PEEL MINING LIMITED - Annual Report 2007

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2007
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Cor orate Director p y

Directors

Michael Kiernan - Non-Executive Chairman Robert Tyson - Executive Director Simon Hadfield – Non-Executive Director

Company Secretary

David Hocking

Registered and Principal Office

Level 1, 79 Hay St, Subiaco, WA 6008 Telephone: (08) 9382 3955 Facsimile: (08) 9388 1025 Website: www.peelex.com.au Email: [email protected]

Share Registry

Computershare investor Services

Level 2, 45 St Georges Tce, Perth, WA 6000 Telephone: 1300 557 010

Auditors

Bdo Kendalls audit & assurance (Wa) Pty ltd

128 Hay St, Subiaco, WA 6008

Legal Advisors

Steinepreis Paganin Level 4, Next Building, 16 Milligan St, Perth, WA 6000

Home Exchange

ASX Code: PEX

ABN

42 119 343 734

Peel exPloration limited AnnuAl RepoRt 2007

SECTION	1 -Chairman’s Report	3
SECTION	2 -Review of Operations	5
SECTION	3 -Schedule of Tenements	12
SECTION	4 -Directors’ Report	13
SECTION	5 -Income Statement	18
SECTION	6 -Balance Sheet	19
SECTION	7 -Statement of Cash Flows	20
SECTION	8 -Statement of Changes in Equity	21
SECTION	9 -Notes to the Accounts	22
SECTION	10 -Directors’ Declaration	34
SECTION	11 -Auditor’s Independence Declaration	35
SECTION	12 -Independent Auditor’s Report	36
SECTION	13 -Corporate Governance Statement	38
SECTION	14 -Shareholder Information	42

Peel exPloration limited AnnuAl RepoRt 2007

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Trough Gully adit and cut,
Dungowan project, NSW.
2 Peel exPloration limited AnnuAl RepoRt 2007
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SeCtion 1

Chairman’s Re ort p

Peel Exploration Limited was formed in April 2006 to prospect for base and precious metal deposits along the Peel Fault in the New England Fold Belt region of north-eastern New South Wales. Peel Exploration listed on the ASX on 17 May 2007 raising $3 million.

At present the Company’s tenements are all located in the New England region of New South Wales and comprise a mix of base and precious metals-prospective prospects and projects. A brief description of each of the tenements is given in the Operations Review and greater detail is available in the prospectus.

In the five months since listing, Peel Exploration has steadfastly pursued its strategy of “exploring forgotten mineral fields”. As previously stated, Peel Exploration believes that the New England Fold Belt, particularly the portion located in northern New South Wales, represents a unique opportunity for mineral exploration. The area has a rich mining history, yet despite its proven endowment, the Belt remains poorly explored with minimal modern exploration techniques having been utilised.

During the brief period since listing, Peel Exploration (through its exploration managers - Geos Mining Mineral Consultants Pty Ltd) has completed the GIS digitisation and interrogation of data for the Dungowan and Barry project areas, and has completed several field reconnaissance trips. Drill target planning for many of Peel Exploration’s projects is now well advanced.

Perhaps most importantly for the Company is the recent acquisition of the historic Attunga-Kensington mineral fields, located approximately 30 kilometres north of Tamworth. The Attunga project represents a potential “company-maker” for Peel, and perfectly fits the Intrusive-Related Gold System deposit model. Intrusive-Related Gold Systems can be very large and Peel is rightly excited by the Attunga project’s potential. The Attunga area is known to contain several non-JORC tungsten resources (reported by previous explorers); along with numerous untested surface gold-tungsten geochemical anomalies. Peel has already begun the process of expediting exploration of the area and looks forward to rapidly testing the most obvious targets.

I would like to thank my fellow Directors, Rob Tyson and Simon Hadfield, our Company Secretary - David Hocking, and the managers of Peel’s exploration programme - Geos Mining Mineral Consultants, for the hard work and commitment to the Company that they have all made. I would also like to acknowledge the contributions made by the team at Bell Potter whom supported Peel Exploration’s IPO.

Lastly, and most importantly, I would like to thank all of Peel Exploration’s shareholders for supporting the Company.

Michael Kiernan

Chairman 27 September 2007

Peel exPloration limited AnnuAl RepoRt 2007

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Peel exPloration’s
Project locations
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Peel exPloration limited AnnuAl RepoRt 2007

SeCtion 2

Review of o erations p

Since listing in May 2007, Peel Exploration has been logically and efficiently moving forward with its strategy of exploring forgotten mineral fields.

Appointment of Geos Mining

A key element in Peel Exploration’s initial exploration strategy has been the engagement of Geos Mining Mineral Consultants Pty Ltd to manage the exploration of the Company’s 700 km[2] of existing granted tenements in New South Wales. Geos Mining is a specialist geology consultancy firm based in Sydney and is responsible for the day-to-day management and exploration of Peel Exploration’s licences.

Geos Mining, headed by veteran geologist Sue Border, has proven expertise in providing world’s best practice exploration and management services in a cost effective and transparent manner. The appointment of Geos Mining will help Peel Exploration preserve shareholder capital and obtain maximum return for each dollar spent.

Dungowan Project - EL6613

The Dungowan Project covers an area of about 252 km[2] and is located about 15 km east of Tamworth, in the New England Fold Belt region of NSW.

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Dungowan project
location and magnetics.
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Peel exPloration limited AnnuAl RepoRt 2007

Review of operations

SeCtion 2

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Trough Gully adit entrance.
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Within the Dungowan Project are two specific areas of interest:

[ numerous historic copper mines/workings in the ] vicinity of Dungowan; and
[ numerous historic gold workings in the vicinity of ] Limbri.

The licence area is considered prospective for polymetallic VHMS mineralisation, syngenetic (volcanicrelated), exhalative gold mineralisation, and epigenetic structurally controlled gold mineralisation related to regional deformation, metamorphism and graniteintrusive phases.

During the period since listing, GIS compilation of historic exploration data has been undertaken along with several field visits to the Dungowan project in preparation for drill target definition.

Other upcoming work at Dungowan will include the acquisition of high-resolution airborne magnetic and radiometric data, scheduled for November 2007.

Peel exPloration limited AnnuAl RepoRt 2007

Review of operations SeCtion 2

Barry Project - EL6614

The Barry Project covers an area of about 48 km[2] and is located about 25 km southeast of Nundle in the New England Fold Belt region of NSW.

The Barry Project is centred on a cluster of copper and molybdenum workings. Exploration in the 1970s returned many significant copper values, however no follow-up work has ever been reported. Peel Exploration considers the area to be prospective for polymetallic VHMS mineralisation and intrusive-related precious/base metal mineralisation.

During the period since listing, GIS compilation of historic exploration data and an initial reconnaissance field trip have been undertaken in preparation for followup mapping and geochemistry surveys. Other upcoming work at Barry will include the acquisition of high-resolution airborne magnetic and radiometric data, scheduled for November 2007. At mid-September 2007, access negotiations with a key landholder were continuing.

Barry Project location and geology.

Peel exPloration limited AnnuAl RepoRt 2007

SeCtion 2

Review of operations

Waverley Project - EL6719

The Waverley Project covers an area of about 100 km[2] and is located about 40 km northeast of Scone in the New England Fold Belt region of NSW.

The licence encompasses the historic Waverley silverlead-zinc workings and a large untested magnetic anomaly proximal to the Waverley workings.

No exploration activity has been completed at Waverley during the period since listing. Upcoming exploration activity will see the GIS compilation of historic exploration data, along with initial reconnaissance field trips. Other upcoming work at Waverley is to include the acquisition of high-resolution airborne magnetic and radiometric data, scheduled for November 2007.

Prospecting in the mid 1990s returned anomalous values of up to 739 ppm silver, 14.6% zinc and 9.4% lead. The Waverley Project is considered prospective for intrusiverelated precious/base metal mineralisation.

Waverley Project location and magnetics.

Peel exPloration limited AnnuAl RepoRt 2007

Review of operations SeCtion 2

Armidale Project - EL6722

The Armidale Project covers an area of about 300 km[2] and is located about 5 km north of Armidale in the New England Fold Belt region of NSW.

The licence encompasses numerous historic precious and exotic metals mines and workings, including three regionally-significant silver mines. The area also abuts Straits Resources Ltd’s Hillgrove gold-antimony mine’s

regional exploration tenure. The Armidale Project is considered prospective for precious metals deposits.

No exploration activity has been completed at Armidale during the period since listing. Upcoming exploration activity will see the GIS compilation of historic exploration data commence, along with initial reconnaissance field trips.

Armidale Project location and geology.

Peel exPloration limited AnnuAl RepoRt 2007

Review of operations SeCtion 2

Attunga Project location.

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Peel exPloration limited AnnuAl RepoRt 2007

Review of operations SeCtion 2

Attunga Project - ELA3177 & ELA3182

In June 2007, Peel Exploration lodged applications for exploration licences covering the historic AttungaKensington gold-tungsten-molybdenum mineral fields, about 20 km north of Tamworth. ELA3177 and ELA3182, referred to as the Attunga Project, cover a combined area of about 250 km[2] .

The area under application contains numerous historic mines, prospects and workings, and initial investigations utilising historic exploration reports coupled with modern datasets indicate that the Attunga-Kensington mineralising structure bears the hallmarks of an IntrusiveRelated Gold System (IRGS).

Peel Exploration engaged Dr Tim Baker, who is widely regarded as an expert in the study of IRGS deposits, to determine if the characteristics of the Attunga area fit with those commonly found associated with IRGS deposits. Dr Baker subsequently corroborated Peel Exploration’s opinion with regard to the Attunga region stating that “an intrusion-related gold model is readily applicable. Prospects in the region contain metal signatures common to IRGS and the wide variety of mineralisation styles is a common feature of intrusion centred systems.”

The Attunga Project has presented Peel Exploration with an outstanding opportunity to delineate gold and tungsten resources in the near term.

Intrusive-Related Gold Systems are an under-recognised and economically important class of gold deposit. Examples of IRGS deposits include Fort Knox in Alaska, Kidston in north Queensland, and Timbarra in northern New South Wales.

Other important aspects of the Attunga-Kensington mineral fields include:

[ only minor modern exploration;]
[ several historic non-JORC tungsten resources reported ] by previous explorers; and
[ numerous large untested surface geochemical gold-] tungsten anomalies.

With this in mind, the Company has further engaged the services of Geos Mining Mineral Consultants to manage the exploration of the Attunga Project. In anticipation of the NSW government granting exploration licences, GIS data compilation has already commenced, as has the fast-tracking of landowner negotiations.

The immediate exploration priority upon approval of the licenses will be to test the validity of certain historic exploration results and, if confirmed, move quickly to drill test some of the most obvious gold-tungsten anomalies.

Rob Tyson

Executive Director

The information in this report that relates to Exploration Results is based on information compiled by Mr Robert Tyson and Mrs Sue Border, both of whom are Members of the Australasian Institute of Mining and Metallurgy. Mr Tyson and Mrs Border each have sufficient experience which is relevant to the styles of mineralisation and types of deposits under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.’ Mr Tyson and Mrs Border each consent to the inclusion in this report of the matters based on their information in the form and context in which it appears.

Peel exPloration limited AnnuAl RepoRt 2007

SeCtion 3

Schedule of tenements

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new south Wales
Project number Holder ownership expiry
Dungowan el6613 peel exploration ltd 100% 21 August 2008
Barry el6614 peel exploration ltd 100% 21 August 2008
Waverley el6719 peel exploration ltd 100% 25 February 2009
Armidale el6722 peel exploration ltd 100% 25 February 2009
Attunga el6883 peel exploration ltd 100% 21 September 2009
Attunga el6884 peel exploration ltd 100% 21 September 2009
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Peel exPloration limited AnnuAl RepoRt 2007

SeCtion 4

Directors’ Re ort p

Your directors present their report on the Company for the financial period ended 30 June 2007. The following persons hold office as Directors at the date of this report. Their qualifications and experience are:

Michael Kiernan – Non-Executive Chairman

With more than 30 years experience in the mining and transport industries, Mr Kiernan brings a wealth of knowledge and experience to the Peel Exploration board. Mr Kiernan retains the position of Chairman at Monarch Gold Mining Company Ltd, Territory Resources Ltd, India Resources Ltd, Precious Metals Australia Ltd and Mineral Resources Ltd, and is also a Director of Matilda Minerals Ltd.

David Hocking – Company Secretary

Mr Hocking is a qualified Chartered Accountant from the United Kingdom. He has more than 20 years commercial experience in Australia producing management and financial accounts for medium sized businesses in a range of industries including publishing, franchising, rural merchandising, financial services and the offshore oil industry. Mr Hocking also brings previous experience as a Company Secretary in a public company.

Robert Maclaine Tyson – Executive Director

Mr Tyson is a geologist with more than 15 years resources industry experience having worked in exploration and mining-related roles for companies including Cyprus Exploration Pty Ltd, Queensland Metals Corporation NL, Murchison Zinc Pty Ltd, Normandy Mining Ltd and Equigold NL. Mr Tyson has more than five years of senior management experience and retains the position of General Manager at resources industry publisher and conference business, Resource Information Unit Pty Ltd. Mr Tyson is a Member of the Australasian Institute of Mining and Metallurgy.

Directors’ Interests in Shares and Options

Directors’ interests in shares and options as at 30th June 2007 are set out in the table below. Between the end of the financial period and the date of this report, Michael Kiernan purchased 1,622,874 options, Robert Tyson purchased 1,372,874 options and Simon Hadfield purchased 1,172,873 options.

Simon Hadfield – Non-Executive Director

Mr Hadfield has more than 30 years experience managing medium and large companies including the holding of directorships at publicly-listed industrial and resource companies. Mr Hadfield is Managing Director of Resource Information Unit Pty Ltd.

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Shares directly and
director options
indirectly Held
Michael Kiernan 3,000,000 4,000,000
Robert tyson 2,500,000 3,750,000
Simon Hadfield 2,100,000 3,550,000
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Peel exPloration limited AnnuAl RepoRt 2007

Directors’ Report SeCtion 4

Activities

The continuing principal activity of the Company is the exploration for economic deposits of minerals. For the period of this report, the emphasis has been on base and precious metals.

Results

The loss of the Company for the financial period after providing for income tax amounted to $409,724 (2006: $5,164).

Dividends

Other than as disclosed above there were at the date of this report no matters or circumstances which have arisen since 30th June 2007 that have significantly affected or may significantly affect:

i) the operations of the Company; ii) the results of those operations; or iii) the state of affairs of the Company.

Likely Developments and Expected Results

As the Company’s areas of interest are at an early stage, it is not possible to postulate the likely developments and any expected results.

No dividends were paid or proposed during the period.

Remuneration Report

Review of Operations

Peel Exploration Limited successfully completed its IPO and was admitted to the Official List of the ASX on May 17, 2007. The Company concentrated on the exploration of its various projects located in the New England region of northern New South Wales. A summary of the Company’s activities during the year is contained in the Operations Review section of the Annual Report.

Corporate Structure

Peel Exploration Limited is a limited Company that is incorporated and domiciled in Australia.

Employees

The Company had three employees as at 30 June 2007 – them being the Directors. The Company uses consultants and contractors as required.

Significant Changes

The Directors are not aware of any significant changes in the state of affairs of the Company occurring during the financial period, other than disclosed in this report.

The remuneration report is set out under the following headings:

a) Principles used to determine the nature and amount of remuneration (audited);
b) Details of remuneration (audited);
c) Service agreements (audited);
d) Share-based compensation (audited); and
e) Additional information (unaudited).

a) Principles used to determine the nature and amount of remuneration (audited)

The objective of the Company’s remuneration framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders. The Board believes that executive remuneration satisfies the following key criteria:

[ competitiveness and reasonableness]
[ acceptability to shareholders]
[ performance linkage / ]

alignment of executive compensation

[ transparency]

Matters Subsequent to the End of the Financial Period

On September 21 2007, the NSW government granted EL6883 & EL6884. These licences are jointly referred to as the Attunga Project.

[ capital management.]

These criteria result in a framework which can be used to provide a mix of fixed and variable remuneration, and a blend of short and long-term incentives in line with the Company’s limited financial resources.

Since the end of the financial period the Company has issued 15,000,000 options exercisable at 20c each on or before 30 November 2010, at an issue price of 1c each raising $150,000.

Peel exPloration limited AnnuAl RepoRt 2007

Directors’ Report SeCtion 4

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table 1: Director and senior executive remuneration
Directors of Peel Consulting Super-
Directors Fees Salaries Options Total
Exploration Ltd Fees annuation
2007 $ $ $ $ $ $
Directors
RM tyson - - - - 107,500 107,500
Ml Kiernan - - - - 107,500 107,500
S Hadfield - - - - 107,500 107,500
- - - - - -
nt Hadfield
other executives
D Hocking - - 9,625 - - 9,625
total - - 9,625 - 322,500 332,125
Options do not represent cash payments to Directors and options granted
may or may not be exercised by the Directors.
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Board and Senior Management

Fees and payments to the non-executive Directors and senior executives reflect the demands which are made on, and the responsibilities of, the Directors and the senior management. Such fees and payments are reviewed annually by the Board.

Company policy in relation to issuing options and remunerating executives is that Directors are entitled to remuneration out of the funds of the Company but the remuneration of the non-executive Directors may not exceed in any year the amount fixed by the Company in general meeting for that purpose. The aggregate remuneration of the non-executive Directors has been fixed at a maximum of $200,000 per annum to be apportioned among the non-executive Directors in such a manner as they determine (refer below). Directors are also entitled to be paid reasonable travelling, accommodation and other expenses incurred in consequence of their attendance at Board meetings and otherwise in the execution of their duties as Directors.

c) Service agreements (audited)

Remuneration and other terms of employment for the Directors and executives are not formalised in Service/ Appointment agreements. Major provisions of employment are set out below:

ML KieRnan - There is no written contract for Mr Kiernan, who received payments and benefits totalling $107,500 in his role as a Director of the Company.

RM TySon - There is no written contract for Mr Tyson, who received payments and benefits totalling $107,500 in his role as a Director of the Company.

S HaDfieLD - There is no written contract for Mr Hadfield, who received payments and benefits totalling $107,500 in his role as a Director of the Company.

No service agreements had been entered into in the period since 30 June 2007 to the date of this report.

d) Share-based compensation (audited)

b) Details of remuneration (audited)

Details of the nature and amount of each element of the remuneration of each of the Directors of Peel Exploration Ltd and those senior executives of the Company who received the highest emoluments during the year ended 30 June 2007 are set out in the following table.

The consolidated entity incurred no Director or senior executive remuneration in 2006.

At 30 June 2007 the Company had granted options over 7,500,000 unissued shares to Directors, all issued in the 2007 financial year, arising from the listing of the Company on the ASX. These were: ML Kiernan – 2,500,000 RM Tyson – 2,500,000 S Hadfield – 2,500,000

These options were all granted on 8 March 2007 and expire 30 November 2010 with an exercise price of 30 cents per share. They are all escrowed until 17 May 2009.

Peel exPloration limited AnnuAl RepoRt 2007

Directors’ Report

SeCtion 4

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table 2: options granted as part of remuneration
Value per Value
Value per
option at at date
Grant Grant Vest Expiry option at Exercised % of
2007 exercise option
date number date date grant date number remuneration
date lapsed
$
$ $
RM tyson 8.3.07 2,500,000 8.3.07 30.11.10 0.043 - - - 100
Ml Kiernan 8.3.07 2,500,000 8.3.07 30.11.10 0.043 - - - 100
S Hadfield 8.3.07 2,500,000 8.3.07 30.11.10 0.043 - - - 100
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The value of the options granted has been recognised as share-based remuneration in the financial statements and are expensed accordingly.

Options granted as a part of Director and executive remuneration have been valued using a Black and Scholes option-pricing model, which takes account of factors including the option exercise price, the share price at time of grant, volatility of the underlying share price, the risk-free interest rate and the expected life of the option.

Fair Value of Options

Model inputs for determining the fair value of options granted during year end 30 June 2007 included:

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underlying security spot price $0.125
exercise price $0.30
Dividend rate nil
Standard deviation of returns (annualised) 70%
Risk–free rate 5.85%
Valuation date 1 March 2007
30 november
expiration date
2010
expiration period (years) 3.7509
Black Scholes valuation ($ per security) 0.043
Binomial valuation ($ per security) 0.043
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The dividend yield reflects the assumption that no dividends will be paid out. The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome.

Options included in Directors’ and executives’ remuneration are treated as follows:

Fair values have been assessed using the Black and Scholes option valuation methodology which takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradable nature of the options, the current price and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

Peel exPloration limited AnnuAl RepoRt 2007

Directors’ Report SeCtion 4

Share Options

A detailed breakdown of the Company’s options (unquoted options and Directors options) is as follows:

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Options $
- -
Balance 1 July 2006
Issued to Shareholders on 8 March 2007 7,500,000 -
Issued to Directors on 8 March 2007 7,500,000 322,500
Balance 30 June 2007 15,000,000 322,500
options
- exercisable at 20 cents each on or before 30 november 2010 7,500,000
- exercisable at 30 cents each on or before 30 november 2010 7,500,000
15,000,000
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Meetings of Directors

Directors’ attendance at Directors’ meetings are shown in the following table:

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Director Number held whilst in office Number attended
Ml Kiernan (appointed 15.3.2007) 4 4
RM tyson 8 8
S Hadfield 8 8
nt Hadfield (resigned 15.3.2007) 5 5
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Indemnification and Insurance of Directors and Officers

During the financial year the Company paid insurance premiums in respect of Directors’ and Officers’ Liability Insurance contracts for the current Directors and officers. The Directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of this insurance, as such disclosure is prohibited under the terms of the contract.

have been no known breaches of the licence conditions.

Auditor’s Independence Declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is included at the end of this financial report.

Auditor

BDO Kendalls Audit & Assurance (WA) Pty Ltd continues in office under section 327 of the Corporations Act 2001.

Proceedings on Behalf of the 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.

This report is made in accordance with a resolution of the Board of Directors:

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

Environmental Performance

Peel Exploration Ltd holds exploration licences issued by the NSW Department of Primary Industry which specifies guidelines for environmental impacts in relation to exploration activities. The licence conditions provide for the full rehabilitation of the areas of exploration in accordance with the Department’s guidelines and standards. There

Rob Tyson Director Perth, Western Australia

Dated on this the 28th day of September 2007.

Peel exPloration limited AnnuAl RepoRt 2007

SeCtion 5

income Statement

For the Year ended 30 june 2007	For the Year ended 30 june 2007	For the Year ended 30 june 2007	For the Year ended 30 june 2007
	Note	2007 $	2006 $
Continuing operations
Revenue	3	13,461	-

Share-based remuneration to employees and directors		(322,500)	-
exploration expenditure written-off		(56,719)	-
Administration expenses		(43,966)	(5,164)

loss before income tax expense		(409,724)	(5,164)

Income tax expense	4	-	-

loss for the year		(409,724)	(5,164)

Basic and diluted loss per share (cents per share)	21	(4.0)	(0.3)
The above income statements should be read in conjunction with the accompanying notes.

Peel exPloration limited AnnuAl RepoRt 2007

SeCtion 6

Balance Sheet

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as at 30 june 2007
Note 2007 $ 2006 $
Current assets
Cash and Cash equivalents 5 2,656,920 1,088
trade and other Receivables 6 22,850 1,000
total Current assets 2,679,770 2,088
non-current assets
Receivables 7 40,000 -
plant and equipment 8 1,676 -
exploration licences 9 11,425 3,220
total non-current assets 53,101 3,220
total assets 2,732,871 5,308
Current liabilities
trade and other payables 10 26,197 4,000
Borrowings 11 - 4,372
total Current liabilities 26,197 8,372
total liabilities 26,197 8,372
net assets / (liabilities) 2,706,674 (3,064)
equity
Contributed equity 12 2,799,062 2,100
Accumulated losses 13 (414,888) (5,164)
Reserves 13 322,500 -
total equity 2,706,674 (3,064)
The above balance sheet statements should be read in conjunction with the accompanying notes.
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Peel exPloration limited AnnuAl RepoRt 2007

SeCtion 7

Statement of Cash Flows

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For the Year ended 30 june 2007
Note 2007 $ 2006 $
Cash flows from operating activities
payments to suppliers and employees (101,338) (1,164)
Interest received 13,461 -
net cash outflow from operating activities 20 (87,877) (1,164)
Cash flows from investing activities
payments for mineral exploration expenditure (8,205) (3,220)
-
payment of security deposits (40,000)
-
payments for purchase of plant and equipment (1,676)
net cash outflow from investing activities (49,881) (3,220)
Cash flows from financing activities
proceeds from issues of shares 3,032,700 2,100
transaction costs of issue of shares (235,738) -
loans to other parties 1,000 (1,000)
proceeds from borrowings (4,372) 4,372
net cash inflow from financing activities 2,793,590 5,472
net increase in cash and cash equivalents 2,655,832 1,088
Cash and cash equivalents at the beginning of the financial year 1,088 -
Cash and cash equivalents at the end of the financial year 2,656,920 1,088
The above cash flow statements should be read in conjunction with the accompanying notes.
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Peel exPloration limited AnnuAl RepoRt 2007

SeCtion 8

Statement of Chan es in e uit g q y

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For the Year ended 30 june 2007
Contributed equity Accumulated
Reserves $ Total equity $
$ losses $
at 20 april 2006 - - - -
- -
loss for the period (5,164) (5,164)
Issue of share capital 2,100 - - 2,100
at 30 June 2006 2,100 (5,164) - (3,064)
- -
loss for the year (409,724) (409,724)
Issue of share capital 3,032,700 - - 3,032,700
Share issue expenses 235,738 - - (235,738)
Share-based payments - - (322,500) 322,500
at 30 June 2007 2,799,062 (414,888) 322,500 2,706,674
The above changes in equity statements should be read in conjunction with the accompanying notes.
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Peel exPloration limited AnnuAl RepoRt 2007

SeCtion 9

notes to the Accounts

1. Statement of Significant Accounting Policies

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report includes the financial statements for Peel Exploration Limited (“the Company”).

attributable to temporary differences and to unused tax losses.

Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

(a) Basis of preparation

This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001.

Compliance with IFRS

Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial statements and notes of Peel Exploration Limited comply with International Financial Reporting Standards (IFRS).

Historical cost convention

These financial statements have been prepared under the historical cost convention.

(b) Revenue recognition

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

Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised. A deferred income tax asset is not recognised where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss or when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax to be utilised.

Interest income

Revenue is recognised as the interest accrues using the effective interest rate method.

(c) income tax

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities

Deferred income tax assets and liabilities are measured at

the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted at the balance date. Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.

Peel exPloration limited AnnuAl RepoRt 2007

notes to the Accounts SeCtion 9

(d) impairment of assets

At each reporting date, the company assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the company makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.

Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cashgenerating unit to which the asset belongs. The estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

No impairment losses have been recognised for the years ending 30 June 2007 and 2006.

(e) Cash and cash equivalents

For cash flow statement preparation purposes, cash and cash equivalents includes cash on hand and deposits held at call with financial institutions. Bank overdrafts are shown within borrowings in the current liabilities of the balance sheet.

(f) Trade and other receivables

Trade receivables, which generally have 30 to 90 day terms, are carried at nominal amounts due less an allowance for any uncollectible amounts. An allowance for doubtful debts is made when there is objective evidence that the Company will not be able to collect the debts. Bad debts are written off when identified.

(h) fair value estimation

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Company for similar financial instruments.

(i) Plant and equipment

All assets acquired, including plant and equipment are initially recorded at their cost of acquisition, being the fair value of the consideration provided plus incidental costs directly attributable to the acquisition.

Plant and equipment is included at cost less provision for depreciation and any impairment in value and depreciated on a straight-line basis commencing from the time the asset is held ready for use.

An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.

(j) exploration and evaluation expenditure

Exploration licences

Exploration licences costs are capitalised on payment. They are not amortised but are reviewed each financial period in respect of each licence being still held by the Company. They are expensed through the profit and loss where the licence is no longer held and the licence cost is not recoverable.

(g) other financial assets

Security deposits

Security deposits are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

The company’s policy with respect to exploration expenditure is to write off all costs as incurred. Accordingly, exploration expenditure of $56,719 has been written off during the year. The decision to write off exploration

Peel exPloration limited AnnuAl RepoRt 2007

SeCtion 9

notes to the Accounts

expenditure as incurred does not indicate any change in the board’s view of the intrinsic value of the mining leases held by the company. Rather, the decision was taken, as it is the most prudent treatment available under current accounting standards for such expenditure.

The carrying value of exploration and evaluation expenditure carried forward in respect of each area of interest is assessed for impairment when facts and circumstances suggest the carrying amount may exceed its recoverable amount. Any resulting impairment loss is recognised as an expense in the income statement.

(k) Trade and other payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

(l) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled, or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in other income or other expenses.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

(m) Contributed equity

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,

net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.

If the entity acquires its own equity instruments, e.g. as the result of a share buy-back, those instruments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in equity.

(n) earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing 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 year.

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing 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.

(o) Goods and services tax

Revenues, expenses and assets are recognised net of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable is included as a current asset in the balance sheet.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from the taxation authority are classified as operating cash flows.

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notes to the Accounts SeCtion 9

(p) new accounting standards and interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2007 reporting periods. The Company’s assessment of the impact of these new standards and interpretations is set out below:

(i) AASB 7 Financial Instruments: Disclosures and AASB 2005-10 Amendments to Australian Accounting Standards (AASB 132, AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1, AASB 4, AASB 1023 & AASB 1038).

AASB 7 and AASB 2005-10 are applicable to annual reporting periods beginning on or after 1 January 2007. The Company has not adopted the standards early. Application of the standards will not affect any of the amounts recognised in the financial statements, but will impact the type of information disclosed in relation to the Company’s financial instruments.

(ii) AASB-I 10 Interim Financial Reporting

and Impairment

AASB-I 10 is applicable to reporting periods commencing on or after 1 November 2006. The Company has not

recognised any impairment losses from inception to date. Application of the interpretation will therefore have no impact on the Company’s financial statements.

No initial application of any other issued and effective Australian Accounting Standard has had any significant effect on the current period or any prior period. Furthermore, no other new Australian Accounting Standard, which has been issued but is not yet effective, is expected to have any significant effect on a future reporting period.

2. Financial Risk Management

The net fair values of financial assets and financial liabilities approximate their carrying values, as disclosed in the balance sheet. The maximum exposure to credit risk at balance date is the carrying amount of financial assets (i.e., cash and receivables) as disclosed in balance sheet and notes to the financial statements. The Company’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rate on classes of financial assets and financial liabilities, is as follows:

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Fixed interest rate
Non-interest bearing
maturing within Total $
$
1 year $
Financial assets & liabilities 2007
Cash and cash equivalents 2,613,460 43,460 2,656,920
Receivables - current - 22,850 22,850
- non-current - 40,000 40,000
Creditors & accruals - (26,197) (26,197)
2,613,460 80,113 2,693,573
Weighted average interest rate 6.18%
Financial assets & liabilities 2006
Cash and cash equivalents - 1,088 1,088
Receivables - current - 1,000 1,000
- non-current - - -
Creditors & accruals - (8,372) (8,372)
-
(6,284) (6,284)
Weighted average interest rate nil%
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The Company manages its interest rate risk through the use of fixed term deposits, to manage the unpredictability of financial markets and seek to minimise potential adverse effects on financial performance.

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3. Revenue

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2007 $ 2006 $
Interest received 13,461 -
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4. Income Tax

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income tax expense
Current tax - -
Deferred tax - -
- -
numerical reconciliation of income tax expense to prima facie tax payable:
Accounting loss before income tax (409,724) (5,164)
At the statutory income tax rate of 30% (2006: 30%) (122,917) (1,549)
expenditure not allowable for income tax purposes:
non-deductible expenses 96,750 -
tax losses not brought to account 26,167 1,549
- -
Income tax benefit reported in the income statement
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The Company has tax losses arising in Australia of $29,595 (2006: $1,549) that are available indefinitely for offset against future taxable profits of the Company. No deferred tax asset has been recognised in respect of these losses at this point in time as the Company is still engaged in exploration activities. The Company also has an unrecognised deferred tax asset in respect of equity raising costs of $70,721.

5. Cash and Cash Equivalents

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Cash at bank and in hand 43,460 1,088
term deposit with a financial institution 2,613,460 -
2,656,920 1,088
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The above figures agree to cash at the end of the financial year as shown in the statement of cash flows. The deposit is bearing a fixed interest rate of 6.18% and has a 30 day term.

6. Trade and Other Receivables

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GSt recoverable from taxation authority 22,850 -
unsecured loans – related parties (note 14) - 1,000
22,850 1,000
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7. Receivables (Non-current)

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Security deposits on mining tenements 40,000 -
40,000 -
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Peel exPloration limited AnnuAl RepoRt 2007

notes to the Accounts SeCtion 9

8. Plant and Equipment

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2007 $ 2006$
Plant and equipment
At cost 1,676 -
- -
less accumulated depreciation
1,676 -
reconciliation
- -
Carrying amount at beginning of year
Additions 1,676 -
- -
Depreciation expense
Carrying amount at end of year 1,676 -
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9. Exploration Licences

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opening balance 3,220 -
payment of exploration licences 8,205 3,220
Closing balance 11,425 3,220
10. Trade and Other Payables
trade payables 23,197 4,000
other payables 3,000 -
26,197 4,000
11. Borrowings
unsecured loan – related party (note 14) - 4,372
12. Contributed Equity
(a) Share capital
30,000,000 (2006: 2,100,000) ordinary shares fully paid 2,799,062 2,100
(b) Movements in ordinary share capital Shares $
Balance 1 July 2005 - -
Shares issued 20 April 2006 2,100,000 2,100
Balance 30 June 2006 2,100,000 2,100
Shares issued as seed capital 17 July 2006 2,700,000 20,700
Shares issued as seed capital 27 February 2007 10,200,000 12,000
Shares issued pursuant to Ipo 11 May 2007 15,000,000 3,000,000
transaction costs on share issues - (235,738)
Balance 30 June 2007 30,000,000 2,799,062
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(c) ordinary shares ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held.

on a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

(d) options

Information relating to options issued during the year is set out in note 13.

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notes to the Accounts

SeCtion 9

13. Reserves

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2007 $ 2006 $
(i) Accumulated losses
-
Balance 1 July (5,164)
loss for the year (409,724) (5,164)
Balance 30 June (414,888) (5,164)
(ii) Share-based payments reserve
- -
Balance 1 July
option expenses 322,500 -
Balance 30 June 322,500 -
nature and purpose of reserve
the share-based payment reserve represents the fair value of equity benefits provided to Directors and employees as part of their
remuneration for services provided to the Company paid for by the issue of equity.
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Options $
Balance 1 July 2006 - -
Issued to Shareholders on 8 March 2007 7,500,000 -
Issued to Directors on 8 March 2007 7,500,000 322,500
Balance 30 June 2007 15,000,000 322,500
- exercisable at 20 cents each on or before 30 november 2010 7,500,000
- exercisable at 20 cents each on or before 30 november 2010 7,500,000
15,000,000
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Model inputs for options granted during the year ended 30 June 2007 included:
underlying security spot price $0.125
exercise price $0.30
Dividend rate nil
Standard deviation of returns (annualised) 70%
Risk free rate 5.85%
Valuation date 1 March 2007
expiration date 30 november 2010
expiration period (years) 3.7509
Black Scholes valuation ($ per security) 0.043
Binomial valuation ($ per security) 0.043
the expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. the
expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the
actual outcome. no other features of options granted were incorporated into the measurement of fair value.
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notes to the Accounts SeCtion 9

14. Key Management Personnel Disclosures

Details of key management personnel

Executive Director

R M Tyson (appointed on 20 April 2006)

Non-Executive Directors

M L Kiernan (appointed 15 April 2007) S Hadfield (appointed 20 April 2006) n T Hadfield (appointed 20 April 2006 and resigned 15 March 2007)

Other key management personnel

The following person also had authority and responsibility for planning, directing, and controlling the activities of the Company, directly or indirectly:

D Hocking , Company Secretary and Corporate Accountant (appointed 15 March 2007)

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Key management personnel compensation 2007 $ 2006 $
- -
Short-term employee benefits
- -
post-employment benefits
- -
long-term benefits
Share-based payments 322,500 -
322,500 -
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The Company has taken advantage of relief provided by Corporations Regulation 2M.6.04 and has transferred the detailed remuneration disclosures to the Directors’ Report. The relevant information can be found in the remuneration report in the Directors’ Report.

equity instrument disclosures relating to key management personnel

Options provided as remuneration and shares issued on exercise of such options

Details of options provided as remuneration and share issued on the exercise of such options, together with terms and conditions of the options, can be found in note 13.

Option holdings

The numbers of options over ordinary shares in the company held during the financial year by each director of Peel Exploration Limited and other key management personnel of the Company, including their personally related parties, are set out below:

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Balance at Granted, Balance at
Granted as Vested and
the start of non- Exercised end of the Unvested
compensation exercisable
30 June 2007 the year compensation year
directors
R M tyson - 2,500,000 1,250,000 - 3,750,000 3,750,000 -
M l Kiernan - 2,500,000 1,500,000 - 4,000,000 4,000,000 -
S Hadfield - 2,500,000 1,050,000 - 3,550,000 3,550,000 -
n t Hadfield - - 50,000 - 50,000 50,000 -
other key management personnel
- - - - - - -
D Hocking
option holdings for Mr Kiernan are from date of appointment on 15 March 2007. option holdings for Mr n t Hadfield are subsequent to his
date of resignation as a director on 15 March 2007.
All vested options are exercisable at the end of the year.
there were no options held by or issued to directors for the period ended 30 June 2006.
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notes to the Accounts

SeCtion 9

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share holdings of key management personnel shares in Peel exploration limited (number)
Received during
Balance at Other changes Balance at
the year on the
1 July 2006 during the year 30 June 2007
30 June 2007 exercise of options
directors
R M tyson 1,000,000 - 1,500,000 2,500,000
M l Kiernan - - 3,000,000 3,000,000
S Hadfield 1,000,000 - 1,100,000 2,100,000
n t Hadfield 100,000 - - 100,000
other key management personnel
- - - -
D Hocking
Shareholdings for Mr M l Kiernan are from date of appointment on 15 March 2007. Shareholdings for Mr n t Hadfield are up to the date of
resignation as a director on 15 March 2007. there were no shares issued as compensation during the year.
Received during
Balance at Other changes Balance at
the year on the
1 July 2005 during the year 30 June 2006
30 June 2006 exercise of options
directors
R M tyson - - 1,000,000 1,000,000
M l Kiernan - - - -
S Hadfield - - 1,000,000 1,000,000
n t Hadfield - - 100,000 100,000
there were no key management personnel other than directors in the period ended 30 June 2006.
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Other transactions with key management personnel

A director, R M Tyson, loaned the Company a total of $57,029 during the year ended 30 June 2007. This amount was repaid during the year.

A director, S Hadfield, is a director of Resource Information Unit (RIU). RIU loaned the Company a total of $37,985 during the year ended 30 June 2007. This amount was repaid during the year.

A director, S Hadfield, is a director of Salamar Pty Ltd. Salamar Pty Ltd loaned the Company a total of $4,372 during the year ended 30 June 2006. This amount was repaid during the year.

A director, S Hadfield, is a director of Resource Information Unit (RIU). RIU charges the Company management fees on a monthly basis. Total fees charged to the Company by RIU for the year ended 30 June 2007 were $3,000. This amount is included on the income statement within administration expenses and on the balance sheet within trade and other payables at year end.

The Company Secretary, D Hocking, provides accounting services to the Company. Fees for services rendered during the year ended 30 June 2007 totalled $9,625. This amount has been included on the income statement within administration expenses. A fee payable to D Hocking of $4,625 is included on the balance sheet within trade and other payables for accounting services received but unpaid as at year end.

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notes to the Accounts SeCtion 9

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aggregate amounts of each of the above types of other transactions with key
management personnel of Peel exploration limited:
2007 $ 2006 $
amounts recognised as expense
Management fees 3,000 -
Accounting service 9,625 -
12,625 -
aggregate amounts payable to key management personnel or their affiliates at balance date relating to the above types of
other transactions:
Current liabilities 7,625 -
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15. Remuneration of Auditors

amounts paid or due and payable to the auditors for:	amounts paid or due and payable to the auditors for:	amounts paid or due and payable to the auditors for:
Auditing or reviewing the fnancial report	7,750	4,000
other services	-	-
	7,750	4,000

16. Contingencies

The Company had no contingent assets or liabilities for the year ended 30 June 2007.

17. Expenditure Commitments

Capital expenditure commitments

Under the terms of mineral tenement licences held by the Company, minimum annual expenditure obligations are required to be expended during the forthcoming financial year in order for the tenements to maintain a status of good standing. This expenditure may be subject to variation from time to time in accordance with Department of Industry and Resources regulations.

capital expenditure commitments contracted for at the reporting date but not recognised as liabilities are as follows:	capital expenditure commitments contracted for at the reporting date but not recognised as liabilities are as follows:	capital expenditure commitments contracted for at the reporting date but not recognised as liabilities are as follows:
	2007 $	2006 $
Within one year	196,500	90,000
later than one year but not later than fve years	106,500	-
later than fve years	-	-
	303,000	90,000

18. Related Parties

Transactions with related parties

The son of M L Kiernan, a director, is a promoter for Bell Potter. Bell Potter is the brokering agency the Company used to list their shares on the Australian Stock Exchange. Amounts totalling $150,000 were paid to Bell Potter during the year and have been recognised within transaction costs on raising equity in note 14.

Peel exPloration limited AnnuAl RepoRt 2007

notes to the Accounts

SeCtion 9

19. Events Occurring After the Balance Sheet Date

The Company issued 15,000,000 $0.20 listed options effective 31 July 2007.

There has not arisen in the interval between the end of financial year and the date of this report any other item, transaction or event of a material or unusual nature, which is likely in the opinion of the Directors, to affect substantially the operation of the Company, the result of those operations and the state of affairs of the Company in the financial year subsequent to 30 June 2007.

20. Reconciliation of Net Cash Outflow from Operating Activities to Loss After Income Tax

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2007 $ 2006 $
net cash outflow from operating activities (87,877) (1,164)
-
Share-based payments (322,500)
- -
Depreciation
Changes in operating assets and liabilities
Increase in receivables 21,850 -
Increase in payables (21,197) (4,000)
loss after income tax (409,724) (5,164)
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21. Earnings Per Share

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2007 cents 2006 cents
Basic earnings per share
loss from continuing operations attributable to the ordinary equity holders of the (4.0) (0.3)
Company
diluted earnings per share
there is no impact of dilutive shares as the Company made a loss for the year, hence any dilution would reduce the loss per share.
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2007 $ 2006 $
reconciliation of loss used in calculation of earnings per share
Basic earnings per share
loss from continuing operations and attributable to the ordinary equity holders of the
(409,724) (5,164)
Company used in calculating basic earnings per share
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating
10,200,000 2,100,000
basic earnings per share
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There is no impact of dilutive shares as the company made a loss for the year, hence any dilution would increase the weighted average number of shares and reduce the loss per share.

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notes to the Accounts SeCtion 9

22. Share-based Payments

option plan

The Company does not have an employee option plan. However, the Board elected to issue 7,500,000 options to Directors for their services to the Company during the year ended 30 June 2007. No consideration was received for options granted.

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Vested and
Balance at Granted Exercised Balance at
exercisable
Grant Expiry Exercise start of during during end of the
at end of
date date price the year the year the year year
30 June the year
Number Number Number Number
2007 Number
30
8 March november $0.30 - 7,500,000 - 7,500,000 7,500,000
2007
2010
there were no options issued prior to 8 March 2007.
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The remaining contractual life of share options outstanding at the end of the period was 3 years and 5 months.

Fair value of options granted

The assessed fair value at grant date of options granted during the year ended 30 June 2007 was $0.043 per option. The fair value at grant date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free rate for the term of the option.

Model inputs for the options granted during the year ended 30 June 2007 have been included in note 13.

expenses arising from share based-payment transactions

Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense were as follows:

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2007 $ 2006 $
options issued to directors 322,500 -
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23. Comparatives

The comparative figures relate to the period from 20 April 2006 to 30 June 2006.

Peel exPloration limited AnnuAl RepoRt 2007

SeCtion 10

Directors’ Declaration

The Board of Directors of Peel Exploration Limited declares that:

(a) the financial statements, associated notes and the additional disclosures included in the Directors’ Report designated as audited of the Company, comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;

(b) the financial statements, associated notes and the additional disclosures included in the Directors’ Report designated as audited of the Company, give a true and fair view of the financial position as at 30 June 2007 and performance of the Company for the financial year ended on that date;

(c) at the date of this declaration, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due;

(d) the audited remuneration disclosures set out on pages 13 to 17 of the Directors’ Report comply with Accounting Standards AASB 124 Related Party Disclosures and the Corporations Regulations 2001.

The financial report has been made out in accordance with Australian Accounting Standards and the Corporations Act 2001.

This declaration has been made out after the Board of Directors received the declaration by the Executive Director and Chief Financial Officer required by Section 295A of the Corporations Act 2001.

Signed in accordance with a resolution of the directors.

Rob Tyson

Director

Perth, Western Australia

Dated on this the 28th day of September 2007.

Peel exPloration limited AnnuAl RepoRt 2007

SeCtion 11

Auditor’s inde endence Declaration p

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Peel exPloration limited AnnuAl RepoRt 2007

SeCtion 12

inde endent Auditor’s Re ort p p

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Peel exPloration limited AnnuAl RepoRt 2007

independent Auditor’s Report SeCtion 12

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Peel exPloration limited AnnuAl RepoRt 2007

SeCtion 13

Cor orate Governance Statement p

A description of the Company’s main corporate governance practices is set out below. These practices, unless otherwise stated, were adopted on 20th March 2007. Copies of relevant corporate governance policies are available in the corporate governance section of the Company’s website at www.peelex.com.au.

Board of Directors

The Board is responsible for guiding and monitoring the Company on behalf of shareholders by whom they are elected and to whom they are accountable. The Board’s primary responsibility is to oversee the Company’s business activities and management for the benefit of shareholders. Day-to-day management of the Company’s affairs and the implementation of corporate strategies and policy initiatives are formally delegated by the Board to the Managing Director and senior executives, as set out in the Company’s Board charter.

Board composition

The Board charter states that:

the Board is to comprise an appropriate mix of both Executive and Non-Executive Directors.
the roles of Chairman and Managing Director will not be combined.
the Chairman is elected by the full Board and is required to meet regularly with the Managing Director.

Board members should possess complementary business disciplines and experience aligned with the Company’s objectives, with a number of Directors being independent and where appropriate, major shareholders being represented on the Board. Consequently, at various times there may not be a majority of directors classified as being independent, according to ASX guidelines. However, where any Director has a material personal interest in a matter, the Director will not be permitted to be present during discussions or to vote on the matter.

Directors’ independence

The experience, qualifications and term of office of Directors are set out in the Directors’ Report. The Board comprises three Directors none of whom are considered independent under the principles set out below. Having regard to the share ownership structure of the Company, it is considered appropriate by the Board that a major shareholder may be represented on the Board and if nominated, hold the position of Chairman. Such appointment would not be deemed to be independent under ASX guidelines. The Chairman is expected to bring independent thought and judgement to his role in all circumstances. Where matters arise in which there is a perceived conflict of interest, the Chairman must declare his interest and abstain from any consideration or voting on the relevant matter.

The Board has adopted ASX recommended principles in relation to the assessment of Directors’ independence. Financial materiality thresholds used in the assessment of independence are set at 10% of the annual gross expenditure of the Company and/or 25% of the annual income or business turnover of the Director.

Directors have the right, in connection with their duties and responsibilities, to seek independent professional advice at the Company’s expense, subject to the prior written approval of the Chairman, which shall not be unreasonably withheld.

Peel exPloration limited AnnuAl RepoRt 2007

Corporate Governance Statement SeCtion 13

Performance assessment

The Board has adopted a formal process for an annual self assessment of its collective performance and the performance of individual Directors. The Board is required to meet annually with the purpose of reviewing the role of the Board, assessing its performance over the previous 12 months and examining ways in which the Board can better perform its duties. A formal assessment was undertaken during the year, using a self-assessment checklist as the basis for evaluation of performance against the requirements of the Board charter.

Corporate reporting

The Managing Director and Chief Financial Officer provide a certification to the Board on the integrity of the Company’s external financial reports. The Board does not specifically require an additional certification that the financial statements are founded on a sound system of risk management and that compliance and control systems are operating efficiently and effectively. The Board considers that risk management and internal compliance and control systems are sufficiently robust for the Board to place reliance on the integrity of the financial statements without the need for an additional certification by management.

Peel exPloration limited AnnuAl RepoRt 2007

Corporate Governance Statement

SeCtion 13

Board Committees

Whilst at all times the Board retains full responsibility for guiding and monitoring the Company, in discharging its stewardship makes use of committees. To this end the Board has established or may establish the following committees:

Audit Committee;
Nomination Committee; and
Remuneration Committee.

At present the Board has deemed that the Company’s current size does not sufficiently warrant the establishment of the above-mentioned committees; however the Board will continually re-evaluate this position as necessary. If or when these committees are established, each will have its own written charter. Matters determined by the committees will be submitted to the full Board as recommendations for Board consideration.

If or when an audit committee is established, the committee will oversee accounting and reporting practices and will also be responsible for:

co-ordination and appraisal of the quality of the audits conducted by the Company’s external auditors;
determination of the independence and effectiveness of the external auditors;
assessment of whether non-audit services have the potential to impair the independence of the external auditor;
reviewing the adequacy of the reporting and accounting controls of the Company.

If or when a remuneration committee is established, the remuneration committee will review all remuneration policies and practices for the Company, including overall strategies in relation to executive remuneration policies and compensation arrangements for the Managing Director and Non-Executive Directors, as well as all equity based remuneration plans.

Details of the Company’s current remuneration policies are set out in the Remuneration Report section of the Directors’ Report. The remuneration policy states that Executive Directors may participate in share option schemes with the prior approval of shareholders. Executives may also participate in employee share option schemes, with any option issues generally being made in accordance with thresholds set in plans approved by shareholders. The Board however, considers it appropriate to retain the flexibility to issue options to executives outside of approved employee option plans in appropriate circumstances.

The responsibility for the selection of potential directors and to review membership lies with the full Board of the Company and consequently no separate nomination committee has been established. In circumstances where the size of the Board is expanded as a result of the growth or complexity of the Company, the establishment of a separate nomination committee will be reconsidered.

Peel exPloration limited AnnuAl RepoRt 2007

Corporate Governance Statement SeCtion 13

External Auditors

The performance of the external auditor is reviewed annually. BDO Kendalls were appointed as the external auditors in 2006. It is both the Company’s and BDO Kendalls’ policy to rotate audit engagement partners at least every five years and the review partner every five years.

The external auditors provide an annual declaration of their independence to the Board. The external auditor is requested to attend annual general meetings and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the audit report.

Code of Conduct

A formal code of conduct for the Company applies to all Directors and employees. The code aims to encourage the appropriate standards of conduct and behaviour of the Directors, officers, employees and contractors of the Company. All personnel are expected to act with integrity and objectivity, striving at all times to enhance the reputation and performance of the Company.

Trading in the Company’s securities by Directors and senior executives is not permitted in the two months immediately preceding the release of the Company’s annual and half-year financial results. Any transactions to be undertaken must be notified to the Chairman or Managing Director in advance.

Continuous Disclosure and Shareholder Communications

The Company has a formal written policy for the continuous disclosure of any price sensitive information concerning the Company. The Board has also adopted a formal written policy covering arrangements to promote communications with shareholders and to encourage effective participation at general meetings.

The Managing Director and Company Secretary have been nominated as the Company’s primary disclosure officers. All information released to the ASX is posted on the Company’s website immediately after it is disclosed to the ASX. When analysts are briefed on aspects on the Company’s operations, the material used in the presentation is released to the ASX and posted on the Company’s website. All shareholders receive a copy of the Company’s annual report. In addition, the Company makes all market announcements, media briefings, details of shareholders meetings, press releases and financial reports available on the Company’s website.

Peel exPloration limited AnnuAl RepoRt 2007

SeCtion 14

Shareholder information

Information relating to shareholders at 28 September 2007.

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substantial shareholders
No. Ord
Holder %
Shares
1 CRAWleY InVeStMentS ptY ltD 3,000,000 10.00
2 MR lAuRenCe JAMeS KIeRnAn 3,000,000 10.00
3 MR RoBeRt MAClAIne tYSon 2,500,000 8.33
4 MR SIMon HADFIelD 2,100,000 7.00
5 MS lISA DupeRouZel 2,100,000 7.00
6 MRS lInDA SAlA tennA 2,075,000 6.92
Distribution of shareholders
No. Ord
Range No. of Holders %
Shares
1 - 1,000 0 0 0.00
1,001 - 5,000 23 67,144 0.22
5,001 - 10,000 95 922,826 3.08
10,001 - 100,000 327 10,060,020 33.53
100,001 - 9,999,999 27 18,950,010 63.17
Rounding 0.00
total 472 30,000,000 100.00
twenty largest shareholders
No. Ord
Holder %
Shares
1 CRAWleY InVeStMentS ptY ltD 3,000,000 10.00
2 MR lAuRenCe JAMeS KIeRnAn 3,000,000 10.00
3 MR RoBeRt MAClAIne tYSon 2,100,000 7.00
4 MS lISA DupeRouZel 1,500,000 5.00
5 MRS lInDA SAlA tennA 1,500,000 5.00
6 SAlAMAR ptY ltD 1,100,000 3.67
7 MR SIMon HADFIelD 1,000,000 3.33
8 Blue CRYStAl ptY ltD 600,000 2.00
9 KAtAnA CApItAl lIMIteD 600,000 2.00
10 ClASSIC CApItAl ptY ltD 500,000 1.67
11 Ron & lIZ noMIneeS ptY ltD (RonAlD JAMeS SupeR FunD A/C) 450,000 1.50
12 MR JoRDAn tYSon + MR FlYnn tYSon 400,000 1.33
MR pAul HoDDeR + MR JAMeS RAMSAY + MR DAnIel FoSteR
13 300,000 1.00
(DeltA Blue InVeStMentS A/C)
MR SCott pAul JoneS + MR RoDneY MAlColM JoneS
14 300,000 1.00
+ MISS CARol RoBIn JoneS (SCopA FAMIlY A/C)
15 KB33 CApItAl ptY ltD (CHARItY A/C) 300,000 1.00
16 WonDeR HolDInGS ptY ltD 290,000 0.97
17 MAJ ptY ltD (WAllACe SupeR FunD A/C) 250,000 0.83
18 MR DenIS IVAn RAKICH (tHe RAKICH RetIReMent A/C) 250,000 0.83
19 SAMS MARKetInG ptY ltD (WAuGH pRoVIDent FunD A/C) 250,000 0.83
20 HopeRIDGe enteRpRISeS ptY ltD (JoneS FAMIlY A/C) 200,000 0.67
17,890,000 59.63
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At the prevailing market price of $0.28 per Share there were five Shareholders with less than a marketable parcel of $500 at 28 September 2007.

Peel exPloration limited AnnuAl RepoRt 2007

Shareholder information SeCtion 14

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Distribution of optionholders
Range No. of Holders Options %
1 - 1,000 5 3,635 0.02
1,001 - 5,000 77 349,051 2.33
5,001 - 10,000 154 1,280,571 8.54
10,001 - 100,000 136 3,514,500 23.43
100,001 - 9,999,999 21 9,852,243 65.68
rounding 0.00
total 393 15,000,000 100.00
twenty largest optionholders
Holder Options %
1 CRAWleY InVeStMentS ptY ltD 1,622,874 10.82
2 MR lAuRenCe JAMeS KIeRnAn 1,622,874 10.82
3 MR RoBeRt MAClAIne tYSon 1,172,874 7.82
4 MS lISA DupeRouZel 750,000 5.00
5 MRS lInDA SAlA tennA 750,000 5.00
6 SAlAMAR ptY ltD 672,873 4.49
7 MR SIMon HADFIelD 500,000 3.33
8 ClASSIC CApItAl ptY ltD 495,748 3.30
9 Blue CRYStAl ptY ltD 300,000 2.00
10 KAtAnA CApItAl lIMIteD 300,000 2.00
11 Ron & lIZ noMIneeS ptY ltD (RonAlD JAMeS SupeR FunD A/C) 225,000 1.50
12 MR JoRDAn tYSon + MR FlYnn tYSon 200,000 1.33
MR pAul HoDDeR + MR JAMeS RAMSAY + MR DAnIel FoSteR
13 150,000 1.00
(DeltA Blue InVeStMentS A/C)
14 HopeRIDGe enteRpRISeS ptY ltD (JoneS FAMIlY A/C) 150,000 1.00
MR SCott pAul JoneS + MR RoDneY MAlColM JoneS
15 150,000 1.00
+ MISS CARol RoBIn JoneS (SCopA FAMIlY A/C)
16 KB33 CApItAl ptY ltD (CHARItY A/C) 150,000 1.00
17 WonDeR HolDInGS ptY ltD 145,000 0.97
18 MAJ ptY ltD (WAllACe SupeR FunD A/C) 125,000 0.83
19 MR DenIS IVAn RAKICH (tHe RAKICH RetIReMent A/C) 125,000 0.83
20 SAMS MARKetInG ptY ltD (WAuGH pRoVIDent FunD A/C) 125,000 0.83
9,732,243 64.87
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At the prevailing market price of $0.096 per Option there were eighty-two Optionholders with less than a marketable parcel of $500 at 28 September 2007.

Peel exPloration limited AnnuAl RepoRt 2007

Shareholder information

SeCtion 14

At 28 September 2007 there were 472 holders of ordinary shares in the Company.

The following shares and options are restricted by ASX:

Ordinary fully paid shares, restricted for 24 months from date of quotation (1 June 2006) – 13,890,000 Ordinary fully paid shares, restricted for 12 months from date of quotation (1 June 2006) – 1,000,000

30 November 2010 20c Options restricted for 24 months from date of issue (1 June 2006) – 7,000,000 30 November 2010 20c Options restricted for 12 months from date of issue (1 June 2006) – 500,000 30 November 2010 30c Options restricted for 24 months from date of issue (1 June 2006) – 7,500,000

Voting Rights

The voting rights attaching to the ordinary shares, set out in Clause 12.11 of the Company’s Constitution, are:

“Subject to any rights or restrictions for the time being attached to any class or classes of Shares, at meetings of Shareholders or classes of Shareholders:

(a) each Shareholder entitled to vote may vote in person or by proxy, attorney or Representative;
(b) on a show of hands, every person present who is a Shareholder or a proxy, attorney or Representative of a Shareholder has one vote; and
(c) on a poll, every person present who is a Shareholder or a proxy, attorney or Representative of a Shareholder shall, in respect of each fully paid Share held by him, or in respect of which he is appointed a proxy, attorney or Representative, have one vote for the Share, but in respect of partly paid Shares, shall have such number of votes being equivalent to the proportion which the amount paid (not credited) is of the total amounts paid and payable in respect of those Shares (excluding amounts credited).”

Statement under ASX Listing Rule 4.10.19

From the date of admission of the Company’s shares on ASX (17 May 2007) to the date of this Annual Report, the Company has used the cash and assets in a form readily convertible to cash that it had at the time of admission in a way consistent with its business objectives. Expenditures have been in line with Prospectus estimates.

Peel exPloration limited AnnuAl RepoRt 2007

Exploring forgotten mineral fields

peel exploration limited ACN 119 343 734 telephone (08) 9382 3955 level 1, 79 hay street, subiaco, western australia 6008 www.peelex.com.au

AI assistant

PEEL MINING LIMITED — Annual Report 2007

65545_rns_2007-10-25_d9ece8b6-714e-4d1f-b922-c8003e7aad9c.pdf

Cor orate Director p y

Directors

Company Secretary

David Hocking

Registered and Principal Office

Share Registry

Auditors

Legal Advisors

Home Exchange

ABN

Contents

Chairman’s Re ort p

Review of o erations p

Appointment of Geos Mining

Dungowan Project - EL6613

Barry Project - EL6614

Barry Project location and geology.

Review of operations

Waverley Project - EL6719

Waverley Project location and magnetics.

Armidale Project - EL6722

Attunga Project location.

Attunga Project - ELA3177 & ELA3182

Rob Tyson

Schedule of tenements

Directors’ Re ort p

Michael Kiernan – Non-Executive Chairman

David Hocking – Company Secretary

Robert Maclaine Tyson – Executive Director

Directors’ Interests in Shares and Options

Simon Hadfield – Non-Executive Director

Activities

Results

Dividends

Likely Developments and Expected Results

Remuneration Report

Review of Operations

Corporate Structure

Employees

Significant Changes

a) Principles used to determine the nature and amount of remuneration (audited)

Matters Subsequent to the End of the Financial Period

Board and Senior Management

c) Service agreements (audited)

d) Share-based compensation (audited)

b) Details of remuneration (audited)

Fair Value of Options

Share Options

Meetings of Directors

Indemnification and Insurance of Directors and Officers

Auditor’s Independence Declaration

Auditor

Proceedings on Behalf of the Company

Environmental Performance

income Statement

Balance Sheet

Statement of Cash Flows

Statement of Chan es in e uit g q y

notes to the Accounts

1. Statement of Significant Accounting Policies

(a) Basis of preparation

Compliance with IFRS

Historical cost convention

(b) Revenue recognition

Interest income

(c) income tax

(d) impairment of assets

(e) Cash and cash equivalents

(f) Trade and other receivables

(h) fair value estimation

(i) Plant and equipment

(j) exploration and evaluation expenditure

Exploration licences

(g) other financial assets

Security deposits

notes to the Accounts

(k) Trade and other payables

PEEL MINING LIMITED Annual Report 2007