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2013

MARATHON RESOURCES ANNUAL REPORT

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Marathon Resources Limited

ACN 107 531 822

Annual Report 1st July 2012 to 30th June 2013

Corporate Directory

Directors

Peter Williams CHAIRMAN (NON-EXECUTIVE) Chen Zeng NON-EXECUTIVE John G (Shad) Linley CHIEF EXECUTIVE OFFICER Christopher Schacht NON-EXECUTIVE

Company Secretary

Stuart Appleyard

Registered & Principal Business Office

Unit 8 53-57 Glen Osmond Road Eastwood SA 5063

Bankers

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

Principal Lawyer

Watson Lawyers Ground Floor 60 Hindmarsh Square Adelaide SA 5000

Auditors

Grant Thornton South Australian Partnership Chartered Accountants Level 1 67 Greenhill Road Wayville SA 5066

Share Registrar

Computershare Registry Services Pty Ltd Level 5, 115 Grenfell Street Adelaide SA 5000 Investor enquiries: 1300 556161 International: +61 3 9415 4000

Marathon Resources Limited

ABN 31 107 531 822 PO Box 181 Fullarton SA 5063 Telephone: 08 8348 3500 Facsimile: 08 7225 6990 [email protected]

Corporate Directory _______2 Chairman’s Address ________4 Directors’ Report (including Director’s Review of Operations) __6 Corporate Governance Statement _____ 7 Director’s Declaration _______ 19 Auditor’s Independence Declaration ______20 Independent Audit Report ______ 21 Financial Statements ________ 24 Notes to Financial Statements ______28 Shareholder Information ______ 56

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

CHAIRMAN’S ADDRESS

I am pleased to report to the shareholders of Marathon Resources Limited (“Marathon”) on activities for the year ended 30th June 2013. On behalf of the Board of Directors therefore, I present the Tenth Annual Report of the Company and outline the significant events that have occurred during the year and since year end which affect the direction of the Company.

I have advised you previously of the unprecedented action taken by the South Australian Government (“SA Government”) in 2012 to preserve Arkaroola from mining forever. Marathon’s Mt Gee Exploration Lease EL 4355, in the Northern Flinders ranges area of South Australia expired in February 2012 and as a result of the SA Government’s proclamation to prevent exploration and mining in the area, including on our lease, exploration and development activities ceased. Consequently, Marathon was required to rehabilitate the exploration lease and exit the Mt Gee prospect. Settlement of the action taken by Marathon against the SA Government in the Supreme Court resulted in $5m compensation being received and all exploration and rehabilitation costs have now been written off. Marathon held in reserve all its investment in fixed assets required for exploration and has commenced during the 2013 year new programs for mineral exploration in South Australia.

The year ended 30th June 2013 has been a difficult year generally in the mining industry and particularly in the exploration sector where small public companies have had funding issues. The deterioration of market capitalisations has meant that many companies have curtailed fund raising activities to avoid dilution of their capital bases. Risk capital in this industry has been hard to secure and the prospect of flow-through tax incentives is a welcome initiative.

The cost and the scale of exploration and mine development are extensive and in some cases are prohibitive, and the decline in base metal prices has seen many projects held over or discarded. There has been activity in Western Australia in precious metals but the industry in South Australia remains very soft. There are several factors impacting on this:

(i) The deferral by BHPB of the Olympic Dam expansion continues to affect employment directly in the sector and also service industries have declining prospects;
(ii) Despite the protestations, sovereign risk is an issue for the State and investment particularly in uranium will take a long time to recover;
(iii) Extensive and exhaustive regulatory approvals are disincentives to mining exploration. The cost of securing approvals over many Government Departments, each seeking elevated approval processes is bad enough; the time delays in meeting approvals has become a burden for the industry. Both Government and the bureaucracy need to direct substantial effort to encouraging an industry which is vital to the State’s future.

The mining industry in SA is more likely to see investments from small to medium operators – not the major global players– and with SA’s vast geographic area and limited infrastructure, we will need to optimise investment in power, water, port and shipping facilities to enable reasonable economic growth to occur.

Marathon has recently completed a respectful native title clearance and the company expected to meet the costs of this important part of our native title obligations. However there is community benefit in ensuring that native title responsibilities are spread widely and not only to the mining company initiating the survey. In our case the cost of completing the clearance could exceed the cost of the initial drilling program planned for the area.

SA will struggle to attract exploration if up-front regulatory and licence costs and time delays, make the risks too great.

2013 Activities

Marathon continued to examine opportunities for investment throughout the last 12 months and we have considered further investments after year end.

In April 2013 our wholly-owned subsidiary Bonanza Gold Pty Ltd, entered into a farm-in arrangement with Australian Desalinated Water Pty Ltd which holds a portfolio of assets in SA and Victoria prospective for mineral sands and other minerals. We remain confident that the mineral sands prospects are good and will provide future value for shareholders. Subject to regulatory approvals drilling is expected to commence as soon as practicable at the Oakvale site where walk-up targets are ready for exploration. Other areas are presently being assessed for their commercial value.

Our farm-in agreement provides for a release of those properties without further costs to, and commitment by, Marathon if the initial drilling is unsuccessful.

In September 2013 Marathon entered into a farm-in agreement with SAEX Pty Ltd over the Walparuta project in the north east of SA. An airborne electromagnetic survey has been committed for October 2013 and anomalies for copper gold and other minerals appear encouraging. Drilling can commence on existing targets as soon as approvals are granted and the EM survey will be concluded by the end of October 2013.

In addition to these projects Marathon has examined approximately 180 projects in Australia and overseas. Most have a risk profile which makes the cost or the nature of the operation unacceptable to us. The company has limited resources and we have avoided greenfields targets accordingly where substantial commitment of limited funds and resources was required.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

During the year the company reduced overheads, terminated executive contracts and limited its scope of activities to analysing market opportunities. It is regretted that the operational personnel group was disbanded but the company could not afford to retain the level of past operating expenditure. As soon as investment discussions are progressed Marathon is confident that the required level of expertise and experience can be recruited.

Conclusion

The opportunities given to us this year have produced two good exploration prospects for the company to conduct cost effective and expeditious drilling programs. At the same time we have been able to analyse a number of major mineral and energy projects which may be appropriate investments for us. We are confident that transactions of value for investing in new mining projects can be made and we have the ability to move quickly.

We have preserved our capital base, maintained good relations with major stakeholders and advisors and reduced our corporate overheads, all in preparation for new ventures.

The dedication and commitment of the Board and staff during 2013 has been excellent and I commend them to you.

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Peter L Williams

Chairman

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MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

DIRECTORS’ REPORT

The directors present their report on Marathon Resources Limited entity (“Group”) for the year ended 30 June 2013.

DIRECTORS

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

Peter Williams (appointed 21.05.2004) Chen Zeng (appointed 27.12.2006) Christopher Schacht (appointed 24.01.2008) John G. Linley (appointed 30.06.2008) 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 – Chairman (non-executive)

BEc. FCA

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.

Chen Zeng – (non-executive)

BA (Economics) Masters Degree in International Finance from Shanghai University of Finance and Economics

Appointed 27th December 2006

Mr Chen Zeng is Chairman of CITIC Australia Pty Ltd and CITIC Resources Australia Pty Ltd., the Australian arm of China’s CITIC Group Corporation. He is a Vice Chairman & CEO of CITIC Resources Holdings Ltd (Hong Kong listed) and a nonexecutive Director of CITIC Dameng Holdings Ltd (Hong Kong listed) and Alumina Limited (ASX and NYSE) listed. Mr Zeng was also a Director of Macarthur Coal Ltd (delisted from ASX) until October 2011. Mr Zeng has over 23 years’ experience in business operations and development, project investments, asset restructuring and commodity trading. He is a member of the Company’s Audit Committee.

Christopher Schacht – (non-executive)

Appointed 24th January 2008

Christopher Schacht is a qualified teacher who entered political service in the 1970’s as a ministerial advisor to both SA State Government and to the Federal government. Mr Schacht served in the Senate of the Federal Parliament for 15 years until 2002. During his time as a Minister from 1993 to 1996, he held the portfolios at various times of Science, Small Business, Customs and Construction. Currently, a self-employed consultant, advisor and investor, Mr Schacht is the President of the Australian Volleyball Federation and in October 2006 he was elected to the Legal Commission of the FIVB (Federation Internationale de Volleyball) for a term ending in September 2012 and elected to the board of the FIVB for a four year term ending in 2016. Mr Schacht is a member of the University of Adelaide Council. He is the chairman of the Company’s Audit Committee.

John G (Shad) Linley – Chief Executive Officer

Doctorate of Philosophy (Adelaide University), BSc (Hons), F AusIMM (CEO)

Appointed 30th June 2008 (Non-Executive) Appointed 10th June 2009 (CEO)

Dr Linley is a qualified geologist holding a PhD from the University of Adelaide. Recently CEO of Sun Metals, the world’s most efficient and environmentally sensitive zinc refinery was successfully built and operated under his stewardship on the edge of the Great Barrier Reef. Dr Linley’s career has also included roles such as the Vice President of TexasGulf Australia, Director of the Centre for Strategic Industrial and Resource Development in Brisbane and positions with Fluor Engineers and Constructions where he was involved in the Olympic Dam project. Dr Linley is also Chairman of Kagara Ltd (ASX listed).

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

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 consultant with 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. He is secretary 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 Recommendations, with any departures summarised at page 18. The Corporate Governance Statement forms a separate part of the Annual Report.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

In the prior year, the Company ceased all mineral exploration activities following the mining ban in Arkaroola. This issue, the Company’s rehabilitation activities, and the subsequent and ongoing investigation of opportunities were canvassed in the Chairman’s address in the 2012 Annual Report.

In the period under review the Company recommenced exploration activity, as announced by ASX release on 30 April 2013 and more fully detailed in the Review of Operations and Operating Results following and in the Chairman’s address. Otherwise there have been no significant changes in the state of affairs of the Company.

AFTER BALANCE DATE EVENTS

There are no after balance date events of consequence. The Board of Directors continues to review all opportunities presented and which it considers may enhance shareholder value. The Chairman’s address details the Board’s considerations.

PRINCIPAL ACTIVITIES

The principal activity of the Group is mineral exploration. The Board is conservatively utilising available funds in its continuing review of mining and energy industries which meet strategic objectives for consideration by the shareholders and ASX as soon as practicable. Exploration activity has recommenced as detailed in the Review of Operations and Operating Results.

REVIEW OF OPERATIONS AND OPERATING RESULTS

The Director’s Review of Operations included in the Company’s 2012 Annual Report indicated that extensive assessment of prospects for investment in mineral exploration and other projects had been undertaken with approximately 150 prospects then having been examined in base and precious metals, energy and related technology areas, to determine a suitable investment for the Company. That assessment continues and the Directors have now reviewed some 30 additional prospects.

One such prospect resulted in a Trading Halt on 4 February 2013, which was subsequently extended by Voluntary Suspension to enable further time to finalise negotiations and conclude an agreement concerning the future operations of the Company. The Voluntary Suspension was lifted on 13 February 2013, when the parties were unable to reach a binding agreement on terms acceptable to Marathon.

Therefore it was pleasing to be able to report in April 2013 that the Company’s wholly owned subsidiary Bonanza Gold Pty Ltd, had entered Heads of Agreement with entities associated with mining entrepreneur and geologist Mr David Clarke (Australian Desalinated Water Pty Ltd - ADW). Marathon has acquired exclusive rights to explore and evaluate ADW controlled tenements, with an option to acquire 78% of ADW, subject to certain conditions.

The consolidated operating loss of the Group for the financial year to 30 June 2013 after applicable income taxes was $ 2,055,085 (2012 Loss of $ 15,165,550). Operating costs and overheads have been curtailed to preserve the Company’s resources.

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 continues to investigate new opportunities for approval by the Company’s shareholders and the ASX if required. The outcomes of these investigations cannot be predicted at this time. The Group may require further capital to sustain its activities.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

ENVIRONMENTAL ISSUES

The Group’s operations are currently not subject to environmental regulation.

No notification of any breach of any environmental regulation has been received in respect of any of the Company’s prior exploration activities during the year.

OPTIONS

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

Grant Date Date of Expiry Exercise Price (1) At Grant Post 2011 Rights 15.12.2009 31.12.2014 $1.10 $1.077 21.10.2010 15.10.2013 $0.34 $0.317 21.10.2010 15.10.2013 $0.75 $0.727 16.11.2010 01.11.2013 $0.876 $0.853 16.11.2010 01.11.2014 $1.25 $1.227 16.11.2010 01.11.2015 $1.75 $1.727	Number under Option 1,000,000 490,000 50,000 500,000 750,000 750000
	, 3,540,000

(1) Following a rights issue in February 2011 unexercised options at that date become subject to an exercise price reduction.

During the year ended 30 June 2013, and to the date of this report no ordinary shares of Marathon Resources Limited were issued on the exercise of options.

No new options were granted during the year or up to the date of this report

1,000,000 options expiring on 2 September 2012 at an exercise price of $0.80¢ each were not exercised and lapsed on that date.

None of the options on issue entitles the holders to participate, by virtue of the options, in any dividend or share issue of any other corporation.

DIRECTORS’ AND EXECUTIVES’ REMUNERATION – AUDITED

Remuneration Policy

The remuneration policy is designed to align Key Management Personnel objectives with shareholder and business objectives by providing a fixed remuneration package to Non-executive Directors and time based remuneration to Executive Directors. The Board of Marathon believes the policy to be appropriate and effective in attracting and retaining the best Directors and Executives to manage and direct the Group, as well as create goal congruence between Directors, Executives and shareholders.

The Company’s policy for determining the nature and amounts of emoluments of board members and other Key Management Personnel of the Company is as follows.

The Company’s Constitution specifies that the total amount of remuneration of Non-executive Directors shall be fixed from time to time by a general meeting. The current maximum aggregate remuneration of Non-executive Directors has been set at $500,000 per annum. Directors may apportion any amount up to this maximum amount amongst the Non-executive Directors as they determine. Directors are also entitled to be paid reasonable travelling, accommodation and other expenses incurred in performing their duties as Directors. The remuneration of the Chief Executive Officer is determined by the Non-executive Directors and approved by the Board as part of the terms and conditions of his employment which are subject to review from time to time.

The remuneration of other executive officers and employees is determined by the Chief Executive Officer subject to the approval of the Board.

Non-executive Director remuneration is by way of fees and statutory superannuation contributions. Non-executive Directors do not participate in schemes designed for remuneration of executives but they may receive options or bonus payments subject to shareholder approval and are not provided with retirement benefits other than salary sacrifice and statutory superannuation.

The Company’s remuneration structure is based on a number of factors including the particular experience and performance of the individual in meeting key objectives of the Company. The Board is responsible for assessing relevant employment market conditions and achieving the overall, long term objective of maximising shareholder benefits, through the retention of high quality personnel.

The Company does not presently emphasise payment for results through the provision of cash bonus schemes or other incentive payments based on key performance indicators of Marathon given the nature of the Company’s business as a mineral exploration entity and the current status of its activities. However the Board may approve the payment of cash bonuses from time to time in order to reward individual executive performance in achieving key objectives as considered appropriate by the Board.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

DIRECTORS’ AND EXECUTIVES’ REMUNERATION – AUDITED (cont)

The Company also has an Employee Share Option Plan approved by shareholders that enables the Board to offer eligible employees options to acquire ordinary fully paid shares in the Company. Under the terms of the Plan, options to acquire ordinary fully paid shares may be offered to the Company’s eligible employees at no cost unless otherwise determined by the Board in accordance with the terms and conditions of the Plan. The objective of the Plan is to align the interests of employees and shareholders by providing employees of the Company with the opportunity to participate in the equity of the Company as an incentive to achieve greater success for the Company and to maximise the long term performance of the Company.

As the Company is a mineral exploration entity, in the opinion of the Board, the Company’s earnings and the consequences of the Company’s performance on shareholder wealth are not related to the Company’s remuneration policy.

Set out below is a summary of key Management personnel remuneration:

Directors’ and Executives’ Remuneration

		Directors	Salary	Superannuation	Share-based	Other	Total	% of
Directors		Fees	and wages	contributions	Payments Options	(1)		remuneration consisting of
								options
P L Williams	2013	60,000	-	5,400	116,734	103,125	285,259	41%
	2012	60,000	-	5,400	155,244	150,000	370,644	42%
C Zeng	2013	43,600	-	-	-	-	43,600	-
	2012	40,600	-	3,000	-	-	43,600	-
C Schacht	2013	40,000	-	3,600	-	-	43,600	-
	2012	40,000	-	3,600	-	-	43,600	-
J Linley	2013	40,000	112,499	13,725	-	-	166,224	-
	2012	40,000	150,000	17,100	-	-	207,100	-
Executives
S Appleyard	2013	-	47,200	17,800	-	-	65,000	-
	2012	-	25,000	40,400	-	-	65,400	-
						(2)
D Tyson	2013	-	177,880	27,670	-	129,462	335,012	-
	2012	-	207,821	16,830	-	-	224,651	-
Total	2013	183,600	337,579	68,195	116,734	232,587	938,695
	2012	180,600	382,821	86,330	155,244	150,000	954,995

(1) The amount of $ 103,125 (2012 $ 150,000) represents consulting fees paid to Cluan Capital Management Pty Ltd, a company in which the Chairman Mr PL Williams has an interest.

(2) The amount of $ 129,462 represents redundancy payment on 15th April 2013 to Mr Tyson based on the termination of his written contract of employment which was not due to expire until 31st December 2013.

Options issued

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 relevant directors and executives of Marathon Resources Limited and its subsidiary to increase goal congruence between executives, directors and shareholders.

There were no options issued during the year or up to the date of this report.

On 16th November 2010 2,000,000 options in three tranches were granted to the Chairman Peter Williams pursuant to shareholder approval at the AGM to take up ordinary shares as follows:

No. of Options	Exercise Date	Expiry
500,000	1 November 2012	1 November 2013
750,000	1 November 2013	1 November 2014
750,000	1 November 2014	1 November 2015

At balance date the first exercise date for 500,000 of the options had been reached.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

Options issued (con’t)

The value of the 16th November 2010 options were calculated using the Black-Scholes option model applying the following inputs:

		Tranche
	1	2	3
- Exercise price	$0.876	$1.25	$1.75
- Life of option	3 years	4 years	5 years
- Underlying share price	$0.625	$0.625	$0.625
- Expectant share price volatility	64.5%	64.5%	64.5%
- Risk free rate	5.13%	5.13%	5.23%
- Number of options granted	500,000	750,000	750,000
- Aggregate fair value of options granted	$114,967	$165,439	$161,966

The total fair value of the fair value of the options issued to the Chairman was $ 442,372 which will be recognised as an expense over the vesting period.

Included under share based payments expense in the statement of comprehensive income is $ 116,734 (2012 $ 155,244) which relates to that part of total equity settled share based payments transactions recognised as expense over the relevant vesting periods of the three tranches of options set out above.

Contracts of Service

The employment conditions, tenure and emoluments of the Chief Executive Officer and executives are evidenced in writing.

Name	Position		Duration of Contract	Duration of Contract	Period of Termination	Period of Termination	Termination payment	Termination payment
					Notice
Dr JG Linley	CEO		Ongoing1		3 month		none
S Appleyard	Company Secretary		Ongoing2		3 month		none
1. Commenced June	2009 & expired June 2010		and ongoing, on same terms,		subject to termination	notice
2. Commenced on listing and ongoing, subject to termination notice
umber of Options Held by Key		Management Personnel
	Balance	Granted as		Option	Net Change	Balance	Exercisable	Not Yet
	01.07.2012	Compensation		Exercised	Other*	30.06.2013		Exercisable
Peter Williams	2,250,000	-		-	-	2,250,000	750,000	1,500,000
Chen Zeng	250,000	-		-	-	250,000	250,000	-
Chris Schacht	250,000	-		-	-	250,000	250,000	-
John Linley	1,250,000	-		-	(1,000,000)	250,000	250,000	-
Stuart Appleyard	-	-		-	-	-	-	-
Total	4,000,000	-		-	(1,000,000)	3,000,000	1,500,000	1,500,000

Number of Options Held by Key Management Personnel

‘Net Change Other’ refers to options forfeited or expired during the financial year.

Number of Shares Held by Key Management Personnel

	Balance	Received as	Option Exercised	Net Change	Balance
	01.07.2012	Compensation		Other*	30.06.2013
Peter Williams	899,360	-	-	-	899,360
Chen Zeng	-	-	-	-	-
Chris Schacht	61,050	-	-	-	61,050
John Linley	375,000	-	-	-	375,000
Stuart Appleyard	1,749,053	-	-	-	1,749,053
Total	3,084,463	-	-	-	3,084,463

Net Change Other refers to shares purchased or sold during the financial year.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

Voting at 2012 AGM

At the 2012 AGM, Resolution 2 proposed the Adoption of the Remuneration Report for the year ended 30 June 2012.

Details of the proxy votes exercisable by all proxies validly appointed were advised to the meeting and are detailed in the following table

In Favour	Against	Abstain	Proxy Discretion	Excluded
18,265,904	18,615,565	8,871	377,236	549,364

As the “Against” vote was greater than 25%, potentially giving rise to a “first strike” under relevant Corporations Act legislation the Chairman;

explained to the meeting that the “Against” vote had been exercised by a major shareholder based on an erroneous judgement, who had subsequently revised and forwarded their proxy vote in favour of the resolution. This was received after close of proxy acceptance deadlines and not able to be used. It was anticipated a revocation of the “No“ vote and appointment of the Chairman to direct a “For” vote would be received prior to the commencement of the meeting. This would have corrected the situation, but did not occur for logistical reasons involving overseas/outsourced voting processes;
exercised his discretion to call a poll for Resolution 2 and invited questions of the members (No questions arose);
The poll was conducted on Resolution 2, with the following results:

In Favour	Against	Abstain
18,926,140	18,615,565	8,871
(50.41%)	(49.59%)

The resolution was carried as an ordinary resolution on the poll however pursuant to Section 250U and 250V of the Corporations Act 2001, failed to pass the 25% test and therefore is registered as a “first strike” against the Company.

In accordance with the Corporations Act 2001, at the 2013 AGM, there will be

a resolution to approve the Remuneration Report for 2013 for the Company; and
a conditional resolution to hold Director elections at a special meeting (“Spill Motion”).

Use of remuneration consultants

The Company did not engage remuneration consultants during the year.

MEETINGS OF DIRECTORS

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

Board Meetings	Appointed	Meeting Held	Meetings Attended
Peter Williams	21 May 2004	10	10
Chen Zeng	27 December 2006	10	9
Christopher Schacht	24 January 2008	10	10
John Linley	30 June 2008	10	10
Committee Meetings		Meetings Held	Meetings Attended
Audit Committee		(1)
Peter Williams		2	2
Chen Zeng		2	2
Christopher Schacht (Chairman)		2	2

(1): In the period under review and due to the ongoing and unique circumstances in which the company was placed matters dealt with by the Board dictated no efficiencies or other benefits would be gained by having separate audit committee meetings on all occasions. The issues relevant to the integrity of the Company’s financial reporting ordinarily dealt with by an audit committee were dealt with by the full Board on occasion. The Company has standing agenda items at each Board meeting to deal with audit related matters normally carried out by the audit committee. In appropriate circumstances the Board sought independent legal and accounting advice on pertinent aspects. The Company resumed formal audit committee meetings in the reporting period.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

INSURANCE PREMIUMS

Since the end of the previous year the Company has paid insurance premiums in respect of Directors’ and Officers’ liability and legal expenses’ insurance contracts.

The terms of the policies prohibit disclosure of details of the amount of insurance cover, the nature thereof and the premium paid.

PROCEEDINGS

The Company is not currently a party to legal proceedings brought against it or initiated by it at the date of this report.

AUDITOR’S 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 2013 has been received and is included in this report.

Signed in accordance with a resolution of the Board.

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Christopher Schacht Director

Peter L Williams Director

Dated at Adelaide, South Australia this 25th day of September 2013

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MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

CORPORATE GOVERNANCE STATEMENT

The Board of Directors (the Board) of Marathon Resources Limited (the Company) is committed to achieving and demonstrating the highest standard of Corporate Governance.

The Board guides the affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are accountable. The Board has responsibility for the overall Corporate Governance of the Company including its strategic direction, establishment of goals for its management and monitoring the achievement of these goals.

The individual Directors recognise that their primary responsibility is to the owners of the Company, its shareholders, while simultaneously having regard for the interests of all stakeholders and the broader community.

This statement outlines the Company’s Corporate Governance Practices in place during the financial year. The Company’s statement is made based on the ASX Corporate Governance Councils Corporate Governance Principles and Recommendations with 2010 Amendments.

Although the ASX Corporate Governance Council’s Recommendations are not mandatory, under listing rule 4.10.3 companies are required to provide a statement in their annual report disclosing the extent to which they have followed the recommendations in the reporting period, identifying any principles which have not been followed with reasons for not having done so.

The revised principles and the Company’s compliance with each principle are as follows:

1. Lay solid foundations for management and oversight

The role of the Board is covered by the Corporations Act 2001, ASX listing rules and the constitution of the Company. Its primary role is to represent shareholders and to promote and protect the interest of the Company with a view to creating long term shareholder wealth. In achieving these ends the Board overviews the development of strategies, the setting of objectives, the establishment of policies to be implemented by management and assumes responsibility for ensuring adequate systems of internal control, risk management and financial reporting. The Board also ensures the provision of resources to senior management to achieve the Company’s objectives and undertakes subsequent monitoring of their performance.

The Board Charter is set out on the Company’s website www.marathonresources.com.au

Pursuant to their appointment Non-Executive Directors usually have limited involvement in the day to day management of the Company unless the circumstances of the Company requires otherwise. The Board has appointed a Director as Chief Executive Officer, responsible for the operational and administrative performance of the Company and the provision of relevant information and input to the Board to enable it to discharge its responsibilities.

Senior management are subject to an Annual Performance Evaluation which is undertaken by the Board. The reviews are internal. The use of external facilitators is not warranted as the members of the Board have direct access to Management. The Chairman presides over the review process with input from other Directors. Review of senior staff performance is ongoing.

2. Structure of the Board to add value

The majority of the Board consists of non executive Directors. Those Directors holding shares in the Company either directly or indirectly, are not considered to be substantial shareholders. No non-executive Director of the Company has a material contractual relationship with the Company, other than as a Director. No Director is or has been employed in an executive capacity or acts or has acted as a material professional advisor, other than Dr Linley who was appointed to the role of CEO 10th June 2009.

Corporate Governance best practice recommends the majority of the Board comprise independent directors, with “independence” in ASX Recommendation 2.1 taken into account for this purpose. Of the Company’s non-executive Directors, Mr Zeng is Chairman of Citic Australia Pty Ltd a substantial shareholder of the Company and may be perceived as a nonindependent Director. Messrs Williams and Schacht are considered independent Directors. Despite the fact that the Board does not consist of a majority of independent Directors, the Board considers it presently has an appropriate balance of skills, experience and independence to properly fulfil its role.

The role of the Chair is undertaken by a separate dedicated independent Director.

The Board is cognisant of the need to review the composition of the Board from time to time to ensure an appropriate balance of skills, diversity, independence and experience relevant to the nature and extent of company operations and its future direction at any given point of time.

The Board does not have a separate nomination committee to oversee the procedure for the selection and appointment of new Directors.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

CORPORATE GOVERNANCE STATEMENT (con’t)

The scope and size of the Company dictates a small independent Board. When a need arises and where it is considered the Board would benefit from the appointment of a Director with specific skills and experience all members of the Board participate in seeking out appropriate potential candidates. In some instances assistance from external sources may be sought if necessary.

Directors (other than CEO) are subject to retirement by rotation at each Annual General Meeting with no Director (other than the CEO) entitled to hold office without re-election past the third Annual General Meeting since their appointment or 3 years whichever is sooner. The Board has in the past and may regularly change members and therefore does not undertake a formal performance evaluation of either each of the Directors or the Board as a whole.

The statutory Directors’ report contained in each Annual Report sets out relevant experience and expertise on each Director, their period in office and status.

More detailed particulars of each Director are set out in the company’s web site at www.marathonresources.com.au

Access to Information

Any Director has the right to seek independent professional advice in connection with their duties and responsibilities at the Company’s expense.

Each Director has access to the Company Secretary. The Secretary is accountable to the Board through the Chair on all governance matters. The appointment or removal of the Secretary is a matter of decision for the Board.

3. Promote Ethical and responsible decision-making

The Directors are aware of and subscribe to the Code of Conduct of the Australian Institute of Company Directors.

Additionally the Company has a Code of Conduct built on highest standards of ethical behaviour. Directors and employees are expected to act with the utmost personal integrity, as required by the Company’s Code of Conduct.

The Company’s Code of Conduct is set out on the Company’s website www.marathonresources.com.au

To meet these obligations Directors and Senior Management seek to:

Comply with all legal obligations in a timely manner and promote active compliance within the Company.
Adopt practices necessary to meet the reasonable expectations of all of the Company’s stakeholders and the wider community.

Specifically Directors and senior management must:

Use the Company’s assets appropriately and efficiently for the Company’s benefit.
Ensure the securities market is fully informed of all matters requiring disclosure.
Not misuse information or their position for their own personal gain.
Avoid or fully disclose conflict of interest events or situations.

Further, Directors, management, employees, contractors and consultants must disclose to the Board immediately any situations where there is a real or apparent conflict of interest between them as individuals and the interest of the Company. The Board must consider and deal with the conflict in the appropriate manner.

If required by the Constitution or law, a Director who has a conflict of interest must leave a Board meeting but only for such a period as the Board meeting is addressing the specific matter in relation to which the Board member has a conflict of interest.

Trading in company securities

The Company’s Share Trading policy sets out the circumstances in which the Company’s officers, employees and contractors and consultants to the Company that are engaged in work for the Company (Representative) may trade or otherwise deal in the Company’s securities.

The Share Trading Policy prohibits any trading by a Representative whilst in possession of inside information compliance with the requirements of section 1043A of the Corporations Act 2001.

The Share Trading Policy also establishes trading windows for the Representative of the Company that have access to the Company’s financial, technical or other price sensitive information and prescribed exceptions to trading in a precluded period.

Representatives must seek written consent from the Managing Director (or Chairman, in the case of the Managing Director) prior to trading in the Company’s securities.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

CORPORATE GOVERNANCE STATEMENT (con’t)

Any acquisition or disposal of securities by Directors is reported to the ASX in compliance with the Corporations Act and ASX listing rules.

The Company’s Share Trading Policy is set out on the Company’s website www.marathonresources.com.au

DIVERSITY

The Board acknowledges the benefits of diversity in the workplace, encompassing a range of matters including (without limiting) differences in gender, race, ethnicity, age, disability and cultural background. The Company does not have a formal policy concerning diversity and the Board and senior management recruit persons based on skills and experience appropriate for the role concerned and do not discriminate based on gender race, ethnicity, age, disability or cultural background.

The Board does not otherwise set objectives for achieving gender or other diversity. The Board and senior management currently has no female representation. Of the Company’s eight permanent / part time employees, six are male and two are female. The issue will remain under Board oversight for review as the Company’s circumstances evolve.

4. Safeguard integrity in financial reporting

Directors have established an Audit and Risk committee comprising the Board’s three non executive Directors, Messrs Williams, Zeng and Schacht.

The committee is chaired by an independent Director who is not the Chair of the Board.

The members of the Audit and Risk committee are all financially literate with Mr Williams being a chartered accountant holding a Bachelor of Economics and Mr Zeng holding a Master’s Degree in International finance.

The annual Statutory Directors Report details the number of meetings held and attendees.

The Audit and Risk committee charter is set out on the Company’s website www.marathonresources.com.au

The committee’s principle responsibilities are:

review the integrity of the Company’s financial reporting and oversee the independence of external auditors
liaise with external auditors on matters arising from conduct of external audits
review compliance with laws, regulations, rules and policies that apply to the Company
review management reporting and financial controls
oversee company policy and procedure development
assess and manage the Company’s risk profile

The Company has appointed external auditors of acknowledged competencies and independence. The performance of the external auditors is reviewed annually taking into consideration assessment of performance, value and cost.

5. Make timely and balanced disclosure

The Board’s policy is to ensure strict compliance with the continuous disclosure regime to ensure that its obligations to disclose relevant information under the ASX Listing Rules and the Corporations Act 2001 (Cth) are met.

Board processes are structured to ensure all information particularly any that may be considered price sensitive is released in a timely manner, is factual and does not omit material information.

Company announcements to the ASX are simultaneously posted on the Company’s website.

The Company uses external geological services in developing the material for ASX JORC code reporting to ensure balance in reporting of resources.

An external Public Relations Consultant is used to disseminate information released to the market to ensure the widest possible circulation of material to external parties including Stockbrokers, Analysts, the media and most importantly the Company’s shareholders.

The Company has not publicly disclosed a formal disclosure policy and therefore has not complied with ASX Recommendation 5.1. Given the size of the Company, the Board does not consider disclosure to be appropriate. The Board takes ultimate responsibility for these matters.

6. Respect the rights of shareholders

The Board seeks to ensure that shareholders are informed of all major developments affecting the Company’s state of affairs.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

CORPORATE GOVERNANCE STATEMENT (con’t)

In addition to communication through its statutory reporting obligations via:

The Annual Report
The Interim Report
Quarterly cash flow and activities reports
ASX disclosures
Explanatory memorandum for AGM resolutions

The Company uses its website and external public relations services to disseminate information as widely as possible.

A Communications Manager is employed by the company to, among other things, promote the interests of shareholders.

The Company periodically issues a newsletter and uses audio/visual presentations in some media releases.

The statutory annual report is available to shareholders electronically.

The Company requires the attendance of a representative of its external auditors at its annual general meeting and encourages shareholders to attend and raise questions with the auditor’s representative or Directors.

7. Recognise and manage risk

The Board assumes ultimate responsibility for establishing the Company’s risk profile focus and for ensuring management has developed and adequately reports against sound systems of risk control.

The Audit and Risk Committee is also responsible for risk management and must ensure that controls are in place to monitor all levels of management in the efficient and effective discharge of their responsibilities by the use of independent analysis, appraisals, advice and recommendations.

The size and nature of the Company’s operations is such that risk is focused on a smaller than normal range of potential adverse events while not impacting potential opportunities.

The Company’s Risk management policy is set out on the Company’s website www.marathonresources.com.au

Key areas of risk which are regularly monitored are:

Operational risk

acquisition of new exploration tenements and their subsequent status
land access and native title considerations
physical exploration activities

These matters are regularly reported on to the Board in Managements’ Operation Reports.

Indigenous people

The Company proactively seeks to foster a respectful, cooperative and trusting relationship through honest and open communication with them and their advisors.

The Company acknowledges and accepts the bond and special interests that the indigenous people have over areas where the company carried out operations in the past and might carry out exploration activities in the future.

The Company recognises the legal, social, and economic obligations to develop and sustain relationships with Indigenous Traditional Owners at all sites where they hold Native Title custody. It recognises that during exploration and mining operational phases, it must comply with State and Commonwealth legal requirements relating to Native Title matters. Apart from the exploration relationship the Company participates in programs for aboriginal cultural enhancement.

HSE&C

The Company operates under a health, safety and environment system developed by management. The Board periodically reviews the adequacy and effectiveness of the system.

A schematic overview has been posted on the Company’s website.

The primary focus in this area is environmental management and compliance.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

CORPORATE GOVERNANCE STATEMENT (con’t)

Environment

The Company has always recognised the importance of sound environmental practice and promoted environmental awareness by all of its employees and contractors. Major exploration operations by the Company were conducted in an area of the Flinders Ranges which is environmentally sensitive.

This necessitated a commitment to continuous improvement of practices. The Board following independent appraisal initiated the development of a full EMS system ultimately leading to 1SO 14001 standard.

Consultants were appointed to assist the Company in developing its EMS system, and the system was finalised in the first half of 2009/2010 financial year..

Financial reporting

Management operates with Board defined limits of authority and a requirement to present monthly financial reports at a detailed level to Directors. These requirements assist in managing the risk of failure to achieve business objectives and protecting the Company’s assets.

In accordance with the requirements of Sec 295A of the Corporations Act 2001 the Board confirms it has received assurance from the CEO and Chief Financial Officer for the last financial year that:

Financial records have been properly maintained in accordance with section 286 of the Corporations Act
Financial statements and notes are in compliance with accounting standards as required by Sec 296 of the Corporations Act.
Financial statements and notes give a true and fair view of the financial performance and position at balance date required by Sec 297 of the Corporations Act.
Risk management and internal compliance and control systems are operating efficiently and effectively in all material respects.

Confirmation that the Board has received the assurance is set out in the Statutory Annual Directors’ Declaration.

8. Remunerate fairly and responsibly

The performance in establishing the remuneration of Executive Management and Executive Directors, when such office is held, is reviewed by the Board with the exclusion of the Executive concerned.

The remuneration of Non Executive Directors is set by reference to an aggregate cap approved by shareholders from time to time at the annual general meeting.

External advice is sought on remuneration matters when deemed necessary.

The company does not have a remuneration committee, as this role is undertaken by the Board.

The details of remuneration of Directors and Senior Management are set out in the Statutory Directors’ Report. The contribution of each Non Executive Director is taken into account in arriving at individual remuneration levels having regard for reasonable and competitive market rates.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

CORPORATE GOVERNANCE STATEMENT (con’t)

Pursuant to the cessation of mineral exploration activities in the 2012 year the Group’s governance policies as set out on the Company’s website were reviewed for ongoing relevance. While no changes were considered necessary, the Governance Statement included in the 2012 Annual Report stated subsequent year amendment may be required in the light of future new business direction and activities. Whilst the Company has recommenced exploration activity in Joint Venture, ongoing review will occur.

In accordance with listing rule 4.10.3 the company summarises its departures from the ASX’s principles of good corporate governance recommendations.

	Corporate Governance	Notification of Departure	Explanation
	Recommendations
2.1	Majority of Directors should be	Two of the four Directors are	The Board considers it presently
	independent	independent	has an appropriate balance of skills,
			experience and independence to
			properly fulfil its role
2.4	The Board should establish a	The Company does not have a	The Board is of the opinion that it is
	nomination committee	nomination committee	not of a sufficient size to warrant a
			nomination committee at this time
2.5	Companies should disclose	The Company does not have a formal	A change to composition of the
	the process for evaluating the	documented process	Board is considered indicative of an
	performance of the Board, its		ongoing process of evaluation of the
	committees and individual Directors		performance of Directors.
3.2	Companies should establish a policy	The Company does not have a formal	The Board and senior management
	concerning diversity and disclose	diversity policy	recruit persons based on skills and
	the policy or a summary of that		experience appropriate for the role
	policy		concerned and do not discriminate
			based on gender, age, ethnicity or
			cultural background
3.3	Companies should disclose in each	The Board does not set objectives for	As above, and subject to review by the
	annual report the measurable	achieving gender diversity and does	Board as Company circumstances
	objectives for achieving gender	not have a formal diversity policy	evolve.
	diversity set by the Board in
	accordance with the diversity policy
	and the progress towards achieving
	them.
4.0	Companies should establish an	Audit Committee members did	Matters the subject of an audit
	audit committee to safeguard	not meet discreetly as an Audit	committee were dealt with in full
	integrity in financial reporting	Committee in this reporting period	Board Meeting on occasion. Formal
		on all occasions	Audit Committee meetings resumed
			in the reporting period under review.
			The Company otherwise complies
			with CGR Principle 4
5.1	Companies should establish	The Company has not publicly	Given the size of the Company, the
	written policies designed to ensure	disclosed a formal disclosure policy	Board does not consider publication
	compliance with the ASX Listing		of a formal disclosure policy to be
	Rule disclosure requirements and		necessary. The Board takes ultimate
	to ensure accountability at a senior		responsibility for these matters.
	executive level for that compliance
	and disclose those policies or a
	summary of those policies.
8.1	The Board should establish a	The Company does not have a	The Board is of the opinion that it is
	remuneration committee	remuneration committee	not of a sufficient size to warrant a
			remuneration committee at this time
8.2	The remuneration committee	The Company does not have a	As above
	should be structured so it consists	remuneration committee
	of a majority of independent
	directors, is chaired by an
	independent chair and has at least
	3 members

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

DIRECTORS’ DECLARATION

The Directors of the company declare that:

The financial statements and notes set out on pages 24 to 56 are in accordance with the Corporations Act 2001 and:
[a] complying with Accounting Standards and the Corporations Regulations 2001;
[b] giving a true and fair view of the financial position as at 30 June 2013 and of the performance for the year ended on that date of the company and consolidated group: and
[c] Complies with international financial reporting standards as disclosed in note 1.
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 debts as and when they become due and payable.

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

==> picture [175 x 64] intentionally omitted <==

Christopher Schacht

Director

Peter L Williams

Director

Dated at Adelaide, South Australia this 25th day of September 2013

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

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Level 1, 67 Greenhill Rd Wayville SA 5034 GPO Box 1270 Adelaide SA 5001 T 61 8 8372 6666 F 61 8 8372 6677 E [email protected] W www.grantthornton.com.au

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 2013, 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 audit; and
b no contraventions of any applicable code of professional conduct in relation to the audit.

GRANT THORNTON SOUTH AUSTRALIAN PARTNERSHIP Chartered Accountants

J L Humphrey Partner

Adelaide, 25 September 2013

Grant Thornton South Australian Partnership ABN 27 244 906 724

a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

Our Ref: Marathon Resources Limited_June 13.Docx

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

Level 1, 67 Greenhill Rd Wayville SA 5034 GPO Box 1270 Adelaide SA 5001 T 61 8 8372 6666 F 61 8 8372 6677 E [email protected] W www.grantthornton.com.au

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF MARATHON RESOURCES LIMITED

Report on the financial report

We have audited the accompanying financial report of Marathon Resources Limited (the “Company”), which comprises the consolidated statement of financial position as at 30 June 2013, the consolidated statement of profit or loss statement and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information 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 of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 The Directors’ responsibility also includes such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. The Directors also state, in the notes to the financial report, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, the financial statements comply 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. Those standards require us to comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

Grant Thornton South Australian Partnership ABN 27 244 906 724 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

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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 Company’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’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 have complied with the independence requirements of the Corporations Act 2001.

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 consolidated entity’s financial position as at 30 June 2013 and of its performance for the year ended on that date; and
ii complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b the financial report also complies with International Financial Reporting Standards as disclosed in the notes to the financial statements.

Report on the remuneration report

We have audited the remuneration report included in the directors’ report for the year ended 30 June 2013. The Directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

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Auditor’s opinion on the remuneration report

In our opinion, the remuneration report of Marathon Resources Limited for the year ended 30 June 2013, complies with section 300A of the Corporations Act 2001.

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GRANT THORNTON SOUTH AUSTRALIAN PARTNERSHIP Chartered Accountants

J L Humphrey Partner

Adelaide, 25 September 2013

==> picture [596 x 423] intentionally omitted <==

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2013

Notes Revenue 2a Other Income 2b Supreme Court action costs 2b Exploration expenditure written off - Current period expenditure 2c - Write off exploration permits – Mt Gee 7 Leasehold improvements written off 5a Share based payment expense 2d Depreciation 5 Impairment fixed assets 5 Loss on disposal fixed assets 5a Financial assets fair value adjustment 6 Employee benefits expense Occupancy expense Consulting and legal expenses Travel expense ASX listing and registry expense Corporate administration 2e Reversal of provision for legal action Loss on disposal of financial asset Loss before income tax Income tax benefit 3 Loss for the year after tax benefit Other comprehensive income Changes in fair value of available for-sale financial assets Reclassification of available for sale financial asset to profit and loss on disposal Total other comprehensive (expense) / income Total comprehensive (loss) for the year Earnings per share Basic (cents per share) 21 Diluted (cents per share)	Consolidated 2013 $ 2012 $ 275,445 311,114 - 5,000,000 - (820,476) (79,876) (1,046,953) - (15,933,546) - (150,448) (116,734) (155,244) (27,785) (178,698) (48,129) (176,245) (66,160) (81,479) (33,350) (4,600) (900,319) (1,142,262) (128,854) (149,081) (496,761) (462,583) (43,380) (43,681) (52,797) (66,733) (258,557) (381,935) - 317,300 (77,828) -
	(2,055,085) (15,165,550) - -
	(2,055,085) (15,165,550)
	(34,500) (7,500) 77,828 -
	43,328 (7,500)
	(2,011,757) (15,173,050)
	(2.2) (16.4) (2.2) (16.4)

The accompanying notes form part of these financial statements.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 JUNE 2013

Notes CURRENT ASSETS Cash and Cash Equivalents 15(a) Trade and Other Receivables 4 Financial Assets 6 Total Current Assets NON-CURRENT ASSETS Property, Plant and Equipment 5 Exploration and evaluation 7 Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and Other payables 8 Short Term Provisions 9 Total Current Liabilities NET ASSETS EQUITY Issued Capital 10 Reserves Retained Losses TOTAL EQUITY	Consolidated 2013 $ 2012 $ 4,921,765 6,772,294 38,467 47,079 45,650 113,500
	5,005,882 6,932,873
	211,400 360,982 - -
	211,400 360,982
	5,217,282 7,293,855
	82,006 165,218 47,348 145,686
	129,354 310,904
	5,087,928 6,982,951
	44,033,982 44,033,982 665,601 963,539 (39,611,655) (38,014,570)
	5,087,928 6,982,951

The accompanying notes form part of these financial statements.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2013

Consolidated BALANCE 1 July 2011 Fair value of share based payments Total comprehensive income BALANCE AT 30 June 2012 Share options expired during the year Fair value of share based payments Total comprehensive income BALANCE AT 30 June 2013	SHARE CAPITAL $ RETAINED EARNINGS $ SHARE OPTION RESERVE $ FINANCIAL ASSET RESERVE $ TOTAL $ 44,033,982 (22,849,020) 968,623 (152,828) 22,000,757 - - 155,244 - 155,244 - (15,165,550) - (7,500) (15,173,050)
	44,033,982 (38,014,570) 1,123,867 (160,328) 6,982,951 - 458,000 (458,000) - - - - 116,734 - 116,734 - (2,055,085) - 43,328 (2,011,757)
	44,033,982 (39,611,655) 782,601 (117,000) 5,087,928

The accompanying notes form part of these financial statements.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2013

Notes Cash flows from operating activities Interest and sundry income received Settlement of legal actions net of costs Payments to suppliers and employees Net cash (used in) / provided by operating activities 15b Cash flows from investing activities Proceeds on disposal of plant and equipment Purchase of plant and equipment Net cash provided by / (used in) investing activities Cash flows from financing activities Proceeds from issue of shares Payment of expenses for the issue of shares Net cash provided by financing activities Net (decrease) / increase in cash held Cash at 30 June 2012 Cash at 30 June 2013 15a	Consolidated 2013 $ 2012 $ 275,445 311,114 - 4,179,524 (2,133,482) (3,854,894)
	(1,858,037) 635,744
	10,300 3,359 (2,792) (210,960)
	7,508 (207,601)
	- - - -
	- -
	(1,850,529) 428,143 6,772,294 6,344,151
	4,921,765 6,772,294

The accompanying notes form part of these financial statements.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

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. Marathon is a for profit entity for the purposes of preparing the financial statements. The financial report has been presented in Australian dollars.

The financial report covers Marathon Resources Limited and its controlled entity as a consolidated entity (“Group”). 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 and its controlled entity 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.

The financial report of Marathon Resources Limited for the year ended 30 June 2013 was authorised for issue in accordance with a resolution of the Directors on 25th September 2013.

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.

Third Statement of Financial Position

Two comparative periods are presented for the statement of financial position when the Group:

Applies an accounting policy retrospectively.
II. Makes a retrospective restatement of items in its financial statements.
III. Reclassifies items in the financial statements.

We have determined that only one comparative period for the statement of financial position was required for the current reporting period as the application of the new accounting standards have had no material impact on the primary financial statements that were presented in the prior year financial statements.

Adoption of new and revised accounting standards

In the current year the Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board that are relevant to its operations and effective for the current annual reporting period.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (con’t)

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 16 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 non-assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance date.

Deferred tax

Deferred tax is accounted for using the 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 statement of profit or loss and other comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly in comprehensive income 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 LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

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 statement of profit or loss and other comprehensive income 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. Leasehold improvements are depreciated over the shorter of the lease term and the assets useful lives.

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

Class of Fixed Asset	Depreciation Rate
Plant and equipment	5-33%
Office equipment	10-20%
Motor vehicles	15%
Leasehold improvement	45%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance 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 statement of profit or loss and other comprehensive income.

d) Exploration and Evaluation Expenditure

Exploration and evaluation expenditures not capitalised unless and until a JORC compliant resource is identified.

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.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

Derecognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.

Classification and subsequent measurement

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 statement of profit or loss and other comprehensive income 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 statement of profit or loss and other comprehensive income.

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 statement of profit or loss and other comprehensive income. Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

MARATHON RESOURCES LTD

ACN 107 531 822

NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

g) Interests in Joint Ventures

An interest is recognised in the event of an incorporated Joint Venture or where the interest of a Joint Venture partner is no longer free carried, in an unincorporated Joint Venture.

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 statement of financial position where applicable.

k) Revenue

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

l) Goods 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 statement of financial position 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 Black-Scholes pricing model. The fair value is fully expensed on a straight line basis over the vesting period.

o) Leases

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

p) 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.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

q) New Accounting Standards and Interpretations

New and amended standards adopted by the Group.

AASB 2010-8 Amendments to Australian Accounting Standard – Deferred Tax: Recovery of Underlying Assets (Applies to annual reporting periods beginning on or after 1 January 2012)

AASB 2010-8 provides clarification on the determination of deferred tax assets and deferred tax liabilities when investment properties are measured using the fair value model in AASB 140 Investment Properties. It introduces a rebuttable presumption that an investment property is recovered entirely through sale. This presumption is rebutted if the investment property is held within a business model where the objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale.

AASB 2010-8 also includes the requirement that the measurement of deferred tax assets and deferred tax liabilities on non-depreciable assets measured using the revaluation model in AASB 116 Property, Plant and Equipment should always be based on recovery through sale.

These amendments have had no impact on the Group.

AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income (Applies annual reporting periods beginning on or after 1 July 2012)

AASB 2011-9 requires entities to group items presented in Other Comprehensive Income on the basis of whether they are potentially re-classifiable to profit or loss subsequently, and changes the title of ‘statement of comprehensive income’ to ‘statement of profit or loss and other comprehensive income’.

The adoption of the new and revised Australian Accounting Standards and Interpretations has had no significant impact on the Group’s accounting policies or the amounts reported during the current half-year period. The adoption of AASB 2011-9 has resulted in changes to the Group’s presentation of its financial statements.

Accounting standards issued but not yet effective and not been adopted early by the Group

The Group notes the following Accounting Standards which have been issued but are not yet effective at 30 June 2013. These standards have not been adopted early by the Group. The Group’s assessment of the impact of these new standards and interpretations is set out below:

(i) AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9, AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) and AASB 2012-6 Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB 9 and Transition Disclosures (effective from 1 January 2015)

AASB 9 introduces new requirements for the classification and measurement of financial assets and liabilities.

These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of AASB 139. The main changes are:

Financial assets that are debt instruments will be classified based on (1) the objective of the entity’s
business model for managing the financial assets; and (2) the characteristics of the contractual cash flows.
Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income (instead of in profit or loss).
Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument.
Financial assets can be designated and measured at fair value through profit or loss at initial recognition if
doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise
from measuring assets or liabilities, or recognising the gains and losses on them, on different bases. Where
the fair value option is used for financial liabilities the change in fair value is to be accounted for as follows:
- The change attributable to changes in credit risk are presented in other comprehensive income (OCI) and; The remaining change is presented in profit or loss.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

q) New Accounting Standards and Interpretations (con’t)

There will be no impact on the Group’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Group does not have any such liabilities. The de-recognition rules have been transferred from AASB 139 Financial Instruments: Recognition and Measurement and have not been changed. The Group has not yet decided when to adopt AASB 9.

(ii) AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in Other Entities, revised AASB 127 Separate Financial Statements, AASB 128 Investments in Associates and Joint Ventures, AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards and AASB 2012-10 Amendments to Australian Accounting Standards – Transition Guidance and Other Amendments (effective 1 January 2013)
AASB 10 replaces all of the guidance on control and consolidation in AASB 127 Consolidated and Separate Financial Statements, and Interpretation 12 Consolidation – Special Purpose Entities.
- The core principle that a consolidated entity presents a parent and its subsidiaries as if they are a single economic entity remains unchanged, as do the mechanics of consolidation. However, the standard introduces a single definition of control that applies to all entities. It focuses on the need to have both power and rights or exposure to variable returns. Power is the current ability to direct the activities that significantly influence returns. Returns must vary and can be positive, negative or both. Control exists when the investor can use its power to affect the amount of its returns.
- When this standard is first adopted for the year ended 30 June 2014, there will be no impact on the transactions and balances recognised in the financial statements.
AASB 11 replaces AASB 131 Interests in Joint Ventures and AASB Interpretation 113 Jointly-controlled Entities – Non-monetary Contributions by Ventures. AASB 11 uses the principle of control in AASB 10 to define joint control, and therefore the determination of whether joint control exists may change.
- In addition, AASB 11 removes the option to account for jointly-controlled entities using proportionate consolidation. Instead, accounting for a joint arrangement is dependent on the nature of the rights and obligations arising from the arrangement. Joint operations that give the venturers a right to the underlying assets and obligations for liabilities are accounted for by recognising the share of those assets and liabilities. Joint ventures that give the venturers a right to the net assets are accounted for using the equity method.
- When this standard is first adopted for the year ended 30 June 2014, there will be no impact on transactions and balances recognised in the financial statements because the Group has not entered into any joint arrangements. OR
- When this standard is first adopted for the year ended 30 June 2014, there will be no impact on transactions and balances recognised in the financial statements because the joint arrangements in place relate to joint operations.
AASB 12 sets out the required disclosures for entities reporting under the two new standards, AASB 10 and AASB 11, and replaces the disclosure requirements currently found in AASB 127 and AASB 128. Application of this standard by the Group will not affect any of the amounts recognised in the financial statements, but will impact the type of information disclosed in relation to the Group investments.
- Amendments to AASB 128 provide clarification that an entity continues to apply the equity method and does not remeasure its retained interest as part of ownership changes where a joint venture becomes an associate, and vice versa. The amendments also introduce a “partial disposal” concept.
- As this is a disclosure standard only, there will be no impact on amounts recognised in the financial statements. However, additional disclosures will be required for interests in associates and joint arrangements, as well as for unconsolidated structured entities.

OR

When this standard is first adopted for the year ended 30 June 2014, there will be no impact on the transactions and balances recognised in the financial statements.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

q) New Accounting Standards and Interpretations (con’t)

(iii) AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 (effective 1 January 2013)

AASB 13 explains how to measure fair value and aims to enhance fair value disclosures. Application of the new standard will impact the type of information disclosed in the notes to the financial statements.

The Group is yet to undertake a detailed analysis of the differences between the current fair valuation methodologies used and those required by AASB 13. However, when this standard is adopted for the first time for the year ended 30 June 2014, there will be no impact on the financial statements because the revised fair value measurement requirements apply prospectively from 1 January 2013.

(iv) Revised AASB 119 Employee Benefits and AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (September 2011)

The AASB released a revised standard on accounting for employee benefits. It requires the recognition of all remeasurements of defined benefit liabilities/assets immediately in other comprehensive income (removal of the so-called ‘corridor’ method), the immediate recognition of all past service cost in profit or loss and the calculation of a net interest expense or income by applying the discount rate to the net defined benefit liability or asset. This replaces the expected return on plan assets that is currently included in profit or loss. The standard also introduces a number of additional disclosures for defined benefit liabilities/assets and could affect the timing of the recognition of termination benefits. The amendments will have to be implemented retrospectively.

The Group does not have any defined benefit plans. Therefore, these amendments will have no impact on the Group.

(v) AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements

The Standard amends AASB 124 Related Party Disclosures to remove the individual key management personnel (KMP) disclosures required by Australian specific paragraphs. This amendment reflects the AASB’s view that these disclosures are more in the nature of governance disclosures that are better dealt within the legislation, rather than by the accounting standards.

When these amendments are first adopted for the year ending 30 June 2014, they are unlikely to have any significant impact on the Group.

(vi) AASB 2012-2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities

This Standard amends the required disclosures in AASB 7 to include information that will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financial position.

This Standard also amends AASB 132 to refer to the additional disclosures added to AASB 7 by this Standard.

When this AASB 2012-2 is first adopted for the year ended 30 June 2014, there will be no impact on the Group as the Group does not have any netting arrangements in place.

(vii) AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities

AASB 2012-3 adds application guidance to AASB 132 to address inconsistencies identified in applying some of the offsetting criteria of AASB 132, including clarifying the meaning of “currently has a legally enforceable right of setoff” and that some gross settlement systems may be considered equivalent to net settlement.

When AASB 2012-3 is first adopted for the year ended 30 June 2015, there will be no impact on the Group as this standard merely clarifies existing requirements in AASB 132.

(viii) Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36)

These narrow-scope amendments address disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal.

When these amendments are adopted for the first time on 1 January 2014, they are unlikely to have any significant impact on the Group given that they are largely of the nature of clarification of existing requirements.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (con’t)

q) New Accounting Standards and Interpretations (con’t)

(ix) IFRIC Interpretation 21 Levies

IFRIC 21 addressed how an entity should account for liabilities to pay levies imposed by governments, other than income taxes, in its financial statements (in particular, when the entity should recognise a liability to pay a levy).

IFRIC 21 is an interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets. IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event (known as an obligating event). The Interpretation clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. For example, if the activity that triggers the payment of the levy is the generation of revenue in the current period and the calculation of that levy is based on the revenue that was generated in a previous period, the obligating event for that levy is the generation of revenue in the current period. The generation of revenue in the previous period is necessary, but not sufficient, to create a present obligation.

When this interpretation is adopted for the first time on 1 January 2014, there will be no significant impact on the financial statements as the Group is not subject any levies addressed by this interpretation.

There are no other standards that are not yet effective and that are expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions

NOTE 2 – REVENUE AND EXPENSES FROM OPERATIONS

Note a. Revenue Interest revenue b. Other income SUPREME COURT OF SOUTH AUSTRALIA ACTION • Settlement received • Costs of advice and legal expenses in the issuing of proceedings	Consolidated 2013 $ 2012 $ 275,445 311,114
	- 5,000,000 - (820,476)

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 2 – REVENUE AND EXPENSES FROM OPERATIONS (con’t)

Note c. Exploration expenditure Mt Gee tenement Arkaroola Preparation of drilling programme Costs following SA Government mining ban Camp costs to completion of rehabilitation Storage and care costs on salvaged equipment Exploration written off	Consolidated 2013 $ 2012 $ - 124,580 - 415,266 - 363,270 20,241 143,837
	20,241 1,046,953 59,635 -
	79,876 1,046,953

d. Share based payments

The following options were granted in the 2010/2011 year as follows:

2,000,000 options to Chairman of Directors in three tranches

Number Exercise Date Expiry Date 500,000 1 Nov 2012 1 Nov 2013 750,000 1 Nov 2013 1 Nov 2014 750,000 1 Nov 2014 1 Nov 2015 Total fair value of the options	Value 114,967 165,439 161,966
	442,372

Fair value recognised as an expense over the vesting period e. Corporate administration Corporate administration includes: Accounting and audit Computer costs Insurance Communication costs Printing, office supplies Public relations Other expenses	116,734 155,244
	116,734 155,244
	50,590 55,990 21,310 27,823 58,280 73,187 28,016 23,818 12,870 14,768 5,244 33,727 82,247 152,622
	258,557 381,935

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 3 – INCOME TAX

OTE 3 – INCOME TAX
The components of tax expense comprise: The prima facie income tax expense from ordinary activities before tax is reconciled to the income tax as follows: Loss from continuing operations Prima facie tax (benefit) on loss from ordinary activities before income tax at 30% (2012:30%) Non-assessable items Non-deductable expenses Assessable gain Non offset portion of assessable capital gain Movement in recognised tax assets and liabilities Current year tax loss Prior year tax losses recouped Income tax from operations	Consolidated 2013 $ 2012 $ (2,055,085) (15,165,550)
	(616,526) (4,549,665) - (1,500,000) 32,339 434,031 3,090 1,008 - 1,190,036 65,767 4,645,525 515,330 - - (220,935)
	- -

Unrecognised deferred tax assets:

Deferred tax assets have not been recognised in respect of the following items:

Tax value of carried forward tax losses - Capital - Revenue Timing differences Revenue differences not recognised Equity differences not recognised	Consolidated 2013 $ 2012 $ 11,454 11,320,001 193,869 35,100 11,454 10,804,672 115,104 48,098
	11,560,424 10,979,328

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.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 4 – TRADE AND OTHER RECEIVABLES

NOTE 4 – TRADE AND OTHER RECEIVABLES
		Consolidated
	2013		2012
	$		$
GST recoverable	24,395		35,723
Other debtors	14,072		11,356
	38,467		47,079
No trade and other receivables are outside terms at balance date.

NOTE 5 – PROPERTY, PLANT AND EQUIPMENT

NOTE 5 – PROPERTY, PLANT AND EQUIPMENT
		Consolidated
Note	2013		2012
	$		$
Property, plant and equipment	929,293		1,018,743
Less accumulated depreciation	(493,519)		(481,516)
Impairment provision	(224,374)		(176,245)
Total plant and equipment	211,400		360,982
Movement in carrying amounts
Balance at beginning of financial year	360,982		740,919
Additions	2,792		210,960
Disposals	(76,460)		(235,954)
Depreciation	(27,785)		(178,698)
Impairment	(48,129)		(176,245)
Balance at end of financial year	211,400		360,982
5a – DISPOSAL PROPERTY, PLANT AND EQUIPMENT
Disposal at written down value	(76,460)		(235,954)
Brought forward balance adjustment	-		668
Proceeds	10,300		3,359
(Loss) / gain on disposal	(66,160)		(231,927)
Leasehold property improvements
written off
	-		(150,448)
Equipment written off on non renewal
of Mt Gee Licence
	-		(81,479)
Sale of equipment no longer required	(66,160)		-
	(66,160)		(231,927)

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

MARATHON RESOURCES LTD

ACN 107 531 822

NOTE 6 – FINANCIAL ASSETS

Notes Current Financial assets at fair value through profit / loss 6a Available-for-sale financial assets 6b Total Financial Assets 6a – Financial asset at fair value through profit/loss - Shares in Wolf Petroleum Ltd (formerly Strzelecki Metals Ltd previously Primary Resources Ltd)	Consolidated 2013 2012 $ $ 12,650 46,000 33,000 67500
	, 45,650 113,500
	12,650 46,000

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:

shares at an issue price of 20 cents	each fully paid as foll
Issue Date No 2 May 2007 1,150,000 28 June 2007 1,150,000	$ 230,000 230,000
	460,000

Contemporaneously with the change of name Strzelecki Metals Ltd their share capital was reconstructed by reduction on a 10 to 1 basis. At balance date the Company’s holding is 230,000 shares.

The market value of these shares at balance date was $0.055 ($0.02 in 2012 on the original holding of 2,300,000 shares). The decrease in the fair value to balance date of $ 33,350 (Decrease $ 4,600 in 2012) has been recorded through the profit and loss in the financial assets fair value adjustment.

6b – Available-for-Sale financial assets

Shares and options in Phoenix Copper Ltd

Shares in Phoenix Copper Ltd 33,000 67,500

Pursuant to the disposal of a tenement interest to Phoenix Copper Ltd the Company was allotted 750,000 ordinary shares at an issue price of 20 cents each fully paid on the listing of Phoenix Copper Ltd on 30th January 2008 and in addition 750,000 options having an exercise price of 25 cents were granted to the Company on 25th January 2008 and were exercisable at any time up to expiry date 25th January 2013. The options were not exercised and lapsed on the expiry date. The fair values on recognition were as follows:

Issues No Shares 750,000 Options 750,000	$ 150,000 77,828
	227,828

The market value of the shares at balance date was $ 0.44 ($0.090 in 2012). The reduction in fair value to balance date of $ 34,500 (Reduction $ 7,500 in 2012) has been recognised directly in equity through the financial asset revaluation reserve.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 7 – EXPLORATION AND EVALUATION EXPENDITURE

Exploration and Evaluation Expenditure Movement Balance at beginning of financial year Additions Write-off of exploration permits Balance at end of financial year	Consolidated 2013 2012 $ $ - 15,933,546 - - - (15,933,546)
	- -

The carrying value of Mt Gee (EL4355) exploration expenditure asset was impaired in full following the South Australian Government’s announcement of a ban on mining in Arkaroola and inability to renew the Company’s exploration licence when it became due for renewal on 22nd February 2012.

The Company’s interests in tenements at the date of this report are as follows:

On 29 April 2013 the Company’s wholly owned subsidiary Bonanza Gold Pty Ltd entered Heads of Agreement with entities associated with entrepreneur and geologist Mr David Clarke (Australian Desalinated Water Pty Ltd – ADW, Goddard Development Pty Ltd – Goddard & Australian Coloured Oxides Pty Ltd – ACO, collectively “ADW”) Marathon has exclusive rights to explore and evaluate ADW controlled tenements with an option to acquire 78% of ADW subject to certain conditions. At balance date no option has been exercised.

Project	Tenement	Location	Commodity
Alice Park	EL 5203	South Australia
Oakvale	EL 5202	South Australia	Mineral sands,
Kangaroo Flat	ML 5787	Victoria	Manganese & other
Pernatty Lagoon	ELA 270	South Australia
All exploration expenditure in the year amounting to $ 59,635 has been expensed.

NOTE 8 – TRADE AND OTHER PAYABLES

Trade payables Other payables Accrued expenses	Consolidated 2013 2012 $ $ 22,017 53,354 18,324 70,199 41,665 41,665
	82,006 165,218

NOTE 9 – SHORT TERM PROVISIONS

Employee benefits Balance at beginning of financial year Additional provisions Amounts paid out Balance at end of financial year	Consolidated 2013 2012 $ $ 145,686 129,072 4,573 86,105 (102,911) (69,491)
	47,348 145,686

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 10 – ISSUED CAPITAL

92,207,789 (2012: 92,207,789) fully paid ordinary shares	Consolidated 2013 2012 $ $ 44,033,982 44,033,982

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.

Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.

Movement in Options

Outstanding at the beginning of the year Granted Forfeited Exercised Expired Outstanding at year end Exercisable at year end	Consolidated 2013 2012 Number of Options Weighted Average Exercise Price $ Number of Options Weighted Average Exercise Price $ 4,540,000 1.032 4,540,000 1.032 - - - - - - - - - - - - (1,000,000) (0.777) - -
	3,540,000 1.104 4,540,000 1.032
	2,040,000 0.831 2,540,000 0.805

The options outstanding at 30 June 2013 had a weighted average exercise price of $ 1.104 and a weighted average remaining contractual life of 15.5 months. Exercise prices range from $0.317 to $ 1.727 in respect of options outstanding at 30 June 2013.

The following share-based payment arrangements existed at 30 June 2013:

On 15th December 2009, 1,000,000 share options were granted pursuant to listing rules 10.11 to directors and recorded under the plan following shareholder approval at the 2009 Annual General Meeting to take up ordinary shares at a current exercise price of $1.10 each. The options are exercisable on or before 31 December 2014. At balance date no share options had been exercised.

On the 30th September 2010 Directors made offers of a grant of 640,000 options to a number of staff and consultants of the Company to take up ordinary shares. All offers were accepted by 21st October and all options are exercisable on or before 15th October 2013. At Balance date 100,000 options had been exercised.

On 16th November 2010 2,000,000 options in three tranches were granted to the Chairman Peter Williams pursuant to shareholder approval at the AGM to take up ordinary shares as follows:

No. of Options	Exercise Date	Expiry
500,000	1 November 2012	1 November 2013
750,000	1 November 2013	1 November 2014
750,000	1 November 2014	1 November 2015

At balance date the first exercise date for 500,000 options had been reached.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 10 – ISSUED CAPITAL (con’t)

Valuation of Options

The value of the 16th November 2010 options were calculated using the Black-Scholes option model applying the following inputs:

		Tranche
	1	2	3
- Exercise price	$0.876	$1.25	$1.75
- Life of option	3 years	4 years	5 years
- Underlying share price	$0.625	$0.625	$0.625
- Expectant share price volatility	64.5%	64.5%	64.5%
- Risk free rate	5.13%	5.13%	5.23%
- Number of options granted	500,000	750,000	750,000
- Aggregate fair value of options granted	$114,967	$165,439	$161,966

All options vested on issue

The total fair value of the fair value of the options issued to the Chairman was $ 442,372 which will be recognised as an expense over the vesting period.

Included under share based payments expense in the statement of profit and loss and other comprehensive income is $116,734 (2012 $155,244) which relates to that part of total equity settled share based payments transactions recognised as expense over the relevant vesting periods of the three tranches of options set out above.

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.

Pursuant to a discounted share issue price arising under a rights issue in February 2011 unexercised options at that date became subject to an exercise price reduction as follows:

GRANT DATE	EXPIRY DATE		EXERCISE PRICE
		AT GRANT	POST 2011 RIGHTS
15th December 2009	31st December 2014	$1.10	$1.077
21st October 2010	15th October 2013	$0.34	$0.317
21st October 2010	15th October 2013	$0.75	$0.727
16th November 2010	1st November 2013	$0.876	$0.853
16th November 2010	15th November 2014	$1.25	$1.227
16th November 2010	15th November 2015	$1.75	$1.727

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.

None of the options listed above are classified as granted under the Company Employee Share Option Plan (ESOP) due to ASX listing Rules 10.1 and ASIC class order requirements. The options whilst not being issued under the ESOP are governed by the Company’s ESOP rules.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 10 – ISSUED CAPITAL (con’t)

Capital Management

The management’s objectives when managing capital are to ensure that the group can fund its operations and continue as a going concern.

The management monitors capital on the basis of expenses cover times ratio. This ratio is calculated as cash and cash equivalent divided by loss before income tax, depreciation, impairment and fair value adjustment as shown on the statement of financial position and statement of comprehensive income respectively.

There are no externally imposed capital requirements.

There have been no changes in the strategy adopted by management to control the capital of the group since the prior year, which is to maintain the expenses cover times at greater than 1. The ratios for 30 June 2013 and 30 June 2012 are as follows:

Cash and cash equivalent Loss before income tax Less items before income tax Depreciation Impairment Fair value adjustment Net write off of Exploration asset Loss before income tax, depreciation, impairment & fair value adjustments Expenses cover times	Consolidated Group 2013 $ 2012 $ 4,921,765 6,772,294
	(2,055,085) (15,165,550) 27,785 178,698 48,129 176,245 33,350 4,600 - 10,933,546
	(1,945,821) (3,872,461)
	2.53 1.75

NOTE 11 – 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 available for sale financial assets.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 12 – COMMITMENTS FOR EXPENDITURE AND CONTINGENT LIABILITIES

Operating lease commitment Not longer than 1 year Longer than 1 year and not longer than 5 years	Consolidated 2013 $ 2012 $ 92,652 102,200 270,235 339,607

The Company entered a five year lease for office premises commencing 1 May 2012 and expiring 1 May 2013 with an early termination clause (on certain terms) effective 1 May 2014.

NOTE 13 – SEGMENT INFORMATION

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

Identification of reportable segments

The group had identified its operating segments based on the internal reports that are reviewed and used by the board of directors (chief operating decision makers) in determining the allocation of resources.

The group was managed primarily on the basis of cost centres since each cost centre had different cash requirements. Operating segments were therefore determined on the same basis. The group’s operating segments were JORC compliant tenements, other tenements, investments and corporate.

Towards the end of the 2012 the South Australian Government decided to revoke the Company’s exploration licence over its JORC compliant Uranium resources tenement Mt Gee (EL 4355) and as a consequence the JORC compliant resource segment ceased. At 30th June 2013 the Company held no assets or liabilities related to ongoing exploration tenement activities.

Late in the current year exploration activities recommenced through unincorporated joint ventures. All expenditures incurred up to balance date have been expensed.

Investment

This segment monitors the performance of the group’s quoted investments.

Unallocated

This relates to all other income and expenses of the group which are not directly attributed to any of the above segments.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 13 – SEGMENT INFORMATION (con’t)

Segment performance YEAR ENDED 30TH JUNE 2013 Income Depreciation Exploration expenditure Overheads Fixed asset impairment Movement in fair value of financial assets Write off of Exploration permits Net (loss) before tax YEAR ENDED 30TH JUNE 2012 Income Depreciation Exploration expenditure Overheads Fixed asset impairment Movement in fair value of financial assets Written off exploration permits Net (loss) before tax AS AT 30THJUNE 2013 Total assets Total liabilities AS AT 30THJUNE 2012 Total assets Total liabilities	TENEMENTS JORC COMPLIANT RESOURCE OTHER - - - - (20,241) (59,635) - - - - - - - -	INVESTMENTS - - - - - (33,350) -
	(20,241) (59,635)	(33,350)
	4,179,524 - (147,499) - (1,046,593) - (208,527) - (176,245) - - - (15,933,546) -	- - - - - (4,600) -
	(13,332,886) -	(4,600)
	TENEMENTS JORC COMPLIANT RESOURCE OTHER - -	INVESTMENTS 45,650
	- -	-
	- -	113,500
	- -	-

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 14 – FINANCIAL INSTRUMENTS

(a) Financial Risk Management

The group’s financial instruments consist mainly of deposits with banks, short-term investments, accounts receivables and payable which are summarised as follows:

Weighted Average Effective Interest Rate 2013 2012 % % Financial Assets Loans and receivables Cash and cash equivalents 4.70 4.85 Receivables - - Available for sale Financial assets - - Financial assets at fair value through profit & loss - - Total Financial Assets Financial Liabilities Trade and other payables - - Total Financial Liabilities	Fixed Interest Non-interest Maturing Bearing Within 1 Year Within 1 year >1 year Total 2013 2012 2013 2012 2013 2012 2013 2012 $000 $000 $000 $000 $000 $000 $000 $000 4,896 6,739 26 33 - - 4,922 6,772 - - 38 47 - - 38 47 - - 33 68 - - 33 68 - - 13 46 - - 13 46
	4,896 6,739 110 194 - - 5,006 6,933
	- - 82 165 - - 82 165
	- - 82 165 - - 82 165

The group does not hold any derivative instruments.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 14 – FINANCIAL INSTRUMENTS (con’t)

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 Group’s financial instruments are exposed to a variety of financial risks, being Market risk (Interest rate and Price risk), Credit risk and Liquidity risk. The group operate mainly in Australia and as such are not subject to foreign exchange risk.

Interest rate risk

The consolidated group’s exposure to interest rate 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 summarised in the table above.

Sensitivity: At 30th June 2013, if interest rates had changed by -/+ 10 basis points from the year end rates with all other variables held constant post tax loss would have been $ 5,818 more/less as a result of lower/higher interest income from term deposits.

Price risk

Price risk relates to the risk that the fair value of a financial instrument will fluctuate because of changes in market prices largely due to market forces. The group’s available-for-sale financial assets and fair value through profit and loss financial assets as disclosed in Note 6 are subject to price risk. Investments within these 2 categories of financial assets are publicly traded on the ASX.

Sensitivity of fair value through profit and loss financial assets

At 30th June 2012, if the market price of these financial assets had changed by +/- 10% from the year end market price with all other variables held constant, the post tax loss would have been $ 1,265 more/less, with corresponding increase/ decrease in equity.

Sensitivity of available-for-sale financial assets.

At 30th June 2013, if the market price of these financial assets had changed by +/- 10% from the year end market price with all other variables held constant, the group equity would have been $ 3,300 more/less, with no effect to profit and loss.

Credit risk

Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligation that could lead to a financial loss to the Group.

The group’s maximum exposure to credit risk are its cash and cash equivalents and receivables as noted in the table above. The group manages its credit risk by depositing with reputable licenced banks. Other receivables are mainly due from government as a result of the Workcover receivables, and therefore not exposed to credit risk.

Liquidity risk

Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate sources of funding are available.

Maturity of the group’s financial liabilities are within 1 year.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 14 – FINANCIAL INSTRUMENTS (con’t)

(b) Fair value

The fair value financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:

Level 1 – the fair value is calculated using quoted prices in active markets.

Level 2 – the fair value is estimated using inputs other than the quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices).

Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.

The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised below.

Consolidated Group				Valuation
		Valuation		technique – non
		technique – market		market observable
	Quoted market price	observable inputs		inputs
	(Level 1)	(Level 2)		(Level 3)	Total
		Year Ended	30	June 2013
Financial Assets
Available for sale investment	33,000		-	-	33,000
Financial assets at fair value
through profit and loss	12,650		-	-	12,650
	45,650		-	-	45,650
Financial Liabilities	-		-	-	-
		Year Ended	30	June 2012
Financial Assets
Available for sale investments	67,500		-	-	67,500
Financial assets at fair value
through profit and loss	46,000		-	-	46,000
	113,500		-	-	113,500
Financial Liabilities	-		-	-	-

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

MARATHON RESOURCES LTD

NOTE 15 – 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:

Cash on hand Cash at call Short-term bank deposit Cash and cash equivalents	Consolidated 2013 $ 2012 $ 53 440 25,858 32,645 4,895,854 6,739,209
	4,921,765 6,772,294

The weighted average effective interest rate on short-term bank deposits is 4.70% (2012: 4.85%). All deposits are for less than 12 months.

(b) Reconciliation of Cash Flow from Operations with Loss after Tax

(b) Reconciliation of Cash Flow from Operations with Loss after Tax
		Consolidated
	2013	2012
	$	$
Loss after income tax	(2,055,085)	(15,165,550)
Cash flows excluded from loss attributable to operating activities: Loss / (Gain) on disposal of plant and equipment	66,160	81,479
Leasehold improvements written off	-	150,448
Loss on disposal of financial asset	77,828	-
Non-cash flows in operating loss
Depreciation	27,785	178,698
Share based payments	116,734	155,244
Fair value adjustment on financial assets	33,350	4,600
Exploration expenditure written off	-	15,933,546
Impairment provision	48,129	176,245
Change in assets and liabilities (Increase) Decrease in receivables / prepayments Increase (Decrease) in payables Increase (Decrease) in provisions	8,612 (83,212 (98,338)	63,165 (159,413) (782,718)
Net Cash (used in) / provided by operating activities	(1,858,037)	635,744

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 16 – INVESTMENT IN CONTROLLED ENTITY

Entity Country of incorporation Class of share Interest Held 2013 2012 Bonanza Gold Pty Ltd Australia Ordinary 100% 100% Provision for impairment	Cost of Investment 2013 2012 230,000 230,000 (230,000) (230,000)
	- -

NOTE 16 (a) - PARENT ENTITY INFORMATION

	2013	2012
	$	$
Parent Entity
Asset
Current assets	5,005,882	6,872,873
Non-current assets	211,400	420,982
Total assets	5,217,282	7,293,855
Liabilities
Current liabilities	129,354	310,904
Non-current liabilities	-	-
Total liabilities	129,354	310,904
Equity
Issued capital	44,033,982	44,033,982
Reserves	665,601	963,539
Retained earnings	(39,611,655)	(38,014,570)
Shareholder equity	5,087,928	6,982,951
Financial performance
Profit (loss) for the year	(2,055,085)	(16,055,232)
Other comprehensive income	43,328	(7,500)
Total comprehensive income	(2,011,757)	(16,062,732)

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 16 (a) - PARENT ENTITY INFORMATION (con’t)

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

Operating lease commitment Not longer than 1 year Longer than 1 year and not longer than 5 years	Consolidated 2013 $ 2012 $ 92,652 102,200 270,235 339,607

NOTE 17 – Key Management Personnel Compensation

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

Peter Williams Chairman (non-executive) Appointed 21/05/2004 Chen Zeng Non-Executive Director Appointed 27/12/2006 Chris Schacht Non-Executive Director Appointed 24/01/2008 John Linley Chief Executive Officer Appointed 30/06/2008 Stuart Appleyard Company Secretary Appointed 28/01/2004 Dan Tyson Strategic Development Executive Effective 05/05/2011 Redundancy 15/04/2013

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 17 – KEY MANAGEMENT PERSONNEL COMPENSATION (con’t)

Key Management Personnel Remuneration

P L Williams 2013 2012 C Zeng 2013 2012 C Schacht 2013 2012 J Linley 2013 2012 S Appleyard 2013 2012 D Tyson 2013 2012 Total 2013 2012	Directors Fees Salary and wages Superannuation contributions Share-based Payments Options Other (1) Total % of Remuneration consisting of options 60,000 - 5,400 116,734 103,125 285,259 41% 60,000 - 5,400 155,244 150,000 370,644 42% 43,600 - - - - 43,600 - 40,600 - 3,000 - - 43,600 - 40,000 - 3,600 - - 43,600 - 40,000 - 3,600 - - 43,600 - 40,000 112,499 13,725 - - 166,224 - 40,000 150,000 17,100 - - 207,100 - - 47,200 17,800 - - 65,000 - - 25,000 40,400 - - 65,400 - (2) - 177,880 27,670 - 129,462 335,012 - - 207,821 16,830 - - 224,651 -
	183,600 337,580 68,195 116,734 232,587 938,695 - 180,600 382,821 86,330 155,244 150,000 954,995 -

P L Williams
2013
2012
C Zeng
2013
2012
C Schacht
2013
2012
J Linley
2013
2012
S Appleyard
2013
2012
D Tyson
2013
2012
Total
2013
2012

Directors
Fees
Salary
and
wages
Superannuation
contributions
Share-based
Payments
Options
Other
(1)
Total
% of
Remuneration
consisting of
options
60,000
-
5,400
116,734
103,125
285,259
41%
60,000
-
5,400
155,244
150,000
370,644
42%
43,600
-
-
-
-
43,600
-
40,600
-
3,000
-
-
43,600
-
40,000
-
3,600
-
-
43,600
-
40,000
-
3,600
-
-
43,600
-
40,000
112,499
13,725
-
-
166,224
-
40,000
150,000
17,100
-
-
207,100
-
-
47,200
17,800
-
-
65,000
-
-
25,000
40,400
-
-
65,400
-
(2)
-
177,880
27,670
-
129,462
335,012
-
-
207,821
16,830
-
-
224,651
-

183,600
337,580
68,195
116,734
232,587
938,695
-
180,600
382,821
86,330
155,244
150,000
954,995
-

Other (1) The amount of $ 103,125 ($ 150,000 2012) represents consulting fees paid to Cluan Capital Management Pty Ltd. A company in which the Chairman Mr PL Williams has an interest.

Other (2): The amount of $ 129,462 represents a redundancy payment on 15th April 2013 to Mr Tyson based on the termination of his written contract of employment which was not due to expire until 31st December 2013.

Options issued as part of remuneration.

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.

There were no options issued during the year or up to the date of this report.

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 17 – KEY MANAGEMENT PERSONNEL COMPENSATION (con’t)

Number of Options Held by Key Management Personnel

Peter Williams Chen Zeng Chris Schacht John Linley Stuart Appleyard Total	Balance 01.07.2012 Granted as Compensation Option Exercised Net Change Other Balance 30.06.2013 Exercisable Not Yet Exercisable** 2,250,000 - - - 2,250,000 750,000 1,500,000 250,000 - - - 250,000 250,000 - 250,000 - - - 250,000 250,000 - 1,250,000 - - (1,000,000) 250,000 250,000 - - - - - - - -
	4,000,000 - - (1,000,000) 3,000,000 1,500,000 1,500,000

‘Net Change Other’ refers to options forfeited or expired during the financial year.

Number of Shares Held by Key Management Personnel

Peter Williams Chen Zeng Chris Schacht John Linley Stuart Appleyard Total	Balance 01.07.2012 Received as Compensation Option Exercised Net Change Other Balance 30.06.2013* 899,360 - - - 899,360 - - - - - 61,050 - - - 61,050 375,000 - - - 375,000 1,749,053 - - - 1,749,063
	3,084,463 - - - 3,084,463

Net Change Other refers to shares purchased or sold during the financial year.

NOTE 18 – 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.

Mr P Williams has an interest in Cluan Capital Management Pty Ltd. The Company paid consulting fees to Cluan Capital Management Pty Ltd during the year amounting to $ 103,125 (2012: $ 150,000).

The Company has had no other related party transactions with any of its key management personnel in either the current or prior financial year.

NOTE 19 – AUDITOR’S REMUNERATION

	Consolidated	Consolidated
	2013	2012
	$	$
Amounts received or due & receivable by the Auditor of the company for:
- auditing & review services
- other services	25,700	35,000
	-	-

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 20 – MATTERS SUBSEQUENT TO THE END OF THE YEAR

There is no other matter or circumstance that has arisen since 30th June 2013 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

NOTE 21 – EARNINGS PER SHARE

NOTE 21 – EARNINGS PER SHARE
		Consolidated
	2013	2012
	$	$
Basic earnings per share	(0.022)	(0.164)
Loss used to calculate basic EPS	(2,055,085)	(15,165,550)
Weighted average number of ordinary shares outstanding
during the year used in calculating basic EPS	92,207,789	92,207,789

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.

NOTE 22 – COMPANY DETAILS

The registered office and principal place of business is: Marathon Resources Limited Unit 8 53-57 Glen Osmond Road Eastwood South Australia 5063

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

MARATHON RESOURCES LTD

ACN 107 531 822

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

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 19th September 2013

NAME FULLY PAID SHARES ORDINARY SHARES % National Nominees Limited 18,495,027 20.06 CITIC Australia Pty Ltd 17,242,855 18.70

DISTRIBUTION OF SHAREHOLDINGS AT 19th September 2012

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.

RANGE	TOTAL HOLDERS	NUMBER OF SHARES
1 – 1,000	508	278,842
1,001 – 5,000	729	1,888,025
5,001 – 10,000	348	2,801,167
10,001 – 100,000	457	14,443,324
100,001–maximum	100	72,796,431
Total	2,142	92,207,789

At 19th September 2013 a marketable parcel constituted 22,728 shares.

The number of shareholders holding less than a marketable parcel was:

1,817 8,631,220

TWENTY LARGEST SHAREHOLDERS AT 19th September 2013

NAME	FULLY PAID ORDINARY SHARES	% OF ISSUED CAPITAL
National Nominees Limited	18,495,027	20.06
Citic Australia Pty Ltd	17,242,855	18.70
HSBC Custody Nominees (Australia) Limited	3,096,542	3.36
BT Portfolio Services Limited (Warrell Holdings S/F A/C)	2,504,369	2.72
FMS Pty Ltd	1,611,379	1.75
JP Morgan Nominees Australia Limited	1,435,551	1.56
PASO Holdings Pty Ltd	1,305,000	1.42
OPEKA Dale Pty Ltd (OPEKA Dale P/L S/F No2)	1,200,000	1.30
Colin Francis McGregor Post	1,000,000	1.08
Archon Resource Technologies Pty Ltd	851,039	0.92
James ST Equities Pty Ltd	800,000	0.87
JP Morgan Nominees Australia Limited (Cash Income A/C)	785,989	0.85
Archon Resources Superannuation Pty Ltd	785,664	0.85
Cluan Capital Management Pty Ltd	770,000	0.84
Trayburn Pty Ltd	733,026	0.79
Citicorp Nominees Pty Ltd	731,490	0.79
Mr C P Ball & Mrs S K Ball (CPB S/F A/C)	704,703	0.76
Mr George Kwitko	585,600	0.64
Miss K B O’Connell & Mr S H Van Emmerik (Kove S/F A/C)	498,000	0.54
Mr Robert Bernard Ollis	472,841	0.51
Total Top 20 holders of ORDINARY SHARES	55,609,075	60.31

MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

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MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

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MARATHON RESOURCES LTD | ANNUAL REPORT 2013 | ACN 107 531 822

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AI assistant

NEURIZER LTD — Annual Report 2013

65442_rns_2013-09-29_e92794a8-07a6-482b-8834-5a1653c1c47a.pdf

2013

Marathon Resources Limited

Annual Report 1st July 2012 to 30th June 2013

Corporate Directory

Directors

Company Secretary

Registered & Principal Business Office

Bankers

Principal Lawyer

Auditors

Share Registrar

Marathon Resources Limited

CONTENTS

CHAIRMAN’S ADDRESS

2013 Activities

Conclusion

DIRECTORS’ REPORT

DIRECTORS

INFORMATION ON DIRECTORS

Peter Williams – Chairman (non-executive)

BEc. FCA

Chen Zeng – (non-executive)

BA (Economics) Masters Degree in International Finance from Shanghai University of Finance and Economics

Christopher Schacht – (non-executive)

John G (Shad) Linley – Chief Executive Officer

Doctorate of Philosophy (Adelaide University), BSc (Hons), F AusIMM (CEO)

COMPANY SECRETARY

Stuart Appleyard LLB

CORPORATE GOVERNANCE

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

AFTER BALANCE DATE EVENTS

PRINCIPAL ACTIVITIES

REVIEW OF OPERATIONS AND OPERATING RESULTS

DIVIDENDS

FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES

ENVIRONMENTAL ISSUES

OPTIONS

DIRECTORS’ AND EXECUTIVES’ REMUNERATION – AUDITED

Remuneration Policy

DIRECTORS’ AND EXECUTIVES’ REMUNERATION – AUDITED (cont)

Directors’ and Executives’ Remuneration

Options issued

Options issued (con’t)

Contracts of Service

Number of Options Held by Key Management Personnel

Number of Shares Held by Key Management Personnel

Voting at 2012 AGM

Use of remuneration consultants

MEETINGS OF DIRECTORS

INSURANCE PREMIUMS

PROCEEDINGS

AUDITOR’S INDEPENDENCE

CORPORATE GOVERNANCE STATEMENT

1. Lay solid foundations for management and oversight

2. Structure of the Board to add value

CORPORATE GOVERNANCE STATEMENT (con’t)

Access to Information

3. Promote Ethical and responsible decision-making

Trading in company securities

CORPORATE GOVERNANCE STATEMENT (con’t)

DIVERSITY

4. Safeguard integrity in financial reporting

5. Make timely and balanced disclosure

6. Respect the rights of shareholders

CORPORATE GOVERNANCE STATEMENT (con’t)

7. Recognise and manage risk

Operational risk

Indigenous people

HSE&C

CORPORATE GOVERNANCE STATEMENT (con’t)

Environment

Financial reporting

8. Remunerate fairly and responsibly

CORPORATE GOVERNANCE STATEMENT (con’t)

DIRECTORS’ DECLARATION

Christopher Schacht

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

NEURIZER LTD Annual Report 2013