PATERSON RESOURCES LTD — Annual Report 2006

Dec 20, 2006

URANIUM OIL AND GAS LIMITED ABN 45 115 593 005

FINANCIAL REPORT 2006

For the Period Ended 30 June 2006

CORPORATE DIRECTORY

Directors

David Zohar John Karajas Zhukov Pervan William Edwin Bannister

Company Secretaries

David Zohar John Van Dieren

Registered Office

Level 8, 256 St Georges Terrace Perth WA 6000

Head Office

160 Crawford Road Inglewood WA 6052 Tel: (08) 9294 4469

Country of Incorporation

Uranium Oil and Gas Limited is domiciled and incorporated in Australia

ASX Code UOG

Auditors

BDO Chartered Accountants and Advisers 256 St George's Terrace Perth Western Australia 6000

Legal Advisors

Lawton Gillon Level 11 16 St Georges Terrace Perth Western Australia 6000

CONTENTS

Directors' Report
lncome Statement
Balance Sheet
Statement of Changes in Equity
Cash Flow Statement
Notes to the Financial Statements
Director's Declaration
Audit Report
Auditors Declaration
ASX Information
Corporate Governance

The Directors of Uranium Oil and Gas Limited submit their report for the period from incorporation on 3 August 2005 to 30 June 2006.

THE BOARD OF DIRECTORS

The names and details of the Company's Directors in office during the financial year until the date of this report are as follows.

DAVID ALAN ZOHAR (Date of Appointment 3 August 2005) BSc DipEd Executive Director, Company Secretary and Commercial Manager

David Zohar has undertaken undergraduate studies in Geology and post graduate studies in Accountancy and Commercial Law. He has been active in the exploration industry for over 20 years. He has been a director and/or CEO of a number of exploration companies and has also negotiated numerous agreements with various companies and other participants within the mining industry. He has been involved in the formation and/or listing on the ASX of several public mining companies. Directorships of other listed public companies over the past three years are Red River resources Limited.

JOHN KARAJAS (Date of Appointment 24 May 2006) BSc (Hons) MAIG MPESA Non Executive Director

John Karajas is an exploration geologist with over 30 years of experience in both the mining and oil industries. After araduating from the University of Western Australia with a BSc (Hons) in 1970, he agined his grounding in the mining industry by working for mining companies, Falconbridge, Anaconda and Hanna Minina. This period extended through to 1982 and was predominantly spent in Western Australia but included three years in Mt Isa. Commodities explored for include nickel, copper/lead/zinc, gold, phosphate, taconitic iron ore, tin/tantalite and lignite/oil shale. Between 1982 and 1985 he gained his initial experience in oil exploration by working for Eagle Corporation and IEDC (Australia). This period was spent in working on sedimentary basins in Western Australia and included basin studies, well-site geology, and other duties related to oil and gas exploration. From 1986 onwards, he has worked predominantly as a consultant/contract geologist for a wide range of mining and oil industry clients, both within Australia and abroad. Periods of a more managerial nature have included:

• 1989 1991 Technical Director of King Mining Ltd
• 1992 1995 Technical Director of Omeaa Oil NL
• 1996 1997 Exploration Vice President of Icelandic Gold Corporation

He is currently a Member of the Australian Institute of Geoscientists and the Petroleum Exploration Society of Australia.

Directorships of listed public companies over the past three years are Kimberley Oil NL and Red River Resources Limited.

Zhukov (Zeke) Pervan (Date of Appointment 24 May 2006) MB, BS(WA), FRACGP, FAICD Non-Executive Director and Chairman

Dr Pervan is a Doctor of Medicine with over 35 years experience in various capacities in Western Australia. He has consulted to several university and aovernment bodies in many areas. He has conducted original research in collaboration with the University of Western Australia Departments of Microbiology and Human Movement. This research has been published in international journals. In the past Dr Pervan has served as a Director of several public companies involved in exploration and in the general commercial world, including Agforce Limited, Gold Lake Mining Pty Ltd, Innovative Coatings Limited and Visionglow Global Limited. Directorships of fisted public companies over the past three years are nil

William Edwin Bannister (Appointed 24 May 2006) Managing Director

Mr Bannister has over 40 years experience in exploration and mineral geology. He has extensive experience with uranium exploration in Western Australia as well as experience in precious metals. Mr Bannister worked in Western Minina Corporation in a number of locations and positions, including senior aeologist, and then joined the Tenneco aroup of companies to rise to the position of Australian Exploration Manager - Minerals. For the past 20 years he has been an independent geologist and consultant. Companies consulted to include WMC. Outokompu Mining (Australia) Pty Ltd and numerous participants in the mining industry.

Company Secretaries

David Zohar (refer details above).

John Van Dieren (FCA) - John is a chartered accountant and an audit and corporate services partner with the accounting firm Stanton Partners and is a director of Stantons International Pty Ltd and Stanton Partners Corporate Pty Ltd. He was appointed a joint company secretary on 16 November 2006. He is also joint company secretary of Red River resources Limited.

Director's Interests in Shares and Options of the Company

As at the date of this report the relevant interest of each Director in shares and options of the Company were:

Director		Fully Paid Ordinary Shares		Unlisted Options over Ordinary Shares
	Direct	Indirect	Direct	Indirect
David Zohar	5.000.001	10,000,002	$\sim$	12,000,000
John Karajas	5,500,000		2,000,000
Zhukov Pervan	200,000		2.200.000
William Bannister	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	$\sim$	2.000.000

Principal Activities

The principal activity of the Company during the course of the financial period was mineral exploration.

Dividends

No dividends were paid or declared during the financial year. No recommendation for payment of dividends has been made.

Results of Operations

The Company made a loss after tax of $523,960. No dividends were paid and the directors have not recommended the payment of a dividend.

Operating and Financial Review

The company to 30 June 2006 issued a total of 29,000,003 shares for total proceeds of $537,353 (before capital raising costs). The Company also issued 19,500,000 share options

The Company achieved an ASX listing on 16 October 2006 after raising a total of $7,113,620 (shares auoted from 18 October 2006). The capital raising included $315,000 relating to repayments of debt and fees.

The Company entered into an option to purchase agreement with Helen Ansell whereby the Company has the option to purchase Ansell's interest in EL36/549 once Ansell's application for that tenement has been granted. The Company paid $100,000 for the grant of the option. The option that expires in 18 months from date of grant is exercisable at $1.

Red River Resources Limited ("Red River") had previously announced on 15 September 2005 that it would seek to enter into a Joint Venture with Uranium Oil & Gas Limited in which D Zohar is a substantial shareholder and director of on the Bungalow Well Uranium Project (Exploration Licence Application E36/549) in the North Eastern Goldfields, Western Australia. The Red River shareholders approved the entering into the joint venture on 23 June 2006.

The terms of the heads of Agreement are as follows:

• Red River may earn a 40 per cent interest in the tenement by expending $500,000 on exploration over a period of 3 years.
• Red River paying to Uranium Oil and Gas $20,000.
• Following expenditure of $100,000 Red River shall earn a 10 per cent interest in the tenement. $\blacksquare$
• Upon expenditure of a further $200,000 Red River shall earn a further 10 per cent interest in the tenement.
• Upon the expenditure of a further $200,000 Red River shall earn a further 20 per cent interest in the tenement.
• Red River may withdraw from the joint venture at any time after expending $100,000 on exploration on the tenement.

The Company has entered into a Heads of Agreement with Ansell whereby the Company has the options to purchase Ansell's interest in EL57/607 once Ansell's application for that tenement has been granted. The Company paid Ansell $3009.06 by way of reimbursement of expenditure and issue Ansell 1,000,000 shares at 0.01 cents each. The Company was required to pay Ansell $45,000 upon achieving an ASX listing. The exercise price is $1 within 18 months of date of grant of the application.

The Company entered into an agreement with Ansell and Strike Resources Limited whereby Strike Resources is entitled to a 70% interest in EL/57/607 and the Company is entitled to a 30% interest. In consideration. Strike Resources issued 350,000 shares in Strike Resources to the Company and paid $5,000 to the Company of which the Company paid $4,177 to Ansell and Strike Resources paid $25,000 to Ansell. Strike Resources undertook a consolidation of capital so that the 350,000 shares became 116,667 shares.

In consideration for consulting services provided by Paul Askins and Callum Baxter in relation to EL's 30/312 and 29/589, the Company has paid Askins $10,000 and Baxter $10,000 for consultancy services and issued 1,000,000 shares at 0.01 cents each to Askins and Baxter. In addition the Company was required to pay a further $25,000 to Askins and a further $25,000 to Baxter on the Company's admission to ASX.

The Company has entered into an agreement with Swancove Enterprises Pty Ltd (associated with David Zohar) whereby the Company has the option to purchase Swancove's interest in EL's 52/1863 and 52/1864. The Company reimbursed all expenditure to Swancove to 1 May 2006. The option is for a two vear period from achieving an ASX listing and commenced on 1 May 2006. The Company is required to spend $250,000 on the tenements in the option period and may after spending $250,000 exercise the option for $1 plus a 2% net smelter return royalty.

The Company has entered into an agreement with Swancove whereby the Company has the option to purchase all of Swancove's interest in EL's 70/2444, 70/2692, E70/2693 and EL70/2727 except for the right to explore for bauxite. The option commenced on 1 May 2006 and expires two years after achieving an ASX listing. The Company is required to spend $200,000 on the mining tenements and the exercise price is $1 plus the right to receive $\alpha$ 2% net smelter return royalty from product containing minerals from the tenements except bauxite. The option is subject to the Right of Red River to acquire the rights to tin and tantalum on EL70/2692 (the Wannamal Central Tenement).

The Company has entered into an agreement with Kjirt Exploration Services Pty Ltd (associated with John Karajas) and Swancove for Kjirt and Swancove to transfer all of their interests in EPA113 and EPA114 once the applications for those exploration permits have been granted and Kjirt has agreed to transfer its 10% interest in EP448 to the Company. The Company has reimbursed Kiirt and Swancove for all payments and expenditure made by each of them in respect of the exploration permits.

The Company entered into an agreement with David Zohar to employ Zohar to seek and source investment opportunities for the Company, manage the operations of the Company's Perth office and perform the normal duties of an executive director (minimum 20 hours per week for at least 40 weeks per annum). The annual payment is to be $90.000 plus statutory superannuation and this commenced on the Company achieving an ASX listing. The term is for a two year period from an ASX listing.

The Company entered into an agreement with WE Bannister to act as Managing Director (Exploration) of the company effective from achieving an ASX listing at the rate of $150,000 per annum plus statutory superannuation.

Tenement Schedule

						The company has an interest in the following tenements
--	--	--	--	--	--	--------------------------------------------------------

TenementName	Holders(Shares)	AreaBlocks	Grant Date	Expiry Date	Rent(S)	MinimumExpenditure(S)
	Swancove Enterprises
E70/2444	Pty Ltd	64	4 July 2003	3 July 2008	6491	57,600
E70/2692	Swancove EnterprisesPty Ltd	70	27 October2005	26 October2010	6,730	63,000
	Swancove Enterprises		24 January	23 January
E70/2693	Pty Ltd	70	2006	2011	6,730	63,000
E70/2727	Swancove EnterprisesPty Ltd	28	27 July 2005	26 July 2010	2,772	25,200
E52/1863	Swancove EnterprisesPty Ltd	70	31 October2005	20 October2010	6,930	63,000
E52/1864	Swancove EnterprisesPty Ltd	37	21 October2005	20 October2010	3,663	33,000
E36/459	Helen Mary Ansell	34	Pending		3,366
E57/607	Helen Mary Ansell	20	Pending		3.048
E30/312	Uranium Oil and GasLimited	60.	30 June 2006	29 June 2011	6,085	60,000
E29/589	Uranium Oil and GasLimited	52.	30 June 2006	29 June 2011	5,274	52,000
E09/1245	Helen Mat Ansell	35	23 March2006	22 March2011	3,550	35,000
EPA113	Kirjt ExplorationServices Pty Ltd andSwancove EnterprisesPty Ltd (50% each)	33	Pending		276	2,800,000
EPA114	Kirit ExplorationServices Pty Ltd andSwancove Enterprises
EPA 448	Pty Ltd (50% eachKirit Exploration	100	Pending		2,200	3,300,000
	Services Pty Ltd (10%),Gulliver ProductionsPty Ltd (25%), IndigoOil Pty Ltd (20%) andManeroo Oil	$\mathbf{2}$
	Company Ltd (45%)	210	16 June 2006	15 June2012	20,880	8,950,000

Number of Employees

The Company had nil employees as at 30 June 2006. It has two executive employees since 30 June 2006, being William Bannister and David Zohar. The Company employs part time staff from time to time depending on the exploration programmes in place.

Risk Management

The board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that activities are aligned with the risks and opportunities identified by the board.

The Company believes that it is crucial for all board members to be a part of this process, and as such the board has not established a separate risk management committee.

The board has a number of mechanisms in place to ensure that management's objectives and activities are alianed with the risks identified by the board. These include the following:

• Board approval of all acquisitions/farm-ins/farm-outs of mineral projects
• The receipt of regular financial information
• The approval of budgets on all significant mineral projects and monitoring of budgets.

Adoption of Australian Equivalents to IFRS

As a result of the introduction of Australian equivalents to International Financial Reporting Standards (IFRS), the Company's financial report has been prepared in accordance with those Standards.

Significant Events after Balance Date

Since 30 June 2006, the Company achieved an ASX listing and raised a total of $7,113,620 and issued 35,568,100 shares fincluding 315,000 shares to extinguish liabilities). In November 2006, the Company entered into a conditional purchase to acquire premises in Victoria Park, Western Australia for $650,000. The conditions are expected to be fulfilled by the end of January 2007. Other than the above, there have been no significant events subsequent to balance date and to the date of this Directors Report.

Likely Developments and Expected Results

Likely developments in the operations of the Company and the expected results of those operations have not been included in this report as the Directors believe, on reasonable grounds, that the inclusion of such information would be likely to result in unreasonable prejudice to the Company. The Company is to continue to explore for metals on its properties and seek new properties for exploration and evaluation.

Share Options

As at 6 December 2006, there were 37,407,800 options over unissued ordinary shares. In August 2005, 19,500,000 options were issued at an exercise price of 20 cents each, exercisable on or before 4 August 2010. In October 2006 17,784,050 options were issued as a result of the issue of shares under the prospectus as free options were issued on the basis of one free option for every two shares subscribed for. Refer to note 12 of the Financial Statements for further details of the options outstanding. All share options expire on 4 August 2010. A further 250,000 options have been granted to the Sponsoring Broker.

126,250 options have been exercised upon the payment of a total of $25,250 (to 6 December 2006).

No person entitled to exercise any of the above options had or has any right, by virtue of the option, to participate in any share issue of any other body corporate.

Directors' Meetings

The following table sets out the number of meetings of the Company's Directors held while each Director was in office and the number of meetings attended by each Director:

	Board Meetings
Director	Number ofmeetings held	Number ofmeetingsattended
David Zohar	4	4
John Karajas	4
Zhukov Pervan	4
William Bannister	4
Julie Zohar (resigned 24 May 2006)	4
Shoshanna Zohar (resigned 24 May 2006)		З

REMUNERATION REPORT

Remuneration policy

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

Executive Remuneration

The Company's remuneration policy for executive directors is designed to promote superior performance and long term commitment to the Company. Executives receive a base salary which is market related. Overall remuneration policies are subject to the discretion of the Board and can be changed to reflect competitive market and business conditions where it is in the best interests of the Company and its shareholders to do so. The Board's reward policy reflects its obligation to align executive's remuneration with shareholders' interests and retain appropriately aualified executive talent for the benefit of the Company. The main principles of the policy are:

• Reward reflects the competitive market in which the Company operates
• Individual reward should be linked to performance criteria; and
• $\blacksquare$ Executives should be rewarded for both financial and non-financial performance.

Non-Executive Remuneration

Shareholders approve the maximum aggregate remuneration for non-executive directors. The Board recommends the actual payments to directors. The maximum aggregate remuneration approved for All directors are entitled to have any indemnity non-executive directors is currently $100,000. insurance paid by the Company (currently nil). Currently each non-executive director is entitled to receive $30,000 per annum.

The board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract the highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth.

Executives are also entitled to participate in the employee share and option arrangements.

The executive directors and executives receive a superannuation quarantee contribution required by the government, which is currently 9%, and do not receive any other retirement benefits.

All remuneration paid to directors and executives is valued at the cost to the company and expensed. Options are valued using either the Black-Scholes or binomial methodologies.

The board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and responsibilities. The board determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability, Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting (currently $100,000). Fees for non-executive directors are not linked to the performance of the Company. However, to alian directors' interests with shareholder interests, the directors are encouraged to hold shares in the Company and are able to participate in an employee option plan (none adopted to date).

Performance based remuneration

The Company currently has no performance based remuneration component built into director and executive remuneration packages.

Company performance, shareholder wealth and directors' and executives' remuneration

The remuneration policy has been tailored to increase goal congruence between shareholders and directors and executives. Currently, this is facilitated through the issue of options to the majority of directors and executives to encourage the alignment of personal and shareholder interests. The company believes this policy will be effective in increasing shareholder wealth. At commencement of mine production, performance based bonuses based on key performance indicators are expected to be introduced. For details of directors and executives interests in options at year end, refer note 13 of the financial statements.

Directors and Executive Officers Emoluments (Key Management Personnel)

$\mathbf{r}$ and $\mathbf{r}$

Disclosures relating to directors and executive officers (key personnel) emoluments are outlined below and in note 14 to the financial statements. To date, no options have been issued to directors as part of remuneration. Details on employment contracts with key management personnel are outlined in note 14 to the financial statements.

2006

$\ddot{\phantom{0}}$

College

Directors of Uranium Oil and Gas Limited
		Short Term		Equity (Share Based)
Name	Cash salaryand fees	Cashbonus	employmentSuper	Options	Shares	Total
David Zohar	189,546	$\overline{\phantom{a}}$		$\sim$	$\overline{\phantom{a}}$	189,546
John Karajas
Zhukov Pervan	20.000	$\mathbf{r}$		$\sim$	$\blacksquare$	20.000
William Bannister		$\overline{\phantom{a}}$		$\overline{a}$	$\blacksquare$
Julie Zohar	30.000	$\cdot$		$\sim$	$\mathbf{r}$	30,000
Shoshanna Zohar

The fees to D Zohar include $144,091 paid to Swancove Enterprises Pty Ltd, a company controlled by D Zohar and J Zohar.

Environmental Requlation and Performance

$\mathbf{r}$

$\mathbf{r}$

So far as the Directors are aware, there have been no sianificant breaches of environmental conditions of the Company's exploration licences.

Indemnification and Insurance of Directors

There is currently no Directors' and Officers' Insurance.

Proceedings on Behalf of Company

No person has applied for leave of Court to bring proceedings on behalf of the Company or 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.

Non-Audit Services

The Board of directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor's independence for the following reasons:

• All non-audit services are reviewed by the Board prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor, and
• The nature of the services do not compromise the general principles relating to auditors independence as set out in the Institute of Chartered Accountant's in Australia and CPA Australia's Professional Statement F1; Professional Independence.

Investigating Accountant's Report

$nil Ito 30 June 2006). Since 30 June 2006 $12,160 has been paid for work as investigating accountants.

Auditor's Independence Declaration

The lead auditor's independence declaration for the year ended 30 June 2006 has been received and is set out on page 29.

Signed in accordance with a resolution of Directors dated this 19 day of December 2006

$\lambda$ a.

John Karajas Director

INCOME STATEMENT For the period ended 30 June 2006

	Note	2006$
REVENUES	2
Interest Income		492
Sale of tenements/farmouts fees		33,000
Unrealised gain on investment		44,333
Total Revenue		77,825
Expenditure
Administration		51,304
Acquisition Costs		205,000
Exploration costs		11,604
Option Fees-Option based payment
Consulting and management		239,545
Loss on sale of investments
Technical costs		94,332
Employment costs (including directors)
		601,785
(Loss) Before Income Tax		(523,960)
Income tax expense	3
NET (LOSS) ATTRIBUTABLE TO MEMBERS		(523, 960)
Basic loss per share (cents)		(1.84)

BALANCE SHEET As at 30 June 2006

	Note	2006$
CURRENT ASSETS
Cash and cash equivalents	4	9,337
Trade and other receivables	5	41,899
Prepayments	7	7,001
TOTAL CURRENT ASSETS		58,237
NON-CURRENT ASSETS
Deferred mineral acquisition costs	6
Fixed assets	8
Other financial assets	9	72,333
TOTAL NON-CURRENT ASSETS		72,333
TOTAL ASSETS		130,570
CURRENT LIABILITIES
Trade and other payables	10	117,177
Provisions	11
TOTAL CURRENT LIABILITIES		117,177
TOTAL LIABILITIES		117,177
NET ASSETS		13,393
EQUITY
Issued capital	12	537,353
Option reserve	13
Accumulated losses	13	(523,960)
TOTAL EQUITY		13,393

STATEMENT OF CHANGES IN EQUITY For the period ended 30 June 2006

	Issued ShareCapital	Accumulated(Losses)	OptionReserve	TotalŞ
2006
Balance on incorporation
(Loss) for the year		(523,960)		(523, 560)
Shares issued during the year	537,353			537.353
Capital raising costs
Options issued for services
Balance as at 30 June 2006	537,353	(523,960)		13,393

CASH FLOW STATEMENT For the period ended 30 June 2006

	Note	2006s
CASH FLOWS FROM OPERATING ACTIVITIESSale of tenements/farm outPayments for exploration, evaluation and acquisitioncostsPayments to suppliers and employeesInterest receivedWithholding taxGoods and services tax (paid)/received		5,000(97, 187)(361,028)429.(238)(30,641)
NET CASH FLOWS FROM/(USED IN) OPERATINGACTIVITIES	21	(483,665)
CASH FLOWS FROM INVESTING ACTIVITIESPayment for plant and equipment
NET CASH FLOWS FROM/(USED IN) INVESTINGACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issues of sharesPayment of share issue costsLoans from director related entities (repaid)		500,003(7,001)
NET CASH FLOWS FROM/(USED IN) FINANCINGACTIVITIES		493,002
NET INCREASE / (DECREASE) IN CASH HELDCash and cash equivalents at the beginning of thefinancial year		9,337
CASH AND CASH EQUIVALENTS AT THE END OF THEFINANCIAL YEAR	4	9,337

$\mathbf{L}$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Compliance with IFRSs

Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (IFRSs). Compliance with AIFRSs ensures that the financial report comprising the company's financial statements and notes, comply with IFRSs.

The financial statements have been prepared on an accruals basis and on the basis of historical costs and do not take into account changing money values or, except where stated, current valuations of non-current assets. The financial statements have been prepared on a going concern basis.

The following is a summary of the significant accounting policies adopted by the Company in the preparation of the financial statements.

The accounting policies have been consistently applied, unless otherwise stated.

$(a)$ Exploration and Evaluation Expenditure

Acquisition, exploration and evaluation expenditure incurred is written off as incurred.

When production commences, the accumulated development costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. Any costs of site restoration are provided for during the relevant production stages and included in the costs of that stage.

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

Impairment of assets $(b)$

At each reporting date, the Company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, beina the higher of the asset's fair value less costs to sell and value in use, is compared to the assets carrying value. Any excess of the assets carrying value over its recoverable amount is expensed to the income statement.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

$(c)$ Property, Plant & Equipment

Each asset of property, plant and equipment is carried at cost or fair value, less where applicable, any accumulated depreciation and impairment losses.

Plant and equipment are measured on the cost basis less depreciation and impairment losses.

Depreciation

Items of property, plant and equipment are depreciated using the diminishing value method over their estimated useful lives to the Company. The depreciation rates used for each class of asset for the current period are as follows:

	Furniture & Fittings		20%
--	----------------------	--	-----

40% Computer Equipment

Assets are depreciated from the date the asset is ready for use.

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These agins and losses are included in the income statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

(d) Income Tax

The charae for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recoanised from the initial recoanition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

$(e)$ Employee Benefits

Wages and salaries, annual leave and sick leave i.

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other creditors in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.

й. Long service leave

The liability for long service leave expected to be settled within 12 months of the reporting date is recognised in the provision for employee benefits and is in accordance with (i) above. The fiability for long service leave expected to be settled more than 12 months from the reporting date is recognised in the provision for employee benefits and is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Share-based payments

The Company provides benefits to employees (including directors) of the Company in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares ('equity-settled transactions').

The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are aranted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ('yesting date').

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the directors of the Group, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award.

$(f)$ Cash and Cash Equivalents

For the purpose of the Statement of Cash Flows, cash includes cash on hand and in banks, and money market investments readily convertible to cash within three months, net of outstanding bank overdrafts.

Revenue Recognition $(a)$

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised.

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

$(h)$ Issued Capital

Ordinary issued share capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction in share proceeds received.

$(i)$ Trade and other payables

Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Company. Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is recognised as an expense on an accrual basis.

Joint Ventures $(i)$

Interest in the joint venture operation is brought to account by including in the respective classifications, the share of individual assets employed and share of liabilities and expenses incurred.

$(k)$ Leases

Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership.

Operating leases

The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased item, are recognised as an expense on a straight line basis.

$(1)$ Earnings per Share

i. Basic earnings per share

Basic earnings per share is determined by dividing net profit after income tax attributable to members of the Company, excluding any costs of service equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the vear.

ìi. Diluted earnings per share

Diluted earnings per share adjusts the figure used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financial costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(m) Financial Period

There are no comparative figures as the Company was incorporated on 4 August 2005. The income statement, cash flow statement and statement of changes in equity is for the period from incorporation to 30 June 2006.

2.	Revenue from Continuing Activities	2006$
	The operating results before income tax has been determined after:
	Revenues From Continuing Activities
	Interest received	492
	Sale of tenements/farm outs	33,000
	Unrealised gain on short term investment	44,33377,825
3.	Income Tax
	Net (Loss) before tax	(523,960)
	Prima facie tax benefit at 30%	(157, 188)
	Tax effect of permanent differences
	Non-deductible acquisition costs	61,500
	Other non-deductible expenses	385
	Other deductible items	(420)
	Future income tax benefit not brought to account	95,723
	Income Tax Loss
	Deferred tax asset arising from tax losses of the Company not brought to
	account at balance date as realisation of the benefit is not regarded as
	highly probable.	97,402
	The benefit for tax losses will only be obtained if:
	the company derives future assessable income of a nature and升
	amount sufficient to enable the benefit from the tax losses to be
	realised:
	the company continues to comply with the conditions for${ii}$
	deductibility imposed by fax legislation; and
	no changes in fax legislation adversely affect the company${\mathsf{iii}}$
	realising the benefit from the deductions for the losses.
	Deferred tax Assets (at 30%) not bought to account as at 30 June 2006
	are made up of:
	Tax losses	91.822
	Provisions and accruals	3,900
	Capital raising costs	i 680
		97.402
	A deferred tax liability on unrealised gains on shares held for trading at
	30 June 2006 are $13,300 and have not been booked as tax lossesexceed the deferred tax liability.
4.	Cash and Cash Equivalents
	Cash at bank	9,337
	Cash funds on short term deposit
		9,337

5.	Trade and other receivables	2006s
	Owing by related party (see note 18 (a))Goods and services tax refundOther Receivables	11,02030,641238
		41,899
6.	Deferred Mineral Acquisition Costs
	Capitalised acquisition costs
7.	Prepayments
	Prepaid capital raising costs	7,001
8.	Fixed Assets
	Computer and sundry plant and equipment, at costAccumulated depreciation
	Movements during the year
	Opening balanceAcquisitionsDepreciation
	Written down value at year end
9.	Other financial assetsShares in listed companies at fair market value	72,333
	The company owns 16,667 shares in Strike Resources Ltd.
10.	Trade and other payables
	Trade creditors and accruals	13,000
	Other creditors owing to director/director related entitiesOwing on tenement acquisitions	104,177
		117,177
11.	Provisions
	Employee entitlements
12.	Issued Capital
(a)	Issued and Paid Up Capital29,000,003 fully paid ordinary shares	537,353

$(b)$ Movement of fully paid ordinary shares during the period were as follows:

	2006
	Number ofShares	s
At the beginning of the year
Shares on incorporation	З	3
Shares to seed investors	5,000,000	500,000
Shares for services rendered (printing)	200,000	5.000
Shares for consulting fees	100.000	10.000
Shares issued for cash pursuant to a prospectus
Shares issued to extinguish liabilities	23.700.000	22.350
Share options exercised
Less: Share Issue expenses
At Reporting Date	29,000,003	537.353

$(c)$ Share Options

$13.$

The Company has on issue as at 6 December 2006, 37,407,800 options excercisable at 20 cents at year end over unissued shares. The Options are exercisable at 20 cents each, on or before 4 August 2010.

(d) Terms and Conditions of Issued Capital

Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. At shareholders' meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has a vote on a show of hands.

$\overline{a}$

Reserves and Accumulated Losses	2006Ş
Accumulated LossesAccumulated losses at the beginning of the financial yearNet loss for the year	523.960
Accumulated losses at the end of the financial year	523,960
Option Reserve
Balance at the beginning of the yearIncrease on option based paymentsBalance at end of year

The Option Reserve is used to recognize fair value of options issued.

$14.$ Key Management Personnel Disclosures

(a) The Directors of Uranium Oil and Gas Limited during the financial year were:

David Zohar John Karaias Zhukov Pervan William Bannister Julie Zohar Iresianed 24 May 2006) Shoshanna Zohar (resigned 24 May 2006)

There are no other key management personnel.

Directors' and Executive Officers' Emoluments $(b)$

The Board of Directors is responsible for determining and reviewing compensation arrangements for the directors and the executive team. The Board assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team.

To assist in achieving these objectives, the Board links the nature and amount of Executive Directors' and officers' emoluments to the Company's financial and operational performance. Details reaarding the issue of share options are provided below.

Executives are those directly accountable and responsible for the operational management and strategic direction of the Company.

(c) The emoluments of each Director are as follows:

2006

Directors of Uranium Oil and Gas Limited
	Short Term		Post-employment	Equity
Name	Cash salaryand fees	Cashbonus	Super	Options	Shares	Total
David Zohar	189,546					189.546
John Karajas
Zhukov Pervan	20,000					20,000
William Bannister
Julie Zohar	30.000	$\overline{\phantom{a}}$		$\overline{a}$	÷.	30,000
Shoshanna Zohar

	The Company2006S
Short-term	239,546
Post employment	$\mathbf{r}$
Other long-term
Termination benefits	$\overline{\phantom{a}}$
Share-based payment
	239,546

(d) Service Agreements and remuneration commitments

The Company has two executive service agreements that came into affect from the date the Company was granted a listing on the ASX on 16 October 2006. William Bannister has a two year contact at the rate of $150,000 per annum plus statutory superannuation and David Zohar has a two year contact at the rate of $90,000 per annum plus statutory superannuation. Mr Zohar is required to work at least 20 hours per week for at least 40 weeks per annum.

As at 30 June 2006, the outstanding commitments under the two agreements to the key management personnel are nil but from the achieving of an ASX listing, the commitments are as follows:

Due within 1 year	261,600
Due 1 to 2 years	261,600
Total	523.200

$(e)$ At balance date the relevant interest of each Director in ordinary fully paid shares and options of the Company were:

	Fully Paid Ordinary Shares
Director	Balance atbeginningof the year	Shares Issued -Direct	Transfers/Ceasingto be a director	Balance at30 June 2006
David Zohar	$\cdot$	15,000,003	$\cdot$	15,000,003
John Karajas	$\overline{\phantom{a}}$	5,500,000	$\overline{\phantom{a}}$	5.500.000
Zhukov Pervan		200.000	$\mathbf{r}$	200.000
William Bannister	$\overline{\phantom{a}}$		÷.

		Share Options
Director	Balance atbeginningof the year	Shares Issued -Direct	Transfers/Ceasingto be a director	Balance at30 June 2006
David Zohar	$\mathbf{r}$	12.000.000		12.000.000
John Karajas	$\cdot$	2,000,000	÷	2,000,000
Zhukov Pervan	$\cdot$	2,200,000	÷	2.200.000
William Bannister	$\overline{\phantom{a}}$	2,000,000	$\cdot$	2,000,000
				2006
Auditors' Remuneration

$15.$ Auditors' Remuneration

Amounts received or due and receivable by the auditors of Uranium Oil & Gas Limited for:

an audit or review of the financial statements of the entity$\mathbf{r}$other services$\sim$	8.000
	$\overline{\phantom{a}}$8.000

16. Sianificant Events after Balance Date

Since 30 June 2006, the Company achieved an ASX listing and raised a total of $7,113,620 and issued 35.568.100 shares (including 315.000 shares to extinguish liabilities). In November 2006, the Company entered into a conditional purchase to acquire premises in Victoria Park. Western Australia for $650,000. The conditions are expected to be fulfilled by the end of January 2007. There have been no other significant evens subsequent to balance date and to the date of sianina the Directors Declaration.

$171$ Segment Information

The Company operates in the mineral exploration industry in Australia only.

18 Related Party Transactions

The directors of Uranium Oil and Gas Limited during the financial period were:-

The following related party transactions occurred during the financial year with director-related a) entities:-

Consulting fees of $144,091 were paid to Swancove Enterprises Pty Ltd a director related entity of David Zohar.

Professional fees of $nil were paid to Kjirt Exploration Pty Ltd, a director related entity of John Karajas for geological services.

David Zohar and Swancove Enterprises Pty Ltd advanced the Company or paid costs on behalf of the Company of $nil with no fixed term for repayment and interest free. As at 30 June 2006, an amount of $10,000 is owed by Swancove Enterprises Pty Ltd and an amount owing by David Zohar of $1019.50.

Zhukov Pervan was paid consulting fees of $20,000 during the vear (of which $10,000 was paid by the issue of 100,000 shares at 10 cents each)

The Company entered into a farm-in arrangement on a uranium property with a company in which Messrs Zohar and Karajas are significant shareholders in and directors of (refer Note 24).

The Company has entered into an agreement with Swancove Enterprises Pty Ltd (associated with David Zohar) whereby the Company has the option to purchase Swancove's interest in EL's 52/1863 and 52/1864. The Company reimbursed all expenditure to Swancove to 1 May 2006. The option is for a two year period from achieving an ASX listing and commenced on 1 May 2006. The Company is required to spend $250,000 on the tenements in the option period and may after spending $250,000 exercise the option for $1 plus a 2% net smelter return royalty.

The Company has entered into an aareement with Swancove whereby the Company has the option to purchase all of Swancove's interest in EL's 70/2444, 70/2692, E70/2693 and EL70/2727 except for the right to explore for bauxite. The option commenced on 1 May 2006 and expires two years after achieving an ASX listing. The Company is required to spend $200,000 on the mining tenements and the exercise price is $1 plus the right to receive a 2% net smelter return royalty from product containing minerals from the tenements except bauxite. The option is subject to the Right of Red River to acquire the rights to tin and tantalum on EL70/2692 (the Wannamal Central Tenement).

The Company has entered into an agreement with Kiirt Exploration Services Pty Ltd (associated with John Karaias) and Swancove for Kiirt and Swancove to transfer all of their interests in EPA113 and EPA 114 once the applications for those exploration permits have been aranted and Kiirt has agreed to transfer its 10% interest in EP448 to the Company. The Company has reimbursed Kiirt and Swancove for all payments and expenditure made by each of them in respect of the exploration permits.

The Company entered into an agreement with David Zohar to employ Zohar to seek and source investment opportunities for the Company, manage the operations of the Company's Perth office and perform the normal duties of an executive director (minimum 20 hours per week for at least 40 weeks per annum). The annual payment is to be $90,000 plus statutory superannuation and this commenced on the Company achieving an ASX listing. The term is for a two year period from an ASX listing.

The Company entered into an agreement with WE Bannister to act as Managing Director (Exploration) of the company effective from achieving an ASX listing at the rate of $150,000 per annum plus statutory superannuation.

19. Capital and Leasing Commitments

TenementName	Holders(Shares)	AreaBlocks	Grant Date	Expiry Date	Rent($)	MinimumExpenditure($)
E70/2444	Swancove EnterprisesPty Ltd	64	4 July 2003	3 July 2008	6491	57,600
E70/2692	Swancove EnterprisesPty Ltd	70	27 October2005	26 October2010	6.730	63.000
E70/2693	Swan Cove EnterprisesPtv Ltd	70	24 January2006	23 January2011	6.730	63,000
E70/2727	Swancove EnterprisesPtv Ltd.	28	27 July 2005	26 Joly 2010	2,772	25,200
E52/1863	Swancove EnterprisesPty Ltd	70.	31 October2005	20 October2010	6.930	63,000
E52/1864	Swancove EnterprisesPtv Ltd	37	21 October2005	20 October2010	3.663	33,000

The following expenditure is required to maintain the exploration tenements over which the Company has an interest in:

NOTES TO THE FINANCIAL STATEMENTS

TenementName	Holders(Shares)	AreaBlocks	Grant Date	Expiry Date	Rent(5)	MinimumExpenditure(S)
E36/459	Helen Mary Ansell	34	Pending		3,366
E57/607	Helen Mary Ansell	20	Pending		3,048
E30/312	Uranium Oil and GasLīmīted:	60	30 June 2006	29 June 2011	6.085	60,000
E29/589	Uranium Oil and GasLimited	52	30 June 2006	29 June 2011	5,274	52,000
E09/1245	Helen Mat Ansell	35	23 March2006	22 March2011	3,550	35,000
EPA113	Kirit ExplorationServices Pty Ltd andSwancove EnterprisesPty Ltd (50% each)	33	Pending		276	2.800.000
EPA114	Kirit ExplorationServices Pty Ltd andSwancove EnterprisesPty Ltd (50% each	100	Pending		2,200	3,300,000
FPA448	Kirjt ExplorationServices Pty Ltd (10%),Gulliver ProductionsPty Ltd (25%), IndigoOil Pty Ltd (20%) andManeroo OilCompany Ltd (45%)	$\mathbf{2}$210	16 June 2006	15 June2012	20,880	8,950,000

Refer note 24 for commitments under Joint Ventures.

$20.$ Financial Instruments, Risk Management and Policies

Interest rate risk

The Company's exposure to interest rate risk, which is the risk that the financial instruments value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rate for classes of financial assets and financial liabilities is set out below:

30 June 2006	Weightedaverageinterest rate	Floatinainterest$	Fixed interestmaturing in lessthan 1 period	Non-interestbearingŞ	Totals$
Financial Assets
Cash at bank	5.5	9.337			9,337
Receivables				41,899	41,899
Total Financial Assets		9.337		41.899	51,236
Financial LiabilitiesTrade and otherpayables			$\overline{\phantom{a}}$	117.177	117,177
Total Financial Liabilities		$\overline{\phantom{m}}$		117,177	117,177
Net Financial Liabilities (30 June 2006)		9,337		(75, 278)	(65,941)

Reconciliation of Net Financial Assets (Liabilities) to Net Liabilities

Net Financial Assets (Liabilities)	(65, 94]
Prepayments	7.001
Investments	72.333
Provisions	$\overline{\phantom{a}}$
Net equity	13.393

Credit Risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance sheet date to recognised financial assets is the carrying amount, net of any provisions for doubtful debts of those assets, as disclosed in the statement of financial position and the notes to the financial statements. The Company does not have any material credit risk exposure to any sinale debtor or aroup of debtors under financial instruments it has entered into. As the Company does not have material debtors, inventories, or any other credit risk, a formal credit risk management policy is not maintained.

Net Fair Values

For all assets and liabilities, their net fair value approximates their carrying values.

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

Cash Flow Information	2006s
Reconciliation of the operating (loss) after tax to the net cash flowsfrom operations.
Operating loss after income tax	(523,960)
Non cash items - Issue of shares for expensesUnrealised gainSale of ContractProvisionsChanges in assets and liabilities	27,350(44,333)(28,000)
Increase/(Decrease) in payables(Increase)/Decrease in receivables	117,177131.8991
Net cash flow from/(used in) operating activities	(483,665)
Reconciliation of CashCash balance comprises;Cash at banksCash on short term deposit	9,337
	9,337

Financing facilities available

As at 30 June 2006 the Company had no financina facilities available.

Non Cash financing and Investing Activities

There were no non-cash financing and investing activities in 2005/06, other than shares issued for consultancy services and other services totalling $15,000.

$221$ Employee Benefits

As at balance date there were no employees employed by the Company.

23. Contingent Liabilities

The Directors are not aware of any contingent liabilities as at 30 June 2006. Refer joint ventures in note 24.

24. Joint Ventures

Bungalow Well - Western Australia

Red River Resources Limited a company has entered enter into a Joint Venture with Uranium Oil & Gas Limited on the Bungalow Well Uranium Project (Exploration Licence Application E36/549) in the North Eastern Goldfields, Western Australia. The Red River shareholders approved the entering into the joint venture on 23 June 2006. The terms of the heads of Agreement are as follows:

Red River may earn a 40% interest in the tenement by expending $500,000 on exploration over a period of 3 years, and Red River paying to Uranium Oil and Gas $20,000 (paid in July 2006). Following expenditure of $100,000 Red River shall earn a 10% interest in the tenement. Upon expenditure of a further $200,000 Red River shall earn a further 10% interest in the tenement. Upon the expenditure of a further $200,000 Red River shall earn a further 20% interest in the tenement. Red River may withdraw from the joint venture at any time after expending $100,000 on exploration on the tenement.

In addition, the Company ("UOG") in November 2006 announced a conditional Heads of Agreement with Swancove Enterprises Pty Ltd ("Swancove"). The Farm In Agreement is subject to the approval of shareholders of UOG as Swancove is a company in the control of an UOG director, David Zohar. The terms of the Farm In Agreement are as follows:

• × UOG will reimburse Swancove costs incurred in acquiring the tenements not exceeding $10,000.
• $\blacksquare$ UOG must maintain the tenements in apod standing for a period of 2 years following the arant of the tenements to acquire a 50 per cent interest in the tenements.
• a. UOG will have the right to acquire a further 40 per cent in the tenements upon expending $1,000,000 after it has acquired its 50 per cent interest.
• ×. If UOG withdraws from the agreement prior to earning its 50 per cent interest, it will withhold no interest in the tenement.
• × UOG will be the operator of the Farm In.
• The Agreement is subject to the completion of formal documentation and the approval of shareholders of UOG.

2006

25. Earnings per share

(a) Basic loss per share (cents) $(1.84)$

The options are not considered dilutive and therefore no diluted earnings per share is disclosed.

(b) Weighted average number of ordinary sharesoutstanding during the year in calculating:
Basic FPS	28.528.353
(c) Net loss used in calculating EPS.	$523,960

The directors of the Company declare that:

• the financial statements and notes of the Company are in accordance with the Corporations ${\alpha}$ Act 2001, including:
  • giving a true and fair view of the Company's financial position as at 30 June 2006 and of ${i}$ its performance for the period ended on that date; and
  • complying with Accounting Standards and Corporations Regulations 2001; and ${ii}$
• there are reasonable grounds to believe that the Company will be able to pay its debts as and $(b)$ when they become due and payable.

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

John Karajas

Director 19 December 2006 Perth, Western Australia

Chartered Accountants & Advisers

Level 8, 256 St George's Terrace Perth WA 6000 PO Box 7426 Cloisters Square Perth WA 6850 Tel: (61-8) 9360 4200 Fax: (61-8) 9481 2524 Email: bdo@bdowa.com at: www.bdo.com.au

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF URANIUM OIL & GAS LIMITED

Scope

The Financial Report and Directors' Responsibility

The financial report comprises the balance sheet, income statement, cash flow statement, statement of changes in equity, accompanying notes to the financial statements, and the directors' declaration for Uranium Oil & Gas Limited (the company), for the period ended 30 June 2006.

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 policics and accounting estimates inherent in the financial report.

Audit Approach

We have conducted an independent audit in order to express an opinion to the members of the company. Our audit was concucted 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 judgment, 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 financial position, and of its performance as represented by the results of its operations and cash flows.

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 $\bullet$ reasonableness of significant accounting estimates made by the directors.

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

a valional association ti a santareshing anni antitia

Independence

In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

The independence declaration given to the directors in accordance with section 307C would be in the same terms if it had been given at the date of this report.

Audit Opinion

In our opinion, the financial report of Uranium Oil & Gas 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 and of $(i)$ its performance for the period ended on that date; and
• complying with Accounting Standards in Australia and the Corporations Regulations $(ii)$ $2001$ ; and

缝

(b) other mandatory financial reporting requirements in Australia.

BDO Chartered Accountants

Sherif Andrawes Partner

Perth. Western Australia Dated this 19th day of December 2006

IBI

Chartered Accountants & Advisers

Level 8, 256 St George's Terrace Perth WA -6000PO Box 7426 Cloisters Square Perth WA 6850 Tel: (61-8) 9360 4200 Fax: (61-8) 9481 2524 Email: bdc@bdowa.com.au www.bdo.com.au

19 December 2006

The Directors Uranium Oil & Gas Limited PO Box 70 INGLEWOOD WA 6052

$\lesssim$

Maria Maria Indonesia (

Dear Sirs

DECLARATION OF INDEPENDENCE BY BDO TO THE DIRECTORS OF URANIUM OIL & GAS LIMITED

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; $\bullet$ and
• · any applicable code of professional conduct in relation to the audit.

Yours faithfully BDO Chartered Accountants

$\mathbb{R}$ MU/

BG McVeigh Partner

ASX Information

Substantial shareholders The substantial shareholders as at 17 November were:

John Karajas	5.525.000
David Zohar	5.000.001
Julie Zohar/Julie Mendelson	6.269.001
Swancove Enterprises Pty Ltd	5.000.000

Distribution of shareholders as at 17 November 2006

Range of Holding	Holders	Shares
$1 - 1,000$	З	1.530
1.001-5.000	45	177.023
5.001-10.000	849	8.410.604
10.001 - 100.000	924	25.645.940
100.001 - over	34	30,424,256
	1.855	64,659,353
Shareholders with less than a
marketable parcel.	8

Distribution of Listed Option Holders as at 17 November 2006

Range of Holding	Holders	Options
1-1.000.	$\mathbf{r}$
1.001-5.000	805	4.019.260
5.001-10.000	277	2.323,790
10.001 - 100.000	588	10.339.250
100,000 - over	6	1,360,500
	1.676	18.042.800

Voting Rights

Each fully paid ordinary share carries voting rights of one vote per share.

Twenty Largest Shareholders as at 17 November 2006 - 43.79%

	Number ofShares
John Karajas	5,525,000
David Allan Zohar	5,000,001
Julie Zohar	5,000,001
Swancove Enterprises Pty Ltd	5,000,000
Julie Mendelson	1,269,000
Helen Ansell	850,000
J & F James Bros Holdings Pty Ltd	750,000
Cisimo Coniglio	550,000
Janice M Roll	550,000
Paul Askins	500,000
Callum Baster	500,000
Miro Lendich (The Lendich S/F)	500,000
Shellgrove Pty Ltd	500,000
John Della Bosca & Jonina Della Bosca	450,000
Branko Rudey	300,000
Shoshanna Zohar	275,000
Cape Equity Pty Ltd	200,000
Chucky Pty Ltd	200,000
Allan R Greenwell & Margaret E Greenwell	200,000
Frederick George Morris and Loma Elsie Morris	200,000

ASX INFORMATION

Twenty Largest Option Holders as at 17 November 2006 (Options Unlisted)

	Number ofOptions
Swancove Enterprises Pty Ltd	12,000,000
Dr Zhukov Pervan	2,150,000
Meekal Pty Ltd	2,000,000
Janice M Roll	2,000,000
Cameron Stockbrokers Limited	1,000,000
	250,000

Twenty Largest Option Holders as at 17 November 2006 - 13.36% (Listed Options)

	Number of
	Options
Julie Mendelson	634.500
Shellgrove Pty Ltd	250,000
Shoshanna Zohar	140,000
M J & W M Collins	112,500
FP&RJWetters	112,500
A D & R M Riddell	111,000
Beverly Gale Besser	100,000
Colin Broder	100,000
Fountain River Pty Ltd	100,000
Gurdavinder Kaur	100,000
Graham Kenneth Ritcher	100.000
Christopher A & Silverani Burwood	75,000
Basil Kouvelis	75,000
CR&LSana	75,000
Taurus Entrepot Nominees Pty Ltd	60,000
Stephen Walter & Marianne Walter	57,500
East Coast Charter Services Pty Ltd	55,000
Phillip Christopher Alexander	50,000
Amelia Nominees Pty Ltd	50,000
Austmay Pty Ltd	50,000

Shares and Options escrowed

No. of Shares	Escrow Period
125.000	12 months from date of auotation on ASX being 18 October 2006
21.650.000	24 months from date of quotation on ASX being 18 October 2006
No. of Options	Escrow Period

19.400.000	24 months from date of quotation on ASX being 18 October 2006

ASX Rule 4.10.19

The Company has used its cash and assets in a form readily convertible to cash that it had at time of admission that is consistent with its business objectives.

CORPORATE GOVERNANCE REPORT RED RIVER RESOURCES LIMITED ("THE COMPANY")

STATEMENT

As an integral part of its preparations to fist on the Australian Stock Exchange, the Company considered and set up a framework for embracing the ASX Principles of Good Corporate Governance and best Practice Recommendations CASX Guidelines"). Commensurate with the spirit of the ASX Guidelines, the Company has followed each Recommendation where the Board has considered the Recommendation to be an appropriate benchmark for corporate governance practices, taking in to account factors such as the size of the Company and the Board, resources available, activities of the Company. Where, after due consideration, the Company's corporate governance practices depart from the Recommendations, the Board has offered full disclosure of the nature of, and reason for, the adoption of its own practice.

Further information about the Company's corporate governance practices is set out on the Company's website at www.uog.com. In accordance with the recommendation of the ASX, information published on the Company's website includes charters, codes of conduct, securities trading policy and other policies and procedures relating to the board and its responsibilities.

EXPLANATIONS FOR DEPARTURES FROM BEST PRACTICE RECOMMENDATIONS

After due consideration, the Company intends to conduct its operations as a listed entity in accordance with the ASX Corporate Governance Best Practice Recommendations, other than in relation to the matters specified below.

Principle 2 Recommendation 2.1, 2.2.2.3

Notification of Departure

In reviewing the independence of directors, the Board considered the criteria of Independence as set out by the ASX in its "Principles of Good Corporate Governance and Best Practice Recommendations". The Board considers that, while none of directors strictly meet the independence criteria, the Board's structure and other corporate governance mechanisms ensure the efficient discharge of duties and maximal value to shareholders. The Board notes that David Zohar and William Bannister are the only executive member of the Board. In this regard, the Board considers that it is well positioned to effectively review and challenge the performance of management, one of the key objectives of Principle 1. The Board is committed to achieving best practice in corporate governance and moreover, structures which deliver best value to the Company and its shareholders.

Principle 2 Recommendation 2.4

Notification of Departure:

At this stage the full board considers remuneration issues and there is no nomination committee.

Explanation for Departure:

The Board is undecided whether efficiencies or other benefits would be agined by establishing a separate nomination committee. In any event, the Board has adopted a Nomination Committee Charter which is equally suited to use by the full Board or a subcommittee.

Principle 2 Recommendation 4.2, 4.3, 4.4

Notification of Departure:

The Board has not yet formally nominated an Audit Committee.

Explanation for Departure:

The Board intends to form an Audit Committee, which will be comprised of the two non-executive directors. It has adopted a Charter for the Committee's use when it is formed. The size of the Board and its current operations do not yet warrant setting up a separate audit and risk management committee

Principle 7 Recommendation 7.1

Notification of Departure:

The Company has well developed internal financial control systems, governing areas of procurement, capital expenditure, expenditure authorities and all other financial aspects of the Company's business. The Company has not yet implemented a formal framework for general enterprise risk management.

Explanation for Departure:

The Company will establish a more formal system for identifying, assessing and monitoring risks when time and resources permit. As part of its requirements for listing on the ASX, the Company included a detailed report identifying and describing the major risk factors facing the Company in its prospectus. This constitutes the Company's current risk profile, which risks will be monitored and reported upon on an on-going basis.

Principle 8 Recommendation 8.1

Notification of Departure:

The Company has not yet established a formal process for evaluation of the board, its directors and management.

Explanation of Departure:

The Board considers the performance of the two executive directors (there are no other key management personnel) on an on-going basis. The size of the Board does not warrant a formal process.

Principle 9 Recommendation 9.1

Notification of Departure:

The Company does not yet have a format remuneration policy.

Explanation of Departure:

The aggregate remuneration for directors was set at $100,000. It is expected that a policy will be established once the Remuneration Committee or the full Board, as the case may be, convenes in accordance with the Remuneration Committee Charter which has recently been adopted by the Company. Currently, non executive directors receive director fees of $30,000 per annum plus each and where applicable statutory superannuation.

Principle 9 Recommendation 9.2

Notification of Departure:

The Board is undecided whether it is necessary to form a separate committee to deal with remuneration matters.

Explanation of Departure:

The Board has adopted a Charter which is suitable for use by the full Board or a committee. Size of the company and its operations do not warrant a separate remuneration committee.