors’ review of operations
14 Directors’ report
20 Corporate governance statement
22 Independent audit report
24 Auditor’s independence declaration 26 Financial statements 50 Shareholder information 51 Corporate directory

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COMPANY HIGHLIGHTS

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Operational highlights

Scoping study confirmed potential of underground mining at Mt Gee, one of Australia’s largest undeveloped uranium deposits. Based on the 2006 Inferred Resource of 45.6 million tonnes averaging 680 parts per million (ppm) U3O8 :
estimated production of around 900 tonnes per annum U3O8 using atmospheric tank leaching - 13-year mine life
72-hole RC drilling program at Mt Gee identifies significant mineralisation in both eastern and western areas.
Six month program of data acquisition launched in preparation for pre-feasibility study in 2008
Joint Venture agreements executed with UraniumSA Ltd over the Kingoonya Palaeochannel System, central Gawler Craton.
September 2007 resource estimate of 42.8 million tonnes (Indicated 3.1 million tonnes and Inferred 39.7 million tonnes) averaging 629ppm U3O8.

Corporate highlights

Appointment of new CEO, Mr Stuart Hall, in April 2007 to drive Mt Gee project through to production.
New major shareholders and new directors from the Talbot Group and CITIC Australia, offering significant resource industry expertise and access to financial resources.
Participation via 7% stake in successful IPO of partner UraniumSA Ltd.
New offices opened in Adelaide and new strategy mapped out in preparation for Marathon’s next stage of growth.
Joint Venture agreement with Primary Resources Ltd over Warburton project, Western Australia.

CHAIRMAN’S ADDRESS

Dear Shareholders

I am pleased to report to you on the significant achievements made by Marathon Resources Limited (Marathon) during the 2006/07 financial year.

The 2007 year witnessed strong growth in the demand for uranium and some delays in production by overseas producers which resulted in an enormous increase in the spot price for the product. Future spot prices for U3O8 may be substantially lower, although few sales occur at these prices. Marathon can expect to benefit from stable long term prices.

The market for listed stocks in the industry reflected speculative attention and sustainable value will only be achieved by those companies prepared to manage their opportunities carefully. Marathon with its investment in comprehensive and planned exploration and development programs has succeeded in doing that for its shareholders in 2007.

Globally, there are 437 nuclear reactors generating electricity, with another 182 planned or proposed in 23 countries that have chosen to include nuclear power to meet their energy requirements.

Marathon believes it can and should participate in the world-wide growth in the uranium market on the basis that our exports have adequate safety and storage of waste safeguards, that our products are used for proper purposes in power generation, and that a responsible global approach to the whole uranium industry is maintained.

Highlights

Marathon defined a major uranium source in the Paralana Mineral System last year in its wholly owned tenement EL 3258 and conducted an extensive drilling and development program during 2006/2007;
Marathon raised a further $7.15 million via a placement to each of Talbot Group Holdings Pty Ltd and CITIC Australia Pty Ltd in November 2006 of 3.25 million ordinary shares at $1.10 for each share;
Marathon received a takeover offer from Buttermere Pty Ltd, an indirect wholly owned subsidiary of Crosby Capital Partners Inc , which was vigorously defended. The initial offer was for the whole of the issued shares of the company at $0.68 per share, subsequently increased on 13 March 2007 to $3.52 per share . The offer lapsed on 4 July 2007;
The Board of the company was strengthened by the appointment of Mr. Denis Wood and Mr. Chen Zeng as directors in November 2006 and December 2006 respectively:
Mr. Stuart Hall was appointed Chief Executive Officer of the company on 15 April 2007;
Marathon undertook a major drilling program at the Mt Gee deposit in the Paralana Mineral System and commenced the permitting and approval process towards mining development.

The Paralana Mineral System – EL 3258

The major asset of Marathon is the Mt Gee deposit located in the Paralana Mineral System in the North Flinders region of South Australia. Your company committed a substantial part of the funds raised during the year to the continued development and analysis of the resource. On 17 September 2007, the company released a revised resource estimate as follows:

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Resource Category Resources Grade Tonnes
Tonnes U3O8 U3O8
Indicated 3.1 Mt 717 ppm 2.2 Kt
Inferred 39.7 Mt 622 ppm 24.7 Kt
Total 42.8 Mt 629 ppm 26.9 Kt
at 300PPM cut-off
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Whilst there has been some downgrading of the resource from the August 2006 estimate, the resource is very large scale and remains open, justifying the additional investment your Board is making to extend the drilling and development program. The independent analysis determined that approximately 40% of the resource area required further drilling and your Board is confident that it continues to represent excellent resource potential.

Other Tenements

Marathon undertook a range of exploration activities on its other tenements and entered into two new joint ventures during 2006/07. A full description of those activities is contained in the Directors’ Review of Operations.

Marathon secured a 7% interest in UraniumSA Limited as consideration for entering the joint venture.
Marathon was granted tenement EL3582 which hosted the former Wild Dog uranium mine where the company wished to conduct research to understand

the geology and mineralisation processes in uranium deposits in the state and did not intend to use the area for mining purposes.

The company relinquished the lease to PIRSA on the understanding that research results would be available to us and that no mining would take place.

Marathon has secured a joint venture with Primary Resources Limited to spend an initial $850,000 out of $2.35 million to earn a 70% interest in the Warburton project in Western Australia.

Crosby Takeover

On 15 August 2006 your company received an unsolicited offer from Buttermere Australia Pty Limited, an indirect wholly owned subsidiary of Crosby Capital Partners Inc. for the whole of the issued capital of the company. Your Directors recommended to shareholders that the offer, at a price of 68 cents per share, should be rejected as it:

was totally inadequate, opportunistic and did not reflect Marathon’s achievements;

Board of Directors

The company appointed Mr Denis Wood and Mr Chen Zeng as Non-Executive Directors in November 2006 and December 2006 respectively. These appointments strengthened the Board by bringing in their considerable experience in the mining industry.

Chief Executive Officer

Marathon appointed Mr. Stuart Hall as Chief Executive Officer on 15 April 2007. His experience is testament to his thoroughness and determination – qualities which are ideally suited to the Mt. Gee development.

Future Plans

The Marathon shareholders heard from the Directors on many occasions during the year as we defended the takeover offer and we consistently advised you that the path we had chosen, especially for the development of Mt Gee, was the right one to realize the potential of the resource. In every way we have fulfilled our objectives moving the company from a junior explorer to a company with sufficient resources capable of attracting major miners.

did not reflect Marathon’s potential;
was well below the volume weighted average market price of Marathon Shares for the period 1 January 2006 to 5 July 2006 (the date immediately before the Offer was announced); and
was highly conditional and uncertain.

The Bidder extended the offer six times from 15 August 2006 without any change in conditions including the price per share until 13 March 2007 when the price was increased to $3.52 per share. No other conditions were changed. Your Directors unanimously recommended that the increased offer be rejected for the same reasons outlined in the Target Statement on 8 September 2006.

The offer was extended again for the seventh time on 26 April 2007 and allowed to lapse on 4 July 2007.

The company will continue exploration drilling to increase confidence in the resource. There will be further metallurgical test work and geotechnical design in the period to December 2007, with accompanying environmental and land use negotiation while a preliminary mine plan is reviewed. The consultation process is outlined in the CEO’s report.

Marathon plans to tender for the project management of the pre-feasibility study and over the next six months the company will be assessing the major risks, preparing an Environmental Impact Statement (EIS) and moving to select the single preferred project configuration with its consultants. By June 2008 we aim to have the mining plan and technical, metallurgy and engineering issues identified in preparation for the next phase.

Your company continued with the planned drilling program at Mt Gee and exploration work on other tenements during this period. Your Board considered that the actions taken were totally appropriate and despite the distraction and the cost of defending the takeover, the Directors believe the outcome achieved was in the best interests of shareholders.

CHAIRMAN’S ADDRESS

Conclusion

This year has seen the company establish solid fundamentals for the delivery of plans to take Marathon from exploration to mine development. I thank the management team – new and old - for their outstanding contributions and I am confident we have persevered with diligence and conviction. Despite the distractions, everyone has remained focused and I compliment them all. The year ahead will need similar focus and determination as the potential for Marathon unfolds.

I would like to pay tribute to retiring founding directors Bill Latimer and Stuart Appleyard who both showed faith in the Marathon vision and played integral parts in establishing the subsidiary which holds the Mt Gee tenement.

I look forward to another successful and challenging year.

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Peter L Williams CHAIRMAN

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06
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Australia is home to almost 40% of the world’s low cost uranium reserves.

CHIEF EXECUTIVE OFFICER’S REPORT

Marathon floated on the Australian Stock Exchange in March 2005 with a broad strategy to increase shareholder value through successful exploration for hard rock deposits of uranium, nonferrous and precious metals of sufficient grade and size to allow long term mining.

I am pleased to say that during the financial year to 30 June 2007 this strategy proved successful with the identification of a significant resource at Mt Gee in South Australia’s North Flinders Ranges. This led to the share price surging from $0.53 on 30 June 2006 to $6.75 a year later.

In large part this success has been due to the perseverance and visionary leadership of the founding directors and management team, especially my predecessor as CEO, John Santich, and fellow director Vic Bogacz. I would like to personally thank them for their contribution.

Success has also brought with it a transition for Marathon from an exploration to a development company. The board has asked me to progress a strategy as a first choice developer of uranium projects, principally in South Australia, but also elsewhere as opportunities present.

This change in emphasis has brought with it some superficial changes – a new logo and new head office - but also, and much more significantly, a renewed focus on the components of our strategy which relate to our social ‘licence to operate’.

In the case of Marathon, this term is especially relevant as we are proposing to develop a world class uranium mine and processing plant in close proximity to a very scenic and environmentally sensitive area in the Flinders Ranges of South Australia.

We are confident in our ability to develop and operate the Mt Gee project in a safe and environmentally benign manner with careful consideration of the social, cultural and financial impact on local stakeholders.

Our vision is to make the operation a strong positive influence on the local community. We have adopted a four-pronged approach to ensure that this occurs:

1. Community

The principles of our approach to the community are:

Engagement
Openness
Honesty
Acknowledgement of alternative views
Contribution to the community
Earned respect

We believe that it is vital that the local community hear first-hand from Marathon about our plans and our progress. It is equally important that people have an open and transparent mechanism to air any concerns.

For this reason we have established the North Flinders Community Consultative Committee. After initial stakeholder discussions this committee was formed in August 2007 under the chairmanship of the Honourable Neil Andrew, former Federal Speaker of the House of Representatives.

Regular meetings will be held in the region of the proposed Mt Gee mine. These meetings will be open to the public and minutes will be published.

We hope that the widest possible cross-section of the local population will engage with their representative to ensure that their voice is heard and concerns addressed.

2. Environment

The principles of our approach to the environment are:

To strive for best practice
To be proactive in planning
To stay ahead of community standards

As the proponents for the development of a uranium mine, we recognise that the community and the Federal and State Governments expect Marathon to consistently achieve the highest levels of environmental excellence.

Accordingly, our approach to environmental issues is reflected as a priority in our corporate values, in our recruitment and in our selection of consultants and contractors.

Marathon has offered to prepare a full Environmental Impact Statement of Mt Gee and to allow full public scrutiny of this document. This will lay the groundwork in establishing our environmental credentials and ensuring the highest standards are maintained throughout project development.

3. Safety

The principles of our approach to safety are:

To build on the existing culture of self-reliance.
To lift safety awareness.
To develop practical, effective policies, processes and procedures.

The well-being of our staff, contractors, visitors and the surrounding community is of paramount importance to Marathon.

Accordingly, safety has been emphasised in our corporate values and a plan developed to implement a full Health, Safety and Environmental policy framework. This will include operating standards and procedures as well as the appropriate behavioural training.

4. People

The principles of our approach to people are:

Technical excellence and experience.
To build a team of like-minded people.
To ‘Walk the talk’.
To develop suitable induction and training for our contractors and new staff.

Marathon will successfully implement our strategy with the full engagement of our staff. We intend to provide them with the appropriate training and tools to inculcate a culture of excellence in community liaison and environmental and safety standards.

Mt Gee

In terms of progress at Mt Gee during the year:

We released the results of a Scoping Study into the development of a mine and processing plant at Mt Gee. The report was produced by Coffey Mining Pty Ltd (“Coffey”) (a subsidiary Coffey International Pty Ltd);

The study points to underground mining as the best solution from both an economic and environmental standpoint, with a processing plant outside the area of environmental and social significance at Mt Gee.

Based on the August 2006 Inferred Resource of 45.6 million tonnes averaging 685ppm uranium oxide (U3O8) (at a cut-off of 300ppm U3O8), Coffey assessed:

An operation processing approximately 1.5 million tonnes per annum (tpa) at 760 ppm U3O8..
Production of about 900 tpa of U3O8 using conventional atmospheric tank leaching (or slightly less using heap leaching).

In addition, Coffey have recommended investigation of several other processing options (apart from atmospheric tank leaching) in the pre-feasibility study due to start early in 2008;

We initiated a programme of RC drilling at Mt Gee from November 2006 to March 2007. This comprised a total of 72 holes or over 15,000 metres of drilling. Assay results were progressively released over subsequent months;
Following completion of that drilling, SMG Consultants produced a revised resource estimate in September 2007 of 42.8 million tonnes (Indicated 3.1 million tonnes and Inferred 39.7 million tonnes) of mineralisation averaging 629ppm for 26,900 tonnes contained U3O8 (cut-off grade 300ppm).

While a decrease compared with the August 2006 resource estimate, the area to which the revised estimate related overlapped with only 60 per cent of the previous estimate area. The reduction in the estimate area was due to a revision to the underlying resource model, with the remaining 40 per cent representing excellent exploration potential. Marathon will continue to improve understanding of the resource based on further drilling, while developing an optimum plan to upgrade a significant portion of the Inferred Resource to Indicated Resource status.

A six-month program of data acquisition was launched in preparation for a pre-feasibility study in 2008.

The Mt Gee project has excellent exploration potential, and with good prospects for upgrades and additions to the current resource figure Marathon is confident of developing the project into one of Australia’s largest uranium mines for the benefit of shareholders and the community.

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Stuart Hall CHIEF EXECUTIVE OFFICER

A mine life of 13 years.

I should emphasise that additional metallurgical testing needs to be completed and further geotechnical data accumulated before accurate processing and mining conclusions can be reached.

DIRECTORS’ REVIEW OF OPERATIONS

Mt Gee (U) EL3258

Marathon completed a major reverse circulation (RC) drilling program at the Mt Gee project together with a scoping study.

The drilling program identified numerous massive width and high grade intersections, while the scoping study reinforced the project’s mining potential.

The RC program consisted of 72 drill holes for 15,251m. The maximum depth was 412m.

Some of the feature drilling results include:

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RC06MN014 24-42m 18m @ 0.08% U3O8
RC06MN016 116-138m 22m @ 0.11% U3O8
RC06MN017 111-127m 16m @ 0.18% U3O8
including 113-118m 5m @ 0.41% U3O8
RC06MN017 150-171m 21m @ 0.11% U3O8
RC06MN019 46-90m 44m @ 0.08% U3O8
RC06MN020 74-100m 26m @ 0.07% U3O8
RC06MN021 170-182m 12m @ 0.14% U3O8
RC06MN022 172-208m 36m @ 0.10% U3O8
RC06MN024 105-129m 24m @ 0.07% U3O8
RC06MN025 106-180m 74m @ 0.08% U3O8
including 172-180m 8m @ 0.11% U3O8
RC06MN029 115-149m 34m @ 0.08% U3O8
RC07MN031 21-37m 16m @ 0.07% U3O8
RC07MN032 8-22m 14m @ 0.08% U3O8
RC07MN038 190-206m 16m @ 0.11% U3O8
RC07MN039 151 to 163m 12m @ 0.09% U3O8
167 to 208m 41m @ 0.11% U3O8
RC07MN041 38 to 41m 3m @ 0.35% U3O8
51 to 68m 17m @ 0.08% U3O8
including 38 to 39m 1m @ 0.89% U3O8
RC07MN045 175 to 190m 15m @ 0.06% U3O8
RC07MN047 71 to 83m 12m @ 0.11% U3O8
RC07MN048 149 to 165m 16m @ 0.08% U3O8
RC07MN050 132 to 160m 28m @ 0.08% U3O8
168 to 196m 28m @ 0.11% U3O8
RC07MN052 116 to 126m 10m @ 0.09% U3O8
160 to 176m 16m @ 0.07% U3O8
RC07MN061 251 to 274m 23m @ 0.08% U3O8
RC07MN065 206 to 225m 19m @ 0.09% U3O8
including 206 to 211m 5m @ 0.17% U3O8
RC07MN068 170 to 218m 48m @ 0.14% U3O8
including 178 to 188m 10m @ 0.38% U3O8
RC07MN069 215 to 227m 12m @ 0.09% U3O8
RC07MN070 195 to 283m 88m @ 0.07% U3O8
including 201 to 214m 13m @ 0.13% U3O8
and including 222 to 228m 6m @ 0.14% U3O8
RC07MN071 144 to 163m 19m @ 0.09% U3O8
RC07MN073 156 to 169m 13m @ 0.08% U3O8
RC07MN075 118 to 143m 25m @ 0.06% U3O8
RC07MN085 188 to 204m 16m @ 0.08% U3O8
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These results outline a zone of mineralisation dipping gently to the east at about 30˚ open to north, east and west.

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600 600
500 500
400 400
300 300
200 200
100 100
340000 340100 340200 340300 340400 340500 340600 340700 340800 340900 341000 341100 341200 341300 341400 341500
339900 340000 340100 340200 340300 340400 340500 340600 340700 340800 340900 341000 341100 341200 341300 341400 341500
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Figure 1. Cross-section of Mt Gee ore body based on polygonal wire-frame model of mineralisation, looking north

Diamond drilling at Mt Gee recommenced in July to obtain geotechnical data and material for metallurgical testwork in the western portion of the ore body and to improve the knowledge and definition of the eastern portion; initially by completing several holes planned for the RC program.

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Figure 2. Cross section of Mt Gee looking north

The scoping study highlighted the economic suitability of the ore body for underground development; this is in accordance with the company’s goal of minimising the environmental impact of mining operations. Ongoing metallurgical testing will help define suitable treatment options.

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Figure 3. Oblique view of Mt Gee resource looking south-west

Mulga Well Project (Cu-Au,U) (EL 3593 & EL 3211)

The Mulga Well and Coondambo tenements are located 250 kilometres northwest of Port Augusta, in almost the geographic centre of South Australia. The country is used solely for grazing and is under perpetual lease tenure; the tenement straddles several properties.

The area is underlain by mid-Proterozoic Pandurra Formation sequences resting on the Neo-Proterozoic complexes of the Gawler Craton basement.

This basement is comprised in part of Gawler Range Volcanics (GRV) dated at about 1592 Ma (mega annum or million years) and Hiltaba granites between 16001550 Ma, indicating almost coeval volcanism and intrusion over this period.

Hiltaba granites typically contain twice the crustal average of U3O8, whilst the GRV has about 1.5 times the crustal average of U3O8. These form the source rocks for a uranium mineralising event.

The Pandurra Formation is conceptually viewed as a potential host for unconformity related uranium deposits as it is the same age as the Athabasca and Kombolgie Sandstones of Canada and the Northern Territory, respectively. The anomalous responses along structures suggest the presence of leakage anomalies from such a source.

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Figure 4 . Radiometrics image of Mulga Well Project area showing responses along the Kingoonya Palaeochannel and the area of anomalous response relating to structures

Mabel Creek Project (Cu-Au) (EL 3455 & EL3324)

Drilling at target M8 at Woorong Creek commenced in September, with the program completed in late October.

Hole MN06WC02 returned the most significant results, uncovering a zone of sulphide in veinlets and interstices, 10-15%, mostly pyrite with acicular arsenopyrite between 335.8 to 341m within amphibolite. Numerous units above this zone contained up to 15% magnetite presumably responsible for the magnetic anomaly.

Hole MN06WC03 contained a fault zone at 335.4 to 337m with strong chlorite-hematite alteration, minor bornite and chalcopyrite ‘paint’ on fractures occurred between 250 to 254.4m; the sequence in this hole was only very weakly magnetic.

Only weakly anomalous assay results were obtained.

An induced polarization survey was completed over the large Paragon Bore magnetic and gravity anomaly. Since this survey produced ambivalent responses not strongly indicative of mineralisation it was decided to withdraw from the Joint Venture with Minex Pty Ltd (subsidiary of Minotaur Exploration Ltd).

Mongolata Project (EL 3164)

Six reverse circulation drill holes were completed to test geochemical anomalies and coincident geophysical features within the tenement area. Drilling was co-funded under the South Australian Government’s PACE initiative.

Disappointing results were obtained, although the amount and quality of water located during the drilling program will be of benefit to local pastoralists.

Pinda Springs (Cu-Au, Zn-Pb) (EL 3159)

A planned drilling program has been deferred to concentrate on the Mt Gee project. Drilling was to target coincident magnetic and geochemical anomalies data derived from stream sediment sampling and follow-up soil sampling.

A diapiric breccia follows the fault trending through the area, although this is unlikely to be the source of the gold anomalism or magnetic responses.

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Figure 5. Anomalous Gold geochemistry in soils overlaid on aeromagnetic data

DIRECTORS’ REVIEW OF OPERATIONS

Warburton Joint Venture

(Cu, Au, Ni) E69/1564 E69/2211

The joint venture covers seven tenements or tenement applications, on which Marathon is committed to spend an initial $850,000 of a total of $3.25 million (in several tranches) to earn a 70% interest in the tenement.

Covering some 1,500 square kilometres, the tenements are located in an area of strong gravity and magnetic anomalism and where the regional geology is indicative of extensive tectonic activity (Figure 6). These encouraging features, coupled with significant radiometric anomalies, confirm the project area as having potential for nickel and other commodities.

Work has commenced on the joint venture with ASXlisted Primary Resources Limited. Heritage clearance surveys for geochemical sampling and gravity survey programs have been completed and approved by the traditional owners.

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Figure 6: Location and regional magnetics map of Warburton and Egerton Projects with tenement outlines

Western Victoria (Au) EL 4526

Located 30 kilometres southwest of Ararat, the joint venture originally covered the tenements of Glenlyle (EL 4621) and Kalymna (EL 4526).

Marathon has withdrawn from the agreement covering the Glenlyle tenement.

At Kalymna, the results from air core drilling completed during January 2007 have defined a zone greater than 900m along the Moyston Fault showing strongly elevated or anomalous results. The air core drilling around the RC drilling has extended the area potentially hosting a mineralised “shoot”.

The anomalous results in broad spaced reconnaissance lines approximately 1.5km south of the RC drilling suggest an additional area of significant potential. This intermittent response character is consistent with repeated ‘shoots’ along the main Moyston structure.

Marathon plans a program of air core drilling to assess the southern zone and several diamond drill holes to investigate the major mineralised area identified to date.

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Figure 7: Location of Significant Results from Air Core Drilling along the Moyston Fault

Uranium is a highly concentrated source of energy. One kilogram of natural uranium will yield approx. 20,000 times as much energy as the same amount of coal.

Marathon Resources Limited | ACN 107 531 882

DIRECTORS’ REPORT

The directors present their report on the company and its controlled entities for the year ended 30 June 2007.

Directors

The names of the directors in office at any time during or since the end of the year are:

Peter Leonard Williams

John Reginald Santich

Wieslaw Bogacz

Denis Wood (appointed 29 November 2006) Chen Zeng (appointed 27 December 2006) William Sydney Latimer (retired 29 November 2006) Stuart McRae Appleyard (retired 27 December 2006)

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

Information on Directors

Peter Williams BEc FCA

CHAIRMAN (NON-EXECUTIVE) Appointed 21st May 2004

Peter Williams is a chartered accountant with extensive professional and commercial experience. He has broad experience as managing director and chairman of public companies. He was a partner of Deloitte for 17 years and managing director of the Lloyd Helicopter group then Enterprise Solutions Asia Pacific Limited. Since then he has acted as a non-executive director of venture capital company Playford Capital Pty Ltd. He is a member of the Company’s Audit Committee.

John Santich BE MEngSc PhD DipLaw MSocSc EXECUTIVE DIRECTOR Appointed 28th January 2004

Dr John Santich is an engineer and lawyer with over three decades experience in mining, geoscience and industry. He has been founder and director of a number of successful exploration and mining companies, including Burmine Ltd and Minotaur Gold Ltd (precursor of Minotaur Resources Ltd. He has also established companies in other technological areas, including bottled water (Palm Springs Ltd), machine vibration analysis (IPACS Australia Pty Ltd) and renewable energy (Solarshop Pty Ltd).

Wieslaw Bogacz Msc Eng PhD Eng EXECUTIVE DIRECTOR Appointed 28th January 2004

Dr Wieslaw Bogacz is a highly qualified geologist and engineer with more than 30 year’s experience in successful ore body exploration and development in Australia and worldwide. He has an established reputation in the development of advanced interpretations of structural geological controls on mineralisation and in tectonic genesis of metalliferous deposits. He is co-founder of mining and exploration companies, including Minotaur Gold Ltd (precursor of Minotaur Resources) and, more recently, Oroya Mining Ltd.

Denis Wood BSC (Geology) NON-EXECUTIVE DIRECTOR Appointed 29th November 2006

Mr Wood is currently CEO of Queensland Coke and Energy. Mr Wood was responsible for the successful development and operation of the Coppabella Coal Project as Managing Director of Australian Premium Coal. Mr Wood is also Director – Resource Development for Talbot Group Holdings. He has over 37 years of experience in the steel and coal industry and his experience includes steel production, coal preparation, marketing, business development and new mine development. Mr Wood has also worked as Managing Director for Carbon Consulting International, responsible for creating laboratories in Mackay and Gladstone. He is a member of the Company’s Audit Committee.

Chen Zeng Masters Degree International Finance Shanghai University of Finance and Economics NON-EXECUTIVE DIRECTOR Appointed 27th December 2006

Mr Chen Zeng is Managing Director of CITIC Australia Pty Ltd., the Australian arm of China’s giant state owned CITIC Group which has assets of over $100 billion. He is also an Executive Director of the Hong Kong listed CITIC Resources Holdings Ltd and a director of Macarther Coal Ltd. He is chairman of the Company’s Audit Committee.

Stuart Appleyard LLB NON-EXECUTIVE DIRECTOR Appointed 28th January 2004 Retired 27th December 2006

William Latimer LLB NON-EXECUTIVE DIRECTOR Appointed 28th January 2004 Retired 29th November 2006

Marathon Resources Limited | ACN 107 531 882

Company secretary

Stuart Appleyard LLB Appointed 28th January 2004

Stuart Appleyard is a practising lawyer with extensive experience in corporate, commercial and property law. A partner at Lynch Meyer, Lawyers, he has a particular focus on complex commercial agreements, joint ventures, property advising and development, and due diligence associated with those areas. He has advised on mining, resource and native title issues in both South Australia and the Northern Territory. Since 2002 he has also been a director of Bonanza Gold Pty Ltd, which Marathon has acquired. He is a member of the Company’s Audit Committee.

Corporate governance

The Board of Marathon Resources Limited is committed to achieving and demonstrating the highest standards of corporate governance and has adopted practices and policies in accordance with the ASX Corporate Governance Best Practice Recommendations. The Corporate Governance Statement forms a separate part of the Financial Report.

Significant changes in the state of affairs

Other than as referred to in the financial statements or notes thereto, there has not been any matter or circumstance that has arisen since the end of the financial year that has significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future years

As noted in the Chairman’s review the Group benefited from share placements in November and December 2006.

Principal activities

The principal activity of the Group during the year was mineral exploration. There were no significant changes in the nature of these activities during the year.

Review of operations and operating results

The Company’s Directors have set out a review of operations for the year in a separate report commencing on page 10.

The consolidated operating loss of the Group for the financial year to 30 June 2007 after applicable income taxes was $5,862,541.

Dividends

The directors do not recommend the payment of a dividend and no amount has been paid or declared since the end of the previous financial year.

Future developments, prospects and business strategies

The Group is a mineral explorer and, potentially, a miner of uranium, gold and other metals in future years. The outcomes of these operations cannot be predicted at this time. The Group may require further capital to sustain these activities.

Environmental issues

The Group’s operations are subject to environmental regulation. The Group is satisfied that no breaches of environmental regulation have occurred. No notification of any breach of any environmental regulation has been received from any relevant agency in Australia or New Zealand.

After balance date events

On the 4th of July 2007 Buttermere Australia Pty Ltd/ Crosby Capital Partners Inc. withdrew it’s unsupported takeover offer made for all of Marathon’s shares. As a result additional fees became due to the Company’s advisors, Baron Partners Limited. Note 10 details the additional charge.

On the 17th of September 2007 the Group made a major resource announcement.

These matters have been more fully covered in the Chairman’s address on page 4.

Marathon Resources Limited | ACN 107 531 882

DIRECTORS’ REPORT

Options

At the date of this report, the unissued ordinary shares of Marathon Resources Limited under options are as follows:

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Grant Date Date of Expiry Exercise Price Number
under Option
31 March 2005 30 June 2009 $0.20 1,142,900
31 December 2005 30 June 2010 $0.20 30,000
31 March 2006 30 June 2010 $0.45 160,000
16 November 2006 30 June 2011 $1.18 3,000,000
2 August 2007 (1) 6 August 2010 $4.36 500,000
4,832,900
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Pursuant to his employment contract, Mr Hall had an entitlement to the grant of 500,000 options. These options were issued on 2 August 2007 with an expiry date of 6 August 2010 and an exercise price of $4.36 each.

During the year ended 30 June 2007, and to the date of this report the following ordinary shares of Marathon Resources Limited were issued on the exercise of options. No amounts are unpaid on any of the shares.

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Grant Date Exercise Price Number of
Shares Issued
7 December 2006 $0.20 40,000
29 January 2007 $0.20 100,000
31 January 2007 $0.20 25,000
5 February 2007 $0.20 1,605,000
29 March 2007 $0.20 40,000
17 May 2007 $0.20 25,000
27 June 2007 $0.20 18,600
28 June 2007 $0.20 25,000
7 July 2007 $0.20 1,000,000
7 August 2007 $0.20 69,900
3 September 2007 $0.20 1,543,600
4,492,100
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None of the options entitles the holders to participate, by virtue of the options, in any dividend or share issue of any other corporation.

Auditors independence

The auditor has not been engaged during the year for any non-audit services which may have impaired the auditor’s independence. The auditor’s independence declaration for the year ended 30 June 2007 has been received and is included in this report.

Marathon Resources Limited | ACN 107 531 882

Directors’ and Executives’ remuneration

The Board, where appropriate, seeks independent advice on generally accepted remuneration policies and practices for directors and packages are benchmarked against comparable industry levels.

The size of the organisation is such that decisions that affect the whole or a substantial part of the business and the Group’s financial standing are made by or in conjunction with Directors.

The Group has determined that fees for Non-Executive Directors be set in aggregate at $150,000 for the year ended 30 June 2007 accruing on a weekly basis; there being no increase on the previous year.

There are no elements of Directors remuneration that are performance related.

There are no contractual termination or retirement benefits for Non-Executive Directors.

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Directors’ and Executives’ Remuneration
Directors Salary and Superannuation Ex gratia Other (1) Share-based Total
Fees wages contributions payments payments
Options
P.L. Williams 2007 50,000 - 4,500 - - - 54,500
2006 39,583 - 3,562 - - - 43,145
J. Santich 2007 - - - - 223,840 790,465 1,014,305
2006 - 114,968 9,525 - 40,875 - 165,368
W. Bogacz 2007 - - - - 257,952 790,465 1,048,417
2006 - 113,814 9,525 - 40,875 - 164,214
W.S. Latimer 2007 12,500 - 1,125 15,000 - - 28,625
2006 25,833 - 2,325 - - - 28,158
D. Wood 2007 17,500 - 1,575 - - - 19,075
2006 - - - - - - -
C. Zeng 2007 15,000 - - - - - 15,000
2006 - - - - - - -
S. M. Appleyard 2007 15,000 15,000 2,700 - - - 32,700
2006 25,833 2,325 - - - 28,158
S. Hall 2007 - 50,154 17,133 - - - 67,287
2006 - - - - - - -
Total 2007 110,000 65,154 27,033 15,000 481,792 1,580,930 2,279,909
2006 91,249 228,782 23,700 - 81,750 - 425,482
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(1) Executive Directors, Dr J.R. Santich and Dr W. Bogacz, elected on the 1 April 2006 to convert to a consultancy based emolument arrangement from salaried benefits in accordance with the relevant terms and conditions of their employment contracts.

Options issued as part of remuneration for the year ended 30 June 2007

Options are issued to directors and executives as part of their remuneration. The options are not issued based on performance criteria, but are issued to the majority of directors and executives of Marathon Resources Limited and its subsidiary to increase goal congruence between executives, directors and shareholders.

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Options Granted as Remuneration
Director / Granted No Grant Date Value per Option at Exercise Price $ First Exercise Date Last Exercise Date
Executive Grant Date $
J. Santich 1,500,000 16-11-06 0.53 1.18 16-11-06 30-6-11
W. Bogacz 1,500,000 16-11-06 0.53 1.18 16-11-06 30-6-11
3,000,000
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All options were granted for nil consideration.

Marathon Resources Limited | ACN 107 531 882

DIRECTORS’ REPORT

Contracts of Service

Mr Stuart Hall was appointed Chief Executive Officer on 15 April 2007 and is initially employed on a fixed two year contract. Mr Hall’s primary responsibility is to lead the company through the feasibility programmes to secure a mining license. An element of Mr Hall’s remuneration package is performance related. At the date of this report no performance hurdle has been reached.

The two Executive Directors, Dr J.R. Santich and Dr W. Bogacz, have entered into service agreements whereby they will be employed by the company for a period of 3 years commencing on 15 March 2005. The terms of these agreements provided that their services to the Company could at their option be provided by their consulting companies. On 1 April 2006 both Executive Directors elected to provide their services under consultancy company arrangements.

Meetings of Directors

During the financial year, the number of Board meetings held at which a director was eligible to attend and the number actually attended by each director were:

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Appointed Meeting Held Meetings Attended Retired
Peter Williams 21 May 2004 14 14
John Santich 28 January 2004 14 13
Wieslaw Bogacz 28 January 2004 14 11
William Latimer 28 January 2004 8 8 29 November 2006
Stuart Appleyard 28 January 2004 9 9 27 December 2006
Denis Wood 29 November 2006 6 5
Chen Zeng 27 December 2006 5 4
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Committee Meetings - Audit Committee Meetings Held Meetings Attended
Peter Williams 2 2
William Latimer 2 2
Stuart Appleyard 2 2
Denis Wood 0 0
Chen Zeng 0 0
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Indemnities insurance

Arrangements for directors and officers insurance had been finalised at year end and insurance premiums have been paid during the year amounting to $19,461.00.

Proceedings

The company has not been a party to any legal proceedings during the year. Directors are not aware of any proceeding initiated during the year or contemplated against or on behalf of the company.

Signed in accordance with a resolution of the Board

John Santich DIRECTOR Dated at Adelaide, South Australia this 21st day of September 2007

Peter L Williams DIRECTOR

In 2005-06 Australia exported more than 10,000 tonnes of uranium oxide valued at $546 million.

Marathon Resources Limited | ACN 107 531 882

CORPORATE GOVERNANCE STATEMENT

The Board of Marathon Resources Ltd is committed to achieving and demonstrating the highest standards of Corporate Governance. The Board is responsible to the shareholders for the performance of the Company and is focused on:

enhancing the interests of shareholders and other key stakeholders;
ensuring the Company is properly managed.

The Board believes that sound Corporate Governance practices will assist in the creation of shareholder wealth and provide accountability and control systems commensurate with the risks involved.

This Statement outlines the main corporate governance practices in place during the financial year, noting where practices depart from the ASX Corporate Governance Council Recommendations and the Board’s reasons for an alternate approach. The Company has complied with the majority of the Ten Essential Corporate Governance Principles and the corresponding Best Practice Recommendations as detailed below.

This Corporate Governance Statement sets out the Company’s current compliance with the ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations (Best Practice Recommendations). Although the Best Practice Recommendations are not mandatory, the Company is required to provide a statement in its annual reports disclosing the extent to which the Company has followed the Best Practice Recommendations.

The Corporate Governance Plan

1. Lay solid foundations for management and oversight

The Company’s Corporate Governance Plan includes a Board Charter, which discloses the specific responsibilities of the Board and provides that the Board shall delegate responsibility for the day-to-day operations and administration of the Company to the Chief Executive Officer.

2. Structure the board to add value

More than half of the current Board are independent directors.

The chairperson (Mr Peter Williams) is an independent director.

The roles of chairperson (Mr Peter Williams) and Managing Executive Director (Dr John Santich) are exercised by different people.

The Board is of the opinion that it is not of a sufficient size to warrant the establishment of a nomination committee at this time.

The Company will continue to provide details of each director, such as their skills, experience and expertise relevant to their position, together with an explanation of any departures from best practice, in its future annual reports.

Promote ethical and responsible decision making
The Company’s Corporate Governance Plan includes a corporate code of conduct which provides a framework for decisions and actions in relation to ethical conduct in employment.

The Company’s Corporate Governance Plan includes guidelines for buying and selling securities in the Company.

Safeguard integrity in financial reporting
The Board will require the Chief Executive Officer and, upon appointment, the Chief Financial Officer (or equivalent) to make a statement (at the relevant times) that the Company’s financial systems are founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board and the company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respect.
The Company does not currently have a Chief Financial Officer.

The Board has an established audit committee, the Chairman of which is Mr Chen Zeng, who is not the chairman of the board. The audit committee currently has 3 members.

The Corporate Governance Plan requires a formal charter for the audit committee. The Company provides details of the members of the audit committee, the number of meetings of the audit committee and the names of the attendees, in its annual reports.

Make timely and balanced disclosure
The Company’s Corporate Governance Plan requires a continuous disclosure policy.

6. Respect the rights of shareholders

The Company’s Corporate Governance Plan includes a shareholder communications strategy which aims to ensure that the shareholders are informed of all major developments affecting the Company’s state of affairs.

The Board requests the external auditor to attend all annual general meetings of the Company, to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report.

Marathon Resources Limited | ACN 107 531 882

Recognise and manage risk
The Board determines the Company’s “risk profile” and is responsible for overseeing and approving risk management strategy and policies, internal compliance and internal control.
The Board has delegated to the audit committee responsibility for implementing the risk management system
Encourage enhanced performance
The Board has not developed a formal process for performance evaluation at this time.
Remunerate fairly and responsibly
The Board is of the opinion that it is not of a sufficient size to warrant the establishment of a remuneration committee at this time.
Non-executive Directors each receive annual fees of $ 30,000 plus 9% superannuation for fulfilling their duties as Directors of the Company, with the exception of the Chairman who receives on annual fee of $ 50,000 plus 9% superannuation.
The Company’s Constitution provides that the remuneration of non-executive Directors will be not more than the aggregate fixed sum determined by a general meeting. The aggregate remuneration was set at an amount of $150,000 per annum at the AGM held on 25th November 2005.
The Board is responsible for determining the remuneration of the Chief Executive Officer and senior executives.
The Company has no plans in relation to payment of equity based executive remuneration at this time.
10.Recognise the legitimate interests
The Company seeks to be a good corporate citizen and protect and preserve all stakeholders’ interests we are currently in the process of establishing a formal Code of Conduct, which will establish principles by which both Directors and employees can appropriately balance, protect and preserve all stakeholders’ interests.
The Company is committed to a policy of environmental management and monitoring of environmental compliance.

Exploration activities require consultation with various claimants including communities affected by Native Title, landowners and authorities. The company aspires to be a good corporate citizen through consultation and involvement of those parties.

DIRECTORS’ DECLARATION

The Directors of the company declare that:

The financial statements and notes set out on pages 26 to 49, are in accordance with the Corporations Act 2001 and:
(a) complying with Accounting Standards and the Corporate Regulations 2001; and
(b) giving a true and fair view of the financial position as at 30 June 2007 and of the performance for the year ended on that date of the company and consolidated group.
The Chief Executive Officer and Chief Finance Officer have each 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 notes for the financial year comply with Australian 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 its debits as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.

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John Santich
DIRECTOR
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Peter L Williams

DIRECTOR

Dated at Adelaide, South Australia this 21st day of September 2007

Marathon Resources Limited | ACN 107 531 882

INDEPENDENT AUDIT REPORT TO MEMBERS OF MARATHON RESOURCES LTD AND CONTROLLED ENTITIES



INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MARATHON RESOURCES LIMITED ACN 107 531 822

Report on the financial report

We have audited the accompanying financial report of Marathon Resources Limited, which comprises the balance sheet as at 30 June 2007, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies and other explanatory notes and the directors’ declaration of the consolidated entity comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report

The directors of the Company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1 the Directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards. Auditor’s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards, which require us to comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance as to whether the financial report is free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstance, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to  provide a basis for our audit opinion.   Independence    In conducting our audit, we complied with the independence requirements of the  Corporations Act 2001.      

Marathon Resources Limited | ACN 107 531 882

Auditor’s opinion

In our opinion:

(a) The financial report of Marathon Resources Limited is in accordance with the Corporations Act 2001, including:

i. Giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2007 and of their performance for the year ended on that date; and
ii. Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
(b) The financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Emphasis of Matter – Economic Dependency

Without qualification to the audit opinion expressed above, attention is drawn to the following matter. As described in Note 25 to the financial statements, the company is economically dependent on the outcomes of some future events.

GRANT THORNTON

South Australian Partnership Chartered Accountants

P S PATERSON Partner

Signed at Hindmarsh this 21 day of September 2007

Marathon Resources Limited | ACN 107 531 882

AUDITORS INDEPENDENCE DECLARATION



AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF MARATHON RESOURCES LIMITED

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Marathon Resources Limited for the year ended 30 June 2007, I declare that, to the best of my knowledge and belief, there have been:

(a) No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and (b) No contraventions of any applicable code of professional conduct in relation to the review.

GRANT THORNTON South Australian Partnership Chartered Accountants

P S PATERSON Partner

Signed at Hindmarsh this 21 day of September 2007

            

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25
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Marathon Resources Limited | ACN 107 531 882

FINANCIAL STATEMENTS

Income Statement

FOR THE YEAR ENDED 30 JUNE 2007

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Consolidated Parent
Notes 2007 ($) 2006 ($) 2007 ($) 2006 ($)
Revenue 2 1,139,947 185,380 1,139,947 185,380
Depreciation 5 (56,048) (38,396) (56,048) (38,396)
Exploration expenditure written off
- Current period expenditure (515,122) (72,973) (501,265) (72,973)
- Prior period expenditure (218,809) (218,809)
Impairment of exploration expenditure - (221,873) - (148,720)
Option over interest in tenement - (32,268) - (32,268)
Financial assets fair value adjustment 6 (115,000) - (115,000) -
Employee benefits expense (715,287) (441,084) (715,287) (441,084)
Share based payment expense 14 (1,580,930) (77,400) (1,580,930) (77,400)
Occupancy expense (71,516) (39,364) (71,516) (39,364)
Consulting expense (344,552) (178,139) (344,552) (178,139)
Travel expense (146,271) (117,381) (146,271) (117,381)
ASX listing and registry expense (148,125) (80,334) (148,125) (80,334)
Corporate administration 2 (474,303) (270,224) (474,303) (270,224)
Takeover defence costs 2 (2,598,525) (2,598,525) -
Loss before income tax (5,844,541) (1,384,056) (5,830,684) (1,310,903)
Income tax expense 3 (18,000) (70,211) (18,000) (70,211)
Loss for the year (5,862,541) (1,454,267) (5,848,684) (1,381,114)
Loss attributable to the members
of Marathon Resources Limited (5,862,541) (1,454,267) (5,848,684) (1,381,114)
Earnings per share
Basic (cents per share) 24 (12.2) (3.7) - -
Diluted (cents per share) (12.2) (3.7) - -
The accompanying notes form part of these financial statements.
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Marathon Resources Limited | ACN 107 531 882

Balance Sheet

AS AT 30 JUNE 2007

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Consolidated Parent
Notes 2007 ($) 2006 ($) 2007 ($) 2006 ($)
CURRENT ASSETS
Cash and Cash Equivalents 19a 2,140,972 4,200,484 2,070,972 4,130,484
Trade and Other Receivables 4 425,397 36,047 284,760 8,540
Financial Assets 6 345,000 - 345,000 -
Total Current Assets 2,911,369 4,236,531 2,700,732 4,139,024
NON-CURRENT ASSETS
Property, Plant & Equipment 5 268,783 184,989 268,783 184,989
Financial Assets 6 1,069,403 - 1,069,403 -
Exploration & Evaluation Expenditure 7 8,072,858 2,221,703 1,251,890 390,113
Related Party Receivable 8 - - 6,890,626 1,774,261
Investment in Controlled Entity 9 - - 230,000 230,000
Total Non-Current Assets 9,411,044 2,406,692 9,710,702 2,579,363
Total Assets 12,322,413 6,643,223 12,411,434 6,718,387
CURRENT LIABILITIES
Trade and Other Payables 10 2,573,821 307,801 2,573,821 307,801
Short Term Provisions 11 30,947 15,277 30,947 15,277
Total Current Liabilities 2,604,768 323,078 2,604,768 323,078
NET ASSETS 9,717,645 6,320,145 9,806,666 6,395,309
EQUITY
Issued Capital 12 15,828,305 8,344,585 15,828,305 8,344,585
Reserves 13 1,826,521 77,400 1,826,521 77,400
Retained Losses (7,937,181) (2,101,840) (7,848,160) (2,026,676)
TOTAL EQUITY 9,717,645 6,320,145 9,806,666 6,395,309
The accompanying notes form part of these financial statements.
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Marathon Resources Limited | ACN 107 531 882

FINANCIAL STATEMENTS

Statement of changes in equity

FOR THE YEAR ENDED 30 JUNE 2007

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Notes Share capital ($) Retained Option reserve Financial asset Total ($)
earnings ($) ($) revaluation
reserve ($)
Consolidated
BALANCE AT 01/07/2005 4,832,684 (647,573) - - 4,185,111
Share Issues (net of transaction costs) 3,511,901 - - - 3,511,901
Option Issues - - 77,400 - 77,400
Loss attributable to members of parent - (1,454,267) - - (1,454,267)
company
BALANCE AT 30/06/2006 8,344,585 (2,101,840) 77,400 - 6,320,145
Share Issues (net of transaction costs) 7,483,720 - - - 7,483,720
Option Issues/Exercised - 27,200 1,553,730 - 1,582,930
Financial Asset Revaluation - - - 195,391 195,391
Loss attributable to members of parent - (5,862,541) - - (5,862,541)
company
BALANCE AT 30/06/2007 15,828,305 (7,937,181) 1,631,130 195,391 9,717,645
Parent
BALANCE AT 01/07/2005 4,832,684 (645,562) - - 4,187,122
Share Issues (net of transaction costs) 3,511,901 - - - 3,511,901
Option Issues/Exercised - - 77,400 - 77,400
Loss attributable to members of parent - (1,381,114) - - (1,381,114)
company
BALANCE AT 30/06/2006 8,344,585 (2,026,676) 77,400 - 6,395,309
Share Issues (net of transaction costs) 7,483,720 - - - 7,483,720
Option Issues/Exercised - 27,200 1,553,730 - 1,580,930
Financial Asset Revaluation - - - 195,391 195,391
Loss attributable to members of parent - (5,848,684) - - (5,848,684)
company
BALANCE AT 30/06/2007 15,828,305 (7,848,160) 1,631,130 195,391 9,806,666
The accompanying notes form part of these financial statements.
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Marathon Resources Limited | ACN 107 531 882

Cash flow statement

FOR THE YEAR ENDED 30 JUNE

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Consolidated Parent
Notes 2007 ($) 2006 ($) 2007 ($) 2006 ($)
Cash flows from operating activities
Interest and sundry income received 265,935 185,380 265,935 185,380
Payments to suppliers and employees (3,116,234) (1,137,543) (2,989,247) (1,116,070)
Net cash provided by (used in) 19b (2,850,299) (952,163) (2,723,312) (930,690)
operating activities
Cash flows from investing activities
Proceeds on disposal plant equipment 4,233 - 4,233 -
Purchase of plant and equipment (149,202) (101,842) (149,202) (101,842)
Payment for financial assets (460,000) - (460,000) -
Payment for exploration activities (6,069,964) (2,015,713) (1,080,586) (447,571)
Amount advanced to controlled entity - - (5,116,365) (1,649,442)
Net cash provided by (used in) (6,674,933) (2,117,555) (6,801,920) (2,198,855)
investing activities
Cash flows from financing activities
Proceeds from issue of shares 7,525,720 3,637,000 7,525,720 3,637,000
Payment of expenses of the issue (60,000) (195,310) (60,000) (195,310)
of shares
Net cash provided by (used in) 7,465,720 3,441,690 7,465,720 3,441,690
financing activities
Net (decrease)/increase in cash held (2,059,512) 371,972 (2,059,512) 312,145
Cash at 30 June 2006 4,200,484 3,828,512 4,130,484 3,818,339
Cash at 30 June 2007 19a 2,140,972 4,200,484 2,070,972 4,130,484
The accompanying notes form part of these financial statements.
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Marathon Resources Limited | ACN 107 531 882

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1 – Statement of significant accounting policies

The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, including Australian Accounting interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

The financial report covers the consolidated group of Marathon Resources Limited and controlled entities, and Marathon Resources Limited as an individual parent entity. Marathon Resources Limited is a listed public company, incorporated and domiciled in Australia.

Compliance with IFRS

Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the consolidated financial statements and notes of Marathon Resources Limited comply with International Financial Reporting Standards (IFRS).

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

Basis of Preparation

The accounting policies set out below have been consistently applied to all years presented.

Reporting Basis and Conventions

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

Accounting policies

a) Principles of Consolidation

A controlled entity is any entity of which Marathon Resources Limited has the power to control the financial and operating policies so as to obtain benefits from its activities.

The controlled entities are disclosed in Note 21 to the financial statements. All controlled entities have a June financial year-end.

All inter-company balances and transactions between entities in the consolidated entity, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries are consistent with those policies applied by the parent entity.

b) Income Tax

Current tax

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

Deferred tax

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 recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

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 condition of deductibility imposed by the law.

Tax consolidation

Marathon Resources Limited and its wholly-owned Australian subsidiary are part of a tax-consolidated group under Australian taxation law. Each entity in the group recognises its own current and deferred liabilities, except for any deferred tax liabilities resulting from unused tax losses and tax credits, which are immediately assumed by the parent entity. The current tax liability of each group entity is then subsequently assumed by the parent entity. The tax consolidated group has entered a tax sharing agreement whereby each company in the group contributes to the income tax payable in proportion to their contribution to the net profit before tax of the consolidated group.

Marathon Resources Limited | ACN 107 531 882

NOTE 1 - CONTINUED

c) Property, Plant and Equipment

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses.

Plant and equipment

Plant and equipment are measured on the cost basis.

The carrying amount of plant and equipment is reviewed annually to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

Assets acquired are recorded at the cost of acquisition being the purchase consideration determined as at the date of acquisition plus costs incidental to the acquisition.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Depreciation

The depreciable amount of all fixed assets is calculated on a straight-line basis over the useful life of those assets to the consolidated entity commencing from the time the asset is held ready for use.

The depreciation rates used for each class of depreciable assets are:

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Class of Fixed Asset Depreciation Rate
Plant and equipment 5-33%
Office equipment 10-20%
Motor vehicles 15%
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The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the income statement.

d) Exploration and Evaluation Expenditure

Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. Where a decision is made to proceed with development, the accumulated costs for the relevant area of interest will be amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

Costs of site restoration are expended over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs may ultimately include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with generally accepted clauses of the mining permit. Such costs will be determined using estimates of future costs, current legal requirements and technology on an undiscounted basis.

Any change in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs will be determined on the basis that the restoration will be completed within one year of abandoning the site.

Marathon Resources Limited | ACN 107 531 882

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1 - CONTINUED

e) Financial Instruments

Recognition

Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.

Financial assets at fair value through profit and loss A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management and within the requirements of AASB 139: Recognition and Measurement of Financial Instruments. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the income statement in the period in which they arise.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.

Available-for-sale financial assets

Available-for-sale financial assets include any financial assets not included in the above categories. Available-for-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity.

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

Impairment

At each reporting date, the group assess whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement.

f) Impairment of Assets

At each reporting date, the group reviews the carrying values of its 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.

g) Interests in Joint Ventures

The consolidate group’s share of the assets, liabilities, revenue and expenses of joint venture operations are included in the appropriate items of the consolidated financial statements. Details of the consolidated group’s interest are shown at Note 15. The consolidated group’s interests in joint venture entities are brought to account using the equity method of accounting in the consolidated financial statements. The parent entity’s interest in joint venture entities are brought to account using the cost method.

h) Employee Benefits

Provision is made for the group’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

i) Provisions

Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

j) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet where applicable.

k) Revenue

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

Marathon Resources Limited | ACN 107 531 882

NOTE 1 - CONTINUED

l) Good and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.

Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financial activities, which are disclosed as operating cash flows.

m) Comparative Figures

Unless otherwise required by an accounting standard comparative information is disclosed in respect of the previous corresponding period, including for narrative and descriptive information. To the extent that items are amended or reclassified comparative amounts are also amended or reclassified. Prior period errors are retrospectively corrected in the next financial report following discovery.

n) Share Based Payments

The company issues shares and options from time to time for no consideration. Equity-settled share based payments are measured at fair value at the date of grant. Fair value is determined by the use of a binomial model. The fair value is fully expensed on a straight line basis by the date of vesting.

Critical Accounting Estimates and Judgments

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

Key Estimates — Exploration and evaluation The group’s policy for exploration and evaluation is discussed in note 1(d). The application of this policy requires management to make certain assumptions as to future events and circumstances. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised exploration and evaluation expenditure, management concludes that the capitalised expenditure is unlikely to be recovered by future sale or exploration, then the relevant capitalised amount will be written off through the income statements.

New Accounting Standards and Interpretations The following Australian Accounting Standards have been issued or amended and are applicable to the parent and consolidated group but are not yet effective. They have not been adopted in the preparation of the financial statements at reporting date.

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AASB No. Title Issue Date Operative Date (Annual reporting periods
beginning on or after)
7 Financial Instruments: Disclosure Aug 2005 1 Jan 2007
8 Operating Segments Feb 2007 1 Jan 2009
101 Presentation of Financial Statements (Amended) Oct 2006 1 Jan 2007
123 Borrowing Costs (Amended) June 2007 1 Jan 2009
2007-4 Amendments to Australian Accounting Standards arising from ED April 2007 1 July 2007
151 and Other Amendments [AASB 1, 2, 3, 4, 5, 6, 7, 102, 107, 108,
110, 112, 114, 116, 117, 118, 119, 120, 121, 127, 128, 129, 130, 131,
132, 133, 134, 136, 137, 138, 139, 141, 1023, &1038]
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Marathon Resources Limited | ACN 107 531 882

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 2 – Revenue and expenses from continuing operations

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Consolidated Parent
Notes 2007 ($) 2006 ($) 2007 ($) 2006 ($)
a. Revenue
Consideration for entering Joint Venture 874,012 - 874,012 -
Interest 265,654 182,736 265,654 182,736
Sundry Income 281 2,644 281 2,644
1,139,947 185,380 1,139,947 185,380
b. Expenses
Corporate administration include:
Administration accounting and auditing 22 25,175 44,931 25,175 44,931
Computer costs 10,419 29,759 10,419 29,759
Insurance 37,308 20,070 37,308 20,070
Communication costs 33,405 24,846 33,405 24,846
Printing, office supplies 37,450 18,471 37,450 18,471
Public relations 104,494 27,670 104,494 27,670
Legal fees 74,154 13,018 74,154 13,018
Other expenses 151,898 91,459 151,898 91,459
474,303 270,224 474,303 270,224
c. Significant revenue and expenses
The following significant revenue and expense
items are relevant in explaining the financial
performance for the year:
Takeover defence costs 2,598,525 - 2,598,525 -
Costs were incurred during the year to defend the company from a joint takeover bid made by Buttermere Australia Pty Ltd and Crosby Capital
Partners. As included in Note 10, $1,942,577 in unpaid cost have been accrued for at year end in relation to the final settlement of this matter.
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Marathon Resources Limited | ACN 107 531 882

NOTE 3 – Income tax

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Consolidated Parent
2007 ($) 2006 ($) 2007 ($) 2006 ($)
The components of
tax expense comprise:
Current tax expense 18,000 70,211 18,000 70,211
The prima facie income tax expense from ordinary
activities before tax is reconciled to the income tax
as follows:
Loss from continuing operations (5,844,541) (1,384,056) (5,830,684) (1,310,903)
Prima facie tax benefit on profit from ordinary (1,753,362) (415,216) (1,749,204) (393,271)
activities before income tax at 30% (2006:30%)
Non-deductible expenses 477,679 24,180 477,679 24,180
Non recognised temporary differences (3,935) (3,935) (3,935) (3,935)
Movement in recognised tax assets (1,117,311) (517,438) 379,502 (67,576)
and liabilities
Current year tax loss not brought to account 2,414,929 982,620 913,958 510,813
Income tax attributable to entity 18,000 70,211 18,000 70,211
Unrecognised deferred tax assets:
Deferred tax assets have not been recognised in
respect of the following items:
Carried forward tax losses 3,755,793 1,340,864 1,627,741 713,781
Timing differences (1,608,011) (498,570) 434,344 6,291
Temporary differences not recognised 3,935 7,870 3,935 7,870
2,147,782 850,164 2,066,020 727,942
Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against
which the consolidated entity can utilise the benefits from them.
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Marathon Resources Limited | ACN 107 531 882

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 4 – Trade and other receivables

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Consolidated Parent
2007 ($) 2006 ($) 2007 ($) 2006 ($)
GST recoverable 379,482 35,122 238,845 7,615
Other debtors 43,960 925 43,960 925
Prepayments 1,955 - 1,955 -
425,397 36,047 284,760 8,540
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NOTE 5 – Property, plant and equipment

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Consolidated Parent
2007 ($) 2006 ($) 2007 ($) 2006 ($)
Plant and equipment 361,017 228,047 361,017 228,047
Less Accumulated Depreciation (92,234) (43,058) (92,234) (43,053)
Total Plant and Equipment 268,783 184,989 268,783 184,989
Movement in carrying amounts
Balance at beginning of financial year 184,989 121,543 184,989 121,543
Additions 149,198 101,842 149,198 101,842
Disposals (9,356) - (9,356) -
Depreciation (56,048) (38,396) (56,048) (38,396)
Balance at end of financial year 268,783 184,989 268,783 184,989
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Marathon Resources Limited | ACN 107 531 882

NOTE 6 – Financial assets

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Consolidated Parent
Notes 2007 ($) 2006 ($) 2007 ($) 2006 ($)
Current
Other financial assets at fair value 6a 345,000 - 345,000 -
Non-Current
Available-for-sale financial assets 6b 1,069,403 - 1,069,403 -
a. Other financial assets at fair value
Listed investments, at fair value: 345,000 - 345,000 -
- Share in Primary Resources Ltd
Pursuant to a joint venture agreement with Primary Resources Limited, the company purchased 2,300,000 ordinary shares at an issue price of
20 cents each fully paid as follows:
Issue Date No $
2 May 2007 1,150,000 230,000
28 June 2007 1,150,000 230,000
460,000
b. Available-for-sale financial assets
Listed investments, at fair value: 1,069,403 1,069,403
- Share in UraniumSA Ltd
Pursuant to a joint venture agreement with UraniumSA Limited, the company was allotted 4,370,061 ordinary shares at an issue price of 20 cents
each fully paid on the listing of UraniumSA Limited 18 October 2006.
These shares are subject to Australian Stock Exchange escrow conditions for 2 years from listing. As the shares are subject to escrow and therefore
not readily tradeable, the fair value has been calculated using a discounted market value by applying the following inputs:
Market price at year end $0.315
Discount factor 6%
Volatility factor 19.72%
The gain arising from the change in fair value of $195,391 has been has been recognised in the Financial Asset Revaluation Reserve.
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Marathon Resources Limited | ACN 107 531 882

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 7 – Exploration and evaluation expenditure

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Consolidated Parent
2007 ($) 2006 ($) 2007 ($) 2006 ($)
Exploration and Evaluation Costs 8,221,578 2,443,576 1,400,610 538,833
Less Provision for Impairment (148,720) (221,873) (148,720) (148,720)
Total Exploration and Evaluation Expenditure 8,072,858 2,221,703 1,251,890 390,113
Movement
Balance at beginning of financial year 2,221,703 406,654 390,113 70,053
Additions 6,069,964 2,036,922 1,080,586 468,780
Write-down of exploration permits (218,809) - (218,809) -
Impairment - (221,873) - (148,720)
Balance at end of financial year 8,072,858 2,221,703 1,251,890 390,113
The recoverability of the carrying value of exploration and expenditure assets is dependant upon the successful development and commercial
exploitation or alternatively, sale of respective area of interest. For details of the Company’s interests in tenements and Joint Ventures,
refer to Note 15.
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NOTE 8 – Related party receivables

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Consolidated Parent
2007 ($) 2006 ($) 2007 ($) 2006 ($)
Receivable from Bonanza Gold Pty Ltd - - 6,890,626 1,774,261
The parent entity provides financial support to the subsidiary to ensure it can pay its debts as and when they fall due and payable. The parent loan
to its subsidiary has no fixed date for repayment and is non interest bearing. The Company will not seek repayment where such repayment would
prejudice the subsidiaries ability to meet any obligations as and when they fall due.
The net asset position of the controlled entity at balance date is a deficit of $89,021 arising from the write off of tenement expenditures in connection
with the surrender of a joint venture during the year. No provision for impairment has however been recognised in relation to this receivable.
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NOTE 9 – Investment in controlled entity

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Entities Country of incorporation Class of share Interest Held Cost of Investment
2007 2006 2007 2006
Bonanza Gold Pty Ltd Australia Ordinary 100% 100% $230,000 $230,000
These financial assets are carried at cost.
The consolidated financial statements incorporate the assets, liabilities and results of the above subsidiary in accordance with the accounting policy
described in Note 1(a).
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NOTE 10 – Trade and other payables

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Consolidated Parent
2007 ($) 2006 ($) 2007 ($) 2006 ($)
Trade payables 547,896 239,870 547,896 239,870
Other payables 83,348 46,722 83,348 46,722
Accrued commitments 1,942,577 21,209 1,942,577 21,209
2,573,821 307,801 2,573,821 307,801
Accrued commitments represent the balance owing (including GST) to Baron Partners Limited, the Company’s corporate adviser in respect of the
defeated takeover offer made by Buttermere Australia Pty Ltd/Crosby Capital Partners for all the issued shares in Marathon Resources Limited.
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Marathon Resources Limited | ACN 107 531 882

NOTE 11 – Short term provisions

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Consolidated Parent
2007 ($) 2006 ($) 2007 ($) 2006 ($)
Employee benefits
Balance at beginning of financial year 15,277 25,951 15,277 25,951
Additional provisions 15,670 8,236 15,670 8,236
Amounts used - (18,910) - (18,910)
Balance at end of financial year 30,947 15,277 30,947 15,277
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NOTE 12 – Issued capital

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Consolidated Parent
2007 ($) 2006 ($) 2007 ($) 2006 ($)
51,723,995 (2006: 43,345,395) fully paid ordinary shares 15,828,305 8,344,585 15,828,305 8,344,585
Movements in ordinary shares 2007 2006
Number $ Number $
Balance at beginning of report period 43,345,395 8,344,585 37,810,395 4,832,684
Issued at 20 cents (22/12/05) 25,000 5,000
Issued at 66 cents (21/03/06) 5,500,000 3,630,000
Issued at 20 cents (05/04/06) 5,000 1,000
Issued at 20 cents (09/05/06) 5,000 1,000
Issued at 110 cents (29/11/06) – Placement 3,250,000 3,575,000
Issued at 110 cents (22/12/06) – Placement 3,250,000 3,575,000
Issued at 20 cents (07/12/06) - 40,000 8,000
Employee Options Exercised
Issued at 20 cents (29/01/07) – Options Exercise 100,000 20,000
Issued at 20 cents (31/01/07) – Options Exercised 25,000 5,000
Issued at 20 cents (05/02/07) – Options Exercised 1,605,000 321,000
Issued at 20 cents (29/03/07) – Options Exercised 10,000 2,000
Issued at 20 cents (29/03/07) - 30,000 6,000
Employee Options Exercised
Issued at 20 cents (17/05/07) – Options Exercised 25,000 5,000
Issued at 20 cents (27/06/07) – Options Exercised 18,600 3,720
Issued at 20 cents (28/06/07) – Options Exercised 25,000 5,000
51,723,995 15,870,305 43,345,395 8,469,684
Less share issue and capital raising expenses (42,000) (125,099)
(net of tax)
At reporting date 51,723,995 15,828,305 43,345,395 8,344,585
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held.
At the shareholders’ meeting each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a
show of hands.
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Marathon Resources Limited | ACN 107 531 882

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 12 – Issued capital (con’t)

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Consolidated Parent
Movements in options 2007 2006 2007 2006
Number of Weighted Number of Weighted Number of Weighted Number of Weighted
options average options average options average options average
exercise exercise exercise exercise
price $ price $ price $ price $
Outstanding at the beginning of the year 5,825,000 0.21 5,500,000 0.20 5,825,000 0.21 5,500,000 0.20
Granted 3,000,000 1.18 360,000 0.31 3,000,000 1.18 360,000 0.31
Forfeited - - - - - - - -
Exercised (1,878,600) 0.20 (35,000) - (1,878,600) 0.20 (35,000) -
Expired - - - - - - - -
Outstanding at year end 6,946,400 0.63 5,825,000 0.21 6,946,400 0.63 5,825,000 0.21
Exercisable at year end 6,946,400 0.63 5,825,000 0.21 6,946,400 0.63 5,825,000 0.21
The options outstanding at 30 June 2007 had a weighted average exercise price of $0.63 and a weighted average remaining contractual life of 2.89
years. Exercise prices range from $0.20 to $1.18 in respect of options outstanding 30 June 2007.
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NOTE 13 – Reserves

Option Reserve

The option reserve records items recognised as expenses on valuation of employee share options.

Financial Assets Reserve

The financial assets reserve records revaluations of financial assets

NOTE 14 – Share-based payments

Employee Option Plan

The Company has established an Employee Share Option Plan (‘the Plan’) to assist in the attraction, retention and motivation of employees or officers of the Company. All employees (full and part-time) and consultants will be eligible to participate in the Plan after a qualifying period of 6 months’ employment (or, in the case of a consultant, having provided consulting services on a continuous basis for at least 6 months). The allocation of options to each employee, officer or consultant is in the discretion of the Board. Each option is to subscribe for one fully paid ordinary share in the Company and will expire 5 years from its date of issue. An option is exercisable at any time from its date of issue. The total number of shares the subject of options issued under the plan, when aggregated with issues during the previous five years pursuant to the plan, must not exceed 10% of the Company’s issued share capital.

The following share-based payment arrangements existed at 30 June 2007:

On 31 December 2005, 200,000 share options were granted to employees under the Marathon Resources Limited employee option plan to take up ordinary shares at an exercise price of $0.20 each. The options are exercisable on or before 30 June 2010. At balance date 30,000 options remained unexercised.

On 31 March 2006, 160,000 share options were granted to employees under the Marathon Resources Limited employee option plan to take up ordinary shares at an exercise price of $0.45 each. The options are exercisable on or before 30 June 2010. At balance no share options had been exercised.

On 16 November 2006, 3,000,000 share options were granted to executive directors following shareholder approval at the 2006 Annual General Meeting to take up ordinary shares at an exercise price of $1.18 each. The options are exercisable on or before 30 June 2011. At balance no share options had been exercised.

All options granted are ordinary shares in Marathon Resources Limited, which confer a right of one ordinary share for every option held.

Marathon Resources Limited | ACN 107 531 882

NOTE 14 – Share-based payments (con’t)

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Consolidated Parent
2007 2006 2007 2006
Number of Weighted Number of Weighted Number of Weighted Number of Weighted
options average options average options average options average
exercise exercise exercise exercise
price $ price $ price $ price $
Outstanding at the beginning of the year 360,000 0.31 - - 360,000 0.31 - -
Granted 3,000,000 1.18 360,000 0.31 3,000,000 1.18 360,000 0.31
Forfeited - - - - - - - -
Exercised (170,000) 0.20 - - (170,000) 0.20 - -
Expired - - - - - - - -
Outstanding at year end 3,190,000 1.10 360,000 0.31 3,190,000 1.10 360,000 0.31
Exercisable at year end 3,190,000 1.10 360,000 0.31 3,190,000 1.10 360,000 0.31
The options outstanding at 30 June 2007 had a weighted average exercise price of $1.10 and a weighted average remaining contractual life of 3.82
years. Exercise prices range from $0.20 to $1.18 in respect of options outstanding 30 June 2007.
The weighted average fair value of the options granted during the year was $0.53.
This price was calculated using a Black Scholes option pricing model applying the following inputs:
Weighted average exercise price $1.18
Weighted average life of the option 4.58 years
Underlying share price $1.22
Expected share price volatility 40%
Risk free interest rate 5.6%
Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is indicative of future trends, which
may not eventuate.
Included under share based payments expense in the income statement is $1,580,930 (2006: $77,400) which relates in full to equity-settled share-
based payment transactions.
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Marathon Resources Limited | ACN 107 531 882

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 15 – Tenements and joint ventures

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The Company’s interests in tenements and unincorporated joint venture operations at the date of this report are as follows:
Project Tenement Commodity Consolidated Parent
2007 2006 2007 2006
100% Interest
South Australia
Pinda Springs EL 3159 Base Metals, Copper, Gold 73,067 46,539 73,067 46,539
Mongalata EL 3164 Gold, Copper 894,631 48,585 894,631 48,585
Mt Gee EL 3258 Uranium, Rare earths 6,589,882 1,746,471
Talaringa EL 3497 Uranium, Copper, Gold 3,416 1,677 3,416 1,677
Paragon Bore EL 3562 Uranium, Copper, Gold 15,675 1,700 15,675 1,700
Myponga EL 3582 Uranium, Copper, Gold 2,599 2,599
Bon Bon EL 3540 2,886 2,886
MacDowell Hill EL 3474 3,026 3,026
Mulga Well EL 3211 Uranium, Copper, Gold 164,792 60,992 164,792 60,992
Joint Ventures
South Australia
Coondambo EL 2819 Copper, Gold, Uranium, 224,580 200,720 224,580 200,720
IOCG
Mabel Creek EL 3324 Copper, Gold, Uranium, 81,760 81,760
IOCG
Bon Bon EL 3540 Copper, Gold Uranium
MacDowell Hill EL 3474 Uranium, Copper, Gold
Mulga Well EL 3211 Copper, Gold, Uranium,
IOCG
Woorong Creek EL 3455 Copper, Gold, Uranium, 67,546 67,546
IOCG
Western Australia
Warburton E69/1564 14,397 14,397
Victoria
Kalymna EL 4526 Gold 231,086 85,119
Glenlyle EL 4621 Gold, Copper 73,153
8,211,526 2,422,773 1,390,558 518,030
Application Monies for Grants of New Tenements 10,052 10,052
Accrued commitments 20,803 20,803
Total exploration costs 8,221,578 2,443,576 1,400,610 538,833
Less provided for impairment (148,720) (221,873) (148,720) (148,720)
Carrying value of exploration costs Per Note 7 8,072,858 2,221,703 1,251,890 390,113
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Marathon Resources Limited | ACN 107 531 882

NOTE 15 – Tenements and joint ventures (con’t)

In respect of the Mulga Well tenement (EL 3211) the company continues to hold a 100% interest in the rights to hard rock exploration while being a party to a joint venture in respect of Palaeochannel exploration over the tenement.

The Mabel Creek and Woorong Creek joint ventures were brought to an end effective on 16 August 2007. All expenditures in respect of those tenements has been written off.

The Glenlyle joint venture was surrendered on 1 May 2007 and expenditure thereon written off.

Interests in unincorporated joint venture operations at the date of this report were as follows:

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Name of entity Principal activity Joint Venture Partner 2007 2006
Coondambo Mineral exploration Platsearch NL 50% 50%
Bon Bon* Mineral exploration UraniumSA 30% 0%
MacDowell Hill Mineral exploration UraniumSA 30% 0%
Mulga Well Mineral exploration UraniumSA 30% 0%
Mabel Creek Mineral exploration Minotaur Exploration Ltd 0% 51%
Woorong Creek* Mineral exploration Minotaur Exploration Ltd 0% 51%
Kalymna Mineral exploration PS & GF Forwood 90% 90%
Glenlyle Mineral exploration PS & JA Forwood 0% 90%
Warburton Mineral exploration Primary Resources Lts 15% 0%
The company’s interest in the unincorporated joint ventures are earned pursuant to agreements providing for minimum
exploration expenditures over defined time lines, as follows: -
Joint venture operations ceased or surrendered.
** The Company’s interest in these joint ventures entered into on 18 October 2006 is free carried.
All expenditures are to be met by the joint venture partner.
The Company meets all exploration costs of these joint ventures.
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NOTE 16 – Commitments for expenditure and contingent liabilities

Exploration Expenditure Commitments

The Company has certain statutory obligations to perform exploration work and expend minimum amounts of money on its mineral exploration tenements.

The terms of current and future joint ventures, granting of new licences and changes to existing licences will impact on the Company’s expenditure commitments.

Total annual expenditure commitments at balance date in respect of minimum expenditure requirements not provided for in the financial statements are approximately:

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Consolidated
2007 2006
Not longer than 1 year 1,084,000 932,400
Longer than 1 year and not longer than 5 years 440,000 50,000
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Marathon Resources Limited | ACN 107 531 882

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 17 – Segment information

The consolidated entity operates solely in the mining and exploration industry in Australia.

NOTE 18 – Financial instruments

(a) Financial Risk Management

The group’s financial instruments consist mainly of deposits with banks, short-term investments, accounts payable, loans to and from subsidiaries and leases.

The main purpose of non-derivative financial instruments is to raise finance for group operations.

The group does not hold any derivative instruments.

i. Treasury Risk Management

A finance committee consisting of senior executives of the group meet on a regular basis to evaluate management strategies in the context of the most recent economic conditions and forecasts.

ii. Finance Risks

The risks the group is exposed to through its financial instruments are liquidity risk and interest rate risk.

Liquidity risk

The group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate sources of funding are available.

Interest rate risk

The consolidated group’s exposure to interest are at risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on classes of financial assets and liabilities, is as follows:

The company has term deposits of $1,812,058 as at 30 June 2007 (2006: $4,187,184) which are deposited for less than one year at an average weighted interest rate of 6.40% (2006: 5.64%).
The Company has no formal overdraft facility and no term borrowing arrangements.
All other financial assets and liabilities are non-interest bearing.

(b) Financial Instruments

Net fair value

The carrying amount of financial assets and financial liabilities recorded in the financial statements represent their respective net fair values, determined in accordance with the accounting policies disclosed in Note 1.

Marathon Resources Limited | ACN 107 531 882

NOTE 19 – Notes to the statement of cash flows

(a) Reconciliation of cash

For the purposes of the statement of cash flows, cash includes cash on hand and in banks and investments in money market instruments. Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows:

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Consolidated Parent
2007 2006 2007 2006
Cash on hand 500 500 500 500
Cash at call 328,414 12,800 328,414 12,800
Short-term bank deposit 1,812,058 4,187,184 1,742,058 4,117,184
2,140,972 4,200,484 2,070,972 4,130,484
The effective interest rate on short-term bank deposits was 6.4% (2006: 5.64%). All deposits are for less than 12 months.
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(b) Reconciliation of Cash Flow from Operations with Loss after Tax

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Consolidated Parent
2007 2006 2007 2006
Loss after income tax (5,862,541) (1,454,267) (5,848,684) (1,381,114)
Cash flows excluded from profit
attributable to operating activities:
Loss on disposal of plant and 5,127 - 5,127 -
equipments
Non-cash flows in profit
Depreciation 56,048 38,396 56,048 38,396
Impairment of exploration assets - 221,873 - 148,720
Employee benefits expense – share 1,580,930 77,400 1,580,930 77,400
based payments
Fair value adjustment on financial 115,000 - 115,000 -
assets
Exploration expenditure written off 218,809 - 218,809 -
Income tax attributable to share issue 18,000 70,211 18,000 70,211
costs
Financial assets received for entering (874,012) - (874,012) -
Joint Venture
Change in assets and liabilities
(Increase) Decrease in receivables (389,350) (29,087) (276,220) (7,614)
Increase (Decrease) in payables 2,266,020 133,985 2,266,020 133,985
Increase (Decrease) in provisions 15,670 (10,674) 15,670 (10,674)
Net Cash provided by (used in) (2,850,299) (952,163) (2,723,312) (930,690)
operating activities
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Marathon Resources Limited | ACN 107 531 882

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 20 – Key management personnel compensation

Names and positions of key management personnel in office at any time during the financial year are:

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Peter Williams Chairman (non-executive)
John Santich Managing Executive Director
Wieslaw Bogacz Executive Director
William Latimer Non-Executive Director Retired 29/11/2006
Denis Wood Non-Executive Director Appointed 29/11/2006
Chen Zeng Non-Executive Director Appointed 27/12/2006
Stuart Appleyard Secretary
Stuart Hall Chief Executive Officer Appointed 15/04/2007
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Key Management Personnel Remuneration
Directors Salary and Superannuation Ex gratia Other Share-based Total
Fees wages contributions payments (1) Payments
Options
P.L. Williams 2007 50,000 - 4,500 - - - 54,500
2006 39,583 - 3,562 - - - 43,145
J. Santich 2007 - - - - 223,840 790,465 1,014,305
2006 - 114,968 9,525 - 40,875 - 165,368
W. Bogacz 2007 - - - - 257,952 790,465 1,048,417
2006 - 113,814 9,525 - 40,875 - 164,214
W.S. Latimer 2007 12,500 - 1,125 15,000 - - 28,625
2006 25,833 - 2,325 - - - 28,158
D Wood 2007 17,500 - 1,575 - - - 19,075
2006 - - - - - - -
C Zeng 2007 15,000 - - - - - 15,000
2006 - - - - - - -
S. M. Appleyard 2007 15,000 15,000 2,700 - - - 32,700
2006 25,833 - 2,325 - - - 28,158
S. Hall 2007 - 50,154 17,133 - - - 67,287
2006 - - - - - - -
Total 2007 110,000 65,154 27,033 15,000 481,792 1,580,930 2,279,909
2006 91,249 228,782 23,700 - 81,750 - 425,482
(1) Executive Directors, Dr J.R. Santich and Dr W. Bogacz, elected on the 1 April 2006 to convert to a consultancy based emolument arrangement
from salaried benefits in accordance with the relevant terms and conditions of their employment contracts.
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Marathon Resources Limited | ACN 107 531 882

NOTE 20 – Key management personnel compensation (con’t)

Options issued as part of remuneration for the year ended 30 June 2007

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Options Granted as Remuneration
Key Management Granted No Grant Date Value per Option Exercise Price $ First Exercise Last Exercise Date
Personnel at Grant Date $ Date
J. Santich 1,500,000 16-11-06 0.53 1.18 16-11-06 30-6-11
W. Bogacz 1,500,000 16-11-06 0.53 1.18 16-11-06 30-6-11
3,000,000
Details of the valuation methodology and inputs used to calculate the fair value at grant date have been included in Note 14. All options were granted
for nil consideration.
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Number of Options Held Key Management Personnel
Balance 1.7.2006 Granted as Option Exercised Net Change Other Balance 30.6.07
Compensation
Peter Williams 1,000,000 - - (500,000) 500,000
John Santich 500,000 1,500,000 - (500,000) 1,500,000
Wieslaw Bogacz 500,000 1,500,000 - (500,000) 1,500,000
Denis Wood - - - - -
Chen Zeng - - - - -
Stuart Appleyard 1,525,000 - - (500,000) 1,025,000
Stuart Hall - - - - -
Total 3,525,000 3,000,000 - (2,000,000) 4,525,000
* Net Change Other refers to options purchased or sold during the financial year.
All options on issue at year end are exercisable.
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Number of Shares Held Key Management Personnel
Balance 1.7.2006 Received as Option Exercised Net Change Other Balance 30.6.07
Compensation
Peter Williams 70,000 - - - 70,000
John Santich 2,090,000 - - (70,000) 2,020,000
Wieslaw Bogacz 2,210,000 - - - 2,210,000
Denis Wood - - - 136,364 136,364
Chen Zeng - - - - -
Stuart Appleyard 910,000 - - (280,000) 630,000
Stuart Hall - - - - -
Total 5,280,000 - - (213,636) 5,066,364
Net Change Other refers to shares purchased or sold during the financial year, or to the reliquinishing of sec 608(1) interests.
In addition to the shares and options detailed above, Mr Appleyard has an interest in a service trust entitlement to shares
and options as follows:
Shares Options
Stuart Appleyard 2007 - 9,300
2006 23,256 9,300
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Marathon Resources Limited | ACN 107 531 882

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 21 – Related party transactions

Transactions between related parties are on normal commercial terms and conditions no more favourable than those to other parties, unless otherwise stated.

The company has paid Cluan Capital Management Pty Ltd $84,000 (2006: $46,400). This company is associated with Mr P.L. Williams, the Chairman of Marathon Resources Limited.

The Company‘s lawyers are Lynch Meyer of which firm Mr S. M. Appleyard is a partner. Lynch Meyer received payments for professional services during the year of $82,042 (2006: $56,513).

The two Executive Directors, Dr J.R. Santich and Dr W. Bogacz, are directors of Archon Pty Ltd and Archon Technologies Pty Ltd respectively. Both companies provided services to Marathon Resources Limited in connection with the provision by them of Executive Directors to the Company and were paid $223,840 and $257,952 respectively, in this regard ($40,875 each covering the period 1 April to 30 June 2006)

The Company has advanced funds to its subsidiary during the year amounting to $5,116,365 (2006: $1,774,261). The balance owing from the subsidiary at year end was $6,890,626 (2006: $1,774,261).

NOTE 22 – Auditor’s remuneration

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Consolidated Parent
2007 $ 2006 $ 2007 $ 2006 $
Amounts received or due & receivable by the Auditor
of the company for:
- auditing & review services 21,500 18,300 21,500 18,300
- other services - - - -
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NOTE 23 – Matters subsequent to the end of the year

There is no matter or circumstance that has arisen since 30 June 2007 that has significantly affected, or may significantly affect:

(a) the consolidated entity’s operations in future financial years, or
(b) the results in future financial years, or
(c) the consolidated entity’s state of affairs in future financial years.

On the 4th of July 2007 Buttermere Australia Pty Ltd/Crosby Capital Partners Inc. withdrew it’s unsupported takeover offer made for all of Marathon’s shares. As a result additional fees became due to the Company’s advisors, Baron Partners Limited. Note 10 details the additional charge.

Marathon Resources Limited | ACN 107 531 882

NOTE 24 – Earnings per share

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Consolidated
2007 $ 2006 $
Basic earnings per share (0.122) (0.037)
Loss used to calculate basic EPS (5,862,541) (1,454,267)
Weighted average number of ordinary shares 48,247,775 39,234,145
outstanding during the year used in calculating
basic EPS
The weighted number of share options on issue during the year is not included in the calculation of
diluted earnings per share because they are anti-dilutive for both reported years. These options could
potentially dilute basic earnings per share in the future.
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NOTE 25 – Economic dependency

As a junior explorer the Group has only sufficient funds on hand to meet ongoing minimum short term corporate and exploration commitments. As a consequence the Directors are considering the following activities:

negotiate to farm out the Group’s surplus exploration commitments;
steps to identify sources of additional capital; and
reduction in the rate of expenditure.

The Group is economically dependent on the achievement of one or all of the above options.

NOTE 26 – Company details

The registered office and principal place of business is:

Marathon Resources Limited

235 Port Road

Hindmarsh South Australia 5007

Marathon Resources Limited | ACN 107 531 882

SHAREHOLDER INFORMATION

At the date of this report all the issued securities of the Company comprised ordinary shares none of which were subject to any restrictions.

Substantial shareholders at 10th September 2007

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Name Fully paid shares Ordinary shares %
CITIC Australia Pty Ltd 5,285,136 9.73
Talbot Group Holdings Pty Ltd 5,285,136 9.73
HSBC Custody Nominees (Australia) Ltd 3,196,466 5.88
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Distribution of shareholdings at 10th September 2007

All securities issued by the Company are fully paid ordinary shares entitling the holders to participate in dividends and proceeds on winding up of the Company in proportion to the number of shares held. On a show of hands every holder of the shares present at a meeting in person or by proxy is entitled to one vote and upon a poll each share counts as one vote.

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Range Total holders Number of shares
1 – 1,000 857 562,865
1,001 – 5,000 1030 2,829,287
5,001 – 10,000 429 3,593,996
10,001 – 100,000 389 12,423,466
100,001 – maximum 44 34,927,881
Total 2,749 54,337,495
At 10th September 2007 a marketable parcel constituted 140 shares.
The number of shareholders holding less than a marketable parcel was: 44 3,189
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Twenty largest shareholders at September 2007

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Name Fully paid ordinary shares % of issued capital
CITIC Australia Pty Ltd 5,285,136 9.73
Talbot Group Holdings Pty Ltd 5,285,136 9.73
HSBC Custody Nominees (Australia) Limited 3,196,466 5.88
ANZ Nominees Limited 2,483,896 4.57
Pan Australian Nominees Pty Limited 2,097,592 3.86
Archon Resource Technologies Pty Ltd 1,647,218 3.03
National Nominees Limited 1,303,842 2.40
Sheoak Runner Pty Ltd 1,240,000 2.28
FMS Pty Ltd 1,164,300 2.14
HSBC Custody Nominees (Australia) Limited 926,106 1.70
UBS Wealth Management Australia Nominees Pty Ltd 916,957 1.69
CITICORP Nominees Pty Ltd 768,271 1.41
Sheoak Runner Pty Ltd 760,000 1.40
Mr William Sydney Latimer 570,000 1.05
JP Morgan Nominees Australia Limited 548,176 1.01
Wieslaw Bogacz + Halina Bogacz 503,324 0.93
AMMF Investments Pty Ltd 500,000 0.92
Cluan Capital Management Pty Limited 500,000 0.92
Mrs Georgia Georgaklis 415,500 0.76
Ms Carol Ann Agnew 384,210 0.71
Total 30,496,130 56.12
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CORPORATE DIRECTORY

Directors

Peter Williams

Dr John Santich Dr Wieslaw Bogacz Denis Wood Chen Zeng

Chairman

Executive Director Executive Director Non-Executive Director Non-Executive Director

Auditors

Grant Thornton Chartered Accountants 67 Greenhill Road Wayville SA 5066

Share Registrar

Chief Executive Officer

Stuart Hall

Company Secretary

Stuart Appleyard

Registered and Principal Business Office

235 Port Road Hindmarsh SA 5007

Lawyers

Lynch Meyer 190 Flinders Street Adelaide SA 5000

Watsons Lawyers 60 Wellington Square North Adelaide SA 5006

Computershare Registry Services Pty Ltd Level 5, 115 Grenfell Street Adelaide, South Australian 5000 Investors enquiries: 1300 556 161 International: +61 3 9415 4000

Marathon Resources Limited

ABN 31 107 531 822

PO Box 566 Hindmarsh SA 5007 Telephone: 08 8348 3500 Fax: 08 8346 8111 [email protected] www.marathonresouces.com.au

Marathon Resources are proud to support the Royal Flying Doctors Service and the Adelaide University Geological Society.

Bankers

National Australia Bank 22 – 28 King William Street Adelaide SA 5000

This Annual Report reflects Marathon Resources’ commitment to a green future for generations to come. Using 55% recycled content and pulp sourced from sustainable forests, the paper used in this report meets the latest standards in renewable resources and committment to biodiversity.

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AI assistant

NEURIZER LTD — Annual Report 2007

65442_rns_2007-09-24_c0763819-54bf-4a4e-be7f-b2782e9ca7e7.pdf

CONTENTS

Operational highlights

Corporate highlights

Dear Shareholders

Highlights

The Paralana Mineral System – EL 3258

Other Tenements

Crosby Takeover

Board of Directors

Chief Executive Officer

Future Plans

CHAIRMAN’S ADDRESS

Conclusion

1. Community

2. Environment

3. Safety

4. People

Mt Gee

DIRECTORS’ REVIEW OF OPERATIONS

Mt Gee (U) EL3258

Mulga Well Project (Cu-Au,U) (EL 3593 & EL 3211)

Mabel Creek Project (Cu-Au) (EL 3455 & EL3324)

Mongolata Project (EL 3164)

Pinda Springs (Cu-Au, Zn-Pb) (EL 3159)

Warburton Joint Venture

(Cu, Au, Ni) E69/1564 E69/2211

Western Victoria (Au) EL 4526

DIRECTORS’ REPORT

Directors

Peter Leonard Williams

John Reginald Santich

Wieslaw Bogacz

Information on Directors

Peter Williams BEc FCA

John Santich BE MEngSc PhD DipLaw MSocSc EXECUTIVE DIRECTOR Appointed 28th January 2004

Wieslaw Bogacz Msc Eng PhD Eng EXECUTIVE DIRECTOR Appointed 28th January 2004

Company secretary

Corporate governance

Significant changes in the state of affairs

Principal activities

Review of operations and operating results

Dividends

Future developments, prospects and business strategies

Environmental issues

After balance date events

Options

Auditors independence

Directors’ and Executives’ remuneration

Options issued as part of remuneration for the year ended 30 June 2007

Contracts of Service

Meetings of Directors

Indemnities insurance

Proceedings

In 2005-06 Australia exported more than 10,000 tonnes of uranium oxide valued at $546 million.

CORPORATE GOVERNANCE STATEMENT

The Corporate Governance Plan

1. Lay solid foundations for management and oversight

2. Structure the board to add value

6. Respect the rights of shareholders

DIRECTORS’ DECLARATION

Peter L Williams



Report on the financial report

Auditor’s opinion

Emphasis of Matter – Economic Dependency

AUDITORS INDEPENDENCE DECLARATION



FINANCIAL STATEMENTS

Income Statement

Balance Sheet

Statement of changes in equity

Cash flow statement

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1 – Statement of significant accounting policies

Compliance with IFRS

Basis of Preparation

Reporting Basis and Conventions

NEURIZER LTD Annual Report 2007