Quantum Resources Limited

ABN 84 006 690 348

ANNUAL REPORT 2006

Dear Shareholder

Quantum Resources Limited holds tenements covering over 4,300 square kilometres in its own right which are prospective for gold in the Eastern Goldfields of Western Australia and in the Northern Territory. In addition, it holds 10,300 square kilometres under joint venture in the Northern Territory which are prospective for uranium and base metals.

During the year, the Company has been actively evaluating and assessing its tenements and planning exploration programs. Several of these have already been implemented while other areas are awaiting heritage survev clearances. In August 2006, an exploration program was conducted at Whiteheads and returned promising results. A follow up program is being planned at Whiteheads.

PROJECT REVIEW

URANIUM EXPLORATION

In the Northern Territory, the Barrow Creek, Tanami, Mt Peake and Ware Range projects are prospective for uranium as well as gold. In Western Australia, the Gardner Range project is prospective for uranium.

Exploration for uranium on the Company's tenement holdings in the Gardner Range, 150 kilometres southeast of Hall's Creek in Western Australia, and in the Ware Range, 250 kilometres north of Tanami in the Northern Territory, will commence as soon as the tenements are granted. The tenements are prospective for unconformity related uranium deposits such as those in the Athabasca Basin in Canada. The Athabasca Basin has produced a significant proportion of total world uranium output. The Gardner Range is also prospective for iron oxide goldcopper-uranium deposits. In addition, the Company has tenement holdings in the Barrow Creek, Tanami and Mt Peake regions of the Northern Territory. These regions are known to be prospective for uranium and large portions of these are under-explored. The Company is currently assessing open file data and previous exploration results to generate targets for a field program.

Barrow Creek Project (Quantum earning 80%)

The Company has acquired through joint venture two granted exploration licenses as well as five exploration license applications covering a total of 5,100 square kilometres of the faulted margin of the Georgina Basin to the southeast of Barrow Creek. The setting is also similar to the Ngalia Basin to the west which contains sediment-hosted uranium deposits of good grade. Radiometrics indicate that adjacent Proterozoic granites are anomalous in uranium, which would be a good source. A brief field visit included rock chip sampling which returned results above the background values which would be expected for these rock types.

Tanami Project (Quantum 100%)

The Company holds seven 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.

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 Limited 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 undertake preliminary exploration as soon as possible.

Newmont Tanami Pty Ltd subsequently expressed interest in EL23150, known as Officer Hill. Newmont have farmed into the tenement and are earning a 75% interest by spending \$500,000 on exploration.

Mt Peake Project (Quantum earning 80%)

The project covers over 7,600 square kilometres of applications in the Northern Territory from Mt Davidson near The Granite to Barrow Creek in the east. The tenements cover parts of the boundary between the Paleozoic Wiso basin and Proterozoic basement rocks of the North Australian Craton. The craton portion has been lightly explored for gold in the past however, there appears to have been no exploration for uranium or base metals. There is no recorded exploration within the Wiso basin.

The Wiso basin, and specifically the Lander Trough at the margin, is considered highly prospective for sedimenthosted uranium deposits and Mississippi Valley Type (MVT) base metal deposits. Early gold exploration within one of the Company's applications, north of Mt Davidson, documented low temperature quartz veins anomalous in base metals. This is suggestive of MVT-style mineralization.

The Lander Trough is also prospective for sediment-hosted uranium deposits similar to those now being explored in the Ngalia Basin to the south. These areas are overlain by extensive sand cover of the Tanami Desert which has impeded exploration in the past however, modern techniques can now be employed to efficiently test these concepts. The tenements also cover areas of extensive calcrete deposits which are suitable hosts to uranium elsewhere

Gardner Range Project

The Company has made application for tenements in the Gardner Ranges, 150 kilometres southeast of Hall's Creek. The tenements are prospective for Olympic Dam-style iron oxide gold-copper-uranium deposits, or unconformity related deposits such as those in the Athabasca Basin Canada. The Athabasca Basin has produced a significant proportion of the total world uranium output. Limited exploration around the margins of the Gardner Ranges was carried out in the early 1980's, and uranium mineralisation was found to be present. Areas to the north along a significant fault system over 60 kilometres long have not been examined by previous explorers.

The tenements are now surrounded to the north by Cameco, the large Canadian uranium producer. Modern day geochemical and geophysical methods will be employed to assess these areas.

The Company is currently compiling all historical exploration data on its North Australian Craton tenements which are prospective for base metals as well as uranium. Following the compilation of this data, field visits are planned to conduct soil sampling programs.

Ware Range Project

The Ware Range tenement covers 335 square kilometres and is located to the east of the Gardner Range in the Northern Territory. This tenement, recently granted, is also prospective for unconformity related uranium mineralisation. Initial site visits will be carried out during the next quarter.

GOLD EXPLORATION

In Western Australia, the Whiteheads, St ives and Jackson projects are the major focus of gold exploration and the Company's tenement holdings cover approximately 3,000 square kilometres.

Whiteheads Project - Quantum earning 80%

The Whiteheads tenement package represents a consolidated landholding of 255 square kilometres in an area adjacent 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 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 several 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

In August 2006, a drilling program of 258 holes for 13,596 metres was undertaken. The samples are composites over 4 metres and have not yet been re-split. A summary of available significant gold values is included in Table 1.

Hole	Significant Gold Values from 4 Metre Composite Samples Northing	Easting	Interval (g/t gold)	Depth (metres)
WTHB944	6647920	378200	4m @ 3.19	48
WTHB959	6648080	378040	18m @ 1.32	36 EOH
WTHB966	6648080	378200	16m @ 0.45	44
WTHB998	6646320	373080	4m @ 1.96	76
WTHB1051	6649760	373880	12m @ $0.11$	48

Table 1: Whiteheads RAB Drilling

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

: 50 gram Acid digest - AAS finish. EOH = End of Hole

Elsewhere in the Whiteheads project are several anomatous 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. Mining leases will be reverted over the course of the year to allow more work to be carried out.

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 structurally related gold deposits and ultramafic 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.

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%)

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 that very little previous exploration was carried out in areas of interest to the Company. Plans for proposed soil sampling and RAB drilling have been completed and await the outcome of heritage surveys presently being carried out.

Multiple granite greenstone contacts and interpreted flexures in structures identified from the regional magnetics have been targeted. North trending structures are also considered favourable. 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 believes the prospects are in areas 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 Company's tenement covers the Chicken Ranch prospect which has returned significant intersections by previous explorers. Widespread occurrences from rock chip sampling, and drill intersections such as 6 metres @ 15.8 g/t and 8 metres @ 9.57 g/t gold indicate that the prospect requires further investigation.

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

The Company's Wallbrook Project is subject to a joint venture with Jackson Gold, who is 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. The Company is confident that aggressive ongoing exploration in both areas will lead to new gold discoveries.

Wanganoo Project (Quantum 20%, Cullen 80%)

The Wanganoo 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 ultramafic contacts followed by TEM geophysical techniques to identify stratigraphic and geochemical targets.

CORPORATE

During the year, the Company has issued 40.5 million shares at a price of four cents per share raising \$1,620,640. The funds are being used for exploration and working capital purposes.

J.I. Cuttink

Joseph Gutnick Chairman

The technical information in this report has been reviewed and approved by Mr K Washburn who is a member of the Australasian Institute of Mining and Metallurgy and has approximately 28 years experience in the industry.

The Directors of Quantum Resources Limited present their report for the year ended 30 June 2006.

1. Directors

The Directors of the Company in office since 1 July 2005 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); President and Chief Executive Officer of Golden River Resources Corporation (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 and President and Chief Executive Officer of Northern Capital Resources Corporation and Yahalom International Resources Corporation. Nevada (USA) Corporations. 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 54

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

Dr Tyrwhitt has been a Director of the Company since 1999. 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), Golden River Resources Corporation (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 68

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), Great Gold Mines N.L. (May 2003 to current) and Golden River Resources Corporation (appointed September 2005). 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 28

$2.$ Principal Activities

The principal activities of the Company 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 was hampered by its cash resources until later in the financial year when the Company was successful in raising equity funds which allowed it to commence a field program.

Income Statement

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 increased from \$4,158 in 2005 to \$20,825 in 2006. Revenue in both years was interest income. Other income increased from \$125,792 in 2005 to \$752,356 in 2006. In 2006, the Company sold shares in Regis Resources N.L. and generated a gain on the disposal of \$444,629 and reversed a provision for doubtful debts of \$305,225 (2005: \$125,792) when a debt owing to the Company, previously thought to be doubtful, was repaid in full.

Costs and expenses have increased from \$701,102 in 2005 to \$1,046,820 in 2006. Exploration expenditure provided for or write off amounted to \$568.017 (2005; \$152.314) as a result of the surrender of non-prospective tenement interests and expenditure incurred under a joint venture farm-in agreement. Administration expenses amounted to \$457,766 (2005: \$462,449).

As a result, the Company made a net loss after tax for 2006 of \$273,639 compared to a net loss after tax of \$571.152 for 2005.

Balance Sheet

At 30 June 2006, the Company had cash at bank of \$1,037,152. During the year, as a result of a capital raising in May 2006, the Company was able to repay all interest bearing debt. As a result, the Company had at 30 June 2006 working capital of \$966,239 and net assets of \$1,637,166.

Cash Flow

During the year, the Company raised a net \$1,486,461 from capital raisings, borrowed \$282,450 and repaid borrowings of \$406,414. In addition the Company received proceeds on the sale of investments of \$476,273 and the repayment of borrowings of \$401,591. It paid \$458,696 for operating activities, \$266,085 for exploration costs and made a loan of \$479,821. At year end, the Company had \$1,037,152 in cash.

Review and Results of Operations 3.

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 \$273,639 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 have not been any significant changes in the state of affairs of the Company 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 Company, has significantly affected or may significantly affect:

the operations of the Company
the results of those operations, or
the state of affairs of the Company

in 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.

$(i)$ Listed

Number	Maturity Date	Issue Price	Exercise Price	Exercise Period
43.748.673	31 October 2010	No issue price	A\$0.10	Anytime 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 Link Market Services 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	Anytime 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 Link Market Services 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
				emplovee share		option

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.

plan

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 I Gutnick	$\bullet$	1.000.000	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	$\omega$
D S Tyrwhitt	سد	٠	$\blacksquare$		$\mathbf{w}$
M Z Gutnick	9.672.022	$\blacksquare$	532	$\mathbf{a}$

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 TO ATTEND	ATTENDED	ELIGIBLE TO ATTENDED ATTEND	ELIGIBLE TO ATTEND	ATTENDED
J I 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 25 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 further three US Corporations 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 Company 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 required 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
	2006 \$	2005 \$
Statutory audit
Auditors of the Company
- audit and review of financial reports	23,000	21,800

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.

Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Company, including Directors of the Company and other Executives. Key management personnel includes the five most highly remunerated S300A Directors and Executives of the Company.

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;
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:

	2006 \$	2005 \$	2004 \$	2003 S	2002 \$
Revenue	20.825	4.158	449,626	10.763	224,264
Net profit (loss)	(273, 629)	(571, 573)	10,253	(657, 211)	(1,474,334)
Basic earnings per shares	(0.09)	(0.19)	(0.00)	(0.26)	(0.68)
Diluted earnings per shares	(0.09)	(0.19)	(0.00)	(0.26)	(0.68)
Net assets (deficiency)	1,637,166	766.893	660,377	191,419	(1, 105, 592)

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. Companies in this industry do not have an ongoing source of revenue, as revenue is normally from ad-hoc 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.

Mr K Washburn does not and Mr C Taylor did 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.

Non-Executive Directors $(iii)$

Total remuneration for all Non-Executive Directors, last voted upon by shareholders at the 1999 AGM, is not to exceed \$200,000 per annum. Non-Executive Directors' base fees are presently up to \$20,000 per annum per Director. 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, 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 Executives in respect of all remuneration (as that term is defined in the Corporations Act 2001) received by the Directors and/or Executives in connection with the management of the affairs of the Company.

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

Directors $(a)$

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

$(b)$ Executives

P J Lee - General Manager Corporate & Company Secretary K Washburn - Exploration Manager (appointed January 2006) C Taylor - Exploration Manager (contract expired December 2005)

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			s300A (1)(e)(i)	s300A $(1)(e)(vi)$ Value
		Salary & fees S	STI cash bonus \$	Non- monetary benefits \$	Super- annuation benefits S	Prescribed benefits \$	Value of options S.	Termination benefits \$	Insurance premiums \$	Total \$	Proportion of remuneration performance related %	of options as proportion of remuneration %
Directors
J I Gutnick	2006 2005	95,000 91,667	$\overline{\phantom{a}}$	5,281 5,685	14,000 13,250					114,281 110,602	0.00 0.00	0.00 $0.00\,$
D S Tyrwhitt	2006 2005	20,000 20,000	$\tilde{\phantom{a}}$		1,800 1,800				$\tilde{\phantom{a}}$ $\tilde{\phantom{a}}$	21,800 21,800	0.00 0.00	0.00 $0.00\,$
M Z Gutnick	2006 2005	20,000 20,000		4,435	1,800 1,800				$\omega$	26,235 21,800	0.00 $0.00\,$	0.00 $0.00\,$
Total all Directors	2006 2005	135,000 131,667	$\mathbf{w}$	9,716 5,685	17,600 16,850					162,316 154,202
Executives
P J Lee	2006 2005	25,564 21,212	$\omega$ $\mathbf{a}_i$	4,301 2,019	4,615 3,833				$\tilde{\phantom{a}}$ $\tilde{\phantom{a}}$	34,480 27,064	0.00 0.00	0.00 $0.00\,$
K Washburn	2006 2005	34,924	$\omega$	1,370	3,143				$\omega$	39,437	0.00 0.00	0.00 0.00
C D Taylor	2006 2005	33,131 30,658	$\tilde{\phantom{a}}$	1,066	2,982 2,759					37,179 33,417	0.00 0.00	0.00 0.00
Total all Executives	2006	93,619	$\omega$ .	6,737	10,740	w		w.		111,096
	2005	51,870	$\tilde{\phantom{a}}$	2,019	6,592					60,481
Total all Directors & Executives	2006	228,619	$\omega$	16,453	28,340					273,412
	2005	183,537		7,704	23,442					214,683

Signed in accordance with a Resolution of the Board of Directors at Melbourne this 28th day of September 2006.

J.I. Cutink

J I Gutnick Director

Chartered Accountants & Business Advisers

28 September 2006

The Directors Quantum Resources Limited Level 8 580 St Kilda Road MELBOURNE VIC 3000

Dear Directors

INDEPENDENCE DECLARATION

As lead audit partner for the audit of the financial report Quantum Resources Limited for the financial year ended 30 June 2006 and in accordance with section 307C of the Corporations Act 2001, 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 relation to the audit; and $(a)$
$(b)$ any applicable code of professional conduct in relation to the audit.

$f_{KF}$

Nihr hit

PKF Chartered Accountants

ML Port Partner

Quantum Resources Limited Income Statement For the Year Ended 30 June 2006

	Consolidated	The Company
	Notes	2005 \$	2006 S	2005 S
Continuing Operations
Finance revenue	3	4,158	20,825	4,158
Revenue		4,158	20,825	4,158
Other income Exploration expenditure written off Administration expenses	3	125,792 (152, 314) (462, 847)	752,356 (568, 017) (457, 766)	125,792 (152, 314) (462, 450)
Other expenses Finance costs	3 3	(78,090) (8,272)	(2,464) (18, 573)	(78,090) (8, 248)
Loss before income tax		(571, 573)	(273, 639)	(571, 152)
Income tax expense	4
Loss for the period after tax from continuing operations		(571, 573)	(273, 639)	(571, 152)
Loss attributable to members		(571, 573)	(273, 639)	(571, 152)
Earnings per share		Cents	Cents
Basic loss per share for the year attributable to ordinary equity holders	5	(0.19)	(0.09)
Diluted loss per share for the year attributable to ordinary equity holders	5	(0.19)	(0.09)

The income statements are to be read in conjunction with the accompanying notes to the financial statements.

Quantum Resources Limited Balance Sheet as at 30 June 2006

	Note	2006 \$	2005 S
ASSETS
Current Assets
Cash and cash equivalents Receivables	6 7	1,037,152 10,500	1,393 143,361
Total Current Assets		1,047,652	144,754
Non-Current Assets
Receivables Available-for-sale investments Exploration expenditure	7 8 9	509,000 879 161,048	29,179 361,270 461,124
Total Non-Current Assets		670,927	851,573
TOTAL ASSETS		1,718,579	996,327
LIABILITIES
Current Liabilities
Trade and other payables	10	81,413	120,806
Total Current Liabilities		81,413	120,806
Non-Current Liabilities
Interest bearing borrowings	11		108,628
Total Non-Current Liabilities			108,628
TOTAL LIABILITIES		81,413	229,434
NET ASSETS		1,637,166	766,893
EQUITY
Share capital Reserves Accumulated losses	12 13	53,484,829 620,250 (52, 467, 913)	51,982,991 978,176 (52, 194, 274)
TOTAL EQUITY		1,637,166	766,893

The balance sheets are to be read in conjunction with the accompanying notes to the financial statements.

Quantum Resources Limited Cash Flow Statements for the Year Ended 30 June 2006

	Note	Consolidated	The Company
		2005 S	2006 \$	2005 S
Cash flows from operating activities
Payments in the course of operations Interest received Borrowing costs paid		(447, 707) 4,158 (3,251)	(476, 287) 20,825 (3,234)	(447, 311) 4,158 (3,226)
Net cash (used in) operating activities	15	(446, 800)	(458, 696)	(446, 379)
Cash flows from investing activities
Payments for exploration expenditure Proceeds from loan receivable Loans to other entity Proceeds from disposal of available-for-sale investments		(363,798)	(266, 085) 401,591 (479, 821) 476,273	(363,798)
Net cash provided by/(used in) investing activities		(363,798)	131,958	(363,798)
Cash flows from financing activities
Proceeds from issue of shares Transaction costs on issue of shares Proceeds from borrowings Repayment of borrowings		492,500 (6, 146) 762,244 (437, 677)	1,620,640 (134, 179) 282,450 (406, 414)	492,500 (6, 146) 762,244 (437, 337)
Net cash provided by financing activities		810,921	1,362,497	811,261
Net increase in cash held		323	1,035,759	1,084
Cash and cash equivalents at beginning of period		1,070	1,393	309
Cash and cash equivalents at end of period	6	1,393	1,037,152	1,393

The cash flow statements are to be read in conjunction with accompanying notes to the financial statements.

Quantum Resources Limited Statement of Changes in Equity for the Year Ended 30 June 2006

	Issued Capital	Accumulated Losses	Reserves \$	Total Equity S
The Company	s	\$
Balance at 1 July 2004	51,611,771	(51, 623, 122)	1,033,438	1,022,087
Net loss on available-for-sale financial assets			(55,262)	(55, 262)
Total income and expense for the period recognised directly in equity			(55,262)	(55, 262)
Loss for the period		(571, 152)		(571, 152)
Total recognised income / expense for the period		(571, 152)	(55,262)	(626, 414)
Issue of share capital	492,500			492,500
Equity transaction costs	(121, 280)			(121, 280)
Balance at 30 June 2005	51,982,991	(52, 194, 274)	978,176	766,893
Net loss on available-for-sale financial assets			(357, 926)	(357, 926)
Total income and expense for the period recognised directly in equity			(357, 926)	(357, 926)
Loss for the period		(273, 639)		(273, 639)
Total recognised income / expense for the period		(273, 639)	(357, 926)	(631, 565)
Issue of share capital	1,620,640			1,620,640
Equity transaction costs	(118, 802)		$\blacksquare$	(118, 802)
Balance at 30 June 2006	53,484,829	(52,467,913)	620,250	1,637,166

The statement of changes in equity are to be read in conjunction with the accompanying notes to the financial statements.

Quantum Resources Limited (the "Company") is a company domiciled in Australia. The financial report of the Company for the year ended 30 June 2006 comprises the Company only and has not been consolidated with any other entity.

The financial report was authorised for issue by the Directors on 28 September, 2006.

$(a)$ Basis of preparation

The financial report is presented in Australian dollars.

The financial report has been prepared on a historical cost basis, except for the revaluation of available-for-sale financial assets that have been measured at fair value. The Company has elected to early adopt the accounting standard AASB 6 "Exploration for and Evaluation of Mineral Resources".

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

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

Judgements made by management in the application of Australian Accounting Standards that have a significant effect on the financial report and estimates with a significant risk of material adjustment in the next year are discussed in note 1(c)(xviii).

The accounting policies set out below have been applied consistently to all periods presented in the consolidated financial report and in preparing an opening AIFRS balance sheet at 1 July 2004 for the purposes of the transition to Australian Accounting Standards - AIFRS.

$(b)$ Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards ('AASBs') adopted by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001. International Financial Reporting Standards ('IFRSs') form the basis of Australian Accounting Standards ('AASBs') adopted by the AASB, and for the purpose of this report are called Australian equivalents to IFRS ('AIFRS') to distinguish from previous Australian GAAP. The financial reports of the Company also comply with IFRSs and interpretations adopted by the International Accounting Standards Board.

This is the first financial report prepared in accordance with Australian Accounting Standards, being AIFRS and IFRS, and AASB 1 First-Time Adoption of Australian Equivalents to International Financial Reporting Standards has been applied.

An explanation of how the transition to AIFRS has affected the reported financial position, financial performance and cash flows of the Company is provided in Note 21. The note includes reconciliations of equity and profit and loss for comparative periods reported under Australian GAAP (previous GAAP) to those periods under AIFRS.

Summary of significant accounting policies $(c)$

Basis of consolidation $(i)$

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.

A consolidated balance sheet is not presented for 30 June 2005 and 2006 due to the deregistration of the former subsidiary during the year ended 30 June 2005.

Foreign currency translation $(ii)$

Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date.

All differences in the financial report are taken to the income statement.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

(iii) Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

Finance Interest

Interest revenue is recognised as the interest accrues.

$(iv)$ Finance costs

Financing costs comprise interest payable on borrowings. Interest is recognised as an expense when incurred.

$(v)$ Leases

Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term.

Cash and cash equivalents $(v_i)$

Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.

$(vii)$ Other receivables

Other receivables are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identified.

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

$(c)$ Summary of significant accounting policies (Cont'd.)

Impairment of assets $(viii)$

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset of a cash-generating unit exceeds its recoverable amount. the asset or cash generating unit is impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease).

An assessment is also made at each reporting date as to whether there is an indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

$(ix)$ Income tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Current tax is the expected tax payable on the taxable income for the period. The Company has not derived taxable income in either the current or previous periods.

Deferred income tax is determined using the balance sheet method which calculates temporary differences on the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred asset to be recovered.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.

$(c)$ Summary of significant accounting policies (Cont'd.)

Other taxes $(x)$

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

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

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

Cash flows are included in the cash flow statement 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.

$(x_i)$ Investments

All investments are initially recognised at cost, being the fair value of the consideration given and including acquisition charges associated with the investment.

After initial recognition, investments, which are classified as held for trading and availablefor-sale, are measured at fair value. Gains or losses on investments held for trading are recognised in the income statement.

Gains or losses on available-for-sale investments are recognised as a separate component of equity until the investment is sold, collected or otherwise disposed of, or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is included in the income statement.

For investments that are actively traded in organised financial markets, fair value is determined by reference to Stock Exchange quoted market bid prices at the close of business on the balance sheet date.

For investments where there is no quoted market price, 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 of the underlying net asset base of the investment.

Purchases and sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the market place are recognised on the trade date i.e. the date that the Company commits to purchase the asset.

Accounting policy applicable for the year ending 30 June 2005

The accounting policy was the same as described above with the exception that shares in overseas-listed entities were carried at the lower of cost and recoverable amount.

$(c)$ Summary of significant accounting policies (Cont'd.)

$(xii)$ Exploration

Exploration expenditure is capitalised for each separate area of interest where rights to tenure are current and:

such costs are expected to be recovered through successful development and $(a)$ exploitation or by sale; or
$(b)$ where 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 of exploration expenditure carried forward is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas.

The carrying values of expenditures carried forward are reviewed for impairment at each reporting date when the facts, events or changes in circumstances indicate that the carrying value may be impaired. Accumulated expenditures are written off to the income statement to the extent to which they are considered to be impaired.

The key points that are considered in this review include:

planned drilling programs and data evaluation.
environmental issues that may impact the underlying tenements.
the estimated market value of assets at the review date.

Information used in the review process is rigorously tested to externally available information as appropriate.

Accounting policy applicable for the year ending 30 June 2005.

The accounting policy was the same as described above with the exception that costs incurred on tenements prior to the granting of tenure were carried forward subject to impairment testing at each reporting date.

The effect of the change in this accounting policy to the current policy is set out in Note 21.

Joint Venture operations $(xiii)$

The interest of the Company in unincorporated joint ventures are brought to account by recognising in its financial statements the assets it controls, the liabilities it incurs and the expenses it incurs in relation to the joint venture.

$(xiv)$ Trade and other pavables

Trade and other payables are stated at cost.

Interest-bearing borrowings $(xv)$

Interest-bearing borrowings are recognised at cost. After initial recognition interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value, if any, being recognised in the income statement over the period of the borrowings on an effective interest basis.

Provisions $(xvi)$

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pretax rate that reflects the risks specific to the liability.

BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Cont'd) $\mathbf{1}$ .

Summary of significant accounting policies (Cont'd.) $(c)$

Share capital (xvii)

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares and options are shown in equity as a deduction, net of tax, from the proceeds.

(xviii) Accounting estimates and judgements

Management discussed with the Audit Committee the development, selection and disclosure of the Company's critical accounting policies and estimates. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below.

Key sources of estimation uncertainty

Note 1(xii) contains information about the assumptions and their risk factors relating to exploration expenditure impairment.

New and Revised Accounting Standards and Interpretations $(xix)$

All new and revised Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to Quantum Resources Limited's operations and effective for annual reporting periods beginning on 1 July 2005 have been adopted by the Company.

Consideration has been given to new and revised standards and interpretations issued by AASB that are not yet effective and the Directors do not believe that they will have any material financial impact on the financial statements of the Company.

$2.$ SEGMENT INFORMATION

The principal business and geographical segment of the Company is mineral exploration within Australia.

REVENUE AND EXPENSES $3.$

Loss before income tax expense includes the following revenues and expenses whose disclosure is relevant in explaining the performance of the entity:		Consolidated 2005 \$	The Company 2006 \$	2005 \$
(i) Finance revenue Interest Other Entity Other	17	3,688 470	13,202 7,623	3,688 470
Total finance revenue		4,158	20,825	4,158
Other income (ii) Net gain on disposal of available-for-sale investments Decrease in allowance for doubtful receivable		125,792	444,629 305,225	125,792
Sundry income			2,502
Total other income		125,792	752,356	125,792

$3.$ REVENUE AND EXPENSES (Cont'd)

		Consolidated	The Company
		2005	2006	2005
		\$	S	S
(iii) Other expense
Net loss on disposal of available-for-sale
investments		78,090		78,090
Impairment of available-for-sale			2,464
investments
Total other expense		78,090	2,464	78,090

(iv) Finance Costs
Borrowing costs
Related Parties	17	5,022	15,337	5,022
Other Entity	17	3,250	3,234	3,226
Other			2
Total finance costs		8,272	18,573	8,248

(v) Auditors' remuneration
Audit services		21,800	23,000	21,800
Other services
TAXATION

(a) Income tax expense
Prima facie income tax benefit calculated at
(2005: 30%) on the loss		171,472	82,092	171,346

(Decrease)/increase in income tax benefit due to:
Exploration expenditure written off		69,804	(90, 704)	69,804
Sundry items		(3,893)	2,408	(1,461)
Capital (losses)/gains		(23, 427)	133,389	(23, 427)
Deferred tax asset not recognised		(213, 956)	(127, 185)	(216, 262)
Income tax expense on loss

(b) Deferred tax asset not recognised

The deferred tax asset 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 probable.

Deferred tax assets have been calculated at 30%.

The potential future income tax benefit at 30 June 2006 not recognised is as follows: The Company 2006 2005 $\mathfrak{S}$ $\mathbb{S}$ Revenue losses 4,901,486 5,029,751 7,983,341 Capital losses 7,849,952 Quarantined foreign losses 1,329,017 1,329,017

5. EARNINGS PER SHARE

Basic earnings per share

The calculations of basic earnings per share for the year ended 30 June 2006 was based on the loss attributable to ordinary shareholders of \$273,639 (year ended 30 June 2005: loss \$571,573 consolidated) and a weighted average number of ordinary shares outstanding during the year ended 30 June 2006 of 316,369,670 (year ended 30 June 2005: 296,672,596) calculated as follows:

		The Company
	2006 \$	2005 \$
Loss attributable to ordinary shareholders
For the year ended 30 June
Loss for the period	(273, 639)	(571, 573)
	Number of shares	Number of shares
Weighted average number of ordinary shares
For the year ended 30 June
Issued ordinary shares at the beginning of the financial period	310,597,528	290,897,528
Effect of shares issued March		5,775,068
Effect of shares issued May	5,772,142
Weighted average number of ordinary shares at the end of the financial period	316,369,670	296,672,596

Diluted earnings per share

There is no change in the calculation of diluted earnings per share as the effect of converting "out of the money" options at reporting date would be anti-dilutive.

6. CASH AND CASH EQUIVALENTS

		The Company
	Note	2006 \$	2005 \$
Cash at bank		1,037,152	1,393
RECEIVABLES
CURRENT
Non-trade receivables Other Entity Other	17	10,500	405,225 43,361
Less allowance for doubtful receivable		10,500	448,586
Other Entity	17		(305, 225)
		10,500	143,361

$\mathbf{7}$ . RECEIVABLES (Cont'd)

NON-CURRENT

	Advance to Other Entities	17	509,000	29,179
8.	AVAILABLE-FOR-SALE INVESTMENTS
	NON-CURRENT		The Company 2006 \$	2005 \$
	Listed Shares at fair value Other Entities		879	361,270
	Unlisted Shares at cost Other Entity less Impairment writedown		1 (1)	1 (1)
			879	361,270
9.	EXPLORATION EXPENDITURE
	At cost		161,048	461,124
10.	TRADE AND OTHER PAYABLES
	CURRENT
	Trade creditors and accruals		81,413	120,806
11.	INTEREST BEARING BORROWINGS
	NON CURRENT
	Secured borrowings Related Party	17,(i)		108,628
			$\blacksquare$	108.628
	The Related Party borrowing was (i) secured by a floating charge over the assets of the Company.
12.	SHARE CAPITAL
	Ordinary shares Issued and fully paid		53,484,829	51,982,991

$12.$ SHARE CAPITAL (Cont'd)

		The Company
	2006	2006	2005	2005
Movements in ordinary	No. of	\$	No. of	\$
shares on issue	shares		shares
At 1 July	310,597,528	51,982,991	290,897,528	51,611,771
Placement of shares (4c per share [2005: 2.5c])	40,516,000	1,620,640	19,700,000	492,500
Transaction costs on share issue		(118, 802)		(121, 280)
At 30 June	351,113,528	53,484,829	310,597,528	51,982,991

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 19 for details.

$13.$ RESERVES

	The Company
	2006	2005
	\$	\$
Option premium reserve	619,690	619,690
Fair value reserve	560	358,486
	620,250	978,176

Option premium reserve

The option premium reserve represents the amounts contributed for the future right to acquire shares at a pre-determined price. The options have an exercise price of 10 cents and a latest expiry date of 28 February 2013.

Fair value reserve

The fair value reserve represents the cumulative net increase in the fair value of availablefor-sale investments until the investment is derecognised.

ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE $14.$

(a) Interest Rate Risk

The Company'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:
2006	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 \$
Financial assets Cash and cash equivalents	6	4.10%	1,037,152				$\overline{\phantom{a}}$	1,037,152
Receivables Available-for-sale investments	7 8	9.60%	509,000			$\blacksquare$	10,500 879	519,500 879
Total			1,546,152	÷		$\blacksquare$	11,379	1,557,531
Financial liabilities Trade and other payables	10					$\blacksquare$	81,413	81,413
Total						$\overline{a}$	81,413	81,413
2005
Financial assets Cash and cash equivalents	6	0.10%	1,393					1,393
Receivables Available-for-sale investments	7 8	1.83%	29,179			$\blacksquare$	143,361 361,270	172,540 361,270
Total			30,572			$\frac{1}{2}$	504,631	535,203
Financial liabilities Trade and other payables Interest bearing borrowing ⁽¹⁾	10 11	9.35%	108,628				120,806	120,806 108,628
Total			108,628				120,806	229,434

(1) Wilzed Pty Ltd charged interest at the "Reference Rate" of the ANZ Banking Group Ltd. The actual rate for 2005 was 9.10% to 9.35%

14. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE (Cont'd)

(b) Foreign Exchange Risk

At 30 June 2006 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

The Company's financial assets and liabilities that are recorded on the balance sheet are carried at amounts that approximate net fair value.

Valuation Approach

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.

Available-for-sale investments: For available-for-sale investments traded in organised financial markets, fair value is the current quoted market bid price 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.

15. CASH FLOW STATEMENTS

	Consolidated	The Company
	2005 \$	2006 \$	2005 \$
(a) Reconciliation of operating loss after income tax to net cash used in operating activities
Operating (loss) after income tax	(571, 593)	(273, 639)	(571, 152)
Add non-cash items:
Impairment of available-for-sale investments		2.464
Loss (profit) on disposal of available-for-sale investments	78,090	(444, 629)	78,090
Exploration expenditure previously capitalised
written off as unsuccessful	152,314	568,017	152,314
Borrowing costs payable	5,021		5,022
Allowance for doubtful receivable	(125,792)	(305, 225)	(125, 792)
Net cash used in operating activities before change in assets and liabilities	(461,960)	(453, 012)	(461, 517)

CASH FLOW STATEMENTS (Cont'd) $15.$

Reconciliation of operating (a) loss after income tax to net cash used in operating activities (Cont'd)	Consolidated 2005	The Company 2006 S	2005 S
Changes in assets and liabilities (Increase)/Decrease in receivables (Decrease)/Increase in trade creditors and accruals	(18, 751) 33.911	40.925 (46, 609)	(18, 751) 33,889
Net cash used in operating activities	(446,800)	(458, 696)	(446,379)

(b) Non-cash financing

In the 2005 year, an amount of \$280,707 advanced to the Company by 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.

16. 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.

	The Company
	2006 S	2005 \$
At balance date the amount which may be required to be expended in respect of the abovementioned is as follows:
Not later than one year	773,000	640,140
Later than one year but not later than five years	2,349,000	1,596,460
	3,122,000	2,236,600

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.

16. COMMITMENTS (Cont'd)

(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.

	The Company 2006	2005 £.
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	1,378,321	1,482,221

However, the Company can withdraw from these commitments after spending \$500,000. To date \$421,679 (2005: \$317,779) has been spent.

$17.$ RELATED PARTIES

(a) Key Management Personnel Disclosures

The names of the key management personnel 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

Executives

P J Lee - General Manager Corporate & Company Secretary K Washburn - Exploration Manager (appointed 1 January 2006) C D Taylor - Exploration Manager (contract expired 23 December 2005)

Pursuant to the Corporations Act Regulation 2M.3.03 and 2M.6.04, Directors and Executives remuneration is disclosed in the Remuneration Report in the Directors' Report on page 8 to 11 of this Annual Report.

The key management personnel compensation are as follows:

	Consolidated	The Company
	2005	2006	2005
	\$	\$
Short-term employee benefits	191,241	245,072	191,241
Other long-term benefits
Post-employment benefits	23,442	28.340	23,442
Termination benefits
Share-based payments
	214,683	273,412	214,683

RELATED PARTIES (Cont'd) $17.$

(b) Equity Holdings and Transactions

2006	Ordinary Shares Number	Options 31/10/2010 Number	Options 30/4/2012 Number	Options 30/11/2012 Number	Options 24/3/2010 Number
J Gutnick
At start of reporting period Granted as Remuneration Received on exercise of options or rights Exercised	144, 125, 878	42,803,448	31,141,562	65,136,241	1,000,000
Resulting from other changes	5,725,615	5,231	23,700	144,500
At close of reporting period	149,851,493	42,808,679	31,165,262	65,280,741	1,000,000
Vested at reporting date Vested and exercisable at reporting date		42,808,679	31,165,262	65,280,741
Vested and unexercisable at reporting date					1,000,000
D S Tyrwhitt
At start of reporting period Granted as Remuneration Received on exercise of options or rights
Exercised Resulting from other changes			$\omega$
At close of reporting period	ä,	u,	w	u,
Vested at reporting date Vested and exercisable at reporting date Vested and unexercisable at reporting date
M Z Gutnick
At start of reporting period Granted as Remuneration Received on exercise of options or rights Exercised	9,672,022	532
Resulting from other changes
At close of reporting period	9,672,022	532
Vested at reporting date Vested and exercisable at reporting date		532
Vested and unexercisable at reporting date

RELATED PARTIES (Cont'd) $17.$

Equity Holdings and Transactions (Cont'd) $(b)$

	Ordinary Shares Number	Options 31/10/2010 Number	Options 30/4/2012 Number	Options 30/11/2012 Number	Options 24/3/2010 Number
PJLee
At start of reporting period Granted as Remuneration	280				350,000
Received on exercise of options or rights
Exercised Resulting from other changes
At close of reporting period	280	w	u,		350,000
Vested at reporting date Vested and exercisable at
reporting date Vested and unexercisable at reporting date					350,000
K Washburn* At start of reporting period
Granted as Remuneration Received on exercise of options
or rights Exercised
Resulting from other changes At close of reporting period	u.	u.		u,
Vested at reporting date
Vested and exercisable at reporting date
Vested and unexercisable at reporting date * from date of appointment
CD Taylor*
At start of reporting period Granted as Remuneration
Received on exercise of options or rights
Exercised Resulting from other changes
At close of reporting period	a.
Vested at reporting date Vested and exercisable at
reporting date Vested and unexercisable at
reporting date * to date of expiry of contract

RELATED PARTIES (Cont'd) $17.$

Equity Holdings and Transactions (Cont'd) $(b)$

2005	Ordinary Shares Number	Options 31/10/2010 Number	Options 30/4/2012 Number	Options 30/11/2012 Number	Options 24/3/2010 Number
J Gutnick
At start of reporting period Granted as Remuneration Received on exercise of options or rights	144, 125, 878	30,003,448	27,741,562	65,136,241	1,000,000
Exercised Resulting from other changes		12,800,000	6,400,000
At close of reporting period	144,125,878	42,803,448	34, 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	34, 141, 562	65,136,241	1,000,000
D S Tyrwhitt
At start of reporting period Granted as Remuneration Received on exercise of options or rights Exercised
Resulting from other changes At close of reporting period		u,		u.
Vested at reporting date Vested and exercisable at reporting date Vested and unexercisable at reporting date
M Z Gutnick
At start of reporting period Granted as Remuneration Received on exercise of options or rights Exercised Resulting from other changes	9,672,022	532
At close of reporting period	9,672,022	532
Vested at reporting date Vested and exercisable at reporting date Vested and unexercisable at		532
reporting date

RELATED PARTIES (Cont'd) $17.$

Equity Holdings and Transactions (Cont'd) $(b)$

	Ordinary Shares Number	Options 31/10/2010 Number	Options 30/4/2012 Number	Options 30/11/2012 Number	Options 24/3/2010 Number
PJLee
At start of reporting period	280				350,000
Granted as Remuneration Received on exercise of options
or rights Exercised Resulting from other changes

At close of reporting period	280	w		w	350,000
Vested at reporting date Vested and exercisable at
reporting date Vested and unexercisable at reporting date					350,000
C D Taylor
At start of reporting period
Granted as Remuneration
Received on exercise of options or rights
Exercised
Resulting from other changes
At close of reporting period	a.	u.	w
Vested at reporting date
Vested and exercisable at reporting date
Vested and unexercisable at reporting date

RELATED PARTIES (Cont'd) $17.$

	Note	Consolidated	The Company
		2005 \$	2006 \$	2005 \$
(c) Other Key Management Personnel Transactions
Transactions with Director Related Entities of Mr. J.I. Gutnick are as follows:
Wilzed Wilzed provides loan funds to the Company
Transactions during the period Amounts advanced during the year Amounts repaid during the year Interest paid or due and payable Amount outstanding to Wilzed	3 11	525,552 (421, 946) 5,022 108,628	282,450 (406, 415) 15,337	525,552 (421, 946) 5,022 108,628
The interest rate for 2006 charged by Wilzed was 9.35% to 9.60% (2005: 9.10% to 9.35%). The loan is secured by a floating charge over the assets of the Company.
(d) Other Transactions
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") Golden River Resources Corporation Great Gold Mines N.L. Regis Resources N.L.
AXIS (i) Transactions with Consultants Pty Ltd ("AXIS") are as follows:
Management services Geological services Interest paid/payable Interest received/receivable Receipt from AXIS Repayment to AXIS	3 3	(118, 241) (3,250) 3,688 (177, 100) 479,336	(417, 656) (101, 632) (3,234) 13,202 (24, 700) 1,013,841	(399, 382) (118, 241) (3,226) 3,688 (177, 100) 478,960
Amount outstanding by AXIS	7	29,179	509,000	29,179

RELATED PARTIES (Cont'd) $17.$

(d) Other Transactions (Cont'd)

	Note	Consolidated	The Company
		2005 S	2006 \$	2005 \$
(ii) Transactions with Astro are as follows:
Amounts repaid during the year Exploration expenses incurred by Astro on behalf of joint venture partners		25,792	401,591 3,634	25,792
Amount owing by Astro	7	405,225		405,225
Allowance for doubtful receivable	7	(305, 225)		(305, 225)
(iii)Transactions with Great Gold Mines N.L. (GNL) are as follows:
Exploration expenses incurred by GNL on behalf of joint venture partners		(2,051)		(2,051)
Amounts paid to GNL		2,051		2,051
(iv) 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.		%	%	%
Ordinary shares AXIS Regis Resources N.L. Golden River Resources Corporation		9.09 N/A	9.09 N/A	9.09 1.10 0.01

18. ULTIMATE PARENT ENTITY

After consideration of AASB 127 and the Corporations Act 2001, the Directors do not believe there is a Parent Entity.

EMPLOYEE SHARE OPTION PLAN 19.

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 $(i)$ March 2010 or the termination of the person's employment.
$(ii)$ 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.

19. EMPLOYEE SHARE OPTION PLAN (Cont'd)

	The Company
Off Balance Sheet Items	2006	2005
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	\$0.04	\$0.02
Exercise price	\$0.08	\$0.08
Number of options repurchased by the Company		250,000
Value of options repurchased by the Company	$\blacksquare$	\$9.250
Interest free option loans provided	\$51,800	\$51,800

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.

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.

$20.$ NUMBER OF EMPLOYEES

The Company is managed by AXIS Consultants Pty Ltd ("AXIS") pursuant to a Service Agreement dated 25 November 1988. Accordingly, the Company has no employees. At 30 June 2006 AXIS had 8 employees who manage a number of public companies including the Company.

EXPLANATION OF TRANSITION TO AIFRS $21.$

For all periods up to and including the year ended 30 June 2005, the Company prepared its financial statements in accordance with AGAAP. These financial statements for the year ended 30 June 2006 are the first the Company is required to prepare in accordance with Australian equivalents to International Financial Reporting Standards (AIFRS).

Accordingly the Company has prepared financial statements that comply with AIFRS applicable for periods beginning on or after 1 January 2005 and the significant accounting policies meeting these requirements are described in note 1. In preparing these financial statements, the Company has started from an opening balance sheet as at 1 July 2004, the Company's date of transition to AIFRS, and made those changes in accounting policies and other restatements required by AASB 1 "First Time Adoption of AIFRS".

This note explains the principal adjustments made by the Company in restating the AGAAP balance sheet as at 1 July 2004, and its previously published AGAAP financial statements for the year ended 30 June 2005.

$21.$ EXPLANATION OF TRANSITION TO AIFRS (Cont'd)

Exemptions Applied

The Company has made its election in relation to the transitional exemptions allowed by AASB 1 "First Time Adoption of Australian Equivalents to International Financial Reporting Standards" as follows:

Designation of previously recognised financial instruments. Financial instruments were designated as financial assets available for sale at the date of transition to AIFRS.

Share-Based Payment Transactions

AASB 2 "Share-Based Payments" is applied only to equity instruments granted after 7 November 2002 that had not vested on or before 1 January 2005.

Exemption from the requirement to restate comparative information for AASB 132 and AASB 139. The Company has not elected to adopt this exemption and has applied AASB 132 "Financial Instruments: Presentation and Disclosure" and AASB 139 "Financial Instruments: Recognition and Measurement" to its comparative information.

Notes to the reconciliation of equity and profit

Exploration and Evaluation - AASB 6 - "Exploration for and Evaluation of Mineral Resources" 1. was issued in December 2004.

As at 30 June 2004 and 2005, the carrying value was based on a review carried out by management and 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 tenure. The adjustment to the carrying value of the asset at 30 June 2004 is a decrease of \$51,617 and at 30 June 2005, a decrease of \$96,025 (cumulative). Exploration expenditure written off as at 30 June 2005 increased by \$44,408 due to the writeoff of expenditure on tenements classified as ungranted.

$2.$ Impairment of Assets - The recoverable amount of non-current assets has been assessed as the higher of net selling price and value in use, on a discounted basis. The Company previously assessed recoverable amounts of non-current assets based on undiscounted future net cash The Company's non-current assets (other than exploration and evaluation and flows. receivable assets) are not material and therefore, the impairment of assets test has not had a material effect on the Company's financial position.
1. Property Plant and Equipment - There was no property, plant and equipment at 30 June 2004 or 30 June 2005.
1. Income Tax $-$ The change from the calculation of deferred tax balances using the income statement method to the AIFRS compliant policy of using the balance sheet method has had no impact on recognised deferred tax balances or on income tax expense. Recoupment of the Company's carry forward tax losses cannot be considered probable as defined in AASB 112 "Income Taxes", therefore deferred tax balances remain unrecognised as was the case under the "virtually certain" test under previous GAAP.
Share Based Payments Under AASB 2 Share Based Payments, the Company is required to 5. determine the fair value of options issued to employees as remuneration and recognise an expense in the income statement. It applies to all share-based payments issued after 7 November 2002 which have not vested as at 1 January 2005. No adjustment has been made for share based payments made prior to 1 January 2005 as the Company has elected not to recalculate comparatives and it had not disclosed the fair value of those equity instruments, determined at measurement date, at the time.

$21.$ EXPLANATION OF TRANSITION TO AIFRS (Cont'd)

Notes to the reconciliation of equity and profit (Cont'd)

1. Non Current Liabilities - Fair value is considered to approximate cost as interest is charged at commercial rates.
Available-for-sale Investments The investments have been restated to fair value, quoted $7.$ market price at the close of business on the balance sheet date. The adjustment to the carrying value of the asset at 30 June 2004 is an increase of \$413,748 and at 30 June 2005 no adjustment was required as the asset had been revalued under AGAAP.
1. No material impacts occurred to the cash flows re-stated under AGAAP on adoption of AIFRS.

EXPLANATION OF TRANSITION TO AIFRS (Cont'd) $21.$

Balance sheets reflecting reconciliation of adjustments to AIFRS as at 1 July 2004

	Consolidated 1 July 2004
	Previous	AIFRS
	GAAP \$	Impact \$	AIFRS \$
ASSETS
Current assets
Cash and cash equivalents	1,070		1,070
Receivables	9,309		9,309
Total current assets	10,379	$\blacksquare$	10,379
Non-current assets
Available-for-sale investments	206,122	413,748	619,870
Exploration expenditure	281,404	(51, 617)	229,787
Receivables	244,480		244,480
Total non-current assets	732,006	362,131	1,094,137
Total assets	742,385	362,131	1,104,516
LIABILITIES
Current liabilities
Trade and other payables	81,668		81,668
Total current liabilities	81,668		81,668
Non-current liabilities
Interest-bearing borrowing	340		340
Total non-current liabilities	340		340
Total liabilities	82,008		82,008
Net assets	660,377	362,131	1,022,508
EQUITY
Share capital	51,611,771		51,611,771
Reserves	619,690	413,748	1,033,438
Retained losses	(51, 571, 084)	(51, 617)	(51, 622, 701)
Total equity	660,377	362,131	1,022,508

EXPLANATION OF TRANSITION TO AIFRS (Cont'd) $21.$

Balance sheets reflecting reconciliation of adjustments to AIFRS as at 1 July 2004 and 30 June 2005.

		THE COMPANY 1 JULY 2004			THE COMPANY 30 JUNE 2005
	Previous GAAP	Transition	AIFRS	Previous GAAP	Transition	AIFRS
	S	Impact s	\$	5	Impact s	\$
ASSETS
Current assets
Cash and cash equivalents	309		309	1,393		1,393
Receivables	9,309		9,309	143,361		143,361
Total current assets	9,618		9,618	144,754		144,754
Non-current assets
Available-for-sale investments	206,122	413,748	619,870	361,270		361,270
Exploration expenditure	281,404	(51, 617)	229,787	557,149	(96, 025)	461,124
Receivables	244,480		244,480	29,179		29,179
Total non-current assets	732,006	362,131	1,094,137	947,598	(96, 025)	851,573
Total assets	741,624	362,131	1,103,755	1,092,352	(96, 025)	996,327
LIABILITIES
Current liabilities
Trade and other payables	81,668		81,668	120,806		120,806
Total current liabilities	81,668	-	81,668	120,806	$\blacksquare$	120,806
Non-current liabilities
Interest-bearing borrowing				108,628		108,628
Total non-current liabilities			$\blacksquare$	108,628		108,628
Total liabilities	81,668		81,668	229,434		229,434
Net assets	659,956	362,131	1,022,087	862,918	(96, 025)	766,893
EQUITY
Share capital	51,611,771		51,611,771	51,982,991		51,982,991
Reserves	619,690	413,748	1,033,438	978,176		978,176
Retained losses	(51, 571, 505)	(51, 617)	(51, 623, 122)	(52,098,249)	(96, 025)	(52, 194, 274)
Total equity	659,956	362,131	1,022,087	862,918	(96, 025)	766,893

EXPLANATION OF TRANSITION TO AIFRS (Cont'd) $21.$

Reconciliation of loss for the year ended 30 June 2005

	CONSOLIDATED 30 June 2005
	Previous GAAP \$	AIFRS Impact s	AIFRS S.
Continuing Operations
Finance revenue	4,158		4,158
Revenue	4,158		4,158
Other income Exploration expenditure written off Administration expenses Other expenses Finance costs	125,792 (107,906) (462, 847) (78,090) (8,272)	(44, 408)	125,792 (152, 314) (462, 847) (78,090) (8,272)
Loss before income tax	(527, 165)	(44, 408)	(571, 573)
Income tax expense
Loss for the period after tax from continuing operations	(527, 165)	(44, 408)	(571, 573)
Loss attributable to members	(527, 165)	(44, 408)	(571, 573)
Earnings per share	Cents		Cents
Basic loss per share for the year attributable to ordinary equity holders	(0.18)		(0.19)
Diluted loss per share for the year attributable to ordinary equity holders	(0.18)		(0.19)

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 summarised below:

	Consolidated
Retained losses as at 1 July 2004 under AGAAP AIFRS reconciliation:	(51, 571, 084)
- exploration expenditure written off	(51, 617)
Retained losses as at 1 July 2004 under AIFRS	(51, 622, 701)

EXPLANATION OF TRANSITION TO AIFRS (Cont'd) $21.$

Reconciliation of loss for the year ended 30 June 2005 (Cont'd)

	THE COMPANY 30 June 2005
	Previous GAAP S	AIFRS Impact S	AIFRS \$
Continuing Operations
Finance revenue	4,158		4,158
Revenue	4,158		4,158
Other income Exploration expenditure written off Administration expenses Other expenses Finance costs	125,792 (107,906) (462, 449) (78,091) (8, 248)	(44, 408)	125,792 (152, 314) (462, 449) (78,091) (8, 248)
Loss before income tax	(526, 744)	(44, 408)	(571, 152)
Income tax expense
Loss for the period after tax from continuing operations	(526, 744)	(44, 408)	(571, 152)
Loss attributable to members	(526, 744)	(44, 408)	(571, 152)

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 summarised below:

	The Company
Retained losses as at 1 July 2004 under AGAAP AIFRS reconciliation:	(51, 571, 505)
- exploration expenditure written off	(51.617)
Retained losses as at 1 July 2004 under AIFRS	(51,623,122)

Quantum Resources Limited ABN 84 006 690 348

Directors' Declaration

In the opinion of the Directors of Quantum Resources Limited

$(a)$ The accompanying financial statements and notes including the remuneration disclosures 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 2006 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 when they $(b)$ become due and payable.
$(c)$ The Directors have been given the declarations from the Chief Executive Officer and Chief 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 28th day of September 2006.

J.I. Curtrick

J.I. Gutnick Director

INDEPENDENT AUDIT REPORT TO MEMBERS OF QUANTUM RESOURCES LIMITED

Chartered Accountants & Business Advisers

Scope

The Financial Report and Directors' Responsibility

The financial report comprises the income statement, balance sheet, statement changes in equity, cash flow statement, accompanying notes to the financial statements, and the directors' declaration for Quantum Resources Limited (the company) for the year ended 30 June 2006.

The company has disclosed information about the remuneration of directors and executives ("remuneration disclosures"), as required by Accounting Standard AASB 124 "Related Party Disclosures", under the heading "remuneration report" 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 124 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 guarantee that all material misstatements have been detected.

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001, including compliance with Accounting Standards 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 124 and the Corporations Regulations 2001.

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

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

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

INDEPENDENT AUDIT REPORT TO MEMBERS OF QUANTUM RESOURCES LIMITED (CONT'D)

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, would be in the same terms if it had been given at the time the audit report was made.

Audit Opinion

In our opinion:

$\ddagger$ . the financial report of Quantum Resources Limited is in accordance with:
$(a)$ the Corporations Act 2001, including:
- giving a true and fair view of the company's financial position as at 30 June 2006, $(i)$ 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
other mandatory financial reporting requirements in Australia; and $(b)$
the remuneration disclosures that are contained in the directors' report comply with Accounting $2.$ Standard AASB 124 and the Corporations Regulations 2001.

PKF

Kill Rt

PKF Chartered Accountants

M L Port Partner

28 September 2006 Melbourne

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

$\ddagger$ . Board of Directors

Ĺ. 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 ensuring appropriate resources are available
To approve and monitor the progress of major capital expenditure, capital management, and ٠ 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 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 Board believes that 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.

iií. 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.

vi External Advice to Directors

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.

Board Committees $2.$

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.

Ħ. 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-yearly 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.

$3.$ 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.
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 and approve remuneration.
To prepare all required financial reports, tax returns, budgets and any other 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 guidance for employees on these areas.
To protect the assets of the Company. $\bullet$

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.

i. Environment

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

ij. 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

Ethical Standards ĭ.

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 (including Directors and executives) 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.

ií. Share Trading

It is the Company's policy to encourage Directors, employees and related parties to own Shares in The trading in shares policy strongly reinforces the obligations of Directors and the Company. 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.

$\overline{I}$ . 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 costbenefit of web casting is worthwhile to a Company of its size.

Quantum Resources Limited Tenement List

TENEMENTS	E 53/1016		E 27/93
WHOLLY	E 53/967	OFFICER HILL	E 27/175
OWNED		Newmont Tanami	E 27/232
	PARABURDOO	Pty Ltd	M 27/273
BARROW	QUANTUM	Earning 75%	M 27/293
CREEK	WINDIMURRA	EL 23150	M 27/296
EL 25290	E 58/251
		TANAMI	M 27/297
BIG BELL	REQUIRING	REGIONAL	M 27/319
E 21/101	ALLOCATION	GOLD	M 27/323
	E 63/775	Earning 80%	M 27/334
BOUNTY		EL 23383	M 27/335
E 77/1084	ST IVES	EL 23384	M 27/336
	E 15/704	EL 23387	M 27/337
BURTVILLE	E 15/722	EL 23388	M 27/357
E 38/1431	E 15/741	EL 23389 EL 23390	M 27/358
	E 15/764 E 15/782	EL 23400	M 27/359
DULCIE NORTH E 77/1078		EL 23401	M 27/368
	TANAMI	EL 23403	M 27/369
GARDNER	EL 23151	EL 23404	M 27/370
RANGE	EL 23152	EL 23405	M 27/377
E 80/3410	EL 23153	EL 23406	M 27/381
E 80/3411	EL 23154	EL 23407	M 27/384
E 80/3412	EL 23155	EL 23408	M 27/387
	EL 23156	EL 23409	M 27/390
GOONGARRIE		EL 24182	M 27/391
E 29/504	TELFER		M 27/398
	E 45/2401	WALLBROOK &	M 27/399
JACKSON		KAL NORTH	M 27/400
E 77/1051	TUCKABIANNA	Jackson Gold
E 77/1052	P 20/1809	Limited Earning	M 27/401
E 77/1053		80% M26/813	M 27/403
E 77/1054	WARE RANGE EL 25010	P 26/3094	M 27/421
E 77/1055		P 26/3095	M 27/422
E 77/1056	WELCOME	P 26/3096	M 27/455
E 77/1065 E 77/1072	WELL	P 26/3097	M 31/279
E 77/1073	P 37/6295	P 26/3098	P 27/1612
E 77/1079		P 26/3099
E 77/1109	WILUNA	P 26/3100	WONGANOO
	E 53/990	P 26/3101	Cullen Resources
JUNDEE NORTH	E 53/991	P 26/3102	Pty Ltd Earning
E 53/989		P 26/3103	80%
	TENEMENTS	P 26/3363	E 53/988
MEEKATHARRA	SUBJECT TO	P 26/3364	ZULEIKA
NICKEL/GOLD	JOINT	P 26/3365	TENEMENT
E 51/935	VENTURES	P 26/3366 P 26/3367	PURCHASE
		P 26/3368	20%
MENZIES	DULCIE	E 31/571	P 16/2178
NORTH	Hamill Resources	M 31/411	P 16/2179
E 29/474	Limited Earning	WHITEHEADS	P 16/2180
	80% E 77/1074	Earning 80%	P 16/2181
MILLROSE

As at 31 August 2006 the following information applied:

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	57.280,000

(1) 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 2,099. 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	846
Holding between	1,001 - 5,000 Shares	484
Holding between	$5,001 - 10,000$ Shares	170
Holding between	10,001-100,000 Shares	462
Holding more than	100,001 Shares	137

The number of holders with less than a marketable parcel of fully paid ordinary shares is 1,525. 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 Fully	Percentage
	Paid Ordinary	interest
	Shares held
Edensor Nominees Pty Limited	72.592.482	20.67
Chabad House of Caulfield Pty Ltd	48.946.667	13.94
Great Gold Mines N.L.	43.594.702	12.42
ANZ Nominees Limited	34,248,095	9.75
Bell Potter Nominees Ltd	12,921,987	3.68
Golden Touch LLC	11,585,856	3.30
Down Under Gold LLC	11.360.855	3.24
Midas Gold LLC	10,636,739	3.03
Mr Mordechai Gutnick	9,672,022	2.75
AXIS Consultants Pty Ltd	6,440,000	1.83
Merrill Lynch (Australia) Nominees Pty Ltd	5,373,531	1.53
Retlet Pty Ltd	5,000,000	1.42
Mr Yehuda Hoch	4,332,000	1.23
Saturn IV LLC	3,325,927	0.95
David Likht and Rina Likht	2,100,000	0.60
Daccar Pty Ltd	2,000,000	0.57
Flinders Property Investments Pty Ltd	2,000,000	0.57
Ms Nada Saade	1,633,000	0.47
Bonos Pty Ltd	1,500,000	0.43
Mr John G Kellas	1.485.960	0.42
Total	290,749,823	82.81

$(b)$ 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 265. 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	187
Holding between	$1,001 - 5,000$ Options	60
Holding between	5,001 - 10,000 Options	7
Holding between	10,001-100,000 Options	8
Holding more than	$100,001$ Options	3

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. Gerald Magree	21.000	0.05
Mr. Stephen Koci	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 Dougherty	16,000	0.04
Mr. Percival James Fleming	10.000	0.02 ₁
Mr. John Robert Montague Polack and Mrs. Shirley Minnie	10.000	0.02
Polack
Dr. Hamidreza Rahmati	10,000	0.02
Mr. Anthony Warwick Whatmore	10.000	0.02 ₁
Tradeworx Pty Ltd	7,500	0.02
National Nominees Limited	5,831	0.01
Mr. Yehuda Hoch	5,231	0.01
Mr. Christopher Edwin Osborne	5,000	0.01
Mrs. Mercia Kwan Ching Wong	5,000	0.01
Total	43,563,795	99.58

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

The number of holders of options maturing on 31 October 2010 over fully paid ordinary shares issued by the Company is 263. 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	20
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.

The top 20 optionholders are as follows:

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		240.050	0.73
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
Mr. Yehuda Hoch		23,700	0.07
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
	Total	32,563,823	99.05

$(d)$ 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	13
Holding between	10,001-100,000 Options	18
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	480,000	0.70
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
Mr Yehuda Hoch	144,500	0.21
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 ₁
Heaney
Mr Anthony Warwick Whatmore	20.000	0.03
Chuter Nominees Pty Ltd	17,500	0.03
Mr Michael Simmons	17.500	0.03
Total	67,934,983	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 1,400,000 options and the number of holders of options is 3.

Quantum Resources Limited Corporate Information

Directors

Joseph Gutnick David Tyrwhitt Mordechai Gutnick

Company Secretary

Peter Lee

Registered Office and Domicile

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

Legal Form

A public company limited by shares

Shareholder Information

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

Bankers

Bank of Melbourne Level 6 360 Collins Street Melbourne Victoria 3000 Australia

Solicitors

Schetzer Brott & Appel 52 Market Street Melbourne Victoria 3000

Senior Management

Peter Lee, General Manager Corporate & Company Secretary Kent Washburn, Exploration Manager

Share Registry

Link Market Services Limited Level 4, 333 Collins Street Melbourne Victoria 3000 Australia 1300 554 474 or + 61 3 9615 9999 Telephone: Facsimile: +61 3 8614 2903

Country of Incorporation Australia

Auditors

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

Australian Stock Exchange Listing Code

QUR QURO QUROA QUROB

Cornwall Stodart Level 10 114 William Street Melbourne Victoria 3000

AI assistant

Nova Minerals Ltd — Annual Report 2006

34115_rns_2006-09-28_3e4c7932-0a4e-42a0-a11d-b235a704cd61.pdf

Quantum Resources Limited

Dear Shareholder

PROJECT REVIEW

URANIUM EXPLORATION

Barrow Creek Project (Quantum earning 80%)

Tanami Project (Quantum 100%)

Mt Peake Project (Quantum earning 80%)

Gardner Range Project

Ware Range Project

GOLD EXPLORATION

Whiteheads Project - Quantum earning 80%

Table 1: Whiteheads RAB Drilling

Jackson Project (Quantum 100%)

St. Ives Project (Quantum 100%)

Telfer Project (Quantum 100%)

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

Wanganoo Project (Quantum 20%, Cullen 80%)

CORPORATE

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

Income Statement

Balance Sheet

Cash Flow

Review and Results of Operations 3.

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

$(i)$ Listed

$(ii)$ Unlisted

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

Non-Executive Directors $(iii)$

INDEPENDENCE DECLARATION

Quantum Resources Limited Income Statement For the Year Ended 30 June 2006

Quantum Resources Limited Balance Sheet as at 30 June 2006

Quantum Resources Limited Cash Flow Statements for the Year Ended 30 June 2006

Quantum Resources Limited Statement of Changes in Equity for the Year Ended 30 June 2006

$(a)$ Basis of preparation

$(b)$ Statement of compliance

Summary of significant accounting policies $(c)$

Basis of consolidation $(i)$

Foreign currency translation $(ii)$

(iii) Revenue

Finance Interest

$(iv)$ Finance costs

$(v)$ Leases

Cash and cash equivalents $(vi)$

$(vii)$ Other receivables

$(c)$ Summary of significant accounting policies (Cont'd.)

Impairment of assets $(viii)$

$(ix)$ Income tax

$(c)$ Summary of significant accounting policies (Cont'd.)

Other taxes $(x)$

$(xi)$ Investments

Accounting policy applicable for the year ending 30 June 2005

$(c)$ Summary of significant accounting policies (Cont'd.)

$(xii)$ Exploration

Accounting policy applicable for the year ending 30 June 2005.

Joint Venture operations $(xiii)$

$(xiv)$ Trade and other pavables

Interest-bearing borrowings $(xv)$

Provisions $(xvi)$

BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Cont'd) $\mathbf{1}$ .

Summary of significant accounting policies (Cont'd.) $(c)$

Share capital (xvii)

(xviii) Accounting estimates and judgements

Nova Minerals Ltd Annual Report 2006

Cash and cash equivalents $(v_i)$

$(x_i)$ Investments