PEEL MINING LIMITED — Interim / Quarterly Report 2011

Mar 13, 2011

PEEL EXPLORATION LIMITED ABN 42 119 343 734

HALF-YEAR CONSOLIDATED FINANCIAL REPORT

31 DECEMBER 2010

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Corporate Directory

Contents

Directors

Simon Hadfield Non-executive Chairman Robert Tyson Executive Director Craig McGown Non-executive Director Graham Hardie Non-executive Director

Company Secretary

David Hocking

Registered Office

Unit 1, 34 Kings Park Road, WA 6005

Telephone: (61-8) 9382 3955 Facsimile: (61-8) 9388 1025 E-mail: rtyson@peelex.com.au Web-site: www.peelex.com.au

Share Registry

Computershare Investor Services Pty Ltd Level 2, 45 St. George’s Terrace, Perth WA 6000

Telephone: (61) 1300 664 593 Facsimile: (61-8) 9323 2033 E-mail: perth.services@computershare.com.au Web-site: www.computershare.com.au

Directors’ report ……………………..…..2 Statement of Comprehensive Income....….3 Statement of Financial Position….…...….4 Statement of Changes in Equity….….......5 Statement of Cash Flows…………..……..6 Notes to the financial statements………....7 Directors’ declaration…………………..…9 Auditor’s independence declaration……. 10 Independent auditor’s review report…….11

Auditors

BDO Audit (WA) Pty Ltd 38 Station Street, Subiaco, WA 6008

Solicitors

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

Bankers

National Australia Bank Limited

Home Exchange ASX code: PEX

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PEEL EXPLORATION LIMITED

Directors’ Report

The directors present their report on the consolidated entity consisting of Peel Exploration Limited and its controlled subsidiaries at the end of, or during, the half-year ended 31 December 2010.

Directors

The following persons held office as directors throughout the entire financial period and up to the date of this report, unless otherwise indicated:

Robert Tyson - Managing Director Simon Hadfield - Chairman

Craig McGown - Non-executive Director Graham Hardie - Non-executive Director

Results

The loss of the Group for the half-year ended 31 December 2010 after providing for income tax amounted to $257,753 (2009: $275,700).

Dividend

No dividends were paid or proposed during the half-year.

Review of Operations

The principal continuing activity of the Group is the acquisition of mineral tenements, mineral exploration and investment. During the half-year Peel Exploration Limited continued to explore its tenements which are located in New South Wales and Western Australia.

Further information on the Group’s activities during the half-year financial period can be found in the Peel Exploration Limited quarterly activity reports.

Significant changes

During the period Peel Exploration Limited increased contributed equity by $3,222,378 through the issue of 43,771,398 shares at an average issue price of 7.4 cents each. The increase in contributed equity included 11,000,000 shares issued at 9.5 cents each as consideration for the acquisition of all the share capital of Apollo Mining Pty Ltd which owns an exploration project near Leonora in Western Australia.

Subsequent events

Since 31 December 2010 the Company has announced the grant of an exploration licence covering the historic Ruby-Tulloch-Rockvale silver field located approximately 30km east of Armidale in north-eastern New South Wales. Other than the above no event has occurred subsequent to 31 December 2010 requiring disclosure in, or amendment to, these financial statements.

Auditor’s independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 10.

Signed in accordance with a resolution of the directors and on behalf of the Board by:

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R.Tyson Executive Director Perth, Western Australia 11 March 2011

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PEEL EXPLORATION LIMITED

Consolidated Statement of Comprehensive Income for the Half-Year ended 31 December 2010

Consolidated Statement of Comprehensive Income or the Half-Year ended 31 December 2010
Note Revenue from continuing operations Depreciation Director fees Exploration expenditure 4 Administration expenses Loss before income tax expense Income tax expense Loss after tax from continuing operations Total comprehensive loss for the period attributable to the members of Peel Exploration Limited Basic and diluted loss per share	Consolidated Entity 31-Dec 31-Dec 2010 2009 $ $ 12,136 16,197 (16,792) (14,461) ( 75,000) (50,000) (17,960) (27,260) (160,137) (200,176) (257,753) (275,700) - - (257,753) (275,700) (257,753) (275,700) Cents Cents (0.51) (0.79)
		(275,700) -
		(275,700)
		(275,700)
		Cents (0.79)

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

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PEEL EXPLORATION LIMITED

Consolidated Statement of Financial Position

for the Half-Year ended 31 December 2010

Note CURRENT ASSETS Cash and cash equivalents Term deposits with maturity greater than 3 months Trade and other receivables TOTAL CURRENT ASSETS NON-CURRENT ASSETS Security deposits Plant and equipment Exploration expenditure 4 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 3 Accumulated losses Reserves TOTAL EQUITY	Consolidated 31-Dec 2010 $ 451,954 1,900,000 32,661 2,384,615 125,000 32,265 3,266,702 3,423,967 5,808,582 210,704 210,704 210,704 5,597,878 7,384,925 (2,356,569) 569,522 5,597,878	Entity 30-Jun 2010 $ 710,490 - 46,939
		757,429
		125,000 46,033 1,891,521
		2,062,554
		2,819,983
		186,730
		186,730
		186,730
		2,633,253
		4,162,547 (2,098,816) 569,522
		2,633,253

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

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PEEL EXPLORATION LIMITED

Consolidated Statement of Changes in Equity

for the Half-Year ended 31 December 2010

At 1 July 2009 Adjustment on change in accounting policy Restated total equity at 1 July 2009 Total comprehensive loss for the half-year Transactions with owners in their capacity as owners Issue of share capital Expenses of issue of share capital At 31 December 2009 At 1 July 2010 Total comprehensive loss for the half-year Transactions with owners in their capacity as owners Issue of share capital Expenses of issue of share capital At 31 December 2010	Attributable to equity holders of the company Contributed Accumulated Other Equity Losses Reserves $ $ $ 2,901,921 (2,507,211) 569,522 - 1,119,965 - 2,901,921 (1,387,246) - - (275,700) - 2,901,921 (1,662,946) 569,522 1,305,941 - - (45,315) - - 4,162,547 (1,662,946) 569,522 4,162,547 (2,098,816) 569,522 - (257,753) - 4,162,547 (2,356,569) 569,522 3,342,598 - - (120,220) - - 7,384,925 (2,356,569) 569,522	Total Equity $ 964,232 1,119,965
		2,084,197 (275,700)
		1,808,497 1,305,941 (45,315)
		3,069,123
		2,633253 (257,753)
		2,375,500 3,342,598 (120,220)
		5,597,878

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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PEEL EXPLORATION LIMITED

Consolidated Statement of Cash Flows

For the half year to 31 December 2010

Cash flows from operating activities Payments to suppliers and employees Payments for mineral exploration expenditure Interest received Net cash outflow from operating activities Cash flows from investing activities Payment for term deposits Payment of security deposits Refund of security deposits Payments for purchase of plant and equipment Net cash outflow from investing activities Cash flows from financing activities Proceeds from issue of shares and options Transaction cost of issue of shares Net cash inflow from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the start of the half-year Cash and cash equivalents at the end of the half-year	Consolidated Entity 31-Dec 31-Dec 2010 2009 $ $ (215,045) (298,579) (330,181) (112,917) 12,136 16,197 (533,090) (395,299) (1,900,000) - (10,000) (43,000) 10,000 20,000 (2,824) (1,465) (1,902,824) (24,465) 2,297,598 1,030,941 (120,220) (45,315) 2,177,378 985,626 (258,536) 565,862 710,490 901,020 451,954 1,466,882	Consolidated Entity 31-Dec 31-Dec 2010 2009 $ $ (215,045) (298,579) (330,181) (112,917) 12,136 16,197 (533,090) (395,299) (1,900,000) - (10,000) (43,000) 10,000 20,000 (2,824) (1,465) (1,902,824) (24,465) 2,297,598 1,030,941 (120,220) (45,315) 2,177,378 985,626 (258,536) 565,862 710,490 901,020 451,954 1,466,882
		(395,299)
		- (43,000) 20,000 (1,465)
		(24,465)
		1,030,941 (45,315)
		985,626
		565,862 901,020
		1,466,882

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

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PEEL EXPLORATION LIMITED

Notes to the Accounts

1. Basis of preparation of Half-Year Financial Statements

These general purpose financial statements for the interim half-year reporting period ended 31 December 2010 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.

These interim financial statements do not include all the notes of the type normally included in an annual financial statement and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial statement. Accordingly, this interim financial statement is to be read in conjunction with the annual financial statement for the year ended 30 June 2010 and any public announcements made by Peel Exploration Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 .

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period with the exception of the following.

2. Segment Information

Management has determined that the Group has one reportable segment, being mineral exploration in NSW. As the group is focused on mineral exploration, the Board monitors the Group based on actual versus budgeted exploration expenditure incurred by area of interest. This internal reporting framework is the most relevant to assist the Board with making decisions regarding the Group and its ongoing exploration activities, while also taking into consideration the results of exploration work that has been performed to date.

Revenue from external sources Reportable segment (loss) Reconciliation of reportable segment (loss) Reportable segment (loss) Other profit Unallocated: - Corporate expenses Loss before tax Reportable segment assets Contributed equity Movements in ordinary share capital Balance at 1 July 2010 Shares issued pursuant to a ‘Rights Issue’ Shares issued as consideration for the acquisition of a subsidiary company Shares issued pursuant to placement Shares issued pursuant to the exercise of options Transaction costs of Rights Issue Balance at 31 December 2010		31-Dec 2010 $ - (34,751) (34,752) 12,136 (235,137) (257,753) 31-Dec 2010 $ 3,299,363 Shares 43,985,917 22,002,959 11,000,000 10,748,439 20,000 - 87,757,315		31-Dec 2009 $ - (41,721) (41,721) 16,197 (250,176)
				(275,700)
				30-Jun 2010 $ 1,937,554 $ 4,162,547 1,540,207 1,045,000 752,391 5,000 (120,220) 7,384,925

3. Contributed equity

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PEEL EXPLORATION LIMITED

4. Exploration expenditure At cost Reconciliations Movement in the carrying amounts of capitalised exploration expenditure between the beginning and end of the half-year Opening balance , 1 July Acquisition of an exploration tenement Acquisition of mining lease Other exploration expenditure Written off during the period Closing net book amount, 31 December	31-Dec 2010 $ 3,266,702 1,891,521 1,045,000 - 336,539 (6,358) 3,266,702	30-Jun 2010 $ 1,891,521
		1,119,965 - 275,000 668,988 (172,432)
		1,891,521

Recovery of the capitalised amount is dependent upon successful development and commercial exploitation, or alternatively, sale of the associated tenements.

5. Subsidiary companies

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiary companies in accordance with the accounting policy described in note 1.

	Country of	Class of	Equity	Holding
Name	Incorporation	Shares	2010	2009
			%	%
Peel Environmental Services Limited	Australia	Ordinary	100	100
Apollo Mining Pty Ltd	Australia	Ordinary	100	-

6. Contingencies

The Group had no contingent assets or liabilities for the half-year ended 31 December 2010.

7. Related Parties

Transactions with related parties

During the financial period the group paid $18,000 (2009: $18,000) for head office accommodation and secretarial services and charges to RIU Pty Ltd, a company controlled by Mr S Hadfield.

8. Events occurring after the Balance Sheet date

Since 31 December 2010 the Company has announced the grant of an exploration licence covering the historic Ruby-Tulloch-Rockvale silver field located approximately 30km east of Armidale in north-eastern New South Wales. Other than the above there has not arisen in the interval between the end of the financial half-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 Group, the results of those operations and the state of affairs of the Group in the financial period subsequent to 31 December 2010.

9. Dividends

No dividends were paid during the period.

10. Acquisition of Apollo Mining Pty Ltd

During the half-year Peel Exploration Limited acquired the whole of the share capital of Apollo Mining Pty Ltd from Hampton Hill Mining NL. The consideration was 11,000,000 fully paid ordinary shares in Peel Exploration Limited at 9.5 cents each. Apollo Mining Pty Ltd owns exploration leases at the Apollo Hill gold prospect near Leonora in Western Australia. After due consideration of AASB 3 the directors have determined that the acquisition of Apollo Mining Pty Ltd constituted the acquisition of an individual asset rather than an operating business. Consequently the transaction has been recognised as an individual asset in the financial statements.

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PEEL EXPLORATION LIMITED

Directors’ Declaration

In the directors’ opinion:

• (a) the financial statements and notes set out on pages 3 to 8 are in accordance with the Corporations Act 2001, including:

• (i) complying with Accounting Standard AASB 134 Interim Financial Reporting , the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

• (ii) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and of its performance for the period then ended; and

• (b) there are reasonable grounds to believe that Peel Exploration Limited will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the directors and signed for on behalf of the Board by:

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R. Tyson Executive Director

Perth, Western Australia 11 March 2010

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38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +8 6382 4600 Fax: +8 6382 4601 www.bdo.com.au

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11 March 2011

Peel Exploration Limited 34 Kings Park Rd, WEST PERTH WA 6005

Dear Board Members,

DECLARATION OF INDEPENDENCE BY GLYN O’BRIEN TO THE DIRECTORS OF PEEL EXPLORATION LIMITED

As lead auditor of Peel Exploration Limited for the half-year ended 31 December 2010, I declare that to the best of my knowledge and belief, there have been:

• No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• No contraventions of any applicable code of professional conduct in relation to the review.

• This declaration is in respect of Peel Exploration Limited and the entities it controlled during the period.

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Glyn O’Brien Director

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BDO Audit (WA) Pty Ltd Perth, Western Australia

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

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Tel: +8 6382 4600 38 Station Street Fax: +8 6382 4601 Subiaco, WA 6008 www.bdo.com.au PO Box 700 West Perth WA 6872 Australia

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INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF PEEL EXPLORATION LIMITED

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Peel Exploration Limited, which comprises the condensed statement of financial position as at 31 December 2010, and the condensed statement of comprehensive income, condensed statement of changes in equity and condensed statement of cash flows for the half-year ended on that date, notes comprising a statement of accounting policies, other selected explanatory notes and the directors’ declaration of the consolidated entity comprising the disclosing entity and the entities it controlled at the halfyear’s end or from time to time during the half-year.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the disclosing entity are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Peel Exploration Ltd Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Peel Exploration Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

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Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Peel Exploration Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

BDO Audit (WA) Pty Ltd

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Glyn O’Brien Director

Signed in Perth, Western Australia Dated this 11[th] day of March 2011.

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