REDSTONE RESOURCES LIMITED

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REDSTONE RESOURCES LIMITED ACN 090 169 154

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2013

ACN 090 169 154

Contents of Financial Report	Page
Corporate Directory	2
Directors’ Report	3-16
Audit Independence Declaration	17
Corporate Governance Statements	18-25
Consolidated Statement of Comprehensive Income	26
Consolidated Statement of Financial Position	27
Consolidated Statement of Changes in Equity	28
Consolidated Statement of Cash Flows	29
Notes to the Consolidated Financial Statements	30-66
Directors’ Declaration	67
Independent Audit Report to Members	68-69
Shareholder Information	70-75

COMPETENT PERSONS STATEMENT:

The information in this report that relates to exploration results is based on information compiled by Dr Joao Orestes Santos, a part-time employee of Redstone Resources Limited. Dr Santos is a member of the Australian Instituted of Geoscientists and has sufficient experience relevant to the style of mineralisation under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves’. Dr Santos consents to the inclusion in the report of the matter based on his information in the form and context in which it appears.

FORWARD LOOKING STATEMENTS:

This report contains certain forward-looking statements. Forward-looking statements are subject to a variety of risks and uncertainties beyond the Company’s ability to control or predict which could cause actual events or results to differ materially from those anticipated in such forward-looking statements.

ADDITIONAL INFORMATION:

This report does not include reference to all available information on the Company or its Projects and should not be used in isolation as a basis to invest in Redstone Resources Limited. Any potential investors should refer to Redstone Resource Limited’s other public releases and statutory reports and consult their professional advisers before considering investing in the Company.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

CORPORATE DIRECTORY

DIRECTORS: Mr Richard Homsany (Chairman) Mr Edward van Heemst Mr Anthony Ailakis SECRETARY: Ms Miranda Conti REGISTERED AND PRINCIPAL OFFICE: Suite 3, 110-116 East Parade EAST PERTH WA 6004 Tel: +61 8 9328 2552 Fax: +61 8 9328 2660 email: [email protected] POSTAL ADDRESS: PO Box 8646 Perth Business Centre WA 6849 WEBSITE: www.redstone.com.au SHARE REGISTRY: Advanced Share Registry Limited PO Box 1156 , NEDLANDS WA 6009 Tel: +61 8 9389 8033 Fax: +61 8 9389 7871 Level 6, 225 Clarence Street SYDNEY NSW 2000 PO Box Q1736 QUEEN VICTORIA BUILDING NSW 1230 Tel: +61 2 8906 3502 Website: www.advancedshare.com.au HOME STOCK EXCHANGE: Australian Stock Exchange Limited Level 2 Exchange Plaza 2 The Esplanade PERTH WA 6000 ASX Code: RDS AUDITOR: Butler Settineri (Audit) Pty Ltd Unit 16, First Floor 100 Railway Road (Cnr Hay Street) SUBIACO WA 6008

REDSTONE RESOURCES LIMITED

ACN 090 169 154

DIRECTORS’ REPORT

The Directors present their report on the Entity consisting of Redstone Resources Limited (‘Redstone’ or the Company) and its controlled entities (‘Entity’) for the financial year ended 30 June 2013.

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

Mr Richard Homsany (B. Com, LL.B (Hons), CPA, Grad. Dip. FINSIA, F Fin, MAICD) (Non-Executive Chairman) Age 43

Mr Homsany is Executive Vice President of Mega Uranium Ltd, a Toronto Stock Exchange listed company.

Prior to this Mr Homsany was a corporate and commercial advisory partner with one of Australia’s leading law firms.

He is the principal of Cardinals Lawyers and Consultants and has been admitted as a solicitor for over 19 years. Mr Homsany has extensive experience in corporate law, including advising public resources and energy companies on corporate governance, finance, capital raisings, takeovers, mergers, acquisitions, joint ventures and divestments.

Mr Homsany also has significant board experience with publicly listed resource companies and in the resources industry. He has also worked for an ASX top 50-listed internationally diversified resources company in operations, risk management and corporate.

Mr Homsany is also a Certified Practising Accountant and is a fellow of the Financial Services Institute of Australasia (FINSIA). He has a Commerce Degree and Honours Degree in Law from the University of Western Australia and a Graduate Diploma in Finance and Investment from FINSIA.

Over the last 3 years Mr Homsany has held a directorship in Toronto Stock Exchange (Venture Exchange) listed Central Iron Ore Limited (TSX-V) (27 October 2010 to present) and ASX listed Merah Resources Ltd (27 August 2010 to present). Mr Homsany is also a director of the Health Insurance Fund of Australia Limited and is chairman of its Audit and Risk Committee.

Mr Edward van Heemst (B. Com, MBA, CA, CPA) (Non-Executive Director) Age 67

Mr Edward van Heemst is a prominent Perth businessman with 40 years’ experience in the management of a diverse range of activities with large private companies.

Mr van Heemst is currently the Managing Director of Vanguard Press and Chairman of Perth Racing. Mr van Heemst holds a Bachelor of Commerce degree from the University of Melbourne, an MBA from the University of Western Australia and is a member of the Institute of Chartered Accountants Australia.

Mr van Heemst has an extensive knowledge of capital markets and established mining industry networks .

Mr Anthony Ailakis (B. Juris LL.B) (Executive Director) Age 53

Mr Anthony Ailakis is a founder of Redstone and returns to the Board after over 2 years as the Company’s Operations Manager, during which time he has overseen the discovery of the Tollu Cu-Ni Project.

Mr Ailakis has been involved in the exploration and mining industry for over 20 years. He obtained a law degree from the University of Western Australia in 1986 and worked as a general commercial and mining lawyer until he moved into the mining and exploration consultancy work on a project basis in the early 1990s.

Mr Ailakis has been involved in the development of constructive relationships with Aboriginal Land Councils and traditional owners and in the conduct of access and native title negotiations, as well as ground acquisition and matters relating to tenement management and Mining Act compliance.

Mr Ailakis has been actively involved in the development and implementation of Redstone’s acquisition strategy over the past several years.

REDSTONE RESOURCES LIMITED ACN 090 169 154

DIRECTORS’ REPORT

Mr Barry Woodhouse (B. Com, LL.B, CPA, FCIS ) (Non-Executive Director) Age 47 Resigned – 9 July 2012

Mr David Le Roy (Non-Executive Director) Age 63 Resigned – 9 July 2012

Other than as stated for Mr Homsany no other director has held directorships in other listed companies over the last three years.

Company Secretary – Miranda Conti (B. Com, CPA , ACSA , ACIS )

Ms Conti is a chartered secretary and certified practising accountant who has been engaged by the Company since March 2006.

Principal Activities

The principal activities of the Entity during the financial year were:

To carry out exploration of tenements in which the Entity has an interest, both on a joint venture basis and by the Entity in its own right;
To evaluate results achieved through surface sampling, drilling and geophysical surveys carried out during the year;
To evaluate and seek opportunities in the mineral sector globally by way of acquisition, investment or joint venture; and
To identify opportunities, both locally and internationally, for resale and joint venture.

Review of Operations

The net loss after income tax attributable to members of the Entity for the financial year ended 30 June 2013 amounted to $5,582,684 (2012: $1,894,133) and net assets were $5,435,072 (2012: $8,816,205).

REDSTONE RESOURCES LIMITED ACN 090 169 154

DIRECTORS’ REPORT

WEST MUSGRAVE

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Figure 1. Locations of the Tollu and Blackstone Range Project Tenements

Tollu Project

(E69/2450) – 100% Redstone

The Tollu Copper Nickel (Cu-Ni) Project (the Project) area hosts a giant swarm of hydrothermal copper rich veins in a mineralised system covering an area of at least 6km[2] and forming part of a dilation system between two major shears. Copper mineralisation exposed at the surface comprises malachite, tenorite and azurite, whereas mineralisation below 60-80 metres is composed by chalcopyrite and minor pyrite, chalcocite, and bornite.

During the year ended 30 June 2013 (the Year) the Company’s exploration activities were limited by a lack of capital.

Regional exploration was conducted north of the known Tollu mineralisation to detect additional mineralised areas. All samples were analysed using handheld spectrometer (Niton®). The program (consisting of mapping, auger sampling and soil sampling) successfully located the following new copper targets:

Copper anomalies on projected strike extensions of the north easternmost vein, potentially extending this vein by at least 285m strike (NW). This mineralisation is approximately 3 km northeast of the Tollu main known mineralisation.
Copper anomalies within an area of several square kilometres approximately 3 km north of the Tollu main mineralisation. Within this area mapping located previously unknown hydrothermal veins up to 4 km north from Tollu.

ACN 090 169 154

REDSTONE RESOURCES LIMITED

DIRECTORS’ REPORT

These results confirm the potential for additional copper mineralisation at the Tollu Project.

The Company’s recent focus has been to undertake the preparatory work necessary to transform the Tollu project into a JORC-compliant resource and to increase the size of the current exploration target.

Work continued on the design of a drilling programme aimed at delineating an initial JORC resource and site works for drill pads were carried out.

During the year, the Company applied for and was awarded a $200,000 grant from the Western Australian Government Exploration Incentive Scheme (EIS) to support a drilling programme at its 100% owned Tollu Project.

Under the terms of the grant, Redstone is required to match the $200,000 in funding provided by the Government. The grant will be used to drill a deep diamond hole to test for the source of the large scale (6.8km[2] ) hydrothermal copper mineralisation which has been discovered at the Tollu Project.

Tollu Targeting Strategy

Redstone is pursuing a dual targeting strategy at Tollu:

1. Hydrothermal copper sulphide is interpreted as having been remobilised from a primary magmatic copper-nickel-(cobalt) sulphide source. The drilling to date is showing this hydrothermal mineralisation to be more extensive than originally indicated. Intersections of copper sulphide mineralisation now extend over an area 1.8km long by up to 1km wide. It is anticipated that this area will be significantly increased with further drilling.

Within the hydrothermal zones at Tollu, Redstone is targeting a deposit with an average copper grade greater than 2%. Redstone expects to increase the size of the Tollu deposit with further drilling at the Central Zone (Subzone 1) and the Eastern Zone. Copper mineralisation detected in two drill holes associated with a large EM anomaly located in the Plains Zone (to the East of the Eastern Zone) will be investigated with more drilling.

2. Magmatic Cu-Ni-(Co) sulphide is the main target style of mineralisation which is interpreted to be the primary source of the hydrothermal mineralisation at Tollu. Typically, magmatic Cu-Ni-(Co) sulphide deposits are large to giant sized deposits often in excess of 100M tonnes of ore. The extent and volume of the remobilised copper sulphide mineralisation at Tollu suggests a major primary source of magmatic CuNi-(Co) sulphide.

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REDSTONE RESOURCES LIMITED ACN 090 169 154

DIRECTORS’ REPORT

Blackstone Range Farmin/Joint Venture

E69/2108 and E69/2109 – Farmin with Resource Mining Corporation Ltd (ASX: RMI), Redstone earning 90%

The Blackstone Range Farmin/Joint Venture is located approximately 25km east of the BHP Babel and Nebo Ni-Cu-PGE discoveries. Under the terms of the Farmin/Joint Venture agreement Redstone can earn up to a 90% interest in the project by completing a feasibility study.

The project consists of two tenements (EL69/2108 and EL69/2109) covering roughly 338km[2] corresponding to two projects: Halley and Saturn. The first is prospective for PGE-(Ni-Cu-Au) and the second for Ni-CuPGE. The two projects contain a number of prospects including:

The project consists of two tenements (EL69/2108 and EL69/2109) covering roughly 338km[2] . The project area is prospective for Cu-Ni-PGE + Au. The project contains a number of prospects including:

Halleys
Halleys NW.
Saturn
Saturn East

During the year, an auger drilling programme was conducted to provide better quality soil geochemistry data.

Baggaley Hills

E69/2249 and E69/2200 – HJH Nominees Pty Ltd earning 80%

During the Year, Redstone and its JV partner relinquished four of the project tenements. Redstone’s JV partner completed an airborne electromagnetic survey (VTEM) over part of the remaining project area to detect massive sulphide mineralisation associated with the Antlion target associated to an intrusion of the Giles Complex. The survey results were not sufficiently encouraging to warrant further exploration. The farmin agreement was terminated and the remaining two tenements comprising this project were relinquished after the end of the Year.

BRAZIL

Apuí

During the Year a Redstone field team carried out exploration, mapping and sampling across key Apuí tenements following the issue of an environmental licence by Amazonas State Government to Redstone’s wholly owned Brazilian subsidiary company for clearing and construction to facilitate the first phase of drilling.

Besides the already known phosphate mineralisation, fieldwork detected bauxite in several areas of the project. In order to completely cover the bauxite plateaus, five additional exploration licences were applied for (Amazonas).

The Company is currently seeking a farmin/joint venture partner for this project.

ACN 090 169 154

REDSTONE RESOURCES LIMITED

DIRECTORS’ REPORT

CORPORATE

During the year the Company undertook various capital raising activities and completed sale and joint venture transactions as follows:

Placements and Capital Raising

During the year, the Company completed a placement of 20,000,000 fully paid ordinary shares at $0.10 per share, with one free attaching listed option for every two shares subscribed for (which listed option is exercisable at $0.20 on or before 28 February 2016), to sophisticated investors to raise $2,000,000 (before costs).

The Company also undertook a fully underwritten pro-rata non-renounceable 1:10 entitlement issue to eligible shareholders of Listed Options to acquire fully paid ordinary shares in the Company at an issue price of $0,01 per Listed Option to raise $143,569 (before costs). The Listed Options are exercisable at $0.20 on or before 28 February 2016. Eligible shareholders subscribed for 9,997,605 Listed Options, whilst the shortfall of 4,359,344 Listed Options was allotted to clients of Argonaut Capital Limited, the underwriter to the offer.

Corporate Advisor

During the year, Argonaut Capital Limited was engaged as corporate advisors to the Company. Pursuant to this engagement, the Company issued 6,000,000 Listed Options exercisable at $0.20 on or before 28 February 2016 at a subscription price of $0.001 per Listed Option. Of these Options, 3,000,000 Listed Options shall not vest until the Company’s share price trades above $0.25 for at least 3 consecutive business days.

Anebá and Autazes Projects

In May 2012 the Entity entered into a Sale and Purchase Agreement for the sale of 100% of its interest in the Brazil Anebá (Potash) and Autazes (Potash) Projects comprising cash consideration of $390,000 payable in instalments combined with a share placement for 2,000,000 Redstone fully paid ordinary shares at an issue price of $0.18 per share to raise $360,000 (before costs). The balance of cash consideration payable as at 30 June 2012 of $280,000 was paid, and the agreement completed, during the 2013 financial year.

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 2013.

Significant Changes in State of Affairs

There have been no significant changes in the state of affairs of the Entity to the date of this report.

ACN 090 169 154

REDSTONE RESOURCES LIMITED

DIRECTORS’ REPORT

Significant Events after Balance Date

Capital Raising

The Entity is currently in the process of undertaking a capital raising by way of placement of fully paid ordinary shares to sophisticated investors.

Extension of Term of the Tollu Exploration Licence

In September 2013 the Western Australian Department of Mines and Petroleum granted an extension of term of the Tollu exploration licence (E 69/2450) for a further 5 years to 18 September 2018.

Baggaley Hills Project – Farmin/Joint Venture Termination and Tenement Surrender Subsequent to the end of the financial year the remaining Baggaley Hills Project tenements (E69/2200 and E69/2249) were surrendered and the farmin deed dated 19 March 2009 between Redstone and HJH Nominees Pty Ltd was terminated by mutual consent.

There has not been any matter or circumstances that have arisen after balance date that have significantly affected, or may significantly affect, the operations of the Entity, the results of those operations, or the state of affairs of the Entity in future financial periods.

Likely Developments

The Entity continues to seek and review opportunities to acquire and invest in mining and exploration projects globally. Likely developments in the operations of the Entity and the expected results of those operations have not been included in this report as the Directors believe, on reasonable grounds, that the inclusion of such information would be likely to result in unreasonable prejudice to the Entity.

Environmental Issues

The 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.

REDSTONE RESOURCES LIMITED ACN 090 169 154

DIRECTORS’ REPORT

Share Options

As at the date of this report, 44,656,966 (2012: 20,816,668) options over unissued ordinary shares in the Company have been granted. Of these, 30,356,966 options are listed on the Australian Stock Exchange (ASX: RDSO).

A total of 30,356,966 listed options (RDSO) and 2,000,000 unlisted options were issued during the period to the date of this report. During the financial year and to the date of this report, 7,916,668 unlisted options lapsed and no options were exercised.

	Number	Exercise Price	Listed/Unlisted	Expiry Date
	1,500,000	$0.25	Unlisted	30 November 2014
	500,000	$0.30	Unlisted	30 November 2014
	500,000	$0.35	Unlisted	30 November 2014
	3,700,000	$0.50	Unlisted	19 October 2013
	600,000	$0.50	Unlisted	04 November 2013
	500,000	$0.50	Unlisted	1 December 2013
	1,100,000	$0.50	Unlisted	24 February 2014
	950,000	$0.35	Unlisted	6 July 2015
	850,000	$0.45	Unlisted	6 July 2015
	1,000,000	$0.30	Unlisted	21 December 2014
	1,000,000	$0.30	Unlisted	26 February 2015
	2,000,000	$0.20	Unlisted	4 December 2017
	30,356,966	$0.20	Listed	28 February 2016
TOTAL	44,556,966

Directors’ Interests

The relevant interests of directors held, directly, indirectly or beneficially, by each specified director including their personally-related entities, in the share capital and unissued shares of the Company as at the date of this report is as follows:

Director	Fully Paid	Ordinary	Listed Share	Options	Unlisted Share Options	Unlisted Share Options
	Shares
	Directly	Indirectly	Directly	Indirectly	Directly	Indirectly
Richard Homsany	-	2,367,330	-	1,183,665	-	3,000,000
Edward	-	12,417,331	-	2,188,666	-	1,500,000
van Heemst
Anthony Ailakis	-	-	-	-	2,000,000	-

ACN 090 169 154

REDSTONE RESOURCES LIMITED

DIRECTORS’ REPORT

Meetings of Directors

During the financial year, the following meetings of directors were held:

	Directors’	meetings
	Number eligible	Number
	to attend	attended
Mr Richard Homsany	7	7
Mr Edward van Heemst	7	7
Mr Anthony Ailakis	7	7

There are no board committees.

Remuneration Report (audited)

This report details the nature and amount of remuneration for each director and key management personnel, including their personally-related entities, of the Company.

- Remuneration Policy

The Board of directors is responsible for determining and reviewing compensation arrangements for the directors and the executive team. The Board assesses the appropriateness of the nature and amount of remuneration of such officers on a periodic basis by reference to relevant employment conditions, with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team.

The Board acts as the Remuneration Committee and assesses the nature and amount of compensation of key management personnel.

All remuneration paid to directors and executives is valued at cost to the Entity and expensed. Options granted to directors are valued using the Black-Scholes option pricing model. Directors are also eligible to participate in the Company’s Employee Share Option Plan ( ESOP ). Any such options to be offered to Directors under the terms of the ESOP require shareholders’ approval. These Options are issued for nil consideration and do not have performance conditions attached other than continued employment with the Entity.

The Board policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The Board determines payments to the non-executive directors and will review their remuneration annually, based on market practice, duties and accountability and to ensure their remuneration is competitive in attracting, retaining and motivating people with appropriate skills and experience. Independent external advice is sought where required.

The maximum amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting. Fees for non-executive directors are currently fixed at up to $250,000 and are not linked to the performance of the Company. However, to align directors’ interests with shareholder interests, the directors are encouraged to hold shares in the Company. Options have been and will be issued to directors of the Company. The purpose of issuing options to directors as part of a remuneration package is to be able to attract, retain and motivate people of the highest calibre to oversee management of the Company's operations by providing them with an opportunity to participate in the company's future growth and give them an incentive to contribute to that growth. The issue of options as a part of remuneration packages is a well-established practice of public listed companies and, in the case of the Company, has the benefit of conserving cash whilst properly rewarding the directors.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

DIRECTORS’ REPORT

Remuneration Report (audited) (continued)

- Performance based remuneration

The Board seeks to align the interests of shareholders and executive directors through a performance related incentive package where applicable. No performance based amounts have been paid or determined to be paid to the Executive at this stage of the Company’s development.

Company Performance, Shareholder Wealth and Director/Executive Remuneration

The Company’s policy is to promote company performance and shareholder wealth by issuing options to directors with the purpose of:

aligning the interests of directors with shareholders;
rewarding capability and experience;
providing competitive reward for contribution to shareholder wealth;
providing a clear structure for earning rewards; and
providing recognition for contribution.
Details of Remuneration

Year ended 30 June 2013

	Cash	Other –	Superannuation	Share	Total	Performance
Directors	Salary	Motor	($)	Options	($)	Related
	and fees	Vehicle		($)		($)
	($)	($)
Richard Homsany
Non-Executive Chairman	96,000	-	1,620	39,250	136,870		-
Edward van Heemst1
Non-Executive Director	-	-	-	117,750	117,750		-
Anthony Ailakis2
Executive Director	205,153	13,500	20,515	-	239,168		-

1Mr Edward van Heemst waived his $13,080 annual entitlement for director’s fee (including 9% SGC) for the 2013 financial year.
2Mr Anthony Ailakis cash salary includes payment of accrued annual leave entitlements of $25,153.

Year ended 30 June 2012

	Cash	Other –	Superannuation	Share	Total	Performance
Directors	Salary	Motor	($)	Options	($)	Related
	and fees	Vehicle		($)		($)
	($)	($)
Richard Homsany
Non-Executive Chairman	96,000	-	1,620	-	97,620	-
Barry Woodhouse
Non-Executive Director	36,000	-	-	67,500	103,500	-
David Le Roy
Non-Executive Director	36,000	-	-	67,500	103,500	-
Executive
Anthony Ailakis
Operations Manager	180,000	1,224	18,000	-	199,224	-

There are no performance conditions attached to remuneration paid during the current or previous financial year.

ACN 090 169 154

REDSTONE RESOURCES LIMITED

DIRECTORS’ REPORT

Remuneration Report (audited) (continued)

Options Granted as Remuneration

Details of options over ordinary shares in the Company that were granted as compensation to each director and specified executive during the current and previous reporting periods and details of options that vested during the reporting period are as follows:

	Number of	Grant Date	Vesting	Fair Value	Exercise	Expiry Date
	options		Date	per option at	Price per
				grant date	option
				($)	($)
Directors
Richard Homsany	500,000	5 Dec 2012	5 Dec 2012	0.078	0.20	4 Dec 2017
Edward van Heemst	1,500,000	5 Dec 2012	5 Dec 2012	0.078	0.20	4 Dec 2017

Employment Contracts of Directors and Senior Executive

Executive Director - Mr A Ailakis

Remuneration and other terms of employment for the Executive Director (formerly Operations Manager to 9 July 2012), Mr Ailakis, are formalised in an executive employment agreement. Major provisions of this agreement are set out below:

Base salary reviewed annually, currently $180,000 plus 10% superannuation, subject to review annually on the anniversary of the Company’s listing on the ASX.
Annual bonus, either by way of cash or shares or options in the Company in a manner to be agreed and determined by the Board.
Other benefits including a vehicle to be leased by the Company for the exclusive use of the executive director, fully maintained and run, mobile phone and notebook with internet.
The Company may pay a termination benefit in lieu of notice, being the amount payable for the termination period of 6 months, where termination is for other than misconduct or illness.
Written notice of six months to terminate the agreement if Mr Ailakis becomes incapacitated by illness or accident for a period of 6 months in any 12 month period.

In light of current market and financial conditions, Mr Ailakis has agreed to reduce his base salary to $140,000 per annum (plus 10% superannuation) effective from 1 October 2013.

During the 2011 financial year Mr Ailakis was granted 2,000,000 $0.50 options exercisable any time on or before 19 October 2013 pursuant to the terms and conditions of the Redstone Resources Ltd Employee Share Option Plan.

Non-Executive Directors

Mr Homsany and his related entity, of which he is a director, Cardinals Corporate Pty Ltd, were paid an annual fee of $96,000 (plus applicable superannuation) for director and consulting services. In light of current market and financial conditions Mr Homsany has agreed to reduce his annual director and consulting fees to $60,000 (plus any applicable super) effective from 1 October 2013.

ACN 090 169 154

REDSTONE RESOURCES LIMITED

DIRECTORS’ REPORT

Remuneration Report (audited) (continued)

Mr van Heemst is entitled to an annual director fee of $13,080 inclusive of any applicable superannuation. In light of current market and financial conditions, Mr van Heemst has agreed to waive his 2013 director fee.

Non-Executive directors may charge consulting fees at commercial rates. Consulting fees paid to directors are separate from any responsibility they may have to the Company or the role they perform as a result of their appointment as a Director of the Company.

On 5 December 2012 following shareholder approval, 1,500,000 and 500,000 unlisted options exercisable at $0.20 on or before 4 December 2017 were granted to Messrs van Heemst and Homsany respectively.

Option Holdings

The movement during the reporting period in the number of options over ordinary shares in the Company held directly, indirectly or beneficially, by each specified director and specified executive, including their personally-related entities, is as follows:

	Held	Granted as	Granted -	Exercised		Lapsed/	Held as
	1 July	remuneration	Entitlement			Other	at
	2012	– Unlisted	Issue/			Changes	30 June
		Options	Placement –				2013
			Listed
			Options
Director
Richard
Homsany	4,000,000	500,000	1,183,665	-	-	(1,500,000)	4,183,665
Non-Executive
Chairman
Edward van	750,000	1,500,000	2,188,666	-	-	(750,000)	3,688,666
Heemst*
Non-Executive
Director
Anthony Ailakis*
Executive	2,000,000	-	-	-	-	-	2,000,000
Director
Barry	800,000	-	-	-	-	(800,000)	-
Woodhouse**
Non-Executive
Director
David Le Roy**	700,000	-	-	-	-	(700,000)	-
Non-Executive
Director

Appointed 9 July 2012

** Resigned 9 July 2012

ACN 090 169 154

REDSTONE RESOURCES LIMITED

DIRECTORS’ REPORT

Remuneration Report (audited) (continued)

Equity Holdings and Transactions

The movement during the reporting period in the number of ordinary shares of the Company held directly, indirectly or beneficially, by each specified director and specified executive, including their personally-related entities is as follows:

	Held at	Received on	Placement	Acquired/	Other	Held as at
	1 July 2012	Exercise of		(Disposed) on	changes	30 June
		Options		Market		2013
Directors
Richard Homsany
Non-Executive	-	-	2,367,330	-	-	2,367,330
Chairman
Edward van Heemst*
Non-Executive Director	9,650,000	-	2,367,331	400,000	-	12,417,331
Anthony Ailakis*
Executive Director	-	-	-	-	-	-
Barry Woodhouse**	-	-	-	-	-	-
Non-Executive Director
David Le Roy**	841,788	-	-	-	(841,788)	-
Non-Executive Director

* Appointed 9 July 2012

** Resigned 9 July 2012

Exercise of options granted as remuneration

During the period no shares were issued on the exercise of options granted as remuneration.

End of Remuneration Report **

Indemnification and insurance of Officers

The Company currently has Directors and Officers insurance. The Company has entered into deeds with each director indemnifying each director against liabilities arising out of their conduct while acting in the capacity of a director of the Company to the full extent permitted by law.

The insurance premium relates to liabilities that may arise from an Officer’s position, with the exception of conduct involving a wilful breach of duty or improper use of information or position to gain personal advantage.

The Officers covered by the insurance policies are the Directors and the Company Secretary.

The contract of insurance prohibits the disclosure of the nature of the liabilities and the amount of the premium.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

DIRECTORS’ REPORT

Auditor

Butler Settineri (Audit) Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.

There were no non-audit services provided by the Entity’s auditor during the financial year.

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.

Legal Proceedings

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

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

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R Homsany Chairman Perth, Western Australia

Dated this 27[th] day of September 2013

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ACN 090 169 154

REDSTONE RESOURCES LIMITED

CORPORATE GOVERNANCE STATEMENT

Corporate Governance is a matter of high importance in the Company and is undertaken with due regard to all of the Company's stakeholders and its role in the community.

The Board supports the Corporate Governance Principles and Recommendations released by the ASX Corporate Governance Council (CGC).

The CGC’s published guidelines are as follows:

Principle 1. Lay solid foundations for management and oversight Principle 2. Structure the board to add value Principle 3. Promote ethical and responsible decision making Principle 4. Safeguard integrity in financial reporting Principle 5. Make timely and balanced disclosure Principle 6. Respect the rights of shareholders Principle 7. Recognise and manage risk Principle 8. Remunerate fairly and responsibly

The key corporate governance practices of the Company and the extent to which the Company has followed the Best Practice Recommendations during the financial year are summarised below.

Principle 1: Lay solid foundations for management and oversight.

1.1 Formalise and disclose the functions reserved to the board and those delegated to management.

The Board represents shareholders' interests in continuing a successful business, which seeks to optimise medium to long-term financial gains for shareholders. The Board believes that this focus will ultimately result in the interests of all stakeholders being appropriately addressed when making business decisions.

The Board is responsible for ensuring that the Company is managed in such a way to best achieve this desired result. Given the current size and operations of the business, the Board currently undertakes an active, not passive, role.

The Board is responsible for evaluating and setting the strategic directions for the Company, establishing goals for management and monitoring the achievement of these goals. The Managing Director (or equivalent) is responsible to the Board for the day-to-day management of the Company.

The Board has primary responsibility for the following:

oversight of the company, including its control and accountability systems,
appointing and removing the chief executive officer (or equivalent),
ratifying the appointment and, where appropriate, the removal of the chief financial officer (or equivalent) and the company secretary,
input into and final approval of management’s development of corporate strategy and performance objectives,
reviewing and ratifying systems of risk management and internal compliance and control, codes of conduct, and legal compliance,
monitoring senior management’s performance and implementation of strategy, and ensuring appropriate resources are available,
approving and monitoring the progress of major capital expenditure, capital management, and acquisitions and divestitures, and
approving and monitoring financial and other reporting.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

CORPORATE GOVERNANCE STATEMENT

The Board’s role and the Company’s corporate governance practices are being continually reviewed and improved as required.

The Directors consider that the Company’s procedures comply with ASX Principle 1.1.

1.2 Disclose the process for evaluation the performance of senior executives.

Arrangements put in place by the Board to monitor the performance of the Company's executives include annual performance appraisal meetings with each individual to ensure that the level of reward is aligned with respective responsibilities and individual contributions made to the success of the Company.

A performance evaluation was undertaken during the financial year with the Executive Director in accordance with Company’s policy.

The Board considers that the Company’s procedures are consistent with ASX Principle 1.2

Principle 2: Structure the board to add value.

The Company's Constitution provides that the number of Directors shall not be less than three. There is no requirement for any shareholding qualification.

2.1 A majority of the board should be independent directors
2.2 The chairperson should be an independent director.

The names of the Directors of the Company in office at the date of this Statement are set out in the Directors’ Report. Directors are appointed based on their experience and on independence of their decision-making and judgement.

In considering the status of directors as independent directors the company has regard to the following:

An independent director is a non-executive director (ie: is not a member of management) and:

is not a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial shareholder of the Company.
within the last three years has not been employed in an executive capacity by the Entity, or been a director after ceasing to hold any such employment.
within the last three years has not been a principal of a material professional adviser or a material consultant to the Entity, or an employee materially associated with the service provided.
is not a material supplier or customer of the Entity, or an officer of or otherwise associated directly or indirectly with a material supplier or customer.
has no material contractual relationship with the Entity other than as a director of the Company.
has not served on the board for a period which could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of the Company.
is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of the Company.

Having regard to the above criteria none of the current directors are considered to be independent.

REDSTONE RESOURCES LIMITED ACN 090 169 154

CORPORATE GOVERNANCE STATEMENT

As such, the Company does not comply with ASX Principle 2.1, however the Board believes that the individuals on the Board can make, and do make, quality and independent judgements in the best interests of the Company on all relevant issues. Directors having a conflict of interest in relation to a particular item of business must absent themselves from the Board meeting before commencement of discussion on the topic.

The Company also does not comply with ASX Principle 2.2.

The composition of the Board is reviewed periodically in view of the underlying scale, scope and complexity of the Company's operations. Changes are made where appropriate.

2.3 The roles of Chair and Chief Executive Officer should not be exercised by the same individual.

The Company complies with ASX Principle 2.3

2.4 The board should establish a nomination committee.

The membership of the Board and its activities are subject to periodic review. The criteria for determining the identification and appointment of a suitable candidate for the Board shall include quality of the individual, background of experience and achievement, compatibility with other Board members, credibility within the Company's scope of activities, intellectual ability to contribute to Board's duties and physical ability to undertake the Board's duties and responsibilities.

The Board considers that the Company is not currently of such 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. Where appropriate, independent consultants are engaged to identify possible new candidates for the Board.

The Board acknowledges that this does not comply with recommendation 2.4 of the ASX Corporate Governance Guidelines. If 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.

2.5 Disclose the process for performance evaluation of the board, its committees and individual directors.

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

The Board considers that the Company’s procedures are consistent with ASX Principle 2.5.

2.6 Structure of the Board

The skills, experience and expertise relevant to the position of director held by each director in office at the date of the annual report is included in the Directors’ Report. Directors of Redstone Resources Limited are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with – or could reasonably be perceived to materially interfere with – the exercise of their unfettered and independent judgment.

In the context of director independence, 'materiality' is considered from both the company and individual director perspective. The determination of materiality requires consideration of both quantitative and qualitative elements. An item is presumed to be quantitatively immaterial if it is equal to or less than 5% of the appropriate base amount. It is presumed to be material (unless there is qualitative evidence to the contrary) if it is equal to or greater than 10% of the appropriate base amount. Qualitative factors considered include whether a relationship is strategically important, the competitive landscape, the nature of the relationship and the contractual or other arrangements governing it and other factors that point to the actual ability of the director in question to shape the direction of the company’s loyalty.

ACN 090 169 154

REDSTONE RESOURCES LIMITED

CORPORATE GOVERNANCE STATEMENT

The terms in office and independence of directors, based on the definition and materiality thresholds above, in office at the date of this statement are:

office at the date of this	statement are:
Name	Position	Term in Office	Independent
Richard Homsany	Chairman, Non-Executive	5 years 9 months	No
Edward van Heemst	Non-Executive	1 year 3 months	No
AnthonyAilakis	Executive	1year 3 months	No

The board does not currently have a nomination or audit committee.

Principle 3: Promote ethical and responsible decision making

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:
(a) the practices necessary to maintain confidence in the company's integrity
(b) the practices necessary to take in into account their legal obligations and the reasonable expectations of their stakeholders; and
(c) the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

The Board acknowledges the need for continued maintenance of a professional standard of corporate governance practice and ethical conduct by all Directors and employees of the Company.

The Board believes that the success of the Company has been and will continue to be enhanced by a strong ethical culture within the organisation. As the Company grows, the need to ensure that ethical standards remain has led the Board to embrace policies to ensure that all Directors, executives and employees act with the utmost integrity and objectivity in their dealings with all people that they come in contact with during their employment with the Company.

The Company is committed to achieving and maintaining high standards of conduct and to ‘institutionalise’ good corporate governance and generally build a culture of best practice.

The Board has adopted a Code of Conduct for Directors to promote ethical and responsible decision-making by the Directors and a Code of Conduct, which provides guidelines aimed at maintaining high ethical standards, corporate behaviour and accountability within the Company.

All Directors, executives and employees are charged with the responsibility to act with the utmost integrity.

Both the Code of Conduct for Directors and Code of Conduct are consistent with the ASX Principle 3.

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

The Company has established a Diversity Policy which complies with ASX Principle 3.2 as disclosed on the Company’s website.

3.3 Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress towards achieving them.

REDSTONE RESOURCES LIMITED ACN 090 169 154

CORPORATE GOVERNANCE STATEMENT

3.4 Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the board,

The board is committed to having an appropriate blend of diversity on the board and on the senior executive management team.

The Company has a measurable objective to achieve at least 25% female representation on the Board, in senior executive positions and the entire Group by 30 June 2016. The Company already meets the desired objective of at least 25% female representation in senior executive management, with one female senior executive representation (33%). There is currently no female representation on the Board and 17% female representation for the Group.

The Company complies with ASX Principles 3.1, 3.2, 3.3 and 3.4

Principle 4: Safeguard integrity in financial reporting

4.1 The board should establish an audit committee.

The Board considers that it is not currently of a size to justify the formation of an audit committee. The Board as a whole undertakes the selection and proper application of accounting policies, the identification and management of risk and the review and operation of the internal control systems.

4.2 Structure an audit committee so that it consists of:
(a) only non-executive directors;
(b) a majority of independent directors;
(c) an independent chairperson, who is not chairperson of the board; and
(d) at least three members.
4.3 The audit committee should have a formal charter.

The Board acknowledges that the Company does not comply with recommendations 4.1, 4.2 and 4.3 of the ASX Corporate Governance Guidelines. If the Company's activities increase in size, scope and nature, the appointment of an audit committee and recommendations 4.2 and 4.3 will be reviewed by the Board and implemented if appropriate.

Principle 5: Make timely and balanced disclosure

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 for that compliance.

The Company has established a continuous disclosure policy in relation to the release of ASX announcements (and media releases) to ensure compliance with the ASX Listing Rule disclosure requirements and to ensure accountability for that compliance. In particular, the policy includes vetting and authorisation processes designed to ensure company announcements are timely, factual, complete and expressed in a clear and objective manner.

The continuous disclosure policy requires all executives and Directors to inform the Managing Director (or equivalent) or in his absence the Company Secretary of any potentially material information as soon as practicable after they become aware of that information.

The Managing Director (or equivalent) is responsible for interpreting and monitoring the Company's disclosure policy and where necessary informing the Board. The Company Secretary is responsible for all communications with ASX.

The Company’s Continuous Disclosure Policy is consistent with ASX Principle 5.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

CORPORATE GOVERNANCE STATEMENT

Principle 6: Respect the rights of shareholders

6.1 Design and disclose a communications strategy to promote effective communication with shareholders and encourage effective participation at general meetings.

The Company places considerable importance on effective communications with shareholders.

The Company's communication strategy requires communication with shareholders and other stakeholders 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. The strategy provides for the use of systems that ensure a regular and timely release of information about the Company to shareholders.

Mechanisms employed include:

(i) announcements lodged with ASX;
(ii) ASX Quarterly Activities and Cash Flow Reports;
(iii) Half Yearly Report;
(iv) presentations at the Annual General Meeting/General Meetings; and
(v) Annual Report.

The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and understanding of the Company's strategy and goals.

The Company also posts all reports, ASX and media releases and copies of significant business presentations on the Company's website.

The Company's practice is to invite the auditor to attend 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.

The Company’s policies are consistent with ASX Principle 6.

Principle 7: Recognise and manage risk

7.1 The board or appropriate board committee should establish policies on risk oversight and management.

The Board is responsible for overseeing the Company's risk management and control framework. The Board adopts an active approach to risk management which recognises that the Company is engaged in activities, which necessarily demand that the Company take certain usual business, entrepreneurial and operational risks. Accordingly, and in the interests of the enhanced performance of the Company, the Board embraces a responsible approach to risk management, as a risk-aware Company, and not a risk-averse one.

Responsibility for control and risk management is delegated to the appropriate level of management within the Company with the Managing Director (or equivalent) having ultimate responsibility to the Board for the risk management and control framework.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

CORPORATE GOVERNANCE STATEMENT

Arrangements put in place by the Board to monitor risk management include:

(i) reporting to the Board in respect of operations and the financial position of the Company;
(ii) Budgetary expenditure controls;
(iii) Review of insurance requirements annually and as needed; and
(iv) Regular reporting on adherence to health and safety guidelines and policies.
Specifically, in managing risk, the Board and Management are to adhere to the following principles:
(i) When considering new strategies or projects, management is to analyse the major risks of those opportunities being secured or being lost, and will consider appropriate strategies for minimising those risks where they are identified.
(ii) The Company will, where thought prudent by the Managing Director (or equivalent) or the Board, take appropriate external advice to determine the best way to manage a particular risk.
(iii) Financial risk will be managed by the whole of the Board working closely with the Managing Director (or equivalent) and the Chief Financial Officer (or equivalent), to ensure that the financial statements and other financial reporting are rigorously tested prior to submission for audit.
(iv) To complement risk management by the Company, appropriate insurances are to be in place, and advice taken from the Company’s brokers or insurers where necessary, to cover the usual risks for businesses such as that of the Company, and where practicable, to cover any particular extraordinary risks which arise in the circumstances of the Company.
7.2 The Board should require management to design and implement the risk management and internal control system to manage the company’s material business risks and report to it on whether those risks are being managed effectively. The board should disclose that management has reported to it as to the effectiveness of the company’s management of its material business risks.

The Board has processes in place to monitor and manage risks whereby:

risks are reported on at regular board meetings;
the Company’s financial position and operations are regularly reviewed; and
each major transaction executed by the Company is accompanied by assessment of its risks.

Management reports to the board regularly as to the effectiveness of the Company’s management of its material business risks.

7.3 The chief executive officer (or equivalent) and the chief financial officer (or equivalent) should state to the board in writing that:
(a) the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board; and

(b) the company's risk management and internal compliance and control system is operating efficiently and effectively in all material respects in relation to financial reporting tasks.

REDSTONE RESOURCES LIMITED ACN 090 169 154

CORPORATE GOVERNANCE STATEMENT

The Company's Managing Director (or equivalent) and Chief Financial Officer (or equivalent) will report in writing to the Board that:

(i) the financial statements of the Company for each half and full year 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;
(ii) the above statement is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and
(iii) the Company's risk management and internal compliance and control framework is operating efficiently and effectively in all material respects.

The Board considers that the Company’s procedures are consistent with ASX Principle 7.

Principle 8: Remunerate fairly and responsibly

The broad remuneration policy of the Company is to ensure that remuneration levels for executive Directors, secretaries and senior managers are set at competitive levels to attract and retain appropriately qualified and experienced personnel.

Remuneration packages offered by the Company are therefore geared to attracting talented employees through a combination of fixed remuneration and long term incentives, calibrated and individually tailored to be competitive in the external market to offer good incentive to join and remain with the Company.

8.1 The board should establish a remuneration committee.

The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the formation of a remuneration committee. The Board as a whole is responsible for the remuneration arrangements for Directors and executives of the Company. For further details please refer to the Remuneration Report included in the Directors’ Report.

The Board acknowledges that this does not comply with principle 8.1 and therefore also principle 8.2 of the ASX Corporate Governance Guidelines. If the Company's activities increase in size, scope and nature, the appointment of a remuneration committee will be reviewed by the Board and implemented if appropriate.

8.3 Clearly distinguish the structure of non-executive directors' remuneration from that of executives.

The remuneration of Non-executive Directors is determined by the Board as a whole having regard to the level of fees paid to Non-executive Directors by other companies of similar size in the industry.

The aggregate amount payable to the Company's Non-executive Directors must not exceed the maximum annual amount approved by the Company's shareholders, which is currently $250,000.

The remuneration of each director is set out in the Directors’ Report included in the Annual Report.

The Directors consider that the Company complies with Principle 8.3 of the Principles of Good Corporate Governance.

The Company’s website is to be updated so as to provide further information about the company’s corporate governance policies. A copy of the Company’s corporate governance policies is available on request.

ACN 090 169 154

REDSTONE RESOURCES LIMITED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2013

Note	Consolidated 2013 $ 2012 $
Revenue Other revenue 3(a) Expenses Administration expenses Employee and directors’ benefits expenses 3(c) Consulting expense Depreciation expense 3(b) Finance costs 3(d) Deferred exploration expenditure impaired and written off 7 Exploration expenditure Other expenses from ordinary activities Loss before interest and taxes Interest revenue 3(a) Loss before income tax Income tax expense 4 Loss after tax for the year Other comprehensive income Movement in foreign exchange translation reserve Total comprehensive income for the year Basic and Diluted Loss per share (cents per share) 14	223,666 26,070 169,122 186,352 811,697 929,798 50,000 18,992 40,383 42,980 245 - 4,407,578 162,419 119,030 7,616 235,486 661,001
	(5,609,875) (1,983,088) 27,191 88,955
	(5,582,684) (1,894,133) - -
	(5,582,684) (1,894,133) - - 29,468 (14,623)
	(5,553,216) (1,908,756)
	(3.85) (1.46)

The accompanying notes form part of these financial statements.

ACN 090 169 154

REDSTONE RESOURCES LIMITED

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2013

Note	Consolidated 2013 $ 2012 $
Current assets Cash and cash equivalents 5 Trade and other receivables 6 Other assets 9 Total current assets Non-current assets Deferred exploration expenditure 7 Plant and equipment 8 Other financial assets 9 Total non-current assets Total assets Current liabilities Trade and other payables 10 Provisions 11 Total current liabilities Non-current liabilities Trade and other payables 10 Provisions 11 Total non-current liabilities Total liabilities Net assets Equity Issued capital 12(a) Reserves 13 Accumulated losses Total equity	740,845 325,173 70,590 33,029 24,391 24,141
	835,826 382,343
	5,176,925 8,922,063 76,568 105,473 6,000 6,000
	5,259,493 9,033,536
	6,095,319 9,415,879
	421,294 476,590 20,408 123,084
	441,702 599,674
	130,000 - 88,545 -
	218,545 -
	660,247 599,674

	5,435,072 8,816,205
	20,538,618 18,523,536 1,712,736 2,338,704 (16,816,282) (12,046,035)
	5,435,072 8,816,205

The accompanying notes form part of these financial statements.

ACN 090 169 154

REDSTONE RESOURCES LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2013

	Contributed Equity Accumulated Losses Share Option Reserve $ $ $	Foreign Currency Translation Reserve Total Equity $ $
At 30 June 2011 Total comprehensive income attributable to members Share capital issued Cost of share-based payment Transfer on expiry of options At 30 June 2012 Total comprehensive income attributable to members Share capital issued Listed option capital issued Capital issue costs Cost of share-based payment Transfer on expiry of options At 30 June 2013	18,165,461 (10,408,002) 2,055,722	(14,845) 9,798,336
	- (1,894,133) - 358,075 - - - - 568,550 - 256,100 (256,100)	(14,623) (1,908,756) - 358,075 - 568,550 - -
	18,523,536 (12,046,035) 2,368,172 - (5,582,684) - 2,000,000 - - 149,569 - - (134,487) - - - - 157,000 - 812,437 (812,436)	(29,468) 8,816,205 29,468 (5,553,216) - 2,000,000 - 149,569 - (134,487) - 157,000 - 1
	20,538,618 (16,816,282) 1,712,736	- 5,435,072

The accompanying notes form part of these financial statements.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2013

Note	Consolidated 2013 $ 2012 $
Cash flows from operating activities Payments to suppliers and employees Interest received Interest paid Income tax paid Other income – 2012 R&D concession Net cash flows used in operating activities 23 Cash flows from investing activities Exploration expenditure Net 2012 R&D tax concession Payments for plant and equipment Proceeds from insurance claim Proceeds from sale of foreign tenement rights Net cash flows used in investing activities Cash flows from financing activities Proceeds from issue of shares Payment of share issue costs Net cash flows from financing activities Net increase/(decrease) in cash held Cash at the beginning of the financial year Effect of foreign currency translation Cash at end of financial year 5	(1,345,593) (810,873) 25,516 90,373 - - - - 92,752 -
	(1,227,325) (720,500)
	(1,053,743) (3,521,666) 384,652 - (19,772) (18,133) 36,400 265,000 280,000 110,000
	(372,463) (3,164,799)
	2,149,569 360,000 (134,487) (1,925)
	2,015,082 358,075
	415,294 (3,527,224) 325,173 3,867,703 378 (15,306)
	740,845 325,173

The accompanying notes form part of these financial statements.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

1. Corporate information

The financial report of Redstone Resources Limited and its controlled entities (the Entity or Group) for the year ended 30 June 2013 was authorised for issue in accordance with a resolution of the directors of the Entity’s parent entity, Redstone Resources Limited, on 27 September 2013.

Redstone Resources Limited (Redstone or the Company) is a company limited by shares incorporated and domiciled in Australia whose shares commenced public trading on the Australian Stock Exchange on 3 August 2006. The nature of operations and principal activities of the Entity are described in the Directors’ Report.

The Group is a for-profit entity for the purpose of preparing financial statements.

2. Summary of significant accounting policies

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

a)

Basis of preparation

The financial report is a general purpose financial report which has been prepared in accordance with the requirements of the Corporations Act 2001, applicable Australian Accounting Standards, Accounting Interpretations and other mandatory professional reporting requirements. The financial report has been prepared on a historical cost basis and is presented in Australian dollars.

b)

Statement of compliance

The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS).

Australian Accounting Standards that have recently been issued or amended but are not yet effective have not been adopted for the annual reporting period ended 30 June 2013.

c) Adoption of new and revised standards

The Entity has also reviewed all new Standards and Interpretations that have been issued and are effective for the year ended 30 June 2013. As a result of this review the Directors have determined that there is no material impact or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change necessary to the Entity’s accounting policies.

d) New accounting standards not yet implemented

The AASB has issued new, revised and amended standards and interpretations that have mandatory application dates for future reporting periods. A discussion of those future requirements and their impact on the Entity follows:

AASB 9: Financial Instruments and AASB 2009–11: Amendments to Australian Accounting Standards arising from AASB 9 [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 121, 127, 128, 131, 132, 136, 139, 1023 & 1038 and Interpretations 10 & 12] (applicable for annual reporting periods commencing on or after 1 January 2015 .

These standards are applicable retrospectively and amend the classification and measurement of financial assets. The Entity has not yet determined the potential impact on the financial statements. The changes made to accounting requirements include:

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

d) New accounting standards not yet implemented (continued)
- simplifying the classifications of financial assets into those carried at amortised cost and those carried at fair value;
- simplifying the requirements for embedded derivatives;
- removing the tainting rules associated with held-to-maturity assets;
- removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost;
- allowing an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument; and
- reclassifying financial assets where there is a change in an entity’s business model as they are initially classified based on:
  - a. the objective of the entity’s business model for managing the financial assets; and b. the characteristics of the contractual cash flows.
AASB 1053: Application of Tiers of Australian Accounting Standards and AASB 2010-2 Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements (applicable for annual reporting periods commencing on or after 1 July 2013).

On 30 June 2010 the AASB officially introduced a revised differential reporting framework in Australia. Under this framework, a two-tier differential reporting regime applies to all entities that prepare general purpose financial statements. Redstone Resources Limited is listed on the ASX and is not eligible to adopt the new Australian Accounting Standards – Reduced Disclosure Requirements. The two standards will therefore have no impact on the financial statements of the Group.

AASB 2011-2: Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project [AASB 1, AASB 5, AASB 101, AASB 107, AASB 108, AASB 121, AASB 128, AASB 132, AASB 134, Interpretation 2, 112 and 113] (applicable for annual reporting periods commencing on or after 1 July 2013).

This standard amends many Australian Accounting Standards, removing the disclosures which have been relocated to AASB 1054.

The Group does not expect this amendment to have any material impact on the consolidated financial statements.

AASB 10: Consolidated Financial Statements (applicable for annual reporting periods commencing on or after 1 January 2013).

The objective of this Standard is to establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities.

This standard is not expected to materially impact the Entity.

AASB 11: Joint Arrangements (applicable for annual reporting periods commencing on or after 1 January 2013).

This standard uses the principle of control in AASB 10 to define joint control, and therefore the determination of whether joint control exists may change. In addition AASB 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, accounting for a joint arrangement is dependent on the nature of the rights and obligations arising from the arrangement. Joint operations that give the venturers a right to the underlying assets and obligations themselves is accounted for by recognising the share of those assets and obligations. Joint ventures that give the venturers a right to the net assets is accounted for using the equity method.

This may result in a change in the accounting for the joint arrangements held by the Group.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

d) New accounting standards not yet implemented (continued)

AASB 12: Disclosure of Interests in Other Entities (applicable for annual reporting periods commencing on or after 1 January 2013).

This standard includes all disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates and structures entities. New disclosures have been introduced about the judgments made by management to determine whether control exists, and to require summarised information about joint arrangements, associates and structured entities and subsidiaries with non-controlling interests.

AASB 13: Fair Value Measurement (applicable for annual reporting periods commencing on or after 1 January 2013).

AASB 13 establishes a single source of guidance for determining the fair value of assets and liabilities. AASB 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value when fair value is required or permitted. Application of this definition may result in different fair values being determined for the relevant assets. AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes information about the assumptions made and the qualitative impact of those assumptions on the fair value determined.

This standard is not expected to materially impact the Entity.

AASB 119: Employee Benefits (September 2011) and AASB 2011-10: Amendments to Australian Accounting Standards arising from AASB 119 (September 2011) AASB 1, AASB 8, AASB 101, AASB 124, AASB 134, AASB 1049 & AASB 2011-8 and Interpretation 14.

These standards introduce a number of changes to accounting and presentation of defined benefit plans. The Entity does not have any defined benefit plans and is therefore not impacted by the amendment.

AASB 119 (September 2011) also includes changes to the accounting for termination benefits that require an entity to recognise an obligation for such benefits. The Entity does not expect to be materially impacted by these amendments at this stage.

Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine (applicable for annual reporting periods commencing on or after 1 January 2013).

This interpretation applies to stripping costs incurred during the production phase of a surface mine. Production stripping costs are to be capitalised as part of an asset, if an entity can demonstrate that its probable future economic benefits will be realised, the costs can be measured reliably and the entity can identify the component of an ore body for which access has been improved. This asset is to be called the “stripping activity asset”

The stripping activity asset shall be depreciated or amortised on a systematic basis, over the expected useful life of the identified component of the ore body that becomes more accessible as a result of the stripping activity. The units of production method shall be applied unless another method is more appropriate.

This interpretation does not currently impact the Entity.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

d) [New accounting standards not yet implemented (continued) ]

AASB 2012-2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities (applicable for annual reporting periods commencing on or after 1 January 2013) and AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Liabilities (applicable for annual reporting periods commencing on or after 1 January 2014)

AASB 2012-2 principally amends AASB 7 Financial Instruments: Disclosures to require disclosure of the effect of potential effect of netting arrangements.

AASB 2012-3 adds application guidance to AASB 132 Financial Instruments : Presentation to address inconsistencies identified in applying some of the offsetting criteria of AASB 132.

These standards are not expected to impact the Entity.

AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 20092011 Cycle (applicable for annual reporting periods commencing on or after 1 January 2013)

AASB 2012-5 makes amendments resulting from the2009-2011 Annual Improvements Cycle, which addresses the following:

Repeat application of AASB 1 is permitted (AASB 1)
Clarification of the comparative information requirements when an entity provides a third balance sheet (AASB 101 Presentation of Financial Statements )

This standard is not expected to materially impact the Entity.

AASB 2012-9 Amendment to AASB 1048 arising from the withdrawal of Australian Interpretation 1039 (applicable for annual reporting periods commencing on or after 1 January 2013)

AASB 2012-9 amends AASB 1048 Interpretation of Standards to evidence the withdrawal of Australian Interpretation 1039 Substantive Enactment of Major Tax Bills in Australia.

This standard does not impact the Entity.

AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements (applicable for annual reporting periods commencing on or after 1 January 2013).

This amendment deletes AASB 124 individual key management disclosure requirements for disclosing entities that are not companies.

This standard does not impact the Entity.

Interpretation 21 Levies (applicable for annual reporting periods commencing on or after 1 January 2014).

The Entity does not anticipate the early adoption of any of the above Australian Accounting Standards.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

d) New accounting standards not yet implemented (continued)

AASB 1055 Budgetary Reporting

This standard specifies budgetary disclosure requirements for the whole of government, General Government (GGS) and not-for-profit entities within the GGS of each government (applicable for annual reporting periods commencing on or after 1 July 2014).

This standard does not apply to the Entity.

e) Parent entity information

The financial information for the Parent Entity, Redstone Resources Limited, disclosed in note 25 has been prepared on the same basis as the consolidated financial statements.

f) Significant accounting judgments, estimates and assumptions

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are:

Capitalisation of exploration and evaluation expenditure

Under AASB 6 Exploration for and Evaluation of Mineral Resources the Entity has the option to either expense exploration and evaluation expenditure as incurred or to capitalise such expenditure provided that certain conditions are satisfied. The Entity applies the latter policy as outlined in note 2(n).

Impairment of plant and equipment

Plant and equipment are reviewed for impairment if there is any indication that the carrying amount may not be recoverable.

Where a review for impairment is conducted, the recoverable amount is assessed by reference to the higher of ‘value in use’ (being net present value of expected future cash flows of the relevant cash generating unit) and ‘fair value less costs to sell’.

Share based payment transactions

The Entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an independent valuer using either Black-Scholes or binomial methodology.

g) Revenue Recognition

Revenues are recognised to the extent that it is probable that the economic benefit will flow to the Entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue can be recognised.

(i) Sale of goods

Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are considered passed to the buyer at the time of delivery of the goods to the customer.

( ii) Rendering of services

Revenue from the rendering of services is recognised by reference to the stage of completion of the contract.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

g) Revenue Recognition (continued)

(iii) Interest income

Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.

(iv) Dividends

Revenue is recognised when the Entity’s right to receive the payment is established.

h) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

i) Cash and cash equivalents

Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the Consolidated Statement of Financial Position.

For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

j) Trade and other receivables

Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method, less provision for impairment. Trade receivables are generally due for settlement within 30 days.

Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by reducing the carrying amount directly. An allowance account is used when there is objective evidence that the Entity will not be able to collect all amounts due according to the original contractual terms. Factors considered by the Entity in making this determination include known significant financial difficulties of the debtor, review of financial information and significant delinquency in making contractual payments to the Entity. The impairment allowance is set equal to the difference between the carrying amount of the receivable and the present value of estimated future cash flows, discounted at the original effective interest rate. Where receivables are short-term, discounting is not applied in determining the allowance.

The amount of the impairment loss is recognised in the consolidated statement of comprehensive income within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other income in the consolidated statement of comprehensive income.

REDSTONE RESOURCES LIMITED ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

k) Financial Assets

Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale investments, as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transactions costs. The Entity determines the classification of its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial year-end.

All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Entity commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the marketplace.

(i) Financial assets at fair value through profit or loss

Financial assets classified as held for trading are included in the category ‘financial assets at fair value through profit or loss’. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on investments held for trading are recognised in profit or loss.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

l) Income tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance date.

Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except:

when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:

when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered

ACN 090 169 154

REDSTONE RESOURCES LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

l) Income tax (continued)

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

m) [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 consolidated statement of financial position are shown inclusive of GST. The net amount of GST recoverable or payable is included as a current asset or current liability in the consolidated statement of financial position. Cash flows are included in the consolidated statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable or payable are classified as operating cash flows.

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

n) Exploration and evaluation expenditure

Exploration and evaluation expenditure incurred is 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.

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

o) Plant and equipment

Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment is measured on a cost basis.

Depreciation

The depreciable amount of all fixed assets is depreciated on a diminishing balance basis over their useful lives to the Entity commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are:

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

o) Plant and equipment (continued)

Class of fixed asset	Depreciation rate
Office furniture & equipment	11.25%
Satellite phone & digital equipment	22.50%
Office paintings	1.50%
Computer equipment	37.50%
Generators	7.50%
Motor vehicles	22.50%

Derecognition and disposal

An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Any gain of loss arising on derecognition of the asset (calculated as the difference between the net disposal and the carrying amount of the asset) is included in the profit and loss in the year the asset is derecognised.

p) Derecognition of financial assets and liabilities

(i) Financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:

the rights to receive cash flows from the asset have expired;
the Entity retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass-through’ arrangement; or
the Entity has transferred its rights to receive cash flows from the asset and either:
(a) has transferred substantially all the risks and rewards of the asset, or
(b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Entity has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Entity’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration received that the Entity could be required to repay.

When continuing involvement takes the form of a written and/or purchased option (including a cash-settled option or similar provision) on the transferred asset, the extent of the Entity’s continuing involvement is the amount of the transferred asset that the Entity may repurchase, except that in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at fair value, the extent of the Entity’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

(ii) Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

ACN 090 169 154

REDSTONE RESOURCES LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

q) Impairment

The Entity assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Entity makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease).

An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

r) Goodwill

Goodwill acquired in a business combination is initially measured at its cost, being the excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. Goodwill is subsequently measured at its cost less any impairment losses.

s) Trade and other payables

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

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

t) Employee benefits

i. Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other creditors in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. Annual leave entitlements are accounted for as a provision.

ii. Long service leave

The liability for long service leave expected to be settled within 12 months of the reporting date is recognised in the provision for employee benefits and is in accordance with i. above. The liability for long service leave expected to be settled more than 12 months from the reporting date is recognised in the provision for employee benefits and is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

iii. Superannuation

Contributions are made by the Entity to employee superannuation funds and are charged as expenses when incurred.

u) Interest-Bearing Loans and Borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

Gains and losses are recognised in profit or loss when the liabilities are derecognised.

v) Provisions

Provisions are recognised when the Entity has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

When the Entity expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as separate assets but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the consolidated statement of comprehensive income net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability.

When discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

w) Share-based payment transactions

The Entity provides incentives to employees (including directors) of the Entity in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’).

The Company has in place an Employee Share Option Plan (ESOP) which provides benefits to directors, senior executives and key employees. Key terms of the ESOP are as follows:

The ESOP is available to eligible persons who will be determined by the Board but must be persons who are Directors or employees of the Entity;
Options are issued for nil consideration;
The exercise price is determined by the Board with regard to the market value of the Company’s shares at the time it resolves to offer the options;
Options will be issued subject to certain conditions that must be satisfied for them to be exercised to be determined by the Board when it resolves to offer the Options and in accordance with the purpose of the ESOP;
The expiry date of the Options will be determined by the Board prior to the offer of the relevant options, subject to any restrictions in the Corporations Act, but in any event no longer than 5 years from the date of issue;
Options will lapse if the eligible person ceases to be an eligible person for any reason other than retirement, permanent disability, redundancy or death;
Options are not transferable;
Any shares issued will rank equally with the Company’s then existing issued shares;
The issue of Options to Directors will require shareholder approval in accordance with the ASX Listing Rules and the Corporations Act.

The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an external valuer using Black-Scholes and binomial methods.

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Redstone Resources Limited (‘market conditions’).

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting date’).

Where the Entity acquires some form of interest in an exploration tenement and the consideration comprises share based payment transactions, the fair value of the equity instruments granted is measured at the grant date. The cost of the equity securities is recognised within capitalised exploration expenditure together with a corresponding increase in equity.

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the directors of the company, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

w) Share-based payment transactions (continued)

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.

x) Share capital

Ordinary share capital is recognised at the fair value of the consideration received by the Entity. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction in share proceeds received.

y) Earnings per share

Basic earnings per share

Basic earnings per share is determined by dividing net profit after income tax attributable to members of the Entity, excluding any costs of service equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

Diluted earnings per share

Diluted earnings per share adjusts the figure used in the determination of basic earnings per share to take into account the dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to potential ordinary shares.

z) Joint venture arrangements

Jointly controlled operations

Where the Entity is a venturer (and so has joint control) in a jointly controlled operation the Entity recognises the assets that it controls and the liabilities it incurs, along with the expenses that it incurs and the Entity’s share of the income that it earns from the sale of goods and services by the joint venture.

aa) Comparative figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

ACN 090 169 154

REDSTONE RESOURCES LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

ab) Foreign currency

Exchange differences are recognised in profit or loss in the period in which they arise except for exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur, which form part of the net investment in a foreign operation, and which are recognised in the foreign currency translation reserve and recognised in profit or loss on disposal of the net investment.

The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in Australian dollars, which is the functional currency of the Entity, and the presentation currency for the consolidated financial statements.

ac) Principles of going concern

The Entity recorded a loss of $5,582,684 for the year ended 30 June 2013 and as at 30 June 2013 had net current assets of $394,124 and exploration commitments of $1,016,065 (note 21). Although this indicates a material uncertainty, the financial report has been prepared on a going concern basis, as the Directors are of the opinion that the Entity will be able to pay its debts as and when they fall due. The Directors contemplate continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business

The Entity is currently in the process of a capital raising by placement of ordinary shares to sophisticated investors to fund operations and exploration for the short to medium term. All capital raising options are being explored and assessed along with a director controlled review and reduction in operating expenditure. In addition, the Board continues to investigate and pursue divestment opportunities, including joint ventures, for some of its West Musgrave and South American tenement holdings. For further information please refer to the Directors’ Report.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

(d) Finance costs Short term borrowings Other third parties Interest is expensed as it accrues. (e) Dividends 3. Revenue and expenses (a) Revenue and Interest Interest revenue Interest income - third party Interest income – related party Other revenue Exploration services income Foreign exchange gain Gain on insurance claim Gain on sale of foreign project R&D concession (b) Depreciation expense Plant and equipment (c) Employee and directors’ benefits expenses Share-based payment Other	Consolidated 2013 $ 2012 $ 26,186 88,955 1,005 -
	27,191 88,955
	71,460 26,070 378 - 31,666 - 27,410 - 92,752 -
	223,666 26,070
	40,383 42,980
	157,000 183,800 654,697 745,998
	811,697 929,798
	- - 245 -
	245 -
	- -

(e) Dividends

No dividends have been paid or are proposed as at 30 June 2013. As at 30 June 2013 the Company has no franking credits available for use in future years.

4. Income tax

Current tax Deferred tax Under/(over) provisions in prior year Income tax expense reported in the statement of comprehensive income	- - - - - -
	- -

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

4. Income tax (continued)

The prima facie income tax benefit on pre-tax accounting loss from operations reconciles to the income tax expense in the financial statements as follows:

Loss before income tax Prima facie tax on loss Tax effect of permanent items Temporary differences not brought to account Income tax expense reported in the statement of comprehensive income	Consolidated 2013 2012 $ $ (5,582,684) (1,894,133) (1,674,805) (568,240) 51,464 222,186 1,623,341 346,054
	- -

The tax rate used in the above reconciliation is the tax rate of 30% payable by Australian corporate entities on taxable profits under Australian tax law. No amounts of current or deferred tax have been recognised directly in equity as at 30 June 2013.

Deferred income tax

Unrecognised deferred income tax at 30
June relates to the following:
Deferred tax liabilities
Capitalised exploration and
evaluation expenditure
Deferred tax assets
Tax losses available to offset
against future income
Tax benefit of capital raising costs
not recognised
Provisions and accruals
Deferred tax assets not brought to
account as realisation is not
considered probable
Gross deferred income tax assets

(1,553,077)
(2,556,568)
5,402,676
5,395,026
74,300
73,328
60,756
44,455
(3,984,655)
(2,956,241)

-
-

Redstone Resources Limited and its controlled entities have not elected to form a tax consolidation group.

It is considered that it is not probable that the Entity will utilise all its carry forward tax losses in the foreseeable future, hence it is not expected to pay tax in the foreseeable future. The deferred tax balances noted above have therefore not been accounted for in the consolidated statement of financial position.

At 30 June 2013, the Entity has tax losses in Australia of $18,008,921 (2012: $17,983,419) that are available indefinitely for offset against future taxable income. The Entity has not recognised deferred income tax assets in relation to these losses as realisation of the benefit is not regarded as probable.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

4. Income tax (continued)

These deferred tax assets will only be obtained if:

a) future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised;
b) the 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 Entity in realising the benefit from the deduction of the loss.

5. Cash and cash equivalents Cash at bank Cash on deposit 6. Trade and other receivables Current Other receivable Provision for doubtful debtors Short term loan – related party GST receivable 7. Deferred exploration expenditure Exploration costs brought forward Expenditure incurred on exploration Reimbursement of capitalised costs Exploration costs written off (i) Proceeds received upon sale of Anebá (Potash) Project Exploration assets sold FX movement Carrying amount at the end of the year		Consolidated 2013 $ 2012 $ 160,845 295,173 580,000 30,000 740,845 325,173 110,252 4,563 (79,431) (4,563) 10,656 - 29,113 33,029 70,590 33,029 8,922,063 6,396,664 1,308,144 3,177,289 (418,773) - (4,407,001) (162,419) (280,000) (110,000) 27,410 (379,471) 25,082 -




		5,176,925 8,922,063

(i) The ultimate recoupment of costs carried forward in relation to exploration expenditure is dependent on the successful development and commercial exploitation or sale of the areas of interest at an amount at least equal to the carrying value.

During the 2013 financial year the Entity impaired the carrying values of its Saturn Project (previously Blackstone Range), Baggaley Hills Project, Apuí (Phosphate) and all other Brazil Projects to nil recoverable value.

During the previous financial year the Entity sold its Stripeys Project (exploration licence E69/2435) and the Entity’s Nickel Project in Brazil was written off.

ACN 090 169 154

REDSTONE RESOURCES LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

8. Plant and equipment At cost Accumulated depreciation Total written down value Reconciliation A reconciliation of the carrying amounts of plant and equipment at the beginning and end of the current financial period. Plant and equipment Carrying amount at beginning of year Additions Disposals Insurance write-off Depreciation expense Total plant and equipment 9. Other assets Current Prepayments Deposits and advances Total other current assets Non-Current Investment in unlisted public company Total non-current other assets 10. Trade and other payables Current Trade creditors (i) Other creditors (ii) Total current trade and other payables Non-Current Other creditors (iii) Total non-current trade and other payables	Consolidated 2013 $ 2012 $ 264,722 424,660 (188,154) (319,187)
	76,568 105,473
	105,473 131,847 19,772 18,133 - (1,527) (8,294) - (40,383) (42,980)
	76,568 105,473
	17,113 9,657 7,278 14,484
	24,391 24,141
	6,000 6,000
	6,000 6,000
	128,858 238,461 292,436 238,129
	421,294 476,590
	130,000 -
	130,000 -

Terms and conditions relating to the above financial instruments: (i) Trade creditors are non-interest bearing and are normally settled on 14-30 days terms. (ii) Other creditors includes $110,000 payable in twelve monthly instalments to 30 June 2014. Other than for this amount Other creditors are non-interest bearing and have an average term of 30 days. (iii) Other creditors includes $130,000 payable in fourteen monthly instalments plus interest to 31 August 2015.

Trade and other payables include $412,984 (2012: $213,012) relating to exploration expenditure.

ACN 090 169 154

REDSTONE RESOURCES LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

11. Provisions Employee entitlements Opening balance at 1 July 2012 Additional provisions Amounts used/paid out Balance as at 30 June 2013 Current employee entitlements Non-current employee entitlements 12. Issued Capital (a) Issued and paid up capital 151,969,390 (2012: 131,969,390) ordinary shares fully paid 30,356,966 (2012: nil) listed $0.20 options expiring 28 February 2016	Consolidated 2013 $ 2012 $ 123,084 14,554 41,970 126,704 (56,101) (18,174)
	108,953 123,084
	20,408 123,084 88,545 -
	108,953 123,084
	20,463,176 18,523,536 75,442 -
	20,538,618 18,523,536

Changes to the then Corporations Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998. Therefore the company does not have a limited amount of authorised share capital and issued shares do not have a par value.

(b) Movements in fully paid ordinary shares during the year were as follows:

Movements in shares on issue Opening balance Shares issued to sophisticated investor pursuant to Anebá (Potash) Sale and Purchase Agreement – 29 May 2012 Shares issued to sophisticated investor pursuant to Anebá (Potash) Sale and Purchase Agreement – 19 June 2012 Share Placement to sophisticated investors – 1stTranche 10 October 2012 Share Placement to sophisticated investors – 2ndTranche 12 December 2012 Share issue costs Closing balance	2013 2012
	No. of Shares $ No. of Shares $
	131,969,390 18,523,536 129,969,390 18,165,461 - - 1,111,111 200,000 - - 888,889 160,000 11,600,000 1,160,000 - - 8,400,000 840,000 - - - (60,360) - (1,925)
	151,969,390 20,463,176 131,969,390 18,523,536

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

12. Issued Capital (continued)

(c) Movements in options issued during the year were as follows:

During the year 30,356,966 Listed Options exercisable at $0.20 on or before 28 February 2016 were issued as follows:

A total 10,000,027 Listed Options were issued during the financial year as part of a $2 million share placement of 20,000,000 fully paid ordinary shares at $0.10 per share.

During the year 14,356,939 Listed Options were issued following a fully underwritten pro-rata nonrenounceable 1:10 entitlement issue to eligible shareholders of Listed Options to acquire fully paid ordinary shares in the Company at an issue price of $0.01 per Listed Option. The entitlement issue of Listed Options raised $143,569 (before costs). Eligible shareholders subscribed for 9,997,605 Listed Options, whilst the shortfall of 4,359,344 Listed Options was allotted to clients of Argonaut Capital Limited, the underwriter to the offer.

Pursuant to the engagement of Argonaut Capital Limited as advisors to the Company, the Company issued 6,000,000 Listed Options at a subscription price of $0.001. Of these Options, 3,000,000 Listed Options shall not vest until the Company’s share price trades above $0.25 for at least 3 consecutive business days.

Movements in listed options on issue Opening balance 1:2 attaching options issued to sophisticated investors pursuant to Placement 1stTranche – 10 October 2012 Options issued pursuant to 1:10 Non- Renounceable Entitlement Issue at $0.01/option – 6 December 2012 1: 2 attaching options issued to sophisticated investors pursuant to Placement 2ndTranche – 12 December 2012 Options issued to underwriter pursuant to 1:10 Non-Renounceable Entitlement Issue at $0.01/option– 14 January 2013 Options issued to Argonaut Capital Limited, Corporate Advisor, pursuant to mandate at $0.001/option – 11 February 2013 Option issue costs Closing balance		2013 2012
		No. of Listed Options (RDSO) $ No. of Listed Options (RDSO) $ - - - - 5,800,013 - - - 9,997,605 99,976 - - 4,200,014 - - - 4,359,334 43,593 - - 6,000,000 6,000 - - - (74,127) - - 30,356,966 75,442 - -

Movements in unlisted options on issue

During the year 2,000,000 unlisted options over ordinary shares were issued and 8,616,668 unlisted options lapsed or expired. During the financial year no options were converted into ordinary shares.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

12. Issued Capital (continued)

(c) Movements in unlisted options on issue (continued)

Unlisted share options	As at 30 June 2012 Issued/ (lapsed) As at 30 June 2013 Exercise price Exercisable from Expiry
Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Total options Weighted average exercise price (cents/share) Weighted average exercise price of lapsed options (cents/share) Weighted average exercise price of issued options (cents/share)	1,000,000 (1,000,000) - 0.95 30 Nov 07 28 Nov 12 500,000 (500,000) - 1.20 30 Nov 07 28 Nov 12 300,000 (300,000) - 0.75 20 Feb 09 20 Feb 13 6,716,668 (6,716,668) - 0.25 30 Nov 09 30 Nov 12 1,500,000 - 1,500,000 0.25 30 Nov 09 30 Nov 14 500,000 - 500,000 0.30 30 Nov 09 30 Nov 14 500,000 - 500,000 0.35 30 Nov 09 30 Nov 14 3,750,000 (50,000) 3,700,000 0.50 19 Oct 10 19 Oct 13 650,000 (50,000) 600,000 0.50 4 Nov 10 4 Nov 13 500,000 - 500,000 0.50 1 Dec 10 1 Dec 13 1,000,000 - 1,000,000 0.50 25 Feb 11 24 Feb 14 100,000 - 100,000 0.50 25 Feb 11 24 Feb 14 950,000 - 950,000 0.35 7 Jul 11 6 Jul 15 850,000 - 850,000 0.45 7 Jul 11 6 Jul 15 1,000,000 - 1,000,000 0.30 22 Dec 11 21 Dec 14 1,000,000 - 1,000,000 0.30 27 Feb 12 26 Feb 15 - 2,000,000 2,000,000 0.20 5 Dec 12 4 Dec 17
	20,816,668 (6,616,668) 14,200,000
	0.407 0.378 0.401 0.20

The weighted average remaining contractual life of options on issue as at 30 June 2013 is 1.51 years (2012: 2.37 years). The exercise prices of options on issue range from $0.20 per share to $0.50 per share.

(d) Terms and conditions of contributed equity

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.

Option holders do not have the right to receive dividends nor are they entitled to vote at a meeting of the company.

(e) Employee Share Option Plan (ESOP)

Key terms relating to the Employee Share Option Plan (ESOP) are set out in note 2(w).

During the financial year no options were issued to eligible persons pursuant to the ESOP (2012: 300,000) and 100,000 options lapsed.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

12. Issued Capital (continued)

(f) Share Issue

13. Reserves

Share option reserve (i) Foreign currency translation reserve (ii) Total reserves	Consolidated 2013 $ 2012 $ 1,712,736 2,368,172 - (29,468)
	1,712,736 2,338,704

(i) This reserve is used to record the value of equity benefits provided to employees and directors as part of their remuneration and as consideration for other equity settled transactions.

(ii) This reserve is used to record exchange differences arising on translation of the foreign controlled entity, as described in note 1(ab). The reserve is recognised in profit and loss when the net investment is disposed of.

Movements in reserves are set out in the Statement of Changes in Equity.

14. Loss per share

Basic loss per share (cents per share) Weighted average number of ordinary shares on issue used in the calculation of basic earnings per share Earnings used in the calculation of basic loss per share	Consolidated 2013 2012 (3.85) (1.46)
	144,930,486 130,093,252 (5,582,684) (1,894,133)

As the Entity made a loss for the year, diluted earnings per share is the same as basic earnings per share.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

15. Key management personnel disclosures

(a) Key management personnel

The directors of Redstone Resources Limited during the financial year were:

Richard Homsany ( B. Com, LL.B (Hons), CPA, Grad. Dip. FINSIA, F Fin, MAICD) - Non-Executive Chairman

Edward van Heemst (B. Com, MBA, CA, CPA ) – Non-Executive Director (appointed 9 July 2012) Anthony Ailakis (B. Juris LL.B) – Executive Director (appointed 9 July 2012)

Barry Woodhouse ( B. Com, LL. B, CPA, FCIS ) – Non-Executive Director (resigned 9 July 2012) David Le Roy – Non-Executive Director (resigned 9 July 2012)

The senior executive of Redstone Resources Limited during the financial year was: Anthony Ailakis (B. Juris LL.B) – Operations Manager (to 9 July 2012)

(b) Remuneration of key management personnel

Refer to the Remuneration Report included on pages 11 to 15 for details of remuneration paid to directors and the specified executive.

Options granted as remuneration to key management personnel

2013 Directors R Homsany E van Heemst A Ailakis B Woodhouse D Le Roy	Balance at start of year Granted as compensation Exercised/ (Lapsed) Other Changes Balance at end of year
	4,000,000 500,000 (1,500,000) - 3,000,000 - 1,500,000 - - 1,500,000 2,000,000 - - - 2,000,000 800,000 - - (800,000) - 700,000 - - (700,000) -
	7,500,000 2,000,000 (1,500,000) (1,500,000) 6,500,000

2,000,000 options were granted as remuneration to key management personnel or vested during the 2013 financial year and 1,500,000 options lapsed.

2012 Directors R Homsany B Woodhouse D Le Roy Executive A Ailakis	Balance at start of year Granted as compensation Exercised/ (Lapsed) Other Changes Balance at end of year
	4,000,000 - - - 4,000,000 300,000 500,000 - - 800,000 200,000 500,000 - - 700,000
	4,500,000 1,000,000 - - 5,500,000
	2,000,000 - - - 2,000,000
	2,000,000 - - - 2,000,000

1,000,000 options were granted as remuneration to key management personnel or vested during the 2012 financial year.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

15. Key management personnel disclosures

(c) Share holdings of key management personnel

	Held as	Received	Acquired/	Placement	Other	Held as at
2013	at	on	(Disposed)		Changes	30 June
	1 July	Exercise	on Market		(director	2013
	2012	of Options			appointment/
					(resignation)
Directors
R Homsany	-	-	-	2,367,330	-	2,367,330
E van Heemst	-	-	-	2,367,331	10,050,000	12,417,331
A Ailakis	-	-	-	-	-	-
B Woodhouse	-	-	-	-	-	-
D Le Roy	841,788	-	-	-	(841,788)	-

	Held as	Received	Acquired/	Placement	Other	Held as at
2012	at	on	(Disposed)		Changes	30 June
	1 July	Exercise	on Market			2012
	2011	of
		Options
Directors
R Homsany	-	-	-	-	-	-
B Woodhouse	-	-	-	-	-	-
D Le Roy	500,000	-	341,788	-	-	841,788
Executive
A Ailakis	444,683	-	-	-	(444,683)	-

All equity transactions with key management personnel, other than those arising from the exercise of remuneration options, have been entered under terms and conditions no more favourable than those the Company would have adopted if dealing at arm’s length.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

15. Key management personnel disclosures (continued)

(d) Transactions with key management personnel

During the financial year, Cardinals Corporate Pty Ltd, a company of which Mr Homsany is a director, undertook work for the Company totalling $49,507 excluding GST, in addition to the amount which has been disclosed as remuneration in the Directors’ Report.

These services were provided on arm’s length terms.

Pursuant to a Deed of Indemnity, Insurance and Access, Mr Ailakis, as an officer of the Company, has been reimbursed legal costs defending a legal claim made against him in the District Court of Western Australia (Olivero v Ailakis & Anor (No. CIV 3982 of 2010)). Total legal costs reimbursed to Mr Ailakis for the financial year were $187,669 (2012: $76,641).

In December 2012 the District Court awarded damages to the plaintiff of $750,000 (Judgment Sum). Following receipt of the judgment the Company has reserved its rights and will not be making any payment of the Judgment Sum or further legal costs pursuant to the Deed (or otherwise).

As at 30 June 2013 $10,656 was outstanding in relation to amounts advanced to Mr Anthony Ailakis, which is offset by amounts owing by the Company to Mr Ailakis totalling $13,500. Amounts owed by Mr Ailakis accrue interest at the notional FBT interest rate which is currently 6.45% per annum.

There were no other loans outstanding to or from key management personnel during the year.

16. Employee benefits Aggregate liability for employee benefits Current Trade and other payables Employee entitlement provision	Consolidated 2013 $ 2012 $ 60,697 84,236 88,545 123,084
	149,242 207,320

The Entity has in place an employee share option plan (ESOP) for the granting of non-transferable options to certain directors, senior executives and key employees, further details of which are provided in note 2(w).

17. Auditors remuneration

Amounts received or due and receivable by the auditors of the Entity for: - an audit or review of the financial statements of the Entity - non audit services	37,504 29,556 - -
	37,504 29,556

REDSTONE RESOURCES LIMITED ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

18. Subsequent events

Capital Raising

The Entity is currently in the process of undertaking a capital raising by way of placement of fully paid ordinary shares to sophisticated investors.

Extension of Term of the Tollu Exploration Licence In September 2013 the Western Australian Department of Mines and Petroleum granted an extension of term of the Tollu exploration licence (E 69/2450) for a further 5 years to 18 September 2018.

There has not been any other matter or circumstance that has arisen after balance date that has significantly affected, or may significantly affect, the operations of the Entity, the results of those operations, or the state of affairs of the Entity in future financial periods.

19. Segment Reporting

The Entity has two operating segments being the distinct geographical location of its Areas of Interest in Australia and South America (The Entity’s primary basis of segmentation).

The Entity has identified its operating segment based on the internal reports that are reviewed and used by management and the Board of Directors in determining the allocation of resources.

However, as the Entity is predominantly operating in Australia then pursuant to the quantitative threshold criteria in AASB8 Segment Reporting, the two segments have been aggregated.

The accounting policies used by the Entity in reporting segments are the same as those in the prior period.

20. Related Party Transactions

Controlled entities

During the year the Company provided loans to controlled entities. The loans are made in the ordinary course of business and are unsecured and interest free with no fixed term of repayment. The amounts receivable from these entities as at the end of the reporting period are as follows:

	2013		2012
	$		$
Westmin Exploration Pty Ltd		-	2,895,788
Minex Services Pty Ltd		-	-

During the 2013 financial year the balance of loan amounts of $3,043,389 to Westmin Exploration Pty Ltd were treated as impaired.

During the 2012 financial year the balance of loan amounts of $3,483 to Minex Services Pty Ltd were treated as impaired.

Other than disclosed above and in note 15 there were no other related party transactions during the financial year.

REDSTONE RESOURCES LIMITED ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

21. Expenditure commitments

Exploration expenditure commitments

Australian tenements

In order to maintain current rights of tenure over its Australian mineral tenement leases, the Entity will be required to outlay amounts in respect of rent and to meet minimum expenditure requirements of the Department of Mines and Petroleum (DMP). Further, those tenements for which access agreements have been signed require annual access payments to be paid to the traditional owners.

The annual expenditure commitments, including access payments, on granted tenements as at 30 June 2013 amounted to $520,500 (2012: $356,500).

Brazilian tenements

In order to maintain current rights of tenure over Brazilian mineral tenement leases, the Company‘s controlled entity, Redstone Mineracao Do Brasil Ltda, will be required to outlay amounts in respect of annual rent and to meet minimum expenditure requirements of the National Department of Mineral Production (DNMP).

As such, the minimum expenditure commitments comprising annual rent on granted Brazilian tenements as at 30 June 2013 amounted to $203,565 (2012: $189,903). These obligations may vary from time to time and are expected to be fulfilled in the normal course of operations by the entity.

The future exploration commitment (including access costs) of the Entity relating to tenements which have been granted is as follows:

Cancellable operating lease commitments for exploration tenements Within one year One year or later and no later than five years Later than five years	Consolidated 2013 $ 2012 $ 634,065 546,309 382,000 30,335 - -
	1,016,065 576,644

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 entity. Further, these obligations are extinguished upon any surrender of the tenement.

Joint venture commitments

Baggaley Hills Farmin/Joint Venture

The Baggaley Hills Sale and Farm-in Agreement dated 19 March 2009 is between Redstone Resources Limited and HJH Nominees Pty Ltd (HJH or the farminee) over the Entity’s Baggaley Hills Project in the West Musgrave region, Australia.

Under the terms of the agreement, HJH paid the Entity $505,000. HJH also earned an 80% interest in the Baggaley Hills project tenements by spending a minimum of $2.5 million over a three year period to 19 March 2012 and by keeping the tenements in good standing. Following this, HJH is required to sole fund exploration and development expenditure on the Project Tenements until a Decision to Mine based on a bankable feasibility study.

In January 2013 the farm-in parties surrendered Exploration Licences EL’s 69/2053, 2054, 2339 & 2340.

Subsequent to the end of the financial year the remaining Baggaley Hills Project tenements (E69/2200 and E69/2249) were surrendered and the farmin deed between Redstone and HJH was terminated by mutual consent.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

21. Expenditure commitments (continued)

Exploration expenditure commitments (continued)

Blackstone Range/Michael Hills Joint Venture

The Blackstone Range/Michael Hills Farm-In Deed dated 2 June 2005 is between Giles Exploration Pty Ltd (Giles), Resources Mining Corporation Ltd (RMC), Westmin Exploration Pty Ltd (Westmin) and Rivergold Exploration Pty Ltd (Rivergold).

As of September 2008 Westmin, a wholly owned subsidiary of the Company, acquired a 75% interest in the Blackstone Range/Michael Hills Exploration Licences (EL) by sole funding $2,000,000 of exploration costs. During the 2010 financial year RMC converted its 25% interest to a 10% free carried interest in which case Westmin will assume RMC’s funding obligations to completion of a feasibility study, upon which Westmin will have earned a 90% interest in the EL.

On 26 February 2010 the Joint Venture parties surrendered Exploration Licences EL’s 69/2106 and 2107. The Farmin Deed continues in respect of the remaining tenements, EL’s 69/2108 and 2109.

Operating lease – corporate office premises

The current operating lease for office premises at an annual rental of $42,820 (plus variable outgoings plus GST) expired on 31 July 2013. Effective from 1 August 2013, the Entity has a further two year operating lease for its office premises and car bays at a current annual rental of $44,360 per annum plus variable outgoings plus GST.

Commencing from 1 April 2013 the Entity has agreed to a two year operating lease for storage premises expiring on 31 March 2015 at an annual rental of $24,000 plus variable outgoings plus GST.

Cancellable operating lease commitments Within one year One year or later and no later than five years Later than five years	Consolidated 2013 $ 2012 $ 67,902 65,455 65,666 3,568 - -
	133,568 69,013

Capital Commitments

The Entity does not have any capital commitments as at balance date.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

22. Financial Risk Management

(a) Overview

The Entity has exposure to the following risks from use of their financial instruments

 credit risk

liquidity risk
market risk

This note presents information about the Entity’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital.

The Board of directors has overall responsibility for the establishment and oversight of the risk management framework.

(b) Credit risk

Credit risk is the risk of financial loss to the Entity if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Entity’s receivables from customers and investments.

(c) Liquidity risk

Liquidity risk is the risk that the Entity will not be able to meet its financial obligations as they fall due. The Entity’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Entity’s reputation.

Ultimate responsibility for liquidity risk management rests with the Board of directors, who have built an appropriate liquidity risk management framework for the management of the Entity’s short, medium and long-term funding and liquidity management requirements. The Entity manages liquidity risk by maintaining adequate reserves by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

It is the Entity’s objective to ensure that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations.

The contractual maturities of the financial liabilities referred to in note 10 to the financial report for the Entity, including estimated interest payments, at reporting date are less than 6 months, other than a debt parcel agreement for a total amount of $240,000, which is required to be paid in monthly instalments over 26 months to 31 August 2015.

(d) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Entity’s income or the value of its holdings of financial instruments.

(i) Price Risk

The Entity has no exposure to price risk.

(ii) Currency risk

The Entity is exposed to currency risk on purchases and investments that are denominated in a currency other than their functional currency, namely the Australian dollar (AUD). The currencies in which these transactions primarily are denominated are the United States dollar (USD) and Brazilian Reais (BRL).

To date, currency risk has not been material to the Entity.

(iii) Interest rate risk

The cash balance of $740,845 as at 30 June 2013 is sensitive to interest rate risk whereby a 1% per annum movement in interest rates would impact the consolidated statement of comprehensive income and net equity by $7,408. This risk is not considered to be material.

At reporting date the Entity does not have any short term borrowings.

REDSTONE RESOURCES LIMITED ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

22. Financial Risk Management (continued)

(e) Capital risk management

Management’s policy is to control the capital of the Company in order to maintain a strong capital base so as to maintain investor, creditor and market confidence and to ensure that the Entity can fund its operations and continue as a going concern.

The Entity’s capital includes ordinary share capital and financial liabilities, comprising trade and other payables totalling $551,294 (2012: $476,590) supported by financial assets of $811,435 (2012: $358,202).

The Entity is currently in the process of a capital raising by way of placement of fully paid ordinary shares to sophisticated investors.

Financial risk management objectives and policies

The Entity’s principal financial instrument is cash. The main purpose of these financial instruments is to provide working capital for operations.

The Entity has various other financial assets and liabilities such as receivables and trade payables, which arise directly from its operations. The main risks currently arising from the Entity’s financial instruments are interest rate risk and credit risk.

It is expected that the Entity will be undertaking certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations will arise.

Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis for measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 to the financial statements.

Credit risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the carrying amount, net of any provisions for doubtful debts of those assets, as disclosed in the statement of financial position and the notes to the consolidated financial statements.

The Entity does not have any material credit risk exposure to debtors under financial instruments it has entered into, with the majority of trade receivables due from the Company’s investment partners and the Australian Taxation Office (ATO).

As at 30 June 2013, financial assets which are neither past due or impaired mainly comprise cash held with reputable financial institutions and is therefore not considered to present material credit risk.

Net fair values

The carrying amount of financial assets and financial liabilities approximate their net fair values at balance date.

Interest rate risk

The following table sets out the carrying amount and maturity of the financial instruments exposed to interest rate risk:

ACN 090 169 154

REDSTONE RESOURCES LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

22. Financial Risk Management (continued)

Consolidated – 2013 Category Financial assets: Cash Cash Trade and other receivables Total financial assets Financial liabilities Trade creditors and other payables Trade creditors and other payables Total financial liabilities Consolidated – 2012 Category Financial assets: Cash Cash Trade and other receivables Total financial assets Financial liabilities Trade creditors and other payables Borrowings Income in advance Total financial liabilities		Time Period Interest Bearing (Floating) Non- Interest Bearing Total Carrying Amount as per the consolidated statement of financial position Weighted Average Effective Interest Rate %
		<1 year 740,169 - 740,169 2.89% <1 year - 676 676 - <1 year 10,656 59,934 70,590 6.81%
		750,825 60,610 811,435
		<1 year - 421,294 421,294 - >1 year - 130,000 130,000 -
		- 551,294 551,294
		Time Period Interest Bearing (Floating) Non- Interest Bearing Total Carrying Amount as per the consolidated statement of financial position Weighted Average Effective Interest Rate % <1 year 321,612 - 321,612 4.75% <1 year - 3,561 3,561 - <1 year - 33,029 33,029 - 321,612 36,590 358,202 <1 year - 476,590 476,590 - < 1 year - - - - <1 year - - - - - 476,590 476,590

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

23. Cash flow information Loss from ordinary activities after income tax Depreciation Loss/(gain) on sale of asset Gain on insurance claim Impairment/write off of deferred exploration expenditure Share-based payments Net exploration expenditure Changes in operating assets and liabilities (Decrease)/increase in provisions (Decrease)/Increase in trade creditors and accruals (Increase)/decrease in sundry receivables and prepayments Net cash flow used in operating activities	Consolidated 2013 $ 2012 $ (5,582,684) (1,894,133)
	40,383 42,980 (27,410) 30,414 (31,666) - 4,407,578 132,005 157,000 568,550 47,570 7,616 (14,130) 113,093 (216,481) 79,070 (7,485) 199,905
	(1,227,325) (720,500)

23.
Cash flow information
Loss from ordinary activities after income tax
Depreciation
Loss/(gain) on sale of asset
Gain on insurance claim
Impairment/write off of deferred exploration
expenditure
Share-based payments
Net exploration expenditure
Changes in operating assets and liabilities
(Decrease)/increase in provisions
(Decrease)/Increase in trade creditors and
accruals
(Increase)/decrease in sundry receivables and
prepayments
Net cash flow used in operating activities

Consolidated
2013
$ 2012
$ (5,582,684)
(1,894,133)

40,383
42,980
(27,410)
30,414
(31,666)
-
4,407,578
132,005
157,000
568,550
47,570
7,616
(14,130)
113,093
(216,481)
79,070
(7,485)
199,905

(1,227,325)
(720,500)

24. Contingent Assets and Liabilities

The Entity had no contingent assets or liabilities as at 30 June 2013.

Lawsuit Expenses and Potential Loss since 30 June 2012

Mr Ailakis, an officer of the Company defended a legal claim lodged against him on 21 February 2011 in the District Court of Western Australia (3982 of 2010 Olivero v Ailakis & Anor) (Claim). In December 2012 the District Court awarded damages to the Plaintiff of $750,000 (Judgement Sum). Redstone understands that Mr Ailakis has appealed the District Court decision to the Supreme Court of Western Australia.

The Company has in place Deeds of Indemnity, Insurance and Access with its officers, whereby, amongst other things, the Company has agreed to indemnify and keep indemnified an officer in accordance with the terms of those Deeds.

The Company has indemnified Mr Ailakis for all legal expenses incurred in defending the Claim in the District Court but has reserved its rights in relation to payment of any Judgment Sum and any further legal costs.

The Company lodged an insurance claim for Legal Expenses and Losses arising from the Claim pursuant to the Company’s Directors and Officers policy with QBE Insurance (Australia) Limited (QBE). Subsequent to 30 June 2013, Redstone and QBE have negotiated a settlement of the Claim, the terms of which are confidential.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

25. Parent Information

25. Parent Information
	Parent Entity 2013 $ 2012 $
Current assets Non-current assets Total Assets Current liabilities Non-current liabilities Total Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Total RDS equity Net loss for the year before other comprehensive income Total comprehensive income for the year Earnings per share (EPS) – (cents per share)	835,826 381,066 5,259,494 8,755,617
	6,095,320 9,136,683
	331,702 545,863 88,545 -
	420,247 545,863

	5,675,073 8,590,820
	20,538,618 18,523,535 1,712,736 2,368,172 (16,576,281) (12,300,887)
	5,676,073 8,590,820
	(5,087,830) (1,894,133)
	(5,087,830) (1,894,133)
	(3.85) (1.46)

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

25. Parent Information (continued)

Controlled entities

Redstone Resources Limited is the ultimate parent entity of the controlled entities.

Particulars in relation to controlled entities	Country of	2013	2012
	incorporation	Ownership %	Ownership %
Allhawk Nominees Pty Ltd	Australia	100	100
Minex Services Pty Ltd	Australia	100	100
Westmin Exploration Pty Ltd	Australia	100	100
Redstone Mineracao Do Brasil Ltda1	Brazil	98	98

1 Redstone Mineraco Do Brasil Ltda is 98% owned by the Company. The remaining 2% shareholding is held by an employee of the Entity, who is a Brazilian citizen and is holding these shares on trust for the Company. The Board and shareholding structure is in accordance with Brazilian law.

(b) Contribution to consolidated result

The results of the controlled entities inclusion in the consolidated statement of comprehensive income is a loss of $494,854 (2012: nil).

26. Share based payments

The impact of share based payments on the consolidated statement of comprehensive income for the financial year ended 30 June 2013 is as follows:

Net loss after income tax and including share based payments Add: share based payments expense Net loss after income tax excluding share based payments	Consolidated 2013 $ 2012 $ (5,582,684) (1,894,133) 157,000 568,550
	(5,425,684) (1,325,583)

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

26. Share based payments (continued)

During the period the company granted 2,000,000 (2012: 3,800,000) share options for nil consideration. These share-based payments were independently valued using either Black Scholes or binomial methodology as detailed in note 2(w). The independent value of these, and existing, options for the year ending 30 June 2013 is as follows:

$
1,500,000 Director Options granted on 30 November 2009. Exercise price $0.25 exercisable
56,550 from 30 November 2009 and expiring 30 November 2014.
500,000 Director Options granted on 30 November 2009. Exercise price $0.30 exercisable
17,550 from 30 November 2009 and expiring 30 November 2014.
500,000 Director Options granted on 30 November 2009. Exercise price $0.35 exercisable
16,575 from 30 November 2009 and expiring 30 November 2014.
3,700,000 Employee Options granted on 19 October 2010. Exercise price $0.50 exercisable
536,315 from 19 October 2010 and expiring 19 October 2013.
600,000 Employee Options granted on 4 November 2010. Exercise price $0.50 exercisable
106,860 from 4 November 2010 and expiring 4 November 2013.
500,000 Director Options granted on 1 December 2010. Exercise price $0.50 exercisable
66,300 from 1 December 2010 and expiring 1 December 2013.
1,000,000 Consultant Options granted on 25 February 2011. Exercise price $0.50
155,350 exercisable from 25 February 2011 and expiring 24 February 2014.
100,000 Employee Options granted on 25 February 2011. Exercise price $0. 50 exercisable
15,535 from 25 February 2011 and expiring 24 February 2014.
200,000 Employee Options granted on 7 July 2011. Exercise price $0.35 exercisable from 7
33,400 July 2011 and expiring 6 July 2015.
100,000 Employee Options granted on 7 July 2011. Exercise price $0.45 exercisable from 7
15,400 July 2011 and expiring 6 July 2015.
750,000 Consultant Options granted on 7 July 2011. Exercise price $0.35 exercisable from 7
125,250 July 2011 and expiring 6 July 2015.
750,000 Consultant Options granted on 7 July 2011. Exercise price $0.45 exercisable from 7
115,500 July 2011 and expiring 6 July 2015.
1,000,000 Director Options granted on 22 December 2011. Exercise price $0.30 exercisable
135,000 from 22 December 2012 and expiring 21 December 2014.
1,000,000 Consultant Options granted on 27 February 2012. Exercise price $0.30
144,000 exercisable from 27 February 2012 and expiring 26 February 2015.
2,000,000 Director Options granted on 5 December 2012. Exercise price $0.20 exercisable
157,000 from 5 December 2012 and expiring 4 December 2017.
1,696,585 Total Options 14,200,000

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

26. Share based payments (continued)

The option valuations adopted in the previous table are calculated using the following assumptions:

For options issued during the 2013 financial year

Underlying security spot price of between $0.13 Dividend rate of nil Volatility factor of 95% Risk free interest rate of 2.55% The weighted average exercise price is $0.20 and the weighted average expiry period is 5 years. The weighted average value per option as at the measurement date is $0.078 cents per option.

For options issued during the 2012 financial year

Underlying security spot price of between $0.24 and $0.27 Dividend rate of nil Volatility factor of 90-95% Risk free interest rate of between 3.08% and 4.87% The weighted average exercise price is $0.35 and the weighted average expiry period is 3.47 years. The weighted average value per option as at the measurement date is $0.15 cents per option.

For options issued during the 2011 financial year

Underlying security spot price of between $0.38 and $0.47 Dividend rate of nil Volatility factor of 90% Risk free interest rate of between 4.94% and 5.13% Discount factor of 35% due to lack of marketability The weighted average exercise price is $0.50 and the weighted average expiry period is 3 years. The weighted average value per option as at the measurement date is $0.15 cents per option.

For options issued during the 2010 financial year

Underlying security spot price of $0.105 Dividend rate of nil Volatility factor of 85% Risk free interest rate of 5.29% Discount factor of 35% due to lack of marketability The weighted average exercise price is $0.26 and the weighted average expiry period is 3.37 years. The weighted average value per option as at the measurement date is $0.027cents per option.

For options issued during the 2009 financial year

Underlying security spot price of $0.09 Dividend rate of nil Volatility factor of 85% Risk free interest rate of 4.12% Discount factor of 35% due to lack of marketability The weighted average exercise price is $0.25 and the weighted average expiry period is 2 years. The weighted average value per option as at the measurement date is $0.019 cents per option.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

27. Jointly controlled operations and assets

Blackstone Range Project

As at 30 June 2013 and the date of this report the Entity has an interest in a joint venture arrangement in the Blackstone Range/Michael Hills Farm-In in Western Australia. The Entity has earned a 75% interest in this joint venture by funding and carrying out exploration on these tenements and is currently sole funding exploration and development expenditure on the Project Tenements until completion of a feasibility study to earn a 90% interest (refer to note 21).

Baggaley Hills Project

In January 2013 the farm-in parties surrendered Exploration Licences EL’s 69/2053, 2054, 2339 & 2340.

Pontal (Iron) Agreement

On 17 June 2010, the Entity divested a 90% interest in its Brazil Iron (Pontal) Project tenements. The Pontal Agreement required the purchaser to incur exploration and other expenditure on the Tenements sufficient to satisfy the relevant Brazilian mining laws and keep the tenements in good standing at all times and sole fund exploration, development and other expenditure on the Tenements until a Decision to Mine in respect of each project on the Project area.

ACN 090 169 154

REDSTONE RESOURCES LIMITED

DIRECTORS’ DECLARATION

In the directors’ opinion:

a) the financial statements and notes set out on pages 26 to 66 are in accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(ii) giving a true and fair view of the Entity’s financial position as at 30 June 2013 and its performance for the financial year ended on that date and
b) there are reasonable grounds to believe that the Entity will be able to pay its debts as and when they become due and payable.

The directors have been given the declarations by the chief executive officer and chief financial officer required by s295A of the Corporations Act 2001 .

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

==> picture [101 x 61] intentionally omitted <==

R Homsany Chairman Perth, Western Australia

Dated this 27[th] day of September 2013

==> picture [525 x 744] intentionally omitted <==

==> picture [130 x 9] intentionally omitted <==

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==> picture [144 x 30] intentionally omitted <==

REDSTONE RESOURCES LIMITED

ACN 090 169 154

SHAREHOLDER INFORMATION AS OF 24 SEPTEMBER 2013

A. CORPORATE GOVERNANCE

A statement disclosing the extent to which the Company has followed the best practice recommendations set by the ASX Corporate Governance Council during the reporting period is contained on pages 18 to 25 of the Annual Report.

B. SHAREHOLDING

Substantial Shareholders

The names of the substantial shareholders listed on the company’s register:

Shareholder

Number

Shareholder	Number
MR EDWARD VAN HEEMST & MRS MARILYN ELAINE VAN HEEMST
	10,867,331
EASTERN PROSPECTING PTY LTD	9,875,758
SAMARKAND HOLDING PTY LTD	9,875,758
BULLRUN INVESTMENTS PTY LTD	9,725,758

Number of holders in each class of equity securities and the voting rights attached

There are 1,728 holders of ordinary shares. Each shareholder is entitled to one vote per share held. On a show of hands every shareholder 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.

There are 446 holders of listed options (ASX: RDSO) (further details of which are set out in section 5 below). There are no voting rights attached to these options

There are 18 holders of unlisted options (details of which are set out in section 7 below). There are no voting rights attached to these options. There are no other unquoted securities of the Company.

Distribution schedule of the number of holders in each class is.

			Holders of	Number of
			Ordinary	Ordinary
			Shares	Shares	%
1	-	1,000	99	55,096	0.04
1,001	-	5,000	369	1,159,008	0.76
5,001	-	10,000	323	2,669,763	1.76
10,001	-	100,000	742	26,964,044	17.74
100,001	and over		195	121,121,479	79.70
TOTALS			1,728	151,969,390	100.00

4. Marketable Parcel

There are 824 shareholders with less than a marketable parcel.

REDSTONE RESOURCES LIMITED

ACN 090 169 154

SHAREHOLDER INFORMATION

Twenty largest holders of each class of quoted equity security

The names of the twenty largest holders of each class of quoted equity security, the number of equity security each holds and the percentage of capital each holds are as follows:

Fully Paid Ordinary Shares – ASX: RDS

		No. of
		Ordinary
Rank	Name	Shares	%
1	MR EDWARD VAN HEEMST & MRS MARILYN ELAINE VAN HEEMST	10,867,331	7.15
2	SAMARKAND HOLDING PTY LTD	9,875,758	6.50
3	EASTERN PROSPECTING PTY LTD	9,875,758	6.50
4	BULLRUN INVESTMENTS PTY LTD	9,725,758	6.40
5	LANARK RESOURCES PTY LTD	5,395,758	3.55
6	GREYHOUND INVESTMENTS PTY LTD	3,031,047	1.99
7	MUSCODA HOLDINGS PTY LTD	2,702,731	1.78
8	CARDINALS CORPORATE PTY LTD	2,367,330	1.56
9	HJH NOMINEES PTY LTD	2,118,760	1.39
10	ACEDAY INVESTMENTS PTY LTD	1,810,000	1.19
11	ARGONAUT EQUITY PARTNERS PTY LIMITED	1,650,678	1.09
12	TROYWARD PTY LTD	1,550,000	1.02
13	AFM PERSEUS FUND LIMITED	1,500,000	0.99
14	POSSUM INVESTORS PTY LTD	1,500,000	0.99
15	HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED	1,461,741	0.96
16	MR THOMAS MILENTIS	1,280,000	0.84
17	HS SUPERANNUATION PTY LTD	1,264,085	0.83
18	MR CHEE NAM LIEW & MRS LEE CHIN LIEW	1,145,900	0.75
19	AJAVA HOLDINGS PTY LTD	1,131,818	0.74
20	MR LINDSAY JOHN ARCHER + MRS DALE BEVERLEY ARCHER	1,030,000	0.68
		71,284,453	46.91

ACN 090 169 154

REDSTONE RESOURCES LIMITED

SHAREHOLDER INFORMATION

Listed Options – ASX: RDSO

		No. of Listed
Rank	Name	Options	%
1	ARGONAUT INVESTMENTS PTY LTD	6,000,000	19.76
2	ARGONAUT EQUITY PARTNERS PTY LIMITED	4,233,521	13.95
3	MR EDWARD VAN HEEMST & MRS MARILYN ELAINE VAN HEEMST	2,033,666	6.70
4	CARDINALS CORPORATE PTY LTD	1,183,665	3.90
5	SAMARKAND HOLDING PTY LTD	987,575	3.25
6	EASTERN PROSPECTING PTY LTD	987,575	3.25
7	BULLRUN INVESTMENTS PTY LTD	972,575	3.20
8	AFM PERSEUS FUND LIMITED	888,401	2.93
9	GREYHOUND INVESTMENTS PTY LTD	823,116	2.71
10	LANARK RESOURCES PTY LTD	589,575	1.94
11	SIMDILEX PTY LTD	544,917	1.80
12	AVIEMORE CAPITAL PTY LTD	500,000	1.65
13	WALSEC PTY LTD	500,000	1.65
14	PATA NOMINEES PTY LTD	440,091	1.45
15	MUSCODA HOLDINGS PTY LTD	270,273	0.89
16	EGR INVESTMENTS PTY LTD	269,593	0.89
17	MRS MICHELLE MARIE WHITEHEAD	267,000	0.88
18	SARK CLOTHING PTY LTD	258,699	0.85
19	BEGLEY SUPERANNUATION CO PTY LTD	250,001	0.82
20	MR MARCELLO DAVID CARDACI & MRS GAYLE ELIZABETH CARDACI <THE SPYDER SUPER FU	220,000	0.72
		22,220,243	73.20

6. Details of Restricted Securities

No ordinary securities are subject to escrow

REDSTONE RESOURCES LIMITED

ACN 090 169 154

SHAREHOLDER INFORMATION

7. Details of unlisted Options

% or No. Options Name / Class of Option No. holders

1
3
2
2
2
3
2
1
2
18

1,500,000
Director Options
Exercise price $0.25 from 30 November 2009 and expiring 30 November 2014
500,000
Director Options
Exercise price $0.30 from 30 November 2009 and expiring 30 November 2014
500,000
Director Options
Exercise price $0.35 from 30 November 2009 and expiring 30 November 2014
3,700,000
Options
Exercise price $0.50 from 19 October 2010 and expiring 19 October 2013
600,000
Options
Exercise price $0.50 from 4 November 2010 and expiring 4 November 2013
500,000
Director Options
Exercise price $0.50 from 1 December 2010 and expiring 1 December 2013
1,100,000
Options
Exercise price $0.50 from 25 February 2011 and expiring 24 February 2014
950,000
Options
Exercise price $0.35 from 7 July 2011 and expiring 6 July 2015
850,000
Options
Exercise price $0.45 from 7 July 2011 and expiring 6 July 2015
1,000,000
Director Options
Exercise price $0.30 from 22 December 2011 and expiring 21 December 2014
1,000,000
Options
Exercise price $0.30 from 27 February 2012 and expiring 26 February 2015
2,000,000
Options
Exercise price $0.20 from 5 December 2012 and expiring 4 December 2017
14,200,000
Total Unlisted Options

C. OTHER DETAILS

1. Company Secretary

The name of the company secretary is Miranda Conti.

Address and telephone details of the entity’s registered and administrative office

Suite 3, 110-116 East Parade East Perth WA 6004 Tel: + 61 8 9328 2552 Fax: + 61 8 9328 2660 email: [email protected]

Address and telephone details of the office at which a register of securities is kept

Advanced Share Registry Limited Website: www.advancedshare.com.au

PO Box 1156, NEDLANDS WA 6009 PO Box Q1736, SYDNEY NSW 2000 Tel: +61 8 9389 8033 Level 6, 225 Clarence Street Fax: +61 8 9389 7871 QUEEN VICTORIA BUILDING NSW 1230 Tel: +61 2 8906 3502

ACN 090 169 154

REDSTONE RESOURCES LIMITED

SHAREHOLDER INFORMATION

4. Stock exchange on which the Company’s securities are quoted

The Company’s listed equity securities are quoted on the Australian Stock Exchange (ASX: RDS and RDSO).

5. Review of Operations

A review of operations is contained in the Directors’ Report.

D. TENEMENT SUMMARY

Following is a list of the Entity’s tenements which are live or active as at the date of this report.

West Musgrave, Australia

Project	Tenement	Registered Holder Applicant Holder Interest Consolidated Entity Interest	Grant Date (Application Date) Expiry	Blocks Area km2
Tollu Blackstone Range Blackstone Range	E 69/2450 E 69/2108 E 69/2109	Redstone Resources Limited 100% 100% River Gold Exploration Pty Ltd 100% 75% River Gold Exploration Pty Ltd 100% 75%	19/09/2008 18/09/2018 28/04/2006 27/04/2015 28/04/2006 27/04/2015	69 214.0 39 121.0 70 217.0
				178 552.0

ACN 090 169 154

REDSTONE RESOURCES LIMITED

SHAREHOLDER INFORMATION

Brazil, South America

Project	Tenement	Registered Holder Applicant	Holder Interest	Consolidated Entity Interest	Grant Date (Application Date)	Expiry	Area ha
Arinos Bala and Pontal Bala and Pontal Aneba Apui Apui Apui Apui Apui Apui Apui Apui Apui Apui Apui Apui Apui Apui Apui Apui Apui Apui Amazonas Amazonas Amazonas Amazonas Amazonas Arapixuna Arapixuna Arapixuna	866280/07 850738/11 850739/11 880657/08 880167/08 880168/08 880169/08 880170/08 880171/08 880172/08 880173/08 880174/08 880175/08 880176/08 880177/08 880178/08 880179/08 880180/08 880181/08 880182/08 880245/08 880246/08 880173/12 880174/12 880175/12 880176/12 880177/12 851153/12 851154/12 851155/12	Redstone Mineração Do Brasil Ltda HJH Mineração do Brasil Ltda. HJH Mineração do Brasil Ltda. Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda Redstone Mineração Do Brasil Ltda	100% 90% 90% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 0% 0% 0% 0% 0% 0% 0% 0%	100% 10% 10% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 0% 0% 0% 0% 0% 0% 0% 0%	15/02/2008 3/10/2011 3/10/2011 13/07/2011 13/07/2011 12/09/2011 13/07/2011 13/07/2011 13/07/2011 13/07/2011 13/07/2011 13/07/2011 13/07/2011 13/07/2011 13/07/2011 13/07/2011 13/07/2011 13/07/2011 13/07/2011 13/07/2011 13/07/2011 13/07/2011 (12/09/2012) (12/09/2012) (12/09/2012) (12/09/2012) (12/09/2012) (19/10/2012) (19/10/2012) (19/10/2012)	15/02/2011* 3/10/2014 3/10/2014 13/07/2014 13/07/2014 12/09/2014 13/07/2014 13/07/2014 13/07/2014 13/07/2014 13/07/2014 13/07/2014 13/07/2014 13/07/2014 13/07/2014 13/07/2014 13/07/2014 13/07/2014 13/07/2014 13/07/2014 13/07/2014 13/07/2014 N/A N/A N/A N/A N/A N/A N/A N/A	6,953.43 9,203.78 9,727.25 1,999.00 9,458.70 10,000.00 9,673.96 9,497.22 9,879.46 10,000.00 8,018.98 9,995.62 9,996.36 8,157.49 10,000.00 10,000.00 9,996.61 9,993.28 2,940.94 9,886.78 9,998.90 9,440.21 8,528.24 9,134.13 9,051.69 9,911.47 9,049.50 9,357.65 7,901.40 7,187.98
							264,940.03

*Application for an extension of term for tenement 866280/07 for a further three years has been lodged with the Brazil National Department of Mineral Production (DNMP) and is still pending.

AI assistant

REDSTONE RESOURCES LIMITED — Annual Report 2013

65676_rns_2013-09-29_8c8cac18-7c4e-4e09-a84d-02bc9bda8fa8.pdf

REDSTONE RESOURCES LIMITED

COMPETENT PERSONS STATEMENT:

FORWARD LOOKING STATEMENTS:

ADDITIONAL INFORMATION:

CORPORATE DIRECTORY

DIRECTORS’ REPORT

DIRECTORS’ REPORT

Principal Activities

Review of Operations

DIRECTORS’ REPORT

WEST MUSGRAVE

Tollu Project

(E69/2450) – 100% Redstone

REDSTONE RESOURCES LIMITED

DIRECTORS’ REPORT

Tollu Targeting Strategy

DIRECTORS’ REPORT

Blackstone Range Farmin/Joint Venture

E69/2108 and E69/2109 – Farmin with Resource Mining Corporation Ltd (ASX: RMI), Redstone earning 90%

Baggaley Hills

E69/2249 and E69/2200 – HJH Nominees Pty Ltd earning 80%

BRAZIL

Apuí

REDSTONE RESOURCES LIMITED

DIRECTORS’ REPORT

CORPORATE

Placements and Capital Raising

Corporate Advisor

Anebá and Autazes Projects

Dividends

Significant Changes in State of Affairs

REDSTONE RESOURCES LIMITED

DIRECTORS’ REPORT

Significant Events after Balance Date

Likely Developments

Environmental Issues

DIRECTORS’ REPORT

Share Options

Directors’ Interests

REDSTONE RESOURCES LIMITED

DIRECTORS’ REPORT

Meetings of Directors

Remuneration Report (audited)

- Remuneration Policy

REDSTONE RESOURCES LIMITED

DIRECTORS’ REPORT

Remuneration Report (audited) (continued)

- Performance based remuneration

Company Performance, Shareholder Wealth and Director/Executive Remuneration

Year ended 30 June 2013

Year ended 30 June 2012

REDSTONE RESOURCES LIMITED

DIRECTORS’ REPORT

Remuneration Report (audited) (continued)

Executive Director - Mr A Ailakis

Non-Executive Directors

REDSTONE RESOURCES LIMITED

DIRECTORS’ REPORT

Remuneration Report (audited) (continued)

Option Holdings

REDSTONE RESOURCES LIMITED

DIRECTORS’ REPORT

Remuneration Report (audited) (continued)

Equity Holdings and Transactions

Exercise of options granted as remuneration

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Indemnification and insurance of Officers

DIRECTORS’ REPORT

Auditor

Auditors’ Independence Declaration

Legal Proceedings

REDSTONE RESOURCES LIMITED

CORPORATE GOVERNANCE STATEMENT

Principle 1: Lay solid foundations for management and oversight.

CORPORATE GOVERNANCE STATEMENT

Principle 2: Structure the board to add value.

CORPORATE GOVERNANCE STATEMENT

REDSTONE RESOURCES LIMITED Annual Report 2013

End of Remuneration Report **