Petratherm Ltd

247 Greenhill Road, Dulwich, 5065, South Australia Tel: +61 8 8366 6055 Fax: +61 8 8366 6056 Website www.petratherm.com.au Email [email protected] A.C.N. 106 806 884

19 October 2005

Dear Shareholder

ANNUAL GENERAL MEETING

I am pleased to invite you to attend the first Annual General Meeting of Petratherm Ltd to be held at the Conference Room 1, Rendezvous Allegra Hotel, 55 Waymouth Street, Adelaide, South Australia on Friday 25 November 2005 at 9.30 am.

If you are unable to attend the meeting in person, I encourage you to return the enclosed Proxy Form. The Proxy Form should be returned by post or faxed to the Company's Office or Share Registry so that it may be received by 9.30 am on Wednesday 23 November 2005.

Yours sincerely,

$61$ P

DEREK CARTER CHAIRMAN

Encl.

Petratherm Ltd

247 Greenhill Road, Dulwich, 5065, South Australia Tel: +61 8 8366 6055 Fax: +61 8 8366 6056 Website www.petratherm.com.au Email [email protected] A.C.N. 106 806 884

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the first Annual General Meeting of Shareholders of Petratherm Ltd will be held at the Conference Room 1, Rendezvous Allegra Hotel, 55 Waymouth Street, Adelaide, South Australia on Friday 25 November 2005 at 9.30am.

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The following will be considered as Ordinary Resolutions:

To receive and consider the financial statements for the year ended 30 June 2005 and accompanying $1]$ reports of the Directors and Auditor thereon.
To consider the election of Mr Derek Carter who retires automatically as a Director in accordance with 2 the Company's Constitution and being eligible, offers himself for election.
To consider the election of Mr Richard Bonython who retires automatically as a Director in accordance 3] with the Company's Constitution and being eligible, offers himself for election.
To consider the election of Dr Lloyd Taylor who retires automatically as a Director in accordance with $\mathbf{A}$ the Company's Constitution and being eligible, offers himself for election,
To consider the election of Dr Richard Hillis who retires automatically as a Director in accordance with 5] the Company's Constitution and being eligible, offers himself for election.
To consider the election of Mr Simon O'Loughlin who retires automatically as a Director in accordance 6] with the Company's Constitution and being eligible, offers himself for election.
To approve the Remuneration Report relating to Directors and specified Executives for the year ended 7] 30 June 2005.

The Explanatory Memorandum attached to this Notice forms part of this Notice of Meeting.

Dated this 19th day October 2005

BY ORDER OF THE BOARD PETRATHERM LTD

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DONALD STEPHENS COMPANY SECRETARY

Voting

A Proxy Form is enclosed with this Notice.

Petratherm Ltd

247 Greenhill Road, Dulwich, 5065, South Australia Tel: +61 8 8366 6055 Fax: +61 8 8366 6056 Website www.petratherm.com.au Email [email protected] A.C.N. 106 806 884

EXPLANATORY STATEMENT

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Introduction

This Explanatory Statement accompanies a Notice of Annual General Meeting of Shareholders proposed to be held at the Conference Room 1, Rendezvous Allegra Hotel, 55 Waymouth Street, Adelaide, South Australia on Friday 25 November 2005 at 9.30 am.

The purpose of the meeting is to consider and, if thought fit, approve 7 ordinary resolutions. The following information should be taken into account in your consideration of each of those resolutions.

Resolution 1: Receive and Consider the Financial Statements

Shareholders should receive a copy of the Company's Annual Report for the year ended 30 June 2005 at the same time as this notice. Shareholders are asked to receive and consider these financial statements and the accompanying reports of the Directors and Auditor thereon.

Resolution 2: To Elect Mr Derek Carter as a Director of the Company

In accordance with the Company's Constitution Mr Derek Carter automatically retires at the first Annual General Meeting. and being eligible, offers himself for election.

Resume of the candidate for election to the office of Director is as follows:-

Derek Carter, MSc, FAusIMM(CP) (Chairman, Non-Executive Director)

Derek Carter was appointed to the board on 24 October 2003. He has over 31 years experience in exploration and mining geology and management. He held senior positions in the Shell Group of Companies and Burmine Limited before founding Minotaur Gold NL where he was Managing Director for 7 years. He was Managing Director of Minotaur
Resources Ltd from February 2000 until its restructure when he became Managing Director of Minotaur Exploration Ltd in February 2005. He is also a board member of Mithril Resources Ltd and the Australian Gold Council and chairs the Council's Investment Group; is former President, and current Vice President of the South Australian Chamber of Mines and Energy and is a Member of the South Australian Resources Industry Development Board and the South Australian Minerals and Petroleum Experts Group.

Resolution 3: To Elect Mr Richard Bonython as a Director of the Company

In accordance with the Company's Constitution Mr Richard Bonython automatically retires at the first Annual General Meeting, and being eligible, offers himself for election.

Resume of the candidate for election to the office of Director is as follows:-

Richard Bonython, BAgSc (Non-Executive Director)

Richard Bonython was appointed to the board on 1 March 2004. He has over 40 years experience in the building, construction, rural and mining exploration industries. In the last 10 years he has primarily been involved in the mining industry and has been influential in the formation and ultimate listing of several mining exploration groups. He is chairman of Hindmarsh Resources Ltd and a director of Minotaur Exploration Ltd and Mithril Resources Ltd. He is a member of the Company's audit committee.

Resolution 4: To Elect Dr Lloyd Taylor as a Director of the Company

In accordance with the Company's Constitution Dr Lloyd Taylor automatically retires at the first Annual General Meeting. and being eligible, offers himself for election.

Resume of the candidate for election to the office of Director is as follows:-

Lloyd Taylor, PhD MAICD (Non-Executive Director)

Lloyd Taylor was appointed to the board on 22 March 2004. He holds a doctorate in geology and geophysics from the University of Sydney. He has 27 years exploration and production experience with Woodside Petroleum Ltd, Shell International, Santos Ltd and Fletcher Challenge Energy Ltd. During the last thirteen years he has been responsible for general management and leadership of oil and gas business operations in Australia, Papua New Guinea, USA, United Kingdom, Canada, Indonesia, Brunei and New Zealand. Most recently he held the role of Chairman and Managing Director of Shell New Zealand. Prior to that he was the Chief Operating Officer of Fletcher Challenge Energy Ltd. Lloyd is the Chairman of Core Collaborative, an Australian based Asia/Pacific energy industry consulting network. He is a member of the Australian Institute of Company Directors.

Resolution 5: To Elect Dr Richard Hillis as a Director of the Company

In accordance with the Company's Constitution Dr Richard Hillis automatically retires at the first Annual General Meeting, and being eligible, offers himself for election.

Resume of the candidate for election to the office of Director is as follows:-

Richard Hillis, BSc, ARSM, PhD (Non-Executive Director)

Richard Hillis was appointed to the board on 1 March 2004. He is the State of South Australia Professor of Petroleum Geology and Mawson Professor of Geology and Geophysics at the University of Adelaide. His research expertise is in the area of subsurface stresses within the crust and their impact on petroleum exploration-related issues such as wellbore stability, fracture stimulation and subsurface fluid flow. He has undertaken 30 consulting projects for 16 oil companies, primarily in the area of subsurface stresses and has taught industry professional short courses on the subject in Australia, Japan, Vietnam, Brunei and the United Kingdom. Richard, who has authored or co-authored 80 scientific papers and edited two books, heads a research group at the University of Adelaide, which includes post-doctoral and PhD students, researching crustal stress.

Resolution 6: To Elect Mr Simon O'Loughlin as a Director of the Company

In accordance with the Company's Constitution Mr Simon O'Loughlin automatically retires at the first Annual General Meeting, and being eligible, offers himself for election.

Resume of the candidate for election to the office of Director is as follows:-

Simon O'Loughlin, BA Acc (Non-Executive Director)

Simon O'Loughlin was appointed to the board on 24 October 2003. He is a legal practitioner with over 25 years experience as a corporate and commercial solicitor. He has had extensive involvement in the mining industry, especially in relation to the formation, structuring and listing of small to medium sized resources companies. He is a past chairman of the Taxation Institute of Australia (SA Division), and is currently a non-executive director of Living Cell Technologies Ltd, WCP Diversified Investments Ltd and Hindmarsh Resources Ltd, all of which are listed on the ASX. He is a member of the Company's audit committee.

Resolution 7 : To Approve the Remuneration Report

The Annual Report for the year ended 30 June 2005 contains a Remuneration Report which sets out the remuneration policy for the Group and reports the remuneration arrangements in place for non-executive Directors and specified Executives. The report is set out in Note 20 of the Notes to the Financial Statements of the Annual Report.

Under the new provisions of the Corporations Act 2001, the shareholder vote is advisory only and will not require the Company to alter any arrangements detailed in the Remuneration Report, should the resolution not be passed. However, the Board has determined that it will take the outcome of the vote into consideration when reviewing the remuneration policy.

Terms defined in the Notice of Meeting have the same meaning in this Explanatory Statement. Interpretation

Proxy Form

Petratherm Ltd

ACN 106 806 884

Mark this box with an"X" if you have made any changes to your address details (see reverse)

All correspondence to:

Computershare Investor Services Ptv Limited GPO Box 1903 Adelaide South Australia 5001 Australia Enquiries (within Australia) 1300 556 161 (outside Australia) 61394154000 Facsimile 61 8 8236 2305 www.computershare.com

Appointment of Proxy

I/We being a member/s of Petratherm Ltd and entitled to attend and vote hereby appoint

the Chairman OR of the Meeting (mark with an 'X')

If you are not appointing the Chairman of the Meeting as your proxy please write here the full name of the individual or body corporate (excluding the registered Securityholder) you are appointing as your proxy.

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the Annual General Meeting of Petratherm Ltd to be held at Conference Room 1, Rendezvous Allegra Hotel, 55 Waymouth Street, Adelaide, South Australia on Friday, 25 November 2005 at 9.30am and at any adjoumment of that meeting.

	Voting directions to your proxy - please mark					to indicate your directions
		For		Against Abstain*			For	Against Abstain*
1.	To receive and consider the financial statements				5.	To elect Dr Richard Hillis as a Director of the Company
2.	To elect Mr Dererk Carter as a Director of the Company				6.	To elect Mr Simon O'Loughlin as a Director of the Company
3.	To elect Mr Richard Bonython as a Director of the Company				7.	To approve the Remuneration Report
4.	To elect Dr Lloyd Taylor as a Director of the Company
	computing the required majority on a poll. Appointing a second Proxy I/We wish to appoint a second proxy

	Mark with an 'X' if AND you wish to appoint a second proxy.			% OR			State the percentage of your voting rights or the number of securities for this Proxy Form.
	PLEASE SIGN HERE					This section must be signed in accordance with the instructions overleaf to enable your directions to be implemented
	Individual or Securityholder 1		Securityholder 2			Securityholder 3

	Individual/Sole Director and		Director				Director/Company Secretary
	Sole Company Secretary
	In addition to signing the Proxy form in the above box(es) please provide the information below in case we need to contact you.

Contact Name

Contact Daytime Telephone

PTR

0.144

How to complete the Proxy Form

1 Your Address

This is your address as it appears on the company's share register. If this information is incorrect, please mark the box and make the correction on the form. Securityholders sponsored by a broker (in which case your reference number overleaf will commence with an 'x') should advise your broker of any changes. Please note, you cannot change ownership of your securities using this form.

$\overline{2}$ Appointment of a Proxy

If you wish to appoint the Chairman of the Meeting as your proxy, mark the box. If the individual or body corporate you wish to appoint as your proxy is someone other than the Chairman of the Meeting please write the full name of that individual or body corporate in the space provided. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy. A proxy need not be a securityholder of the company. Do not write the name of the issuer company or the registered securityholder in the space.

3 Votes on Items of Business

You may direct your proxy how to yote by placing a mark in one of the three boxes opposite each item of business. All your securities will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of securities you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on a given item, your proxy may vote as he or she chooses. If you mark more than one box on an item your vote on that item will be invalid.

Appointment of a Second Proxy 4

You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the company's share registry or you may copy this form.

To appoint a second proxy you must:

indicate that you wish to appoint a second proxy by marking the box. $(a)$
on each of the first Proxy Form and the second Proxy Form state the percentage of your voting rights or number of $(b)$ securities applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded. return both forms together in the same envelope. $(c)$

5 Signing Instructions

You must sign this form as follows in the spaces provided:

where the holding is in one name, the holder must sign. Individual:

where the holding is in more than one name, all of the securityholders should sign. Joint Holding:

to sign under Power of Attorney, you must have already lodged this document with the registry. If you Power of Attorney: have not previously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this form when you return it.

where the company has a Sole Director who is also the Sole Company Secretary, this form must be Companies: signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please indicate the office held by signing in the appropriate place.

If a representative of a corporate Securityholder or proxy is to attend the meeting the appropriate "Certificate of Appointment of Corporate Representative" should be produced prior to admission. A form of the certificate may be obtained from the company's share registry or at www.computershare.com.

Lodgement of a Proxy

This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below no later than 48 hours before the commencement of the meeting at 9.30am on Friday, 25 November 2005. Any Proxy Form received after that time will not be valid for the scheduled meeting.

Documents may be lodged using the reply paid envelope or:

Principal Business Office - 247 Greenhill Road, DULWICH SA 5065 AUSTRALIA IN PERSON Share Registry - Computershare Investor Services Pty Limited, Level 5, 115 Grenfell Street, Adelaide SA 5000 Australia Share Registry - Computershare Investor Services Pty Limited, GPO Box 1903, Adelaide SA 5001 Australia BY MAIL 61882362305 BY FAX 61883666056

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DIRECTORS

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SOLICITORS TO THE COMPANY

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GHAIRMAN S REPORT

kilometres. The Company has worked closely with the University of Adelaide in modelling not contribute is within the South Australian Heart How Anomaly and has developed a good understanding of the relationships between the temperatures of the rock strata, depths of buriel, and rock types that might be encountered.

Our amus to assess the potential of our targets by initially drilling through the upper covering sediments, determining the heat gradient, and then, if these results are positive, deepening the hole for further assessment. Drilling of the initial stages of our first two wells was completed successfully in September this year, in achieving this, the Company is grateful to the South Australian Government for the assistance i povlici intire S140,000 Plan for Accelerating Exploration" (PACE) grant support of the geothermal evoluciion well at Callabonna, 90 kilometres northeast KEL ALANDARI KELOZEE

temperature of 64ºC at 675 metres"

Petratherm's two holes recorded temperature gradients at the upper level of expectations. Yerila Tat Caliabonna returned a maximum temperature of 649 at 675 metres, with a temperature gradient of 68°C per kilometre, while at Paralana, 58°C was mensured ei 495 mehes, representing a gradientor et experien kilometre. Paralana-1B records one of the nighes temperature gradients in Australia, over distances of consequence, and reinforces our belief that we are sitting above some of the, if not the, hottest rock stratall mantagan m

Modelling suggests that the temperature and depth requirements of the Company may well be met in both Callabonna and Paralana. The results not only

represent significant discoveries in their own right, but ine dala support the models denved from the excellent Work of the Company's employees in cooperation with Shii immhe Unversiv of Adelaide. The next stage in the program is to deepen these holes, initially to about 1,500 metres and, it results are encouraging, to then din to start dinamatical indicates in increased and

Interest in hot rock geothermal energy is expanding

The early stage results of the two holes have been most suitsidatory und her company is discussing possible cooperation in these programs with a number. of third parties. The interest in hot rock geothermal energy is expanding, and we are well pashtoned to take advantage of the opening market for this form. of power generation, as drilling costs at our larget depins diedelahvely ow computed to taraks beyond 4 kilometres and our targets are within close proximity of infrastructure. Because the generation of energy from geathermal sources can provide base-load electricity of a competitive cost, it is the Company's beilet that government should be supporting this. industry in its efforts, particularly given geofhermal energy's low environmental impact and the absence of on geemotic emissions.

geothermal scources can provide base load electricity at a competitive cost'

Would like to facial all host involved to hem KONNIBUTON SERBERKARA SALUG ORBITILIIYA BILARKIN La partide de la propieta de la partide de la partide de la partide de la partide de la partide de la partide An standard and the standard and the sta SOLOMON STRIKE MARKET STATISTIKE STATISTIKE STATISTIKE STATISTIKE STATISTIKE STATISTIKE STATISTIKE STATISTIKE nu ollennessi ile interipo Azione orino; Stellen Stelle som andere stelle som av 1999 i 1999 i 1999 i 1999 i 1999 i 1999 i 1999 i 1999 i 1999 i 1999 i Aleman Alis Scripter energies en hiersteun bischarp Himil Voyale mining formally conversion of the Maharan sang di kalendar sa sa sa n

Yours sincerely

Derek Guner CHAIRMAN

CORPORATE OVERVIEW

Petratherm listed on the Australian Stock Exchange on the 27 July 2004 after the successful completion of a \$4,000,000 public offering. Minotaur Resources Investments Pfy Ltd, a wholly-owned subsidiary of Minotaur Exploration Ltd, is a substantial shareholder of the company (42.86% interest). The Company held \$2,575,000 net cash reserves at 30 June 2005.

Petratherm Ltd is actively exploring for new hot rock energy supplies in Australia. Hot rock energy, being renewable, sustainable, and emission free, has the potential to supply large-scale base-load electricity at a cost competitive with the fossil fuels.

Through collaborative research with the University of Adelaide, Petratherm has developed methods to locate potential hot rock reserves in a cost effective manner and is well positioned to capitalise on the expansion of the hot rock industry.

Since listing, the Company has received strong state and federal government support in its endeavours. Increasing public and government concern about global warming and increasing fossil fuel prices have provided renewed impetus to find new, clean sustainable forms of energy production, and consequently the Australian energy market is moving toward obtaining electricity from renewable energy suppliers. Petratherm's recent drilling successes at Paralana and Callabonna puts it in good stead to attract new funding partners.

Climate Change and the Greenhouse Effect - Geothermal Energy's role in Australia's energy solution

The scientific community appears to have reached strong consensus regarding global climate change. The Intergovernmental Panel on Climate Change (IPCC) has reported that the average global temperature at the earth's surface has increased by $0.6^{\circ}$ C +/- 0.2% since the late 19^th century. Climate models predict that global warming

will continue, with temperatures expected to rise between 1.4°C and 5.8°C over the 1990 to 2100 period.

Governments are beginning to acknowledge the reality of climate change and the link with greenhouse gas emissions. About 80% of the world's energy currently comes from fossil fuels, venting about 7 billion tonnes of CO₂ and other greenhouse gases into the earth's atmosphere each year. The atmospheric concentration of CO₂ has increased by about 35% above pre-industrial levels and is considerably higher than at any time during the last 420,000 years; the period for which reliable data has been extracted from ice cores. From less direct geological evidence it is believed that CO₂ values this high were last attained 40 million years ago.

According to Adelaide Museum Director, Dr Tim Flannery, "human-induced global warming is already underway - an accelerating process that, if left unchecked, will lead to devastating long-term changes in sea levels, weather patterns, and the fate of many species - the time available for effective international action is running out".

Australia is reported to contribute 1.9% to current global CO₂ emissions, and is the highest per capita producer of greenhouse gases in the world, largely due to dependence on coal for electricity generation. Only 10% of Australia's energy is generated from renewable sources.

On 28 July 2005, the US, Australia, Japan, South Korea, India and China announced the formation of the Asia-Pacific Partnership on Clean Development and Climate. The prime objective of the partnership is to develop and transfer technology which enables the reduction of greenhouse gas emissions. Unlike the Kyoto Protocol, this pact allows member countries to set their goals for reducing emissions individually, with no mandatory enforcement mechanism. The Australian government's policy position is to deliver a mix of traditional and renewable energy sources, via direct funding of all technologies that lower Australia's future emissions.

Australia is in a prime position to address its future energy needs, as well as meeting its environmental objectives, by exploiting the benefits of geothermal power.

Geothermal power as Australia's primary energy solution

Independent studies indicate that the costs of geofhermal power production can compare favourably with other forms of power production (Figure 1). Other advantages of geothermal energy are:

Provision of large scale base-load power, unlike wind and solar;
Potential reserves are massive;
Is reliable, safe, emission free, sustainable and of low environmental impact.

Emeritus Professor John Veevers has stated that "Australian enterprise could well lead a global revolution. An international Oz Rock Power Corporation could overtake General Electric as the leading global company".

Figure 1. Total Electricity Generation Cost in Australia

Economic Modelling

Petratherm's business strategy is to locate economically favourable geothermal reserves. The largest capital cost components are plant construction (50% total capital expenditure), and drilling/fracturing costs (30-35% total capital expenditure). Operating and maintenence costs are relatively low, and unlike coal and gas fired power generation, there are no ongoing fuel costs. For this reason small improvements in either plant and or drilling costs can greatly affect the overall base cost of electricity generation.

Transmission losses and line infrastructure costs also weigh heavily on overall project economics, so it is important to develop resources as close as possible to market. For these underlying economic reasons, Petratherm's business model can be simply summarised as "locate shallow hot rocks close to market".

The average wholesale cost of electricity in Australia is approximately \$40 a Megawatt hour (MWh) (Figure 1). Economic modelling studies indicate that to achieve this base cost a large-scale geothermal development (300 MW+), requires installed capacity to cost no more than \$3,000,000 per MW. Applying this information to a potential hot rock field, suggests an economically competitive

CORPORATE OVERVIEW

hot rock resource needs to be in excess of 220°C at depths of about 3.5 kilometres. This strategy underpins Petratherm's exploration models and field programs.

Projects

Petratherm's geothermal exploration projects lie within the South Australian Heat Flow Anomaly (SAHFA) (Figure 2). Temperatures within the SAHFA are elevated but irregular and will vary according to the localized geology. Location of target sources is based on the use of two specific geological models known as the thermally anomalous granite (TAG) model and the radiogenic iron oxide (RIO) model outlined in our prospectus. Each has clearly defined geological parameters.

Petratherm has obtained geofhermal exploration licences (GELs) over 3 project areas that it believes are highly prospective for 'hot spots' within the already thermally

Figure 2. South Australian Heat Flow Anomaly (SAHFA).

anomalous SAHFA. The Ferguson Hill Project is a RIO target and is located 70 kilometres north of Olympic Dam. The Paralana (Paralana-1B) and Callabonna (Yerila-1) Projects are associated with TAG's of the Mt Painter System (Figure 3).

figure 3. Location map of Yerila-1 (Callabonna-Project) and Paralana-18 (Paralana Project) geothermal evaluation wells and Petratherm licence areas.

Ferguson Hill (GEL 158)

The Ferguson Hill RIO model focuses on an area where ancient volcanic and granitic rocks released hot sub-surface fluids that permeated through the surrounding rocks and altered their composition. Olympic Dam is an example of the RIO model.

Low-level radiogenic decay of elements naturally occurring in granitic rocks determines the heat production rate of any granite. Measured heat production rates in RIO bodies may be as much as 50 times greater than those from average granite, and thermal modelling shows that, under favorable conditions, temperatures in excess of 200°C may be generated at depths of around three kilometres (Figure 4). Petratherm has a number of techniques to identify RIO bodies by using detailed gravity (measuring density changes) and magnetic data to detect the iron oxide associated with these systems.

During the first year of the licence, Petratherm's technical studies focused on the collection and review of available open file data and compilation of regional aeromagnetic and gravity datasets.

The work program for Year 2 at Ferguson Hill will be aimed at extending our understanding of the depth to basement and thermal conductivity of the known cover. This work will provide the necessary information to ensure selection of the most suitable drilling target in the tenement.

Figure 4. Depth vs l'emperature Model for a l'ypical Radiogenic Iron Oxide Body

Figure 5. Callabonna and Paralana Project Areas

MI Painter Hot Rock Province

Estimates from outcropping granites in the Mt Painter Inlier indicate their average heat production is eight times (and locally up to twenty-five times) that of average granite, and at least twice that of other radiogenic granites used to successfully generate geothermal power elsewhere in the world.

Petratherm recognised these granites as having potential to produce geothermal energy under the TAG model and acquired five geothermal exploration licences covering around 2,500 square kilometres over two key areas, Paralana and Callabonna (Figure 5).

Paralana Project (GELs 156,178,180)

The Paralana Project is centred 130 kilometres east of the main grid connection at Leigh Creek. The tenements (GELs 156, 178, 180) cover 1500 square kilometeres over the most prospective portion of the informally termed

Figure 6. Heat model for the Paralana Project Area. The model gives a potential temperature of 225°C at 3.5 kilometres

Poontana Basin, but also include an area to the west covering the radiogenic hot springs at Paralana, along the eastern margin of the Mt Painter Range (Figure 5).

The fault-bounded Poontana Basin offers a suitable trapping insulator overlying a potential basement heat engine with similar high heat producing capacity of the Mt Painter granites. The combination of the two factors means this region may contain large geothermal energy supplies yet to be exploited. Forward thermal modelling studies of this area indicate temperatures in excess of 220°C may be achieved at 3.5 kilometres depth. Field evidence of the potential heat source in the Paralana area includes the Paralana Springs (located about 25 kilometres west of Paralana-1B) where surface temperatures of the spring water are 60-62°C. Geochemical analysis of the spring water indicates that the water is shallowly sourced (i.e. less than 1 kilometre), and has been heated through the radiogenic decay of the host granite. Thermal logging

of exploration holes undertaken by others during the year also indicates that the geothermal gradient to 400 metres is within the desired temperature range.

Modelling of historical seismic data in combination with regional gravity data acquired in the first year, clearly defined the extent of the Poontana Basin. This work was used in combination with forward thermal modelling to locate the most favourable location to drill a geothermal evaluation well (Figure 6).

Paralana-1B Geothermal Evaluation Well.

The Phase 1 drilling program at Paralana commenced in January 2005 and was designed to drill through the artesian aquifer estimated to be located at 460 metres depth, and into underlying rock sequence.

The drilling operation encountered unstable hole conditions and the hole was halted at 306 metres, however the temperature logging program was limited to the section above 127 metres. Geothermal gradients determined from measurements taken

CORPORATE OVERVIEW

at such shallow depths are inconclusive, however the recorded bottom hole temperature of 34⁰C was consistent with Petratherm's modelled target geothermal gradient and higher measured regional temperatures.

In September 2005, beyond the current reporting period, Paralang-1B was successfully completed using a larger rig. The well was drilled to a fotal depth of 491 metres into the sedimentary section below the artesian aquifer, and recorded a temperature at 485 metres of 58°C. The temperature gradient exceeded Petratherm's expectations, recording an average of 81.5°C per kilometre, one of the highest gradients measured in Australia over distances of consequence (Figure 8). The gradient average and trend is consistent with the Paralana area being located above thermally anomalous granites with temperatures ranging between 220-250°C at a target depth of about 3.5 kilometres.

The results are closely aligned to the modelling outcomes developed by Petratherm and the University of Adelaide, ratifying the exploration methodology and giving confidence in continuing to drill deeper.

Subject to a complete technical evaluation of the new results, Petratherm intends to deepen Paralana-1B to about 1,500 metres. This second phase of drilling will establish thermal and rock properties at intermediate depths, prior to a decision to drill to an ultimate depth of about 3.5 kilometres. The results at Paralana establish that thermal anomalies can be identified and evaluated using the intellectual property which is the basis of the Petratherm business model.

Callabonna (GELs 157, 179) Yerila-1 Geothermal Evaluation Well.

Figure 7. Regional IVD Gravity image, highlighting spatial and geophysical connection of Callabonna Gravity Low with the outcropping Mt Painter radiogenic aranites.

The Callabonna geothermal body, defined by the regional gravity low that clearly marks its boundary, spans an area of approximately 1200 square kilometres immediately northnortheast of the outcropping Mt Painter Inlier (Figure 7). Petratherm holds two licences covering 1000 square kilometres over the centre of this body. Callabonna is 90 kilometres northeast of Arkaroola which in turn is about a similar distance east of Leigh Creek, the terminal of existing main grid power transmission lines.

The high heat producing granites that make up the Mt Painter Inlier to the south of Callabonna are defined by a strong gravity low. Modelling of new geophysical data, acquired by Petratherm during the reporting year, supports the concept that the Callabonna gravity low (Figure 7) is basement granite rock occurring under 2-3 kilometres of insulating cover material. Geological analysis indicates that this buried granite is likely to be of a similar age and chemistry to the Mt Painter granites, with

CORPORATE OVERVIEW

similar radiogenic heat generating potential.

Geophysical modelling of the Callabonna gravity low, along with historical seismic data, also supports the development of a sub-basin above the granite, providing the requisite insulating blanket to retain heat in the granite. The potential combination of a suitable capping insulator and basement heat engine below means this region may contain a large geothermal energy resource.

In May 2005 Petratherm was successful in obtaining a \$140,000 South Australian Government "Plan for Accelerating Exploration" (PACE) grant to support the drilling of its geothermal evaluation well at Callabonna. The well, Yerila-1 is named after the granite which crops out just 40 kilometres southwest of the drilling site, and is one of the highest heat producing granites known (over 20 times more than normal granites).

Yerila-1 was spudded in early August 2005, after the current reporting period. The hole was drilled to 693.5 metres and a temperature of 64⁰C was measured at a depth of 675

metres. Correcting for near surface thermal effects in the well bore, the overall thermal gradient determined from the data is at least 68°C per kilometre. The significance of the temperature result is summarized in Figure 8.

Based on this gradient, temperatures in the range 220-250°C are possible at a depth of 3.5 kilometres, and it is intended to deepen the hole to about 1500 metres in order to establish thermal and rock properties at intermediate depths.

Generative

During the reporting period, geological and geophysical studies identified a number of potentially favourable terrains for hot rock power generation in areas close to regional mining centres and other infrastructure sites in Australia. Using Petratherm's predictive model, international areas of potential hot rock prospectivity were screened and a number of favourable terrains and targets identified.

Figure 8. Temperature gradient (recorded 14 days after drilling).

NU P

$\boldsymbol{9}$

DIRECTORS' REPORT

Your directors submit their report for the year ended 30 June 2005.

DIRECTORS

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

Mr Derek Carter	Chairman, Non-Executive Director Appointed 24 October 2003
Mr Lloyd Taylor	Non-Executive Director	Appointed 22 March 2004
Mr Richard Bonython	Non-Executive Director	Appointed 1 March 2004
Mr Richard Hillis	Non-Executive Director	Appointed 1 March 2004
Mr Simon O'Loughlin	Non-Executive Director	Appointed 24 October 2003

Names, qualifications, experience and special responsibilities

Derek Carter

BSc, MSc, FAusIMM(CP) (Chairman, Non-Executive Director)

Derek Carter has over 31 years experience in exploration and mining geology and management. He held senior positions in the Shell Group of Companies and Burmine Limited before founding Minotaur Gold NL where he was Managing Director for 7 years. He was Managing Director of Minotaur Resources Ltd from February 2000 until its restructure when he became Managing Director of Minotaur Exploration Ltd in February 2005. He is also a board member of Mithril Resources Ltd and the Australian Gold Council and chairs the Council's Investment Group; is former President, and current Vice President of the South Australian Chamber of Mines and Energy and is a Member of the South Australian Resources Industry Development Board and the South Australian Minerals and Petroleum Experts Group.

Lloyd Taylor

PhD MAICD (Non-Executive Director)

Lloyd Taylor holds a doctorate in geology and geophysics from the University of Sydney. He has 27 years exploration and production experience with Woodside Petroleum Ltd, Shell International, Santos Ltd and Fletcher Challenge Energy Ltd. During the last thirteen years he has been responsible for general management and leadership of oil and gas business operations in Australia, Papua New Guinea, USA, United Kingdom, Canada, Indonesia, Brunei and New Zealand. Most recently he held the role of Chairman and Managing Director of Shell New Zealand. Prior to that he was the Chief Operating Officer of Fletcher Challenge Energy Ltd. Lloyd is the Chairman of Core Collaborative, an Australian based Asia/Pacific energy industry consulting network. He is a member of the Australian Institute of Company Directors.

Richard Bonython

BAgSc (Non-Executive Director)

Richard Bonython has over 40 years experience in the building, construction, rural and mining exploration industries. In the last 10 years he has primarily been involved in the mining industry and has been influential in the formation and ultimate listing of several mining exploration groups. He is chairman of Hindmarsh Resources Ltd and a director of Minotaur Exploration Ltd and Mithril Resources Ltd. He is a member of the Company's audit committee.

Richard Hillis

BSc, ARSM, PhD (Non-Executive Director)

Richard Hillis is the State of South Australia Professor of Petroleum Geology and Mawson Professor of Geology and Geophysics at the University of Adelaide. His research expertise is in the area of subsurface stresses within the crust and their impact on petroleum exploration-related issues such as wellbore stability, fracture stimulation and subsurface fluid flow. He has undertaken 30 consulting projects for 16 oil companies, primarily in the area of subsurface stresses and has taught industry professional short courses on the subject in Australia, Japan, Vietnam, Brunei and the United Kingdom. Richard, who has authored or co-authored 80 scientific papers and edited two books, heads a research group at the University of Adelaide, which includes post-doctoral and PhD students, researching crustal stress.

Simon O'Loughlin

BA Acc (Non-Executive Director)

Simon O'Loughlin is a legal practitioner with over 25 years experience as a corporate and commercial solicitor. He has had extensive involvement in the mining industry, especially in relation to the formation, structuring and listing of small to medium sized resources companies. He is a past chairman of the Taxation Institute of Australia (SA Division), and is currently a non-executive director of Living Cell Technologies Ltd, WCP Diversified Investments Ltd and Hindmarsh Resources Ltd, all of which are listed on the ASX. He is a member of the Company's qudit committee

COMPANY SECRETARY

Donald Stephens

BAcc, FCA

Donald Stephens is a Chartered Accountant and corporate adviser with over 20 years experience in the accounting industry, including 14 years as a partner of HLB Mann Judd Stephens, a firm of Chartered Accountants. He is a non-executive director of Mithril Resources Ltd and Papyrus Australia Ltd and is company secretary to Minotaur Exploration Ltd, Mithril Resources Ltd and Redport Ltd. These companies are all listed on the ASX. He holds other directorships with private companies and provides corporate advisory services to a wide range of organisations. He is a member of the Company's audit committee.

Interests in the shares and options of the company and related bodies corporate

As at the date of this report, the interests of the directors in the shares and options of Petratherm Ltd were:

	Ordinary Shares	Options over Ordinary Shares
Derek Carter	69.000	Exercise
Lloyd Taylor	300.000	400.008
Richard Bonython	218.099	50000
Richard Hills	20,000	-300.000
Simon O' Gughin	100.00	23632163

Refer to note 20 to the financial statements for further details.

OPERATING RESULTS

The operating loss for the consolidated entity after income tax for the year ended 30 June 2005 amounted to \$380,924.

EARNINGS PER SHARE

Genis Basic earnings per share $\mathcal{L}(\Lambda)$ Diluted earnings per share $(0, 9)$

DIVIDENDS

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

NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES

The principal activities during the year of entities within the consolidated entity were:

Test hot rocks, specifically granitic and hydrothermal iron oxide systems, with high temperatures;
Establishing an economically viable, emission free, renewable source for power generation.

There have been no significant changes in the nature of those activities during the year.

OPERATING AND FINANCIAL REVIEW

Group Overview

On the 27th of July 2004, the Company listed on the ASX following the successful completion of a \$4,000,000 public offering. Minotaur Resources Investments Pty Ltd, a wholly-owned subsidiary of Minotaur Exploration Ltd, is a substantial shareholder of the Company (42.86% interest).

The Company held \$2,575,000 net cash reserves at 30th of June 2005. The Company was active in exploring three project areas in South Australia for hot rock geothermal energy. These are Ferguson Hill (GEL 158), Callabonna (GEL 157 and GELA 179) and Paralana (GEL 156, GEL 178 and GEL 180).

During the period geological and geophysical studies identified a number of potentially favourable terrains for hot rock power generation in areas close to regional mining centres and other infrastructure sites in Australia. Using Petratherm's predictive model, infernational areas of potential hot rock prospectivity have been screened and a number of favourable terrains and targets identified.

Exploration commenced on two project areas during the period. Geophysical surveys were initiated at Paralana and Callabonna to help determine the best sites for geothermal drill evaluation. At Paralana down hole temperature measurements of recent drilling by mineral explorers also demonstrated elevated temperature gradients, consistent with the presence of a significant thermal anomaly in the area.

Drill preparations were concluded for both project areas and in January 2005 Petratherm's maiden hot rock evaluation well was spudded at Paralana. Shallow temperature logging of the upper cased portion of Paralana 1 confirmed a high temperature gradient consistent with target models. However, the drilling operation encountered unstable hole conditions and the hole was stopped short at 306m.

In view of the problems encountered with Paralana 1 a much larger capacity drilling rig, able to manage the unstable hole conditions by drilling with a weighted mud system, was sourced to complete the hole to the original target depth of 500-600m. With the availability of a larger capacity rig, drilling of the Callabonna Hot Rock Target (GEL 157) 70 kilometres north of Paralana was moved forward in the drilling schedule.

In May 2005 the Company was successful in obtaining a \$140,000 South Australian Government "Plan For Accelerating Exploration" (PACE) grant to support the drilling of its geothermal evaluation well at Callabonna.

Beyond the reporting period, in August 2005 the Callabonna geothermal evaluation well was successfully drilled to 693.5 metres. The hole (Yerila-1) recorded an exceptionally high temperature gradient of 68 degrees C per kilometre, one of the highest gradients recorded in Australia. This supports the Company's initial model for locating shallow geothermal resources in excess of 220 degrees centigrade at around 3.5 kilometres depth. As such, Yerila-1 marks a breakthrough in the evolution of the hot rock industry towards a business model based on the identification and evaluation of prospective thermal regimes closer to markets and infrastructure, with attendant reduction in project risk and improved total energy supply economics. Re-drilling of the Paralana geothermal evaluation well commenced in September 2005.

Risk Management

The group takes a proactive approach to risk management. The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that the group's objectives and activities are aligned with the risks and opportunities identified by the Board.

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

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

Board approval of a strategic plan, which encompasses the group's vision, mission and strategy statements, designed to meet stakeholders needs and manage business risk.
Implementation of Board approved operating plans and budgets and Board monitoring of progress against these budgets, including the establishment and monitoring of performance indicators both of a financial and non-financial nature.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

As indicated in the Operating and Financial Review, Petratherm Ltd listed on the Australian Stock Exchange following the successful Initial Public Offering of 20 million shares at 20 cents, resulting in \$4 million of initial capital.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the company, the results of those operations, or the state of affairs of the company in future financial years.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

The consolidated entity expects to maintain the present status and level of operations and hence there are no likely developments in the entity's operations.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The entity is aware of its responsibility to impact as little as possible on the environment, and where there is any disturbance, to rehabilitate sites. During the period under review the majority of work carried out was in South Australia and the entity followed procedures and pursued objectives in line with guidelines published by the South Australian Government. These guidelines are quite detailed and encompass not only the impact on owners and land users, heritage, health and safety and proper restoration practices. The entity supports this approach and is confident that it properly monitors and adheres to these objectives, and any local conditions applicable, both in South Australia and elsewhere.

SHARE OPTIONS

Unissued shares

At the date of this report, the following options to acquire ordinary shares in the company were on issue:

Issue Date	Expiry Date	laterale Hige	Balance at 1 July 2004	Issueci dunng Yedr	Bolonce at 30 June 2003
25203.22004	2428372109	$80-20$	750000		7500000
05/04/2004	04/04/2009	$\mathcal{S}(\mathcal{Y},\mathcal{Y})$	2.6000000		2,600.000
27/07/2004	26199112999	$S \cap \mathcal{D}$		2.00.990	2 GOO GOO
28/07/2004	27/07/2009	SO 20.		650.000	2550121010
2210612004	2343812909	80.32		40.OOC	40.000
16/12/2004	15/12/2009	SO 32		50.000	50,000
			10.200.000	2740.339	2840000

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

To the extent permitted by law, the Company has indemnified (fully insured) each director and the secretary of the Company for a premium of \$35,586. The liabilities insured include costs and expenses that may be incurred in defending civil or criminal proceedings (that may be brought) against the officers in their capacity as officers of the Company or a related body, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Company.

REMUNERATION REPORT

This report outlines the remuneration arrangements in place for directors and senior executives of Petratherm Ltd.

Remuneration philosophy

The Board is responsible for determining remuneration policies applicable to directors and senior executives of the entity. The broad policy is to ensure that remuneration properly reflects the individuals' duties and responsibilities and that remuneration is competitive in attracting, retaining and motivating people with appropriate skills and experience. At the time of determining remuneration consideration is given by the Board to the entity's financial performance.

Employment contracts

The employment conditions of the Chief Executive Officer, Mr Peter Reid, are formalised in a contract of employment. Mr Reid commenced employment on 27 July 2004 and his base salary is \$120,000 plus statutory superannuation contribution of 9%. The Company may terminate the employment contract without cause by providing three (3) months written notice or making payment in lieu of notice, based on the annual salary component. Termination payments are generally not payable on resignation or dismissal for serious misconduct. In the instance of serious misconduct the Company can terminate employment at any time.

Director remuneration for the year ended 30 June 2005

		Primary benefits		Post Employment
	Salary & Fees	NON Monetary	Superannuation	Retirement bonents	Options	N.
Derek N Carter	27500		2.475	×.		299/5
ROVE TOWOT	10.417		14563			24933
Richard M
Bonython	20,438		4,542		÷.	24980
Richard Hills	229.11		2 Vers			24,980
Simon
O'Loughlin	22,917		2.063			24,980

Remuneration of executives for the year ended 30 June 2005

	Primary benefits Solomy Sc	2NO A	Superannuation	Post Employment	Retirement	Ecitiv Options	mori
Peter Reid	EOS 112125.	Monetary	MOTOPAI		zoonente	36.440 -	158.656

Options granted as part of remuneration for the year ended 30 June 2005

	Grant Number	M	Farvalue	Exercised	Total fair	9. ST
$G(\bullet)(\bullet)$			Granted Vested per option at	Number	waite	remuneration
			efent date
23. AND 1 Peter Reid 2004	400000	28 AAV 200A	SG 0911		36.445	2297%

At the time of issue, the value of the options using the Black-Scholes option pricing model, which takes account of factors including the option exercise price, the current level and volatility of the underlying share price, the risk-free interest rate, expected dividends on the underlying share, current market price of the underlying share and the expected life of the option, was \$0.0911 per option.

DIRECTORS' REPORT

DIRECTORS' MEETINGS

The number of meetings of directors held during the year and the number of meetings attended by each director were as follows:

	Directors' Meetings
Number of meetings held.	Đ.
Number of meetings attended:
Derek Carter	A
Lloyd Taylor	В
The Kort Born Thom	凞
Richard Fills	8
Simon O'Loughlin	Ж

Committee membership

An audit committee was established in June 2005. There were no meetings of the audit committee held prior to the 30 June 2005.

Members acting on the audit committee of the Board were: Richard Bonython Simon O'Loughlin Donald Stephens

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.

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

AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES

The board of directors is satisfied that there was no provision of non-audit services during the year, and that all services were compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

DIRECTORS' REPORT

AUDITOR'S INDEPENDENCE

The auditor's independence declaration for the year ended 30 June 2005 has been received and can be found on page 19.

Signed in accordance with a resolution of the board of directors.

$\sqrt{at}$

Derek Carter Chairman Dated this 30^th day of September 2005.

Grant Thornton ®

Chartered Accountants and Business Advisors

AUDITOR'S INDEPENDENCE DECLARATION

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Petratherm Ltd for the year ended 30 June 2005, I declare that, to the best of my knowledge and belief, there have been:

(a) no contraventions of the auditor independence requirements of the Corporations Regulations 2001 in relation to the audit; and

(b) no contraventions of any applicable code of professional conduct in relation to the audit.

GRANT THORNTON CHARTERED ACCOUNTANTS

S J GRAY Partner

Dated this 30^th day of September 2005

Level 1 67Greenhäl Road Wayvike SA 5034 GPÓ Box 1270 Adelaide SA 5001 DX 275 Adelaide T (08) 8372 6666
F (08) 8372 6677 E [email protected] W www.grantlhornton.com.au

Grant Thornton Services (SA) Pty Etd ACN 080 740 067 A Member of Grant Thornton Association Inc.

The Australian Member of Grant Thornton International

ำ

CORPORATE GOVERNANCE STATEMENT

The board of directors is responsible for the corporate governance of Petratherm Ltd (the Company) and its controlled entity (MNGI Pty Ltd). Summarised in this statement are the main corporate governance practices that have been developed by the board and were in place at the end of the financial year.

Board Responsibilities

The board of directors is accountable to shareholders for the performance of the Group and has an overall responsibility for its operations. Day to day management of the Group's affairs and the implementation of the corporate strategy and policy initiatives are formally delegated by the board to the Chief Executive Officer.

The key responsibilities of the board include:

Developing the strategic direction and related objectives for the Group and monitoring management performance in the achievement of these objectives.
Adopting budgets and monitoring the financial performance of the Group.
Reviewing the performance of the managing director.
Overseeing the establishment and maintenance of adequate internal controls and effective monitoring systems.
Ensuring all major business risks are identified and effectively managed.
Ensuring that the Group meets its legal and statutory obligations.

Chief Executive Officer and Company Secretary Declaration to the Board of Directors

The declaration made by the Chief Executive Officer and the Company Secretary to the board with regard to the integrity of the Company's financial report is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board. The Company's risk management and internal compliance and control system is operating efficiently and effectively in all material respects.

Board Composition

At the date of this statement the board consists of five non-executive directors, Mr D Carter, who is also chairman of the board, Dr L Taylor, Dr R Hillis, Mr R Bonython and Mr S O'Loughlin. Dr Taylor, Dr Hillis and Mr O'Loughlin have no other material relationship with the Company or its subsidiary other than their directorships. Messrs Carter and Bonython are directors of Minotaur Exploration Ltd which is the beneficial holder of 42.9% of the issued capital Petratherm Ltd. The Company therefore has three independent directors as those relationships are currently defined.

The board considers this to be an appropriate composition given the size and development of the Group at the present time. The names of directors including details of their qualification and experience are set out in the Directors' Report of this Annual Report.

The composition/membership of the board is subject to review in a number of ways, as outlined below:

The Company's constitution provides that at every Annual General Meeting, one third of the directors shall retire from office but may stand for re-election.
Board composition is also reviewed periodically either when a vacancy arises or if it

CORPORATE GOVERNANCE STATEMENT

is considered that the board would benefit from the services of a new director, given the existing mix of skills and experience of the board which should match the strategic demands of the Group. Once it has been agreed that a new director is to be appointed, a search would be undertaken, sometimes using the services of external consultants. Nominations are subsequently received and reviewed by the board.

Board Remuneration

The maximum aggregate annual remuneration which may be paid to non-executive directors is currently \$300,000. This cannot be increased without approval of the Company's shareholders.

Remuneration of the non-executive directors is reviewed and approved by the board.

Conflicts of Interest

In accordance with the Corporations Act 2001 and the Company's constitution directors must keep the board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the board believes that a significant conflict exists the director concerned does not receive the relevant board papers, is not present at the meeting whilst the item is considered and takes no part in any decision.

Director and Senior Management Dealings in Company Securities

The Company's constitution permits directors to acquire securities in the Company, however Company policy prohibits directors and senior management from dealing the Company's securities at any time whilst in possession of price sensitive information and for 24 hours after:

Any major announcements
The release of the Company's annual financial results to the Australian Stock Exchange; and
The Annual General Meeting.

Directors must advise the Chairman of the board before buying or selling securities in the Company. All such transactions are reported to the board. In accordance with the provisions of the Corporations Act and the Listing Rules of the Australian Stock Exchange, the Company advises the Exchange of any transaction conducted by directors in securities in the Company.

Board Committees

The board of directors takes ultimate responsibility for corporate governance including the functions of:

Establishing compensation arrangements of its chief executive officer and its senior executives and officers
Appointment and retirement of non-executive directors $\bullet$
Appointment of auditors
Areas of Business Risk
Maintenance of Ethical Standards

CORPORATE GOVERNANCE STATEMENT

The board of directors seeks independent professional advice as necessary in carrying out their duties and responsibilities.

The board established an audit committee in June 2005 comprising two directors of the company, Mr Richard Bonython and Mr Simon O'Loughlin and the company secretary, Mr Donald Stephens. As at the reporting date no meetings of the audit committee had been held. The committee will be responsible for reviewing the integrity of the Company's financial reporting and overseeing the independence of the external auditors.

External Auditor Attendance at Annual General Meeting

An external auditor attends the Company's Annual General Meeting and is available to answer questions from shareholders on the auditors' report and the conduct of the audit.

Continuous Disclosure

The Company has a policy that all shareholders and investors have equal access to the Company's information. The Chairman ensures that all price sensitive information is disclosed to the ASX in accordance with the continuous disclosure requirements of the Corporation's Act and ASX Listing Rules. The Company Secretary has primary responsibility for all communications with the ASX.

Code of Ethics

Directors, management and staff are expected to perform their duties for the Group in a professional manner and act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the Group.

The Role of Shareholders

The board of directors aims to ensure that the shareholders are informed of all major developments affecting the Group's state of affairs. Information is communicated to shareholders as follows:

The annual report is distributed to all shareholders (unless a shareholder has specifically requested not to receive the document);
The half-yearly report contains summarised financial information and a review of the operations of the Group during the period (the financial report is sent to any shareholder who requests it);
The ASX quarterly cash reports containing summarised financial information and a review of operations of the group during the periods;
Notices of all meetings of shareholders;

All information disclosed to the ASX is posted on the company's web sife www.petratherm. com.au.

Departures from ASX Corporate Governance Council "Principles of Good Corporate Governance and Best Practice Recommendations"

In a number of instances the Company has departed from the various recommendations as set out in the "Principles of Good Corporate Governance and Best Practice Recommendations" released by the ASX Corporate Governance Council. This is primarily due to the size of the Company and the nature and scope of its operations and the cost benefit of adopting such recommendations. These departures and reasons for departure are as follows:

There have been no formal disclosures of policies or processes. Given the involvement of all five directors it is not considered that formal policies or processes are yet required as principles are followed.
The board has formed an audit committee which will formulate the objectives and $\bullet$ responsibilities for that committee. No other committees have been established. As previously noted this is because of the size of the Company and the involvement of the board in the operations of the company. The board takes ultimate responsibility for these matters.

STATEMENT OF FINANCIAL PERFORMANCE

YEAR ENDED 30 JUNE 2005	Noles	CONSOLIDATED		PARENTENTIFY
		2005	2004	2005 S	2004
REVENUE FROM ORDINARY ACTIVITES	2	146,363		146,218
Depreciation and amortisation expenses	J.	(4.286)
Salaries and employee benefits expense		(196, 413)		(129, 892)
Exploration expenditure	Ø	(54.495)
Other expenses from ordinary activities	$3($ c $)$	(272, 093)		(64,968)
PROFIT/(LOSS) FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE		(380,924)		(48, 642)
INCOME TAX EXPENSE	A
PROFIT/(LOSS) FROM ORDINARY ACTIVITIES AFTER INCOME TAX EXPENSE		(380, 924)		(48, 642)
NET PROFIT/(10SS) ATTRIBUTABLE TO MEMBERS OF PETRATHERM bid.	15	(380924)		(48,642)
TOTAL CHANGES IN EQUITY OTHER THAN THOSE RESULTING FROM TRANSACTIONS WITH OWNERS AS OWNERS а інвідні ю MEMBERS OF PETRATHERM 11D		(380,924)		(48, 642)
Basic earnings per share (cents per share)	18	(1.1)
Diluted earnings per share (cents per share)	X.	(0.9)

The Statement of Financial Performance is to be read in conjunction with the Notes to the Financial Statements.

STATEMENT OF FINANCIAL POSITION

As at 30 JUNE 2005	Noles	CONSOLIDATED		PARENT ENTITY
		2005 K.	2004	2005 9	2004 X
CURRENT ASSETS
Cash assets		2.670,150	6820	2.497.338
Receivables	5	134,041		1,008,593
Offrex TOTAL CURRENT ASSETS	Ŷ.	26,366 2,830,557	6.820	18 240 3,524,171	1

NON-CURRENT ASSETS
Property, plant and	Ň	13,984	2.085
equipment Exploration and
evaluation costs	10	881,841	402,732
Other tinancial assets	٣			300,000	300,000
IOIAL NON-CURRENT ASSETS		895825	405,818	300,000	300,000

iom#Ases		3,726,382	412,688	3,824,171	300,001
CURRENT LIABILITIES
Payables	V.	267 703	W2 631	20,262
Provisions	12	47.052
TOTAL CURRENT LIABILITIES		254.755	N2 637	20262

TOTAL LIABILITIES		245.755		20 262
NET ASSETS		3,471,627	300.001	3.803,909	300,001

EQUITY
Contributed equity	13	3,852,551	300,001	3.852.551	300.001
Retained profits/(losses)	14	(380924)		(48,642)

The Statement of Financial Position is to be read in conjunction with the Notes to the Financial Statements.

STATEMENT OF CASH FLOWS

YEAR ENDED 30 JUNE 2005	Noles	CONSOLIDATED		PARENTENHEY
		2005	2004	2005	2004
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees		(440.816)		(200, 024)
Interest received		129,002		128/842
NET CASH FLOWS FROM/(USED IN) CPERATING ACTIVITIES	කායා	(311,814)		(11.162)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(16, 240)
Payments for exploration activity		(526, 195)
Loans to wholly-owned subsidiary				(956, 479)
Loans from/(to) related parties		(6, 819)	6,80
Purchase of controlled entity (net of cash acquired)	$15($ c $)$	$(\overline{\mathcal{U}}$ (552)		(27,552)
NET CASH FLOWS FROM (USED) IN) INVESTING ACTIVITIES		(511,006)	689	(984,031)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of ordinary shares		4,000,000		4.000,000
Payment of share issue costs		(A47, 456)		(447.450)
NET CASH FLOWS FROM/(USED) IN) FINANCING ACTIVITIES		3,552,550	1	3,552,550	1
NET INCREASE/(DECREASE) IN CASHHUD		2663,330	6.820	2,491331
CASH AT THE BEGINNING OF THE YEAR		6,820
CASH AT THE END OF THE YEAR	15(b)	2670150	6.820	2497338

The Statement of Cash Flows is to be read in conjunction with the Notes to the Financial Statements.

30 JUNE 2005

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of accounting

The financial report is a general purpose financial report which has been prepared in accordance with the requirements of the Corporations Act 2001 which includes applicable Accounting Standards. Other mandatory professional reporting requirements (Urgent Issues Group Consensus Views) have also been complied with.

The financial report has been prepared in accordance with the historical cost convention and on an accrual basis and do not take into account changing money values or current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets. The accounting policies have been consistently applied, unless otherwise stated.

Petratherm Ltd is a listed public company, incorporated and domiciled in Australia.

(b) Changes in accounting policies

As the Company is reporting its inaugural results, it is the first year in which the accounting policies have been applied. Accordingly, there have been no changes in accounting policies.

(c) Principles of consolidation

The consolidated financial statements are those of the consolidated entity, comprising Petratherm Ltd (the parent entity) and all entities which Petratherm Ltd controlled from time to time during the year and at balance date.

Information from the financial statements of subsidiaries is included from the date the parent company obtains control until such time as control ceases. Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during which the parent company has control.

Subsidiary acquisitions are accounted for using the purchase method of accounting. The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies which may exist.

All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered.

(d) Cash and cash equivalents

Cash on hand and in banks and short-term deposits are stated at nominal value. For the purposes of the Statement of Cash Flows, cash includes cash on hand and in banks, and money market investments readily convertible to cash within 2 working days, net of outstanding bank overdrafts.

Bank overdrafts are carried at the principal amount. Interest is charged as an expense as it accrues.

(e) Receivables

Trade receivables are recognised and carried at original invoice amount less a provision for any uncollectable debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written-off as incurred.

Receivables from related parties are recognised and carried at the nominal amount due.

Interest is taken up as income on an accrual basis.

(f) Recoverable Amount

Non-current assets measured using the cost basis are not carried at an amount above their recoverable amount, and where a carrying value exceeds this recoverable amount, the asset is written down.

(g) Property, plant and equipment

Cost basis

All classes of property, plant and equipment are measured at cost.

Depreciation

Depreciation is provided on a straight line basis on all property, plant and equipment.

Major depreciation rates used for each class of depreciable asset are: - Plant & Equipment $10 - 40%$

(h) Exploration and evaluation costs

Costs carried forward

Costs arising from exploration and evaluation activities are carried forward provided such costs are expected to be recouped through successful development, or by sale, or where exploration and evaluation activities have not, at reporting date, reached a stage to allow a reasonable assessment regarding the existence of economically recoverable reserves.

Grants and subsidies are offset against costs as incurred.

Costs carried forward in respect of an area of interest that is abandoned are written off in the year in which the decision to abandon is made.

(i) Payables

Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the consolidated entity.

Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is recognised as an expense on an accrual basis.

(j) Interest-bearing liabilities

All loans are measured at the principal amount. Interest is charged as an expense as it accrues.

(k) Contributed equity

Issued and paid up capital is recognised at the fair value of the consideration received by the company.

Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

(I) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured.

Interest is recognised when the entity has control of the right to receive the interest payment.

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Mili ֦֦֪֦֪֦֦֦֧֦֦֧֦֪֦֦֦֧֦֞֟֟֟֟֟֟֟֟֟֕֕֕֕֕֕֩֕֕֩֕֩֕֩֕֩֕֩֕֩֕֩֕֩֕֟֞֟֟֟֟֟

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(m) Taxes

Tax-effect accounting is applied using the liability method whereby income tax is regarded as an expense and is calculated on the accounting profit after allowing for permanent differences. To the extent timing differences occur between the time items are recognised in the financial statements and when items are taken into account in determining taxable income, the net related taxation benefit or liability, calculated at current rates, is disclosed as a future income tax benefit or a provision for deferred income tax. The net future income tax benefit relating to tax losses and timing differences is not carried forward as an asset unless the benefit is virtually certain of being realised.

Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST except:

where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position.

Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(n) Tax consolidation legislation

Petratherm Ltd and its wholly-owned Australian controlled entity have not yet decided to implement the tax consolidation legislation as of 1 July 2004. The Australian Taxation Office has not yet been notified of any decision.

If the entity were to implement the tax consolidation legislation in the current or future reporting period, the consequence would be that Petratherm Ltd, as the head entity in the tax consolidated group, recognises current and deferred tax amounts relating to transactions, events and balances of the wholly-owned Australian controlled entities in the group as if those transactions, events and balances were its own, in addition to the current and deferred tax amounts arising in relation to its own transactions, events and balances. Amounts receivable or payable under an accounting tax sharing agreement with the tax consolidated entities are recognised separately as tax-related amounts receivable or payable. Expenses and revenues arising under the tax sharing agreement are recognised as a component of income tax expense (revenue). The deferred tax balances recognised by the parent entity in relation to wholly-owned entities joining the tax consolidated group are measured based on their carrying amounts at the level of the tax consolidated group before the implementation of the tax consolidation regime.

There will be no impact of the legislation on the entity's historical carrying amounts of its deferred fax assets, as these have not been recognised in the parent or consolidated entity financial statements.

(o) Employee benefits

Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries, annual leave, sick leave and long service leave.

Liabilities arising in respect of wages and salaries, annual leave, sick leave and any other employee benefits expected to be settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled. All other employee benefit liabilities are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date. In determining the present value of future cash outflows, the market yield as at the reporting date on national government bonds, which have terms to maturity approximating the terms of the related liability, are used.

Employee benefit expenses and revenues arising in respect of the following categories:

wages and salaries, non-monetary benefits, annual leave, long service leave, sick leave and other leave benefits; and
other types of employee benefits

are charged against profits on a net basis in their respective categories.

The value of the equity-based compensation scheme described in note is not being recognised as an employee benefits expense.

(p) Earnings per share

Basic EPS is calculated as net profit attributable to members, adjusted to exclude costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted EPS is calculated as net profit attributable to members, adjusted for:

costs of servicing equity (other than dividends) and preference share dividends;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares;

divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

2. REVENUE FROM ORDINARY ACTIVITIES

30 JUNE 2005 Nökx	CONSOLDATED		PARENTENTITY
	2006 W.	28137 86	2005 Ø.	$200\,d$ 缀
Revenues from operating activities
interest received or receivable	matan		146.218
Total revenues from ordinary convires	126,363		Z6,218	ч.

3. EXPENSES AND LOSSES/(GAINS)

(a) Expenses

30 JUNE 2005	(consolidand	PARENTEENHEY
	200.5 X.	208/3 Ø	231.3 ×,	2004 Ø
Depreciation of non-current assets
-Plant and equipment	4,235
Total depreciation of non-current CISSETS	4, 286
Exploration and evaluation costs
Avrillen oft	82 M.D.S
Total exploration and evaluation costs	54,495

(b) Movement in provisions:

30 JUNE 2005 ngra	(Confondants)		PARENISENII IYA
	2.310151	$200 -$	2035	2004
	X	W.		90
Employees annual leave	7011
Enployees lang service leave	10 369
	17.380

JA E PER NET

petratherm td

(c) Other Expenses from ordinary activities

30 JUNE 2005	Gonsohdated		1200 - 1201 - 121 122 123 124
	2005 Z	2004 ł,	2965 翳	2804 X
Secretarial and professional fees	50,548
Occupancy costs	19044
Share register maintenance	18,844		18,844
Insurance costs	39633		32 224
Promotion and advertising	14,362	×
Service Charges	38.603
Consulting tees	25,869
Travel experiences	18,188
Stock exchange fees	11,313		11213
Audi tees	12,500
Other expenses	23,189	÷	2,584
	272.093		64968

4. INCOME TAX

The prima facie tax, using tax rates applicable in the country of operation, on profit and extraordinary items differs from the income tax provided in the financial statements as follows:

303UNE 2005	CONSOLDATED		EXRENCENTIE
	2000 £.	2004 en eller Kalendar	21.865 S.	2201874 Ź,
Prima facie fax on profit from ordinary cretivities	(114.277)		(14.523)
Add. lax effect of
inon-cilowable tems	261745		pyren
Less Tax ettect of
other deductible terms	(188.0/9)		(26.629)
Income tax cenetif at hautable to ordinary activities not brought to account as the penetit is not virtually retion of perroriectised	(278.581)		(39.222)

Income tax losses

Future income tax benefit arising from tax losses of a controlled entity not recognised at reporting date as realisation of the benefit is not regarded as virtually certain

30 JUNE 2005	gonkohymed		PARENT ENTITY
	2005	22322	2005	2004
	88	潟	M	繿
timing differences at 30%	GORIGEN		109.301
tax losses at 30%	278 581		スマルカル
	243.512		148.828

This future income tax benefit will only be obtained if:

(a) Future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised;
(b) The conditions for deductibility imposed by tax legislation continue to be complied with; and
(c) No changes in tax legislation adversely affect the consolidated entity in realising the benefit.

Tax consolidation

Petratherm Ltd and its wholly-owned Australian controlled entity (MNGI Pty Ltd) have not yet decided to implement the tax consolidation legislation as of 1 July 2004. The Australian Taxation Office has not yet been notified of any decision. The accounting policy relating to the possible implementation of the tax consolidation legislation is set out in note 1, together with the impact on the income tax expense for the year.

5.RECEIVABLES (CURRENT)

30 JUNE 2005	Noier	CONSOHDATED		LAN JIN SIN BA
		2005 Ä	2004 X	2805 Ø,	2302 B
Trade debtors:	5(5)	93.980
Sundry debtors	SKO)	39.843		24 563
Goods and Services Tax receivable
Amounts offer their trade debts receivable from related parties.	2X CH
Wholly-owned group
controlled entities	28			984 838
Other related parties
Director related entity Minotaur exploration Ltd		218
		134.041		1,008.593

(a) Total related party receivables

30 JUN 22005	Noies	(Goingondans)		EAREN 2011 N
		2005 X.	2004 B	2005. X.	2004 灪
Wholly-owned group
-control ed entitles	汤			934.030
Other related parties
- Director related entity Minotaur Exploration Ltd.	渕	2218
		218		934,080

(b) Terms and conditions

(i) Trade debtors are non-interest bearing and generally on 30 day terms.
(ii) Sundry debtors and other receivables are non-interest bearing and have repayment terms between 30 and 90 days.

6. OTHER FINANCIAL ASSETS

30 JUNE 2005 Nors		(GONFORD) (12)	PARENTSENTITY
	2003	2002	2005	2004.
Shares in controlled entities (MNGI Pty)	鎏	18	23	繆
11d)	74		300,000	300,000
			3001008	30000

The shares represent the investment in MNGI Pty Ltd, which is a private company and as such, the carrying amount of the investment is at cost.

7. INTEREST IN SUBSIDIARIES

			Percentage of equity interest
Name	County of Incorporation		heid by the consolidated enilly	Invesiment
		2005 26	2804 W.	219(6) W	2281874 M.
MNGI Pty Ltd.	Australia	100	າດດ	300.000	300000
				300.000	300.000

8. OTHER CURRENT ASSETS

30 JUNE 2005	CONSOLDATED		PARENTENTIY
	2005	2004	2005	2004
	×	Ã.	X	X.
Prepayments	41 164	æ.	31033	. .
Other cuttent assets	15.202		15.202
	26.366		13246

9. PROPERTY, PLANT AND EQUIPMENT

30 JUNE 2005 Nojeg	gonso Idaied		PARENISENIII Y
	2036	2834	2005	231025
	獿	86	M	繆
Plant & equipment
Alcost	18/270	3. 186
Accumulated depreciation	(4, 286)		$\sim$	- 11
96. 13 Hotal plant and equipment	18.934	S. Vela

AO EAL ALLANDR

$\text{max}^{\mathbf{x}}_{\mathbf{0}}$

(a) Reconciliations

Reconciliations of the carrying amounts of property, plant and equipment at the beginning and end of the current financial year.

30 JUNE 2005	gonkon/m:		exvatients
	2005	2204	2005	2004
Plant and equipment	纝	Ø.	8	纝
Balance at the beainming of the penca	31086
Additions	15.184	3.086	Жĕ.
Deprediction expense	(4.286)
	18984	3086

10. EXPLORATION AND EVALUATION COSTS

Exploration and evaluation costs carried forward in respect of mining areas of interest

30 JUNE 2005	(gonko) paha		PAREMIZENHIYA
	2005	2004	2005	2004
	憠		88	燭
Pre-production
-Exploration and evaluation phase	881.841	402.732
	8813241	402.782

The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent on the successful development and commercial exploitation or sale of the respective mining areas. Amortisation of the costs carried forward for the development phase is not being charged pending the commencement of production.

11. PAYABLES (CURRENT)

30 JUNE 2005 NSK	(gonno) id (19		EXQAN BANINY
	2005 8	таат 77	200 B.S M.	2004 纋
Trade creditors	170.894	105.818
Other creditors (a)	36.809	S. S. P	26252
	207/08	112.637	20,262

(a) Total related party payables

30 JUNE 2005 wart		gonkohdnism	PARENT BATTER
	2005	78.34	2005	2004
	×		N.	HANG
Other related parties
-Director related entity: Minotaur 28		$\sim$ 8 $\sim$
Resources Nd:

٣ľ C

12. PROVISIONS (CURRENT)

30 JUNE 2005 Nato	CONSOLDATED		PARENTISATITIY
	2005	2034	2085	2004
16 Employee benefits	B 4/105/2	2		25
	47.852

13. CONTRIBUTED EQUITY

(a) Issued and paid up capital

30 JUNE 2005 Mares	(goint (gin) (h. 189		PARENTEENTITY
	2005	2002	21910.57	201074
		癥	38	186
Ordinary shares fully paid	318124551	300.001	83823551	6001001
	3852551	ao col	3.8522533	390001

(b) Movements in shares on issue

	كالماها		92e e P. E
	Number of shares	ł,	Number of Sacres	$\mathcal{S}$
Beginning of the financial year	ISOODKOOL	300.001
issued duting the year
-Shares issued pursuant to Prospectus	2000000	4000,000	15.000,001	300.001
less transaction costs		(44/450)
End of the financial year	35,000,001	3.852.551	15000.001	300(00)

14. RESERVES AND RETAINED PROFITS/(LOSSES)

30 JUNE 2005	Naisa	gon Rohdnied		PARENTENTIEZ
		2005.	2004	20053	2004
			纝
Retained profits/(losses)	4(0)	(380,924)		(48, 642)

(a) Retained profits/(losses)

301UNE 2005	Gonegiidaied		PARENISENHIW
	2005. W.	2000 鷚	2005 刎	WU OKA S.
Balance at the beginning of vear	$\alpha$
Net protit/(toss) criticulable to members of Petrotherm Ltd	(280.924)		(48.642)
Total available for appropriation	(380.924)	÷	(48,642)
Balance at end of year	(830.724)		(48.642)

MOGENIVON

15. STATEMENT OF CASH FLOWS

(a) Reconciliation of the net profit/(loss) to the net cash flows from operations

30 JUNE 2005		CONSOLIDATED *PARENTIENTITY*
	2005 5	2004 W	2005 B	2364 83
Net profit/(loss)	(380,924)		(48, 642)
Non-Cash Items
Depreciation of non-current assets	4,286
Changes in assets and liabilities
(Increase)/decrease in trade and other receivables	(30.466)		(15,202)
(increase)/decrease in prepayments	(11,164)		(3.037)
(Decrease)/Increase in trade and other creditors	59, 42		20 262
(increase)/decrease in withholding tax receivable	(2M5)		(2,1/5)
(Increase)/decrease in net goods and services fax receivable	(22, 388)		(22, 388)
(Decrease)/increase in employee entitiements	17,380
Write off of tenement costs (classified as an investing activity)	54,495
Net cash flow from operating activities	(311, 814)		$(1)$ (1823)

(b) Reconciliation of cash

30 JUNE 2005	CONSOLDATED nara		parenierniin
	2865	220025	2003	2004.7

Cash balance comprises:
weash on handy	2.610150	1820	2491838
Closing cash balance	2 6701 50	6,820	2 497,338

(c) Acquisition of Controlled Entity

Petratherm Ltd acquired its subsidiary MNGI Pty Ltd by purchasing 100% of the issued capital in exchange for 15,000,000 ordinary shares. The details of the fransaction are listed below:

	2005
	ł.
Consideration
Fair value of shares issued	300,000
	300,000
Net Assets of MNGI Pty Ltd at acquisition date:
- Tenement properties	357,224
Payables	(60, 524)
Net Assets acquired (excluding cash)	296,700
Shares issued	(300,000)
	3,300
Cash included in het assets acquired	(3,300)

Cash paid for the purchase of controlled entity as
reflected in the consolidated statement of cash	27.552
flow
Represented by
- Settlement of payables	(60, 524)
Employee provision undertaken	29.612
- Cash Included in net assets acquired	3.300

16. EMPLOYEE BENEFITS

Employee Benefits

30 JUNE 2005	(gonsondnie) Naies		earan san Ba
	2006 纝	2034 S	2005 æ	2007 e. Nask
The aggregate employee benefit liability is comprised of:
Accrued wages, salaries and on costs	W. H.		Walio
Provisions (current)	47052		-40	÷.
	54 A27		7275

Employee Share Option Scheme

The Company has established the Petratherm Ltd Employee Share Option Plan and a summary of the Rules of the Plan are set out below:

All employees (full and part time) will be eligible to participate in the Plan after a qualifying period of 12 months employment by a member of the Group, although the board may waive this requirement.
Options are granted under the Plan at the discretion of the board and if permitted by the board, may be issued to an employee's nominee.
Each option is to subscribe for one fully paid ordinary share in the Company and will expire 5 years from its date of issue. An option is exercisable at any time from its date of issue. Options will be issued free. The exercise price of options will be determined by the board, subject to a minimum price equal to the market value of the Company's shares at the time the board resolves to offer those options. The total number of shares the subject of options issued under the Plan, when aggregated with issues during the previous 5 years pursuant to the Plan and any other employee share plan, must not exceed 5% of the Company's issued share capital.
If, prior to the expiry date of options, a person ceases to be an employee of a Group company for any reason other than retirement at age 60 or more (or such earlier age as the board permits), permanent disability, redundancy or death, the options held by that person (or that person's nominee) automatically lapse on the first to occur of
a) the expiry of the period of 6 months from the date of such occurrence, and
b) the expiry date. If a person dies, the options held by that person will be exercisable by that person's legal personal representative.
Options cannot be transferred other than to the legal personal representative of a deceased option holder.
The Company will not apply for official quotation of any options.
Shares issued as a result of the exercise of options will rank equally with the Company's previously issued shares.
Optionholders may only participate in new issues of securities by first exercising their options.
The board may amend the Plan Rules subject to the requirements of the Listing Rules

Information with respect to the number of options granted under the share option plan is as follows:

	Noles	74115		$7.918\%$
			Weighted		Weighted
		Number	avergge	Number	average
		of options	ехетске	of options	exercise
			рисе		price
- granted during the year		490.000	11/27		525
Balance at end of year	k(c)	490 000	0.922
Exercisable at end of year		490,000	(1122)

The fair value of options issued during the year was \$64,755.

(a) Options held as at the end of the reporting period

The following table summarises information about options held by employees as at 30 June 2005:

Number of opions	*erentdate*	Vesting date	Expiry date	Exercise price
400 009	28 July 2004	28 HAY 2004	27 NW 2009	29 cents
40,000	22 August 2004	22 August 2004	23 August 2009	32 cents
50.000	To December 2334	16 December 2984	15 December 299	32 cents
490,000

17. SUBSEQUENT EVENTS

No matters or events have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of its operations, or the state of affairs of the Company in subsequent financial years.

18. EARNINGS PER SHARE

The following reflects the income and share data used in the calculations of basic and diluted earnings per share:

30 JUNE 2005 Noier	(ganko) idaz
	2003	23102
Net profit/(loss)	× (380,924)	貜
Famings used in calculating
base and diluted earnings per	CHILLAN
share

394UNE 2005	CONSOLIDATED
	2018	2002
	Number of shares	Number of shares
Weighted average number of ordinary shares used in calculating basic earnings per share	35,000,001	15.00001
Effect of dilutive securities:
Shares issued free of consideration	4,780,531
Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share	39,780,532	15.000.001

19. AUDITOR'S REMUNERATION

Amounts received or due and receivable by Grant Thornton for:

30 JUNE 2005	Noles	CONSOLDATED	PARENIZENII IY
	2005 兤	2001 y	2005 勜	2002
- an audit or review of the financial report of the entity and any other entity in the consolidated entity	12,500
	12.580

20. DIRECTOR AND EXECUTIVE DISCLOSURES

(a) Details of Directors and Specified Executives

(i) Directors

Derek Carter Chairman
Lloyd Taylor
Richard Bonython
Richard Hillis
Simon O'Loughlin

Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director

(ii) Specified executives

Mr Peter Reid

Chief Executive Officer

b) Remuneration of Specified Directors and Specified Executives

(i) Remuneration Policy

The board currently determines the nature and amount of remuneration for board members and senior executives of the consolidated entity. The policy is to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas affecting the consolidated entity's financial results.

The non-executive directors and other executives receive a superannuation guarantee contribution required by the government, which is currently 9%, and do not receive any other retirement benefits. Some individuals, however, may choose to sacrifice part of their salary to increase payments towards superannuation.

All remuneration paid to directors and executives is expensed as incurred. Executives are also entitled to participate in the company share option scheme. Options are valued using the Black-Scholes methodology.

The board policy is to remunerate non-executive directors at market rates based on comparable companies for time, commitment and responsibilities. The board determines payments to non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required.

	Primary	Post Employment		Equity	រចាចា
	Salary & Foos	Superannuation	Retirement benetits	Options	S
Directors
Detek Carter	27,500	2.475			29.975
Lloyd Taylor	10,417	14,563			24,980
Richard Bonython	20,438	4.542			24.980
Richard Hillis	22917	2,063			24,980
Simon O'Loughtin	22.917	2,063	嫐	M	24980
Total Remuneration: Directors	104.189	25.706	ú.		129.895
Specified Executives Peter Reid	12,23	10,091			36,440
Total Remuneration: Specified Executives	112.125	10,091	й,		36,440

(ii) Remuneration of Specified Directors and Specified Executives

As this is the Company's inaugural report, no comparative information is available.

(c) Remuneration options: Granted and vested during the year

		Terms & Conditions for Each Grani
	Number Vested	Number Granted	Grant Dalo	Holl value per option at grant dale (\$)	Exercise Price per share $\langle \mathbb{S} \rangle$	HISI Exercise Date	KOS. Exercise Dolle
Specified Directors
Specified Executives
Peter Reid	400.000	400000	28. AR 2005	3093	0.20	28.A.I 2005	27 Jul 2009
Donald Stephens	250,000	250,000	28 Jul 2005	0.0911	0.201	$28$ Jul 2005	$27$ Jul 2009

(d) Option holdings of specified directors and specified executives

Options issued to the Directors of the consolidated entity are escrowed until 27 July 2006, at which point they will be exercisable at any time until 4 April 2009.

コフランス

(e) Shareholdings of Directors and Specified Executives

Shokes held in Petrothern Ltd	ោតសេ 1 July 2004	Granicalas Remuneration	(B) () Exercise of Options	Mer Change Other	Balence) 30 June 2005
	Oici	(OXG)	Ørð	ので	OSTO
Specified Directors
Derek Carter				60 000	60000
Lloyd Taylor				300,000	300,000
Richard Bonythen				270.000	270.000
Richard all is			÷	20,000	20000
Simon O'Loughiln				100.000	100.009
Specified Executives
Mr Peter Reid				50000	50.000
Тоган	₩			800,000	800.000

All shares acquired by the directors and specified executives of the consolidated entity were in relation to the IPO of Petratherm Ltd. All shares were acquired at the price of \$0.20 per share.

Messrs Carter and Bonython are directors of Minotaur Exploration Ltd which is the beneficial holder of 15,000,001 ordinary shares.

21. RELATED PARTY DISCLOSURES

Wholly-owned group fransactions

Loans

The wholly-owned Group consists of Petratherm Ltd and its wholly owned controlled entity MNGI Pty Ltd. Ownership interests in these controlled entities are set out in note 7. Transactions between Petratherm Ltd and MNGI Pty Ltd during the year consisted of loans advanced by Petratherm Ltd to fund exploration and investment activities. The loan amounts are detailed in note $5(a)$ .

Other related party transactions

Administrative Costs

Administration and service fees have been paid to Minotaur Exploration Ltd, which is a related party of Petratherm Ltd. These fees relate to shared administrative costs including the salaries of key administrative staff, use of computer network and shared office space. Additionally included are disbursements of administration related expenditure. These costs have been incurred at an amount that would be attracted in an arms length commercial transaction. The total expense incurred by Petratherm Ltd in regards to Minotaur Exploration Ltd's services throughout the reporting period was \$26,142 (exclusive of GST).

Prior to its demerger, Minotaur Resources Ltd was also a related party of Petratherm Ltd which provided the same services, as previously mentioned. The total expense incurred by Petratherm Ltd in regards to Minotaur Resources Ltd's services throughout the reporting period was \$54,628 (exclusive of GST).

22. SEGMENT REPORTING

The Company operates solely in the mineral exploration industry within Australia.

23. FINANCIAL INSTRUMENTS

(a) Interest Rate Risk

The consolidated entity's exposure to interest rate risk, which is the risk that a financial instrument's value will fluctuate as a result in changes in market interest rates and the effective weighted average interest rates on classes of financial assets and financial liabilities, is as follows:

			Fixed Interest for:
$2005\,$	Notes	Hoating Interest roto	1 year Or less.	$O$ vor $\sim$ 10 $\sigma$ voars	Non-Inforcst Bearing	16 G I X
Einancial Assets
Cash and deposits		510.50	2,100,000			2.670.150
Receivables	5				149.243	149,243
		570750	2,100,000		149.243	289393
Weighted average interest rate		4.34%	5.79%
Eindhoidi Lidbilities
Trade and other creditors	X				201103	287788
					207,703	207,703
Weighted average Interest rate

(b) Credit Risk

The consolidated entity does not have any material credit risk exposure to any single debtor or group of debtors.

(c) Net Fair Value

At balance date the carrying amount of financial assets and their realisable value are not materially different

24. COMMITMENTS FOR EXPENDITURE

(a) Operating Lease Commitments Payable

30 JUNE 2005 Mors	(go) Kolipy (20)			Parenisenhey
	2035 S.	2004 28	2005. S.	20114 灦
- not later than one year	19 665	1288	Ж.
- Igter than one year but not later	88 ASC
than 5 years aggregate lease expenditure
contracted for at reporting date	53724		÷.

(b) Exploration Leases

In order to maintain current rights of tenure to exploration tenements the Company will be required to outlay in the year ending 30 June 2006 amounts of approximately \$1,318,360 in respect of tenement lease rentals and to meet minimum expenditure requirements. These obligations are expected to be fulfilled in the normal course of operations.

25. IMPACT OF ADOPTING AUSTRALIAN EQUIVALENTS TO IFRS

Petratherm Ltd is preparing and managing the transition to Australian Equivalents to International Financial Reporting Standards (AIFRS) effective for the financial years commencing from 1 January 2005. The adoption of AIFRS will be reflected in the consolidated and parent entity's financial statements for the year ending 30 June 2006. On first time adoption of AIFRS, comparatives for the financial year ended 30 June 2005 are required to be restated.

The consolidated entity's management, with the assistance of external consultants, has assessed the significance of the expected changes and is preparing for their implementation. The impact of the alternative treatments and elections under AASB 1: First Time Adoption of Australian Equivalents to International Financial Reporting Standards has been considered where applicable.

The directors are of the opinion that there are no material differences in the consolidated entity's accounting policies on conversion to AIFRS. Users of the financial statements should note, however, that this could change if there are any amendments by standard-setters to the current AIFRS, or interpretation of the AIFRS requirements changes from the continuing work of the consolidated entity's management.

Set out below are the key areas where accounting policies are expected to change on adoption of AIFRS and our best estimate of the quantitative impact of the changes on total equity as at the date of transition and 30 June 2005 and on net profit for the year ended 30 June 2005.

Exploration and Evaluation

AASB 6 was issued in December 2004 to facilitate the introduction of Australian equivalents to IFRS in respect of the treatment of exploration and evaluation expenditure. There is still no comprehensive international standard covering the extractive industries and AASB 6 provides no real guidance other than allowing entities to "grandfather" previous accounting policies adopted for the extractive industries. The new AASB 6 retains the Area of Interest approach

as contained in AASB 1022. The board has elected to adopt the key policies keeping strictly in line with AASB 6, and in the transition to AASB 6 during the Financial Year, the consolidated entity has completed Impairment Testing on all of its Exploration and Evaluation Expenditure previously capitalised which has not resulted in any write-down.

Recoverable Amount of Non-Current Assets

The consolidated entity's existing approach to impairment is consistent with the requirements of AASB 136. As a result the introduction of this standard will have no impact on the consolidated entity's financial statements.

Impairment of Assets

Under AASB 136: Impairment of Assets, the recoverable amount of an asset is determined as the higher of the fair value less costs to sell, and value in use. In determining value in use, projected future cash flows are discounted using a risk adjusted pre-tax discount rate and impairment is assessed for the individual asset or the 'cash generating unit' level. A 'cash generating unit' is determined as the smallest group of assets that generate cash flows that are largely independent of the cash inflows from other assets or groups of assets. The current policy is to determine the recoverable amount of an asset on the basis of undiscounted net cash flows that will be received from the asset's use and subsequent disposal. It is likely that this change in accounting policy will lead to impairments being recognised more often.

Share Based Payments

Under AASB 2: Share Based Payments, the consolidated entity is required to recognise an expense for those options that were issued to employees or executives. This will result in a change to the current accounting policy under which no expense is recognised for equity based remuneration. If the policy required by AASB 2 had been applied during the year ended 30 June 2005, consolidated employee benefits expense would have been \$64,755 higher with a corresponding increase in share based payment reserve.

Income Tax

Under AASB 112 Income Taxes, deferred tax balances are determined using the balance sheet method, which calculates temporary differences based on the differences between the carrying amounts of an entity's assets and liabilities in the statement of financial position and their associated tax base.

This will result in a change to the accounting policy under which deferred tax balances are determined using the income statement method. The standard requires the recognition of temporary differences when it is probable that the consolidated entity will generate sufficient taxable profit in the same period as the reversal of the deductible temporary difference or taxation loss (or in the periods into which a tax loss arising from the deferred tax asset can be carried back or forward) At the date of this report it is considered that the consolidated entity would not meet this criteria.

AASB 112 requires the recognition of temporary differences associated with revenues and expenses taken directly to equity. The consolidated entity has previously recognised transaction costs associated with capital raising directly in equity. The effect of this recognition is to increase share capital by \$134,235 and increase accumulated losses by \$134,235. The adjustment to accumulated losses reflects the directors view that the criteria for recognition of deferred fax assets has not been met.

(a) Reconciliation of equity as presented under AGAAP to that under AIFRS

	CONSOLIDATED Naies	PARENISENII M
	30 June 2005	30 June 2005
	纞	Ø,
Total equity under AGAAP	3.471.627	3.803.909
AASB 12 adjustment in regards to capital raising costs	(134.235)	(134,235)
Decrease in current year profit resulting from Itanshion to AIFRS	tha Tin	(64.455)
Total equity under AIFRS	3272637	3.604.919

This represents the cumulative adjustments as at the date of transition to AIFRS and those for the year ended 30 June 2005.

(b) Reconciliation of net profit/(loss) under AGAAP to that under AIFRS

NEAR ENDED 30 JUNE 2005	gonroedaibe	PARENT ENTITY

Net profit/(loss) as reported under AGAAP	(380.924)	(28,622)
AASB 12 adjustment in regard to employee share	664.7558	$\mathcal{L}(\mathcal{A})$ , $\mathcal{L}(\mathcal{A})$
MORE STATES Net profit under AIRRS	(445,679)	(113,397)

In accordance with a resolution of the directors of Petratherm Ltd, I state that:

(1) In the opinion of the directors:

(a) The financial statements and notes of the company and of the consolidated entity are in accordance with the Corporations Act 2001, including:
(i) Giving a true and fair view of the company's and consolidated entity's financial position as at 30 June 2005 and of their performance for the year ended on that date; and
(ii) Complying with Accounting Standards and Corporations Regulations $2001$ : and
(b) There are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

(2) This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the Corporations Act 2001 for the financial period ending 30 June 2005.

On behalf of the Board

Derek Carter Chairman

Adelaide, 30^th September 2005

Grant Thornton

Chartered Accountants and Business Advisors

INDEPENDENT AUDIT REPORT TO MEMBERS OF PETRATHERM LTD AND CONTROLLED ENTITIES

Scope

The financial report and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the financial statements, and the directors' declaration of Petratherm Ltd and Controlled Entities (the consolidated entity), for the year ended 30 June 2005. The consolidated entify comprises both the company and the entities it controlled during that year.

The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Audit approach

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

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

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

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

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

Grant Thornton ®

Independence

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

Audit opinion

In our opinion, the financial report of Petratherm Ltd and Controlled Entities is in accordance with:

(a) The Corporations Act 2001, including:

(i) Giving a true and fair view of Petratherm Ltd's and consolidated entity's financial position as at 30 June 2005, and of its performance for the year ended on that date; and
(ii) Complying with Accounting Standards in Australia and the Corporations Regulations 2001; and

(b) Other mandatory financial reporting requirements in Australia.

GRANT THORNTON CHARTERED ACCOUNTANTS

SJ GRAY Partner

Signed at Adelaide this $30^th$ day of September 2005

Levei 1 67Greenhäl Road Wayville SA 5034 GPÓ Box 1270 Adelaide SA 5001 DX 275 Adelaide T (08) 8372 6666 F (08) 8372 6677 [email protected] W www.grantlhornton.com.au

Grant Thornton Services (SA) Pty Etd. ACN 080 740 067 A Member of Grant Thornton Association Inc.

The Australian Member of Grant Thornton International

ASX Additional Information

Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 5 October 2005.

(a) Distribution of equity securities

The number of security holders, by size of holding, in each class of security are:

		Number of Holders
	Listod and Unitstod Ordinary Shares	Unlisted Options
$1 - 1,000$	ЛL
1001-5000	202
$5001 - 10000$	278	1963
$10.001 - 100.000$	353
100:001 and over	125	Þ
	862	40

The number of shareholders holding less than a marketable parcel of shares are: 22

(b) Twenty largest shareholders

The names of the twenty largest holders of listed shares are:

	Listed ordinary shares
	Number of shares	Percentage of ordinary shares
1 J P Morgan Nominees Australia Limited	2,250,000	11.25
2 Vainera Holdings Pty Ltd	500.000	2.50
3 J Aronov Computer Services Pty Ltd	300,000	1.50
4 Dr Lloyd Walter Hart Taylor & Mrs Colleen Margaret Taylor	300.000	XXX)
5 Mr Maurice Frederick Holley	284,000	142
6 Dotica Nominees Pty Ltd.	250,000	128
7 Greenslade Holdings Pty Ltd	200,000	LOG
8 Trustmont Pty Ltd Phoenix Piston Rings S/F A/C	12500	V.
9 Bob Blesing	150,000	075
10 Dagres Pty 110	150000	The Co
11 Mr John Darroch	150,000	075
12 Gryphon Partners Limited	150.000	$07\%$
13 Mr Micheal Andrew Whiting & Mrs Tracey Anne Whiting	150,000	0.75
14 Stumpclub Investments Pty Ltd.	135.000	ಾಡ
15 Foresight Pty Ltd	130,000	0.65
16 M: Peter Neville Fleming	125,000	Ozna
17 Mr Kong Klong Mu	120,028	0.60
18 ANZ Nominees Limited	112.000	ಾಹ
19 Mr Stefan Metanomski	106,000	0.53
20 Mi Glovanni Eugenio Zappia & Mis Eleonora Zappia	100,500	0.50
	5,835,028	29.2

(c) Substantial shareholders

The names of substantial shareholders are:

		Ministeri


		Sheles



Minotaur Resources Investments Pty Ltd (unquoted and escrowed)		251000 D.H


UP Mordan Nominees Australia Limited		-2,250,000

(d) Voting rights

All ordinary shares (whether fully paid or not) carry one vote per share without restriction.

(e) Restricted and Unquoted Equity Securities

Of the 35,000,001 fully paid ordinary shares, 20,000,000 are listed on the Australian Stock Exchange Limited and 15,000,001 shares are subject to a restriction agreement and escrowed until 27 July 2006.

Of the 12,840,000 unlisted options 11,940,000 are subject to restriction agreements.

(f) Schedule of interests in mining tenements

$\sqrt{2000000000000000000000000000000000000$	ICicinieni	Percentage held
Faralana	CALLES	60%
Paralana Bast	CHE 78	100%
Paralana South	$C_{2} + 10.80$	XII MA
Callabonna	CAS VI	100%
Calabonna Last	GH 19	KN 1.
Ferguson Hill	GFI IS8	100%

(g) Cash Usage

Since the time of listing on the ASX, the entity has used its cash and assets in a form readily converted to cash that it had at the time of admission to the official list of the ASX in a manner which is consistent with its business objectives.

(h) Corporate Governance

Petratherm's corporate governance practices are set forth in the section headed Corporate Governance of the annual report.

(i) Company Particulars

The name of the company secretary is Mr Donald C Stephens.

The address of the principal registered office in Australia is: c/-HLB Mann Judd Stephens Pty Ltd Chartered Accountants 82 Fullarton Road Norwood SA 5067, Telephone (08) 8130 2000

The address of the principal administrative office is: 247 Greenhill Road Dulwich SA 5065. Telephone (08) 8366 6055 Website: www.petratherm.com.au

The address of the register of securities is: Computershare Investor Securities Pty Ltd Level 5, 115 Grenfell Street Adelaide SA, 5000 Telephone (08) 8236 2300

Ecimennie 247 greenhill road duiwich 6065 Zecicle south australe esistello (618) 8366 6055 $(618)$ $336666056$ [email protected] es www.oolicihemnoom.du

Kaanaanan kanaa aan an an ama an an ama an ama ama

. Kaanaanan noon ay aanaanaanaan isaa ay aanaanaanaanaanaanaanaanaanaanaanaanaan a sa mga sangangang nagsang pangangang nagsa pangangang nagsa pangangang nagsa pangangang nagsa pang

the contract of the contract of the contract of the contract of the contract of

1999 - Andrew Maria Ba

AI assistant

PTR MINERALS LTD — AGM Information 2005

65621_rns_2005-10-24_d7f54aef-cc76-493b-8479-9835863011cb.pdf

Petratherm Ltd

ANNUAL GENERAL MEETING

Petratherm Ltd

NOTICE OF ANNUAL GENERAL MEETING

Business

Petratherm Ltd

EXPLANATORY STATEMENT

Introduction

Resolution 1: Receive and Consider the Financial Statements

Resolution 2: To Elect Mr Derek Carter as a Director of the Company

Derek Carter, MSc, FAusIMM(CP) (Chairman, Non-Executive Director)

Resolution 3: To Elect Mr Richard Bonython as a Director of the Company

Richard Bonython, BAgSc (Non-Executive Director)

Resolution 4: To Elect Dr Lloyd Taylor as a Director of the Company

Lloyd Taylor, PhD MAICD (Non-Executive Director)

Resolution 5: To Elect Dr Richard Hillis as a Director of the Company

Richard Hillis, BSc, ARSM, PhD (Non-Executive Director)

Resolution 6: To Elect Mr Simon O'Loughlin as a Director of the Company

Simon O'Loughlin, BA Acc (Non-Executive Director)

Resolution 7 : To Approve the Remuneration Report

Proxy Form

Petratherm Ltd

Appointment of Proxy

How to complete the Proxy Form

1 Your Address

$\overline{2}$ Appointment of a Proxy

3 Votes on Items of Business

Appointment of a Second Proxy 4

5 Signing Instructions

Lodgement of a Proxy

Documents may be lodged using the reply paid envelope or:

AND THE REAL ABIN TAI GGB 1964 884

EN MARK EN EN EN HANDEL

STAG PACORTO

SHARROOM

SOLICITORS TO THE COMPANY

GORZO ZA ELITTARIA

GHAIRMAN S REPORT

temperature of 64ºC at 675 metres"

Interest in hot rock geothermal energy is expanding

CORPORATE OVERVIEW

Climate Change and the Greenhouse Effect - Geothermal Energy's role in Australia's energy solution

Geothermal power as Australia's primary energy solution

Economic Modelling

CORPORATE OVERVIEW

Projects

Ferguson Hill (GEL 158)

MI Painter Hot Rock Province

Paralana Project (GELs 156,178,180)

Paralana-1B Geothermal Evaluation Well.

CORPORATE OVERVIEW

Callabonna (GELs 157, 179) Yerila-1 Geothermal Evaluation Well.

CORPORATE OVERVIEW

Generative

DIRECTORS' REPORT

DIRECTORS

Names, qualifications, experience and special responsibilities

Derek Carter

BSc, MSc, FAusIMM(CP) (Chairman, Non-Executive Director)

Lloyd Taylor

PhD MAICD (Non-Executive Director)

Richard Bonython

BAgSc (Non-Executive Director)

Richard Hillis

BSc, ARSM, PhD (Non-Executive Director)

Simon O'Loughlin

BA Acc (Non-Executive Director)

COMPANY SECRETARY

Donald Stephens

BAcc, FCA

Interests in the shares and options of the company and related bodies corporate

OPERATING RESULTS

EARNINGS PER SHARE

DIVIDENDS

NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES

OPERATING AND FINANCIAL REVIEW

Group Overview

PTR MINERALS LTD AGM Information 2005