ORCODA LIMITED — Annual Report 2004

Sep 29, 2004

HOLDINGS LIMITED

ACN 009 065 650

Suite 3, 614 Newcastle Street LEEDERVILLE WA 6007 Telephone: (08) 9228 1199 E-mail: smarttrans@smarttrans.com.au

PO Box 334 LEEDERVILLE WA 6903 Facsimile: (08) 9228 2299 Website: www.smarttrans.com.au

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SmartTrans Holdings Limited

2004 Annual Report

TABLE OF CONTENTS

Chairman's Report
Directors' Report
Independent Audit Report
Directors' Declaration
Statement of Financial Performance
Statement of Financial Position
Statement of Cash Flows
Notes to Financial Statements
Corporate Governance
Shareholder Information
Summary of Mining Tenements

$\sim$ $\mu$

CORPORATE DIRECTORY

Directors

John P C FORSYTH James P LAURIE BSc. MAusIMM, FAICD Andrew D FORSYTH Lib

Chairman Executive-Director Non-Executive Director

Company Secretary

John W MILLARD

Senior Management

James P LAURIE

Director

Registered Office

Suite 3, First Floor 614 Newcastle Street Leederville WA 6007

Head Office

Suite 3, First Floor 614 Newcastle St LEEDERVILLE WA 6007 Telephone: (61-8) 9228 1199 Facsimile: (61-8) 9228 2299

email: smarttrans@smarttrans.com.au Homepage: www.smarttrans.com.au

Auditors

RSM Bird Cameron Partners 8 St Georges Terrace PERTH WA 6000

Bankers

Westpac Banking Corporation 273 George Street SYDNEY NSW 2000

Solicitors

Deacons Level 2. 1 Alfred Street Circular Quay SYDNEY NSW 2000

Securities Quoted

Australian Stock Exchange Limited Home Exchange - Australian Stock Exchange (Perth) Limited

Share Registry

Computershare Registry Services Level 2, Reserve Bank Building 45 St Georges Terrace PERTH WA 6000

Telephone:	$(61-8)$ 9323 2000
Facsimile:	$(61-8)$ 9323 2033

CHAIRMAN'S REPORT

EXPLORATION PROJECTS

Marlborough Project

The Company and its joint venture partner, Marlborough Resources NL, have two third-party joint ventures in the Marlborough Project. At Waitara, Midas Resources Ltd (Midas) has earned 51% in five tenements and at Mount Mackenzie Jetcld Ptv Ltd (Jeteld) is carning 47% in two tenements.

The Mount Mackenzie Joint Venture has entered the second stage of exploration following Jeteld's initial expenditure of \$500,000 and further expenditure of \$250,000. Jeteld committed to contribute a further \$500,000 to the project on 15^th June 2004 bringing its total expenditure and commitments to a total of \$1,250,000. Jeteld's total cash contribution to 30 June 2004 is \$805,000. Jeteld can carn a 47% equity by contributing a total of \$2,500,000 by 1^st August 2005.

The Company's Consultant, Terra Search Pty Ltd, advised that the Mount Mackenzie system of alteration and mineralisation is one of the largest hydrothermal systems in eastern Australia and is considered to have significant potential for the discovery of a major porphyry style deposit adjacent to the large intense advanced argillic alteration system.

The change in focus at Mount Mackenzic from a small cpithermal gold target to a larger high-sulphidation porphyryrelated target has been an important development in the evaluation of this prospect.

Seven drill holes were completed during the year and the results have all supported this geological model.

Further drilling is planned and, in order to maximise the company's chances of locating a zone of economic mineralisation in the system, the company plans to conduct gravity, P.I.M.A. (Portable Infra-Red Mineral Analyser) and ground magnetics surveys over the target zone. The results of these surveys will be integrated into a three dimensional model that is aimed at providing a map of the fluid pathways that control gold deposition. If successful, this process will provide specific drilling targets within the very large alteration system.

The field components of the gravity and ground magnetics surveys have been completed and an orientation P.I.M.A. survey has been conducted over a sclection of samples taken from the ground surface and drill core and chips. Results from this initial P.J.M.A. survey have indicated that this technique works very well at Mount Mackenzie and that it can successfully discriminate between mincralised (proximal) and nonmineralised (distal) zones. A more detailed and more extensive P.I.M.A. survey is now being designed as a result of these favourable indications.

At Waitara, Midas drilled 5 holes into the Six Mile Creek epithermal vein. This drilling successfully located the main vein with widths in excess of 3 metres at a depth of approximately 100 vertical metres. Results were considered anomalous however the tenor of results suggests the average grade of the vein at these depths is in the order of 1g/t gold.

Midas also completed 4 holes into the Twin Peaks prospect. One hole, drilled into "Target A", a geophysical target with a coincident magnetic anomaly and moderate electrical conductivity, intersected copper values ranging up to 745 ppm. Most of the higher values (above 250 ppm) coincided with visible copper sulphide (chalcopyrite) zones.. The intersection of

anomalous copper results at Twin Peaks highlights the regional prospectivity of the Hamilton Park porphyry system.

The three remaining three holes, drilled into a magnetic anomaly ("Target B") were inconclusive and more follow-up drilling is required.

Riversleigh Base Metals Project.

This Project covers the "Grevillea" and "Grevillea West" zinclead-silver prospects. The Company's Consultant, Flagstaff Geoconsultants Pty Ltd, advised that there is an interesting similarity in size and mineralogy between the Grevillea West deep conductor and the mineralised Macarthur River sub-basin.

These prospects have the potential to host a significant zinc-leadsilver deposit and the Company is seeking a new like-minded joint venture partner to participate in further exploration of "Grevillea West" and the various other base metal prospects on its extensive tenement holdings in the Lawn Hill region. A number of large base metal explorers have expressed interest in this project.

VEHICLE ROUTE OPTIMISATION AND TRACKING SUBSIDIARY

SmartTrans Limited increased revenue by more than 220% and, whilst it still incurred a loss for the year, its business continues to expand and it has budgeted to produce a small profit for the year to 30 June 2005.

The company is continuing to build recurring income through the addition of major customers to those already using the company's route optimisation system.

The integration of vehicle tracking and voice and data messaging services with the existing route optimisation system is being well received by industry and is currently being implemented with significant businesses in Melbourne and Sydney with Australiawide rollouts scheduled through 2004 - 2005.

Details of these systems and the benefits they provide to our customers can be seen on the company's website www.smarttrans.com.air

Although the Directors are budgeting for the business to be profitable from and including the year ending 30 June 2005, on the basis of conservatism and prudence and in preparation for the introduction of the international financial reporting standards next financial year, the Directors have elected to:

• raise provisions against the holding company's i. investment in and loan to SmartTrans Ltd until the budgeted profit has been achieved and;
• Ħ. write of the good will.

My thanks go to our team of dedicated and loyal staff who have worked extremely hard during the year.

John Forsyth Chairman

30 September 2004

DIRECTORS' REPORT

Your Directors present their report on the economic entity consisting of SmartTrans Holdings Limited and the entity it controls at the end of and during the year ended 30 June 2004.

Directors

The Directors' names and qualifications during the financial year and up to the date of this report are:

John P C Forsyth James P Laurie B Sc, MAusIMM, FAICD Andrew D Forsyth Llb

John P C Forsyth - Chairman

Chairman of Directors of the Dymocks Group of Companies, SmartTrans Ltd, Tandragee Pty Limited, Coolgardie Units Pty Limited and Jamajon Pty Ltd.

James P Laurie - Director

Director and geologist with over twenty years in mining and exploration for gold and base metals. Also a director of SmartTrans Limited.

Andrew D Forsyth

Solicitor and a director of Dymocks Group of Companies, SmartTrans Limited, Tandragee Pty Limited, Coolgardie Units Pty Limited and Jamajon Pty Ltd.

Dividends

There were no dividends declared or paid during the course of the financial year and no dividend is recommended.

Principal Activities

The principal activities of the Company during the year were mineral exploration and an investment in a vehicle route optimisation and tracking company.

Operating Results

The consolidated operating loss of the economic entity amounted to \$1,922,036 (2003: \$1,361,944 loss).

Likely Developments and Results

The likely developments of the economic entity for subsequent years will depend upon exploration success at all or any of its projects and the success of the vehicle route optimisation and tracking business.

Environmental Regulation

The Company is committed to environmental care and aims to carry out its activities in an environmentally-responsible and scientifically-sound way. In performing exploration activities, some disturbance of the land in the creation of tracks, drill rig pads, sumps and the clearing of vegetation occurs. These

activities have been managed in a way that reduces environmental impact to a practical minimum. Rehabilitation of any land disturbance commences as soon as practicable after exploration activity in an area has been completed.

The Company has, as far as the Directors are aware, complied with all statutory requirements relating to its exploration activities.

Directors' and Executives' Emoluments

Directors' and Executives' emoluments are disclosed in Note 18.

Insurance of Officers

During the financial year, SmartTrans Holdings Ltd paid a premium of \$42,711 to insure all Directors and Officers of the economic entity for all liabilities and costs relating to any claim made against them arising out of their conduct whilst acting as a Director or Officer of the economic entity, other than conduct involving a wilful breach of duty in relation to the economic cntity.

Meetings of Directors

The following table sets out the number of meetings of the Company's Directors during the year ended 30 June 2004 and the number of meetings attended by each Director:

Number of meetings held: 5

Number of meetings attended by:

	No. of meetings	No. of
	Held whilst	Meetings
	Director	Attended
John P C Forsyth	5	5
James P Lauric	5	5
Andrew D Forsyth	5	5

Corporate Governance

In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of SmartTrans Holdings Limited support and have adhered to the principles of corporate governance. The Company's statement of corporate governance practice is included in this Annual Report.

Proceedings on Behalf of Company

No person has applied for leave of Court to bring proceedings on behalf of the Company or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

The Company was not a party to any such proceedings during the year.

$-2-$

DIRECTORS' REPORT (Cont.)

Directors' Interest in Shares

Director	Relevant interest in fully paid ordinary shares
	No. of Shares	Held by
John P C Forsyth	3.214	$J.P C$ Forsyth*
	25,912,571	Dymocks Pty Ltd**
	12,848,867	Tandragee Pty Ltd**
	9,442,098	Coolgardie Units Pty Ltd**
	15,573,736	Jamajon Pty Ltd**
	63,780,486

The relevant interest arises because of:

Beneficial owncrship

Control of shareholder within meaning of Corporations Act 2001 $+ +$

Andrew D Forsyth	4.407.132 12,848,867 9,442,098	A D Forsyth Tandragee Pty Ltd Coolgardie Units Pty Ltd*
	26,698,097

The relevant interest arises because of:

• Beneficial ownership $\frac{1}{2}$
• Control of shareholder within meaning of Corporations Act 2001 $\bullet$ $\bullet$

James P Laurie	42.857	JP Lauric*
The relevant interest arises because of beneficial ownership

Signed in accordance with a resolution of the Board of Directors.

Sames Creevil.

JP LAURIE Director Perth, Western Australia

Dated this 30th September 2004

900 S16.0N

RSM Bird Cameron Partners Chartered Accountants

8 St Georges Terrace Perth WA 6000 GPO Box R1253 Perth WA 6844 T+61892619100 F+61892619101 www.rsmi.com.au

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF SMARTTRANS HOLDINGS LIMITED

Scope

The financial report and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the financial statements and the directors' declaration for SmartTrans Holdings Limited (the Company) and the consolidated entity, for the year ended 30 June 2004. The consolidated entity comprises both the Company and the entities it controlled during that year.

The directors of the Company are responsible for preparing a financial report that gives a 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.

Audit Approach

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

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

'Liability is limited by the Accountants' Scheme pursuant to the NSW Professional Standards Act 1994*

Major Offices in: Perth, Sydney, Melbourne, Adelaide and Canberra ABN 36 965 185 036

$\overline{4}$

RSM Bird Cameron Partners is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms.

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

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

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

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

Independence

We are independent of the Company and have met the independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001. In addition to our audit of the financial report, we were engaged to undertake the services disclosed in the notes to the financial statements. The provision of these services has not impaired our independence.

Audit Opinion

In our opinion, the financial report of SmartTrans Holdings Limited is in accordance with:

• the Corporations Act 2001, including: $(a)$
• giving a true and fair view of the financial position of SmartTrans Holdings Limited $(i)$ and the consolidated entity at 30 June 2004 and of their performance for the year ended on that date; and
• complying with Accounting Standards in Australia and the Corporations Regulations $(i)$ $2001$ , and
• other mandatory financial reporting requirements in Australia. $(b)$

RSM Bird Cumeron Partner

RSM BIRD CAMERON PARTNERS Chartered Accountants

Eurleitt

Perth, WA

Dated: 30 September 2004

S C CUBITT Partner

DIRECTORS' DECLARATION

The directors of the company declare that:

• the financial statements and notes, as set out in pages 7 to 21, are in accordance with the Corporations Act 2001: $\mathbf{1}$ .
• comply with Accounting Standards and the Corporations Regulations 2001; and $\mathbf{a}$
• give a true and fair view of the financial position as at 30 June 2004 and of the performance for the year ended on that date of $\mathbf b$ . the company and economic entity;
• in the directors' opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they $\overline{2}$ become duc and payable.

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

Ames (auvie

JPLAURIE Director

Perth, Western Australia

Dated this 30th September 2004

STATEMENT OF FINANCIAL PERFORMANCE

For the year ended 30 June 2004

		Consolidated		Company
	NOTE	2004	2003	2004	2003
		\$	\$	\$.	5
Revenues from ordinary activities	$\mathbf{2}$	856,705	481,714	214,539	284,837
Borrowing costs expense		(417)	(1, 395)
Employee Benefits Expense		(851, 664)	(906, 125)	(235, 378)	(268.977)
Depreciation and Amortisation Expense	3	(202, 013)	(166, 663)	(8, 837)	(8, 457)
Management and Administration Services Expense	20(b)	(240,000)	(240,000)	(240,000)	(240.000)
Other expenses from ordinary activities		(775, 019)	(529, 475)	(302, 917)	(201.837)
Provisions	3			(3,838,165)
Goodwill written off	3	(709, 628)
Loss from ordinary activities before income tax expense		(1,922,036)	(1,361.944)	(4.410,758)	(434, 434)
Income tax expense	4
Net loss from ordinary activities after income tax expense	3	(1,922,036)	(1,361,944)	(4, 410, 758)	(434, 434)
Net loss attributable to outside equity interests
Net loss attributable to members of the parent entity	16	(1,922,036)	(1,361,944)	(4, 410, 758)	(434, 434)
Basic carnings per share (cents)	21	(1.01)	(0.71)
Diluted carnings per share (cents)	21	(1.01)	(0.71)

The accompanying notes form part of these financial statements

STATEMENT OF FINANCIAL POSITION

As at 30 June 2004

		Consolidated			Company
	NOTE	2004 \$	2003 \$	2004 \$	2003 ٩.
Current Assets
Cash assets	5.	1,096,405	2,286,956	1,084,009	2,290,331
Receivables	6	128,208	57,248	36,818	25,991
Other	7	1,714	8,051	755	680
Total Current Assets		1,226,327	2,352,255	1,121,582	2,317,002
Non-Current Assets
Receivables	$\ddot{\sigma}$	48,526	10,600	536,116	2,538,585
Other financial assets	8	36,379	36,379	36,381	1,331,546
Property, plant and equipment	9	679,323	773,356	197,731	197,321
Exploration, evaluation and development costs	10	4,508,970	4,501,052	4,508,970	4,501,052
Intangibles	11		754,128
Total Non-Current Assets		5,273,198	6,075,515	5,279,198	8,568,504
TOTAL ASSETS		6,499,525	8,427,770	6,400,780	10,885,506
Current Liabilities
Payables	12	292,765	298,521	132,534	209.026
Interest bearing liabilities	13	2,052	9,028
Provisions	$\overline{14}$	150,579	144,056	112,585	110,061
TOTAL LIABILITIES		445,396	451,605	245,119	319,087
NET ASSETS		6,054,129	7,976,165	6.155.661	10,566,419
Equity
Contributing equity	15	49,130,498	49,130,498	49,130,498	49,130,498
Accumulated losses	16	(43,076,369)	(41, 154, 333)	(42, 974, 837)	(38, 564, 079)
Parent entity interest		6,054,129	7,976,165	6,155,661	10,566,419
Outside equity interest	17
TOTAL EQUITY		6,054,129	7,976,165	6,155,661	10,566,419

The accompanying notes form part of these financial statements

$\cdot$

STATEMENT OF CASH FLOWS

For the year ended 30 June 2004

	Consolidated		Company
	NOTE	2004	2003	2004 \$	2003 S
		\$	\$
Cash Flows from Operating Activities
Receipts from customers		671,727	300,039	30,128	33,455
Payments to suppliers and employees		(1,804,136)	(1,613,105)	(700, 636)	(654, 885)
Exploration and evaluation expenditure		(337,406)	(488, 413)	(337, 406)	(488, 413)
Interest received		72,434	125,605	72,067	125,418
Interest and other costs of finance		(417)	(1,395)
Net cash used in Operating Activities	24	(1, 397, 798)	(1,677,269)	(935, 847)	(984, 425)
Cash Flows from Investing Activities
Payments for plant and equipment		(83, 620)	(12, 451)	(9,380)	(1,577)
Proceeds from sale of plant and equipment		15,408	3,378	15,208	3,378
Payments for software development		(18, 577)	(27,098)
Loans to controlled entities				(577, 303)	(708,982)
Net cash used in Investing Activities		(86, 789)	(36, 171)	(571, 475)	(707.181)
Cash Flows from Financing Activities
Proceeds from joint venture partner		301,000	500,000	301,000	500,000
Proceeds from Issue of Shares		12
Repayment of borrowings		(6,976)	(7,027)
Net cash provided by Financing Activities		294,036	492,973	301,000	500,000
Net decrease in cash held		(1, 190, 551)	(1, 220, 467)	(1, 206, 322)	(1, 191, 606)
Cash at the beginning of the financial year		2,286,956	3,507,423	2,290,331	3,481,937
Cash at the end of the financial year	5	1,096,405	2,286,956	1,084,009	2,290,331

The accompanying notes form part of these financial statements

For the year ended 30 June 2004

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

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

The financial report covers the economic entity of SmartTrans Holdings Limited and controlled entities and SmartTrans Holdings Limited as an individual parent entity. SmartTrans Holdings Limited is a listed public company, incorporated and domiciled in Australia.

The financial report has been prepared on an accruals basis and is based on historical costs and does not take into account changing money values or, except where stated, current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets.

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

(a) Principles of consolidation

The consolidated financial report incorporates the assets and liabilities of all entities controlled by SmartTrans Holdings Ltd as at 30 June 2004 and the results of its controlled entities for the year then ended. Control exists where SmartTrans Holdings Ltd has the capacity to dominate the decision making in relation to the financial and operating policies of another entity so that the other entity operates with SmartTrans Holdings Ltd to achieve the objectives of SmartTrans Holdings Ltd.

SmartTrans Holdings Ltd and its controlled entities together are referred to in this financial report as the economic entity. The effects of all inter-company balances and transactions between entities in the economic entity including any unrealised profits or losses have been eliminated in full.

Where controlled entities have entered or left the economic entity during the year, their operating results have been included from the date control was obtained or until the date control ceased. Outside interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial report.

Outside interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial report.

(b) Income tax

The economic entity adopts the liability method of tax effect accounting, whereby the income tax expense shown in Statement of Financial Performance is based on the operating profit before tax adjusted for any permanent differences.

Timing differences which arise due to the different accounting periods in which items of revenue and expense are included in the determination of accounting profit and taxable income are brought to account as either a provision for deferred income tax or as a future income tax benefit at the rate of income tax applicable to the period in which the benefit will be received or the liability will become payable.

Future income tax benefits relating to tax losses is not carried forward unless the benefit is virtually certain of realisation. Income tax on cumulative timing differences are set aside to the deferred income tax or the future income tax accounts at the rates which are expected to apply when those timing differences reverse.

(c) Recoverable amount of non-current assets

The carrying values of non current assets are recorded at their recoverable amounts, which are determined by reference to the present value of future net cash flows expected to be generated by those assets.

The present value of future net cash flows expected to be generated by the parent entity's investment in SmartTrans Ltd cannot be assessed with certainty as it is dependent upon a continuation of the successful development and commercialisation of the route optimisation system technology. Although the Directors are budgeting for the business to be profitable from and including the year ending 30 June 2005, on the basis of conservatism and prudence and in preparation for the introduction of the international financial reporting standards next financial year, the Directors have elected to:

• i. raise provisions against the parent entity's investment in and loan to SmartTrans Ltd until the budgeted profit has been achieved and;
• ii. write off the good will.

For the year ended 30 June 2004

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(d) Property, plant and equipment

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

Depreciable non-current assets, other than freehold land, are depreciated over their expected useful lives to the economic entity, using the straight line method. Estimates of remaining useful lives are made on a regular basis for all assets, with annual reassessments for major items.

The expected useful lives are as follows:

40 years Buildings: 5 to 15 years Plant and equipment :

(e) Exploration, evaluation and development expenditure

Exploration, evaluation and development expenditure is accumulated in respect of each identifiable area of interest. The expenditure relating to an area of interest is carried forward provided the rights to tenure of the area of interest are current, and provided further that either:-

• it is expected that the expenditure will be recovered through successful development and exploitation of the area of interest, or $\left( i \right)$ alternatively by its sale, or
• (ii) exploration and/or evaluation activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in, or in relation to, the area are continuing.

Accumulated expenditure in relation to an abandoned area is written off in full against profit in the year in which the decision to abandon the area is made.

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

(f) Joint ventures

The proportionate interests in the assets, liabilities and expenses of joint venture operation have been incorporated in the financial statements under the appropriate headings.

(g) Intangibles

Goodwill and goodwill on consolidation are initially recorded at the amount by which the purchase price for a business or for a ownership interest in a controlled entity exceeds the fair value attributed to its nct assets at date of acquisition. Both purchase goodwill and goodwill on consolidation are amortised on a straight line basis over the period of 20 years. The balances are reviewed annually and any balance representing future benefits for which the realisation is considered to be no longer probable are written off.

(h) Employee benefits

Provision is made for the Company's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits expected to be settled within one year together with benefits arising from wages and salarics, annual leave and sick leave which will be settled after one year, have been measured at their nominal amount. Other employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

Contributions are made by the economic entity to employee superannuation funds and are charged as expenses when incurred.

(i) Earnings per share

Basic earnings per share is determined by dividing the operating loss after income tax attributable to members of SmartTrans Holdings Limited by the weighted average number of ordinary shares outstanding during the financial year.

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share by taking into account amounts unpaid on ordinary shares.

(j) Web site costs

Costs in relation to web sites controlled by a controlled entity are charged as expenses in the period in which they are incurred unless they relate to the acquisition of an asset, in which case they are capitalised and amortised over their period of expected benefit. Generally, costs in relation to feasibility studies during the planning phase of a web site, and ongoing cost of maintenance during the operating phase are considered to be expenses. Costs incurred in building or enhancing a web site, to the extent that they represent probable future economic benefits controlled by the controlled entity that can be reliably measured, are capitalised as an asset and amortised over the period of the expected benefits which vary from 2 to 5 years.

For the year ended 30 June 2004 (Cont.)

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(k) Cash

For the purpose of the statement of cash flows, eash includes deposits at call with banks or financial institutions which are readily convertible to cash on hand and are subject to an insignificant risk of changes in value, net of outstanding bank overdrafts.

(I) Comparative figures

Where required by Accounting Standards comparative figures have been adjusted to conform with changes in presentation for the current financial year.

(m) Revenue recognition

Revenue from the sale of goods is recognised upon the delivery of goods to customers. Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Dividend revenue is recognised when the right to receive a dividend has been established. Dividends received from associate and joint venture entities are accounted for in accordance with the equity method of accounting. All revenue is stated net of the amount of goods and services tax (GST).

(n) Goods and services tax

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

(o) Adoption of Australian Equivalent to International Financial Reporting Standards

Australia is currently preparing for the introduction of International Financial Reporting Standards (IFRS) effective for financial years commencing 1 January 2005. This requires the production of accounting data for future comparative purposes at the beginning of the next financial year.

The economic entity's management, along with its auditors, are assessing the significance of these changes and preparing for their implementation. We will seek to keep stakeholders informed as to the impact of these new standards as they are finalised

		Consolidated	Company
	2004 s	2003	2004 \$	2003 \$
NOTE 2 : REVENUE
Operating activities Consulting fees Maintenance contracts	294,601 106,066	245,829 16,678	97,136	122.586
Installations Access fees	213,735 123,466	56,770
	737,868	319,276	97,136	122,586
Non-operating activities Proceeds from sale of plant and equipment Interest received	15,408 72,434 30,995	3,378 125,605 33,455	15,208 72,067 30,128	3,378 125,418 33,455
Other revenue	118,837 856,705	162,438 481,714	117,403 214,539	162,251 284,837

For the year ended 30 June 2004 (Cont.)

		Consolidated	Company
	2004 \$	2003 \$	2004 \$	2003 S
NOTE 3 : OPERATING LOSS
The loss from ordinary activities has been determined after charging the following items.
Revenue Profit on disposal of plant and equipment	15,076	3,378	15,076	3,378
Expense	417	1,395
Borrowing Cost
Depreciation	4,000	4,000	4,000	4,000
- building	80,833	39,396	4,837	4,457
- plant and equipment	6,976	7,027		$\overline{\phantom{a}}$
- leased plant and equipment - Route optimisation system and website development	65,704	71.740	٠	$\qquad \qquad -$
	157,513	122,163	8,837	3,457
	44.500	44,500
Amortisation of goodwill Bad or doubtful debts	00.010
Loss on disposal of plant and equipment	4 4 6 2	134
Provision for diminution in value of investment in controlled
entity - Note 1 (c)			1,295,165
Provision for non recovery of loan to controlled entity - Note 1 (c)			2,543,000
Recoverable amount write down of goodwill on consolidation - Note $1(g)$	709,628
NOTE 4 : INCOME TAX No income tax is payable by the Company or economic entity as they incurred losses for income tax purposes for the year. The Company and economic entity also has available for recoupment, income tax and capital losses at balance date.
(a) Reconciliation
The prima facic income tax benefit on the loss from ordinary activities
is reconciled as follows:	1,922,036	1,361,944	4.410.758	434,434
Loss from ordinary activities before income tax	(576, 611)	(408, 583)	(1,323,227)	(130, 330)
Income tax benefit at 30%
Less tax effect of permanent differences Expenditure and amortisation not deductible	226.238	19,037	1,171,631	45
Tax effect of timing differences not brought to account as future
income tax benefits	350,373	389,546	151,596	130,285
Income tax expense
(b) Future income tax benefits
The Directors estimate that the potential future income tax benefits at 30 June 2004 at 30% not brought to account is in
respect of:				5,335,209
Tax losses	6,607,943 1,103,789	6,343,598 1,103,789	5,483,010 1,103,789	1,103,789
Capital losses

The above benefits will only be obtained if:

The Company and economic entity derive future assessable income of a nature and of an amount sufficient to enable the $(i)$ benefits to be realised;

the Company and economic entity continue to comply with the conditions for deductibility imposed by tax legislation and $\rm (ii)$

no changes in tax legislation adversely affect the Company and economic entity in realising the benefits. $(iii)$

For the year ended 30 June 2004 (Cont.)

		Consolidated		Company
		2004	2003	2004	2003
		s	\$	s.	5
NOTE 5: CASH ASSETS
Cash on hand		1,374	1.600	1,000	1,600 24,856
Cash at bank		49,628	21,481	37,606	2,263,875
Deposits at call		1,045,403	2,263,875	1,045,403 1,084,009	2,290,331
		1,096,405	2,286,956
NOTE 6: RECEIVABLES
Current			21,144
Trade debtors		143,394 (66, 644)		$\equiv$
Provision for doubtful debts		76,750	21.144	$\overline{a}$
		51,458	36.104	36,818	25,991
Sundry debtors		128,208	57,248	36,818	25,991
Non Current				3,038,016	2,527,985
Amounts owing by controlled entities (Refer Note 8)			$\omega$	(2,543,000)
Provision for non recovery			$\overline{a}$	495.016	2,527,985
		48,526	10,600	41,100	10,600
Performance bonds		48,526	10,600	536.116	2,538,585
NOTE 7: OTHER ASSETS
Prepayments		1,714	8,051	755	680
NOTE 8: OTHER FINANCIAL ASSETS
Shares in controlled entities - cost				1,295,167	1,295,167
Provision for diminution in value			L.	(1,295,165)
		ä, 36,379	36,379	2 36,379	1,295,167 36,379
Specimen gold		36,379	36.379	36,381	1,331,546
Investment in Controlled Entities:			Equity Holding		Parent Entity
	Place of Incorporation				Investment
		2004	2003	2004	2003
Parent Entity	Australia			Z.	\$
SmartTrans Holdings Limited Controlled Entities
SmartTrans Limited	Australia	95%	100%	$\blacksquare$	1.295.165
E-Trans Pty Ltd	Australia	100%	100%	2 $\overline{2}$	1.295,167

For the year ended 30 June 2004 (Cont.)

	Consolidated		Company
	2004 \$	2003 \$	2004 \$	2003 s
NOTE 9 : PROPERTY, PLANT AND EQUIPMENT
Land and buildings Cost Accumulated depreciation	172,000 (32,000) 140,000	172,000 (28,000) 144,000	172,000 (32.000) 140,000	172,000 (28,000) 144,000
Plant and equipment Cost Accumulated depreciation	485,945 (334, 242) 151,703	416,231 (262, 520) 153,711	235,181 (177, 450) 57,731	227.351 (174.030) 53.321
Leased plant and equipment Capitalised leased assets Accumulated amortisation	16,055 (14,003) 2,052	16,055 (7,027) 9,028	-
Route Optimisation System development (refer Note 8) Cost Accumulated Amortisation	551,148 (165, 580) 385,568	532,571 (133, 740) 398,831	$\qquad \qquad \blacksquare$
Website development costs (refer Note 8)		67,786	٠
Total property, plant and equipment	679.323	773, 56	197,731	197,321

The basis of recovery of the carrying value of the route optimisation system and website development costs, is disclosed in Notes 1 (c).

			Consolidated
	Land and Buildings	Plant and Equipment	Leased Plant And Equipment	Route Optimisation System	Website Development	Total
	s	Ś.	T
Balance at the beginning of the year	144.000	153.711	9,028	398,831	67,786	773_356
Additions		83.620	۰	18,577		102,197
Disposals	$\blacksquare$	(4.795)	$\overline{\phantom{0}}$		(33,922)	(38, 717)
Depreciation and amortisation	(4,000)	(80.833)	(6, 976)	(31, 840)	(33,864)	(157, 513)
Carrying amount at end of year	140.000	151.703	2,052	385,568		679 323
			Company

	Land and Buildings	Plant and Equipment	Leased Plant And Equipment	Route Optimisation System	Website Development	Total
		S
	144.000	53,321				197.321
Balance at the beginning of the year Additions		9.380				9,380
		(133)				(133)
Disposals Depreciation and amortisation	(4,000)	(4.837)				(8.837)
	140,000	57.731				197,731
Carrying amount at end of year

NOTE 10 : EXPLORATION, EVALUATION AND DEVELOPMENT COSTS

.	Consolidated		Company
	2004	2003 s	2004 ж	2003
Exploration properties - at cost	4,508,970	4,501,052	4,508,970	4.501.052
Balance at beginning of financial year Expenditure incurred during the year Expenditure written off during the year	4,501,052 64.785 (56.867)	4.466.103 67.096 (32.147)	4.501.052 64.785 (56.867)	4.466,103 67,096 (32, 147) 4,501,052
Balance at end of financial year	4,508,970	4.501.052	4,508,970

The ultimate recoupment of exploration and evaluation expenditure carried forward is dependent on the successful development and commercial exploitation, or alternatively, the sale of the respective areas.

$-15 -$

For the year ended 30 June 2004 (Cont.)

	Consolidated		Company
	2004	2003	2004	2003
	S.	£	\$	s
NOTE 11: INTANGIBLE ASSETS
	890.086	890,086
At cost	(180.458)	(135,958)
Accumulated amortisation Write down to recoverable amount	(709.628)			$\blacksquare$
		754,128	٠
NOTE 12: PAYABLES
	180,709	117.708	20,478	28,213
Trade creditors and accruals	112.056	180,813	112,056	180,813
Advance from joint venture	292,765	298.521	132, 534	209,026
NOTE 13: INTEREST BEARING LIABILITIES
	2.052	9,028
Lease liability
NOTE 14: PROVISIONS
Employee entitlements	150,579	144.056	112,585	110,061
Number of employees at year end	11	10	3	3.
NOTE 15: CONTRIBUTED EQUITY
190,957,302 (2003: 190,957,302) fully paid ordinary shares	49.130.498	49,130,498	49,130,498	49.130,498
NOTE 16: ACCUMULATED LOSSES
Accumulated losses at the beginning of financial year	41,154,333	39,792,389	38,564,079	38,129,645
Net loss attributable to parent entity	1,922,036	1,361,944	4,410,758	434.434
Accumulated losses at the end of financial year	43,076,369	41,154,333	42,974,837	38,564.079
NOTE 17: OUTSIDE EQUITY INTERESTS IN CONTROLLED ENTITY
Outside equity interest comprises:
Share capital	50,501
Accumulated losses	(.50.501)	$\blacksquare$ $\overline{a}$

NOTE 18 : REMUNERATION OF DIRECTORS AND EXECUTIVES

(a) Names and positions held of Parent Entity Directors and Specified Executives in office at any time during the financial year are:

Parent Entity Directors

John P. C. Forsyth	Chairman - Non-Executive
James P. Laurie	$Director - Exercise 1$
Andrew D. Forsyth	Director - Non-Executive

Specified Executives

Bryan E. Carr

Chief Operating Officer

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the year ended 30 June 2004 (Cont.)

NOTE 18: REMUNERATION OF DIRECTORS AND EXECUTIVES (Cont.)

	(b) Parent Entity Directors' Remuneration	Primary					Total
	Salary, Focs & Commissions		Superannuation Contribution		Other – Note $20(b)$
	2004	2003	2004	2003	2004	2003	2004	2003
J. Forsyth		-			240,000	240,000	240,000	240,000
J. Lautie	136,881	184.240	10,519	13.160	$\blacksquare$	$\Delta$	197.400	197,400
A. Forsyth	18,350	20,000	1.650	٠			20,000	20,000
Total	205,231	204.240	12.169	13.160	240.000	240.000	457,400	457,400

(c) Specified Executives' Remuneration

		Primary			10tar
	Salary & Fees		Superannuation Contribution
	2004	2003	2004	2003	2004	2003
$B.$ Carr	145,000	131,180	13,050	11.806	158,050	142.986
Total	145,000	131.180	13,050	11.806	158,050	142,986

(d) Shareholdings

Number of Shares held by Parent Entity Directors and Specified Executives

	Balance	Received as			Balance
	1 July 2003	Remuneration	Options Exercised	Net Change Other	30 June 2004
Parent Entity Directors
J Forsyth	63,780,486	$\qquad \qquad \blacksquare$	$\blacksquare$	$\bullet$	63,780,486
J. Laurie	42,857	$\blacksquare$	$\overline{\phantom{a}}$	$\overline{\phantom{0}}$	42,857
A. Forsyth	26,698,097	$\blacksquare$	٠	-	26.698,097
Specified Executives
B. Carr	200.000	$\blacksquare$	٠		200,000
Total	90.721.440	٠	$\blacksquare$	×	90,721,440

(c) Remuneration Practices

The company's policy for determining the nature and amount of emoluments of board members and senior executives of the company is as follows:

The remuneration structure for executive officer, including the executive director, is based on a number of factors, including length of service, particular experience of the individual concerned, and overall performance of the company. The contracts for service between the company and specified directors and executives are on a continuing basis the terms of which are not expected to change in the immediate future. Upon retirement specified directors and executives are paid employee benefit entitlements accrued to date of retirement. Specified executive directors and specified executives are paid a percentage of their salary (determined by the Board) in the event of redundancy.

For the year ended 30 June 2004 (Cont.)

	Consolidated		Company
	2004	2003 1	2004	2003 5
NOTE 19: REMUNERATION OF AUDITORS
Remuneration of the auditor of the parent entity for: Auditing or reviewing the financial statements Other Services	11.500 13.142	15,075 10,583	8,000 7, 355	7.900 9,125
	24 642	25,658	15,355	17,025

NOTE 20: RELATED PARTY INFORMATION

(a) Names of Directors

The names of persons who were Directors of SmartTrans Holdings Limited at any time during the financial year are as follows:

• John PC Forsyth $\blacksquare$
• Andrew D Forsyth
• James P Laurie

(b) Transactions of Directors and Director-Related Entities

Transactions with Directors during the year, that were made on normal commercial terms and conditions, were as follows:

• Dymocks Pty Ltd, a company of which Messis JPC Forsyth and AD Forsyth are Directors, provided management, office accommodation and administrative services to the Company totalling \$240,000 (2003: \$240,000).
• Deacons, a firm of solicitors of which Mr AD Forsyth was, until 30 June 2004, a partner, provided legal services to the Company and its ٠ controlled entity and was paid \$19,227 (2003: \$12,124).

(c) Directors' Shareholdings

Directors and director related entities held directly, indirectly or beneficially at balance date, the following equity interests in the Company.	Number of Sharcs
	2004	2005
Chairman chungo	61.757.946	61.757.946

Ordinary shares

d) Economic entity

The economic entity consists of SmartTrans Holdings Limited and its subsidiaries as disclosed in Note 8. Transactions between the parent entities and other entities in the group consisted of the loans advanced as disclosed in Note 6. Additionally, the parent has provided a letter to a controlled entity, undertaking to give or arrange any financial assistance which the controlled entity may need to ensure that it is solvent at the date upon which it incurs a debt within the meaning of section 588G of the Corporations Act 2001. Such financial assistance is not quantifiable at balance date, as it is dependent upon the trading performance of the controlled entity in the succeeding financial year.

	Consolidated
NOTE 21: EARNINGS PER SHARE Basic earnings per share - loss	2004 Cents (1.01)	2003 Cents (0.71)
		Number of Shares
Weighted average number of ordinary shares outstanding during the year used in the calculation of basic carnings per share.	190.957,302	190,957,302
Weighted average number of ordinary shares outstanding during the year used in the calculation of diluted earning per share	190,957,302	190,957,302

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the year ended 30 June 2004 (Cont.)

NOTE 22 : SEGMENT INFORMATION

$\left( a\right)$

(a) Industry Segments	Exploration		Transport			Consolidated
	2004	2003	2004	2003	2004	2003
	5	\$	\$	S	2	\$
REVENUE
External sales	214,539	284,837	642,166	196,877	856,705	481.714
RESULT						(1, 361, 944)
Segment result	(572, 593)	(434, 434)	(639, 815)	(927,510)	(1.212,408)
Unallocated expense					(709, 628)
					(1.922, 036)	(1,361.944)
ASSETS
Segment assets	5.905,762	7,130,140	593,763	1.297,630	6,499.525	8,427,770
LIABILITIES
Segment liabilities	245,119	319,087	200,277	132,518	445,396	451.605
OTHER
Acquisition of plant and equipment	9,380	1,577	92,817	37,976	102,197	39,553
Depreciation and amortisation	8,837	8.457	193,176	158,206	202.013	166.663
Non-cash expenses other than depreciation and amortisation	56,867	32.147	67,272		124,139	32.147

(b) The economic entity derived income from the following activities

Exploration

Exploration for gold and base metals in Australia. $\bullet$

Transport Logistics

Development and operation of logistics systems for use in the transport industry to optimise efficiency of consignment systems and to track vehicles.

(c) Intersegment Transactions

There are no intersegment transactions.

NOTE 23 : COMMITMENTS

(a) Capital Expenditure

There are no capital expenditure commitments at balance date.

(b) Exploration Work

The Company has certain obligations to perform minimum exploration work and expend minimum amounts of money on its mining tenements and its share of joint venture contractual commitments. The obligations are expected to amount to \$230,200 in the year ended 30 June 2005 (2004: \$668,400) and be fulfilled in the normal course of operations of the Company. The estimated expenditure may be varied as a result of expenditure by joint venturers or exemptions to be requested.

		Consolidated		Company
	2004	2003	2004	2003
(e) Finance Lease Commitments
Payable Not later than one year	2.062	9.102
Later than one year but not later than five years
Minimum lease payments	2,062	9,102
Less future finance charges	(10)	(74)	$\overline{\phantom{a}}$
Total lease liability	2.052	9.028

For the year ended 30 June 2004 (Cont.)

NOTE 24: NOTES TO THE STATEMENT OF CASH FLOWS

Reconciliation of not cash used in operating activities to net loss from ordii

nary activities Net loss from ordinary activities after income tax	(1,922,036)	(1.361.944)	(4.410,758)	(434, 434)
Non-cash flows in loss from ordinary activities
Exploration and evaluation expenditure	(434.542)	(610, 999)	(434, 542)	(610,999)
Depreciation	91,809	50.423	8,837	8,457
Write-down of Intercompany Loan	33.922		67.272
Amortisation	110,204	116,240
Exploration expenditure written off	56,867	32,147	56.867	32,147
Gain on disposal of plant and equipment	(15,076)	(3,378)	(15,076)	(3,378)
Loss on disposal of plant and cquipment	4,462	134		134
Provisions for diminution in value and non recovery			3,838,165
Goodwill written off	709,628	$\mathbf{r}$		٠
Change in net assets and liabilities:
Increase/(decrease) in receivables	(27,094)	82,814	(36, 277)	12,920
(Increase)/decrease in other assets	6,337	(3.243)	(75)	(3,243)
(Increase)/decrease in payables	(5,756)	(1.018)	(7, 735)	(4,206)
(Increase)/decrease in provisions	(6, 523)	21,555	(2, 525)	18.177
Net Cash used in Operating Activities	(1,397,798)	(1,677.269)	(935,847)	(984, 425)

NOTE 25 : JOINT VENTURES

The Company is a participant in the South Connors Arch Project with Marlborough Resources NL where it has earned a 60% interest in various tenements. No assets are employed by the joint venture. Expenditure incurred by the Company in respect of this joint venture is included in deferred exploration expenditure. (Note 10). Midas Resources Limited (Midas) has earned 51% equity in five tenements and SmartTrans has diluted to 29.4% equity. Jeteld Pty Ltd (Jeteld) can earn 47% equity in two tenements at Mount Mackenzie for expenditure of \$2,500,000 by 1^x August 2005. Jeteld had contributed \$805,000 by 30^th June 2004. SmartTrans Holdings Ltd is the operator and manager of this Joint Venture.

A new joint venture partner is being sought for the Riversicigh project.

NOTE 26 : FINANCIAL INSTRUMENTS

Interest Rate Risk $(a)$

The economic entity's exposure to interest rate risk, which is the risk that a financial instrument will fluctuate as a result of changes in market interest rates and effective average interest rates on those financial assets and liabilities, is set out below:

í ï

	Fixed interest maturing in:
	Floating interest rate \$	I year or less. \$	1 to 5 years \$	Non- interest bearing s	Total \$
Financial assets Cash	1,095,031	×.		1,374 176.734	1.096.405 176,734
Receivables	1,095,031			178,108	1,273,139
Weighted average interest rate	4.75%
Financial liabilities Payables Interest bearing habilities		(2,0.52)	÷	(292,765)	(292, 765) (2,052)
		(2,052)		(292,765)	(294.817)
Weighted average interest rate		10.81%
Net financial assets	1.095.031	(2,052)		(114, 657)	978.322

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the year ended 30 June 2004 (Cont.)

NOTE 26: FINANCIAL INSTRUMENTS (Cont.)

2003			Fixed interest maturing In:
	Floating interest rate	1 year or less	1 to 5 VPAT5	Non- Interest bearing	Total
	\$	S	s	٨	\$
Financial assets Cash Receivables	2,285,356			1.600 61.785	2,286,956 61 785
	2,285,356			61,785	2,348.741
Weighted average interest rate	4.56%
Financial liabilities Payables Interest bearing liabilities		٠ (9,028)	A.	(109,376)	(109.376) (9.028)
		(9.028)		(109,376)	(118,404)
Weighted average interest rate		10.81%
Net financial assets	2,286,956	(9,028)		(47.591)	2,230,337

Credit Risk $(b)$

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

(c) Net Fair Value of Financial Assets and Liabilities

The net fair value of financial assets and liabilities of the economic entity approximates their carrying amount.

The economic entity has no financial assets and liabilities where the carrying amount exceeds the net fair values at balance date.

No financial assets and financial liabilities are readily traded on organised markets in standardised form,

The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the Statement of Financial Position and in the notes to the financial statements.

NOTE 27: COMPANY DETAILS

The registered office of the company is:

SmartTrans Holdings Limited Suite 3, First Floor 614 Newcastle Street Leederville WA 6007

The principal places of business are:

SmartTrans Holdings Limited Suite 3, First Floor 614 Newcastic Street Leederville WA 6007

SmartTrans Limited Suite 4, Level 7 11 Oucens Road Melbourne VIC 3004

CORPORATE GOVERNANCE

The Company is committed to implementing the highest practical standards of corporate governance. The Company is pleased to advise that its practices are largely consistent with the ASX Corporate Governance Council's Principles of Good Corporate Governance and Best Practice Recommendations.

Where the Company's corporate governance practices differ from the practices recommended by the Council, the Company will explain its position bearing in mind that not all the practices are appropriate due to the size of the Company.

Board of Directors 1.

Role of the Board $1.1$

The Board's role is to govern the Company rather than to manage it. In governing the Company, the Directors must act in the best interests of the Company as a whole. It is the role of senior management to manage the Company in accordance with the direction and delegations of the Board.

$L₂$ Composition of the Board

The Board does not comply with practices recommended as it Directors are does not have any independent Directors. appointed based on the specific skills required by the Company and on the independence of their decision-making and judgment.

The current Board comprising two Non Executive Directors and one Executive Director is appropriate for the size of the сотрапу.

This issue will be kept under review and one or more independent Directors will be appointed if and when it is appropriate to do so.

$13$ Responsibilities of the Board

Without intending to limit the role of the Board, the principal functions and responsibilities of the Board include the following.

• overseeing the Leadership of the Organisation: $1.3.1$ Company and establishing codes that reflect the values of the Company and guide the conduct of the Board, management and employees.
• Strategy Formulation: working with senior management $1.3.2$ to set and review the overall strategy and goals for the Company and ensuring that there are policies in place to govern the operation of the Company.
• ensuring effective $1.3.3$ Shareholder Liaison: shareholders through an communications with appropriate communications policy and promoting participation at general meetings of the Company.
• Company Finances: approving and monitoring $1.3.4$ acquisitions, divestitures and financial and other reporting.
• Delegation of Authority: delegating appropriate powers $1, 3.5$ to senior management to ensure the effective day-to-day management of the Company.

Board Policies $1.4$

1.4.1 Conflicts of Interest

Directors must disclose to the Board actual or potential conflicts of interest that may or might reasonably be thought to exist between the interests of the Director and the interests of any other parties in carrying out the activities of the Company;

1.4.2 Related Party Transactions

Related party transactions include any financial transaction between a Director and the Company and, if any, will be reported in writing to each Board meeting.

1.4.3 Trading in Company Shares

The Company has a Share Trading Policy under which Directors and certain employees and their associates are prohibited from trading in the Company's securities during the 4 weeks preceding:

• the release by the Company of its half-yearly results to the ASX; and
• the release by the Company of its annual results to the ASX.

In addition, consistent with the law, designated officers are prohibited from trading in the Company's securities while in the possession of unpublished price sensitive information concerning theCompany.

2. Board Committees

Audit Committee $2.1$

As the whole Board only consists of only three members, and due to the size of the Company, it does not have a separate audit committee.

$2.2$ Remuneration Committee

As the whole Board only consists of only three members, and due to the size of the Company, it does not have a separate remuncration committee.

2.2.1 Non-Executive Director Remuneration Policy

Non-Executive Directors are paid their fees out of the maximum aggregate amount (currently \$80,000) approved by shareholders Nonfor the remuneration of Non-Executive Directors. Executive Directors do not receive performance based bonuses and do not participate in equity schemes of the Company other than rights issues of securities and underwriting of the issue of securities.

The remuneration payable to the non-executive Directors has remained constant since 2^ad November 1990.

Nomination Committee $2.3$

As the whole Board only consists of only three members, and due to the size of the Company, it does not have a separate nomination committee.

Company Code Of Conduct $3.$

As part of its commitment to recognising the legitimate interests of stakeholders, the Company has established a Code of Conduct to guide compliance with legal and other obligations to legitimate stakeholders. These stakeholders include employees, clients, customers, government authorities, creditors and the community as whole. This Code includes:

Responsibilities to Shareholders and the Financial Community Generally

The Company has processes in place designed to ensure the truthful and factual presentation of the Company's financial position.

Responsibilities to Clients, Customers and Consumers

Each employee has an obligation to use their best efforts to deal in a fair and responsible manner with each of the Company's clients, customers and consumers.

Employment Practices

The Company endeavours to provide a safe workplace in which there is equal opportunity for all employees at all levels of the Company. The Company does not tolerate the offering or acceptance of bribes or the misusc of Company assets or resources.

Obligations Relative to Fair Trading and Dealing

The Company aims to conduct its business fairly and to compete ethically and in accordance with relevant competition laws.

Conflicts of Interest

Employees and Directors must avoid conflicts as well as the appearance of conflicts between personal interests and the interests of the Company.

SHAREHOLDER INFORMATION

The following details are according to the Share Registry's records as at 31st July 2004.

Substantial Shareholders $(a)$

The Company's register of substantial shareholders, prepared in accordance with the Corporations Law, recorded the information summarised below:

Substantial Shareholder	ACN	No. of Shares
Tandragee Pty Ltd Coolgardic Units Pty Ltd Jamajon Pty Ltd (includes subsidiaries) $MI$ J P C Forsyth Mr A D Forsyth and the following companies of	008 776 949 050 049 191 008 502 770	67,034,002 67.034,002 66,674,641 63.074.641
which he is a Director Cotway Investments Pty Ltd Dileen Pry Ltd Gardner Denver (Aust) Pty Ltd Nothing But the Best Pty Ltd Willeroon Pty Ltd	008 429 528 008 488 208 000 147 875 053 693 280 008 507 604	25.992.253 25,992,253 25,992,253 25,992,253 25.992.253

Twenty Largest Shareholders $(b)$

The names of the twenty largest shareholders of fully paid shares in the Company are:

		No. of Ordinary Fully Paid Shares Held	Percentage Held Issued Ordinary Capital
		25,912,571	13.57%
1	Dymocks Pty Ltd	15,573,736	8.16%
2	Jamajon Pty Ltd
3	Tandragee Pty Ltd	12,848,867	6.73%
4	Coolgardie Units Pty Ltd	9,442,098	4.94%
5	ANZ Nominees Limited	6.864,278	3.59%
6.	A D Forsyth	4407,132	2.31%
7	Loxden Pty Ltd	3,000,000	1.57%
8	Templevale Pty Ltd	2,750,000	1.44%
9	Lawrence Crowe Consulting Pty Ltd	2,300,000	1.20%
10	Nefco Nominees Pty Ltd	2,286,794	1.20%
11	Isatsan Pty Ltd	1,972,176	1.03%
12	National Nominees Limited	1,841,887	0.96%
13	Carew Corporation	1,685,282	0.88%
14	Rokadia Pty Limited	1,250,257	0.65%
15	Kanaslex Pty Ltd	1,209,500	0.63%
16	Equitas Nominees Pty Ltd	1,136,017	0.59%
17	Westpac Custodian Nominees Ltd	1,133,729	0.59%
$1\,$ $!$	Mr David Edward Brown	1,110,000	0.58%
19	Citicorp Nominees Pty Ltd	1,103,571	0.58%
20	Ms Jillian Elizabeth Ross	1,050,000	0.55%
		99,032,997	51.86%

SHAREHOLDER INFORMATION (Cont.)

Distribution of Shareholders $(c)$

Ordinary Shareholders $\omega$

(Ordinary shares paid to 30 cents)

	Spread of Holding	Holders	$\frac{1}{2}$	Shares Held
	1 - 1 000 $1,001 - 5,000$ 5.001 - 10.000 10,001 - 100,000 100.001 and over	263 715 552 1.050 184 2.764	0.09 1.13 2.36 19.61 76.82 100.00	162.903 2.148,577 4,509,103 37.445.445 146,691.274 190.957.302
(i)	Shareholders of less than a marketable parcel	2.209 2,209	10.63 10.63	20,299,412 20,299,412

SUMMARY OF MINING TENEMENTS

Project	Tenements	Group Interest	Joint Venture Partners
Base Metals Project	EPM10199	100%
	EPM11130	100%
	EPM 7797	100%
Marlborough Joint Venture	EPM9442	60%	Marlborough Resources NL
	EPM9777	60%	Marlborough Resources NL
	EPM10006	60%	Marlborough Resources NL & Jeteld Pty Ltd
	EPM10131	29.4%	Marlborough Resources NL & MIDAS
	EPM10132	60%	Marlborough Resources NL
	EPM10133	29.4%	Marlborough Resources NL & MIDAS
	EPM11134	29.4%	Marlborough Resources NL & MIDAS
	EPM11726	60%	Mariborough Resources NL
	EPM11727	60%	Marlborough Resources NL
	EPM12353	60%	Marlborough Resources NL
	EPM12355	29.4%	Marlborough Resources NL & MIDAS
	EPM12361	29.4%	Marlborough Resources NL & MIDAS
	EPM 12546	60%	Marlborough Resources NL & Jeteld Pty Ltd

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