QX RESOURCES LIMITED - Annual Report 2011

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Black Mountain Resources Limited and its Controlled Entity ABN 55 147 106 974

Annual Report

For the financial period 29 October 2010, date of incorporation, to 30 June 2011

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Corporate Information ................................................................................................................................................. 1 Letter to Shareholders .................................................................................................................................................. 2 Directors Report ........................................................................................................................................................... 3 Auditor’s Independence Declaration .......................................................................................................................... 13 Independent Auditor’s Report .................................................................................................................................... 14 Consolidated Statement of Comprehensive Income .................................................................................................. 16 Consolidated Statement of Financial Position ............................................................................................................ 17 Consolidated Statement of Cash Flows ...................................................................................................................... 18 Consolidated Statement of Changes in Equity ........................................................................................................... 19 Notes to the Financial Statements ............................................................................................................................. 20 Corporate Governance ............................................................................................................................................... 39 ASX Additional Information ........................................................................................................................................ 49

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Corporate Information

This financial report includes the consolidated financial statements of Black Mountain Resources Limited and controlled entity (‘Group’). The Group’s functional presentation currency is AUD ($).

A description of the Group’s operations and of its principal activities is included in the review of operations and activities in the Director’s Report.

Directors

Mr Stephen Anastos – Non‐Executive Chairman Mr David Morris – Non‐Executive Director Mr Peter Landau ‐ Executive Director (appointed 23 August 2011)

Mr Jeremy Bond – Non‐Executive Director (resigned 23 August 2011)

Company Secretary

Auditors

RSM Bird Cameron Partners 8 St Georges Terrace Perth WA 6000

Bankers

Westpac Level 13, 109 St Georges Terrace Perth WA 6000

Ms Rebecca Sandford

Solicitors

Registered Office

945 Wellington Street West Perth WA 6005

Share Registry

Computershare Investor Services Level 2/45 St Georges Tce Perth WA 6000

Steinepreis Paganin Level 4, 16 Milligan Street Perth WA 6000

Stock Exchange

Australian Securities Exchange Limited Exchange Plaza 2 The Esplanade Perth WA 6000

Website

ASX Code: BMZ

www.blackmountainresources.com.au

Page 1

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Letter to Shareholders

Black Mountain Resources Limited ( Black Mountain or Company ) is a recently incorporated Australian exploration company. Black Mountain was admitted to the official list of the Australian Securities Exchange ( ASX ) on 17 February 2011 and securities commenced trading under the ASX code "BMZ". The Company issued 18,750,000 shares at $0.20 raising $3.75 million under its initial public offering.

The Company entered into a Tenement Sale Agreement in November 2010 to acquire exploration tenements in Western Australia. The Tenements include E36/563 (known as the Foley Outcamp Project) and E37/834 and E37/950 (known as the Six Mile Well Project) (together the Projects ).

The Tenements comprise approximately 187km[2] of exploration ground in Western Australia. The Projects are located near Leonora in the North Eastern Goldfields in the northern part of the Yilgarn Craton, Western Australia. The Projects are prospective for uranium and may also have potential for nickel or gold mineralisation.

The Company’s aim is to generate Shareholder value through exploration success and acquisition opportunities. In addition to exploring and evaluating the Projects, the Company intends to pursue acquisition and investment opportunities to secure new projects in the resources sector both in Australia and overseas.

Recently the Company entered into an agreement to acquire a 70% interest in 3 projects which are highly prospective former producing silver and gold mines in north‐western USA. The projects have extensive historical data, independent geological reports and significant production and exploration upside. The Company will seek shareholder approval of the acquisition.

The Board brings together a combination of experience and expertise that will assist in the development and enhancement of the Company's assets.

On behalf of the Board of Directors of Black Mountain, I would like to thank you for your support as a shareholder of the Company, and we look forward to a successful future for the Company.

Yours faithfully

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Stephen Anastos Non‐Executive Chairman

Page 2

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Directors Report

Your Directors present the following report on Black Mountain Resources Limited and its controlled entity (referred to hereafter as “the Group”) for the financial period ended 30 June 2011.

Directors

The names of the Directors in office during the financial period and until the date of this report are as follows. All Directors were in office for the entire period unless otherwise stated:

Mr Stephen Anastos – (Non‐Executive Chairman) Mr David Morris – (Non‐Executive Director) Mr Jeremy Bond – (Non‐Executive Director)[1] Mr Peter Landau – (Executive Director)[2]

Note:

1 Mr Bond resigned as Non Executive Director effective 23 August 2011

2 Mr Landau was appointed as Executive Director effective 23 August 2011

Principal Activities

The principal activity of the Group for the financial period ended 30 June 2011 was resource mineral exploration.

Dividends

No dividend has been paid or recommended by the Directors since the commencement of the financial year.

Review of Operations

The consolidated statement of comprehensive income shows a net loss attributable to members of ($167,870) for the financial period ended 30 June 2011.

Significant Changes in State Of Affairs

There were no significant changes in the state of affairs of the Group during the year.

After Balance Date Events

Since the end of the financial year, the Company has entered into an agreement to acquire a 70% interest in three projects which are highly prospective former producing silver and gold mines in north‐western USA ("Silver Projects"). The acquisition of the Silver Projects is subject to shareholder approval.

Likely Developments and Expected Results

The Group will continue its mineral exploration activity at and around its exploration projects with the object of identifying commercial resources. The Group will undertake exploration activity on its existing projects and will also focus on completing the acquisition of the Silver Projects.

Page 3

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Financial Position

The net assets of the Group are $3,533,749 as at 30 June 2011. The Group’s working capital, being current asset less current liabilities, is $3,413,921 as at 30 June 2011.

Environmental Regulation

The Group operates within the resources sector and conducts its business activities with respect for the environment while continuing to meet the expectations of the shareholders, employees and suppliers. The company’s exploration activities are currently regulated by significant environmental regulation under laws of the Commonwealth and states and territories of Australia. The Group aims to ensure that the highest standard of environmental care is achieved, and that it complies with all relevant environmental legislation.

The directors have considered the recently enacted National Greenhouse and Energy Reporting Act 2007 (the NGER Act) which introduces a single national reporting framework for the reporting and dissemination of information about the greenhouse gas emissions, greenhouse gas projects, and energy use and production of corporations. At the current stage of development, the directors have determined that the NGER Act will have no effect on the Group for the current, or subsequent financial year. The directors will reassess this position as and when the need arises.

The directors are mindful of the regulatory regime in relation to the impact of the organisational activities on the environment.

There have been no known breaches by the Group during the financial year.

Page 4

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Directors Report (continued)

Information on Directors

Information on Directors
Mr Stephen Anastos	‐	Non‐Executive Chairman
Qualifications	‐	Dip Applied Finance FINSIA
Experience	‐	Mr Steve Anastos is the Chairman of the Company. Mr Anastos holds a
		Diploma of Applied Finance from the Financial Services Institute of Australasia
		(Finsia). Mr Anastos spent 12 years as a stockbroker with a national broking
		firm. During that time he gained valuable experience in capital raisings,
		corporate advice and company structuring
Interest in Shares and Options	‐	210,000 Ordinary Shares
		1,890,000 Ordinary Shares (escrowed to 17 February 2013)
		1,000,000 Unlisted Options (exercisable at $0.30 on or before 15 November
		2015)
Current directorships	‐	Director of Silver Stone Resources Limited
Former directorships held in past	‐	Director of Jameson Resources Limited
three years

Mr David Morris	‐	Non‐Executive Director
Qualifications	‐	LLB
Experience	‐	Mr Morris is currently a partner in the Sydney practice of Morris Legal. Prior
		to joining Morris Legal, Mr Morris was a partner at Phillips Fox and Hunt. Mr
		Morris has extensive experience in advising corporate clients on a wide range
		of issues.
Interest in Shares and Options	‐	500,000 Unlisted Options (exercisable at $0.30 on or before 15 November
		2015)
Current directorships	‐	Nil
Former directorships held in past	‐	Director of Sunset Energy Limited, Bluefire Energy Limited and Winchester
three years		Resources Limited

Page 5

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Directors Report (continued)

Mr Jeremy Bond	‐	Non‐Executive Director
Qualifications	‐	BCom, BEcons, BArts
Experience	‐	Mr Bond graduated from the University of Western Australia with a Bachelor
		of Commerce (Accounting and Finance), Bachelor of Economics (International
		Banking) and Bachelor of Arts (Political Science). Mr Bond is currently a fund
		manager and founder of Terra Capital, a small cap natural resource fund
		based in Australia. This fund invests in both public and private resource deals
		throughout the world.
Interest in Shares and Options	‐	50,000 Ordinary Shares
		450,000 Ordinary Shares (escrowed to 17 February 2013)
		500,000 Unlisted Options (exercisable at $0.30 on or before 15 November
		2015)
Current directorships	‐	Director of Silver Stone Resources Limited.
Former directorships held in past	‐	Nil
threeyears

Mr Peter Landau	‐	Executive Director
Qualifications	‐	LLB
Experience	‐	Mr Landau is a corporate lawyer and corporate advisor, having previously
		worked with Grange Consulting Group, Clayton Utz and as general counsel at
		Co‐operative Bulk Handling. Mr Landau is responsible for providing general
		corporate, capital raising, transaction and strategic advice to numerous ASX
		listed and unlisted companies. Mr Landau has project managed a significant
		number of mining exploration and development transactions around the
		world including capital raisings, M & A, joint ventures and financings.
Interest in Shares and Options	‐	305,000 Ordinary Shares
Current directorships	‐	Director of Range Resources Limited, Nkwe Platinum Limited and Continental
		Capital Limited.
Former directorships held in past	‐	Nil
threeyears

Ms Rebecca Sandford

Company Secretary Qualifications: B.Bus

Ms Sandford is an employee of Grange Consulting. Grange Consulting specialises in corporate advisory and financial management services. Ms Sandford’s experience at Grange Consulting includes acquisitions, takeovers, capital raisings, listing of companies on ASX, due diligence reviews and compliance. Ms Sandford has acted as the company secretary of a number of ASX listed companies. Ms Sandford is a member of the Chartered Secretaries Australia.

Page 6

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Directors Meetings

The number of Directors’ meetings held and the number of meetings attended by each of the Directors of the Group for the time the Director held office during the financial period were as follows:

	Number of Meetings	Number of Meetings
	Eligible to Attend	directors’ attended
Number of Meetings Held	2	2
Number of Meetings Attended
Director
Mr Stephen Anastos	2	2
Mr David Morris	2	2
Mr Jeremy Bond	2	2
Mr Peter Landau	‐	‐

Shares under Option

Unissued ordinary shares of Black Mountain Resources Limited under option at the date of this report are as follows:

Date Options Granted	Expiry Date	Issue Price of Shares	Number Under Option
15 November 2010	15 November 2015	$0.30	2,000,000

Shares Issued on the Exercise of Options

There were no options exercised during the financial period.

Insurance of Officers

During the financial period, Black Mountain Resources Limited paid a premium of $16,447 to insure the directors and secretaries of the Group.

The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the Group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from 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 them or someone else or to cause detriment to the Group. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities.

Proceedings on Behalf of the Group

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the purpose of taking responsibility on behalf of the Group for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Group with leave of the Court under section 237 of the Corporations Act 2001.

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Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Directors Report (continued)

Non‐Audit Services

The Group may decide to employ its auditor on assignments additional to their statutory audit duties where the auditor's expertise and experience with the Group is important.

During the year the following fees were paid or payable for services provided by the auditor of the Group:

	2011 $
Audit services RSM Bird Cameron Partners ‐ Audit and review of financial report ‐ Other non audit services : Investigating Accountant’s Report Total remuneration for auditors	13,000 12,000
	25,000

Auditor’s Independence Declaration

A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 has been included as part of the financial report.

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Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Directors Report (continued)

Remuneration Report

The remuneration report is set out under the following main headings:

A Principles used to determine the nature and amount of remuneration.
B Details of remuneration.
C Service agreements.
D Share‐based compensation.

A Principles used to determine the nature and amount of remuneration

The Board has elected not to establish a remuneration committee based on the size of the organisation and has instead agreed to meet as deemed necessary and allocate the appropriate time at its board meetings.

The following items are considered and discussed as deemed necessary at the board meetings:

make specific recommendations to the board on remuneration of directors and senior officers;
� recommend the terms and conditions of employment for the Executive Director;
undertake a review of the Executive Director’s performance, at least annually, including setting with the Executive Director goals for the coming year and reviewing progress in achieving those goals;
consider and report to the Board on the recommendations of the Executive Director on the remuneration of all direct reports; and
develop and facilitate a process for Board and Director evaluation.

Non‐Executive Directors

Fees and payments to non‐executive directors reflect the demands which are made on, and the responsibilities of, the directors. Non‐executive directors’ fees and payments are reviewed annually by the Board.

Directors’ Fees

Non‐executive directors’ fees are determined within an aggregate directors’ fee pool limit, which is periodically recommended for approval by shareholders. The maximum currently stands at $150,000 per annum.

The following fees have applied:

per annum. The following fees have applied:
Base fees	2011
Chairman	$60,000
Other non‐executive directors	$25,000

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Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Directors Report (continued)

Remuneration report (cont’d)

A Principles used to determine the nature and amount of remuneration (cont’d)

Additional fees

A Director may also be paid fees or other amounts as the Directors determine if a Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a Director. A Director may also be reimbursed for out of pocket expenses incurred as a result of their directorship or any special duties.

Retirement allowances for directors

Superannuation contributions required under the Australian Superannuation Guarantee Legislation continue to be made and are deducted from the directors’ overall fee entitlements.

Executive pay

The executive pay and reward framework has two components:

base pay and benefits, including superannuation; and
long‐term incentives through participation in the Employee Share Option Plan.

The combination of these comprises the executive’s total remuneration. The Group intends to revisit its long‐term equity‐linked performance incentives for executives as deemed necessary by the Board.

Base pay

The employment cost package which may be delivered as a combination of cash and prescribed non‐ financial benefits at the executives’ discretion.

Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. Base pay for executives is reviewed annually to ensure the executive’s pay is competitive with the market. An executive’s pay is also reviewed every 12 months and may increase every 12 months.

Benefits

No benefits other than noted above are paid to Directors or Management except as incurred in normal operations of the business.

Page 10

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Directors Report (continued)

Remuneration report (cont’d)

A Principles used to determine the nature and amount of remuneration (cont’d)

Long term incentives

Options are issued at the Board’s discretion. Other than options disclosed in section D of the remuneration report, there have been no options issued to employees at the date of this financial report.

B Details of remuneration

Amounts of remuneration

Details of the remuneration of the directors and the key management personnel of the Group are found below:

Mr Stephen Anastos Mr David Morris

Mr Jeremy Bond

Key Management personnel and other executives of the Group

30 June 2011 Directors Non‐executive directors Stephen Anastos David Morris Jeremy Bond Sub‐total Non‐executive directors Total key management personnel compensation (Group)	Short‐ term employee benefits Post‐employment benefits Share‐ based pay‐ ments Total Total Remun‐ eration Represen‐ ted by Cash salary & Fees Other Non Monetary Benefits Super‐ annuation Pensions Retire‐ ment Benefits Options Options $ $ $ $ $ $ $ % 21,965 ‐ ‐ 1,977 ‐ 12,000 35,942 33 9,150 ‐ ‐ 824 ‐ 6,000 15,974 37 9,150 ‐ ‐ 824 ‐ 6,000 15,974 37
	40,265 ‐ ‐ 3,625 ‐ 24,000 67,890 35

	40,265 ‐ ‐ 3,625 ‐ 24,000 67,890 35

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Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Directors Report (continued)

Remuneration report (cont’d)

C Service agreements

On appointment to the Board, all non‐executive directors enter into a service agreement with the Group in the form of a letter of appointment. The letter summarises the Board policies and terms, including compensation, relevant to the director.

D Share‐based compensation

Options

Options over shares in Black Mountain Resources Limited are granted at the Directors discretion.

The terms and conditions of each grant of options affecting remuneration in this or future reporting periods are as follows:

Grant Date	Date Vested and Exercisable	Expiry Date	Expiry Price	Value Per Option at Grant Date
15 November 2010	15 November 2012	15 November 2015	$0.30	$0.030

Options granted under the plan carry no dividend or voting rights.

This report of Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of Directors.

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_______ Stephen Anastos Chairman

Perth, Western Australia, 12 September 2011

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RSM Bird Cameron Partners 8 St Georges Terrace Perth WA 6000 GPO Box R1253 Perth WA 6844 T +61 8 9261 9100 F +61 8 9261 9111 www.rsmi.com.au

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the financial report of Black Mountain Resources Limited for the period 29 October 2010, date of incorporation, to 30 June 2011, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.

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RSM BIRD CAMERON PARTNERS Chartered Accountants

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Perth, WA Dated: 12 September 2011

TUTU PHONG Partner

Liability limited by a Major Offices in: RSM Bird Cameron Partners is an independent member firm of RSM scheme approved Perth, Sydney, Melbourne, International, an affiliation of independent accounting and consulting firms. under Professional Adelaide and Canberra RSM International is the name given to a network of independent accounting Standards Legislation ABN 36 965 185 036 and consulting firms each of which practices in its own right. RSM International does not exist in any jurisdiction as a separate legal entity.

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RSM Bird Cameron Partners 8 St George’s Terrace Perth WA 6000 GPO Box R1253 Perth WA 6844 T +61 8 9261 9100 F +61 8 9261 9101 www.rsmi.com.au

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BLACK MOUNTAIN RESOURCES LIMITED

Report on the Financial Report

We have audited the accompanying financial report of Black Mountain Resources Limited, which comprises the consolidated statement of financial position as at 30 June 2011, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the period 29 October 2010, date of incorporation, to 30 June 2011 (the financial period), notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at 30 June 2011 or from time to time during the financial period.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1(a), the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements , that the financial statements comply with International Financial Reporting Standards .

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

Liability limited by a Major Offices in: scheme approved Perth, Sydney, Melbourne, under Professional Adelaide and Canberra Standards Legislation ABN 36 965 185 036

RSM Bird Cameron Partners is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms. RSM International is the name given to a network of independent accounting and consulting firms each of which practices in its own right. RSM International does not exist in any jurisdiction as a separate legal entity.

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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Independence

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

Opinion

In our opinion:

(a) the financial report of Black Mountain Resources Limited is in accordance with the Corporations Act 2001 , including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of its performance for the financial period; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001 ; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1(a).

Report on the Remuneration Report

We have audited the Remuneration Report contained within the directors’ report for the financial period. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion the Remuneration Report of Black Mountain Resources Limited for the financial period complies with section 300A of the Corporations Act 2001 .

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RSM BIRD CAMERON PARTNERS Chartered Accountants Perth, WA TUTU PHONG Dated: 12 September 2011 Partner

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Consolidated Statement of Comprehensive Income

For the financial period 29 October 2010, date of incorporation, to 30 June 2011

Note	2011 $
Revenue Interest received 2 Finance costs Employee and director benefits expense 3 Financial and company secretarial expenses Audit fees Insurance ASX and share registry fees Share based payment expense Consultants Travel Other expenses Loss before income tax Income tax expense 4 Loss for the year Other comprehensive income Total comprehensive loss for the year Loss attributable to the members of Black Mountain Resources Limited Earnings per share (cents per share) 5	90,367 (851) (43,890) (28,875) (13,000) (8,233) (6,326) (24,000) (20,000) (45,375) (67,687)
	(167,870) ‐
	(167,870) ‐
	(167,870)
	(167,870)
	(0.802)

The above consolidated statement of comprehensive income is to be read in conjunction with the accompanying notes.

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Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Consolidated Statement of Financial Position

As at 30 June 2011

Consolidated Statement of Financial Position As at 30 June 2011
Note	2011 $
ASSETS Current Assets Cash and cash equivalents 7 Trade and other receivables 8 Other assets 9 Total Current Assets Non‐Current Assets Exploration and evaluation expenditure 10 Total Non‐current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables 11 Total Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 12 Reserves 13 Accumulated losses TOTAL EQUITY	3,466,366 4,087 8,233
	3,478,686
	119,828
	119,828
	3,598,514
	64,765
	64,765
	64,765
	3,533,749
	3,677,619 24,000 (167,870)
	3,533,749

The above consolidated statement of financial position is to be read in conjunction with the accompanying notes.

Page 17

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Consolidated Statement of Cash Flows

For the financial period 29 October 2010, date of incorporation, to 30 June 2011

Note	2011 $
Cash flows from operating activities Payments to suppliers and employees Interest received Net cash flows from operating activities 21(a) Cash flows from investing activities Payments for exploration and evaluation expenditure Net cash flows from investing activities Cash flows from financing activities Proceeds from issue of shares and options Payment of share issue and IPO costs Net cash flows from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 7	(181,792) 90,367
	(91,425)
	(57,328)
	(57,328)
	3,925,000 (309,881)
	3,615,119
	3,466,366 ‐
	3,466,366

The above consolidated statement of cash flows is to be read in conjunction with the accompanying notes.

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Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Consolidated Statement of Changes in Equity

For the financial period 29 October 2010, date of incorporation, to 30 June 2011

	Issued Capital Accumulated Losses Option Reserve Total
Balance at incorporation Loss for the year Other comprehensive income Total Comprehensive Income Transaction with owner, directly recorded in equity: Issue of shares Issue of options Share issue costs Balance at 30 June 2011	$ $ $ $ ‐ ‐ ‐ ‐ ‐ (167,870) ‐ (167,870) ‐ ‐ ‐ ‐
	‐ (167,870) ‐ (167,870)
	3,987,500 ‐ ‐ 3,987,500 ‐ ‐ 24,000 24,000 (309,881) ‐ ‐ (309,881)
	3,677,619 (167,870) 24,000 3,533,749

The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.

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Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Notes to the Financial Statements

1. Summary of significant accounting policies

Black Mountain Resources Limited is a listed public company, incorporated and domiciled in Australia.

These consolidated financial statements and notes represent those of Black Mountain Resources Limited and its controlled entity. The separate financial statements of the parent entity, Black Mountain Resources Limited, have not been presented within this financial report as permitted by the Corporations Act 2001 .

The financial report was authorised for issue on 12 September 2011 by the board of directors.

(a) Basis of preparation

The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards (including Australian Accounting Interpretations), other authoritative pronouncements of the Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001 .

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated.

The financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected non‐current assets, financial assets and financial liabilities.

(b) Principles of consolidation

Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Black Mountain Resources Limited (‘’company’’ or ‘’parent entity’’) as at 30 June 2011 and the results of all subsidiaries for the financial period then ended. Black Mountain Resources Limited and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity.

Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one‐half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

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Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Notes to the Financial Statements (continued)

1. Summary of significant accounting policies (cont’d)

(b) Principles of consolidation (cont’d)

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de‐consolidated from the date that control ceases.

Intercompany transactions, balance and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction proves evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Subsidiaries are accounted for in the parent entity financial statements at cost.

(c) Income Tax

The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income).

Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses.

Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity.

Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Page 21

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Notes to the Financial Statements (continued)

1. Summary of Significant Accounting Policies (cont’d)

(c) Income Tax (cont’d)

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set‐off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set‐off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

(d) Exploration and Development Expenditure

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis.

Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.

Page 22

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Notes to the Financial Statements (continued)

1. Summary of Significant Accounting Policies (cont’d)

(e) Impairment of Assets

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

(f) Employee Benefits

(i) Wages and salaries, annual leave, long service leave and sick leave Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to the end of the reporting period.

Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled.

Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that the employee may satisfy the vesting requirements. Those cash flows are discounted using market yields on national government bonds with terms to maturity that match the timing of cash flows.

(ii) Share‐based payments

Share‐based compensation benefits are provided to employees of Black Mountain Resources Limited at the Directors discretion.

The fair value of options granted by Black Mountain Resources Limited is recognised as an option benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options.

The fair value at grant date is independently determined using a Binomial option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

The fair value of the options granted is adjusted to reflect market vesting conditions, but excludes the impact of any non‐market vesting conditions (for example, profitability and sales growth targets).

Non‐market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each reporting date, the entity revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. The impact of the revision to original estimates, if any, is recognised in the statement of comprehensive income with a corresponding adjustment to equity.

Page 23

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Notes to the Financial Statements (continued)

1. Summary of Significant Accounting Policies (cont’d)

(g) Provisions

Provisions are recognised when the Group has a legal or constructive obligation, as a result, of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.

(h) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short‐term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash.

(i) Revenue

Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument.

All revenue is stated net of the amount of goods and services tax (GST).

(j) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST.

Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(k) Comparatives

There are no comparatives shown in the financial statements as Black Mountain Resources Limited was only incorporated on 29 October 2010.

Page 24

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Notes to the Financial Statements (continued)

1. Summary of Significant Accounting Policies (cont’d)

(l) Critical accounting estimates and judgments

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definitions, seldom equal the related actual results.

Share based payment transactions

The Group measures the cost of equity‐settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using the Binomial option pricing model.

Exploration and Evaluation Expenditure

The Group capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. While there are certain areas of interest from which no reserves have been extracted, the directors are of the continued belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded.

(m) New accounting standards

At the date of this financial report the following accounting standards, which may impact the Group in the period of initial application, have been issued but are not yet effective:

Reference	Title	Summary	Application date (financial years beginning)
AASB 9	Financial Instruments	Replaces the requirements of AASB 139 for the classification and measurement of financial assets. This is the result of the first part of Phase 1 of the IASB’s project to replace IAS 39.	1 January 2013
AASB 124	Related Party Disclosures	Revised standard. The definition of a related party is simplified to clarify its intended meaning and eliminate inconsistencies from the application of the definition	1 January 2011

The above changes in the accounting standards will not have a material effect on the Group.

The Group has decided not to early adopt any of the above accounting standards.

Page 25

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Notes to the Financial Statements (continued)

2. Revenue

2. Revenue
	2011 $
Revenue Bank interest	90,367
	90,367

3. Loss for the financial period

Loss for the financial period includes the following items:

3. Loss for the financial period Loss for the financial period includes the following items:
	2011 $
Employee benefits expense Directors fees Superannuation Total employee benefits expense	40,265 3,625
	43,890

4. Income Tax

	2011 $
Loss before income tax Tax benefit, prima facie, at the Australian tax rate f 30% Less: Non‐deductible expenses Deferred tax assets not brought to account Income tax expense/ (benefit)	(167,870) (50,361) 8,212
	(42,149) 42,149
	‐

At 30 June 2011, the Group has unused tax losses of $276,716. The potential tax benefit at 30% not recognised for unused tax losses is $83,015.

The benefit for tax losses will only be obtained if:

(i) the Group derives future assessable income in Australia of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised;
(ii) the Group continues to comply with the conditions for deductibility imposed by tax legislation in Australia; and
(iii) there are no changes in tax legislation in Australia which will adversely affect the Group in realising the benefit from the deductions for the losses.

Page 26

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

5. Earnings per Share

Basic earnings per share amounts are calculated by dividing net profit/ (loss) for the year attributable to ordinary equity holders of the company by the weighted average number of ordinary shares outstanding during the year.

The following reflects the loss and share data used in the basic earnings per share computations:

The following reflects the loss and share data used in the basic earning	s per share com
	2011
	$
Loss after income tax	(167,870)
Basic loss per share – cents per share	(0.802)
	No.
Weighted average number of ordinary shares outstanding during the year
used in calculating basic EPS	20,936,220

6. Dividends Paid or Proposed

The directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a dividend to the date of this report.

Page 27

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Notes to the Financial Statements (continued)

7. Cash and Cash Equivalents

7. Cash and Cash Equivalents
	2011 $
Current Cash at bank and in hand	3,466,366
	3,466,366

8. Trade and Other Receivables

8. Trade and Other Receivables
	2011 $
Current Other receivables	4,087
	4,087

9. Other Assets

	2011 $
Current Prepayments	8,233
	8,233

10. Exploration and Evaluation Expenditure

	2011 $
Non – Current Exploration and evaluation expenditure – at cost Movement At the date of incorporation Capitalised during the financial period At 30 June 2011	119,828
	‐ 119,828
	119,828

The carrying value of the Group’s interest in exploration expenditure is dependent upon:

the continuance of the Group’s rights to tenure of the areas of interest;
the results of future exploration; and
the recoupment of costs through successful development and exploitation of the areas of interest, or alternatively, by their sale.

Page 28

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Notes to the Financial Statements (continued)

11. Trade and Other Payables

11. Trade and Other Payables
	2011 $
Current Trade payables Other payables	7,567 57,198
	64,765

Trade and other payables are non‐interest bearing and are normally settled within 30‐60 days.

12. Issued Capital

30 June 2011

Date Details	No. of Shares Issue Price $
29 October 2010 Issue of founder share 22 November 2010 Issue of seed and promoter shares 14 January 2011 Vendor shares 14 January 2011 Initial public offering Less: share issue costs 30 June 2011	1 $1.00 1 8,750,000 $0.02 175,000 312,500 $0.20 62,500 18,750,000 $0.20 3,750,000 (309,881)
	27,812,501 3,677,619

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

Capital risk management

The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns to shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Due to the nature of the Group’s activities, being mineral exploration, the Group does not have ready access to credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Group’s capital risk management is the current working capital position against the requirements of the Group to meet exploration programmes and corporate overheads. The Group’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required.

The net working capital position of the Company at 30 June 2011 was $3,413,921 and the net increase in cash held during the financial period was $3,466,366.

The Group currently has $3,466,366 of cash and cash equivalents and no debt which is sufficient working capital to fund its exploration commitments in the near future.

Page 29

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Notes to the Financial Statements (continued)

13. Reserves

Notes to the Financial Statements (continued) 13. Reserves
	2011 $
Reserves Option reserve	24,000
	24,000

Options reserve

The option reserve records items recognises options issued as share‐based payments.

14. Financial Instruments

Financial Risk Management

The Group’s activities expose it to a variety of financial risks including market risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of the financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group does not use derivative financial instruments.

(a) Market risk

Foreign exchange risk The Group operates in Australia and is not exposed to foreign exchange risk arising from various currency exposures.
Interest rate risk

The Group’s only interest rate risk arises from cash and cash equivalents. Term deposits and current accounts held with variable interest rates expose the group to cash flow interest rate risk.

Interest rate sensitivity analysis

The following table illustrates sensitivities to the Group’s exposures to changes in interest rates. The table indicates the impact of how the result for the reporting period would have been affected by changes in bank interest rates.

2011	Change in profit/ (loss)
	$
Increase in interest rate	25,102
by 100 basis points
Decrease in interest rate	(25,102)
by100 basispoints

The above interest rate sensitivity analysis has been performed on the assumption that all other variables remain unchanged.

Page 30

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Notes to the Financial Statements (continued)

14. Financial Instruments (cont’d)

(b) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient to fund the Group’s operations. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity dates of financial assets and liabilities. As at reporting date, the Group had sufficient cash reserves to meet its requirements.

The financial liabilities of the Group at reporting date were trade payables incurred in the normal course of the business. These were non interest bearing and were due within the normal 30‐60 days terms of creditor payments. The Group does not consider this to be material to the Group and have therefore not undertaken any further analysis of risk exposure.

2011
Financial Instrument
Financial Assets
Cash
Receivables – other
Total financial assets
Financial Liabilities
Trade payables and accruals
Total financial liabilities

Fixed Interest rate
maturing in
Floating
interest
rate
1 year
or
less
Over
1 to 5
years
More
than 5
years
Non‐interest
Bearing
Total
Weighted
average
effective
interest rate
3,466,366
‐
‐
‐
‐
3,466,366
3.6%
‐
‐
‐
‐
4,087
4,087
3,466,366
‐
‐
‐
4,087
3,470,453
‐
‐
‐
‐
64,765
64,765
‐
‐
‐
‐
64,765
64,765

Net Fair Values

Fair value estimation

The carrying value of financial assets and liabilities as presented in the statement of financial position are the same as their fair value. Fair values are those amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.

Page 31

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Notes to the Financial Statements (continued)

15. Operating Segment

The Group has identified its operating segments based on internal reports that are reviewed and used by the board of directors (chief operating decision makers) in assessing performance and determining the allocation of resources.

The Group operates as a single segment which is mineral exploration within Australia.

The Group is domiciled in Australia. All revenue from external parties is generated in Australia. Segment revenues are allocated based on the country in which the party is located. All assets are located in Australia. Segment assets are allocated to the country where the asset is located.

16. Share‐Based Payments

The following options were issued to directors during the financial period.

Grant Date Expiry Date Exercise Price	Balance at start of year Granted during the year Exercised during the year Forfeited during the year Balance at end of the year Vested & exercisable at end of the year Number Number Number Number Number Number
2011 15/11/2010 15/11/2015 $0.30 Weighted average exercise price	‐ 2,000,000 ‐ ‐ 2,000,000 2,000,000
	‐ 2,000,000 ‐ ‐ 2,000,000 2,000,000
	‐ ‐ ‐ ‐ ‐ ‐

The fair value at grant date was calculated to be 1.2 cents per option. Using the Binomial option pricing model, the fair value of the options has been assessed based on the following variables:

Underlying share price	2 cents
Exercise price	30 cents
Expected volatility	130%
Option life	5 years
Risk‐free interest rate	5.3%

The share‐based payments expense recognised in the statement of comprehensive income for the financial period was $24,000.

Page 32

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Notes to the Financial Statements (continued)

17. Commitments and Contingent Liabilities

(a) Commitments Exploration Expenditure

In order to maintain mining tenements, the Group is committed to meet the prescribed conditions under which tenements were granted. These commitments may be met in the normal course of operations by future capital raisings and/or farm‐out and under certain circumstances are subject to the possibility of adjustment to the amount and timing of such obligations or by tenement relinquishment.

relinquishment.
	2011 $
Exploration expenditure commitments Payable: ‐ not later than 12 months ‐ between 12 months and 5 years ‐ greater than 5 years	750,000 ‐ ‐
	750,000

(b) Contingent Liabilities

There are no contingent liabilities at the date of this report.

18. Related Party Disclosure

The consolidated financial statements include the financial statements of Black MountainResources Limited and the subsidiary listed in the following table:

	Country of	% Equity
	Incorporation	Interest
		2011
Future Generation Energy Pty Ltd	Australia	100%

(a) Parent entity

Black Mountain Resources Limited is the ultimate Australian parent entity.

(b) Transactions between related parties

(b) Transactions between related parties
	2011 $
Loans to subsidiaries Loans advance during the financial period for exploration expenditure Write‐down of intercompany loans As at 30 June 2011	119,828 ‐
	119,828

There were no other related party transactions during the financial period.

Page 33

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

19. Events after the Reporting Date

The Company has entered into a heads of agreement to acquire a 70% interest in three projects which are highly prospective former producing silver and gold mines in North‐western USA ("Silver Projects") ("Acquisition"). The Silver Projects is principally comprised of a number of patented mining claims in Montana and Idaho, USA. The Company intends to undertake a capital raising as part of the acquisition. The acquisition is subject to shareholder approval.

20. Auditor’s Remuneration

	2011 $
Amounts received or due and receivable by RSM Bird Cameron Partners: - an audit or review services - Other non‐audit services : Investigating Accountant’s Report	13,000 12,000
	25,000

21. Cash Flow Information

(a) Reconciliation of Cash Flow from Operations

(a) Reconciliation of Cash Flow from Operations
	2011 $
Reconciliation of Cash Flow from Operations with Loss after Income Tax Loss after income tax for the period Share‐based payments Movements in assets and liabilities: - Trade and other receivables - Other assets - Trade payables and accruals Net Cash from Operating Activities	(167,870) 24,000 (4,087) (8,233) 64,765
	(91,425)

(b) Reconciliation of Cash

For the purposes of the statement of cash flows, cash balances of the Group are disclosed in note 7.

(c) Non‐cash investing activities

On 14 January 2011, the company issued 312,500 fully paid ordinary shares with a fair value of 20 cents as part consideration to acquire tenements E36/563, E37/834 and E37/950. The consideration of $62,500 has been capitalised into the exploration and evaluation asset.

Page 34

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Notes to the Financial Statements (continued)

22. Directors and Key Management Disclosures

(a) Directors

The following persons were directors of Black Mountain Resources Limited during the financial year:

Name Position

Mr Stephen Anastos Director (Non‐executive Chairman) Mr David Morris Director (Non‐executive) Mr Jeremy Bond Director (Non‐executive)

(b) Other key management personnel

There were no further key management personnel of the Group.

(c) Key management personnel compensation

	2011 $
Short‐term employee benefits Post‐employment benefits Share‐based payments Total	40,265 3,625 24,000
	67,890

(d) Option holdings

The number of options over ordinary shares in the company held during the financial period by each director of Black Mountain Resources Limited and other key management personnel of the Group, including their personally related parties, are set out below:

2011 Name	Balance at the start of theyear Granted as compen‐ sation Exercised Other changes Balance at end of the year Vested and exercisable Unvested
Directors Stephen Anastos Jeremy Bond David Morris Total	‐ 1,000,000 ‐ ‐ 1,000,000 ‐ 1,000,000 ‐ 500,000 ‐ ‐ 500,000 ‐ 500,000 ‐ 500,000 ‐ ‐ 500,000 ‐ 500,000
	‐ 2,000,000 ‐ ‐ 2,000,000 ‐ 2,000,000

Page 35

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Notes to the Financial Statements (continued)

22. Directors and Key Management Disclosures (cont’d)

(e) Shareholdings

The numbers of shares in the company held during the financial year by each director of Black Mountain Resources Limited and other key management personnel of the Group, including their personally related parties are set out below.

2011 Name	Balance at the start of theyear Received during the year on the exercise of options	Other changes Balance at the end of theyear
Directors Stephen Anastos Jeremy Bond David Morris Total	‐ ‐ ‐ ‐ ‐ ‐	2,100,001 2,100,001 500,000 500,000 ‐ ‐
		2,600,001 2,600,001

There were no shares granted during the reporting period as compensation.

(f) Loans to key management personnel

There were no loans made or outstanding to directors of Black Mountain Resources Limited and other key management personnel of the Group, including their personally related parties.

(g) Other transactions with key management personnel

There were no other transactions made or outstanding to directors of Black Mountain Resources Limited and other key management personnel of the Group, including their personally related parties.

Page 36

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Notes to the Financial Statements (continued)

23. Parent Entity Information

The following details information related to the parent entity, Black Mountain Resources Limited, as at 30 June 2011. The information presented here has been prepared using consistent accounting policies as presented in Note 1.

policies as presented in Note 1.
	2011 $
Current assets Non‐current assets Total assets Current liabilities Non‐current liabilities Total liabilities Contributed equity Accumulated losses Reserves Total equity Loss after income tax Other comprehensive income for the year Total comprehensive loss for the year	3,478,686 119,828
	3,598,514
	64,765 ‐
	64,765
	3,677,620 (167,870) 24,000
	3,533,749
	(167,870) ‐
	(167,870)

Guarantees

The Company has not entered into any guarantees in relation to the debts of its subsidiary.

Other Commitments and Contingencies

The Company has no commitments to acquire property, plant and equipment and has no contingent liabilities as at the date of report.

Page 37

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Directors’ Declaration

In the Directors’ opinion:

(a) the financial statements and notes, are in accordance with the Corporations Act 2001 and:
(i) comply with Australian Accounting Standards and the Corporations Regulations 2001;
(ii) give a true and fair view of the Group’s financial position as at 30 June 2011 and of its performance for the financial period 29 October 2010, date of incorporation, to 30 June 2011;
(iii) are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board, as stated in note 1(a); and
(b) The remuneration report contained within the directors’ report for the financial period 29 October 2010, date of incorporation, to 30 June 2011 comply with section 300A of the Corporations Act 2001;
(c) The Directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A; and
(d) In the Directors’ opinion, there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.

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

==> picture [119 x 57] intentionally omitted <==

Stephen Anastos Chairman

Perth, Western Australia, 12 September 2011

Page 38

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Corporate Governance

In fulfilling its obligations and responsibilities to its various stakeholders, the Board is a strong advocate of corporate governance. This statement outlines the principal corporate governance procedures of the Company. The Board supports a system of corporate governance to ensure that the management of the Company is conducted to maximise shareholder wealth in a proper and ethical manner.

ASX Corporate Governance Council Recommendations

The Board has adopted corporate governance policies and practices consistent with the ASX Corporate Governance Council's Principles of Good Corporate Governance and Best Practice Recommendations ("ASX Principles and Recommendations 2nd Edition") where considered appropriate for company of the Company’s size and nature. Such policies include, but are not limited to the Board Charter, Board Committee Charters, Code of Conduct, Security Trading, Continuous Disclosure, Shareholder Communication and Risk Management Policies.

The Company’s main corporate governance policies and practices are outlined below:

(a) Board of Directors

The Company’s Board of Directors is responsible for corporate governance of the Company. The Board develops strategies and financial objectives for the Company, reviews strategic objectives and monitors performance against those objectives.

The Board acknowledges its accountability to Shareholders for creating Shareholder value within a framework which protects the rights and interests of Shareholders and ensures the Company is properly managed.

The objective of the Board is to provide an acceptable rate of return to the Company’s Shareholders and take into account the interests of its employees, customers, suppliers, lenders and the wider community.

Each of the Directors, when representing the Company, must act in the best interest of Shareholders of the Company and in the best interests of the Company as a whole.

In carrying out the responsibilities and powers set out in the Board Charter, the Board:

(i) recognises its overriding responsibilities to act honestly, fairly, diligently and in accordance with the law in serving the interests of its Shareholders; and
(ii) recognises its duties and responsibilities to its employees, customers and the community.
(b) Composition of the Board

Election of Board members is substantially the province of the Shareholders in general meeting.

The composition of the Board is to be reviewed regularly to ensure the appropriate mix of skills and expertise is present to facilitate successful strategic direction.

The majority of the Board is comprised of Non‐Executive Directors. Where practical, at least half of the Board will be independent. An independent Director is one who is independent of management and free from any business or other relationship, which could, or could reasonably be perceived to, materially interfere with, the exercise of independent judgement.

Page 39

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Corporate Governance Statement (continued)

The Board is currently comprised of a majority of Non‐Executive and independent Directors. The Board considers that its current structure is appropriate given the Company is in the early stages of its development and given the size, nature and scope of the Company’s activities.

(c) Independent professional advice

The Board or individual Directors may seek independent external professional advice as considered necessary at the expense of the Company, subject to prior consultation with the Chairperson. A copy of any such advice received is to be made available to all members of the Board.

(d) Remuneration arrangements

The total maximum remuneration of Non‐Executive Directors is the subject of a Shareholder resolution in accordance with the Company’s Constitution, the Corporations Act and the ASX Listing Rules, as applicable. The determination of Non‐Executive Directors’ remuneration within that maximum will be made by the Board having regard to the inputs and value to the Company of the respective contributions by each Non‐Executive Director. The current limit, which may only be varied by Shareholders in general meeting, is an aggregate amount of $150,000 per annum.

The Board may award additional remuneration to Non‐Executive Directors called upon to perform extra services or make special exertions on behalf of the Company.

(e) Performance Assessment

The Board has adopted a formal process for an annual self assessment of its collective performance and the performance of individual directors. The Board is required to meet at least annually with the purpose of reviewing the role of the Board, assessing its performance over the previous 12 months and examining ways in which the Board can better perform its duties. The issues examined in the review include the Board’s interaction with management, the type of information provided to the Board by management and management performance in helping the Board meet its objectives.

(f) External audit

The Company in general meetings is responsible for the appointment of the external auditors of the Company, and the Board from time to time will review the scope, performance and fees of those external auditors.

(g) Code of Conduct

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

The Directors, managers and employees are expected to act with the utmost integrity and objectivity, observe the highest standards of behaviour and business ethics and strive at all times to enhance the good reputation and performance of the Company by acting in the best interests of the Company, being responsible and accountable for their actions and observing the ethical principles of fairness, honesty and truthfulness, including disclosure of potential conflicts.

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Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Corporate Governance Statement (continued)

(h) Audit committee

The Company does not have a separate constituted audit committee. The Board, as a whole, serves as an audit committee and acts in accordance with the Audit and Risk Management Committee Charter.

Pursuant to the charter, the audit and risk management responsibilities include:

overseeing, co‐ordinating and appraising the quality of the audits conducted by both the Company’s external and internal auditors (if and when appointed);
determining the independence and effectiveness of the external and internal auditors;
maintaining open lines of communications among the Board and the internal and external auditors to exchange views and information, as well as confirm of their respective authority and responsibilities;
serving as an independent and objective party to review the financial information submitted by management to the Board for issue to shareholders, regulatory authorities and the general public; and
reviewing the adequacy of the reporting and accounting controls of the Company.
(i) Nomination and Remuneration Committee

The Company does not have a separate constituted nomination and remuneration committee. The Board, as a whole, serves as a nomination and remuneration committee and acts in accordance with the Nomination and Remuneration Committee Charter.

Pursuant to the charter, the nomination and remuneration responsibilities include:

reviewing and recommending the overall strategies in relation to executive remuneration policies;
reviewing and make recommendations in respect of the compensation arrangements for all non‐executive directors, the Chief Executive Officer and all other senior executives;
reviewing the effectiveness of performance incentive plans;
reviewing and make recommendations in respect of all equity based remuneration plans;
reviewing and make recommendations in respect of the Company's recruitment, retention and termination policies and superannuation arrangements;
reviewing the composition of the Board and ensuring that the Board has an appropriate mix of skills and experience to properly fulfil its responsibilities;
ensuring that the Board is comprised of directors who contribute to the successful management of the Company and discharge their duties having regard to the law and the highest standards of corporate governance;

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Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Corporate Governance Statement (continued)

reviewing and make recommendations to the Board in respect of the succession plans of senior executives (other than executive Directors) and ensuring the performance of senior executives is reviewed at least annually; and
considering nominations for potential candidates to act as Directors.
(j) Identification and Management of Risk

The Board’s collective experience will enable accurate identification of the principal risks that may affect the Company’s business. Key operational risks and their management will be recurring items for deliberation at Board meetings.

The Board takes a proactive approach to risk management and have a formal risk management policy to provide further guidance. The identification and proper management of risk within the Company is a priority for the Board.

(k) Policy for Trading in Company Securities

Trading in the Company’s securities by directors and employees is not permitted when they are in possession of unpublished price sensitive information. Any transactions undertaken must be notified to the Chairman or the Board in advance.

Directors, officers and employees must not buy, sell or subscribe for securities if they are in possession of ‘inside information’ (information that is not generally available and, if the information were generally available, a reasonable person would expect it to have a material effect on the price or value of securities). The Corporations Act 2001 (Cth) provides that a reasonable person would be taken to expect information to have a material effect on the price or value of securities if the information would, or would be likely to, influence persons who commonly invest in securities in deciding whether or not to subscribe for, buy or sell the securities.

Subject to the insider trading restrictions above, it is the Company’s policy that Directors, officers and employees will not deal in the Company's securities as a matter of course during:

in the two weeks prior to the release of the Company’s quarterly reports (if appropriate) and for two business days after the release of the report;
from 1 January until the release of the Company’s half year financial results and for two business days after the release of the results;
from 1 July until the release of the Company’s full year financial results and for two business days after the release of the results;
in any other period when the Company is in possession of unpublished price‐sensitive information and for two business days after the release of such information; and
any time it may be reasonably probable that notification of price‐sensitive information is required pursuant to the ASX Listing Rules and for two business days after the release of such information.

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Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Corporate Governance Statement (continued)

The Company’s policy also reinforces the Directors’ and Company’s statutory obligations to notify the ASX of any dealing in the securities which results in a change in the relevant interests of a Director in the securities. As contemplated in the ASX listing rules, each Director provides notice of such dealings to the Company Secretary within five business days of any such dealing to enable the Company to comply with its corresponding obligation to notify the ASX.

Subject to the insider trading restrictions above, Directors may trade outside the specified periods with approval from the Chairman or in the case of the Chairman intending to trade with approval from the Audit Committee Directors.

(l) Continuous Disclosure and Shareholder Communication

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

The Chairman and the Company Secretary have been nominated as the Company’s primary disclosure officers. All information released to the ASX is posted on the Company’s web‐site as soon as practicable after it is disclosed to the ASX. When analysts are briefed on aspects on the Company’s operations, the material used in the presentation is released to the ASX and posted on the Company’s web‐site.

The Company is committed to providing shareholders and stakeholders with extensive, transparent, accessible and timely communications on the Company’s activities, strategy and performance. In addition, the Company makes all market announcements, media briefings, details of shareholders meetings, press releases and financial reports available on the Company’s website www.blackmountainresources.com.au.

(m) Ethical standards

The Board is committed to the establishment and maintenance of appropriate ethical standards.

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Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Corporate Governance Statement (continued)

ASX Best Practice Recommendations

The table below identifies the ASX Corporate Governance Principles and Recommendations (Principles) and whether or not the Company has complied with the recommendations during the reporting period:

	Recommendation	Complied	Note
1.1	Establish the functions reserved to the board and those delegated to senior executives and disclose those functions	�
1.2	Disclose theprocess for evaluatingtheperformance of senior executives	�
1.3	Provide the information indicated in the Guide to reportingon Principle 1	�
2.1	A majorityof the board should be independent directors	�
2.2	The chair should be an independent director	�
2.3	The roles of chair and chief executive officer should not be exercised by the same individual	�
2.4	The board should establish a nomination committee	�	Note 1
2.5	Disclose the process for evaluating the performance of the board, its committees and individual directors	�
2.6	Provide information indicated in the Guide to reportingon Principle 2	�
3.1	Establish a code of conduct and disclose the code or a summary of the code as to: � the practices necessary to maintain confidence in the company’s integrity � the practices necessary to take into account heir legal obligations and the reasonable expectations of their stakeholders � the responsibility and accountability of individuals for reporting and investigatingreports of unethicalpractices	�
3.2	Establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the board to establish measureable objectives for achieving gender diversity and for the board to assess annuallyboth the objectives andprogress in achievingthem.	�	Note 2
3.3	Companies should disclose in each annual report the measureable objectives for achieving gender diversity set by the board in accordance with the diversity policyandprogress in achievingthem.	�	Note 2
3.4	Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the board.	�	Note 2
3.3	Provide information indicated in the Guide to reportingon Principle 3	�
4.1	Establish an audit committee	�	Note 3
4.2	Structure the audit committee so that it: � consist only of non‐executive directors � consists of a majority of independent directors � is chaired by an independent chair, who is not chair of the board � has at least three members	�	Note 3
4.3	The audit committee to have a formal charter	�
4.4	Provide the information indicated in the Guide to reportingon Principle 4	�
5.1	Establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at senior executive level for that compliance and disclose thosepolicies or a summaryof thosepolicies	�
5.2	Provide the information indicated in the Guide to reportingon Principle 5	�
6.1	Design communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose theirpolicyor a summaryof thatpolicy	�
6.2	Provide the information indicated in the Guide to reportingon Principle 6	�

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Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

	Recommendation	Complied	Note
7.1	Establish policies for oversight and management of material business risks and disclose a summaryof thosepolicies	�
7.2	Require management to design and implement the risk management and internal control system to manage the company’s material business risks and report to it on whether those risks are being managed effectively. Disclose that management has reported to it as to the effectiveness of the company’s management of its material business risks.	�
7.3	Disclose whether assurance has been received from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reportingrisks.	�
7.4	Provide information indicated in the Guide to reportingon Principle 7	�
8.1	Establish a remuneration committee	�	Note 1
8.2	Clearly distinguish the structure of non‐executive directors’ remuneration from that of executive directors and senior executives	�
8.3	Provide the information indicated in the Guide to reportingon Principle 8	�

Note 1:

The Principles recommend that companies should have a board of an effective composition, size and commitment to adequately discharge its responsibilities and duties and that companies should have a structure to ensure that the level and composition of remuneration is sufficient and reasonable and that its relationship to performance is clear.

(a) Recommendation 2.4 – Nomination Committee

Recommendation 2.4 of the Principles states that the board should establish a nomination committee that should be structured so that it:

consists of a majority of independent directors;
is chaired by an independent director; and
has at least three members.

The Board does not have a separate nomination committee. The Board, as a whole, serves as a nomination committee and acts in accordance with the Nomination and Remuneration Committee Charter. The Board does not believe any efficiency or other benefits would currently be gained by establishing a separate nomination committee.

The responsibility for the selection of potential directors lies with the full Board of the Company. A separate nomination committee has not been constituted because the Board considers that the size of the current full Board permits it to act as the nomination committee and to regularly review membership. This includes an assessment of the necessary and desirable competencies of Board members, Board succession plans and an evaluation of the Board’s performance and consideration of appointments and approvals.

When a Board vacancy occurs, the Board acting as the nomination committee, identifies the particular skills, experience and expertise that will best complement Board effectiveness, and then undertakes a process to identify candidates who can meet those criteria.

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Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Corporate Governance Statement (continued)

Directors are not appointed for specific terms, as their periods in office are regularly reviewed as part of annual performance evaluation processes and they are subject to re‐election every three (3) years.

(b) Recommendation 8.1 – Remuneration Committee

Recommendation 8.1 of the Principles states that the board should establish a remuneration committee that should be structured so that it:

consists of a majority of independent directors;
is chaired by an independent director; and
has at least three members.

The Board does not have a separate remuneration committee. The Board, as a whole, serves as a remuneration committee and acts in accordance with the Nomination and Remuneration Committee Charter. The Board does not believe any efficiency or other benefits would currently be gained by establishing a separate remuneration committee.

The responsibility for remuneration of directors and senior management lies with the full Board of the Company. A separate remuneration committee has not been constituted because the Board considers that the size of the current full Board permits it to act as the remuneration committee and will review remuneration issues at regular Board meetings.

Given the size of the Board and the Company, the Board considers that this function is efficiently achieved by the full Board. In circumstances where the size of the Board is expanded as a result of the growth or complexity of the Company, the Board will reconsider the establishment of a remuneration committee to ensure compliance with the Principles where possible.

Note 2:

The Principles recommends that companies should actively promote ethical and responsible decision‐ making.

(a) Recommendation 3.2 – Diversity Policy

Recommendation 3.2 states that companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the board to establish measureable objectives for achieving gender diversity and for the board to assess annually both the objectives and progress in achieving them.

The Company recognises that a talented and diverse workforce is a key competitive advantage and that an important contributor to the Company’s success is the quality, diversity and skills of its people.

Under the Company's Code of Conduct, employees must not harass, discriminate or support others who harass and discriminate against colleagues or members of the public on the grounds of sex, pregnancy, marital status, age, race (including their colour, nationality, descent, ethnic or religious background), physical or intellectual impairment, homosexuality or transgender. Such harassment or discrimination may constitute an offence under legislation.

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Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Corporate Governance Statement (continued)

Due to the small scale of the Company's operations and the limited number of employees, the Company has not yet established a Diversity Policy. However, as the Company develops the Board will consider adopting such a policy.

(b) Recommendation 3.3 – Measurable Objectives for Achieving Gender Diversity

Recommendation 3.3 of the Principles states that the board should disclose in each annual report the measurable objective for achieving gender diversity set by the board in accordance with the diversity policy and progress towards achieving them.

Given the size of the Company, the Company has not yet set measurable objectives for achieving gender diversity. In addition, the Board will review progress against any objectives identified on an annual basis.

(c) Recommendation 3.4– Annual Report Disclosure

Recommendation 3.4 of the Principles states that the board should disclose in each annual report:

the proportion of women employees in the whole organisation;
women in senior executive positions; and
women on the board.

Given the size of the Board and the Company, the Board considers that this function is efficiently achieved with Ms Rebecca Sandford as the Company Secretary holding a senior executive position in the Company. The Company does not currently have any employees.

Note 3:

The Principles recommend that companies should have a structure to independently verify and safeguard the integrity of their financial reporting. Recommendation 4.1 of the Principles states that the board should establish an audit committee.

Recommendation 4.2 of the Principles states that the audit committee should be structured so that it:

consists only of non‐executive directors
consists of a majority of independent directors
is chaired by an independent chair, who is not chair of the board
has at least three members.

The Board does not have a separate audit committee. The Board, as a whole, serves as a audit committee and acts in accordance with the Audit and Risk Management Committee Charter. The Board does not believe any efficiency or other benefits would currently be gained by establishing a separate audit committee.

The responsibility for preparation of financial statements and their audit lies with the full Board of the Company. A separate audit committee has not been constituted because the Board considers that the size of the current full Board permits it to act as the audit committee and will review audit issues at regular Board meetings.

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Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

Corporate Governance Statement (continued)

Given the size of the Board and the Company, the Board considers that this function is efficiently achieved by the full Board. In circumstances where the size of the Board is expanded as a result of the growth or complexity of the Company, the Board will reconsider the establishment of an audit committee to ensure compliance with the Principles where possible.

Page 48

Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

ASX Additional Information

Additional information required by the ASX Limited Listing Rules not disclosed elsewhere in this Annual Report is set out below.

1. Shareholdings

The issued capital of the Group as at 12 September 2011 is 27,812,501 ordinary fully paid shares, 2,000,000 unlisted options (exercisable at 30 cents, on or before 15 November 2015). All issued ordinary fully paid shares carry one vote per share.

Ordinary Shares

Shares Range	Holders	Units	%
1‐1,000	2	2,000	0.01
1,001‐5,000	55	539,002	1.94
5,001‐10,000	300	10,909,498	39.22
10,001‐100,000	57	14,262,000	51.28
100,001‐9,999,999	1	2,100,001	7.55
Total	415	27,812,501	100.00

Unmarketable parcels

There were 2 holders of less than a marketable parcel of ordinary shares.

2. Top 20 Shareholders as at 9 September 2011

	Name	Number of Shares	%
1	RAVENHILL INVESTMENTS PTY LTD	2,100,001	7.55
2	FERNLAND HOLDINGS PTY LTD	500,000	1.80
3	MALVERN PTY LTD	500,000	1.80
4	WATERLOO AUSTRALIA PTY LTD	500,000	1.80
5	SEVENTY THREE PTY LTD	450,000	1.62
6	TWO TOPS PTY LTD	450,000	1.62
7	MR PHILIP LUMB	410,000	1.47
8	MS SHARON GREEN	400,000	1.44
9	HSBC PORTFOLIO NOMINEES PTY LTD	400,000	1.44
10	MR NICHOLAS KORENEFF + MRS LINDA KORENEFF	400,000	1.44
11	MRS BEVERLEY LUMB	400,000	1.44
12	MS DIANNE SCHELLHORN	400,000	1.44
13	WATEROX PTY LTD	400,000	1.44
14	RISEWILD ENTERPRISES PTY LTD	350,000	1.26
15	KARAKORAM NO2 PTY LTD	340,000	1.22
16	LIBERTY RESOURCES LIMITED	312,500	1.12
17	789 PTY LTD	300,000	1.08
18	PARK FINANCE PTY LTD	300,000	1.08
19	PERTH INVESTMENT CORPORATION LIMITED	300,000	1.08
20	143 PTY LTD	265,000	0.95
	Total	9,477,501	34.08

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Black Mountain Resources Limited and its controlled entity Annual Report for the financial period 29 October 2010, date of incorporation, to 30 June 2011

3. Substantial Shareholders as at 12 September 2011

3.	Substantial Shareholders as at 12 September 2011
	Name	Number of Shares	%
1	Ravenhill Investments PtyLtd	2,100,001	7.55

4. Restricted Securities subject to escrow period

Securities subject to escrow are:

Securities subject to escrow are:
Category	Number of Shares	Period of Escrow
Ordinaryfully paid shares	5,400,000	22 November 2011(12 months from Issue)
Ordinaryfully paid shares	2,475,000	24 Months from 17 February2011
Ordinaryfully paid shares	312,500	9 February2012(12 months from Issue)
Unlisted options exercisable at $0.30 on or before 15/11/2015	2,000,000	24 Months from 17 February 2011

5. Group cash and assets

In accordance with Listing Rule 4.10.19, the Group confirms that it has been using the cash and assets it had acquired at the time of admission and for the period ended 30 June 2011 in a conservative manner that is consistent with its business objective and strategy.

Page 50

AI assistant

QX RESOURCES LIMITED — Annual Report 2011

65654_rns_2011-09-12_09e47527-243b-49f9-bd13-071b933c5c5c.pdf

Contents

Corporate Information

Directors

Company Secretary

Auditors

Bankers

Solicitors

Registered Office

Share Registry

Stock Exchange

Website

Letter to Shareholders

Directors Report

Directors

Principal Activities

Dividends

Review of Operations

Significant Changes in State Of Affairs

After Balance Date Events

Likely Developments and Expected Results

Financial Position

Environmental Regulation

Directors Report (continued)

Information on Directors

Directors Report (continued)

Ms Rebecca Sandford

Directors Meetings

Shares under Option

Shares Issued on the Exercise of Options

Insurance of Officers

Proceedings on Behalf of the Group

Directors Report (continued)

Non‐Audit Services

Auditor’s Independence Declaration

Directors Report (continued)

Remuneration Report

A Principles used to determine the nature and amount of remuneration

Non‐Executive Directors

Directors’ Fees

Directors Report (continued)

Remuneration report (cont’d)

A Principles used to determine the nature and amount of remuneration (cont’d)

Additional fees

Retirement allowances for directors

Executive pay

Base pay

Benefits

Directors Report (continued)

Remuneration report (cont’d)

A Principles used to determine the nature and amount of remuneration (cont’d)

Long term incentives

B Details of remuneration

Amounts of remuneration

Key Management personnel and other executives of the Group

Directors Report (continued)

Remuneration report (cont’d)

C Service agreements

D Share‐based compensation

Options

AUDITOR’S INDEPENDENCE DECLARATION

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BLACK MOUNTAIN RESOURCES LIMITED

Report on the Financial Report

Directors’ Responsibility for the Financial Report

Auditor’s Responsibility

Independence

Opinion

Report on the Remuneration Report

Opinion

Consolidated Statement of Comprehensive Income

For the financial period 29 October 2010, date of incorporation, to 30 June 2011

Consolidated Statement of Financial Position

As at 30 June 2011

Consolidated Statement of Cash Flows

For the financial period 29 October 2010, date of incorporation, to 30 June 2011

Consolidated Statement of Changes in Equity

For the financial period 29 October 2010, date of incorporation, to 30 June 2011

Notes to the Financial Statements

QX RESOURCES LIMITED Annual Report 2011