REDSTONE RESOURCES LIMITED — Annual Report 2005

Aug 1, 2006

Annexure 6B

REDSTONE RESOURCES LIMITED

ACN 090 169 154

CONSOLIDATED SPECIAL PURPOSE FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2005

ACN 090 169 154

Contents of Financial Report

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Page

Corporate directory	2
Directors Report	$3 - 5$
Auditors Independence Declaration	6
Statements of Financial Performance	7
Statements of Financial Position	8
Statements of Cash Flows	9
Notes to the Financial Statements	$10 - 17$
Directors' Declaration	18
Independent Audit Report	19

REDSTONE RESOURCES LIMITED ACN 090 169 154

CORPORATE DIRECTORY

DIRECTORS

$\ddot{\phantom{1}}$

SECRETARY

Mr Philip Scott Gardoll Mr Anthony Alexander AilakisMr Anthony Alexander AilakisMr Paul Slobodan Babun

Mr Philip Scott Gardoll

REGISTERED OFFICE

c/ Rosemount Partners Unit 4, 1st Floor 2 Mugul Road Malaga WA 6090

PRINCIPAL PLACE OF BUSINESS

Suite 3, 110-116 East Parade East Perth WA 6004

ACCOUNTANT TO COMPANY

Endeavour Corporate Pty Ltd Suite 8, 7 The Esplanade Mt Pleasant, WA 6153

AUDITOR

Butler Settineri (Audit) Pty Ltd Level 1 35 - 37 Havelock Street WEST PERTH WA 6005

ACN 090 169 154

DIRECTORS' REPORT

The Directors present their Report together with the Financial Statements for Redstone Resources Limited and the Consolidated Financial Statements for the Company and its controlled entities ('Consolidated Entity') for the financial year ended 30th June 2005.

Directors

The names of directors in office at any time during or since the end of the year are:

• Mr Philip Scott Gardoll
• Mr Anthony Alexander Ailakis $\blacksquare$
• Mr Paul Slobodan Babun

Principal Activities

The principal activity of the consolidated entity during the financial year was mineral exploration in Western Australia.

Review of Operations and Operating Results

The net loss after income tax attributable to members of the consolidated entity for the financial year to 30 June 2005 amounted to $190,617 (2004 $109,532).

Dividends

No dividends were paid during the year and the directors recommend that no dividends be paid or declared for the financial year ended 30 June 2005.

Events Subsequent to Balance Date

Since the end of the financial year, the Company has raised an additional $83,000 in seed capital contributions. Other than the above, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors. to affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in subsequent financial years.

Likely Developments

The Company is planning to list on the Australian Stock Exchange in either late 2005 or early 2006.

Environmental Issues

The consolidated entity's operations are subject to significant environmental regulation under the law of the Commonwealth and State. The Directors of the Company monitor compliance with environmental regulations. The Directors are not aware of any significant breaches during the period covered by this Report.

ACN 090 169 154

Directors' Details

Secretary:

Mr Philip Scott Gardoll - since 17 December 1999 Mr Gardoll founded Redstone in 1999 for the purpose of acquiring exploration holdings in the West Musgrave region. He has administration experience specialising in logistics.

Mr Gardoll is aged 35.

Director:

Mr Anthony Alexander Ailakis - since 17 December 2003

Mr Ailakis has been involved in the exploration and mining industry for almost 20 years. He graduated as a lawyer from the University of Western Australia in 1986 and has experience in all aspects of mining law, native title negotiations, tenement management, as well as in general corporate and commercial matters.

Mr Ailakis is aged 45.

Director:

Mr Paul Slobodan Babun - since 17 December 2003 Mr Babun has been involved in the exploration industry since the mid 1990's as a prospector. He continues to prospect and is also employed in the avionics industry.

Mr Babun is aged 35.

Directors' Interests

The relevant interests of Directors, both directly or through entities controlled by the Directors, in the share capital and unissued shares of the company as at the date of this report are:

Director	Ordinary Shares
	Balance at 01/07/04	Balance at 30/06/05
Phillip Gardoll
Paul Babun

Meetings of Directors

During the financial year, the following meetings of directors (including committees) were held:

	DIRECTORS' MEETINGS
	Number eligibleto attend	NumberAttended
Mr Philip Scott Gardoll	2	2 (by phoneconference)
Mr Anthony Alexander Alilkis	2
Mr Paul Slobodan Babun	2	2

ACN 090 169 154

Indemnification and insurance of Officers and Auditors

The consolidated entity has not, during or since the end of the financial year, given an indemnity or entered an agreement to indemnify, or paid or agreed to pay insurance premiums for the Directors, officers or Auditors of different to much may, or paid or agreed to pay modified premiums for the Directors, onters or Additions or Directors and officers through a Directors and Officers Insurance Policy in the event of the Company becoming a listed entity.

Auditors' Independence Declaration

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

Signed in accordance with a resolution of the Board of Directors.

Director

Dated this 7th day of October 2005.

AUDITOR'S INDEPENDENCE DECLARATION

As lead auditor for the audit of Redstone Resources Limited for the year ended 30 June 2005. I declare that, to the best of my knowledge and belief, there have been:

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

Butter Setterer ( Andle) Phylodel

BUTLER SETTINERI (AUDIT) PTY LTD

Lung Guand

LUCY P GARDNER Director

Perth Date: 7 October 2005 Chartered Accountants

Level 1 Construction House 35-37 Havelock Street West Perth 6005

Locked Bag 18 West Perth 6872 Western Australia

Phone: (08) 9426 4444 (08) 9321 5215 $Fax:$ Email: mail@butlersettineri.com.au

Directors: Colin Butler FCA Paul Chabrel CA Lucy Gardner $CA$

6

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ACN 090 169 154

STATEMENTS OF FINANCIAL PERFORMANCE

FOR THE YEAR ENDED 30 JUNE 2005

	Consolidated		Company
	Note	2005S	2004S	2005S	2004$
Depreciation and amortisation expense	2$\overline{2}$	4,906185.711	2.527	4.906	2,527
Other expenses from ordinary activitiesLoss from ordinary activities beforeincome tax expenseIncome tax expense relating to ordinary		(190.617)	107,005(109, 532)	185,435(190,341)	106,335(108, 862)
activitiesNet Loss attributable to members ofthe Company	3	(190,617)	(109, 532)	(190,341)	(108,862)

$\sim 10^7$

The accompanying notes form part of these financial statements.

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ACN 090 169 154

STATEMENTS OF FINANCIAL POSITION

AS AT 30 JUNE 2005

		Consolidated		Company
		2005	2004	2005	2004
	Note	$	$	$	$
CURRENT ASSETS
Cash assets	12a	6,363	3,606	6,337	3,525
Receivables	4	22,638	1,646	22,638	1,638
Other financial assets	7	4,701		4,701
Total current assets		33,702	5,252	33,676	5,163
NON-CURRENT ASSETS
Exploration and evaluation expenditure	5	856,974	640,345	497,630	384,309
Plant and equipment	6	47,691	13,015	47,691	13,015
Investments	$\overline{7}$			48,000	48,000
Receivables	4			316,687	213,166
Total non current assets		904,665	653,360	910,008	658,490
TOTAL ASSETS		938,367	658,612	943,684	663,653
CURRENT LIABILITIES
Payables	8	266,139	81,767	266,139	81,767
Total current liabilities		266,139	81,767	266,139	81,767
NON-CURRENT LIABILITIESLoans	8	42,000	42,000	42,000	42,000
Total non-current liabilities		42,000	42,000	42,000	42,000
TOTAL LIABILITIES		308,139	123,767	308,139	123,767
NET ASSETS		630,228	534,845	635,545	539,886
EQUITY
Contributed equity	9	997,504	711,504	997,504	711,504
Accumulated losses	10	(367, 276)	(176, 659)	(361, 959)	(171, 618)
TOTAL EQUITY		630,228	534,845	635,545	539,886

The accompanying notes form part of these financial statements.

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ACN 090 169 154

STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2005

		Consolidated		Company
	Note	2005$	2004S	2005S	2004$
CASH FLOWS FROM OPERATINGACTIVITIES
Cash payments in the course of operationsIncome tax paid		(80, 134)	(13, 675)	(79, 867)	(25, 225)
Net cash provided by (used in) operatingactivities	12 b	(80, 134)	(13, 675)	(79,867)	(25, 225)
CASH FLOWS FROM INVESTINGACTIVITIES
Exploration expenditureAdditions to fixed assetsAmounts advanced to related parties		(176, 571)(33, 543)	(106, 252)	(79, 111)(33, 543)(97, 672)	(68, 032)(26, 527)
Net cash provided by (used in) investingactivities		(210, 114)	(106, 252)	(210, 326)	(94, 559)
CASH FLOWS FROM FINANCINGACTIVITIES
Proceeds from seed capital contributionsProceeds from borrowings		286,0007,005	92,00022,100	286,0007,005	92,00022,100
Net cash provided by (used in) financingactivities		293,005	114,100	293,005	114,100
Net increase (decrease) in cash heldCASH AT THE BEGINNING OF THE		2,757	(5,827)	2,812	(5,684)
FINANCIAL YEAR		3,606	9,433	3,525	9,209
CASH AT THE END OF THE FINANCIALYEAR	12a	6,363	3,606	6,337	3.525

The accompanying notes form part of these financial statements.

ACN 090 169 154

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2005

1. Statement of Significant Accounting Policies

Redstone Resources Limited ("the Company") is a public company incorporated and domiciled in Australia. The consolidated financial report is a special purpose financial report that has been prepared in accordance with the Corporations Act 2001 and the following Australian Accounting Standards:

• AASB 1018 Statement of Financial Performance
• AASB 1034 Financial Report Presentation and Disclosure
• AASB 1040 Statement of Financial Position
• AASB 1044 Provisions, Contingent Liabilities and Contingent Assets.

No other Australian Accounting Standards, Urgent Issues Group Consensus Views and other authoritative pronouncements of the Australian Accounting Standards Board have been applied.

The directors do not believe the consolidated entity represented by Redstone Resources Ltd and its controlled entity to be a reporting entity. This report has been prepared to fulfil the company's reporting requirements under the Corporations Act 2001.

The following is a summary of the material accounting policies adopted by the Company and the Consolidated Entity in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated

Consolidation Principles $a)$

The Consolidated Financial Statements of the Consolidated Entity include the Financial Statements of the Company, being the parent entity, and its controlled entities.

Where an entity either began or ceased to be controlled during the year, the results are included only from the date control commenced or up to the date control ceased.

The balances and effects of transactions, between controlled entities included in the Consolidated Financial Statements have been eliminated.

b) Revenue recognition

Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST) payable to the taxation authority.

Interest revenue

Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset.

ACN 090 169 154

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2005

Income Tax $C)$

The Company adopts the income statement method 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 realisation 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 Company will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

d) Cash

For the purpose of the statement of cash flows, cash includes:

• cash on hand and at call deposits with banks or financial institutions, net of bank overdrafts.

$e)$ Receivables

The recoverability of debts is assessed at balance date and specific provision is made for any doubtful accounts.

$\overline{D}$ Plant and Equipment

Plant and equipment are measured on the cost basis.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employment and subsequent disposal. The expected net cash flows have not been discounted to their present values in determining recoverable amounts

Depreciation

The depreciable amount of all fixed assets is depreciated on a diminishing balance basis over their useful lives to the Company commencing from the time the asset is held ready for use.

The depreciation rates used for each class of depreciable assets are:

Class of Fixed Asset	Depreciation Rate
Office furniture & equipment	11.25%
Satellite phone & digital equipment	22.5%
Office paintings	1.5%
Computer equipment	37.5%
Generators	7.5%

ACN 090 169 154

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2005

Recoverable amount of non-current assets valued on cost basis $q)$

The carrying amounts of non-current assets valued on the cost basis, other than exploration and evaluation expenditure carried forward (refer Note 1(h)), are reviewed to determine whether they are in excess of their recoverable amount at balance date. If the carrying amount of a non-current asset exceeds its recoverable amount, the asset is written down to the lower amount. The write-down is expensed in the reporting period in which it occurs.

Where a group of assets working together supports the generation of cash inflows, recoverable amount is assessed in relation to that group of assets. In assessing recoverable amounts of non-current assets, the relevant cash flows have been discounted to their present value

$h$ Exploration, evaluation and development expenditure

Exploration, evaluation and development costs are accumulated in respect of each separate area of interest

Exploration and evaluation costs are carried forward where right of tenure of the area of interest is current and they are expected to be recouped through sale or successful development and exploitation of the area of interest, or, where exploration and evaluation activities in the area of interest have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

j) Payables

Liabilities are recognised for amounts to be paid in the future for goods or services received. Trade accounts payable are normally settled within 60 days.

$\mathbf{j}$ Leases

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.

$\mathsf{k}$ Goods and Services Tax (GST)

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

ACN 090 169 154

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2005

2.	Loss from ordinary activitiesLoss from ordinary activities before	Consolidated		Company
	income tax has been determinedafter:Depreciation / amortisation of non-current assets:	2005$	2004$	2005$	2004$
	- plant and equipment	4,906	2,527	4,906	2,527
	Audit FeesAccounting and tax adviceConsultants and contractorsInterest expenseOffice RentLegal FeesTravelling costsTelephone & faxOther Expenses	4,00019,395111,1101,4397,1575,67718,1945,82312,916185,711	9,36577,1505,5304,85510,105107,005	4,00019,395111,1101,4397,1575,67718,1945,82312,640185,435	9,36577,1505,5304,8559,435106,335
3.	Income tax expense
	Prima facie tax benefit on loss fromordinary activities before income taxat 30% (2004: 30%)Income tax benefit not brought toaccount	57,185(57, 185)	32,860(32, 860)	57,102(57, 102)	32,659(32, 659)
	Income tax expense

The future income tax benefit arising from tax losses has not been brought to account because recovery is not assured beyond reasonable doubt.

The benefit of these losses will only be obtained if:

• a) the economic entity derives future assessable income of a nature and of an amount sufficient to enable the benefit to be realised:
• b) the economic entity continues to comply with the conditions for deductibility imposed by tax legislation; and
• c) no changes in the income tax legislation adversely affect the economic entity in realising the benefit from the deduction of the loss.

4. Receivables

.GST RefundableOther debtors	22,638$\bullet$	1.6388	22.638$\overline{\phantom{0}}$	1,638
	22,638	.646	22.638	.638
Non CurrentAmounts due from controlled entity	$\blacksquare$	$\bullet$	316.687	213,166

ACN 090 169 154

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2005

5.	Exploration and evaluation expenditure		Consolidated		Company
		2005S	2004S	2005S	2004S
	Carrying amount at the start of the yearExpenditure incurred during the year	640,345216.629	530,616109.729	384,309113.321	312,79871,511
	Expenditure written off during the year
	Carrying amount at the end of the year	856,974	640.345	497,630	384,309

Ultimate recoupment of exploration and evaluation expenditure carried forward is dependent on successful development and commercial exploitation or alternatively, sale of the respective areas.

$6.$ Plant and equipment

$\overline{7}$ .

i.

Carrying amount
At cost	56,041	16,459	56,041	16,459
Accumulated depreciation	(8,350)	(3, 444)	(8,350)	(3,444)
	47,691	13,015	47,691	13,015
Movement in carrying amounts
Movement in the carrying amounts for
each class of plant and equipment
between the beginning and the end of the
current financial yearBalance at the beginning of year	13,015	15,542	13,015	15,542
Additions	39,582		39,582
Disposals
Depreciation expense	(4,906)	(2, 527)	(4,906)	(2, 527)
Carrying amount at the end of year	47,691	13,015	47,691	13,015
Other financial assets
Current
Prepayments	4,701		4.701
Non Current
Investment in controlled entity			48,000	48,000

ACN 090 169 154

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2005

8.	Payables	Consolidated		Company
		2005	2004	2005	2004
		$	$	$	$
	Current
	Trade creditorsShort Term borrowings - non interest	59,982	4,138	59,982	4,138
	bearing
	Sundry creditors and accruals	29,105	22,100	29,105	22,100
		177,052	55,529	177,052	55,529
		266,139	81,767	266,139	81,767
	Non-current liabilities
	Loans	42,000	42,000	42,000	42,000
9.	Contributed equityShare capital
	4 (2004: 4) ordinary fully paid shares	4	4	4	4
	Seed capital contributions
	Contributions at beginning of year	711,500	619,500	711,500	619,500
	Contributions received during the year	286,000	92,000	286,000	92,000
	Contributions at end of year	997,500	711,500	997,500	711,500
	Total contributed equity
		997,504	711,504	997,504	711,504
	Fully paid shares on issue
	At the beginning of the year	4	4	4	4
	At the end of the year	4	4	$\overline{\mathbf{4}}$	4

Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held.

At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

Contributions from seed capital investors were received in accordance with individual contracts with each investor for shares to be issued prior to the company listing. Shares will be issued upon approval at the company's next annual general meeting.

Since the end of the financial year, the Company has raised an additional $83,000 in seed capital contributions.

	Accumulated losses	Consolidated		Company
10.		2005S	2004$	2005S	2004$
	Retained profits at the beginning of thefinancial yearNet loss attributable to the members of	(176, 659)	(67, 127)	(171, 618)	(62, 756)
	the Company	(190,617)	(109,532)	(190, 341)	(108, 862)
	Accumulated losses at the end of thefinancial year	(367, 276)	(176,659)	(361,959)	(171,618)

ACN 090 169 154

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2005

$11.$ Commitments

Exploration expenditure commitments

In order to maintain current rights of tenure over its mineral tenement leases, the company and its controlled entity will be required to outlay amounts in respect of rent and to meet minimum expenditure requirements of the Department of Minerals and Energy (DME). The annual expenditure commitments on tenements held at 30 June 2005 amounted to $747,017 (2004: $223,200) These obligations may vary from time to time, are subject to approval and are expected to be fulfilled in the normal course of operations by the relevant company.

	Consolidated		Company
Non cancellable operating leasecommitments in respect ofexploration tenements	2005$	2004$	2005S	2004$
Within one yearOne year or later and no later than	75,456	75.456	52.231	52,231
five yearsMore than five years	85,497-	160.954	78.499	130,730
	160,953	236,410	130,730	182,961

12. Notes to the statement of cash flows

Reconciliation of cash

For the purposes of the statements of cash flows, cash includes cash on hand and at bank and short term deposits. Cash as at the end of the financial year as shown in the statements of cash flow is reconciled to the related item in the statement of financial position as follows:

a) Cash assets

a) Cash assets	Consolidated		Company
	2005$	2004S	2005$	2004$
Cash at bank and on hand	6,363	3,606	6,337	3,525
b) Reconciliation of loss from ordinaryactivities after income tax to net cashprovided by operating activities
Loss from ordinary activities after income taxAdd (less) non cash items:-	(190, 617)	(109, 532)	(190, 341)	(108, 862)
Depreciation and amortisation	4,906	2,527	4.906	2,527
Increase in trade creditors and accruals(Increase)/decrease in sundry receivables	131,269	54,390	131,269	54,390
and prepayments	(25, 692)	38,940	(25, 701)	26,720
Cash flow used in operations	(80, 134)	(13, 675)	(79,867)	(25, 225)

ACN 090 169 154

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2005

13.	Controlled entities	2005	2004
	a) Particulars in relation to controlled entities	$%$	%
	Controlled entityAllhawk Nominees Pty Ltd	100	100

b) Contribution to consolidated result

The results of the controlled entity included in the statement of financial performance is a loss of $275 $(2004: $669)$ .

14. Dividends

No dividends were paid or declared during the year. There are no franking credits available to shareholders for subsequent financial years.

15. Contingent liabilities

There were no contingent liabilities not provided for in the financial statements of the consolidated entity as at 30 June 2005.

ACN 090 169 154

DIRECTORS' DECLARATION

The directors have determined that the consolidated entity is not a reporting entity. The directors have determined that this special purpose financial report should be prepared in accordance with the accounting policies outlined in Note 1 to the financial statements.

The directors of the company declare that:

• 1. The financial statements and notes, as set out on pages 7 to 17, are in accordance with the Corporations Act 2001:
  • give a true and fair view of the Company and consolidated entity's financial position as at 30 a. June 2005 and of their performance, as represented by the results of their operations and their cash flows, for the year ended on that date; and
  • b. comply with Australian Accounting Standards and Corporations Regulations 2001.
• 1. In the directors' opinion 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.

Director Dated this 7th day of October 2005

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF REDSTONE RESOURCES LIMITED

Chartered Accountants

Scope

We have audited the financial report, being a special purpose financial report, of Redstone Resources Limited ("the Company") and its controlled entity for the financial year ended 30 June 2005 as set out in pages 7 to 18. The Company's directors are responsible for the financial report and have determined that the accounting policies used and described in Note 1 to the financial statements, including the basis of accounting, which form part of the financial report are appropriate to meet the requirements of the Corporations Act 2001 and the needs of members. We have conducted an independent audit of the financial report in order to express an opinion on it to members of the Company. No opinion is expressed as to whether the accounting policies used and described in Note 1, are appropriate to the needs of the members.

The financial report has been prepared for distribution to members for the purpose of fulfilling the directors' reporting requirements under the Corporation Act 2001. We disclaim any assumption of responsibility for any reliance on this audit report or on the financial report to which it relates to any person other than the members, or for any purpose other than that for which it was prepared

Our audit has been conducted in accordance with Australian Auditing Standards. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report and the evaluation of significant accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the financial report is presented fairly in accordance with the Corporations Act 2001 in Australia and presented fairly in accordance with the accounting policies described in Note 1 to the financial statements, so as to present a view which is consistent with our understanding of the Company's financial position, and performance as represented by the results of its operations and its cash flows. These policies do not require the application of all accounting standards and other mandatory professional reporting requirements in Australia.

The audit opinion expressed in this report has been formed on the above basis.

Audit Opinion

In our opinion, the financial report of the Company is in accordance with:

• the Corporations Act 2001, including: $a)$
  • giving a true and fair view, in accordance with the accounting policies described in i) Note 1 to the financial statements, of the Company's financial position as at 30 June 2005 and its performance for the year ended on that date; and
  • complying with Accounting Standards, comprising AASB 1025: Application of the ii) Reporting Entity Concept and Other Amendments and other Accounting Standards to the extent described in Note 1 to the financial statements, and the Corporations Regulations 2001; and
• b) other mandatory professional reporting requirements to the extent described in Note 1 to the financial statements.

Butter Settrai (Andit) Phyllel

BUTLER SETTINERI (AUDIT) PTY LTD

Lung Gud

LUCY P GARDNER Director

Perth Date: 11 October 2005

19 Butler Settineri (Audit) Ptv Ltd A.C.N. 112 942 373

Level 1 Construction House 35-37 Havelock Street West Perth 6005

Locked Baa 18 West Perth 6872 Western Australia

Phone: (08) 9426 4444 $Fax:$ (08) 9321 5215 Email: mail@butlersettineri.com.au

Directors: Colin Butler FCA Paul Chabrel $CA$ Lucy Gardner $CA$