RAND MINING LIMITED — Annual Report 2004

Sep 29, 2004

RAND MINING NL ABN 41 004 669 658

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2004

RAND MINING NL

INDEX

Corporate Directory	3
Directors' Report	4
Corporate Governance Statement	9
Statements of Financial Performance	15.
Statements of Financial Position	16
Statements of Cash Flows	17.
Notes to the Financial Statements	18
Directors' Declaration	40
Audit Report	41

CORPORATE DIRECTORY

DIRECTORS

O Demis A Billis F Bozic W H Jay J Andrews G Sklenka

COMPANY SECRETARY

O Demis

REGISTERED OFFICE

Unit G1, 49 Melville Parade SOUTH PERTH WA 6151 Tel: (08) 9474 2113 Fax: (08) 9367 9386

SHARE REGISTRY

Computershare Investor Services Pty Limited Level 2, 45 St Georges Terrace PERTH WA 6000 Tel: 61 8 9323 2000 Fax: 61 8 9323 2033

BANKERS

BankWest VICTORIA PARK WA 6100

AUDITORS

Hall Chadwick GPO Box W2106 PERTH WA 6848

STOCK EXCHANGE LISTING

The Company's shares are quoted on the Official List of Australian Stock Exchange Limited. The ASX Code is RND.

The directors of Rand Mining N.L. submit herewith the annual financial report of the company for the financial year ended 30 June 2004. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

The names and particulars of the directors of the company during or since the end of the financial year are:

Name	Particulars
Mr Otakar Demis	Chairman and Company Secretary, appointed in 1985 and is a private investor and businessman with several years experience as a Director of the Company.
Mr William H. Jay ASTC (Chem Eng), BSc., (Chem. Eng), PhD.	Chemical Engineer with some 40 years experience in the mining industry (particularly in copper and gold hydrometallurgy) and in polymer chemistry and production. Joined the Board in 2001 in a non-executive capacity. He is a visiting academic at Monash University and is the inventor of more than ten international patents.
Mr Franjo Bozic	Joined the Board in 1996. He is a Petrochemical Engineer and Investor.
Mr Anthony Billis	Joined the Board in 2003 and has 25 years experience in gold exploration within the mining industry in Western Australia.
Dr John Andrews BSc, B.E. (Hons) Ph.D. AusIMM	Fellow of AusIMM with extensive knowledge, qualifications and experience in mineral processing joined the Board in 2004 in a non-executive capacity. Dr Andrews has a number of granted patents in mineral processing and has in excess of 50 technical publications to his name. Dr Andrews has consulted to a wide range of mineral and research companies.
Mr Gordon Sklenka	Joined the Board in 2004 in a non-executive capacity. Mr Sklenka has worked in Chartered Accounting and commerce in both Perth and Sydney and has over 15 years experience in corporate finance in the resources and technology industry predominantly focusing on capital raisings, IPO's, acquisitions and project finance.
Mr Francis J O'Kane	Managing director, joined the Board in 1997 and resigned during the year.

The above named directors held office during and since the end of the financial year except for:

Mr Francis J O'Kane who was appointed 14 February 1997 resigned 28 July 2004.

Principal activities

The principal activities of the Company during the year were the exploration and development of resources on the East Kundana Joint Venture tenements. There has been no significant change in the nature of these activities during the financial year.

Review of operations

The activities of the company were focused on the East Kundana Project during the year. Gold production and studies to develop further mining operations continued throughout the year. A more detailed review of operations is contained in Review of Operations section of the Annual Report.

Operating Results

The profit of the company after income tax of \$Nil (2003: \$Nil) was \$1,969,851 (2003: \$1,219,892).

Changes in state of affairs

Other than noted below during the course of the financial year ended 30 June 2004, there were no significant changes to the state of affairs of the company.

During the year mining and processing was completed at the Raleigh and Rubicon Open Pit mines.

Subsequent events

During July 2004 the development of the Raleigh Underground mine was approved after successful negotiations with joint venture partner Placer Dome Asia Pacific concluded and funding was secured from the ANZ Investment Bank

Other than the above, there has not been any matter or circumstance, other than that referred to in the financial statements or notes thereto, that has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

Future developments

The Company intends to continue its exploration program on its existing tenements and to acquire further suitable tenements for exploration as opportunities arise.

Further information on the likely developments in the operations of the Company and the expected results of those operations have not been included in this Report because the Directors believe it would be likely to result in unreasonable prejudice to the Company.

Environmental regulations

The Company's environmental obligations are regulated under both State and Federal Law. The Company has a policy of complying with its environmental performance obligations. No environmental breaches have been notified by any Government agency to the date of this report.

Dividends

No dividends have been paid by the Company during the year ended 30 June 2004 (2003: Nil) nor have the Directors recommended that any dividend be paid.

Share options

At the commencement of the financial year, the following options over unissued shares in the capital of the company existed:

Expiry Date	Exercise Price	Number of ordinary shares under ontion
30 April 2005	20 cents.	2.300.000

These options were issued to Trans Global Trust d.o.o. There were no movements in these options during the year.

At the end of the financial year, the following options over unissued shares in the capital of the Company remain.

Expiry Date	Exercise Price	Number of ordinary shares under option
30 April 2005	20 cents	2.300.000

Directors' meetings

The following table sets out the number of directors' meetings (including meetings of committees of directors) held during the financial year and the number of meetings attended by each director (while they were a director or committee member).

Directors		Board of Directors
	Held	Attended
O Demis	10	4
W Jay	10	10
F Bozic	10
A Billis	10	8
J Andrews (appointed 16 August 2004)
G Sklenka (appointed 16 August 2004)
F O'Kane (resigned 28 July 2004)	10	9

Directors' shareholdings

As at the date of this report, the following represents shares held by Directors in the company. The indirect interest in the company's shares includes, where applicable, the shareholding of the following companies by virtue of the relevant Director being a director of Rand Mining NL, Rand Exploration NL, Lake Grace Exploration Pty Ltd, Regent Gulf Pty Ltd or Sierra Gold Pty Ltd.

Directors	Direct	Indirect	Total
O Demis	3,200	6.890,897	6,894,097
W Jay	30,000	9,120,997	9,150,997
F Bozic	252,000		252,000
A Billis	14,000	11,500,997	11,514,997
J Andrews	4,000	6.143,997	6,203,997
G Sklenka		6.143,997	6,143,997

Directors' and Executives' remuneration

The remuneration packages of all directors and executive officers are reviewed on an annual basis.

Remuneration packages contain the following key elements:

• · Primary benefits salary/fees;
• · Post-employment benefits superannuation benefits; and
• · Other benefits.

The following table discloses the remuneration of the directors of the company. There are no specified executives:

		Primary	Post Employment	Total
Director				S
	Salary &	Bonus	Superannuation
	fees S	S	S.
Executive directors
F O'Kane (resigned 28 July 2004)	53,563		3,471	53,563
O Demis	15,000			15,000
A Billis	48,000		2,970	50,970
Non-executive directors
F Bozic
W Jay	15,000			15,000
J Andrews (appointed 16 August 2004
G Sklenka (appointed 16 August 2004)

Directors' salaries and superannuation benefits are paid by STT Pty Ltd, a director related entity.

Non-executive directors received a fixed fee for their services as directors.

Other than outlined above, since the end of the previous financial year, no director has received or become entitled to receive a benefit, other than benefits disclosed in the financial statements as emoluments or the fixed salary of a full-time employee of the Company or a related body corporate, by reason of a contract made by the Company with the director or with a firm of which he is a member, or with an entity in which he has a substantial financial interest.

There have been no options issued during the year to directors.

There are no termination or retirement benefits for non-executive directors (other than statutory superannuation).

Details of director related transactions are disclosed in Note 16 to the financial statements. There were no executive officers during the year who were not also directors.

Corporate Governance

The company has undertaken a review of its corporate governance practices and policies in accordance with the ASX Corporate Governances Best Practice Recommendations. The Company's policies are described in the Corporate Governance Statement section of this Annual Report.

Indemnification of officers and auditors

During the financial year, the company has not paid any premiums insuring the directors or officers against liabilities incurred as directors or officers of the company. The company does not indemnify directors or their auditors.

Signed in accordance with a resolution of the directors made pursuant to s.298(2) of the Corporations Act 2001. On behalf of the Directors

G Skleyka Dated 30 September 2004 Perth, Western Australia

The Board of Rand Mining NL is committed to achieving and demonstrating the highest standards of Corporate Governance.

The Board is responsible to the Shareholders for the performance of the Company and focuses on:

• enhancing the interests of Shareholders and other key stakeholders;
• and ensuring the Company is properly managed.

The Board believes that sound Corporate Governance practices will assist in the creation of Shareholder wealth and provide accountability and control systems commensurate with the risks involved.

This Statement outlines the main corporate governance practices in place during the financial year, noting where practices depart from the ASX Corporate Governance Council Recommendations and the Board's reasons for an alternate approach. Where the Board supports a recommendation, but is yet to fully implement, a complementary policy or practice, has also been identified.

Explanations for Departures from Best Practice Recommendations

Principle I. LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT ROLE OF THE BOARD AND MANAGEMENT

Council Recommendation 1.1: Formalise and disclose the functions reserved to the Board and those delegated to management.

The Company complies with this recommendation.

The Company has adopted a formal written Board Charter.

The functions of management are undertaken by the Board and Director, Mr Anton Billis is responsible for management activities under delegated authority of the Board.

Principle 2. STRUCTURE THE BOARD TO ADD VALUE

Council Recommendation 2.1: The majority of the Board should be independent directors

The Company complies with this recommendation.

Details of the on the members of the Board, their experience, expertise and qualifications are set out in the Directors' Report in the Annual Report.

Council Recommendation 2.2: The chairperson should be an independent director

The Company does not comply with this recommendation.

The Board believes that the Chairman, Mr Otakar Demis, brings quality and independent judgement to all relevant issues falling within the scope of the role of a Chairman.

The Company does not comply with this recommendation.

The Board considers that the Company is not currently of a size to justify the formation of a nomination committee. The Board as a whole undertakes the process of reviewing the skill base and experience of existing Directors to enable identification or attributes required in new Directors.

When Directors have concerns about issues being considered by the Board, they are (by a majority decision of the Board) entitled to seek independent professional advice at the Company's expense.

The Company's Constitution specifies that all non-executive Directors must retire from office on a three year rotational basis.

Should the Company's activities increase in size, scope and nature, the appointment of a nomination committee will be reviewed by the Board and implemented if appropriate.

Principle 3. PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING

Council Recommendation 3.1: Establish a code of conduct to guide the Directors, the chief executive officer (or equivalent), the chief financial officer (or equivalent) and any other key executives as to: the practices necessary to maintain confidence in the Company's integrity; $3.1.1$ 3.1.2 the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

The Company complies with this recommendation.

The Company has adopted a Code of Conduct to guide the Directors and Officers.

Prior to the adoption of the formal written Code of Conduct, the Board considers that its business practices, as overseen by the Board, were the equivalent to the Code of Conduct as formally adopted.

The Code of Conduct requires all Directors and Officers to:

• actively promote the highest standards of ethics and integrity in carrying out their duties for the Company.
• disclose any actual or perceived conflicts of interest of a direct or indirect nature of which they become aware and which they believe could compromise in any way the reputation or performance of the Company.
• respect confidentiality of all information of a confidential nature, which is acquired in the course of the Company's business and not disclose or make improper use of such confidential information to any person unless specific authorisation is given for disclosure or disclosure is legally mandated.
• deal with the Company's customers, suppliers, competitors and each other with the highest level of honesty, fairness and integrity and to observe the rule and spirit of the legal and regulatory environment in which the Company operates.
• protect the assets of the Company to ensure availability for legitimate business purposes and ensure all ٠ corporate opportunities are enjoyed by the Company and that no property, information or position belonging to the Company or opportunity arising from these are used for personal gain or to compete with the Company.

Council Recommendation 3.2: Disclose the policy concerning trading in Company securities by directors, officers and employees.

The Company complies with this recommendation.

The Board has adopted a policy and procedure on dealing in the Company's securities by Directors, Officer's and employees which prohibits dealing in the Company's securities when those persons possess unpublished market price sensitive information. It also requires directors to notify the Chairman of the Company when trading in the Company occurs. In the case of the Chairman, he must notify a non-executive Director.

Directors must also notify the Company Secretary of any trade in the Company's securities within two days of such trade occurring so that the Company Secretary can comply with ASX Listing Rule 3.19A.2 requirement to notify ASX of any change in a notifiable interest held by a Director.

Principle 4. SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

Council Recommendation 4.1: Require the chief executive officer (or equivalent) and the chief financial officer (or equivalent) to state in writing to the Board that the Company's financial reports present a true and fair view, in all material respects, of the Company's financial condition and operational results and are in accordance with relevant accounting standards.

The Company does not comply with this recommendation.

The Board considers that the Company is not currently of a size to justify the appointment of a chief executive officer and/or chief financial officer or their equivalents. The Board as a whole undertakes the process of reviewing the financial statements of the Company for each half year and full year and ensuring that they present a true and fair view, in all material aspects, of the Company's financial condition and operational results and are in accordance with accounting standards.

Council Recommendation 4.2: The Board should establish an audit committee.

The Company does not comply with this recommendation.

The Board believes that the Company is not of a size, nor are its financial affairs of such complexity to justify the formation of an audit committee. The Board as a whole undertakes the functions normally associated with an audit committee.

Council Recommendation 4.3: Structure the audit committee so that it consists of:

• only non-executive Directors;
• a majority of independent Directors;
• an independent chairperson, who is not the chairperson of the Board;
• at least three members.

Refer Council Recommendation 4.2.

Council Recommendation 4.4: The audit committee should have a formal operating charter.

Refer Council Recommendation 4.2.

PRINCIPLE 5. MAKE TIMELY AND BALANCED DISCLOSURE

Council Recommendation 5.1: Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level of that compliance.

The Company complies with this recommendation.

The Company has adopted a continuous disclosure policy that requires all Directors, Officers and executives to inform Director Anton Billis of any potentially material information as soon as practicable after they become aware of that information.

Information is material if it is likely that the information would influence investors who commonly acquire securities on ASX in deciding whether to buy sell or hold the Company's securities.

Director Anton Billis is responsible for interpreting and monitoring the Company's disclosure policy and where necessary informing the Board.

Prior to the adoption of the continuous disclosure policy there were no written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and accountability for the compliance however, the policies and procedures outlined in the formally adopted policy did in fact exist and were applied prior to their adoption in writing.

Director Anton Billis has been nominated as the person responsible for communications with ASX. This role includes responsibility for ensuring compliance with the continuous disclosure requirements in ASX Listing Rules and overseeing and co-ordinating information disclosure to ASX, analysts, brokers, Shareholders, the media and the public.

Principle 6. RESPECT THE RIGHTS OF SHAREHOLDERS

Council Recommendation 6.1: Design and disclose a communications strategy to promote effective communication with Shareholders and encourage effective participation at general meetings.

The Company complies with this recommendation.

The Company's communication strategy requires communication with Shareholders in an open, regular and timely manner so that the market has sufficient information to make informed investment decisions on the operations and results of the Company.

Council Recommendation 6.2: Request the external auditor to attend at the Annual General Meeting and be available to answer Shareholder questions about the conduct of the audit and the preparation and content of the auditor's report. All shareholders receive a copy of the company's annual and half yearly reports.

The Company complies with this recommendation.

It is the Company's policy to require the external auditor Hall Chadwick to attend the annual general meeting of the Company and be available to answer Shareholder questions about the conduct of the audit and the preparation and content of the audit report.

Principle 7. RECOGNISE AND MANAGE RISK

Council Recommendation 7.1: The Board or appropriate board committee should establish policies on risk oversight and management.

The Company complies with this recommendation.

The Board is responsible for risk management and control and they examine and consider areas of significant business risk on an ongoing basis and implement policy to minimise exposure to these risks.

The risk management policy of the Company will continue to be developed as its operations and areas of potential risks evolve.

Council Recommendation 7.2: The chief executive officer (or equivalent) and the chief financial officer (or equivalent) should state in writing that:

the statement given in accordance with best practice recommendation 4.1 (the integrity of financial $7.2.1$ statements) is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board;

$7.2.2$ the Company's risk management and internal compliance and control system is operating efficiently and effectively in all material respects.

The Company does not comply with this recommendation.

The Company does not have a CEO or CFO or their equivalent..

The Board is responsible for recognizing and managing risk.

Principle 8. ENCOURAGE ENHANCED PERFORMANCE

Council Recommendation 8.1: Disclose the process for performance evaluation of the Board, its committees and individual Directors, and key executives.

The Company complies with this recommendation.

The Board has adopted a self-evaluation process to measure its own performance during each financial year. This process includes a review in relation to the composition and skills mix of the Directors of the Company.

Principle 9. REMUNERATE FAIRLY AND RESPONSIBLY

Council Recommendation 9.1: Provide disclosure in relation to the Company's remuneration policies to enable investors to understand (i) the costs and benefits of those policies and (ii) the link between remuneration paid to directors and key executives and corporate performance.

The Company complies with this recommendation.

The Chairman in consultation with independent directors makes recommendations to the full Board on the remuneration packages provided for officers and the directors themselves.

Where appropriate the Board will use the services of external advisers to assist them in this process.

Non-executive Directors receive a fixed fee for providing their services as directors.

Council Recommendation 9.2: The Board should establish a remuneration committee.

The Company does not comply with this recommendation.

The Board considers that at the Company's stage of development no benefits or efficiencies are to be gained by delegating this function to a separate committee.

Council Recommendation 9.3: Clearly distinguish the structure of the non-executive directors' remuneration from that of executives.

The Company complies with this recommendation.

Council Recommendation 9.4: Ensure that the payment of equity based executive remuneration is made in accordance with thresholds set in plans approved by Shareholders.

The Company complies with this recommendation.

10. RECOGNISE THE LEGITIMATE INTERESTS OF STAKEHOLDERS

Council Recommendation 10.1: Establish and disclose a code of conduct to guide compliance with legal and other obligations to legitimate stakeholders.

The Company complies with this recommendation.

The Board has adopted a Code of Conduct.

The Code of Conduct formalises, in written form, business practices and principles previously adopted by the Board.

STATEMENTS OF FINANCIAL PERFORMANCE FOR THE FINANCIAL YEAR ENDED 30 JUNE 2004

			CONSOLIDATED	RAND MINING N.L.
		2004	2003	2004	2003
	NOTE	S	\$	S	S
Revenues from Ordinary Activities	2	8,339,693	8,155,587
Changes in inventories of finished
goods and work in progress		(412,014)	298.967
Depreciation and amortisation expense Write-off of deferred exploration	3(a)	(2,705,052)	(3,649,300)
expenditure	3(b)	(412,911)	(264, 751)
Borrowing cost expenses	3(a)	(1,460)	(63, 184)
Write-down of non-current assets	3(b)	(51, 547)	(38,966)
Management fees		(210,400)	(159,600)
Administrative expenses		(800, 223)	(605,202)	(183)
Royalty expenses		(201, 159)	(305, 432)
Mining expenses		(815, 483)	(983, 642)
Processing expenses		(734,580)	(1,064,145)
Environmental management expense		(25,013)	(100, 440)
		1,969,851	1,219,892	(183)
Income tax expense relating to
ordinary activities	4
Net Profit/(Loss)	5	1,969.851	1,219,892	(183)
Earnings per share: Basic (cents per share)	20	5.15	3.19
Diluted (cents per share)	20	5.01	3.09

STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2004

	NOTE	2004 S	CONSOLIDATED 2003 \$	2004 \$	RAND MINING N.L. 2003 S
CURRENT ASSETS
Cash Assets	21(a)	4,744,755	2,582,400
Receivables	6	67,439	908,194		183
Investments	7	5,238,267	3,047,948
Inventories	8		412,014
Exploration, Development and Mining Costs	9		373,592
TOTAL CURRENT ASSETS		10,050,461	7,324,148		183
NON CURRENT ASSETS
Receivables	6			8,174,210	8,174,210
Investments	7	162,512	62,523	538,161	538,161
Property, Plant and Equipment	10	299,379	298,960	217,038	217,038
Exploration, Development and Mining Costs	9	604,459	1,963,255
TOTAL NON-CURRENT ASSETS		1,066,350	2,324,738	8,929,409	8,929,409
TOTAL ASSETS		11,116,811	9,648,886	8,929,409	8,929,592
CURRENT LIABILITIES
Payables	11	112,438	803,810
Interest Bearing Liabilities	12	12,638	12,238	$\overline{\phantom{a}}$
TOTAL CURRENT LIABILITIES		125,076	816,048
NON-CURRENT LIABILITIES
Payables	11	339,848	153,933
Interest Bearing Liabilities	12	20,842	26,083
Provision	13	73,094	64,787
TOTAL NON-CURRENT LIABILITIES		433,784	244,803	$\overline{\phantom{a}}$
TOTAL LIABILITIES		558,860	1,060,851
NET ASSETS		10,557,951	8,588,035	8,929,409	8,929,592
SHAREHOLDERS' EQUITY Contributed equity	14	10,993,558	10,993,558
Reserves	15	1,326,974	1,326,974	10,993,558 1,113,759	10,993,558 1,113,759
Accumulated losses	5	(1,762,581)	(3,732,497)	(3,177,908)	(3,177,725)
SHAREHOLDERS' EQUITY		10,557,951	8,588,035	8,929,409	8,929,592

STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2004

	NOTE	2004 S	CONSOLIDATED 2003 \$	RAND MINING N.L. 2004 \$	2003 S
CASH FLOWS FROM OPERATING
ACTIVITIES
Receipts from customers		8,278,148	7,984,972
Borrowing costs			(100, 465)
Expenditure on mining interests		(3,660,787)	(4,261,814)
Payments to suppliers and employees		(874, 622)	(826,403)
Interest received		20,072	19,785
NET CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES	21(b)	3,762,811	2,816,075
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of investments		(2,341,854)	(190, 885)
Purchase of plant and equipment		(19, 239)	(9,982)
Loan to related parties			(267, 427)
NET CASH FLOWS USED IN
INVESTING ACTIVITIES		(2,361,093)	(468, 294)
CASH FLOWS FROM FINANCING
ACTIVITIES
Repayment of borrowing			(1,608,577)
Advance by related entities		760,637	479,241		25,019
Payments for capital raising costs			(25,019)		(25,019)
NET CASH FLOW FROM/(USED IN)
FINANCING ACTIVITIES		760,637	(1,154,355)
NET INCREASE IN CASH HELD Cash at the beginning of the		2,162,355	1,193,426
financial year		2,582,400	1,388,974
CASH AT THE END OF THE FINANCIAL YEAR	21(a)	4,744,755	2,582,400

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Accounting

The financial report is a general purpose financial report that has been drawn up in accordance with the requirements of the Corporations Act 2001 which includes applicable Accounting Standards. Other mandatory professional reporting requirements of the Australian Accounting Standard Board and Urgent Issues Group Consensus views have also been complied with.

The parent entity is a listed public company, incorporated and domiciled in Australia.

The financial report has been prepared on an accruals basis and is based on historical costs and does not take into account changing money values or, except where stated, current valuations of non-current assets. Cost is based on the fair value of the consideration given in exchange for assets. The accounting policies have been consistently applied unless otherwise stated. Comparative information is reclassified where appropriate to enhance comparability.

The following is a summary of the material accounting policies adopted by the economic Entity in the preparation of the financial report.

(b) Non-Current Assets

Non-current assets are not revalued to an amount above their recoverable amount, and where carrying values exceed this recoverable amount, assets are written down. In determining recoverable amount, the expected net cash flows have not been discounted to their present value.

(c) Investments

Investments expected to be realised within 12 months are carried at the lower of cost and net realisable value.

Non-current investments are carried at cost. Where cost exceeds recoverable amount, the investment has been written down to this recoverable amount.

(d) Principles of Consolidation

A controlled entity is any entity controlled by Rand Mining NL. Control exists where Rand Mining NL has the capacity to dominate the decision making in relation to the financial and operating policies of another entity so that the other entity operates with Rand Mining NL to achieve the objectives of Rand Mining NL. A list of controlled entities is disclosed in Note 7 to the financial statements.

All inter-company balances and transactions between entities in the economic entity, including any unrealised profits or losses have been eliminated on consolidation.

Where controlled entities have entered or left the economic entity during the year, their operating results have been included from the date control was obtained or until the date control ceased.

Outside interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial report.

(e) Income Tax

The economic entity adopts the liability method of tax-effect accounting whereby the income tax expense is based on the profit from ordinary activities adjusted for any permanent differences.

Timing differences which arise due to the different accounting periods in which items of revenue and expense are included in the determination of accounting profit and taxable income are brought to account as either a provision for deferred income tax or as a future income tax benefit at the rate of income tax applicable to the period in which the benefit will be received or the liability will become payable.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt. Future income tax benefits in relation to tax losses are not brought to account unless there is virtual certainty of realization of the benefit.

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

(f) Receivables

Trade receivables and other receivables are recorded at amounts due less any provision for doubtful debts.

(g) Accounts Payable

Trade payables and other accounts payable are recognised when the company becomes obliged to make future payments resulting from the purchase of goods and services.

(h) Financial instruments issued by the company

Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual agreement.

The company had no financial derivatives or hedging at the end of the financial year.

(i) Interest Bearing Liabilities

Bank loans are recorded at an amount equal to the net proceeds received. Interest expense is recognised on an accrual basis.

Costs incurred in connection with the borrowing arrangement were expensed in the year incurred.

(i) Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST).

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

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

(k) Inventories

Inventories are valued at lower of average cost and net realizable value.

(I) Deferred Exploration, Evaluation And Development Expenditure

Cost arising from exploration, evaluation and development activities are carried forward provided such costs are expected to be recouped through the successful development or the sale, or where activities have not at balance date reached a stage to allow a reasonable assessment regarding the existence of economically recoverable reserves. Costs are written off as soon as an area has been abandoned or is considered to be non commercial.

Each year the directors consider the recoverable value of the areas being carried forward and where they believe those values to be lower than the costs, write-down the costs accordingly.

Once production commences, expenditure accumulated in respect of areas of interest is amortised on a unit of production basis against the proven and probable economically recoverable reserves.

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

(m) Deferred Waste

Contract mining costs associated with waste removal is deferred and charged to the Statement of Financial Performance on the basis of gold produced relative to the total ounces expected to be produced from the pit. The estimated future costs and expected ounces to be produced are revised on a regular basis and changes are dealt with prospectively.

(n) Rehabilitation & Restoration

Expenditure relating to ongoing rehabilitation are provided for or charged to costs of production as incurred. Final mine restoration costs are accrued over the life of the mine. The estimated costs are reassessed on a regular basis and changes are dealt with prospectively.

$(o)$ Cash

For the purpose of the statement of cash flows, cash includes cash on hand and in banks, money investments readily convertible to cash within two working days and gold bullion on hand net of outstanding bank overdrafts.

(p) Property, Plant and Equipment

Property, plant and equipment are carried at cost. Any gain or loss on the disposal of assets is determined as the difference between the carrying amount of the asset at the time of disposal and the proceeds of disposal, and is included in the results of the Company or consolidated entity in the year of disposal.

Depreciation is provided on all property, plant and equipment, other than freehold land, at rates calculated to allocate the depreciable amount of the assets against revenue over their estimated useful lives.

Major depreciation periods are:

plant and equipment 3 to 12 years.

(q) Revenue Recognition

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

Royalties

Royalty revenue is recognised on an accrual basis in accordance with the substance of the relevant agreement.

Revenue from Gold Production

Gold revenue is recognised at spot price at the time of sale. Gold bullion held at year end is recognised as revenue at spot price on balance date.

Proceeds on sale of investments Proceeds are recognised on settlement of an unconditional contract of sale.

Proceeds on sale of non-current assets

Proceeds are recognised on settlement of an unconditional contract of sale.

Interest Revenue

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

(r) Interests in Joint Venture

The economic entity's share of the assets, liabilities, revenue and expenses of joint venture operations are included in the appropriate items of the consolidated statements of financial performance and financial position. Details of the economic entity's interests are shown in Note 16.

(s) Earnings Per Share

Basic earnings per share is determined by dividing the operating profit/loss after tax by the weighted average number of ordinary shares on issue during the financial year.

Diluted earnings per share is determined by dividing the operating profit/loss after tax adjusted for the effect of earnings on potential ordinary shares, by the weighted average number of ordinary shares (both issued and potentially dilutive) outstanding during the financial year.

(f) Leases

Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership, are transferred to entities in the economic entity are classified as finance leases. Finance leases are capitalised, recording an asset and a liability equal to the present value of the minimum lease payments, including any guaranteed residual values. Leased assets are depreciated on a straight line basis over their estimated useful lives where it is likely that the economic entity will obtain ownership of the asset or over the term of the lease. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor are charged as expenses in the periods in which they are incurred.

Lease incentives under operating leases are recognised as a liability. Lease payments received reduce the liability.

	CONSOLIDATED		RAND MINING N.L.
	2004	2003	2004	2003
	S	S	\$	S
2. REVENUE
Operating Activities
- Sale of gold & silver	5,913,742	6,557,439
- Gold bullion on hand	2,244,899	1,426,168
- EKJV income	160,980	101,554
- Royalties		38,089
	8,319,621	8,123,250
Non-Operating Activities
- Interest received	20.072	19,785
- Other revenue		12,552
	20,072	32,337
Total Revenue	8,339,693	8,155,587

3. OPERATING PROFIT/(LOSS)

The operating profit/(loss) from ordinary activities before income tax is arrived at after charging/ (crediting) the following items:-

$\left( a\right)$	EXPENSES
	Cost of sales	3,399,299	2,471,476
	Borrowing costs
	Interest expense - other persons/corporations	1.460	63,184
	Depreciation of plant and equipment	18,819	13,929
	Amortisation of non-current asset
	- capitalised exploration expenditure	1,343,315	1,736,637
	- waste	1,127,002	1,610,849
	- prepaid interest		2,660
	- mine development	215.916	16,085
	- technical services		269,140
	Total depreciation and amortisation costs	2,705,052	3,649,300
	Bad and doubtful debts
	- other related parties	142,577	123,252

		CONSOLIDATED		RAND MINING N.L.
		2004	2003	2004	2003
		S	S	\$	S
3.	OPERATING PROFIT/(LOSS) (CONT'D)
(b)	SIGNIFICANT EXPENSES The following significant expenses are relevant in explaining the financial performance Included in the operating profit/(loss) from ordinary activities are the following items: Diminution in value of investments Write-off of deferred exploration expenditure	51,547 412,911	38,966 264,751
		464.458	303,717
4.	INCOME TAX

The prima facie tax, using tax rates applicable in the country of operation, on operating loss from ordinary activities differs from the income tax provided in the accounts as follows:-Prima facie tax charge/(credit) on operating profit/(loss) at 30% 590,955 365,968 $(55)$ 122,910 55 Tax effect of permanent differences $\overline{a}$ Future income tax benefit not previously $(365,968)$ recognised now brought into account $(713, 865)$ Income tax expense on operating profit/(loss) $\overline{\phantom{a}}$ $\overline{a}$ $\overline{\phantom{a}}$ $\sim$

	CONSOLIDATED			RAND MINING N.L.
	2004 S	2003 S	2004 \$	2003 s
ACCUMULATED LOSSES 5.
Accumulated losses at the beginning of the financial year Net profit/(loss) for the year	(3,732,432) 1,969,851	(4,952,324) 1,219,892	(3,177,725) (183)	(3,177,725)
Accumulated losses at the end of the financial year	(1,762,581)	(3,732,432)	(3,177,908)	(3,177,725)
6. RECEIVABLES
CURRENT Other debtors Provision for doubtful debts other debtors Amounts receivable from other related parties Provision for doubtful debts other related parties	95.061 (30,000) 357,171 (354, 793)	217,963 932,447 (242,216)		183
	67,439	908,194		183
NON-CURRENT Amounts receivable from Controlled entity - loans Provisions for amounts receivable from Controlled entity - loans			10.267,091 (2,092,881)	10,267.091 (2,092,881)
			8,174,210	8,174.210

		CONSOLIDATED		RAND MINING N.L.
		2004	2003	2004	2003
		S	\$	\$	S
7. INVESTMENTS
CURRENT
Shares listed on a prescribed stock exchange at cost	(a)	5,238,267	3,047,948
Aggregated quoted market value at balance date of investments listed on a prescribed stock exchange		6,800,616	5,494,350
NON CURRENT Unlisted investment, at cost
- Shares in controlled entity	(b)			538,161	538,161
- Unlisted shares in other corporations		162,512	62,523
- Shares in other related party	(c)	686,319	634,772
Provision for diminution		(686,319)	(634,772)
Total Non Current Investments		162,512	62,523	538,161	538.161

(a) The majority of these investments are held in Tribune Resources NL (a director related entity). At the end of the financial year, the company holds 19.49% of shares in Tribune Resources.

(b) Investments in Controlled Entity

	Country	$\frac{1}{2}$					Contribution To Consolidated
	Of.		Ordinary Shares	Carrying Value Of			Operating Profit/(Loss) After
Хити	Incornoration	Owned				Investment		Income Tax
				2004	2003	2004	2003
		2004	2003
Rand Exploration N.L.	Australia	100.	100	538,161	538.161	3.231.850	.219.892

(c) Shares in related party relates to investment in Oretek Limited. The company has a 20% interest in the Oretek patents. The initial investment in Oretek was \$529,000. This has been fully written off.

8. INVENTORIES

At cost (i)

412,014

(i) Inventory relates to the controlled entity's portion of EKJV product stocks which includes direct mining, technical services and geology costs together with amortised, deferred waste and rehabilitation costs.

		CONSOLIDATED	RAND MINING N.L.
	2004 S	2003 \$	2004 \$	2003 S
9. EXPLORATION, DEVELOPMENT AND MINING COSTS
CURRENT Deferred waste Amortisation		2,160,364 (1,786,772)
Total current deferred expenditure (i)		373,592
NON-CURRENT Exploration Expenditure Cost carried forward in respect of interest in: - exploration and evaluation phases	604,459	578,441
	604,459	578,441
Production phase Accumulated amortization	3,089,959 (3,089,959)	2,934,689 (1,746,644)
		1,188,045	÷
Mine development Accumulated amortization	267,385 (267, 385)	27,182 (16,090)
		11,092
Technical services capitalized Accumulated amortization		454,817 (269, 140)
		185,677
Total non-current deferred expenditure (i)	604,459	1,963,255

(i) Included in Total Deferred Expenditure of \$604,459 is \$373,033 in relation to the Kundana Project. The EKJV Project is a joint venture between the Company, Tribune Resources NL and Gilt-Edged Mining NL a wholly owned subsidiary of Placer Dome Asia Pacific Limited. Gilt~Edged Mining NL has a 51% interest in the Kundana Project, the consolidated entity 12.25% and Tribune Resources NL 36.75%. The EKJV commenced production in May 2002 and 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.

	CONSOLIDATED		RAND MINING N.L.
	2004 S	2003 \$	2004 $\mathbf S$	2003 S
PROPERTY, PLANT AND EQUIPMENT 10.
Freehold land and buildings At cost	217,038	217,038	217,038	217,038
Plant and equipment At cost	417,799	398,561	59,249	59,249
Accumulated depreciation	(371, 595) 46,204	(355, 663) 42,898	(59,249)	(59,249)
Leased plant and equipment Capitalised leased assets Accumulated depreciation	49,262 (13, 125)	49,262 (10, 238)
	36,137	39,024
Total plant and equipment	82,341	81,922
Total written down value of property, plant and equipment	299.379	298,960	217,038	217.038

Movement in Property, Plant & Equipment

	LAND AND BUILDINGS	PLANT AND EQUIPMENT	LEASED PLANT AND	TOTAL
Opening balance Additions Depreciation expense	217,038	42.898 19,238 (15.932)	EQUIPMENT 39.024 (2.887)	298,960 19,238 (18, 819)
Closing balance	217,038	46.204	36.137	299.379

Capital gains tax will be accounted for if assets are disposed of for amounts in excess of the indexed cost price of the asset.

	CONSOLIDATED			RAND MINING N.L.
	2004	2003	2004	2003
	S	\$	S	S
11. PAYABLES
CURRENT
Trade creditors and accruals	45,632	737,004	۰
Other creditors – related party $(i)$	66,806	66,806
	112,438	803,810
NON CURRENT
Other creditors $-$ related party (ii)	339.848	153,933

(i) This relates to \$66,806 owed to Oretek Ltd for Rand contributions (20%) to the expenses incurred on the Oretek Ltd Joint Venture.

(ii) This relates to an amount owing to Tribune Resources NL.

		CONSOLIDATED		RAND MINING N.L.
	NOTE	2004	2003	2004	2003
		\$	\$	\$	S
12. INTEREST BEARING LIABILITIES
CURRENT - UNSECURED
Lease liabilities		12,638	12,238
		12,638	12,238
NON-CURRENT UNSECURED
Lease liability		20,842	26,083
		20,842	26,083

				CONSOLIDATED		CONSOLIDATED
			2004 S	2003 \$	2004 \$	2003 S
13.	PROVISIONS
	Rehabilitation		73.094	64,787
14.		CONTRIBUTED EQUITY
	38,260,813)	(a) Issued and paid up capital at 30 June 2004 38,260,813 fully paid ordinary shares (2003:	10,993,558	10.993.558	10.993,558	10,993.558
(b)		Movements in issued and paid up ordinary share capital of the company over the past year were as follows:
	DATE		NOTES	No. OF SHARES	ISSUE PRICE	S
	1/7/03	Opening balance at beginning of reporting period Transaction costs relating to		38,260,813		11,018,577
		share issues in prior year				(25,019)
				38,260,813		10.993,558

Shares issued and options exercised during the year:

• There were no issue of shares during the current financial year. $\bullet$
• There was no exercise of options during the current financial year. $\bullet$

At the end of the year there were the following options on issue:

• 2,300,000 unlisted options exercisable at 20 cents prior to 30 April 2005.

15. RESERVES

1,326,974 1,326,974 1,113,759 1,113,759

	2004	CONSOLIDATED 2003		RAND MINING N.L. 2003
	S	S	\$	S
16. JOINT VENTURES
Interest in joint venture operations The controlled entity, Rand Exploration has 12.25% interest in the East Kundana Joint Venture, whose principle activity is the exploration mining and sale of gold.
The economic entity share of assets employed in the joint venture is: CURRENT ASSETS
Cash	79,635	814,447
Receivables	42,678	167,652
Deferred waste		373,592
Inventories		412,014
Total current assets	122,313	1,767,705
NON-CURRENT ASSETS Exploration & Evaluation Mine development Technical Service Capitalised	606,794 267,385	27,182 454,812
	874,179	481,994
Property, plant and equipment Plant and equipment Accumulated depreciation	9,093	8,467
	9.093	8,467
Total non-current assets	883,272	490,461
Share of total assets of joint venture	1,005,585	2,258,166
Net interest in joint venture	890.688	1,535,861

17. SEGMENT INFORMATION

During the year ended 30 June 2004, the consolidated entity operated within the mineral exploration industry in Australia.

	CONSOLIDATED		RAND MINING N.L.
	2004 s	2003 \$	2004 \$	2003 S
18. AUDITORS' REMUNERATION
Amounts paid or payable to the auditors for: Auditing the financial statements Other services	31.567	27,155	۰
	31.567	27,155

19. RELATED PARTY AND SPECIFIED EXECUTIVE DISCLOSURES

Equity interests in related parties

Equity interests in associates and joint ventures Details of interests in joint ventures are disclosed in Note 16 to the financial statements.

Equity interests in other related parties

The consolidated entity holds 19.49% of the ordinary share capital of Tribune Resources N.L. a director-related party.

Specified directors' remuneration

The specified directors of Rand Mining N.L. during the year were: F. O'Kane (Managing Director) O. Demis (Executive) A. Billis (Executive) W. Jay (Non-executive) F Bozic (Non-executive) There were no specified executives

Director	Primary		Post Employment	Total S
	Salary & fees	Bonus	Superannuation
	\$	S	S
Executive directors
F O'Kane (resigned 28 July 2004)	53,563		3,471	57,034
O Demis	15,000			15,000
A Billis	48,000		2,970	50,970
Non-executive directors
W Jay	15,000			15,000
F Bozic

Specified directors' and specified executives' equity holdings

Fully paid ordinary shares of Rand Mining N.L

	Balance $\widehat{a}$ 1/7/03	Granted as remuneration	Received on exercise of options	Net other change	Balance@ 30/6/04
	No.	No.	No.	No.	No.
Specified directors
F O'Kane	5,647,957			498,040	6,145,997
O Demis	6.396,057			498,040	6,894,097
A Billis	11,111,957			403,040	11,514,997
W Jay	8,652,857			498.040	9,150,997
F Bozic	252,000				252.000
	32.060,828			1.897,160	33,957,988

No executive share options were issued to the directors during the financial year.

Transactions with other related parties Other related parties include director-related entities.

Other transactions involving other related parties

At 30 June 2004, the consolidated entity owned 9,350,160 (2003: 7,325,800) ordinary shares in Tribune Resources N.L. Messrs Demis, O'Kane, Jay and Billis were all directors of Tribune Resources N.L. during the year.

As at 30 June 2004 Tribune Resources N.L. had loaned the consolidated entity \$339,848 (2003: \$153,933). The loan is interest free and has no fixed repayment date.

Mr Billis was a director of STT Pty Ltd during the year. The Company paid STT Pty Ltd \$210,400 (2003: \$161,542) for office administration, tenement administration, fieldwork and accounting services. Those services are provided on a cost recovery basis only. They do not include any profit element.

Mr Billis was a director of Lake Grace Exploration Pty Ltd during the year. As at 30 June 2004 Lake Grace Exploration Pty Ltd owes the company \$10,500 (2003: \$10,500). This loan is at arms length with commercial terms. The Company has raised a provision against this loan of \$10,500 $(2003 : SN1).$

Oretek Limited is a company in which Mr Jay was a director during the year. At year end Oretek Limited owed the consolidated entity \$343,793 which has been fully provided for (2003: \$242,216). The loan is interest free and has no fixed repayment date.

Transactions With Related Parties In The Wholly Owned Group

Rand Mining N.L. has loaned Rand Exploration N.L. funds totalling \$Nil (2003: nil) during the year. At year end the loan amounting to \$10,267,092 (2003: \$10,267,092) was outstanding. A provision of \$2,092,881 (2003: \$2,092,881) has been made in respect of this loan. The loan is interest free and has no fixed repayment date.

20. EARNINGS PER SHARE

a) Basic earnings per share (cents per share)	$5.15$ cents	$3.19$ cents
-----------------------------------------------	--------------	--------------

The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

Earnings	1.969,851	1.219,892
Weighted average number of ordinary shares	38,260,813	38,260,813
b) Diluted earnings per share (cents per share)	5.01 cents	$3.09$ cents
Earnings	1.969,851	1,219,892
Weighted average number of ordinary shares	39,317,570	39,514,659

Weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted $c)$ earnings per share reconciles to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows:

		S
Weighted average number of ordinary shares used in the calculation of EPS	38,260,813	38,260,813
Shares deemed to be issued for no consideration in respect of:
Options	1,056.757	1.253.846

Weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted EPS 39,317,570 39,514,659

	CONSOLIDATED		RAND MINING N.L.
2004	2003	2004	2003
	S	5

21. STATEMENT OF CASH FLOWS

(a) RECONCILIATION OF CASH

For the purpose of the statement of cash flows, cash includes cash on hand, investments in money market instruments and gold bullion on hand net of outstanding bank overdrafts. Cash at the end of the financial year, as shown in the statement of cash flows, is reconciled to the related items in the balance sheet as follows:

Cash balance comprises:
- cash at bank	927,302	1,156,232
- gold bullion	3,817,453	1,426,168
	4,744,755	2,582,400
(b) RECONCILIATION OF THE OPERATING LOSS
FROM ORDINARY ACTIVITIES AFTER TAX TO
THE NET CASH FLOWS FROM OPERATIONS
Profit/(Loss) from ordinary activities after
tax	1,969,851	1,219,892	(183)
Depreciation/Amortisation	1,578,054	3,649,301
Diminution in value of investments	51,547	38,966
Tenement write-off	412.920	264,751
Doubtful debts	142,577	123,252
Changes in assets and liabilities:
Receivables	40.938	(42,759)	183
Trade creditors and accruals	(613.627)	62,112
Mine Development, Exploration and
evaluation costs	(613, 362)	(726,992)
Inventories	412,014	(298,967)
Provisions	8.307	61,504
Deferred waste	373.592	(1,534,985)
Net Cash Flows from/(used in) operating
activities	3,762,811	2,816,075

(c) A performance bond of \$97,511 which represents the company's 25% share is included in cash at bank.

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONT'D)
For the Financial Year Ended 30 June 2004

		CONSOLIDATED		RAND MINING N.L.
		2004	2003	2004	2003
		S	\$	\$	S
22.	CAPITAL AND LEASING COMMITMENTS
$\left( a\right)$	FINANCE LEASE COMMITMENTS
	Payable
	- not later than 1 year	11.436	11,436
	- later than I year but not later than 5 years	24.835	32,371
	Minimum lease payments	36.271	43,807
	Less: future finance charges	(2.791)	(5,486)	۰
	Total lease liability	33,480	38,321

(b) MINERAL TENEMENT LEASES

In order to maintain current rights of tenure to mining tenements, the consolidated entity will be required to outlay the following funds in respect of tenement lease rentals and to meet minimum expenditure requirements of the Western Australian Mines Department. These obligations are expected to be fulfilled in the normal course of operations.

Lease expenditure commitments:

$\overline{\phantom{a}}$	not later than one year	102.438	70.000
$\overline{\phantom{a}}$	later than one year and not later than
	two years	102.438	70.000
$\overline{\phantom{a}}$	later than two years and not later than
	five years	307.314	78.000
	later than five years		70,000

23. CONTINGENT LIABILITIES

The Company is currently defending an action pursuant to a Writ of Summons lodged with the local court. The Plaintiff is seeking payment for accounting services rendered. The Company has lodged a defence and counter claim. The amount in dispute is \$8,404. No provision for loss has been recorded in the financial statements in relation to this action.

24. SUBSEQUENT EVENTS

During July 2004 the development of the Raleigh Underground mine was approved after successful negotiations with joint venture partner Placer Dome Asia Pacific concluded and funding was secured from the ANZ Investment Bank.

Other than noted above there have been no subsequent events since balance date which would have had a significant effect of the company's financial position.

25. FINANCIAL INSTRUMENTS

(a) Accounting Policies

The consolidated entity's accounting policies, including the terms and conditions of each class of financial liability and equity instrument, both recognised and unrecognised at the balance sheet date, are as follows:

RECOGNISED FINANCIAL	BALANCE	ACCOUNTING POLICIES	TERMS AND CONDITIONS
INSTRUMENTS	SHEET NOTE
(i) Financial Assets
Cash at bank	23	Cash is carried at nominal amount.	Short-term deposits have an average maturity of I month and an effective interest rate of 4.10% (2003: 3.90%).
Receivables - other	6	Receivables - other are carried at nominal amounts due less any provision for doubtful debts. A provision for doubtful debts is recognised when collection of the full nominal amount is no longer probable.	Credit terms vary in accordance with the terms and conditions agreed upon with each party
Listed shares	$\tau$	Listed shares are carried at lower of cost and net realisable value. Dividend income is recognised when the dividends are declared by the investee.
(ii) Financial Liabilities
Payables	$\blacksquare$	Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the consolidated entity	Trade liabilities are normally settled on 30 day terms.
Lease liability	12	Assets purchased under finance leases are capitalised. An asset and a liability equal to the present value of the minimum payments are recorded at the inception of the agreement. Liabilities are reduced by repayments of principal. The interest components of the payments are expensed.	Interest rate of 8.25%
(iii) Equity
Ordinary shares	4	Ordinary share capital is recognised at the fair value of the consideration received by the company.	Details of shares issued and the terms and conditions of options outstanding over ordinary shares at balance date are set out in note 14.

25. FINANCIAL INSTRUMENTS (CONT)

(b) Interest Rate Risk

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

			Fixed Interest Maturing					Total Carrying
		Weighted Average	in					Amount as per the
	Effective Interest		I Year or Less		Non Interest Bearing		Balance Sheet
	2004	2003	2004	2003	2004	2003	2004	2003
Financial Assets
Cash at bank	4.10%	3.90%	927,302	1,156,232			927,302	1,156,232
Gold bullion				ä,	3,817,453	1,426,168	3,817,453	1,426,168
Other debtors			٠	à,	67,439	1,233,503	67,439	1,233,503
Investments			٠		5,238,267	3,047,948	5,238,267	3,047,948
Total Financial
Assets			927,302	1,156,232	9,123,159	5,707,619	10,050,461	6,863,851
Financial Liabilities
Trade creditors			$\tilde{\phantom{a}}$		45,632	118,747	45,632	118,747
Lease Liabilities	8.25%	8.25%	33,480	38,321			33,480	38,321
Total Financial
Liabilities			33,480	38,321	45,632	118,747	79,112	157,068
Net Financial
Assets/(Liabilities)			893,822	1,117,911	9,077,527	5,588,872	9,971,349	6,708,783

(c) Credit Risk

The maximum exposure to credit risk, excluding the value of any collateral or other security which has been recognised on the balance sheet, is the carrying amount, net of any provisions for doubtful debts.

The consolidated entity does not have any material risk exposure to any single debtor or group of debtors under financial instruments entered into by it.

(d) Net Fair Values

Methods and assumptions used in determining net fair value.

Assets and liabilities net fair value approximates their carrying value except for listed investments. (Refer Note 7 for market value). No financial assets and financial liabilities are readily traded on organised markets in standard form, other than listed investments. The consolidated entity has no financial assets where the carrying amount materially exceeds net fair values at balance date.

25. FINANCIAL INSTRUMENTS (CONT)

(e) Unrecognised Financial Instruments

Forward Exchange Contracts

The consolidated entity enters into forward exchange contracts to sell specified ounces of gold in the future at a stipulated price. The objective of entering the forward exchange contracts is to protect the economic entity against unfavourable price movements for both the contracted and anticipated future sales undertaken in the gold market.

At balance date, there were no outstanding forward exchange contracts.

26. INTERNATIONAL FINANCIAL REPORTING STANDARDS

The Australian Accounting Standards Board (AASB) is adopting the International Financial Reporting Standards (IFRS) for application to reporting periods beginning on or after 1 January 2005.

This financial report has been prepared in accordance with Australian accounting standards and other financial reporting requirements (Australian GAAP). The differences between Australian GAAP and IFRS identified to date as potentially having a significant effect on the Company's financial performance and financial position are summarised below. The summary should not be taken as an exhaustive list of all the differences between Australian GAAP and IFRS. No attempt has been made to identify all disclosure, presentation or classification differences that would affect the manner in which transactions or events are presented.

The Company has not quantified the effects of the differences discussed below. Accordingly, there can be no assurances that the financial performance and financial position as disclosed in this financial report would not be significantly different if determined in accordance with IFRS.

The key potential implications of the conversion to IFRS on the entity are as follows:

a) First-time adoption of IFRS

On first-time adoption of A-IFRS, the company will be required to restate its comparative balance sheet such that the comparative balances presented comply with the requirements specified in the A-IFRS. That is, the balances that will be presented in the financial report for the year ended 30 June 2005 may not be the balances that will be presented as comparative numbers in the financial report for the following year, as a result of the requirement to retrospectively apply the A-IFRS. In addition, certain assets and liabilities may not qualify for recognition under A-IFRS, and will need to be derecognised. As any adjustments on firsttime adoption are to be made against opening retained earnings, the amount of retained earnings at 30 June 2004 presented in the 2005 financial report and the 2006 financial report available to be paid out as dividends may differ significantly.

Various voluntary and mandatory exemptions are available to the company on first-time adoption, which will not be available on an ongoing basis. The exemptions provide relief from retrospectively accounting for certain balances, instruments and transactions in accordance with A-IFRS, and includes relief from having to restate past business combinations, expense share-based payments granted before 7 November 2002, and the identification of a 'deemed cost' for property, plant and equipment.

The impact on Rand Mining N.L. of the changes in accounting policies on first-time adoption of A-IFRS will be affected by the choices made. The company is evaluating the effect of the options available on firsttime adoption in order to determine the best possible outcome for the company.

b) Income tax

The company currently recognises deferred taxes by accounting for the differences between accounting profits and taxable income, which give rise to 'permanent' and 'timing' differences. Under A-IFRS, deferred taxes are measured by reference to the 'temporary differences' determined as the difference between the carrying amount and the tax base of assets and liabilities recognised in the balance sheet.

Adjustments to the recognised amounts of deferred taxes will also result as a consequence of adjustments to the carrying amounts of assets and liabilities resulting from the adoption of other A-IFRS. The likely impact of these changes on deferred tax balances has not currently been determined.

c) Property, plant and equipment.

On transition to A-IFRS, the company has several options in the determination of the cost of each tangible asset, and can also elect to use the cost or fair value basis for the measurement of each class of property, plant and equipment after transition. At the date of this report, the company has not decided which options and measurement basis will be adopted and the likely impacts therefore cannot be determined.

d) Provision for restoration

A-IFRS specifically requires the capitalisation of costs of dismantling and removing an asset and restoring the site on which the asset was created when an asset is initially recognised. The company currently accrues through profit and loss for the cost of dismantling and restoration over the life of the asset. Adjustments may be required to the liability recognised where the amount accrued and the date of transition under AGAAP differs from that required under A-IFRS. The company is also still determining the adjustments to the carrying amounts of assets that may result from these requirements.

e) Correction of errors

An error made in a prior reporting period is presently corrected in the reporting period in which the error is discovered by recognising the effect of the error in the current financial statements. In future financial periods, any material prior period errors are to be accounted for retrospectively, i.e. by adjusting the opening balance of retained earnings of the comparative period. Accordingly, the identification of a material prior period error will no longer give rise to volatility in the current period income statement.

The above should not be regarded as a complete list of changes in accounting policies that will result from the transition to IFRS, as not all standards have yet been analysed and some decisions have not yet been made where choices of accounting policies are available. For these reasons it is not yet possible to quantify the impact of the transition to IFRS on the Company's financial position and reported results.

The Company is currently addressing the issues and effects of the impact of IFRS and will endeavour to have in place all changes in reporting requirements to fully meet the new standards by 31 December 2004.

The directors of the company declare that:

• (a) the financial statements and notes of the company and of the consolidated entity are in accordance with the Corporations Act 2001, including:
• $(i)$ giving a true and fair view of the company's and consolidated entity's financial position as at 30 June 2004 and of their performance for the year ended on that date; and
• (ii) complying with Accounting Standards and Corporations Regulations 2001; and
• (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

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

On behalf of the Board

G Sklenka DIRECTOI

DATED at PERTH this 30^th day of September 2004

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF RAND MINING NL

SCOPE

The financial report and directors' responsibility.

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the financial statements, and the directors' declaration for Rand Mining NL (the company) and the consolidated entity, for the year ended 30 June 2004. The consolidated entity comprises both the company and the entity it controlled during that year.

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

AUDIT APPROACH

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

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

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

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

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

Page 41

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INDEPENDENCE

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

AUDIT OPINION

In our opinion, the financial report of Rand Mining NL is in accordance with:

• the Corporations Act 2001, including: a.
• giving a true and fair view of the company's and consolidated entity's i. financial position as at 30 June 2004 and of their performance for the vear ended on that date; and
• ii. complying with Accounting Standards in Australia and the Corporations Regulations 2001; and
• ь. other mandatory professional reporting requirements in Australia.

Hay Chadule

HALL CHADWICK CHARTERED ACCOUNTANTS

Dated at Perth this 30 day of September 2004.

MAURICE L ANGHIE PARTNER