Quantum Resources Limited

ABN 84 006 690 348

ANNUAL REPORT 2005

Dear Shareholder

Quantum Resources Limited continues to explore its tenements and prioritise exploration towards areas that it believes has the greatest potential to add value for the shareholders. The Company has been actively evaluating and assessing tenements and seeking joint venture partners for areas that it believes are not a high priority to it, yet still have potential for exploration success. Areas that do not fit these criteria have been relinguished and to maintain the balance of the portfolio, additional prospective projects have been acquired.

In Western Australia the Company continues to drill test targets in the Gindalbie area as part of the Whiteheads Project Joint Venture and the acquisition of aeromagnetic data has provided further valuable data in the target generation phase of the St Ives project. A review of the Jackson Project at Southern Cross indicates areas that require additional reconnaissance and field investigation prior to drill testing and this will be a priority in the coming year.

The farm-out proiects continue to be advanced. Jackson Gold Limited ("Jackson") is earning an 80% interest in EL31/571 at Wallbrook which is adiacent to Jackson's own Wallbrook project. Jackson has announced a substantial resource increase on its own Wallbrook Project tenements from 200,000 ounces to 423,500 ounces of gold. Preliminary soil geochemistry completed by Jackson on the joint venture tenement, may indicate potential for gold mineralization. At the Kalgoorlie North project, which is also farmed out to Jackson, several tenements have now been granted and the Company is anticipating positive developments in the coming year from exploration by Jackson. Cullen Resources are farming into the Company's Wanganoo Prospect and exploration has concluded that it is prospective for both nickel and gold.

In the Northern Territory the Company continues to participate in the process of meeting with the traditional landholders and consulting with the Central Land Council in order to gain consent to negotiate an access agreement for its Tanami Project tenements. The Company believes it has established a core of prospective tenements in areas which it hopes will bring exploration success in the coming year.

The Company has farmed out one tenement in the Tanami region to Newmont Tanami Pty Ltd who are earning an interest through exploration. Under the agreement, Newmont is required to spend \$500,000 over 3 years to earn a 75% interest. Newmont are required to spend \$100,000 within the first 12 months. Once Newmont have earned their 75% interest, the Company has the right to convert its 25% contributing interest into a 10% free carried interest to decision to mine. If a feasibility study prepared by Newmont results in a proposal that does not meet Newmont's development criteria, the Company has the right to buy-back Newmont's participating interest for 200% of Newmont's exploration costs.

Over the past few months, a number of the major international and Australian gold producers have approached the Company to either joint venture or purchase interests in tenements held by the Company. The Company assesses each approach on its merits and will continue to consider such approaches that it believes are in the best interests of all shareholders.

PROJECT REVIEW

Whiteheads Project - Quantum earning 80%

The Whiteheads tenement package represents a consolidated landholding of 255 square kilometres in an area adiacent to the Gindalbie mining centre, which has historically produced 45,000 ounces of gold. The Company is required to spend \$1.2 million on exploration over 4 years to earn an 80% interest and to date has spent approximately \$300,000.

The main targets are medium to large tonnage gold deposits potentially exploitable by open pit and underground mining methods and a number of soil geochemical anomalies have been identified. Previous drilling by earlier explorers has tested the majority of these anomalies but only to shallow depths. The Company believes that the drilling completed to date is not comprehensive and has not fully explored the potential for mineralisation along strike and at depth. During the year, the granting of E27/175 enabled the Company to undertake a major rotary air blast ("RAB") drilling programme of 202 holes for 14,207 metres across the inferred position of several major regional shear and lithological boundaries. The drilling was along lines spaced up to 1.4 kilometres apart and targeted interpreted trends of gold mineralisation associated with soil geochemical anomalies and a north west trending set

of fault structures around Jubilee Well. The drilling intersected a number of zones where alteration and oxidation extended to depths of up to 150 metres and these are interpreted to reflect the sheared contact zones between the mafic rocks to the west and the felsic to intermediate rocks to the east.

Strongly weathered remnant pyrite and quartz veining was recorded within the highly altered basalt and felsic porphyry host rocks. A summary of available significant gold values is included in Table1.

Table 1: Whiteheads RAB Drilling

Hole	Northing	Easting	Interval (g/t gold)	Depth
WTHB736	6647680	377480	[email protected]	36
			[email protected]	48
WTHB759	6647520	378040	[email protected]	48
WTHB914	6648960	377240	[email protected]	20
WTHB932	6647840	378200	[email protected]	56
			[email protected]	64

Significant Gold Values from 4 Metre Composite Samples

Note: all intervals are 4 metre composite samples collected using a sample scoop

: 50 gram Acid digest - AAS finish.

Elsewhere in the Whiteheads project are several anomalous drill targets including a small gold resource (<10,000 ounces, JORC status unknown) delineated on the Seven Leaders prospect. Deeper drilling of the Seven Leaders prospect failed to expand the resource at depth however the mineralisation is poorly understood and remains open along strike to the south east.

The Company is confident that it can improve on the results to date and hopes to investigate a number of additional targets to the southeast of the Gindalbie Mining Centre associated with north northwest trending structures which splay off the major northwest trending regional faults.

Jackson Project (Quantum 100%)

The Jackson project is located approximately 100 kilometres north of Southern Cross in Western Australia and covers 730 square kilometres of the Barlee greenstone belt, including favourable greenstone lithologies for Archaean gold mineralisation. The six southern most tenements include deeply weathered and laterite capped greenstone/granite lithologies which are considered prospective for nickel and gold.

A review of the previous exploration within the Company's tenements indicates that they are prospective for structure related gold deposits and ultramatic associated nickel deposits. Transported cover overlies a high percentage of the area and planned field work will provide a base map for areas suitable for geochemical sampling. The Company also believes previous surface sampling in some covered areas may have been inappropriate and RAB and aircore drilling are proposed to collect reliable geochemistry. It is also noted that most of the significant gold mineralisation discovered to date is related to prominent banded iron formations and the structure hosted mafic lithologies, which lie beneath much of the covered areas, are under explored.

In the region, several small resources have been delineated by International Goldfields Ltd ("IGL") for a total resource of 1.3 million tonnes for 123,000 ounces of gold. Internal scoping studies by IGL indicate a positive cash flow but the economics are limited by the capital cost of a stand alone milling operation.

The Company believes that this area is under explored and that the potential for the discovery of economic gold deposits is high and that these may in turn offer synergies with existing resources.

St. Ives Project (Quantum 100%)

At the St Ives project, the Company holds four exploration licences and one exploration application covering approximately 162 square kilometres covering a highly prospective zone within and adjacent to Lake Lefroy, approximately 60 kilometres south of Kalgoorlie. Quantum's tenure lies immediately east of the Boulder-Lefroy fault system that hosts the world-class St Ives mineral field presently producing

400,000 ounces of gold per annum. In addition, the one million ounce Belleisle gold deposit is located approximately two kilometres to the southwest of the project area.

The Company has purchased aeromagnetic data which will aid target generation and a brief review of previous exploration indicates a substantial amount of geochemistry and drilling has been completed over selected areas. Ongoing processing of the geophysical data and detailed assessment of exploration completed to date is planned, along with field verification, as part of the target generation process.

The prospect consists of multiple granite greenstone contacts and interpreted subtle flexures in structures identified from the regional magnetics. The greenstones are related to the Kalgoorlie succession of rocks which host the Kambalda nickel and gold deposits and in most cases are covered by a veneer of transported sediment. The Company expects to advance this prospect through targeted geochemistry and drilling and believes it is in an area with the potential to host a world class gold deposit.

Telfer Project (Quantum 100%)

The Company has applied for a single exploration licence covering 62 square kilometres located six kilometres to the northeast of the Newcrest Mining Ltd Telfer gold mine. The Telfer gold mine is host to one of Australia's largest gold deposits with a reported ore reserve of 18.0 million ounces of gold and 0.685 million tonnes of copper within a mineral resource of approximately 27 million ounces gold.

The Telfer operations have been commissioned and given the renewed activity in this area, the Company continues to reassess and compile the previous exploration data for the area, with the view to generating new exploration targets based on geological and geophysical interpretations.

Tanami Project (Quantum 100%)

The Company holds 7 exploration licence applications covering some 1,361 square kilometres in the highly prospective Tanami region of the Northern Territory.

During the year the Company attended two meetings with the traditional landholders in relation to its exploration programmes in the Northern Territory. In both instances the Company stressed the low impact nature of its reconnaissance exploration methods and believed it had successfully communicated this to the traditional landowners. However the consent to negotiate with the Central Land Council with regards to ELA 23153-23156 inclusive was refused and according to native title rulings, the Company must wait 5 years to restart this negotiation process.

The second meeting with regards to ELA 23150 -23152 was more successful and consent to negotiate was granted. The Company believes that ELA23150-23152 are the more prospective tenements and are located in the region of the Newmont Australia Ltd Callie and Granites gold mines. A review of the project areas has confirmed that these areas have the potential to host a significant gold discovery and the Company is hopeful of completing negotiations and gaining access to do preliminary exploration as soon as possible.

The Company has farmed out ELA 23150 to Newmont Tanami Pty Ltd who are earning a 75% interest by spending \$500,000 on exploration.

Wallbrook & Kalgoorlie North Projects (Quantum 100% Farming Out)

The Company's Wallbrook Project is joint ventured to Jackson, who are earning an 80% interest in Exploration License 31/571 by spending \$250,000 over three years. Jackson has been aggressively drilling its own Wallbrook tenements to define additional gold resources and recently announced that it had increased its resources on its own Wallbrook project to 423,500 ounces of gold. The joint venture tenement is adjacent to Jackson's Crusader Deposit and Jackson's Wallbrook tenements are approximately two kilometres south east of the joint venture tenement. New geological models indicate potential mineralised structures may continue to the west and northwest into the joint venture tenements.

On the joint venture tenement, a reconnaissance soil sampling programme of 207 samples on a grid of 80x320 metre spacing returned a peak value of 26 parts per billion (ppb) gold against a background of 4.8 ppb gold. A review of the soil results seems to indicate that there may be a similar structural trend to

the Wallbrook mineralisation and mapping has also identified a major lithological contact which may correlate with St Barbara Mines Limited's Far East prospect 15 kilometres to the southeast. Further investigation of these areas is anticipated during the coming year and the Company is confident that Jackson will continue to develop the joint venture tenement as part of its search for additional gold resources.

At Kalgoorlie North, the tenements consist of 6 granted prospecting licences and 4 prospecting licence applications covering an area of 16 square kilometres. These tenements form part of Jackson's larger Kalgoorlie Gold Project but have been farmed out in an exploration and mining agreement with Placer Dome Asia Pacific Limited ("Placer") in which Placer shall conduct the exploration in the area. The Company is confident that aggressive ongoing exploration in both areas will lead to new gold discoveries.

Wanganoo Project (Quantum 20%, Cullen 80%)

The Wandanoo Project (E53/988) is located in the central portion of the Wanganoo Greenstone Belt approximately 125 kilometres south east of Wiluna in the Laverton Sub-province of the North Eastern Goldfields of Western Australia. Cullen Resources ("Cullen"), as manager of the joint venture, has completed a detailed assessment of the nickel and gold potential of the area and has concluded that it has a very favourable geological and structural setting for gold mineralization.

Work completed during the year includes a detailed review, desk top study and field inspection by a consulting group that concluded substantial komatiite horizons indicated by previous drilling were favourable for nickel sulphide accumulations. Cullen completed a programme of aircore and RAB drilling to obtain regolith, bedrock and geochemical data which would assist with the geophysical interpretation of the prospect. Significant drill intersections included a 5 metre interval with elevated nickel and copper values (up to 2,756 ppm nickel and 313 ppm copper). Further work proposed includes RAB drilling to define the ultramatic contacts followed by TEM geophysical techniques to identify stratigraphic and geochemical targets.

Tuckabianna Project (surrendered)

WestCoast Mining Ltd ("WestCoast) were farming into the Company's Tuckabianna Project and had met the minimum expenditure requirement.

During the expenditure period WestCoast conducted a series of airborne electromagnetic surveys and geochemical surveys which generated a number of targets within the joint venture tenements. These were consequently tested by aircore, RAB and RC drilling but failed to find any significant gold mineralisation. As a result, WestCoast withdrew from the joint venture. A subsequent review of the data by the Company indicated that the exploration to date has adequately tested the main targets and given the lack of significant results the Company surrendered the tenements.

CORPORATE

During the year, the Company has issued 19.7 million shares at a price of 2.5 cents per share raising \$492,500. The funds were used for exploration and working capital purposes.

J.I. Curtink

Joseph Gutnick Chairman

The technical information in this report has been reviewed and approved by Mr C. Taylor who is a member of the Australasian Institute of Mining and Metallurgy and has approximately 20 years experience in the industry.

The Directors of Quantum Resources Limited present their report for the vear ended 30 June 2005.

$\mathbf{1}$ . Directors

The Directors of the Company in office since 1 July 2004 and up to the date of this Report are:

Mr Joseph Gutnick FAusIMM FAIM MAICD Chairman and Managing Director

Mr Gutnick has been a Director of the Company since 1987 and is currently Chairman and Managing Director of Astro Diamond Mines N.L. (October 1988 to current), Great Gold Mines N.L. (July 1987 to current), and President and Chief Executive Officer of Bay Resources Ltd (March 1988 to current) and Legend International Holdings Inc (December 2004 to current) Delaware Corporations listed on the over the counter market in the USA. In the three years prior to the date of this Report, Mr Gutnick was also a Director of Regis Resources N.L. (February 1987 to August 2004) and Tahera Corporation (May 2000 to October 2003). Mr Gutnick has been responsible for overseeing the discovery, development and operation of a number of world class gold and nickel mines in Australia. He was awarded the Diggers award at the 1997 Diggers and Dealers Industry Awards and is a former Director of the World Gold Council. Age 53

Dr David Tyrwhitt PhD(Geology) BSc(Hons) FSEG(USA) FAusiMM CPGeo Non-Executive Director

Dr Tyrwhitt has been a Director of the Company since 1996. He has more than 40 years experience in the mining industry. He is currently a Director of Astro Diamond Mines N.L. (November 1996 to current), Great Gold Mines N.L. (November 1996 to current), Bay Resources Ltd (November 1996 to current) and Legend International Holdings Inc (March 2005 to current). In the three years prior to the date of this report. Dr Tyrwhitt was also a Director of Regis Resources N.L. (November 1996 to August 2004) and Tahera Corporation (November 2002 to September 2003). He worked for over 20 years with Newmont Mining Corporation in Australia, South East Asia and the United States. During this time, he was responsible for the discovery of the Telfer Gold Mine in Western Australia. He was Chief Executive of Newmont Australia Limited between 1984 and 1988 and Chief Executive Officer of Ashton Mining Limited between 1988 and 1991. He established his own consultancy in 1991 and worked with Normandy Mining Limited on a number of mining projects in South East Asia. Age 67

Mr Mordechai Gutnick Non-Executive Director

Mr Mordechai Gutnick is a businessman and long-term investor in the mining industry. He is also a Director of Astro Diamond Mines N.L. (May 2003 to current) and Great Gold Mines N.L. (May 2003 to current). In the three years prior to the date of this report, Mr Gutnick was also a Director of Regis Resources N.L. (May 2003 to August 2004) Age 27

$2.$ Principal Activities

The principal activities of the Economic Entity during the financial year was mineral exploration. There has been no significant change in the nature of these activities during the financial year.

Objectives

The Company's objective is to increase shareholder wealth through successful exploration activities whilst providing a safe workplace and ensuring best practice in relation to its environmental obligations.

The key opportunity for the Company during the year has been the advancement of its exploration projects however, this has been hampered by its cash resources.

Statement of Financial Performance

As an exploration company. Quantum does not have an ongoing source of revenue. Its revenue stream is normally from ad-hoc tenement disposals, sale of fixed assets and interest received on cash in bank.

In the current year, revenue has decreased from \$449,626 in 2004 to \$129,407 in 2005. Revenue in 2005 was primarily from the sale of investments.

Costs from ordinary activities have increased from \$439,373 in 2004 to \$656,572 in 2005. This is a net result of (i) an increase in the provision for or write off of exploration expenditure carried forward by \$59,118 as a result of the surrender of non-prospective tenement interests; (ii) an increase in administration expenses of \$58,280; (iii) the carrying value of the investments and tenement interests sold during the year of \$203,339; and (iy) a decrease in the provision for doubtful receivables of \$125.792 as the Company received a part payment of a receivable that it had previously provided for as doubtful.

As a result, the operating loss from ordinary activities before income tax was \$527,165 in 2005 compared to a profit of \$10,253 in 2004. There is no income tax attributable to the operating result in either year.

As a result, the Company made a net loss after tax for 2005 of \$527,165 compared to a net profit after tax of \$10,253 for 2004.

Statement of Financial Position

At 30 June 2005, the Company had cash at bank of \$1,393, receivables of \$143,361 and creditors and accruals totalled \$120,806. Non-current assets totalled \$947,598 primarily made up of exploration expenditure.

At 30 June 2005, the Company had a positive working capital position of \$23,948 and net assets of \$862,918.

Cash Flow

During the year, the Company raised \$492,500 from an issue of shares, borrowed \$762,244 to assist in the funding of its operations, repaid \$437,677 of borrowings, paid exploration costs of \$363,798 and made payments in the normal course of operations of \$447,707. At 30 June 2005, the Company had cash in bank of \$1,393.

In order to meet its ongoing exploration commitments, working capital requirements and other obligations, the Company will need to raise further funds through either equity or debt raisings.

During the year, the Company made application to ASIC to de-register Topalite Resources Pty Ltd as that company ceased to have any operations. Topalite was de-registered on 19 September 2005.

3. Review and Results of Operations

A review and results of operations is contained in the Principal Activities section of the Directors' Report. The financial result of the operations was a loss of \$527,165 after providing for income tax.

4. Significant Change in State of Affairs

The Directors are of the opinion that other than that disclosed in the Principal Activities section of the Directors' Report, there has not been any significant changes in the state of affairs of the Economic Entity during the year under review.

5. Dividends

The Directors do not recommend the payment of a dividend and no amount has been paid or declared by way of dividend since the end of the previous financial year and up to the date of this Annual Report.

6. Events After The End Of The Financial Year

There has not arisen in the interval between the end of the financial year and the date of this Report any item, transaction or event of a material and unusual nature which in the opinion of the Directors of the Economic Entity, has significantly affected or may significantly affect

the operations of the Economic Entity $\bullet$
the results of those operations, or
the state of affairs of the Economic Entity

in financial years subsequent to this financial year.

7. Future Developments and Results

There are no likely developments of which the Directors are aware which could be expected to significantly affect the results of the Company's operations in subsequent financial years not otherwise disclosed in this Annual Report.

8. Options

At the date of this Report the Company had on issue the following options over fully paid ordinary shares.

$(1)$ Listed

Number	Maturity Date	Issue Price	Exercise Price	Exercise Period
43.748.673	31 October 2010	No issue price	A\$0.10	Anvtime after
				1 January 2002

During the year and up to the date of this Report, no options were issued and no options have been exercised. Optionholders have no rights to participate in an issue of shares unless they convert their options. The names of all the persons who currently hold options are entered on a register maintained for the Company, by ASX Perpetual Registrars Limited. In accordance with the Corporations Act 2001, this Register may be inspected free of charge.

Number	Maturity Date	Issue Price	Exercise Price	Exercise Period
32.875.597	30 April 2012	A\$0.02	A\$0.10	Anvtime after
				1 January 2003.

During the year and up to the date of this Report, no options have been issued and no options have been exercised. Optionholders have no rights to participate in an issue of shares unless they convert their options. The names of all the persons who currently hold options are entered on a register maintained for the Company, by ASX Perpetual Registrars Limited. In accordance with the Corporations Act 2001, this Register may be inspected free of charge.

Number	Maturity Date	Issue Price	Exercise Price	Exercise Period
68.378.151	30 November 2012	A\$0.02	A\$0.05	Anytime after
				1 July 2003

(ii) Unlisted
------------------	--

Number	Maturity Date	Issue Price	Exercise Price	Exercise Period
1.400.000	24 March 2010	A\$0.037	A\$0.08	Under terms and conditions the ΩŤ employee share option plan

During the year and up to the date of this Report, no options have lapsed, no options have been issued and no options have been exercised. Optionholders have no rights to participate in an issue of shares unless they convert their options. The names of all the persons who currently hold options are entered on a register maintained for the Company, by the Company. In accordance with the Corporations Act 2001, this Register may be inspected free of charge.

9. Directors' Interests in Shares and Options

The relevant interest of each Director in the number of fully paid ordinary shares and options over fully paid ordinary shares of the Company disclosed by that Director to the Australian Stock Exchange as at the date of this Report is:

Director	Relevant Interest
	Ordinary Shares	Employee Options	Options 31/10/2010	Options 30/04/2012	Options 30/11/2012
J Gutnick		1.000.000	$\overline{\phantom{a}}$		$\blacksquare$
D S Tyrwhitt			$\blacksquare$		$\overline{\phantom{0}}$
M Z Gutnick		-	$\overline{\phantom{0}}$	$\overline{\phantom{a}}$	$\overline{\phantom{0}}$

10. Meetings of Directors

The number of meetings of Directors held including meetings of Committees of the Board during the financial year including their attendance was as follows:

		BOARD		REMUNERATION COMMITTEE
	ELIGIBLE TÓ ATTEND	ATTENDED	ELIGIBLE ATTENDED TO ATTEND	ELIGIBLE ТO ATTEND	ATTENDED
J Gutnick
D S Tyrwhitt
M Z Gutnick

Note: Dr. D.S. Tyrwhitt and Mr M Z Gutnick were members of the Audit Committee and Remuneration Committee during the year and up to the date of this Report.

11. Company Secretary

Mr Peter Lee is the Company Secretary of the Company. Mr Lee is a Member of the Institute of Chartered Accountants in Australia, a Fellow of Chartered Secretaries Australia Ltd., a Member of the Australian Institute of Company Directors and holds a Bachelor of Business (Accounting) from Royal Melbourne Institute of Technology. He has over 20 years commercial experience and is currently General Manager Corporate and Company Secretary of several listed public companies in Australia and a Director, Chief Financial Officer and Secretary of a US Corporation listed on the over the counter market in the USA and Chief Financial Officer and Secretary of a second US Corporation listed on the over the counter market in the USA.

12. Directors And Officers' Indemnity

The Company has entered into an Indemnity Deed with each of the Directors and certain former Directors which will indemnify them against liability incurred to a third party (not being the Company or any related company) where the liability does not arise out of conduct including a breach of good faith. The Indemnity Deed will continue to apply for a period of 10 years after a Director ceases to hold office and a Director's Access and Insurance Deed with each of the Directors pursuant to which a Director can request access to copies of documents provided to the Director whilst serving the Company for a period of 10 years after the Director ceases to hold office. There will be certain restrictions on the Directors' entitlement to access under the deed.

13. Environment

The exploration activities of the Economic Entity are conducted in accordance with and controlled principally by Australian state and territory government legislation. The Company has exploration land holdings in Western Australia and Northern Territory. The Company employs a system for reporting environmental incidents, establishing and communicating accountability, and rating environmental performance. During the year data on environmental performance was reported as part of the monthly exploration reporting regime. In addition, as reguired under various state and territory legislation, procedures are in place to ensure that the relevant authorities are notified prior to the commencement of ground disturbing exploration activities.

The Company is committed to minimising the impact of its activities on the surrounding environment at the same time aiming to maximise the social, environmental and economic returns for the local community. To this end, the environment is a key consideration in our exploration activities and during the rehabilitation of disturbed areas. Generally rehabilitation occurs immediately following the completion of a particular phase of exploration. In addition, the Company continues to develop and maintain mutually beneficial relationships with the local communities affected by its activities.

14. Non-Audit Services

During the year PKF, the Company's auditor, has not performed any other services in addition to their statutory duties.

A copy of the auditors independence declaration as required under Section 307C of the Corporations Act is attached to the Directors' Report.

Details of the amounts paid to the auditor of the Company, PKF, and its related practices for audit and non-audit services provided during the year are set out below.

	Consolidated
	2005 \$	2004 \$
Statutory audit
Auditors of the Company
- audit and review of financial reports	21,800	20,800

The auditors performed no other services

15. Remuneration Report

$(i)$ Overview

The Company is managed by AXIS Consultants Pty Ltd ("AXIS Consultants") pursuant to a Service Deed dated 25 November 1988. In accordance with the arrangement with AXIS Consultants, it provides company secretarial, finance, geology, exploration, IT and other services to the Company. As a result, the Company has no employees.

Remuneration levels for Directors of the Company are competitively set to attract and retain appropriately qualified and experienced Directors. The Remuneration Committee obtains independent advice on the appropriateness of remuneration packages given trends in comparative companies and the objectives of the Company's remuneration strategy, when appropriate.

The remuneration structures explained below are designed to attract suitably qualified candidates. reward the achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders. The remuneration structures take into account:

the capability and experience of the Directors;
the Directors ability to control the Company's performance; $\blacksquare$
the Company's performance including:
the Company's earnings
the growth in share price and returns on shareholder wealth

The Company's performance during the current year and over the past four years has been as follows:

	2005 \$	2004 \$	2003 \$	2002 \$	2001 S
Revenue	129,407	449.626	10,763	224.264	17,348
Net profit (loss)	(527, 165)	10,253	(657, 211)	(1,474,334)	(2, 393, 107)
Basic earnings per shares	(0.18)	(0.00)	(0.26)	(0.68)	(1.23)
Diluted earnings per shares	(0.18)	(0.00)	(0.26)	(0.68)	(1.23)
Net assets (deficiency)	862,918	660,377	191,419	(1, 105, 592)	368,588

The Directors do not believe the financial performance of the Company is an accurate measure when considering remuneration structures as the Company is in the mineral exploration industry. Company's in this industry do not have an ongoing source of revenue, as revenue is normally from adhoc transactions.

The more appropriate measure is the identification of exploration targets, identification and/or increase of mineral resources and reserves and the ultimate conversion of the Company from explorer status to mining status.

$(ii)$ Service Agreements with AXIS Consultants Pty Ltd

Messrs JI Gutnick and MZ Gutnick and Dr DS Tyrwhitt do not have a contract for their services as Directors. Their remuneration and fees are paid to them by AXIS Consultants Pty Ltd. based on amounts agreed by the Company.

Mr. Peter Lee, Company Secretary, does not have a contract of employment with the Company. His services are provided to the Company through the service arrangements with AXIS Consultants Pty Ltd. This service contract with AXIS Consultants Pty Ltd is for an unlimited term and is capable of termination on two months notice.

Messrs C Taylor and D Prentice (Executives) also do not have contracts of employment with the Company. Their services were also provided to the Company through the service arrangements with AXIS Consultants Pty Ltd.

$(iii)$ Non-Executive Directors

Total remuneration for all Non-Executive Directors, last voted upon by shareholders at the 1999 AGM, is not to exceed \$200,000 per annum. Directors' base fees are presently up to \$40,000 per annum. Non-Executive Directors do not receive performance related remuneration. Directors' fees cover all main board activities and membership of board committee. Non-Executive Directors do not receive any benefits on retirement.

$(iv)$ Details of Directors, Specified Executives and Remuneration.

As noted in section (i), management services are provided to the Company by AXIS Consultants Pty Ltd. AXIS Consultants Pty Ltd pays the Chairman and Managing Director's remuneration and Non-Executive Directors' fees on behalf of the Company, based on pre-agreed amounts. AXIS Consultants invoices the Company for remuneration paid to the Company's Executives (not being Directors) based on the time the Executive spends in servicing the requirements of the Company. AXIS Consultants has provided the following information in regard to the amounts invoiced to the Company for the Directors and Specified Executives in respect of all remuneration (as that term is defined in the Corporations Act 2001) received by the Directors and/or Specified Executives in connection with the management of the affairs of the Company.

The names of the Directors and Specified Executives in office during the year are as follows:-

Directors $(a)$

J | Gutnick - Chairman and Managing Director D S Tyrwhitt - Non Executive Director M Z Gutnick - Non Executive Director

$(b)$ Specified Executives

P J Lee - General Manager Corporate & Company Secretary C Taylor-Exploration Manager D Prentice- General Manager Operations (Resigned March 2004)

Details of the nature and amount of each major element of remuneration of each Director of the Company and each Executive of the Company are:

			Primary		Post-employment		Equity compensation	Other compensation
		Salary & fees S	STI cash bonus \$	Non-monetary benefits \$	Super- annuation benefits \$	Prescribed benefits \$	Value of options \$	Termination benefits \$	Insurance premiums	Total \$
Directors
J Gutnick	2005 2004	91,667 76,000		5,685 3,313	13,250 13,171					110,602 92,484
D S Tyrwhitt	2005 2004	20,000 20,000			1,800 1,870					21,800 21,870
M Z Gutnick	2005 2004	20,000 20,000			1,800 1,982					21,800 21,982
Total all specified Directors	2005 2004	131,667 116,000		5,685 3,313	16,850 17,023					154,202 136,336
Executives
PJLee	2005 2004	21,212 21,297		2,019 3,783	3,833 4,389					27,064 29,469
C D Taylor	2005 2004	30,658			2,759					33,417
D Prentice	2004	24,059		4,306	2,359					30,724
Total, all specified Executives	2005	51,870	$\overline{\phantom{a}}$	2,019	6,592			$\overline{\phantom{a}}$		60,481
	2004	45,356		8,089	6,748					60,193
Total all specified Directors & Executives	2005	183,537		7,704	23,442					214,683
	2004	161,356		11,402	23,771					196,529

Signed in accordance with a Resolution of the Board of Directors at Melbourne this 29^th day of September 2005.

J.I. Curtink

J | Gutnick Director

Chartered Accountants & Business Advisers

Level 11, CGU Tower 485 La Trobe Street Melbourne 3000 GPO Box 5099BB Melbourne 3001

Tel: (03) 9603 1700 Fax: (03) 9602 3870

÷..

www.pkf.com.au

INDEPENDENCE DECLARATION

TO: THE DIRECTORS QUANTUM RESOURCES LIMITED

As lead engagement partner for the audit of Quantum Resources Limited for the year ended 30 June 2005, I declare that, to the best of my knowledge and belief, there have been:

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

PKF

PKF Chartered Accountants

29 September 2005 Melbourne

Kill Ret

M L Port Partner

Quantum Resources Limited and its former Controlled Entity
Statements of Financial Performance for the Year Ended 30 June 2005

		Consolidated			Parent Entity
	Note	2005 S	2004 \$	2005 \$	2004 S
Revenue
Revenue from operating activities: Interest Proceeds from sale of non-current assets Management fees	2 $\bar{2}$ $\overline{2}$	4,158 125,249	16,701 432,925	4,158 125,249	16,701 432,925 21,578
		129,407	449,626	129,407	471,204
Expenses
Expenses from ordinary activities Exploration expenditure provided for and written off Administration Carrying value of non-current assets sold Borrowing costs Provision for diminution of investments Decrease/(increase) in provision for doubtful receivable	3	(107, 906) (462,847) (203, 339) (8,272) 125.792	(48, 788) (404, 567) (46, 343) (13, 420) 21,284 52,461	(107, 906) (462,449) (203, 339) (8, 248) (1) 125,792	(48, 708) (404, 598) (46,343) (14,434) 11,284 52,461
Total costs and expenses		(656, 572)	(439, 373)	(656, 151)	(450, 338)
Operating profit/(loss) before income tax		(527, 165)	10,253	(526, 744)	20,866
Income tax attributable to operating loss	4
Net profit/(loss) attributable to members of the parent entity		(527, 165)	10.253	(526, 744)	20,866
Net increase in asset revaluation reserve		358,486		358,486
Share issue costs		(121, 280)	(35, 257)	(121, 280)	(35, 257)
Total revenues, expenses and valuation adjustments attributable to members of the parent entity and recognised directly in equity		237,206	(35, 257)	237,206	(35, 257)
Total changes in equity other than those resulting from transactions with owners as owners		(289,959)	(25,004)	(289, 538)	(14, 391)
Basic (loss) per share	5	Cents (0.18)	Cents 0.00
Diluted (loss) per share	5	(0.18)	0.00

The Statements of Financial Performance are to be read in conjunction with the attached notes to and forming part of these Financial Statements.

Quantum Resources Limited and its former Controlled Entity
Statements of Financial Position as at 30 June 2005

		Consolidated		Parent Entity
	Note	2004 \$	2005 \$	2004 \$
CURRENT ASSETS
Cash assets	6	1,070	1,393	309
Receivables	7	9,309	143,361	9,309
TOTAL CURRENT ASSETS		10,379	144,754	9,618
NON-CURRENT ASSETS
Receivables	7	244,480	29,179	244,480
Other financial assets Exploration expenditure	8	206,122 281,404	361,270 557,149	206,122
				281,404
TOTAL NON-CURRENT ASSETS		732,006	947,598	732,006
TOTAL ASSETS		742,385	1,092,352	741,624
CURRENT LIABILITIES
Payables	9	81,668	120,806	81,668
TOTAL CURRENT LIABILITIES		81,668	120,806	81,668
NON-CURRENT LIABILITIES
Interest bearing liabilities	10	340	108,628
TOTAL NON-CURRENT LIABILITIES		340	108,628
TOTAL LIABILITIES		82,008	229,434	81,668
NET ASSETS		660,377	862,918	659,956
EQUITY

Contributed equity Reserves	11 12	51,611,771 619,690	51,982,991 978 176	51,611,771 619,690
Accumulated losses	13	(51, 571, 084)	(52,098,249)	(51, 571, 505)
TOTAL EQUITY	14	660,377	862,918	659,956

The Statements of Financial Position are to be read in conjunction with the attached notes to and forming part of these Financial Statements.

Quantum Resources Limited and its former Controlled Entity
Statements of Cash Flows for the Year Ended 30 June 2005

		Consolidated			Parent Entity
	Note	2005 \$	2004 \$	2005 S	2004 S
CASH FLOWS FROM OPERATING ACTIVITIES
Payments in the course of operations Borrowing costs paid Interest received		(447, 707) (3,251) 4,158	(409, 994) (1,837) 16,701	(447, 311) (3,226) 4,158	(409, 629) (1,837) 16,701
NET CASH USED IN OPERATING ACTIVITIES	16	(446, 800)	(395, 130)	(446, 379)	(394, 765)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration Net proceeds from sale of financial assets Proceeds from security deposits retired		(363,798)	(79, 509) 432.874 10,000	(363,798)	(79, 421) 432,874
NET CASH (USED IN)/PROVIDED BY INVESTING ACTIVITIES		(363,798)	363,365	(363,798)	353,453
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares Share issue costs Proceeds from exercise of options Proceeds from borrowings Repayment of borrowings		492,500 (6, 146) 762,244 (437, 677)	493,900 (63, 476) 62 274.371 (676, 956)	492,500 (6, 146) 762,244 (437, 337)	493,900 (63, 476) 62 284,521 (678, 456)
NET CASH PROVIDED BY FINANCING ACTIVITIES		810,921	27,901	811,261	36,551
Net increase/(decrease) in cash held		323	(3,864)	1.084	(4,761)
Cash at the beginning of the financial year		1.070	4,934	309	5.070
CASH AT THE END OF THE FINANCIAL YEAR	6	1,393	1,070	1,393	309

The Statements of Cash Flows are to be read in conjunction with the attached notes to and forming part of these Financial Statements.

The significant policies which have been adopted in the preparation of this financial report are:

$(i)$ Basis of Preparation

The financial report is a general purpose financial report and has been prepared in accordance with applicable Accounting Standards, Urgent Issues Group Consensus Views, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The financial report has been prepared on the historical cost basis and going concern basis and except where stated, does not take into account changing money values or current valuations of non-current assets. Except where stated, the accounting policies are consistent with those of the previous vear.

$(ii)$ The following Accounting Policies have been adopted in preparing and presenting the Financial Report

Principle of Consolidation

The consolidated accounts of the Consolidated Entity include the financial statements of the Company, being the Parent Entity and its former Controlled Entity. The balances and effects of transactions between the former Controlled Entity and the Parent Entity included in the consolidated accounts have been eliminated. The financial statements of Controlled Entities are included from the date control commences until the date control ceases.

A consolidated statement of financial position is not presented for 30 June 2005 due to the deregistration of the former controlled entity. Refer to note 8 to the financial statements for details

Revenue Recognition

Interest income

Interest income is recognised as it accrues.

Asset sales

The gross proceeds of asset sales are included as revenue of the Company. The profit or loss on disposal of assets is brought to account at the date an unconditional contract of sale is signed. The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal.

Other revenue

Revenue recognition policies for other financial assets are described in the relevant Accounting Policy Note.

Borrowing Costs

Borrowing costs include interest and lease finance charges. Borrowing costs are expensed as incurred.

Foreign Currency Translation

Foreign currency transactions are translated to Australian currency at the rates of exchange ruling at the dates of the transactions. Amounts receivable and payable in foreign currencies at balance date are translated at the rates of exchange ruling on that date. Exchange differences relating to amounts payable and receivable in foreign currencies are brought to account as exchange gains or losses in the Statement of Financial Performance in the financial year in which the exchange rates change.

Classification of Assets and Liabilities

Assets and liabilities are classified as current and non-current. Current assets are cash or other assets that would in the ordinary course of business be consumed or converted into cash within twelve months. Current liabilities are liabilities that would in the ordinary course of business be due and payable within twelve months.

Taxes

Income Tax

Income tax has been brought to account using the liability method of tax effect accounting whereby income tax expense/benefit for the period is calculated on the accounting result after adjusting for items which, as a result of their treatment under income tax legislation, create permanent differences between that result and the taxable result. The tax effect of timing differences which arise from the recognition in the accounts of items of revenue and expenses in periods different from those in which they are assessable or allowable for income tax purposes are represented as "Future income tax benefits" or "Provisions for deferred income tax" at current tax rates.

Future income tax benefits are only carried forward as assets where realisation of the benefits can be regarded as being virtually certain.

The ultimate realisation of these benefits will depend upon:

the ability of the Consolidated Entity to derive future assessable income and capital profits $(1)$ of the nature and of sufficient amount to enable the benefits to be realised:
(ii) the ability of the Consolidated Entity to comply with the conditions for deductibility imposed by law; and
(iii) an expectation that legislation will not change in a manner which would adversely affect the ability of the Consolidated Entity to realise the benefits.

Good and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST except:

where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position.

Cash flows are included in the Statements of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

Employee Share Option Plan

The Company has granted options to certain participants under an employee share option plan. Further information is set out in Note 22. The receivable and the option reserve have not been recognised as the probability that the economic benefits embodied in the asset will eventuate, cannot be reliably determined due to the terms of the option plan. These amounts will be recognised when options are exercised. Other than the costs incurred in administering the scheme which are expensed as incurred, the scheme does not result in any expense to the Company.

Joint Venture Operations

The Company's interest in an unincorporated joint venture is brought to account by including its interest in the following amounts in the appropriate categories in the Statement of Financial Position and Statement of Financial Performance:

each of the individual assets employed in the joint venture;
liabilities incurred by the Company in relation to the joint venture and the liabilities for which it is jointly and/or severally liable; and
expenses incurred in relation to the joint venture.

Receivables

Trade receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. Bad debts are written-off as incurred.

Receivables from other entities are recognised and carried at nominal amount due. Interest is taken up as income on an accrual basis.

Other Financial Assets

Controlled Entities

Investments in the Controlled Entities are carried in the Company's financial statements at the lower of cost and recoverable amount. Refer to Note "Revaluation of non-current assets".

Investments in other listed entities are measured at fair value, being quoted market prices at reporting date. Refer to "Revaluations of non-current assets".

Investments in other unlisted and overseas listed entities are carried at the lower of cost and recoverable amount. Refer to Note "Recoverable amount of non-current assets valued on cost basis".

Payables

Liabilities are recognised for amounts to be paid in the future for goods or services received. whether or not billed to the Consolidated Entity. The amounts are incurred and paid within the normal payment terms.

Interest-Bearing Liabilities

All loans are measured at the principal amount. Interest is recognised as an expense as it accrues.

Exploration

Exploration expenditure is capitalised for each separate area of interest where:

(i) it is expected to be recovered through successful development and exploitation or by sale; or
(ii) activities in the area of interest have not yet reached a stage which permits reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in relation to the area are continuing.

Ultimate recoupment is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas.

Each area of interest is reviewed at the end of each accounting period to determine whether costs should continue to be carried forward in respect of that area of interest.

Where it is determined that an area of interest has no commercial value and is to be abandoned, the net balance of costs carried forward is written off. As a matter of prudence, where appropriate, a provision is made against the remaining expenditure, to recognise the inherent uncertainty of successful development of current areas of interest.

Recoverable amount of non-current assets valued on cost basis

The carrying amounts of non-current assets valued on the cost basis, other than exploration and evaluation expenditure carried forward, are reviewed to determine whether they are in excess of their recoverable amount at reporting date. If the carrying amount of a non-current asset exceeds its recoverable amount, the asset is written down to the lower amount.

In assessing recoverable amounts of non-current assets, the relevant cash flows have been discounted to their present value.

Revaluation of non-current assets

Classes of non-current assets measured at fair value are revalued with sufficient regularity to ensure the carrying amount of each asset in the class does not differ materially from fair value at reporting date. Revaluation increments, on a class of assets basis, are recognised in the asset revaluation reserve except that amounts reversing a decrement previously recognised as an expense are recognised as revenues. Revaluation decrements are only offset against revaluation increments relating to the same class of asset and any excess is recognised as an expense.

Restoration Expenditure

No material future restoration liabilities are anticipated in relation to the Economic Entity's normal exploration programme.

(iii) Change in Accounting Policy

The Company has changed its accounting policy in relation to other financial assets. Previously the Company valued its investments in other companies at the lower of cost and net realisable value as determined in respect of each security holding. Investments in other listed entities are now measured at fair value, being quoted market prices at reporting date. The change is a result of the decrease in the size of the holdings in listed companies such that market value is an appropriate basis of measurement. The value of the adjustment at 30 June 2005 is \$358,486 and was taken to the asset revaluation reserve (see note 12). If the revised accounting policy had been adopted at 30 June 2004, the amount of the adjustment to the asset revaluation reserve would have been \$316,464. There is no effect at 30 June 2005 on the Statement of Financial Performance. At 30 June 2004, the effect would have been a reduction in expenses of \$97,284. The accumulated losses at 30 June 2004 would have decreased by \$97,284.

(iv) Comparative Figures

Where necessary comparative figures have been restated to be consistent with current year presentation.

				Consolidated	Parent Entity
		Note	2005	2004	2005	2004
2.	REVENUES		\$	\$	\$	S
	From operating activities
	Interest
	Other Entity	21	3,688	15,394	3,688	15,394
	Other		470	1,307	470	1,307
	From outside operating activities
	Gross proceeds from sale of non-current assets
	Financial assets		125,249	432,925	125,249	432,925
	Management fees					21,578
			129,407	449,626	129,407	471,204

3.	LOSS (PROFIT) FROM ORDINARY ACTIVITIES
	The loss (profit) from ordinary activities has been determined after charging/crediting:

	Borrowing costs Controlled Entity					1,037
	Related Party	21	5,022	13,232	5,022	13,231
	Other Entities	21	3,250	188	3,226	166
			8,272	13,420	8,248	14,434


	Net loss (gain) on disposal of non-current assets Financial Assets		78,090	(386, 582)	78,090	(386, 582)

	Auditors remuneration
	Audit services Other services		21,800	20,800	21,800	20,800

4.	TAXATION

	(a) Income tax expense
	Prima facie income tax (expense)/benefit calculated
	at 30% (2004 30%) on the (profit)/loss from ordinary activities		158,150	(3,076)	158,023	(6,260)

	Decrease in income tax benefit due to:
	Provision for diminution of investments			6,385		3,385
	Sundry items Future income tax expense/(benefits) not		(3, 892) (154, 258)	836 (4, 145)	(3,892) (154, 131)	836 2,039
	realised

	Income tax expense on loss from ordinary activities

(b) Future income tax benefit not recognised

The future income tax benefit in respect of tax losses has not been recognised for as an asset in the financial statements as the realisation of the benefit is not virtually certain.

Future income tax benefits have been calculated at 30%.

The potential future income tax benefit at 30 June 2005 not

recognised is as follows:
Revenue losses	4.735.238	4.815.929	4.685.225
Capital losses	7,888,086	7,892,532	7.869.105
Quarantined foreign losses	1,329.017	1.329.017	1.329.017

	Consolidated
		2005	2004
		Number	Number
5.	EARNINGS PER SHARE
	Weighted average number of ordinary shares on issue used in the calculation of basic earnings (loss) per share	296.672.596	289.324.409
	Weighted average number of potential ordinary shares used in the calculation of diluted earnings (loss) per share	296.672.596	289.324.409
		S	\$
	Operating loss after tax used in calculation of earnings per share	(527.165)	10.253

In accordance with paragraph 12.1 of AASB 1027 "Earnings per Share" there are no potential ordinary shares considered to be dilutive for 2005.

Options that would be included in the calculation of diluted earnings per share when applicable are 43,748,673 options exercisable at \$0.10 each, 32,875,597 exercisable at \$0.10 each and 68,378,151 exercisable at \$0.05 each. All options converting to one fully paid ordinary share.

Options that would be included in the calculation of diluted earnings per share when applicable are 1,400,000 options issued under the employee share option plan.

			Consolidated 2004 \$	Parent Entity 2005 \$	2004 \$
6.	CASH ASSETS
	Cash at bank		1,070	1,393	309
7.	RECEIVABLES
	CURRENT Non-trade receivables Other Entity Other	21	431,017 9,309	405,225 43,361	431,017 9,309
	Less provision for doubtful receivable Other Entity	21	440.326 (431, 017)	448,586 (305, 225)	440,326 (431, 017)
			9,309	143,361	9,309
	NON-CURRENT
	Advance to Other Entities	21	244,480	29,179	244,480

		Consolidated		Parent Entity
8.	OTHER FINANCIAL ASSETS	2004 \$	2005 S	2004 \$
	NON-CURRENT
	Investments in former Controlled Entity Unlisted shares at cost Less provision for diminution in value			10,000 (10,000)
		$\overline{\phantom{a}}$
	Listed Securities Other Entity at fair value Other Entities at cost Less provision for diminution in value	228,728 (22,606)	358,486 787,878 (785, 094)	1,642,394 (1,436,272)
		206,122	361,270	206,122
		206,122	361,270	206,122
			2005 ℅	Consolidated 2004 %
	Particulars in relation to former Controlled Entity
	Topalite Resources Pty Ltd ("Topalite") (incorporated in Australia)			100
	The investment in Topalite has been written off as Topalite does not hold any assets. Subsequent to the end of the financial year, Topalite was deregistered on 19 September 2005.
9.	Note PAYABLES	Consolidated 2004 \$	2005 \$	Parent Entity 2004

CURRENT

Trade creditors and accruals

10. INTEREST BEARING LIABILITIES

NON CURRENT

Secured borrowings
Related Party	21, (i)	$\sim$	108,628
Other Entity	21, (ii)	340	$\sim$	-

81,668

340

120,806

108,628

$81,1$

(i) The Related Party borrowing is secured by a floating charge over the assets of the Company

(ii) In 2004, the Other Entity borrowing was
secured by a second ranking floating charge over the assets of the Company

11. CONTRIBUTED EQUITY

Issued and paid-up capital

310,597,528 (2004: 290,897,528) fully paid ordinary shares	51,611,771	51.982.991	51,611,771
Movement in ordinary share capital
Balance at the beginning of the financial year Shares issued -	51,153,057	51,611,771	51.153,057
(2004; 4,490,000) 19,700,000 placement of shares	493.900	492.500	493.900
Less transaction costs Nil (2004: 627) options converted	(35, 257) 71	(121, 280)	(35, 257) 71
Balance at end of year	51.611.771	51.982.991	51.611.771

Terms and Conditions of Contributed Equity

Ordinary Shares:

Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders meetings. In the event of winding up of the Company ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any proceeds of liquidation.

Options:

43,748,673 options are on issue at an exercise price of \$0.10 per option which, if exercised, will entitle the option holder to one ordinary fully paid share in the Company for each option. Options not exercised by 31 October 2010 will lapse.

32,875,597 options are on issue at an exercise price of \$0.10 per option which, if exercised will entitle the option holder to one ordinary fully paid share in the Company for each option. Options not exercised by 30 April 2012 will lapse.

68,378,151 options are on issue at an exercise price of \$0.05 per option. If exercised will entitle the option holder to one ordinary fully paid share in the Company for each option. Options not exercised by 30 November 2012 will lapse.

1,400,000 employee options are on issue at an exercise price of \$0.08 per option. Refer note 22 for details.

		Consolidated 2004 \$	2005 \$	Parent Entity 2004 \$
12.	RESERVES
	Asset revaluation Option reserve	619,690	358,486 619,690	619,690
		619,690	978,176	619,690
	Asset revaluation
	Nature and purpose of reserve
	The asset revaluation reserve is used to record increments and decrements in the value of non current assets.
	Balance at beginning of year	-
	Revaluation increment - listed shares in Other Entities	$\overline{a}$	358,486
	Balance at end of year		358,486

2004 \$ 619,699 (9) 619,690










6,012,995
(6,012,995)


(51, 592, 371) 20,866

(51, 571, 505)

180,385
(14, 391)
493,962
659,956

ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE $15.$

(a) Interest Rate Risk

The Parent Entity for 2005 and the Consolidated Entity for 2004's exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities is set out below:

					Fixed interest maturing in:
2005	Note	Weighted average interest rate $\%$	Floating interest rate \$	1 year or less \$	Over 1 to 5 years \$	More than 5 years \$	Non- interest bearing \$	Total s
Financial assets Cash assets Receivables Other financial assets	6 7 8	0.10% 1.83%	1,393 29,179				143,361 361,270	1,393 172,540 361,270
Total			30,572				504,631	535,203
Financial liabilities Payables Interest bearing liabilities ⁽¹⁾	9 10	9.35%	108,628				120,806	120,806 108,628
Total			108,628				120,806	229,434
2004
Financial assets Cash assets Receivables Other financial assets	6 7 8	0.95% 10.21%	1,070 244,480				9,309 206,122	1,070 253,789 206,122
Total			245,550				215,431	460,981
Financial liabilities Payables Interest bearing liabilities ⁽²⁾	9 10	10.60%	340				81,668	81,668 340
Total			340				81,668	82,008

Wilzed Pty Ltd charges interest at the "Reference Rate" of the ANZ Banking Group Ltd. The actual rate for 2005 was 9.10% to 9.35%.
AXIS Consultants Pty Ltd charges interest at the National Australia Bank business base rate plus a margin. The actual rate for 2004 was 10.10% to 10.60%. The loan is secured by a second ranking floating charge over the assets of the Company.

15. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE (Cont'd)

(b) Foreign Exchange Risk

At 30 June 2005 there are no material foreign exchange risks.

(c) Credit Risk Exposures

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.

(d) Net Fair Values of Financial Assets and Liabilities

Valuation Approach

16.

Net fair values of financial assets and liabilities are determined by the Company on the following basis:

Cash, cash equivalents and short-term investments: The carrying amount approximates fair value because of their short-term to maturity.

Receivables and payables: The carrying amount approximates fair value.

Long-term loans receivable: The fair values of long-term loans receivable are estimated using discounted cash flow analysis, based on current incremental lending rates for similar types of lending arrangements.

Non-current investments/securities: For financial instruments traded in organised financial markets, fair value is the current quoted market bid price for an asset or offer price for a liability, adjusted for transaction costs necessary to realise the asset or settle the liability. Where small volumes are traded relative to the number of trading units of the investment to be valued, fair value is determined after consideration of the size of the holding and net assets of the investee, adjusted for transaction costs necessary to realise the asset. For investments where there is no quoted market price, a reasonable estimate of the fair value is determined by reference to the current market value of another instrument which is substantially the same or is calculated based on the expected cash flows or the underlying net asset base of the investment/security.

The carrying amounts and net fair values of financial assets and liabilities as at the reporting date are as follows:

	Note	Parent Entity 2005 Carrying amount S	2005 Net fair Value \$	Consolidated 2004 Carrying amount S	2004 Net fair Value S
Recognised financial instruments Financial assets
Cash assets	6	1,393	1.393	1.070	1.070
Receivables	7	172.540	172,540	253,789	253,789
Other financial assets:
Shares in other corporations - listed	8	361,270	361,270	206.122	619,870
Financial liabilities Payables Interest bearing liabilities	9 10	120,806 108,628	120,806 108,628	81.668 340	81,668 340

			Consolidated
STATEMENTS OF CASH FLOWS		2005 S	2004 \$	2005 \$	Parent Entity 2004 S
(a) Reconciliation of operating profit (loss) after income tax to net cash used in operating activities
Operating profit/(loss) after income tax		(527, 165)	10.253	(526, 744)	20,866

			Consolidated		Parent Entity
		2005 \$	2004 \$	2005 \$	2004 £
16.	STATEMENTS OF CASH FLOWS (Cont'd)
	Loss (profit) on disposal of non-current assets	78,090	(386, 582)	78,090	(386, 582)
	Exploration expenditure previously capitalised written off as unsuccessful	107,906	48.788	107.906	48.708
	Borrowing costs payable Provision for doubtful debts	5.021 125,792	13.420 (52, 461)	5.022 (125,792)	14.434 (52, 461)

	Net cash used in operating activities before change in assets and liabilities	(461, 940)	(387, 866)	(461, 517)	(366, 319)
	Changes in assets and liabilities: Increase/(Decrease) in receivables	(18.751)	(5,098)	(18, 751)	(21, 057)
	Increase in trade creditors and accruals	33,891	(2, 166)	33,889	(7, 389)
	Net cash used in operating activities	(446, 800)	(395, 130)	(446, 379)	(394, 765)

(b) Non cash financing

An amount of \$280,707 advanced to the Company by a Wilzed Pty Ltd, a Director related entity has been used to repay AXIS Consultants Pty Ltd an Other Entity. Proceeds from borrowings does not include interest of \$5,022 that was capitalised into borrowings during the year.

For the purposes of the Statements of Cash Flows, cash includes cash on hand and in banks.

$(d)$ Financing facilities

Wilzed Pty Ltd, a Director Related Entity as detailed in Note 21 provides finance to the Company.

$17.$ COMMITMENTS

(a) Exploration

The Company has to perform minimum exploration work and expend minimum amounts of money on its tenements. The overall expenditure requirement tends to be limited in the normal course of the Company's tenement portfolio management through expenditure exemption approvals and expenditure reductions through relinquishment of parts or the whole of tenements deemed non prospective.

	Consolidated		Parent Entity
	2004 \$	2005 \$	2004 S
At balance date the amount which may be required to be expended in respect of the abovementioned is as follows:
Not later than one vear	711.060	640.140	711.060
Later than one year but not later than five years	1,493,660	1.596.460	1,493,660
	2,204,720	2,236,600	2,204,720

The terms and conditions under which the Company has title to its various mining tenements oblige it to meet tenement rentals and minimum levels of exploration expenditure as gazetted by the Department of Minerals and Energy of Western Australia, as well as Local Government rates and taxes.

(b) Farm-In contracts

The Company is required to spend certain amounts on exploration expenditure and in certain cases make other cash payments to partners to earn interests under Farm-In contracts.

		Consolidated		Parent Entity
		2004	2005	2004
		\$		\$
17.	COMMITMENTS (Cont'd)
	At balance date the amount which may be required to be expended in respect of the abovementioned is as follows:
	Later than one year but not later than five years	1.067.436	1,482,221	1.067.436

However, the Company can withdraw from these commitments after spending \$500,000 (2004: \$300,000). To date \$317,779 (2004: \$132,564) has been spent.

SEGMENT INFORMATION 18.

		Mineral Exploration		Investments		Consolidated
	2005	2004	2005	2004	2005	2004
	\$	\$	\$	\$	\$	\$
Primary Segment Business Segments
Revenue Interest Proceeds from sale of non- current assets	4,158	16,701	125,249	432,925	4,158 125,249	16,701 432,925
Total segment revenue	4,158	16,701	125,249	432,925	129,407	449,626
Results Net (profit) loss	449,075	397,613	78,090	(407, 866)	527,165	(10, 253)
Assets Segment Assets	731,082	536,263	361,270	206,122	1,092,352	742,385
Liabilities Segment Liabilities	120,806	81,668	108,628	340	229,434	82,008

Secondary Segment

Geographic segment

The Company operates predominately in Australia

DIRECTORS AND EXECUTIVES DISCLOSURE 19.

The names of the Directors and Specified Executives in office during the year are as follows:-

Directors

J I Gutnick - Chairman and Managing Director D S Tyrwhitt - Non Executive Director M Z Gutnick - Non Executive Director

Specified Officers P J Lee - General Manager Corporate & Company Secretary C D Taylor - Exploration Manager

Pursuant to the Corporations Act Regulation 2M.6.04, Directors and Executives remuneration is disclosed in the Remuneration Report in the Directors' Report.

Equity Holdings and Transactions

J I Gutnick

	Ordinary Shares Number	Options 31/10/2010 Number	Options 30/4/2012 Number	Options 30/11/2012 Number	Options 24/3/2010 Number
At start of reporting period	144, 145, 878	30,003,448	24,741,562	65,136,241	1,000,000
Granted as Remuneration Received an exercise of options or rights Exercised
Resulting from other changes	8,669,600	12,800,000	6,400,000
At close of reporting period	152,815,478	42,803,448	31,141,562	65,136,241	1,000,000
Vested at reporting date
Vested and exercisable at reporting date Vested and unexercisable at reporting date		42,803,448	31,141,562	65,136,241	1,000,000
Held nominally at reporting date
D S Tyrwhitt
At start of reporting period Granted as Remuneration
Received an exercise of options or rights Exercised
Resulting from other changes
At close of reporting period
Vested at reporting date Vested and exercisable at reporting date Vested and unexercisable at reporting date
Held nominally at reporting date
M Z Gutnick
At start of reporting period Granted as Remuneration	152,795,478	30,003,448	24,741,562	65,136,241	1,000,000
Received an exercise of options or rights Exercised
Resulting from other changes		12,800,000	6,400,000
At close of reporting period	152,795,478	42,803,448	31,141,562	65,136,241	1,000,000
Vested at reporting date Vested and exercisable at reporting date		42,803,448	31,141,562	65,136,241
Vested and unexercisable at reporting date					1,000,000
Held nominally at reporting date

DIDECTORE AND EVECHTIVES DISCLOSIDE (CARPA) 19.

DIRECTORS AND EXECUTIVES DISCLOSURE (COIR 0)	Ordinary Shares Number	Options 31/10/2010 Number	Options 30/4/2012 Number	Options 31/11/2012 Number	Options 24/3/2010 Number
PJLee
At start of reporting period Granted as Remuneration Received an exercise of options or rights Exercised Resulting from other changes	280				350,000
At close of reporting period	280				350,000
Vested at reporting date Vested and exercisable at reporting date Vested and unexercisable at reporting date Held nominally at reporting date					350,000
C Taylor
At start of reporting period Granted as Remuneration Received an exercise of options or rights Exercised Resulting from other changes At close of reporting period	÷,	L.	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$
Vested at reporting date Vested and exercisable at reporting date Vested and unexercisable at reporting date
Held nominally at reporting date

Equity instruments for each disclosing party include equity instruments held by director related parties. Messrs J I Gutnick and M Z Gutnick are related and accordingly are director related parties of each other. The equity instruments disclosed by Messrs J I Gutnick and M Z Gutnick are primarily the same equity instruments.

20. ULTIMATE PARENT ENTITY

After consideration of AASB 1024 and the Corporations Act 2001, the Directors do not believe there is a Parent Entity.

		Note		Consolidated		Parent Entity
			2005 \$	2004 \$	2005 S	2004 \$
21.	RELATED PARTY AND OTHER INFORMATION
	Directors Transactions with the Company
	Transactions with Director Related Entities of $\langle$ i Mr. J.I. Gutnick are as follows:
	Chevas Pty Ltd ("Chevas") Chevas provides loan funds to the Company Transactions during the period
	Amounts advanced during the year Amounts repaid during the year Amount assigned to Wilzed Pty Ltd ("Wilzed") Interest paid or due and payable	3	$\overline{a}$ $\overline{\phantom{0}}$ $\overline{\phantom{a}}$ ۰	83.836 (243, 941) (72,013) 11.561		83,836 (243, 941) (72,013) 11.561
	Amount outstanding to Chevas

The interest rate for 2004 charged by Chevas was 8.60% to 9.10%. During the 2004 year Chevas assigned the loan and security it held in respect to the loan to Wilzed Pty Ltd.

		Note		Consolidated		Parent Entity
			2005 \$	2004 S	2005 \$	2004 \$
	RELATED PARTY AND OTHER INFORMATION (Cont'd)
	Wilzed Wilzed provides loan funds to the Company
	Transactions during the period Amount assigned from Chevas			72,013		72,013
	Amounts advanced during the year		525,552		525,552
	Amounts repaid during the year		(421, 946)	(72, 839)	(421, 946)	(72, 839)
	Interest paid or due and payable Amount outstanding to Wilzed	3 10	5,022 108,628	826	5,022 108,628	826
	The interest rate for 2005 charged by Wilzed was 9.10% to 9.35% (2004: 7.43% to 9.10%). The loan is secured by a floating charge over the assets of the Company.
	Edensor Gold Pty Ltd ("Edensor")
	Edensor provides loan funds to the Company Transactions during the period
	Amounts advanced during the year			35,000		35,000
	Amounts repaid during the year			(35,000)		(35,000)
	Interest paid or due and payable	3		845		845
	The interest rate for 2004 charged by Edensor was 9.10%.
	Edensor Gold Pty Ltd (current). This Company provides geological consulting services to the company on normal terms and conditions.
	Transactions during the period
	Fees for geological services Amounts paid			16,970 (16, 970)		16.970 (16,970)
	Some of the Directors of the Company are/were also Directors of the following companies ("Other Entities").
	Astro Diamond Mines N.L. ("Astro") AXIS Consultants Pty Ltd ("AXIS")
	Bay Resources Ltd ("Bay Resources")
	Great Gold Mines N.L. Regis Resources N.L.
(ii)	Transactions with AXIS Consultants Pty Ltd ("AXIS") are as follows:
	Management services		(399, 394)	(362, 983)	(399, 382)	(362, 665)
	Geological services		(118, 241)	(46, 167)	(118, 241)	(46, 167)
	Interest paid/payable	3	(3,250)	(188)	(3,226)	(166)
	Interest received/receivable Receipt from AXIS	2	3,688 (177, 100)	15,394 (41,000)	3,688 (177, 100)	15,394 (41,000)
	Repayment to AXIS		479,336	596,728	478,960	596,728
	Amount outstanding (to) AXIS	10		(340)
	Amount outstanding by AXIS	7	29,179	244,480	29,179	244,480
	(iii) Transactions with Bay Resources are as follows:
	Expenses incurred on behalf of Bay Resources Provision for doubtful debt			43,941		43,941
	Receipts from Bay Resources			(43, 941)		(43, 941)

				Consolidated		Parent Entity
			2005 \$	2004 S	2005 s	2004 \$
21.	RELATED PARTY AND OTHER INFORMATION (Cont'd)
	(iv) Transactions with Astro are as follows:
	Amounts repaid during the year		25,792	8,520	25,792	8,520
	Amount owing by Astro	7	405,225	431,017	405,225	431,017
	Provision for doubtful receivable	7	(305, 225)	(431, 017)	(305, 225)	(431, 017)
	(v) Transactions with Great Gold Mines N.L. (GNL) are as follows:
	Exploration expenses incurred by GNL on behalf of joint venture partners		(2,051)	$\overline{\phantom{a}}$	(2,051)
	Amounts paid to GNL		2.051		2,051
	(vi) The Company has the following ownership interests and is one of a number of public companies that together hold all the issued shares in AXIS.				%	%
	AXIS - Ordinary shares				9.09	9.09
	Ordinary shares
	Regis Resources N.L.				1.10	3.24
	Great Gold Mines N.L.					0.01
	Bay Resources Ltd				0.01	0.01
	Movements in provision for diminution of investment					21,284

EMPLOYEE SHARE OPTION PLAN $22.$

On 24 March 2000 the Company granted unlisted options over 5,325,000 unissued ordinary shares to employees at an issue price of 3.7 cents under the employee share option plan.

The options are exercisable from 25 March 2003 until the earlier of their expiry date on 24 March 2010 or the $(i)$ termination of the person's employment.
$\langle$ ii) The options may only be exercised if the price on the ASX of the ordinary shares in the Company has increased by a factor of 20%, after adjustments for rights issues, bonus issues and dividends, from the date that the options were acquired.
$(iii)$ The exercise price for the option will be equal to the weighted average market price of the ordinary shares on the five business days prior to and including the date of acquisition, less the issue price.

Off Statement of Financial Position Items	2005	2004
Unissued ordinary shares of the Company under option	1,400,000	1.400.000
The market value of the shares under these options at 30 June was	\$0.02	\$0.04
Exercise price	\$0.08	\$0.08

Interest free loans were made available to participants who subscribed for options. The option loans are repayable if the participant disposes of any ordinary shares acquired as a result of the exercise of the options or on the termination of employment, however in these circumstances the Company will buy back the options and use the proceeds to repay the loan.

			Parent Entity
22.	EMPLOYEE SHARE OPTION PLAN (Cont'd)	2005	2004
	Number of options repurchased by the Company	$\overline{\phantom{0}}$	250,000
	Value of options repurchased by the Company	-	\$9,250
	Interest free option loans provided	\$51,800	\$51,800

The Company may at the discretion of the Board, make loans to participants to fund the exercise price of the options. These loans are likely to be interest free and repayable with "after tax" dividends or on the earlier of the disposal of the ordinary shares or the termination of the executive's employment.

GOING CONCERN 23.

The Financial Report has been prepared on the basis of going concern, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. The Directors believe this basis to be appropriate. The Company has signed a term sheet with a US Based Investment Fund for a \$3 million equity line of credit facility. The Company may, at its discretion, issue shares to the Fund at any time over the next 36 months, up to a total of \$3 million. The Company may drawdown up to \$50,000 in any five day period. A commission of five percent will be payable by the Company at the time of issue. In addition, the Company has no reason to doubt that normal credit and borrowing facilities will not continue to be provided by creditors and lenders and the Company will continue to be able to comply with these credit terms and there are no material contingent liabilities which could have an effect on the Company's financial position.

$24$ NUMBER OF EMPLOYEES

The Economic Entity is managed by AXIS Consultants Pty Ltd ("AXIS") pursuant to a Service Agreement dated 25 November 1988. Accordingly, the Economic Entity has no employees. At 30 June 2005 AXIS had 10 employees who manage a number of public companies including the Economic Entity.

AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS 25.

The Australian Accounting Standards Board (AASB) has adopted International Financial Reporting Standards ("IFRS") for application to reporting periods beginning on or after 1 January 2005. The AASB has issued Australian equivalents to IFRS ("AIFRS"), and the Urgent Issues Group has issued abstracts corresponding to IASB interpretations originated by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee. The adoption of AIFRS will be first reflected in the financial statements for the half-year ending 31 December 2005 and the year ending 30 June 2006.

Entities complying with AIFRS for the first time will be required to restate their comparative financial statements to amounts reflecting the application of IFRS to that comparative period. Most adjustments required on transition to IFRS will be made, retrospectively, against opening retained earnings as at 1 July 2004.

This financial report has been prepared in accordance with Australian accounting standards and other financial reporting requirements ("Australian GAAP") applicable for reporting periods ended 30 June 2005.

The Company has reviewed the transition to AIFRS. The project is being run by the Company Secretary who reports to the Managing Director and the Board of Directors.

Assessment and planning phase

The assessment and planning phase was a high level overview of the impacts of conversion to AIFRS on existing accounting and reporting policies and procedures, systems and processes, business structure and staff. This phase included:

high level identification of the key differences in accounting policies and disclosures that are expected to arise from adopting AIFRS
assessment of new information requirements
evaluation of the implications for staff; and
preparation of a conversion plan for expected changes to accounting policies, reporting structures, systems, accounting and business processes and staff training.

AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (Cont'd) 25.

The assessment phase is completed as at 30 June 2005 and the planning phase is expected to be completed shortly.

Design phase

The design phase formulated the changes required to existing accounting policies and procedures and systems and processes in order to transition to AIFRS. The design phase included staff working on areas such as application of impairment requirements and transitional elections.

The design phase incorporated:

$\blacksquare$ formulation of revised accounting policies and procedures for compliance with AIFRS requirements
identification of potential financial impacts as at the transition date and for subsequent reporting periods prior to adoption of AIFRS
Ĩ. development of revised AIFRS disclosures
formulation of accounting processes to support AIFRS reporting obligations
identification of required changes to financial reporting and systems, and
development of training programs for staff.

The design phase is substantially completed as at 30 June 2005.

Implementation phase

The implementation phase includes implementation of identified changes to accounting and business procedures, processes and systems and operational training for staff and enables the Company to generate the required reconciliations and disclosures of AASB 1 First Time Adoption of Australian Equivalents to International Financial Reporting Standards.

This phase is substantially complete as at 30 June 2005.

Impact of transition to AIFRS

The impact of transition to AIFRS, including the transitional adjustments disclosed in the reconciliations from current Australian GAAP to AIFRS, and the selection and application of AIFRS accounting policies, are based on AIFRS standards that management expect to be in place, or where applicable, early adopted, when preparing the first complete AIFRS financial report (being the half-year ending 31 December 2005). Only a complete set of financial statements and notes together with comparative balances can provide a true and fair presentation of the Company's financial position, results of operations and cash flows in accordance with AIFRS. This note provides only a summary, therefore, further disclosure and explanations will be required in the first complete AIFRS financial report for a true and fair view to be presented under AIFRS.

There is a significant amount of judgement involved in the preparation of the reconciliations from current Australian GAAP to AIFRS, consequently the final reconciliations presented in the first financial report prepared in accordance with AIFRS may vary materially from the reconciliations provided in this Note.

Revisions to the selection and application of the AIFRS accounting policies may be required as a result of:

changes in financial reporting requirements that are relevant to the Company's first complete AIFRS financial report arising from new or revised accounting standards or interpretations issued by the Australian Accounting Standards Board subsequent to the preparation of the 30 June 2005 financial report.
additional guidance on the application of AIFRS in a particular industry or to a particular transaction ř.
changes to the Company's operations.

Where the application or interpretation of an accounting standard is currently being debated, the accounting policy adopted reflects management's current assessment of the likely outcome of those deliberations. The uncertainty relating to the accounting quidance is disclosed in the relevant accounting policy note and where practicable, the expected impact of the alternative interruption is also disclosed.

The rules for first time adoption of AIFRS are set out in AASB 1 First Time Adoption of Australian Equivalents to International Financial Reporting Standards. In general, AIFRS accounting policies must be applied retrospectively to determine the opening AIFRS balance sheet as at transition date, being 1 July 2004. The Standard allows a number of exemptions to this general principle to assist in the transition to reporting under AIFRS. The accounting policies note includes details of the AASB 1 elections adopted.

The significant changes in accounting policies expected to be adopted in preparing the AIFRS reconciliations and the elections expected to be made under AASB 1 are set out below.

25. AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (Cont'd)

(a) Reclassifications

AASB 101 prohibits the presentation of items of income or expense as extraordinary, either on the face of the income statement or in the notes. The nature and amount of material items will be disclosed separately in the notes to the financial statements.

Non-current assets classified as held for sale and the assets and liabilities of a disposal group classified as held for sale will be presented separately from other assets and liabilities on the balance sheet. A non-current asset (or disposal group) is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use, the asset (or disposal group) is available for immediate sale in its current condition, and its sale is highly probable. For the Company there are no non current assets to be reclassified.

The changes identified to date that will be required to the Company's existing accounting policies include the following:

Exploration and Evaluation - The Australian equivalent of the IFRS standard AASB 6 - Exploration for and $1.$ Evaluation of Mineral Resources was issued in December 2004. This standard is specific to exploration and evaluation assets and mandates the "area of interest" concept. It also requires companies that recognize exploration and evaluation assets to perform impairment tests on those assets when facts and circumstances suggest the carrying amount of the asset may be impaired. The impairment test is assessed at a cash generating unit or group of cash generating units level provided this is no larger than an area of interest.

As at 30 June 2004 and 2005 the carrying value was based on a review carried out by the management agreed upon by the directors of the company. The carrying value has been further adjusted to take into account expenditure on ungranted tenements except refundable rents where there are no underlying related granted tenements. The adjustment to the carrying value of the asset at 30 June 2004 is a decrease of \$57,708 and at 30 June 2005, a decrease of \$83,078 (cumulative). Exploration expenditure written off as at 30 June 2004 will increase by \$57,708 and at 30 June 2005 by \$25,370.

Impairment of Assets-

Under current AGAAP the carrying amounts of non-current assets valued on a cost basis, other than exploration and evaluation expenditure carried forward, are reviewed at reporting date to determine whether they are in excess of theire recoverable amount. The Company currently assesses recoverable amounts of non-current assets based on undiscounted future net cash flows.

Under AIFRS, the carrying amount will be reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset will be tested for impairment by comparing its recoverable amount to its carrying amount. The recoverable amount of non-current assets will be assessed as the higher of net selling price and value in use, on a discounted basis.

$2.$ Other financial assets as at 30 June 2004 Under AIFRS the impact of the change in the carrying value of the assets for the Consolidated Entity and the Company is an increase of \$413,748. There is no impact on the Company as at 30 June 2005.
Other non current assets Receivables 3. The current accounting policy under AGAAP is not expected to change under AIFRS.
Property Plant and Equipment 4. There were no property, plant and equipment at 30 June 2004.
1. Income Tax - Under the Australian equivalent to IAS 12 Income Taxes, deferred tax balances are determined using the balance sheet method which calculates temporary differences based on the carrying amounts of an entity's assets and liabilities in the statement of financial position and their associated tax bases. In addition, current and deferred taxes attributable to amounts recognized directly in equity are also recognized directly in equity.

This will result in a change to the current accounting policy, under which deferred tax balances are determined using the income statement method, items are only tax-effected if they are included in the determination of pre-tax accounting profit or loss and/or taxable income or loss and current and deferred taxes cannot be recognized directly in equity. Under IFRS deferred tax assets will be recognized for the carry forward of unused tax losses to the extent that future taxable profit is probable rather than virtually certain.

There is no impact for the Company as at 30 June 2005 and 2004.

25. AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (Cont'd)

1. Share Based Payments Under AASB 2 Share Based Payments, the Company will be required to determine the fair value of options issued to employees as remuneration and recognise an expense in the Statement of Financial Performance. This standard is not limited to options and also extends to other forms of equity based remuneration. It applies to all share-based payments issued after 7 November 2002 which have not vested as at 1 January 2005. The Company has no share based payments.
1. Non current Liabilities The current AGAAP accounting policy is not expected to change under AIFRS.
1. Earnings per share

Under AIFRS, basic and diluted earnings per share are calculated using the profit or loss from continuing operations attributable to the ordinary equity holders of the parent entity. The basic and diluted earnings per share for the discontinued operations is calculated and disclosed separately.

	Cents
Basic EPS from continuing operations per share	(0.30)
Diluted EPS from continuing operations per share	(0.30)

Restated AIFRS Statement of Cash Flows for the year end 30 June 2005 No material impacts are expected to the cash flows re-stated under AGAAP on adoption of AIFRS.

Summary of transitional adjustments

The following table sets out the expected adjustments to the Statements of Financial Position of the Company at transition to AIFRS as at 1 July
2004 and for the AIFRS comparative period Balance Sheet as at 30 June 2005.

Reconciliation of Equity

$\overline{a}$

30 JUNE 2005 Note AGAAP Transition AIFRS AGAAP Transition AIFRS impact impact \$ \$ \$ \$ s s ASSETS Current assets 309 309 1,393 1,393 Cash and cash equivalents 9,309 Receivables 9,309 143,361 143,361 9,618 9,618 144,754 144,754 $\tilde{\phantom{a}}$ Non-current assets classified as held for sale 144,754 144.754 9,618 9,618 Total current assets $\tilde{\phantom{a}}$ $\tilde{\phantom{a}}$ Non-current assets Other financial assets 206,122 413,748 619,870 361,270 361,270 Exploration expenditure 281,404 (57, 708) 223,696 (83,078) 557,149 474,071 Other non-current receivable 244,480 244,480 29,179 29,179 assets 732,006 356,040 1,088,046 947,598 (83,078) 864,520 Total non-current assets 741,624 1,009.274 Total assets 356,040 1,097,664 1,092,352 (83,078) LIABILITIES Current liabilities Trade and other payables 81.668 81,668 120,806 120,806 Liabilities directly associated with non-current assets classified as held for sale 81.668 81,668 120,806 120.806 Total current liabilities ×, ÷ Non-current liabilities Long-term borrowings 108,628 108,628 ÷ 108,628 Total non-current liabilities 108,628 $\ddot{\phantom{0}}$ $\blacksquare$ $\tilde{\phantom{a}}$ $\tilde{\phantom{a}}$ 229,434 Total liabilities 81.668 81,668 229,434 $\tilde{\phantom{a}}$ ×, 779,840 659,956 356,040 1,015,996 862,918 (83,078) Net Assets EQUITY Share capital 51,611,771 51,611,771 51,982,991 51,982,991 $\overline{a}$ Reserves 619,690 316,464 936, 154 978,176 978,176 39,576 (52,098,249) (83,078) Retained losses (51,571,505) (51,531,929) (52, 181, 327) 862,918 779,840 659,956 356,040 1,015,996 (83,078) Amounts recognized directly in equity relating to non-current assets classified as held for sale 659,956 1,015,996 (83,078) 779,840 356,040 862,918 Total Equity		THE COMPANY	THE COMPANY
		1 JULY 2004

Reconciliation of Profit for the Financial Year ended 30 June 2005

The following table sets out the expected adjustments to the Statements of Financial Performance of the Company for the year ended 30 June 2005.

	COMPANY
	For the year ended 30 June 2005
	Note	AGAAP	Transition	AIFRS
		\$	Impact т	\$
Other income		129,407		129,407
Exploration expenditure written off		(107, 906)	(25, 370)	(133, 276)
Administration expenses		(462, 449)		(462, 449)
Borrowing costs		(8,248)		(8, 248)
Provision for diminution of investments		(1)		(1)
Recovery of doubtful receivable		125,792		125,792
Carrying value of non current assets sold		(203, 339)	(348, 225)	(551, 564)
Loss from continuing operations		(526, 744)	(373, 595)	(900, 339)
Loss before income tax expense		(526, 744)	(373,595)	(900, 339)
Income tax expense
Loss for the period		(526, 744)	(373, 595)	(900, 339)
Loss attributable to members		(526.744)	(373.595)	(900.339)

Summary of Impact of Transition to AIFRS on Retained Earnings

The impact of the transition to AIFRS on Retained Earnings as at 1 July 2004 is summarized below:

	The Company s
Retained losses as at 1 July 2004 under AGAAP	(51,571.505)
AIFRS reconciliation:
- exploration expenditure written off	(57.708)
- gain on investment held	97.284
Retained losses as at 1 July 2004 under AIFRS	(51, 531, 929)

Summary of transitional adjustments

Reconciliation of Equity

	CONSOLIDATED
		1 JULY 2004
	Note	AGAAP	Transition impact	AIFRS
		\$	\$	\$
ASSETS
Current assets
Cash and cash equivalents		1,070		1,070
Receivables		9,309		9,309
Other current assets
		10,379	$\overline{a}$	10,379
Non-current assets classified as held for sale
Total current assets		10,379	٠	10,379
Non-current assets
Other financial assets		206,122	413,748	619,870
Property, plant & equipment
Exploration expenditure		281,404	(57, 708)	223,696
Other non-current receivable		244,480		244,480
assets
Total non-current assets		732,006	356,040	1,088,046
Total assets		742,385	356,040	1,098,425
LIABILITIES
Current liabilities
Trade and other payables		81,668		81,668
Liabilities directly associated with non-current assets classified as held for sale
Total current liabilities		81,668		81,668
Non-current liabilities
Long-term borrowings		340		340
Long-term provisions
Total non-current liabilities		340		340
Total liabilities		82,008	×	82,008
Net Assets		660.377	356,040	1,016,417
EQUITY
Share capital		51,611,771		51,611,771
Reserves		619,690	316,464	936,154
Retained losses		(51, 571, 084)	39,576	(51, 531, 508)
		660,377	356,040	1,016,417
Amounts recognized directly in equity relating to non-current assets classified as held for sale
Total Equity		660,377	356,040	1,016,417

Reconciliation of Profit for the Financial Year ended 30 June 2005

The following table sets out the expected adjustments to the Statements of Financial Performance of the Company for the year ended 30 June 2005.

		CONSOLIDATED For the year ended 30 June 2005
	Note	AGAAP	Transition Impact	AIFRS
		\$	s	\$
Other income		129,407		129,407
Exploration expenditure written off		(107, 906)	(25, 370)	(133, 276)
Administration expenses		(462, 847)		(462, 847)
Borrowing costs		(8,272)		(8,272)
Recovery of doubtful receivable		125,792		125,792
Carrying value of non current assets sold		(203, 339)	(348.225)	(551, 564)
Loss from continuing operations		(527, 165)	(373, 595)	(900, 760)
Loss before income tax expense		(527, 165)	(373, 595)	(900, 760)
Income tax expense
Loss for the period		(527, 165)	(373.595)	(900, 760)
Loss attributable to members		(527, 165)	(373, 595)	(900, 760)

Summary of Impact of Transition to AIFRS on Retained Earnings

The impact of the transition to AIFRS on Retained Earnings as at 1 July 2004 is summarized below:

	Consolidated S
Retained losses as at 1 July 2004 under AGAAP	(51,571.084)
AIFRS reconciliation:
- exploration expenditure written off	(57, 708)
- gain on investments held	97.284
Retained losses as at 1 July 2004 under AIFRS	(51,531,508)

Quantum Resources Limited ARN 84 006 690 348

Directors' Declaration

In the opinion of the Directors of Quantum Resources Limited

The accompanying financial statements and notes including the remuneration disclosures $(a)$ contained in the remuneration report section of the Directors' Report are in accordance with the Corporations Act 2001, including giving a true and fair view of the financial position of the Company as at 30 June 2005 and of its performance, as represented by the results of its operations and its cash flows for the year ended on that date; and complying with Accounting Standards and the Corporations Regulations 2001.
There are reasonable grounds to believe that the Company will be able to pay its debts as and $(b)$ when they become due and payable for the reasons set out in note 23.
The Directors have been given the declarations from the Chief Executive Officer and Chief $(c)$ Financial Officer as required by section 295A of the Corporations Act 2001.

Signed in accordance with a Resolution of the Board of Directors at Melbourne this 29^th day of September 2005.

J.I. Cutink

J.I. Gutnick Director

Chartered Accountants & Business Advisers

Level 11, CGU Tower 485 La Trobe St Melbourne VIC 3000 GPO Box 5099BB Melbourne 3001

Tel: (03) 9603 1700 Fax: (03) 9602 3870 www.pkf.com.au

INDEPENDENT AUDIT REPORT TO MEMBERS OF QUANTUM RESOURCES LIMITED

Scope

The Financial Report and Directors' Responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the financial statements, and the directors' declaration for both Quantum Resources Limited (the company) and the consolidated entity, for the year ended 30 June 2005. The consolidated entity comprises both the company and the entities it controlled during that year.

The consolidated entity has disclosed information about the remuneration of directors and executives ("remuneration disclosures"), as required by Accounting Standard AASB 1046 "Director and Executive Disclosures by Disclosing Entities", under the heading "remuneration report" in paragraph 15 of the directors' report, as permitted by the Corporations Regulations 2001.

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

Audit Approach

We conducted an independent audit in order to express an opinion to the members of the company. Our audit was conducted in accordance with Australian Auditing Standards in order to provide reasonable assurance as to whether the financial report is free of material misstatement and the remuneration disclosures comply with Accounting Standard AASB 1046 and the Corporations Regulations 2001. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot quarantee that all material misstatements have been detected.

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001, including compliance with Accounting Standards and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the company's and the consolidated entity's financial position, and of their performance as represented by the results of their operations and cash flows and whether the remuneration disclosures comply with Accounting Standard AASB 1046 and the Corporations Regulations 2001.

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

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

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

A Victorian Partnership

Independence

In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, provided to the directors on 29 September 2005, would be in the same terms if it had been given at the time the audit report was made.

Audit Opinion

In our opinion:

(1) the financial report of Quantum Resources Limited is in accordance with:
(a) the Corporations Act 2001, including:
(i) giving a true and fair view of the company's financial position as at 30 June 2005, and of the company's and the consolidated entity's performance for the year ended on that date, and
(ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001; and
(b) other mandatory financial reporting requirements in Australia: and
(2) the remuneration disclosures that are contained in paragraph 15 of the directors' report comply with Accounting Standard AASB 1046 and the Corporations Regulations 2001.

Inherent Uncertainty Regarding Continuation as a Going Concern

Without qualification to the opinion expressed above, attention is drawn to the following matter. As result of the matters described in note 23, there is significant uncertainty whether Quantum Resources Limited will be able to continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.

PKF Chartered Accountants A Victorian Partnership

29 September 2005 Melbourne

Kill Rt

M L Port Partner

The main corporate governance practices that the Board of Quantum Resources Limited had in place during the year were:

$\mathbf{1}$ . Board of Directors

i. Board Responsibilities

The Board's role is to maximize wealth creation and shareholder value in the Company. It assumes responsibility for overseeing the affairs of the Company by ensuring that they are carried out in a professional and ethical manner and that business risks are effectively managed. The primary responsibilities of the Board include the following:

To oversee the Company, including its control and accountability systems
To appoint and remove the Chief Executive Officer (or equivalent)
To ratifying the appointment and, where appropriate, the removal of the Chief Financial Officer (or equivalent) and the Company Secretary
To have input into and final approval of management's development of corporate strategy and performance objectives
To review and ratify systems of risk management and internal compliance and control, codes of conduct, legal compliance and any other regulatory compliance
To monitoring senior management's performance and implementation of strategy, and ٠ ensuring appropriate resources are available
To approve and monitor the progress of major capital expenditure, capital $\bullet$ management, and acquisitions and divestitures
To approve and monitor financial and other reporting to shareholders and the market
To monitor the Board composition. Director selection. Board processes and performance and ensure Directors have an understanding of the Company's business
To monitor and influence the key standards of the Company including ethical $\bullet$ standards, reputation and culture
To review and approve executive remuneration
To approve annual budgets

ii. Board Composition

While the Company's Constitution fixes the maximum number of Directors at twelve, the Board currently comprises one Executive Director and two Non-Executive Directors. The Company does not have a majority of independent Directors. The Chairman of the Company is a Director and Shareholder of Edensor Nominees Pty Ltd, which is a substantial shareholder of the Company, and is not independent in accordance with the ASX Corporate Governance Council definitions and recommendations. In considering the best interests of the Company and its shareholders, the background and experience of the Chairman should not preclude him from the office of Chairman of the Board on the grounds of him being a Director and Shareholder of a substantial shareholder. The Chairman is also the Managing Director. The Board believes the experience in the industry that the Company operates in that Mr. JI Gutnick brings to the Company is invaluable and is in the best interests of all shareholders.

To ensure that it has the right mix of management skills and technical expertise to meet the challenges of its business, the Board regularly reviews its composition. The Board believes that at the current stage of the Company's development, the composition is adequate. However, it continues to assess the need to enhance the membership of the Board and is cognisant of the ASX Corporate Governance Council definitions and recommendations.

iii. Appointment/retirement of Directors

The Company's Constitution requires that all Directors other than the Managing Director submit themselves for re-election every three years with not less than one third of the Board retiring by rotation. Directors appointed during the period since the last Annual General Meeting of the Company must submit themselves for election at the next Annual General Meeting.

iv. Board Meetings

The full Board meets formally to conduct appropriate business. The Board uses resolutions in writing signed by all Directors to deal with matters requiring decisions between meetings.

Directors' Remuneration v.

Total remuneration for the Executive Director includes an annual salary and other entitlements. Attendance at and participation in Board and Committee meetings are considered among the duties of the Executive Director. Non-Executive Directors receive fees for attending Board and Committee meetings. Pro-rata fees are paid to Non-Executive Directors who serve for less than a full year. None of the Directors or the General Manager Corporate & Company Secretary has letters of appointment. However, the Company is in the process of preparing appropriate letters of appointment.

External Advice to Directors vî

The Company recognises that in the exercise of their responsibilities there may be occasions when Directors may wish to seek independent professional advice. With the prior consent of the Chairman, advice can be obtained at the Company's expense and is to be made available to the whole Board.

$\mathbf{2}$ Board Committees

The Board has Committees to address the areas of remuneration and audit.

i. Remuneration Committee

The Company has a Remuneration Committee and has an independent Chairperson, who is not Chairperson of the Board. It does not have at least three members all of whom are independent for the reasons set out above. The Company currently only has one independent Director and he is a Chairman of the Remuneration Committee. The Company's does not use short-term incentives as part of an executive's remuneration package however, it does use long-term incentives as part of an executive's remuneration package. The Remuneration Committee meets to review remuneration policies and practices of the Company, to ensure that they meet current market conditions. The Committee draws on the experience of Senior Management and where appropriate, seeks the advice of external consultants. The Remuneration Committee has a formal charter.

ii. Audit Committee

The Audit Committee comprises only non-executive Directors and has an independent Chairperson, who is not Chairperson of the Board. It does not have at least three members all of whom are independent, for the reasons set out above. The Company currently only has one independent Director and he is a Chairman of the Audit Committee.

The Audit Committee meets to plan and review annual and half-vearly financial statements and reports prior to their release to the Australian Stock Exchange. The Committee also monitors the performance of the Company's Auditors and for evaluation of the adequacy and effectiveness of internal controls. The external Auditor is invited to attend and speak at these meetings. The Audit Committee has a formal charter.

iii Nomination Committee

The Company does not have a Nomination Committee. The Board believes that with only three Directors on the Board, the Board itself is the appropriate forum to deal with this function.

$\overline{3}$ . Role of Management

Day to day management of the Company's activities and the implementation of Board strategy, policy and decisions is delegated to management. This includes the following:

To develop and recommend internal control and accountability systems for the Company and if approved, ensure compliance with such systems.
$\bullet$ To prepare mission systems, corporate strategy and performance objectives for approval by the Board of Directors.
To prepare systems of risk management and internal compliance and controls, codes of conduct, legal compliance and any other regulatory compliance and if approved, ensure compliance with such systems.
To monitor employees' performance, recommend appropriate resources and review ٠ and approve remuneration.
To prepare all required financial reports, tax returns, budgets and any other ٠ appropriate financial reports, meet all statutory deadlines, monitor performance against budgets.
Prepare recommendations on acquisitions and divestments of assets.
To implement decisions of the Board of Directors on key standards of the Company covering such areas as ethical standards, reputation and culture of the Company and influence and provide quidance for employees on these areas.
To protect the assets of the Company.

4. Risk Management

The Company continues to monitor its operations to identify the greatest areas of potential risk to minimise any adverse effects on the Company's strategic, operational and financial activities.

ì. Environment

Details of the environmental policy and other related matters are provided in the Environment section of the Directors' Report.

ii. Occupational Health and Safety

The Company is committed to providing a safe and healthy working environment for all staff. It considers that safety is a collective responsibility and ensures that regular training in safe working methods is undertaken and encourages participation and involvement in the development of workplace safety programs. Individual employees and employees of contractors are required to practice safe working habits, to take all reasonable care to prevent injury to themselves and their colleagues and to report all hazards and accidents.

New staff and contractors (where appropriate) are required to undergo an induction program to familiarise themselves with policies, procedures and work practices prior to commencing work. All staff are covered against injury under the various Workers' Compensation Acts.

iii. Financial Reporting

The Managing Director and Company Secretary sign off to the Board of Directors in respect to the annual financial statements and risk management policies as required by law and the ASX Corporate Governance Council "Principles of Good Corporate Governance and Best Practice Recommendations".

5. Code of Conduct

i. Ethical Standards

The Company operates under a code of conduct that sets out the ethical standards under which the Company operates when dealing with internal and external parties. This code requires parties to act with integrity, fairness and honesty in all dealings and to treat other parties with dignity at all times. They are required to:

not discriminate against any staff member or potential employee;
carry out their duties in respect to the law at all times;
to use the Company's assets responsibly;
to respect the confidentiality of the Company's business dealings; and
take responsibility for their own actions and for the consequences surrounding their own actions.

ii. Share Trading

It is the Company's policy to encourage Directors, employees and related parties to own Shares in the Company. The trading in shares policy strongly reinforces the obligations of Directors and employees, both of the Company and AXIS Consultants Pty Ltd, under the Corporations Act 2001 and the Australian Stock Exchange Listing Rules in relation to trading in Company shares. The acquisition and sale of Company shares by Directors and employees is restricted to periods of fourteen (14) days immediately following announcements of the Company's quarterly, half yearly and full year reports to the Australian Stock Exchange. Directors, employees and related parties can seek permission from the Chairman to purchase or sell shares outside this 14-day period. Directors and employees are required to report share trading to the Company Secretary.

6. Continuous Disclosure Compliance

The Company's continuous disclosure compliance procedure enables it to meet its obligations and to ensure that all matters, which may require announcement to the Australian Stock Exchange, are brought to the attention of Directors immediately.

7. Communicating with Shareholders

The Board ensures that shareholders are kept informed of all major developments that affect their shareholding or the Company's state of affairs through quarterly, half-yearly, annual and ad hoc reports. All shareholders are encouraged to attend the Annual General Meeting to meet the Chairman and Directors and to receive the most updated report on Company activities. The auditors of the Company attend the annual general meeting for the purpose of answering any questions on the annual financial statements and audit thereof, properly brought before the meeting.

The Company maintains a website at http://www.qur.com.au to provide shareholders with up to date information on the Company's activities. Shareholders may also communicate with the Company through its e-mail address [email protected].

The Company does not web-cast shareholder meetings and does not believe that at this stage the cost-benefit of web casting is worthwhile to a Company of its size.

Quantum Resources Limited Tenement List

TENEMENTS		EL 23153	EL 23384	M 27/335
WHOLLY	MEEKATHARR	EL 23154	EL 23387	M 27/336
OWNED	A	EL 23155	EL 23388	M 27/337
	NICKEL/GOLD	EL 23156	EL 23389	M 27/357
BIG BELL	E 51/935		EL 23390	M 27/358
E 21/101		TUCKABIANNA	EL 23400	M 27/359
	MENZIES	E 20/462	EL 23401	M 27/368
BOUNTY	NORTH	E 20/463	EL 23403	M 27/369
E 77/1084	E 29/474	E 20/464	EL 23404	M 27/370
		E 20/483	EL 23405	M 27/377
BURTVILLE	MILLROSE	E 20/484	EL 23406	M 27/381
E 38/1431	E 53/1016	E 20/508	EL 23407	M 27/384
	E 53/967	P 20/1809	EL 23408	M 27/387
DULCIE NORTH		P 20/1829	EL 23409	M 27/390
E 77/1078	PARABURDOO	P 21/620	EL 24182	M 27/391
	E 47/1087			M 27/398
GARDNER		WELCOME	WALLBROOK	M 27/399
RANGE	PINNACLE	WELL	& KAL NORTH	M 27/400
E 80/3410	P 37/6212	P 37/6295	Jackson Gold	M 27/401
E 80/3411	P 37/6213		Limited Earning	M 27/403
E 80/3412	P 37/6246	WILUNA	80%	M 27/421
E 80/3413	P 37/6247	E 53/990	P 26/3094	M 27/422
	P 37/6248	E 53/991	P 26/3095	M 27/455
JACKSON	P 37/6249		P 26/3096	M 31/279
E 77/1051	P 37/6250		P 26/3097	P 27/1310
E 77/1052	P 37/6251		P 26/3098	P 27/1311
E 77/1053	P 37/6262	TENEMENTS	P 26/3099	P 27/1343
E 77/1054		SUBJECT TO	P 26/3100	P 27/1612
E 77/1055	QUANTUM	JOINT	P 26/3101
E 77/1056	WINDIMURRA	VENTURES	P 26/3102	WONGANOO
E 77/1065	E 58/251		P 26/3103	Cullen
E 77/1072		DULCIE	E 31/571	Resources Pty
E 77/1073	REQUIRING	Hamill	M 31/411	Ltd Earning
E 77/1079	ALLOCATION	Resources		80%
E 77/1109	E 29/504	Limited Earning	WHITEHEADS	E 53/988
	E 63/775	80%	Eaming 70%
JUNDEE NORTH		E 77/1074	E 27/93	ZULEIKA
E 53/989	STIVES	P 77/3348	E 27/175	TENEMENT
	E 15/704		E 27/199	PURCHASE
KOWTAH	E 15/722	OFFICER HILL	E 27/201	20%
P 39/4211	E 15/741	Newmont	E 27/232	P 16/2178
P 39/4212	E 15/764	Tanami Pty Ltd	E 27/246	P 16/2179
P 39/4213	E 15/782	Earning 75%	E 27/252	P 16/2180
P 39/4214		EL 23150	E 31/550	P 16/2181
P 39/4215	TELFER		M 27/273	P 16/2182
P 39/4216	E 45/2401	TANAMI	M 27/293
P 39/4217		REGIONAL	M 27/296
P 39/4218	TANAMI	GOLD	M 27/297
P 39/4219	EL 23151	Earning 80%	M 27/319
P 39/4220	EL 23152	EL 23383	M 27/323
			M 27/334

As at 31 August 2005 the following information applied:

$\mathbf{1}$ . Substantial Shareholders

Substantial shareholders disclosed in substantial shareholder notices to the Company:

Name	Number of Fully Paid Ordinary Shares held
Edensor Nominees Pty Limited ⁽¹⁾	72.592.482
Chabad House of Caulfield Pty Ltd	48.946.667
Great Gold Mines N.L.	43,594,702

^(*) Mr J I Gutnick is a Director and Shareholder of Edensor Nominees Pty Limited.

$2.$ Fully Paid Ordinary Shares

The number of holders of fully paid ordinary shares in the Company is 2,030. On a show of hands every holder of fully paid ordinary shares present or by proxy, shall have one vote. Upon a poll, each share shall have one vote. The distribution of holders of fully paid ordinary shares is as follows:

Category		Number of
		Shareholders
Holding between	1-1,000 Shares	852
Holding between	1,001 - 5,000 Shares	496
Holding between	$5,001 - 10,000$ Shares	158
Holding between	10,001-100,000 Shares	387
Holding more than	100,001 Shares	137

The number of holders with less than a marketable parcel of fully paid ordinary shares is 1,583. The Company's fully paid ordinary shares are quoted on the Australian Stock Exchange using the code QUR.

The top 20 shareholders are as follows:

Name	Number of	Percentage
	Fully Paid	interest
	Ordinary
	Shares held
Edensor Nominees Pty Limited	72.592,482	23.37
Chabad House of Caulfield Pty Ltd	48.946.667	15.76
Great Gold Mines N.L.	43,594,702	14.04
ANZ Nominees Limited	35,786,347	11.52
Bell Potter Nominees Ltd	12,963,507	4.17
Mr. Mordechai Gutnick	9,672,022	3.11
AXIS Consultants Pty Ltd	6.440.000	2.07
Mr. Zalman Gutnick	3,646,374	1.17
David Likht & Rina Likht	2,100,000	.68
Daccar Pty Ltd	2,000,000	.64
Wabana Holdings Pty Ltd	1,525,000	.49
Mr John G Kellas	1,485,960	$-48$
Congregation Lubavitch	1,464,039	.47
Meder Pty Ltd	1,400,000	.45
Patkin Investments Pty Ltd	1,308,540	.42
And Holdings LLC	1,225,000	.39
Bonos Pty Ltd	1,215,000	.39

	250.575.902	80.68

David Ah Chee	1.000.000	.32
Merrill Lynch (Australia)	1.060.262	.34
E K C Tong Holdings	1.150.000	.37

$(b)$ LISTED OPTIONS MATURING 31 OCTOBER 2010 OVER FULLY PAID ORDINARY SHARES.

The number of holders of options maturing on 31 October 2010 over fully paid ordinary shares issued by the Company is 267. Optionholders may attend and speak at general meetings of the Company. However, they have not entitlement to vote upon the business before the meeting either by show of hands or by poll. The distribution of holders of options is as follows:

Category		Number of
		Optionholders
Holding between	1-1,000 Options	189
Holding between	$1.001 - 5.000$ Options	61
Holding between	5,001 - 10,000 Options	6
Holding between	10,001-100,000 Options	8
Holding more than	100,001 Options	2

The Company's options maturing on 31 October 2010 over fully paid ordinary shares are quoted on the Australian Stock Exchange using the code QURO.

The top 20 optionholders are as follows:
Name	Number of	Percentage
	Options held	interest
Chabad House of Caulfield Pty Ltd	30,002,916	68.58
Wilzed Pty Ltd	12,800,000	29.26
Mr. John G. Kellas	371,490	0.85
Mr. Teng Hee Chee	87,500	0.20
SSI Nominees Pty Ltd	87,500	0.20
Morgeo Nominees Pty Limited	51,327	0.12
Mr. Stephen Koci	20,000	0.05
Mr. Ralph Erhard Soeffky	20,000	$0.05 -$
Mr. Kenneth John Whitnall	20,000	0.05
Mr. Barry Wilfred Tarver & Ms Joanne Abigail Tarver	17,500	0.04

Mr. Stephen Ross Dougherty & Mrs Julie Anne	16,000	0.04
Dougherty
Mr. Percival James Fleming	10,000	0.02 ₁
Mr. John Robert Montague Polack and Mrs. Shirley	10,000	$0.02 -$
Minnie Polack
Dr. Hamidreza Rahmati	10,000	0.02 ₁
Mr. Anthony Warwick Whatmore	10,000	0.02
Tradeworx Pty Ltd	7,500	0.02 ₁
National Nominees Limited	5,831	0.01
Sir Robert Mathers	5,000	0.01
Mr. Christopher Edwin Osborne	5,000	0.01
Mrs. Mercia Kwan Ching Wong	5,000	0.01
Total	43,562,564	99.58

.
Santa de la caractería $\mathbf{r}$ , as $\sim$

$(c)$ LISTED OPTIONS MATURING 30 APRIL 2012 OVER FULLY PAID ORDINARY SHARES.

The number of holders of options maturing on 31 October 2010 over fully paid ordinary shares issued by the Company is 262. Optionholders may attend and speak at general meetings of the Company. However, they have not entitlement to vote upon the business before the meeting either by show of hands or by poll. The distribution of holders of options is as follows:

Category		Number of
		Optionholders
Holding between	1-1,000 Options	180
Holding between	$1,001 - 5,000$ Options	51
Holding between	5,001 - 10,000 Options
Holding between	10,001-100,000 Options	19
Holding more than	100,001 Options	5

The Company's options maturing on 30 April 2012 over fully paid ordinary shares are quoted on the Australian Stock Exchange using the code QUROA.

Name	Number of	Percentage
	Options held	interest
Chabad House of Caulfield Pty Ltd	24,741,562	75.26
Wilzed Pty Ltd	6,400,000	19.47
Mr. John G. Kellas	371,490	1.13
Bonos Pty Ltd	263,750	0.80
Mr Saeed Ghasimzadeh	200,000	0.61
Jandamint Pty Ltd	100,000	0.30
Mr Teng Hee Chee	87,500	0.27
SSI Nominees Pty Ltd	87,500	0.27
Mr Lubomir Staffa	58.621	0.18
Mr Kayne Mitchell	50,000	0.15
Mr John George King	35,000	0.11
Blossom Hotels Pty Ltd	25,000	0.08
Mrs Judith Ann Valentino	22,000	0.07
Mr Kenneth Reginald Savins	21,400	0.07
Mr Peter Gasparini	20,000	0.06
Hazlaha Investments Limited	20,000	0.06
Mr Mark Raymond Luzi & Mrs Janine Marie Luzi	20,000	0.06
Mrs Lorraine Maree Purdy & Mr Stephen Hall Purdy	20,000	0.06
Dr Hamidreza Rahmati	20,000	0.06
Mr Donald Lawrence Valentino & Mrs Judith Ann	20,000	0.06
Valentino
Total	32,583,823	99.11

The top 20 optionholders are as follows:

$(d)$ LISTED OPTIONS MATURING 30 NOVEMBER 2012 OVER FULLY PAID ORDINARY SHARES.

The number of holders of options maturing on 30 November 2010 over fully paid ordinary shares issued by the Company is 277. Optionholders may attend and speak at general meetings of the Company. However, they have not entitlement to vote upon the business before the meeting either by show of hands or by poll. The distribution of holders of options is as follows:

Category		Number of
		Optionholders
Holding between	1-1,000 Options	162
Holding between	$1,001 - 5,000$ Options	76
Holding between	5,001 - 10,000 Options	$\overline{13}$
Holding between	10,001-100,000 Options	19
Holding more than	100,001 Options

The Company's options maturing on 30 November 2010 over fully paid ordinary shares are quoted on the Australian Stock Exchange using the code QUROB.

The top 20 optionholders are as follows:

Name	Number of	Percentage
	Options held	interest
Chabad House of Caulfield Pty Ltd	64,936,241	94.97
Mr. John G. Kellas	742,980	1.09
Bonos Pty Ltd	527,500	0.77
Reynolds (Nominees) Pty Ltd	425,850	0.62
Mr Saeed Ghasimzadeh	400,000	0.58
Mr Zalman Gutnick	200,000	0.29
Jandamint Pty Ltd	200,000	0.29
National Nominees Ltd	97,000	0.14
M/S Judith Edna Brandt	62,500	0.09
Mrs Susan Margaret West	53,500	0.08
Mr Zdenek Havlicek	50,000	0.07
Mr Peter Gasparini	40,000	0.06
Mr Douglas James Brown	35,000	0.05
Graham J Bench Pty Ltd	34,912	0.05
Dr Lakshika Swarnapalee Bogoda & Mr Kapila Raja Bogoda	34.500	0.05
Mr Russell James Barker	20,000	0.03
Mr Thomas Joseph Heaney & Mrs Shirley Margaret	20,000	0.03
Heaney
Mr Anthony Warwick Whatmore	20,000	0.03
Chuter Nominees Pty Ltd	17,500	0.03
Mr Michael Simmons	17,500	0.03

67,934,983 Total	99.35
---------------------	-------

Unlisted OPTIONS MATURING 24 MARCH 2010 OVER FULLY PAID ORDINARY SHARES. $(e)$

The number of unlisted options maturing 24 March 2010 over fully paid ordinary shares is 1,650,000 options and the number of holders of options is 5.

Quantum Resources Limited Corporate Information

Directors

Joseph Gutnick David Tyrwhitt Mordechai Gutnick

Company Secretary

Peter Lee

Senior Management

Peter Lee, General Manager Corporate & Company Secretary Chris Taylor, Exploration Manager

Registered Office and Domicile

Level 8 580 St. Kilda Road Melbourne Victoria 3004 Australia +61 3 8532 2840 Telephone: Facsimile: +61 3 8532 2805 E-mail: [email protected] Internet: http://www.gur.com.au

Legal Form

A public company limited by shares

Country of Incorporation

Australia

Share Registry

ASX Perpetual Registrars Limited Level 4 333 Collins Street Melbourne Victoria 3000 Australia 1300 554 474 or + 61 3 9615 9999 Telephone: +61 3 8614 2903 Facsimile:

Shareholder Information

Manager Investor Relations +61 3 8532 2840 Telephone: Facsimile: +61 3 8532 2805 E-mail: [email protected] Internet: http:/www.qur.com.au

Auditors

PKF Level 11, CGU Tower 485 LaTrobe Street Melbourne Victoria 3000 Australia

Australian Stock Exchange Listing Code QUR QURO

QUROA QUROB Bankers Bank of Melbourne Level 6 360 Collins Street Melbourne Victoria 3000 Australia

Solicitors

Schetzer Brott & Appel
52 Market Street Melbourne Victoria 3000

AI assistant

Nova Minerals Ltd — Annual Report 2005

34115_rns_2005-09-28_37249438-3534-4638-b743-d522e0104517.pdf

Quantum Resources Limited

PROJECT REVIEW

Whiteheads Project - Quantum earning 80%

Table 1: Whiteheads RAB Drilling

Significant Gold Values from 4 Metre Composite Samples

Jackson Project (Quantum 100%)

St. Ives Project (Quantum 100%)

Telfer Project (Quantum 100%)

Tanami Project (Quantum 100%)

Wallbrook & Kalgoorlie North Projects (Quantum 100% Farming Out)

Wanganoo Project (Quantum 20%, Cullen 80%)

Tuckabianna Project (surrendered)

CORPORATE

$\mathbf{1}$ . Directors

Mr Joseph Gutnick FAusIMM FAIM MAICD Chairman and Managing Director

Dr David Tyrwhitt PhD(Geology) BSc(Hons) FSEG(USA) FAusiMM CPGeo Non-Executive Director

Mr Mordechai Gutnick Non-Executive Director

$2.$ Principal Activities

Objectives

Statement of Financial Position

Cash Flow

3. Review and Results of Operations

4. Significant Change in State of Affairs

5. Dividends

6. Events After The End Of The Financial Year

7. Future Developments and Results

8. Options

$(1)$ Listed

9. Directors' Interests in Shares and Options

10. Meetings of Directors

11. Company Secretary

12. Directors And Officers' Indemnity

13. Environment

14. Non-Audit Services

15. Remuneration Report

$(i)$ Overview

INDEPENDENCE DECLARATION

TO: THE DIRECTORS QUANTUM RESOURCES LIMITED

Quantum Resources Limited and its former Controlled EntityStatements of Financial Performance for the Year Ended 30 June 2005

Quantum Resources Limited and its former Controlled EntityStatements of Financial Position as at 30 June 2005

Quantum Resources Limited and its former Controlled EntityStatements of Cash Flows for the Year Ended 30 June 2005

$(i)$ Basis of Preparation

$(ii)$ The following Accounting Policies have been adopted in preparing and presenting the Financial Report

Principle of Consolidation

Revenue Recognition

Interest income

Asset sales

Other revenue

Borrowing Costs

Foreign Currency Translation

Classification of Assets and Liabilities

Taxes

Employee Share Option Plan

Joint Venture Operations

Receivables

Other Financial Assets

Controlled Entities

Payables

Interest-Bearing Liabilities

Exploration

Recoverable amount of non-current assets valued on cost basis

Revaluation of non-current assets

Restoration Expenditure

(iii) Change in Accounting Policy

(iv) Comparative Figures

CURRENT

10. INTEREST BEARING LIABILITIES

11. CONTRIBUTED EQUITY

Issued and paid-up capital

Terms and Conditions of Contributed Equity

Ordinary Shares:

Options:

ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE $15.$

(a) Interest Rate Risk

15. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE (Cont'd)

(b) Foreign Exchange Risk

(c) Credit Risk Exposures

Nova Minerals Ltd Annual Report 2005

Quantum Resources Limited and its former Controlled Entity
Statements of Financial Performance for the Year Ended 30 June 2005

Quantum Resources Limited and its former Controlled Entity
Statements of Financial Position as at 30 June 2005

Quantum Resources Limited and its former Controlled Entity
Statements of Cash Flows for the Year Ended 30 June 2005