PACIFIC RESOURCES LIMITED — Interim / Quarterly Report 2004

Oct 25, 2004

Appendix 5B

Rule 5.3

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.

Name of entity

LODESTONE EXPLORATION LIMITED

ABN

20 075 877 075

Quarter ended ("current quarter")

30 SEPTEMBER 2004

Year to date

$\left($ 3 months)

Current quarter

$\frac{1}{2}$ $A*000

Consolidated statement of cash flows

Cash flows related to operating activities

			$A'000
1.1	Receipts from product sales and related debtors	16	16
1.2	Payments for (a) exploration and evaluation	(94)	(94)
	(b) development
	(c) production
	(d) administration	(97)	(97)
1.3	Dividends received
1.4	Interest and other items of a similar naturereceived	10	10
1.5	Interest and other costs of finance paid
1.6	Income taxes paid
1.7	Other (provide details if material)
	Net Operating Cash Flows	(165)	(165)
	Cash flows related to investing activities
1.8	Payment for purchases of:
	(a)prospects
	(b)equity investments
	(c) other fixed assets
1.9	Proceeds from sale of:
	(a)prospects
	(b) equity investments
	(c)other fixed assets
1.10	Loans to other entities
1.11	Loans repaid by other entities
1.12	Other (provide details if material)	(5)	(5)
	Net investing cash flows	(5)	(5)
1.13	Total operating and investing cash flows
	(carried forward).	(170)	(170)

+ See chapter 19 for defined terms.

1.13	Total operating and investing eash flows(brought forward)	(170)	(170)
1.141.151.161.17	Cash flows related to financing activitiesProceeds from issues of shares, options, etc.Proceeds from sale of forfeited sharesProceeds from borrowingsRepayment of borrowings	wےw
1.181.19	Dividends paidOther – Share issue costs	w
	Net financing cash flows
	Net increase (decrease) in eash held	(170)	(170)
1.201.21	Cash at beginning of quarter/year to dateExchange rate adjustments to item 1.20	894	894
1.22	Cash at end of quarter	724	724

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

		Current quarter$A'000
1.23	Aggregate amount of payments to the parties included in item 1.2	4.
1.24	Aggregate amount of loans to the parties included in item 1.10	Nil

1.25 Explanation necessary for an understanding of the transactions

Non-cash financing and investing activities

$2.1$ Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

$NiI$

$2.2^{\circ}$ Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

$NiI$

+ See chapter 19 for defined terms.

Financing facilities available

Add notes as necessary for an understanding of the position.

		Amount available$A'000	Amount used$A'000
3.1	Loan facilities	Nil	Nil
3.2	Credit standby arrangements	Nil	Nil

Estimated cash outflows for next quarter

	Total
		202
$4.2^{\circ}$	Development
4.1	Exploration and evaluation	202
		$A'000

Reconciliation of cash

Reconciliation of cash at the end of the quarter (asshown in the consolidated statement of cash flows) tothe related items in the accounts is as follows.		Current quarter$A'000	Previous quarterSA 000
5.1	Cash on hand and at bank
5.2	Deposits at call	723	885
5.3	Bank overdraft.
5.4	Other (provide details)
	Total: cash at end of quarter (item 1.22)	724	894

Changes in interests in mining tenements

		Tenementreference	Nature of interest(note (2))	Interest atbeginningof quarter	Interest atend ofquarter
6.1	Interests in miningtenements relinquished,reduced or lapsed	NIL.
6.2	Interests in miningtenements acquired orincreased	EPM 14696Morganite East	100% equity. Application lodged01.07.04	Nit	28 sub-blocks$(84 \text{ sq. km})$

+ See chapter 19 for defined terms.

Issued and quoted securities at end of current quarterDescription includes rate of interest and any redemption or conversion rights together with prices and dates.

		Total number	Number quoted	Issue price persecurity (see note	Amount paid up persecurity (see note 3)
				$3)$ (cents)	(cents)
7.1	Preference
	$^{\mathfrak t}$ securities $^{\mathfrak t}$
	(description)
7.2	Changes during
	quarter
	(a) Increases
	through issues(b) Decreases
	through returns of
	capital, buy-backs,
	redemptions
7.3	+ Ordinary	30,916,154	18,232,867	Fully paid	Fully paid
	securities
7.4	Changes during
	quarter
	(a) Increases
	through options
	exercised
	(b) Decreases
	through returns of
	capital, buy-backs
	(c) Shares
	previously
	escrowed now listed
7.5	+ Convertible debt	N/A
	securities
	(description)
7.6	Changes during
	quarter
	(a) Increasesthrough issues
	(b) Decreases
	through securities
	matured, converted
7.7	Options			Exercise price	Expiry date
	(description and	6,245,000	6,245,000	20 cents	07/12/04
	conversion factor)	100,000	$\overline{\phantom{a}}$	30 cents	30/09/05
		800,000		30 cents	30/09/07
7.8	Issued during	N/A
	quarter
7.9	Exercised during	N/A
	quarter
7.10	Expired during	${\sf N/A}$
	quarter
7.11	Debentures	${\sf N/A}$
	(totals only)
7.12	Unsecured notes	${\sf N/A}$
	(totals only)

+ See chapter 19 for defined terms.

Compliance statement

• $\mathbf{I}$ This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).
• $\overline{2}$ This statement does give a true and fair view of the matters disclosed.

Sign

here: hew Starty

Date: 26 October 2004

(Company secretary)

Print name: Leni Stanley

Notes

• $\begin{array}{c} \end{array}$ The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
• $\overline{2}$ The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and $6.2$ .
• 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.
• $\overline{4}$ The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.
• $\lesssim$ Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic. the Australian standard on that topic (if any) must be complied with.

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+ See chapter 19 for defined terms.