Red Mountain Mining Ltd ACN 119 568 106

Annual Report 30 June 2008

Red Mountain Mining Ltd ACN 119 568 106

Contents	Page
Corporate Directory
Directors' Report	$\overline{2}$
Auditors' Independence Declaration	8
Financial Report	9
Directors' Declaration	32
Independent Audit Report to the Members	33

Red Mountain Mining Ltd ACN 119 568 106

Corporate Directory

Directors M B Wolley Chairman

N F Warburton

B Zhou

K B Rowe

Secretary D J Kelly

Auditor Butler Settineri (Audit) Pty Ltd Unit 16, First Floor Spectrum Offices 100 Railway Road Subiaco WA 6008

Bankers National Australia Bank 1232 Hay St West Perth WA 6005

Principal registered office in Australia Unit 2 2 Richardson Street West Perth WA 6005

$,$ I

Directors' Report

Your directors present their report on the Consolidated Entity ("Group") consisting of Red Mountain Mining Ltd ("RMM" or "Company") and the entities it controlled at the end of, or during, the financial year ended 30 June 2008.

Directors

The following persons were directors of Red Mountain Mining Ltd for the full financial year and up to the date of this report, unless otherwise stated:

MB Wolley Non-executive chairman (appointed 4 April 2011) N F Warburton Non-executive director B Zhou Non-executive director K B Rowe Executive director B Harris Managing director (appointed 9 January 2008, resigned 12 April 2008)

Principal activities

During the financial year the principal continuing activities of the consolidated entity consisted of sourcing and evaluating suitable exploration and operating mining properties for prospective purchase in China and establishing an experienced exploration management team.

Review of operations

A summary of consolidated revenues and results is set out below:

	2008S	2007S
Revenue	44,878	34,081
Loss before income tax expenseIncome tax expense	(1,537,928)	(73,216)
Loss attributable to members of Red Mountain Mining Ltd	(1,537,928)	(73,216)

Financial Position

During the financial year the Group had a net increase in contributed equity of $50,000 (from $1,388,635 to $1,438,635) as a result of a placement of 275,000 ordinary shares at 18 cents each.

At the end of the financial year the Group had net cash balances of $372,878 (2007: $1,338,004) and net liabilities of $4,402 (2007: $1,315,419 net assets).

Total liabilities amounted to $383,676 (2007: $29,981) being trade and other creditors of $83,676 and borrowings of $300,000.

Significant changes in the state of affairs

During the financial year the Company entered into an agreement with the Lingbao Xuanrui Mineral Resources Company Limited ("Xuanrui") whereby the Group agreed to purchase a 58% interest in the Kama, Heba and Qiaotou-Shari exploration licences. Total consideration under the agreement is US$5.7 million to be made in staged payments. Xuanrui, on behalf of the Group, is attempting to procure the remaining 42% equity of Kama, Heba and Qiaotou-Shari exploration licences by transfer of the licenses from the 3rd Brigade of Gansu BGMR. During the year US$800,000 was paid as a deposit option fee against the purchase price.

Other than those matters shown above, no significant changes in the state of affairs of the consolidated entity occurred during the financial year.

Annual Report - 30 June 2008

Directors' Report

Matters subsequent to the end of the financial year

On 20 October 2008 an amount of $200,000 advanced to the Company by a director, has been converted to equity at the price of 10 cents per share. A total of 2,000,000 ordinary shares were issued in lieu of this conversion.

On 20 October 2008 250,000 shares were issued to seed capitalists at a price of 10 cents per share, raising a total of $25,000.

On 22 August 2009 500,000 ordinary shares at a deemed price of 10 cents per share were issued as a share-based payment for services rendered to the company.

On 14 September 2009 the Company entered into an agreement with Terrain Capital Limited ("Terrain") whereby Terrain undertook to provide corporate advice and support in relation to capital raising activities to the Group. As part of this contract 3,000,000 options with a strike price of 10 cents and an expiry term of three years were advanced to Terrain and their nominated entities as payment in lieu of these services.

On 24 December 2009 the Company issued 750,000 ordinary shares to sophisticated investors at 10 cents per share to raise working capital.

On 14 January 2010 the Company issued 300,000 ordinary shares to sophisticated investors at 10 cents per share to increase working capital.

On 10 March 2010 the Company issued 1,700,000 ordinary shares to sophisticated investors at 10 cents per share to increase working capital.

On 15 November 2010 the Company issued 6,000,000 ordinary shares to sophisticated investors at 10 cents per share to increase working capital.

On 4 March 2011 the Company restructured its share capital and options on issue with a consolidation whereby share and option holders received 1 new share or option for every 1.6 share or option held before consolidation. As part of this consolidation process it was resolved to convert certain options as described into ordinary shares.

On 5 March 2011 the Company issued 9,375,000 ordinary shares at 16 cents per share to sophisticated investors to increase working capital.

On 31 March 2011 the Company issued 17,728,125 options to participating shareholders at a price of 1 cent per option to increase working capital. These options carry a strike price of 20 cents per ordinary share and have a three and a half year term.

In November 2009 Red Mountain Mining Ltd began negotiations with its Chinese partners Lingbao Xuanrui Mineral Resources Company Limited to acquire a controlling interest in the Zuongqu Gold Project.

Geological Solutions Asia, RMM's independent geologist, completed initial due diligence on the Zhongqu Project in December 2009 and concluded that the mineralisation style has the potential to produce significant gold deposits. A diamond drilling programme is currently scheduled for 2011 depending on funding and availability of equipment.

On 1 May 2010 Red Mountain Mining (Hong Kong) Holdings Limited ("RMMHK") secured an option ("Zhongqu Option") to acquire a 51% controlling interest of the Chinese Zhongqu Gold Project from its vendor, Lingbao Xuanrui Mineral Resources Company Limited. Further due diligence conducted by Geological Solutions Asia during May 2010 confirmed high probability of depth extensions to the existing high grade underground gold resource and possible along strike extensions.

Annual Report - 30 June 2008

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Directors' Report

Matters subsequent to the end of the financial year (continued)

The Zhongqu Option gives RMM two years to elect to acquire 51% of an operating underground gold mine, 400,000 tpa treatment facility and infrastructure in the Qinling Mountain Fold of Gansu Province in western China. The Zhongqu Gold Project has been operating profitably since 2007 at a production rate of approximately 30,000 oz of gold per annum. The Zhongqu Gold Project has a non JORC compliant reported Chinese categorisation resource of gold. The company is confident about the project's potential and gold endowment.

Also on 1 May 2010 RMMHK signed a revised version of the option agreement for the purchase of 90% interest in the Deibu Gold tenements. The revised version supersedes the previous agreement and better reflects the current undertakings of both parties.

During the first quarter of 2011 the Company entered into an initial public offering which is aimed to obtain official listing on the Australian Stock Exchange to enhance the ability of the company to raise a total of $8,000,000 in capital in order to advance the transaction with Xuanrui as described above, to further enhance the Group's ability to raise funds in future years to advance its strategic and operational plan, and to increase the tradability of the equity instruments of the Company.

No other matter or circumstances have arisen since 30 June 2008 that has significantly affected, or may significantly affect:

(a) the Consolidated Entity's operations in future financial years, or
(b) the results of those operations in future financial years, or
(c) the Consolidated Entity's state of affairs in future financial years.

Likely developments and expected results of operations

Further information on likely developments in the operations of the Group and the expected results of operations have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the Consolidated Entity.

Information on directors

Michael Wolley Non-Executive Chairman, BE, MM, MAICD

Michael Wolley was appointed as Non-Executive Chairman for Red Mountain Mining Ltd in April 2011.

Michael has a depth of experience in the resources and industrial sectors in both Australia and internationally. Michael was recently Managing Director of a junior gold development business, Golden Iron Resources, and prior to that was Chief Operating Officer for Lynas Corporation, an ASX 100 company that is a vertically integrated mining and minerals business with mining and processing facilities in Western Australia and downstream processing in Malaysia. Prior to Lynas Corporation, Michael held senior executive roles with industrial and construction services businesses across Asia Pacific including the position of Managing Director Asia Pacific for a refrigeration and climate control business and as President BlueScope Steel China. Prior to joining BlueScope Steel Michael was General Manger Operations for Dexion, a business servicing the logistics industry across Asia Pacific. He began his career with Mobil Oil Australia and over a 15 year period held senior roles in engineering, production and planning across Australia and New Zealand.

Michael holds a first class honours degree in Chemical and Materials Engineering from Auckland University and a Masters of Management from Macquarie Graduate School of Management. Michael is a Member of the Australian Institute of Company Directors.

Annual Report - 30 June 2008

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Red Mountain Mining Ltd and its controlled entities Directors' Report

Information on directors (continued)

Executive Director, B App Sci (Pt), Grad Dip (Mt), MAICD Keith Rowe

Keith Rowe is a Consultant to mining operations in the development, delivery and management of occupational health and safety systems, and prior to accepting the Executive role at Red Mountain Mining Ltd was Senior Safety Advisor to Ausdrill Ltd. He has over 20 years' experience in the mining industry and has delivered safety programmes at over 40 mine sites throughout Australia.

Keith's involvement with China began with a university study tour in 1977. He has broad experience as a business manager in a variety of fields and in recent years he has developed business interests in China. He brings valuable experience to the Board in dealing with Chinese affairs and mining safety systems.

Keith is a founding Director of the Finding Sydney Foundation which managed the successful search for the HMAS Sydney II which was sunk off the Western Australian Coast in 1941 and located in 2008, and received the Gold Swan Award at the 2010 Western Australia Citizen of the Year Awards.

Keith qualified as a physiotherapist at Curtin University and has a B.App.Sci (PT) and Grad.Dip (Manip. Th.) and is a Member of the Australian Institute of Company Directors.

Neil Warburton Non-Executive Director, MAusIMM, FAICD

Neil Warburton is Chief Executive Officer of Barminco, Australia's largest domestic underground mining contractor with operations in Australia and Africa. Barminco mines (under contract) over 800,000 oz of gold per annum in Australia alone. Neil has successfully guided and grown the company with annual revenues having more than doubled during his tenure. Before joining Barminco he was Managing Director of Coolgardie Gold NL. Neil is also a non executive director of Australian Mines Limited, a company publicly listed on the ASX. Neil has

over 30 years' experience in gold and base metal mining. His experience includes 7 years with Western Mining Corporation as a Senior Mining Engineer and Mine Manager at Kambalda, Western Australia.

Neil is a graduate from the Western Australian School of Mines and is a Fellow of the Australian Institute of Company Directors.

Bo Zhou Non Executive Director, BSc, PhD, MBA, MAusIMM

Bo Zhou is currently Managing Director of Qzcorp Pty Ltd, a resource consultancy business, and is General Manager China Operations for Griffin Mining Ltd, a UK listed company with operations in China.

Over the last 10 years Bo has worked on various resource projects covering many projects in China in both senior geological and management banking roles. Bo previously worked as Managing Director of ASX listed Sinovus Mining Ltd and as General Manager Operations for Guangxi Golden Tiger Mining Joint Venture, a Sino-Australian Joint Venture gold company focused in Guangxi, China. He has also worked as Senior Geologist for Silk Road Resources and as an exploration geologist and programme manager for Turnbull and Partners (Mr Malcolm Turnbull's mining ventures in China in the 1990s).

Bo holds a Bachelor of Science degree in geology from the Peking University and a PhD in exploration geology from the University of Sydney. He also has an MBA from the Australian Graduate School of Management. He is a member of the Australian Institute of Mining and Metallurgy.

Annual Report - 30 June 2008

Directors' Report

Desmond Kelly Company Secretary, B Comm, CPA, MAICD

Desmond Kelly is a commerce graduate from the University of Western Australia and is a member of CPA Australia and the Australian Institute of Company Directors. Desmond has over 35 years' experience in the mining industry and accounting profession. He has been an accountant in public practice and currently is consulting to various companies as a company secretary and management consultant. He has held the positions of Director, Managing Director and Company Secretary with a number of public listed mining and industrial companies..

Directors' interests in shares and options

As at the date of this report the interests of the Directors in the shares and options of the Company were:

	Ordinary Shares			Options over Ordinary Shares
	Direct	Indirect	Direct	Indirect
MB Wolley	$\qquad \qquad \blacksquare$		$,$	$\overline{\phantom{0}}$
N F Warburton		6,290,625		3,774,375
B Zhou	625,000	1,793,750	375,000	1,076,250
K B Rowe	312,500	5,040,625	187,500	3,024,375

Directors' remuneration

Directors' remuneration is disclosed in note 16 to the financial report and do not need further comment in the Directors' report.

Meetings of directors

The number of meetings of the Company's Board of Directors held during the financial period ended 30 June 2008 and the number of meetings attended by each director were as follows:

	Held	Attended

N F Warburton
B Zhou
K B Rowe
B Harris

Held - denoted the number of meetings held during the time the director held office or was a member of the committee during the year.

Insurance of officers

At present the Group carries Directors and Officers liability insurance, with a limit of $10,000,000. This policy came into effect as of 2 May 2011.

Share options

There are currently 19,446,558 unlisted options on issue with a strike price of 20 cents per share of which 17,728,125 options have an expiry date of 30 June 2014 and 1,718,433 have an expiry date of 12 September 2013.

Dividends

No dividends were paid to members during the financial period and the directors do not recommend the payment of a dividend.

Annual Report - 30 June 2008

Directors' Report

Proceedings on behalf of the Company

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

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

Environmental regulations

The operations of the Group are not subject to any particular and significant environmental regulations under a law of the commonwealth or state. There have been no known significant breaches of any other environmental requirement applicable to the scheme.

Non-audit services

During the financial year the Group did not procure any non-audit services.

Auditors' Independence Declaration

A copy of the auditors' independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 8.

This report is made in accordance with a resolution of the directors.

KBROOK

Keith Rowe Director Perth, Western Australia 28 June 2011

Annual Report - 30 June 2008

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AUDITOR'S INDEPENDENCE DECLARATION

As lead auditor for the audit of Red Mountain Mining Limited for the year ended 30 June 2008, I declare that, to the best of my knowledge and belief, there have been:

a) No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b) No contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Red Mountain Mining Limited and the entities it controlled during the year.

BUTLER SETTINERI (AUDIT) PTY LTD

Lucy le

LUCY P GARDNER Director

Perth 28 June 2011 Date:

Chartered

Unit 16, First Floor Spectrum Offices 100 Railway Road (Cnr Hay Street)Subiaco WA 6008

Locked Bag 18 Subiaco WA 6904 Australia

Phone: (08) 6389 5222 (08) 6389 5255 Fax: Email: [email protected]

Directors:

Colin Butler FCA Paul Chabrel FCA

Lucy Gardner CA

Butler Settineri (Audit) Pty Ltd

A.C.N. 112 942 373 Registered Company Auditor Number 289109

Liability limited by a scheme approved under Professional Standards Legislation

www.butlersettineri.com.au

Red Mountain Mining Ltd Financial report $-30$ June 2008

Page

Financial report
Income Statements	10
Balance Sheets	11
Statements of Changes in Equity	12
Cash Flow Statements	13
Notes to the financial statements	14
Directors' declaration	32
Independent audit report to the members	33

This financial report covers both Red Mountain Mining Ltd as an individual entity and the Consolidated Entity consisting of Red Mountain Mining Ltd and its controlled entities.

This financial report is presented in Australian dollars.

Red Mountain Mining Ltd is a Company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Red Mountain Mining Ltd Unit 2, 2 Richardson Street West Perth WA 6005

A description of the nature of the Consolidated Entity's operations and its principal activities is included in the Directors' Report, which is not part of this Financial Report.

The financial report was authorised for issue by the directors on 28 June 2011. The Company has the power to amend and reissue the financial report.

Annual Report - 30 June 2008

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Income Statements

For the year ended 30 June 2008

			Consolidated		Parent
		2008	2007	2008	2007
	Notes	$	$	S	$
Revenue	5	44,878	34,081	43,257	32,622
Professional fees		(94, 288)	(12,650)	(92, 678)	(12,650)
Consultancy costs		(217, 033)	(44, 382)	(217, 033)	(44, 382)
Legal fees		(27, 935)	(27, 337)	(1,250)
Travel costs		(83, 528)	(19, 361)	(52, 464)	(19, 361)
Employee costs		(51, 633)
Investment option costs	15	(974, 246)
Provision for non-recovery of intercompanyloan	9			(1, 118, 745)
Net foreign exchange losses		(114, 596)
Other expenses from ordinary activities		(19, 547)	(3, 567)	(1,757)	(3,183)
Loss before income tax		(1,537,928)	(73,216)	(1,440,670)	(46, 954)
Income tax expense	6
Net loss for the year		(1,537,928)	(73, 216)	(1,440,670)	(46, 954)
Loss attributable to members of RedMountain Mining Ltd		(1,537,928)	(73, 216)	(1,440,670)	(46, 954)
		Cents	Cents
Basic and diluted loss per share	24	(4.32)	(0.48)

The above Income Statements should be read in conjunction with the accompanying notes.

Annual Report - 30 June 2008

$10,$

Balance Sheets As at 30 June 2008

			Consolidated		Parent
		2008	2007	2008	2007
	Notes	$	$	$	$
Current assets
Cash and cash equivalents	7	372,878	1,342,971	323,429	1,337,622
Trade and other receivables	8	6,396	2,429	6,396	2,429
Total current assets		379,274	1,345,400	329,825	1,340,051
Non-current assets
Trade and other receivables	$\overline{9}$				8,745
Other financial assets	10			17	17
Total non-current assets				17	8,762
Total assets		379,274	1,345,400	329,842	1,348,813
Current liabilities
Trade and other payables	11	83,676	25,014	78,831	2,165
Borrowings	12	300,000	4,967	300,000	4,967
Total current liabilities		383,676	29,981	378,831	7,132
Total liabilities		383,676	29,981	378,831	7,132
Net (liabilities)/assets		(4, 402)	1,315,419	(48,989)	1,341,681
Equity
Contributed equity	13	1,438,635	1,388,635	1,438,635	1,388,635
Reserves		168,107
Accumulated losses	14	(1,611,144)	(73, 216)	(1, 487, 624)	(46, 954)
Total (deficiency)/equity		(4, 402)	1,315,419	(48,989)	1,341,681

The above Balance Sheets should be read in conjunction with the accompanying notes.

Annual Report - 30 June 2008

$11,$

Statements of Changes in EquityFor the financial year ended 30 June 2008

			Foreigncurrency
	Share	Accumulated	translation
	Capital	Loss	reserve	Total
	$	$	$	$\mathbf S$
Consolidated GroupBalance at 1 July 2006
Net loss for the year		(73,216)		(73, 216)
Transactions with owners in their capacity asowners:
Contributions of equity	1,388,635			1,388,635
Balance at 30 June 2007	1,388,635	(73, 216)		1,315,419
Net loss for the year		(1,537,928)		(1,537,928)
Exchange differences on translation of foreigncontrolled entities			168,107	168,107
Transactions with owners in their capacity asowners:
Contribution of equity	50,000			50,000
Balance at 30 June 2008	1,438,635	(1,611,144)	168,107	(4, 402)
Parent EntityBalance at 1 July 2006
Net loss for the year		(46,954)		(46,954)
Transactions with owners in their capacity asowners:
Contributions of equity	1,388,635			1,388,635
Balance at 30 June 2007	1,388,635	(46, 954)		1,341,681
Net loss for the year		(1,440,670)		(1,440,670)
Exchange differences on translation of foreigncontrolled entities
Transactions with owners in their capacity asowners:
Contribution of equity	50,000			50,000
Balance at 30 June 2008	1,438,635	(1,487,624)		(48,989)

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

Annual Report - 30 June 2008

Cash Flow Statements

For the financial year ended 30 June 2008

			Consolidated		Parent
		2008	2007	2008	2007
	Notes	$	$	$	$
Cash flows from operating activities
Payments to suppliers (inclusive of goods
and services tax)		(432, 937)	(83, 859)	(277, 406)	(79, 840)
Interest received		44,878	32,644	43,257	32,622
Net cash outflow from operating
activities	23	(388, 059)	(51,215)	(234, 149)	(47,218)
Cash flows from investing activities
Loan to controlled entity				(1, 118, 745)	(8,745)
Payments of investment option fees		(974, 246)
Payments for equity investments					(17)
Net cash outflow from investing
activities		(974, 246)	$\overline{\phantom{0}}$	(1, 118, 745)	(8, 762)
Cash flows from financing activities
Proceeds from borrowings		300,000		300,000
Proceeds from issues of securities		50,000	1,451,000	50,000	1,451,000
Securities issue costs		(6, 332)	(62, 365)	(6, 332)	(62, 365)
Net cash inflow from financing
activities		343,668	1,388,635	343,668	1,388,635
Net (decrease)/increase in cash held		(1,018,637)	1,337,420	(1,009,226)	1,332,655
Cash at the beginning of the year		1,338,004		1,332,655
Net foreign exchange gains/(losses)		53,511	584
Cash at the end of the year	23	372,878	1,338,004	323,429	1,332,655

The above Cash Flow Statements should be read in conjunction with the accompanying notes.

Annual Report - 30 June 2008

Note 1. Summary of Significant Accounting Policies

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report contains separate financial statements for Red Mountain Mining Ltd as an individual entity and the Consolidated Entity consisting of Red Mountain Mining Ltd and its subsidiary.

Basis of preparation of the financial report $(a)$

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

Historical cost convention

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

Critical accounting estimates

The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 3.

(b) Principles of consolidation

Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Red Mountain Mining Ltd ("Company" or "parent entity") as at 30 June 2008 and the results of all subsidiaries for the financial period then ended. Red Mountain Mining Ltd and its subsidiary 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.

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.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides 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.

$(c)$ Segment reporting

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment and is subject to risks and returns that are different from those of segments operating in other economic environments.

Annual Report - 30 June 2008

Note 1. Summary of Significant Accounting Policies (continued)

(d) Revenue recognition

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

Interest income

Interest revenue is recognised on a time proportionate basis using the effective interest method.

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

$(e)$ Income tax

The income tax expense or revenue for the period is the tax payable on the current period's taxable income based on the income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

$(f)$ Cash and cash equivalents

Cash and cash equivalents includes 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 and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

$\left( \varrho \right)$ Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful debts. Trade receivables are due for settlement no more than 120 days from the date of recognition.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement.

Annual Report - 30 June 2008

Note 1. Summary of Significant Accounting Policies (continued)

$(h)$ Investments and other financial assets

The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at each reporting date.

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables are included in receivables in the balance sheet.

(ii) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group's management has the positive intention and ability to hold to maturity.

Recognition and derecognition

Regular purchases and sales of financial assets are recognised on trade-date - the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

$(i)$ Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are carried at amortised cost, using the effective interest method.

Contributed equity $(i)$

Ordinary shares are classified as equity.

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

$(k)$ Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted for bonus elements in ordinary shares issued during the year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

Annual Report - 30 June 2008

Note 1. Summary of Significant Accounting Policies (continued)

$(1)$ Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the Australian Taxation Office. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the Australian Taxation Office is included with other receivables or payables in the balance sheet.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the Australian Taxation Office, are presented as operating cash flow.

(m) Foreign exchange

Both the functional and the presentation currency of Red Mountain Mining Limited is the Australian Dollar.

Transactions in foreign currencies are initially recorded in the functional currency at the rate of exchange of the transaction date. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange at the balance sheet date. Resulting exchange differences are brought to account in determining the result for the period.

The functional currency of Red Mountain Mining (HK) Holdings Ltd is the Hong Kong Dollar. The functional currency of Red Mountain Mining Consulting (Shenyang) Co Ltd is the Chinese Yuan.

At the reporting date the assets and liabilities of the overseas subsidiary are translated into presentation currency of Red Mountain Mining Limited at the rate of exchange ruling at balance sheet date and the income statements are translated at the weighted average exchange rates for the period. Resulting exchange differences are brought to account in determining the result for the period.

Impairment of assets $(n)$

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation. They are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cashgenerating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

$\left( 0\right)$ Borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transactions costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

$(p)$ New accounting standards and interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2008 reporting periods. The Company's assessment of the impact of these new standards and interpretations is set out as follows:

Annual Report - 30 June 2008

	Note 1. Summary of Significant Accounting Policies (continued)
--	----------------------------------------------------------------	--	--	--	--

Reference	Title	Summary	Applicationdate ofstandard*	Impact on Company financialreport	Applicationdate forCompany*
AASB 8	Operating Segments	This new standard will replace AASB114 Segment Reporting and adopts amanagement approach to segmentreporting.	1 January2009	Refer to AASB 2007-3 below.	1 July 2009
AASB 123(revised June2007)	Borrowing costs	AASB 123 previously permittedentities to choose between expensingall borrowing costs and capitalisingthose that were attributable to theacquisition, construction orproduction of a qualifying asset. Therevised version of AASB 23 requiresborrowing costs to be capitalised ifthey are directly attributable to theacquisition, construction orproduction of a qualifying asset.	1 January2009	Refer to AASB 2007-6 below.	1 July 2009
AASB 2007-3	Amendments toAustralian AccountingStandards arising fromAASB 8 [AASB 5,AASB, AASB 6.AASB 102, AASB107, AASB 119,AASB 127, AASB134, AASB 136,AASB 1023 & AASB10381	Amending standard issued as aconsequence of AASB 8 OperatingSegments.	1 January2009	AASB 8 is a disclosure standard sowill have no direct impact on theamounts included in the Group'sfinancial statements. However thenew standard may have an impacton the segment disclosures includedin the Group's financial report.	1 July 2009
AASB 2007-6	Amendments toAustralian AccountingStandards arising fromAASB 123 [AASB 1,AASB 101, AASB107, AASB 111,AASB 116 & AASB138 and Interpretations1 and 12]	Amending standard issued as aconsequence of AASB 123 (revised)Borrowing Costs.	1 January2009	As the Group does not currentlyconstruct or produce any qualifyingassets which are financed byborrowings the revised standard willhave no impact.	1 July 2009
AASB 101(revised) andAASB 2007-3	Presentation ofFinancial Statementsand consequentialamendments to otherAustralian AccountingStandards	Introduces a statement of comprehensiveincome. Other revisions include impacts onthe presentation of items in the statement ofchanges in equity, new presentationrequirements for restatements ofreclassifications of items in the financialstatements, changes in the presentationrequirements for dividends and changes tothe titles of the financial statements.	1 January2009	These amendments are only expected toimpact the presentation of the Group'sfinancial report and will not have a directimpact on the measurement andrecognition of the amounts disclosed inthe financial report. The Group has notdetermined at this stage whether topresent a single statement ofcomprehensive income or two separatestatements.	1 July 2009
AASB 2008-1	Amendments toAustralian AccountingStandard - ShareBased Payments:Vesting Conditionsand Cancellations	The amendments clarify the definitionof 'vesting conditions' introducing theterm 'non-vesting conditions' forconditions other than vestingconditions as specifically defined andprescribe the accounting treatment ofan award that is effectively cancelledbecause a non-vesting condition is notsatisfied.	1 January2009	The Group has share-based paymentarrangements that may be affectedby these amendments. However thegroup has not yet determined theextent of the impact, if any.	1 July 2009

Annual Report - 30 June 2008

$\overline{18}$

Note 1. Summary of Significant Accounting Policies (continued)

Reference	Title	Summary	Applicationdate ofstandard*	Impact on Company financialreport	Applicationdate forCompany*
AASB 3(revised)	BusinessCombinations	The revised standard introduces anumber of significant changes to theaccounting for business combinations.	1 July 2009	The Group has businesscombinations that may be affectedby these amendments. However thegroup has not yet determined theextent of the impact, if any.	1 July 2009
AASB 127(revised)	Consolidated andSeparate FinancialStatements	Under the revised standard, a changein the ownership interest of asubsidiary (that does not result in aloss of control) will be accounted foras an equity transaction.	1 July 2009	If the Group changes its ownershipinterest in existing subsidiaries inthe future, the change will beaccounted for as an equitytransaction. This will have noimpact on goodwill, nor will it givea rise to a gain or loss in theGroup's income statement.	1 July 2009
AASB 2008-3	Amendments toAustralian AccountingStandards arising fromAASB 3 and AASB127	Amending standard issued as aconsequence of revisions to AASB 3and AASB 127.	1 July 2009	No change to the accounting policy,therefore no impact.	1 July 2009
AmendmentstoInternationalFinancialReportingStandards	Cost of an Investmentin a Subsidiary, JointlyControlled Entity orAssociate	The main amendments of relevance toAustralian entities are those made inIAS 27 deleting the cost method' andrequiring all dividends from a jointlycontrolled entity, subsidiary, orassociate to be recognised in profit orloss in an entity's separate financialstatements (i.e., the parent companyaccounts). The distinction betweenpre and post acquisition profits is nolonger required. However thepayment of such dividends requiresthe entity to consider whether there isan indicator of impairment.AASB 127 has also been amended toeffectively allow the cost of aninvestment in a subsidiary, in limitedreorganizations, to be based on theprevious carrying amount of thesubsidiary (that is, share equity) ratherthan its fair value.	1 January2009	No change to the accounting policy,therefore no impact.	1 July 2009

Annual Report - 30 June 2008

$\overline{19}$

Note 1. Summary of Significant Accounting Policies (continued)

Reference	Title	Summary	Applicationdate ofstandard*	Impact on Company financialreport	Applicationdate forCompany*
Amendments toInternationalFinancialReportingStandards	Improvements toInternationalFinancial ReportingStandards	The improvements project is anannual project that provides amechanism for making non-urgent.but necessary amendments to IFRSs.The IASB has separated theamendments into two parts: Part Ideals with changes to IASB identifiedresulting in accounting changes; PartII deals with either terminology oreditorial amendments that the IASBbelieves will have minimal impact.	1 January2009 exceptforamendmentsto IFRS 5.which areeffectivefrom 1 July2009	The Group has not yet determinedthe extent of the impact of theamendments, if any	July 2009

Note 2. Financial risk management

The Group's activities expose it to a variety of financial risks; market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk.

The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group.

Risk management is carried out by the full Board of Directors. The Board identifies and evaluates financial risks in close co-operation with management and provides written principles for overall risk management.

(i) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash, prudent oversight of future funding requirements and maintaining ongoing contact to facilitators of further funding.

It is the Group's policy to review the Group's liquidity position including cash flow forecasts to determine the forecast liquidity position and maintain appropriate liquidity levels.

The remaining contractual maturities of the Group's and parent entity's financial liabilities are:

	Consolidated		Parent entity
	2008	2007	2008	2007

Three months or less	83,676	29,981	78,831	7,132
Greater than three months	300,000	$\overline{\phantom{a}}$	300,000	$\blacksquare$
	383,676	29,981	378,831	7,132

The Group funds its activities through capital raising in order to limit its liquidity risk.

(ii) Cash flow and fair value interest rate risk

As the Group's major assets are cash deposits held in fixed and variable interest rate deposits, the Consolidated Entity's income and operating cash flows are materially exposed to changes in market interest rates. The Consolidated Entity manages this risk by only investing in AAA rated institutions.

At balance date, the Group had the following exposure to Australian variable interest rate risk.

Annual Report - 30 June 2008

Note 2. Financial risk management (continued)

	Consolidated		Parent entity
	2008	2007	2008	2007

Financial assets
Cash and cash equivalents	372,878	1,342,971	323,429	1,337,622

The following sensitivity analysis is based on the interest rate risk exposure in existence at the balance sheet date. The 1% sensitivity is based on reasonably possible changes over a financial year, using the observed range of actual historical rates for the preceding five year period.

At 30 June 2008, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post-tax profit would have been affected as follows:

Judgments of reasonably possible movements:

	ConsolidatedHigher/(Lower)		Parent entityHigher/(Lower)
	2008S	2007	2008	2007


Post tax profit
$+1.0%$ (100 basis points)	3,729	13,430	3,234	13,376
$-1.0%$ (100 basis points)	(3,729)	(13, 430)	(3,234)	(13,376)

The Group deals with financial institutions that have a AA rating or better.

(iii) Market Risk

Price risk - The Group is not exposed to equity securities price risk as it holds no investments in securities classified on the balance sheet either as available-for-sale or at fair value through profit or loss. The Group is not exposed directly to commodity price risk.

(iv) Credit Risk

The Group's maximum exposures to credit risk at the reporting date in relation to each class of recognised financial asset is the carrying amount of those assets as indicated in the balance sheet.

The Group trades only with recognised, credit worthy third parties. The Group has no significant concentrations of credit risk.

(v) Currency risk

The Company's subsidiary is based in Hong Kong and its sustainability is dependent on the provision of cash from the parent entity. Cash funds in Hong Kong are held in Hong Kong dollars and US dollars thus the Company is exposed to diminution of cash balances through currency exchange risk.

The Group's subsidiary is based in China and its sustainability is dependent on the provision of cash from its parent entity. Cash funds in China are held in Chinese Yuan and US dollars thus the Group is exposed to diminution of cash balances through currency exchange risk.

Annual Report - 30 June 2008

Note 3. Critical accounting estimates and judgments

Estimates and judgments 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.

Critical accounting estimates and assumptions

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

Principles of going concern

The Consolidated Entity recorded a loss of $1,537,928 (2007: 73,216) for the year ended 30 June 2008 and had a net asset deficiency of $4,402 (2007: net asset surplus of $1,315,419). The directors reviewed the working capital requirements of the Group for a relevant period of two years from the date of the directors' report, and determined that subject to a successful initial public offering, listing and capital raising, the Group will be able to continue to pay its debts as and when they fall due.

Although the above facts indicate a material uncertainty in relation to the applicability of the going concern concept as it pertains to these financial statements, the directors are confident of the successful outcome of the capital raising activities and therefore the financial report has been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

Note 4. Segment information

Business segments $(a)$

The Consolidated Entity operates predominantly in one industry. Its principal activities are those of prospecting and mineral exploration.

$(b)$ Geographical segments - primary reporting

	Hong Kong &
	Australia	China	Eliminations	Consolidated
	2008	2008	2008	2008
	$	$	$	$
Revenue
Interest revenue	43,257	1,621	۰	44,878
Total revenue	43,257	1,621	-	44,878
Result
Segment result	(1,440,670)	(1,216,003)	1,118,745	(1,537,928)
Loss before income tax				(1,537,928)
Income tax expense
Loss after income tax				(1,537,928)
Assets
Segment assets	329,842	49,449	(17)	379,274
Liabilities
Segment liabilities	378,831	1,132,123	(1, 127, 278)	383,676
Annual Report - 30 June 2008			22

Note 4. Segment information (continued)

$(a)$ Geographical segments - primary reporting (continued)

	Australia2007$	Hong Kong2007$	Eliminations2007S	Consolidated2007$
Revenue
Interest revenue	32,622	22		32,644
Foreign exchange gains		1,437		1,437
Total revenue	32,622	1,459		34,081
ResultSegment result	(46, 954)	(26, 262)		(73,216)
Loss before income taxIncome tax expense				(73, 216)
Loss after income tax				(73, 216)
AssetsSegment assets	1,348,812	5,350	(8, 762)	1,345,400
LiabilitiesSegment liabilities	7,132	31,595	(8,746)	29,981

		Consolidated	Parent
	2008	2007	2008	2007
	$	$\mathbb{S}$	$	$\mathbb S$
Note 5. Revenue
Other revenue
Interest received	44,878	32,644	43,257	32,622
Net foreign exchange gains	$\qquad \qquad \blacksquare$	1,437
	44,878	34,081	43,257	32,622
Note 6. Income tax
(a) Income tax expense
Current tax
Deferred tax
	$\overline{\phantom{a}}$	-	$\overline{a}$

Annual Report - 30 June 2008

$\overline{23}$

Note 6. Income tax (continued)

(b) Numerical reconciliation of income tax expense to prima facie tax payable

		Consolidated	Parent
	2008	2007	2008	2007
	$	$	S	$
Loss from continuing operations before income taxexpense	(1, 537, 928)	(73, 216)	(1,440,670)	(46, 954)
Tax at the Australian tax rate of 30%	(461, 378)	(21, 965)	(432, 200)	(14,086)
Tax effect of amounts which are not deductible(taxable) in calculating taxable income:
Legal fees	375		375
Net foreign exchange losses		8,201
Capital raising expense	1,900		1,900
Overseas travel	15,739		15,739
Provision for non-recovery of intercompany loan			335,623
Consulting fees	65,110		65,110
Other	364,801
	(13, 453)	(13,764)	(13, 453)	(14,086)
Current year tax assets not recognised	13,453	13,764	13,453	14,086
Income tax expense

(c) The estimated potential deferred tax benefits not brought to account at 30%

Revenue losses	13,453	13,764	13,453	14,086

The potential future income tax benefit will only be obtained if:

the Company derives future assessable income of a nature and of an amount sufficient to enable the benefit to be $(i)$ realised;

the Company continues to comply with the conditions for deductibility imposed by law; and $(ii)$

$(iii)$ no changes in tax legislation adversely affect the Company in realising the benefit.

No deferred tax assets have been recognised due to the fact that it is not probable that future taxable profit will be available against which the unused tax losses can be utilised.

The franking account balance at year end was nil.

		Consolidated		Parent
	2008	2007	2008
	S	$	S	$
Note 7. Current assets – Cash assets
Cash at bank and on hand	372,878	1,342,971	323,429	1,337,622
Note 8. Current assets - Receivables
Other receivables	6,396	1,353	6,396	1,353
Deposits		1,076		1,076
	6,396	2,429	6,396	2,429
Annual Report - 30 June 2008			24

Notes to the financial statements For the year ended 30 June 2008

			Consolidated		rarent
		2008$	2007$	2008$	2007$

	Note 9. Non-current assets - Receivables
Loans to controlled entities				1,118,745	8,745
Less: Provision for non-recovery				(1, 118, 745)	8,745
	Note 10. Non-current-assets - Other financial assets
Shares in controlled entities - at cost (Note 21)				17	17
Less: Provision for non-recovery					$\overline{\phantom{a}}$
				17	17
Note 11. Current liabilities - Payables
Trade and other creditors		83,676	25,014	78,831	2,165
	Note 12. Current liabilities - Borrowings

Loan from related partyBank overdraft		300,000	4,967	300,000	4,967
		300,000	4,967	300,000	4,967
Note 13. Contributed equity					Parent entity
	Notes			Shares	2008$
(a) Share capitalOrdinary shares fully paid	13(b)			35,775,000	1,438,635

(b) Movements in ordinary share capital			Shares	Issue price
Date5 May 2006	DetailsIssue to directors	Notes(d)(i)	No.100	S1.00	$100
9 May 2006	Issue to directors and associates	(d)(ii)	900	1.00	900
30 November 2006	Reconstruction	(d)(iii)	(1,000)		(1,000)
	Reconstruction	(d)(iii)	21,000,000	0.00004762	1,000
		(d)(iv)	14,000,000	0.10	1,400,000
15 February 2007	Placement to seed capitalists
8 March 2007	Placement to seed capitalists	(d)(v)	500,000	0.10	50,000
	Less: Transaction costs arising onplacement of shares
30 June 2007	Balance		35,500,000		1,388,635
26 May 2008	Placement to seed capitalists	(d)(vi)	275,000	0.18	50,000
30 June 2008	Balance		35,775,000		(62, 365)1,438,635

$\ddotsc$ $\mathbb{R}$ $\ddot{\phantom{a}}$

Note 13. Contributed equity (continued)

(c) Ordinary shares

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

Effective 1 July 1998, the corporations legislation abolished the concepts of authorised capital and par value shares. Accordingly the Company does not have authorised capital nor par value in respect of its issued capital.

(d) Ordinary share issues

$(i)$ On 5 May 2006 the Company was incorporated and 100 ordinary shares were issued to the founding directors and their associates.
$(ii)$ On 9 May 2006 an allotment of 900 shares was made to directors and associates of directors.
(iii) On 30 November 2006 the Company reconstructed the share capital. 1,000 shares of $1.00 each were subdivided into 21,000,000 ordinary shares of $0.00004762 each.
(iv) On 15 February 2007 a placement of 14,000,000 ordinary shares was made to seed capitalists.
(v) On 8 March 2007 a placement of 500,000 ordinary shares was made to seed capitalists.
(vi) On 26 May 2008 a placement of 275,000 ordinary shares was made to seed capitalists.

Note 14. Accumulated losses

Consolidated		Parent
2008	20072008	2007


(73,216)		(46, 954)	$\blacksquare$
(1,537,928)	(73,216)	(1,440,670)	(46, 954)
(1,611,144)	(73,216)	(1, 487, 624)	(46, 954)

Note 15. Investment option fee

974.246 Investment option fee paid

This payment was made in accordance with the framework agreement between the Group and Lingbao Xuanrui Mineral Resources Company Limited, as an option to acquire an interest in the Deibu Gold tenements as described in more detail in the Directors' report.

Note 16. Key management personnel disclosures

(a) Directors

The following persons were directors of Red Mountain Mining Ltd during the financial year:

N F Warburton B Zhou K B Rowe B Harris

Annual Report - 30 June 2008

Note 16. Key management personnel disclosures (continued)

(b) Other key management personnel

The following persons also had authority and responsibility for planning, directing and controlling the activities of the group, directly or indirectly, during the financial year:

Position Employer Name DJ Kelly Company Secretary Mosman Management Pty Ltd

Key management personnel compensation $(b)$

	Consolidated		Parent
	2008	2007	2008	2007
Short term benefits
KB Rowe	62,500	5,000	62,500	5,000
B Zhou	48,000	5,000	48,000	5,000
B Harris	93,200	5,000	93,200	5,000
DJ Kelly	23,020	5,000	23,020	5,000
Total	226,720	20,000	226,720	20,000

(d) Equity instrument disclosures relating to key management personnel

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

There have been no options issued as remuneration to key management personnel during the financial year.

Share holdings

The numbers of shares in the Company held during the financial year by each director of Red Mountain Mining Ltd and other key management personnel of the group, including their personally related parties, are set out below. There were no shares granted during the reporting period as compensation.

2008Name	Balance atthe start ofthe period	Receivedduring theyear on theexercise ofoptions	Other changesduring theperiod	Balance at theend of the year
Directors of Red Mountain Mining Ltd
N F Warburton	8,065,000	$\overline{\phantom{a}}$	-	8,065,000
B Zhou	3,870,000		-	3,870,000
K B Rowe	8,065,000		$\qquad \qquad \blacksquare$	8,065,000
B Harris	٠		-
Other key management personnel of the group
D J Kelly	1,000,000	۰		1,000,000

2007Name	Balance atthe start ofthe period	Receivedduring theyear on theexercise ofoptions	Other changesduring theperiod	Balance at theend of the year
Directors of Red Mountain Mining Ltd
N F Warburton	$\overline{\phantom{0}}$	$\blacksquare$	8,065,000	8,065,000
B Zhou	٠	$\overline{\phantom{0}}$	3,870,000	3,870,000
K B Rowe			8,065,000	8,065,000
Other key management personnel of the group
D J Kelly	$\overline{\phantom{a}}$		1,000,000	1,000,000
Annual Report - 30 June 2008			27

Note 16. Key management personnel disclosures (continued)

(e) Loans to key management personnel

There are no loans made to directors or other key management personnel of Red Mountain Mining Ltd or the Consolidated Entity.

(f) Other transactions with key management personnel

Directors of Red Mountain Mining Ltd

Mr. Warburton advanced the company an amount of $300,000. The loan bears an interest rate of 11.25% and is provided on normal commercial terms and conditions. Subsequent to the end of the financial year $200,000 of this was converted to equity at a price of 10 cents per share.

Consolidated		Parent
2008	2007	2008	2007
۰J

Note 17. Remuneration of auditors

During the year the following services were paid to the auditor of the parent entity:

Assurance services
Audit servicesAudit and review of financial report	5,000	2,500	5,000	2,500
Non-Audit servicesFees paid to Butler Settineri Chartered Accountants:
Fee re Company's equity structure		1,250		1.250
	5,000	3.750	5,000	3,750

Note 18. Contingent liabilities

Neither the Company nor the Group has any contingent liabilities at 30 June 2008.

Note 19. Commitments for expenditure

Neither the Company nor the Group has any commitments for expenditure at 30 June 2008.

Note 20. Related parties

Directors and specified executives

Disclosures relating to directors and other key management personnel are set out in Note 16.

Wholly-owned Group

The wholly-owned Group consists of Red Mountain Mining Ltd and its wholly-owned subsidiary: Red Mountain Mining (HK) Holdings Ltd as described in Note 21.

Aggregate amounts receivable from Red Mountain Mining (HK) Holdings Ltd at balance date:

	rarent
	2008	2007

Non-current receivables (loans)	1,118,745	8,745
Less: Provision for non-recovery	(1, 118, 745)
	۰	8,745

Ownership interests in related parties

Interests held in the following classes of related parties are set out in the following note.

Annual Report - 30 June 2008

Note 21. Investments in controlled entities

Name of entity	Country of incorporation	Class of shares	Equity holding2008$\frac{0}{0}$
Red Mountain Mining (HK) Holdings Ltd	Hong Kong	Ordinary	100
Red Mountain Mining Consulting (Shenyang) Co Ltd	People's Republic of China	Ordinary	100

Note 22. Events occurring after reporting date